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/raid1/www/Hosts/bankrupt/TCR_Public/051020.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 20, 2005, Vol. 9, No. 249 Headlines ACURA PHARMACEUTICALS: Needs Funding to Avert Bankruptcy Filing ALOHA AIRLINE: Pilots Condemn Request to Terminate Labor Pacts AMERICAN HARDWOODS: Case Summary & 28 Largest Unsecured Creditors AMHERST TECHNOLOGIES: Committee Balks at Consolidation of Estates AMHERST TECHNOLOGIES: IBM Accelerates Debt Following Default ASHTON WOODS: Earns $6 Million of Net Income in First Quarter BALLY TOTAL: Independent Directors Adopt Stockholder Rights Plan BANK OF AMERICA: Fitch Upgrades Rating on Class 1-B-5 Certs. to BB BCBG MAX: S&P Assigns Low-B Ratings to $300 Million Loans BIRCH TELECOM: Bankruptcy Court Fixes November 4 Claims Bar Date BLACK WARRIOR: Two Noteholder Groups Will Convert Notes to Shares BOSTON COMMS: Enjoined from Infringing on Freedom Wireless Patent BOYDS COLLECTION: Court Restricts Trading in Claims & Equity BROOKFIELD PROPERTIES: Completes Acquisition of O&Y Entities BULL RUN: Can Borrow Up to $61.9-Mil Under Bank Credit Facility BULL RUN: Inks Merger Pact with Triple Crown & BR Acquisition CALIFORNIA STEEL: Incurs $1.1 Million Net Loss in Third Quarter CAPE SYSTEMS: Tackles Material Weaknesses in Controls & Procedures CHAMPION ENTERPRISES: Earns $14.3 Mil. of Net Income in 3rd Qtr. CHEMTURA CORP: Rescinds Resolution of Calif. & Conn. Class Suits COLLINS & AIKMAN: Closing Mfg. Facility in Westland, Michigan COMPANHIA PETROLIFERA: Moody's Lifts Notes' Rating to Baa3 from B1 COMPOSITE TECHNOLOGY: Settles American China's $10 Million Claim CONSTELLATION BRANDS: Offers to Acquire Vincor for C$1 Billion CONTINENTAL AIRLINES: Earns $61 Million of Net Income in 3rd Qtr. CONTINENTAL AIRLINES: Prices Public Offering of 18 Million Shares CREDIT SUISSE: S&P Assigns Low-B Rating to Six Certificate Classes CROWN HOLDINGS: Launches Tender Offers for Subsidiary's Notes CROWN HOLDINGS: Earns $78 Million of Net Income in Third Quarter DANA CORP: Secures Credit Facility Waivers Until Nov. 30 DEL LABORATORIES: Offering $185 Million Notes in Private Placement DELPHI CORP: CEO Steve Miller Cuts Salary to $1 Annually DELPHI CORP: Judge Drain Approves Skadden Arps as Lead Counsel DELPHI CORP: FTI Consulting Approved as Financial Advisors DELPHI CORP: U.S. Trustee Appoints 7-Member Creditors Committee DELTA AIR: Two Airports Question Amount Deposited in PFC Accounts DELTA AIR: Court OKs Rejection of 12 Burdensome Contracts & Leases DENNY'S CORP: Issues Earnings Guidance for Fiscal Year 2005 DOCTORS HOSPITAL: Wants to Employ Wilton Burt as Management Expert EASTMAN KODAK: Syndication of $2.7 Billion Loan Packages Completed ELEC COMMS: Balance Sheet Upside-Down by $2,642,674 at August 31 EMERITUS ASSISTED: Launches Exchange Offer for Conv. Sub. Notes ENDURANCE SPECIALTY: Completes $600 Million Capital Raising Plan ENRON CORP: Court Directs U.S. Bank to Disburse $13.6 Million ENTERGY NEW ORLEANS: Bond Default Prompts S&P to Cut Rating to D FAIR UNDERCAR: Case Summary & 36 Largest Unsecured Creditors FLY AMERICA: Files Notice Under Bankruptcy and Insolvency Act FORD CREDIT: S&P Lifts Ratings on Six Certificate Classes FREEDOM MEDICAL: Court Confirms Chapter 11 Plan of Reorganization GATEWAY EIGHT: Court Confirms Amended Plan of Reorganization GENTEK INC: Abrams Capital Commences Tender Offer for Warrants GENTEK INC: Plans to Prepay $3MM of 1st Lien Term Loan This Month GRAPHIC PACKAGING: Lenders Agree to Relax Financial Covenants H&E EQUIPMENT: $200M IPO Prompts S&P to Review Credit Ratings HEATING OIL: Gets Final Court Nod on $115 Million DIP Financing HMSC CORP: S&P Rates $210 Million Senior Credit Facility at B+ INDIANAPOLIS POWER: Fitch Raises Preferred Stock Rating to BBB- INTERNATIONAL PAPER: Appoints Marianne Parrs Executive VP & CFO INTERPUBLIC GROUP: Fitch Junks Preferred Stock & Rates Bonds at B+ INTERSTATE BAKERIES: Union Locals Ratify Extended Labor Contracts INTRAWEST CORP: Discloses Realignments of Executive Positions IPALCO ENTERPRISES: Fitch Lifts Sr. Notes Ratings to BBB- from BB J. CREW GROUP: All Holders of Senior Sub. Notes Tender Notes LAKESHORE LAUNDRY: Case Summary & 20 Largest Unsecured Creditors LEVITZ HOME: Organizational Meeting Today to Appoint Committee LEVITZ HOME: Court Approves Hiring of Jones Day as Lead Counsel LEVITZ HOME: Wants to Hire Blackstone Group as Financial Advisors MCLEODUSA INC: Solicits Lender Consent for Debt Restructuring MARCO DEVELOPMENT: Voluntary Chapter 11 Case Summary MEBAKK INC: Case Summary & 20 Largest Unsecured Creditors MESABA AVIATION: Wants to Continue Using Cash Management System MESABA AVIATION: Wants Mercer Management as Consultant MESABA AVIATION: Wants Marr Hipp as Labor Counsel MIRANT CORP: Court Halts Wilson Law Firm's Negative Solicitations MORGAN STANLEY: Low Values Spur Fitch to Cut Ratings on 2 Classes MOSAIC GROUP: Chapter 7 Trustee Hires Kane Russell as Counsel NEXTMEDIA OPERATING: S&P Junks Proposed $100 Million Secured Loan NUTRAQUEST INC: Has Until Feb. 7 to File Chapter 11 Plan NUTRAQUEST INC: Court Extends Removal Period to April 11 O'CHARLEY'S INC: Says 3rd Quarter Results Below Earnings Guidance O'SULLIVAN INDUSTRIES: Inks GECC Adequate Protection Stipulation O'SULLIVAN INDUSTRIES: Overview of Plan Of Reorganization OM GROUP: Reduced Earnings Prompt S&P to Affirm Low-B Ratings ORBIT BRANDS: Files Chapter 11 Plan Leaving Existing Equity Intact PASADENA GATEWAY: Wants Court to Close Chapter 11 Case PERSISTENCE CAPITAL: Section 341(a) Meeting Slated for Nov. 15 PINKSTON-HOLLAR: Voluntary Chapter 11 Case Summary PLEASURE COVE: Case Summary & 20 Largest Unsecured Creditors POINT TO POINT: Files Plan of Reorganization in W.D. Missouri POINT TO POINT: Taps Paul Fouts as Special Accountant PPM AMERICA: Moody's Lowers $256 Million Sr. Notes' Rating to Caa1 PRUDENTIAL MORTGAGE: Fitch Raises Ratings on Four Cert. Classes PUTNAM CBO: Credit Enhancement Prompts Fitch to Lift Ratings REFCO INC: Updated Case Summary & 50 Largest Unsecured Creditors REFCO INC: S&P Ratings Tumble to D After Bankruptcy Filing RF CUNNINGHAM: Wants Exclusive Period Extended to December 26 RF CUNNINGHAM: Court Sets November 22 as Claims Bar Date SAINT VINCENTS: Plaintiffs Object to Removal Period Extension SAINT VINCENTS: Taps Togut Segal as Special Conflicts Counsel SAINT VINCENTS: Court Affirms St. Mary's Closure Order SAKS INC: Earns $8.2 Million of Net Income in Second Quarter SHOPKO STORES: Extending 9-1/4% Debt Tender Offer Until Nov. 10 STATION CASINOS: Earns $39 Million of Net Income in Third Quarter STATION CASINOS: Reports 3rd Quarter Financial & Operating Results STEEL HOUSE: Voluntary Chapter 11 Case Summary STEWART ENTERPRISES: Delays Third Quarter Reports Until Oct. 24 SUPREME REALTY: To Acquire Hotel Properties for $34 Million TEVEAMERICA NETWORKS: Voluntary Chapter 11 Case Summary TIRO ACQUISITION: Wants Exclusive Period Stretched to December 8 TODD MCFARLANE: Wants Until Feb. 17 to File Chapter 11 Plan TOM'S FOODS: Lance Inc. Wins Asset Auction with $37.9 Million Bid TORCH OFFSHORE: Wants Until Nov. 14 to File Chapter 11 Plan USA MANUFACTURING: Case Summary & 20 Largest Unsecured Creditors UNISYS CORP: Poor Performance Prompts S&P's Negative Outlook UNISYS CORP: Low 3rd Quarter Earnings Cue Fitch's Low-B Ratings VARTEC TELECOM: Wants to Assume License Pacts with Edify Corp. VTEX ENERGY: U.S. Energy to Acquire U.K. Assets for $60 Million WELLINGTON PROPERTIES: Taps John Kepley to Appraise Property WELLS FARGO: Fitch Upgrades Low-B Ratings on Ten Cert. Classes WEST SUBURBAN: Voluntary Chapter 11 Case Summary XYBERNAUT CORP: Equity Panel Taps Executive Sounding as Advisor XYBERNAUT CORP: Wants to Access $5MM DIP Financing from LC Capital XYBERNAUT CORP: Blank Rome Approved as Committee's Lead Counsel * McCarter & English Names Three New Partners to Firm * Epstein Becker Adds Two Attorneys to New York Corporate Practice * Sheppard Mullin Continues N.Y. Growth With Edward Tillinghast ********* ACURA PHARMACEUTICALS: Needs Funding to Avert Bankruptcy Filing --------------------------------------------------------------- Acura Pharmaceuticals, Inc. (OTC.BB-ACUR) estimates that its current cash reserves will fund operating expenses only through November 11, 2005, assuming a waiver from existing bridge loan lenders allowing use of $200,000 pledged as security against the bridge loans. The Company can provide no assurance that the Lenders will grant such waiver. If the waiver is not granted prior to October 25, 2005 the Company may be required to seek protection under applicable bankruptcy laws. Assuming that the Company receives the waiver, to continue operating after November 11, 2005, the Company must obtain additional financing or enter into appropriate collaboration agreement with third parties providing for cash payments to the Company. The Company can provide no assurance that it will be successful in obtaining any such financing or entering into appropriate collaborative agreements, on acceptable terms, if at all, or if obtained, that such financing or collaborative agreements will provide sufficient cash to continue funding operations. In the absence of financing or third-party collaborative agreements, the Company will be required to scale back or terminate operations or seek protection under applicable bankruptcy laws. Acura Pharmaceuticals, Inc. -- http://www.acurapharm.com/-- together with its subsidiaries, is an emerging pharmaceutical technology development company specializing in proprietary opioid abuse deterrent formulation technology. At June 30, 2005, Acura Pharmaceuticals' balance sheet showed a $3,569,000 stockholders' deficit, compared to a $1,085,000 deficit at Dec. 31, 2004. ALOHA AIRLINE: Pilots Condemn Request to Terminate Labor Pacts -------------------------------------------------------------- The Aloha Airlines unit of the Air Line Pilots Association, International denounced Saturday's 1113 motion filing by Aloha Airlines, calling it disappointing, unnecessary and inappropriate. The filing, which attempts to void labor contracts as part of the bankruptcy process, comes at a time when management gave assurances to the pilot group that they would avoid filing the motion and would work with the pilots to reach a consensual agreement. The company's 1113 motion also follows months of negotiations and numerous concessions given by the pilot group putting Aloha's pilots in a significantly poorer financial position than those at Aloha's competitors. These concessions have succeeded in making Aloha very profitable over the past months, and have created a stable labor environment for the potential new investor groups, Yucaipa Cos. and Aloha Aviation Investment Group LLC. "We have made every attempt to negotiate in good faith with this management team for a labor contract that benefits both the pilots and the company, and would create a seamless transition for the new investors," said David Bird, chairman of the master executive council for the Aloha pilot group. "Why they now would go back on their word, ask the Court to reject our contract, and risk having the new investors walk away from the table is beyond reason." Mr. Bird continued: "The Aloha Airlines management has failed to demonstrate the need for us to take these drastic concessions at this time. While we are aware of the cash crunch our company faces, management should be negotiating with us rather than trying to use the courts to raid its own workers who have worked so hard to make Aloha successful." "Our goal was, and remains, to reach a consensual agreement with Aloha management to allow the airline to successfully emerge from bankruptcy court protection. We met with management as recently as Friday afternoon, and we continue to believe a satisfactory agreement can be reached. The company's attempt to seek bankruptcy court intervention is both inappropriate and completely unnecessary." Under Section 1113, employers can seek to reject labor contracts as part of the bankruptcy process, in effect modifying the terms of any provision in those agreements, including pay, benefits, work rules, and scope. Any proposal must be limited to necessary modifications and any request must treat all parties fairly and equitably. As part of the most recent round of concessions this past Spring, Aloha pilots agreed to a 20% pay cut, productivity enhancements and a two-year "freeze" on their pension plan. In return for nearly $12.5 million in pilot concessions, Aloha Airlines management on May 13, 2005, signed a Letter of Agreement expressly agreeing not to seek rejection of the pilot collective bargaining agreement in bankruptcy court. Merely five months later, the company not only is seeking complete termination of the pilots' pension plan, but rejection of the entire contract. The Air Line Pilots Association, International -- http://www.alpa.org/-- is the world's largest pilots union, representing 64,000 pilots at 41 airline carriers in the United States and Canada. Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors it listed more than $50 million in estimated assets and debts. AMERICAN HARDWOODS: Case Summary & 28 Largest Unsecured Creditors ----------------------------------------------------------------- Lead Debtor: American Hardwoods, Inc. 28260 McKee Road Toney, Alabama 35773 Bankruptcy Case No.: 05-87114 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Southern Architectural Millworks, LLC 05-87120 Type of Business: The Debtor sells hardwood materials and custom millwork products to customers throughout Northern, Central and Southern Alabama. See http://www.american-hardwoods.com/ Chapter 11 Petition Date: October 16, 2005 Court: Northern District of Alabama (Decatur) Judge: Jack Caddell Debtors' Counsel: Michael E. Lee, Esq. 200 West Side Square, Suite 803 Huntsville, Alabama 35801-4816 Tel: (256) 536-8213 Fax: (256) 536-8262 Estimated Assets Estimated Debts ---------------- --------------- American Hardwoods, Inc. Less than $50,000 $1 Million to $10 Million Southern Architectural Less than $50,000 $100,000 to Millworks, LLC $500,000 A. American Hardwoods, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ So. Architectural Millwork Unsecured $317,957 28260 McKee Road Toney, AL 35773 U Lock It Sorage Unsecured $232,492 Madison Commercial LLC Unsecured $77,167 117 Benson Drive Madison, AL 35758 Rugger Construction Unsecured $75,402 Weather Shield Mfg., Inc. Unsecured $73,369 Renasant Unsecured $50,100 The Bank Unsecured $50,000 Monaco International Unsecured $45,863 Moss Lumber Industries Unsecured $27,432 SN Servicing Corporation Unsecured $22,432 Alabama Dept. of Revenue Taxes $18,787 Northland Corporation Unsecured $16,307 John Paul McKee Unsecured $16,036 DLH Nordisk, Inc. Unsecured $13,789 Eggers Industries Unsecured $11,902 Dyke Industries, Inc. Unsecured $10,461 ANB Insurance Services Unsecured $9,023 North American Wood Unsecured $7,273 Huntsville City Sales Tax Taxes $6,636 Compass Bank Unsecured $5,730 B. Southern Architectural Millworks, LLC's 8 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ First Commercial Unsecured $49,002 RE/Building Loan 301 Washington Street Huntsville, AL 35801 Rugger Construction Company Unsecured $36,171 28260 McKee Road Toney, AL 35773 McDonald Construction Unsecured $17,446 2906 McJohn Street Huntsville, AL 35805 SNS Equipment Loan Unsecured $11,845 SBA Loan Repayment Auto Unsecured $10,603 Debit SNS Equipment Loan Unsecured $5,326 LeaseSouth, LLC Unsecured $3,471 Faulker Hill Fogg & Assoc. Unsecured $3,935 AMHERST TECHNOLOGIES: Committee Balks at Consolidation of Estates ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Amherst Technologies, LLC, and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of New Hampshire to deny the Debtors' request for substantive consolidation of their estates. Amherst Technologies, LLC, proposes that its estate will be the lone surviving bankruptcy estate following the consolidation. The Committee says there's no justification for disregarding the corporate separateness of the debtors' estates. Substantive Consolidation The Debtors tell the Bankruptcy Court that maintaining 11 separate chapter 11 cases results in unnecessary expenses and cutting those costs could make more money available to satisfy creditor claims. Peter N. Tamposi, Esq., at Nixon Peabody LLP, says that the proposed consolidation is justified since the Debtors' assets and liabilities are intermingled and because the Debtors have historically held themselves out as a single entity since 1998. Mr. Tamposi adds that a substantive consolidation of the various Debtors will not harm IBM Credit -- their major secured creditor -- since the aggregate value of their businesses is greater than the debt to IBM. The prepetition loan made by IBM was made jointly to all Debtors and is secured by a perfected security interest in virtually all of their assets. The substantive consolidation will result in: a) the write-off and extinguishment of all inter-company claims belonging to any Debtor; b) the merger of all assets and liabilities of the Debtors; c) Amherst Technologies LLC's assumption of all obligations of any one of the Debtors; d) the treatment of any claims filed in the Debtors' bankruptcy cases as a claim against Amherst Technologies, LLC. e) the treatment of the Debtors as a single entity for the purposes of determining the availability of the right of setoff under Section 553 of the Bankruptcy Code. Committee's Objections The Committee tells the Bankruptcy Court that the proposed substantive consolidation should be rejected because it is premature and unwarranted. Charles R. Powell, Esq., at Devine Millimet & Branch, PA, argues that substantive consolidation is an exceptional remedy and should be used sparingly. Mr. Powell says the Debtors have failed to present sufficient compelling evidence to justify a substantive consolidation. The Committee complains that: a) The Debtors have not offered evidence demonstrating that creditors will not be prejudiced by substantive consolidation. b) The Debtors' unwillingness to undertake the task of examining its books and records and unsubstantiated allegations of hardship do not justify consolidation of their bankruptcy cases. Headquartered in Merrimack, New Hampshire, Amherst Technologies, LLC -- http://www.amherst1.com/-- offers enterprise class solutions including wired and wireless networking, server and storage optimization implementations, document management solutions, IT lifecycle solutions, Microsoft solutions, physical security and surveillance and complex configured systems. The Company and its debtor-affiliates filed for chapter 11 protection on July 20, 2005 (Bankr. D. N.H. Case No. 05-12831). Daniel W. Sklar, Esq., and Peter N. Tamposi, Esq., at Nixon Peabody LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. AMHERST TECHNOLOGIES: IBM Accelerates Debt Following Default ------------------------------------------------------------ IBM Credit, LLC, accelerated all payments due under existing prepetition and postpetition financing agreements with Amherst Technologies, LLC, and its debtor-affiliates after the Debtors failed to comply with various covenants stipulated in the financing agreements. The default notice pointed to the Debtors': -- failure to obtain a required $1,162,500 member payment within sixty days following the petition date; -- inability to meet forecasted sales in Sept. 2005; -- ongoing losses to its sales force and costumers; and -- deteriorating financial condition. Because of these events of default, IBM Credit informed the Debtors on Oct. 7, 2005, that it has terminated and reduced to zero its obligation to make further advances to the Debtors. IBM further informed the Debtor that it will seek relief from the automatic stay so that it can exercise any and all other rights and remedies under the agreements. Financing Agreements As reported in the Troubled Company Reporter, the Debtors owe approximately $39.4 million to IBM Credit pursuant to a Term and Revolving Credit Agreement signed in Oct. 1999. Of this amount, approximately $10 million is owed under a Term Loan and approximately $30 million is owed under a Revolving Credit Facility. IBM holds liens on substantially all the Debtor's assets, including inventory and accounts receivable. In Sept. 2005, the U.S. Bankruptcy Court for the District of New Hampshire authorized the Debtors to continue accessing the prepetition credit facility as a DIP facility subject to the Ratification and Amendment Agreements with IBM Credit. Among other things, the ratification agreement granted IBM Credit a superpriority administrative claim under Section 364(c)(1) of the U.S. Bankruptcy Code and a valid perfected security interests in all property of the estate, subject to the professional fees carve-out. Committee's Advances Conspiracy Theory to Stall Relief from Stay The Official Committee of Unsecured Creditors says there's a conspiracy among the Debtors, IBM Credit and Knightsbridge Holdings, LLC, to formulate an unconfirmable "sub rosa" plan of reorganization. The Committee asks the Bankruptcy Court to delay entry of an order granting IBM Credit relief from the automatic stay. The Debtors' default on its IBM Credit loan was triggered, among other things, by its failure to obtain a required $1,162,500 member payment. Knightsbridge Holdings had agreed to provide the LLC member payment on the condition that the loaned amount will convert to equity upon the effective date of any plan of reorganization proposed the Debtors. The Committee objected to the Knightsbridge loan after learning that Mr. David Lipson, a member of Knightsbridge, would not fund the loan unless he receives at least a 40% interest in the reorganized debtors. The Committee later learned that the Mr. Lipson's demand was based on a prepetition agreement with IBM Credit and the Debtors. After the Debtors failed to secure the Knightsbridge loan, IBM Credit called a default under the DIP facility. On Oct. 12, 2005, IBM Credit filed a proposed order granting relief from the automatic stay. On the same day, IBM and the Debtors presented a letter of intent granting a company called ePlus Technology, Inc., an option to purchase certain of the Debtors' assets for $2 million. The purchase will be made in the context of a private sale after IBM Credit has obtained relief from the automatic stay. The Committee alleges that the Debtors' chapter 11 cases have proceeded based on an undisclosed prepetition agreement that effectively carves up equity in a reorganized Debtor primarily for the benefit of IBM Credit, Mr. Lipson and the Debtors' management to the detriment of unsecured creditors who would rightfully be entitled to most of the equity. Charles R. Powell, Esq., at Devine Millimet & Branch, PA, tells the Bankruptcy Court that the Debtor's failure to disclose the existence and terms of the agreement has improperly skewed the playing field in this chapter 11 case to the distinct detriment of the unsecured creditors. Headquartered in Merrimack, New Hampshire, Amherst Technologies, LLC -- http://www.amherst1.com/-- offers enterprise class solutions including wired and wireless networking, server and storage optimization implementations, document management solutions, IT lifecycle solutions, Microsoft solutions, physical security and surveillance and complex configured systems. The Company and its debtor-affiliates filed for chapter 11 protection on July 20, 2005 (Bankr. D. N.H. Case No. 05-12831). Daniel W. Sklar, Esq., and Peter N. Tamposi, Esq., at Nixon Peabody LLP represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. ASHTON WOODS: Earns $6 Million of Net Income in First Quarter ------------------------------------------------------------- Ashton Woods USA L.L.C. (Bloomberg: ASHWOO) reported financial results for its first fiscal quarter ended Aug. 31, 2005. The Company reported $6,077,000 of net income on $106,454,000 of revenues for the three months ended Aug. 31, 2005, compared to a $22,161,000 net income on $106,277 of revenues for the same period in 2004. Home sales revenues for the quarter ended Aug. 31, 2005, of $106.5 million reflects a $200,000 increase as compared to the same period a year ago despite an 11.2% decrease in home closings. Land sales revenue declined in the quarter ended Aug. 31, 2005, by $23.8 million or 99.7%. The Company's consolidated net income for the first quarter ended Aug. 31, 2005, was $6.1 million compared to $22.2 million for the first quarter ended Aug. 31, 2004. Tom Krobot, President and Chief Executive Officer of ASHTON WOODS USA L.L.C., said, "We are pleased with our significant growth in net new home orders during the quarter as we feel it reflects the strength of our product diversification and our highly attractive land positions. Our strong results also point to the solid consumer demand in the homebuilding markets in which we build. We continued our product and price point expansion with the opening of our first two townhome communities in Dallas, our first active adult community in Atlanta and our second stacked flat condominium community in Atlanta. This strong new home order performance produced the highest level of backlog in our Company's history at $461.2 million, which along with our robust balance sheet, positions us for a strong fiscal year 2006." Mr. Krobot continued, "The decline in first quarter home closings as compared to the prior year reflects delays experienced in Atlanta and Orlando due to the series of hurricanes in fiscal year 2005 and subcontractor delays experienced in Phoenix due to the strong homebuilding market. This decline in home closings was offset by the 11.7% increase in our average home sales price. We anticipate that our second quarter home closings will compare favorably to the prior year as we overcome the weather related delays experienced during the past year." Headquartered in Roswell, Georgia, Ashton Woods builds: * single-family detached homes, * townhomes, and * stacked-flat condominiums with operations in five U.S. cities and with two more slated for imminent start-up. Revenues and pretax income for the fiscal year ending May 31, 2005 were approximately $500 million and $60 million, respectively. * * * As reported in the Troubled Company Reporter on Sept. 15, 2005, Moody's Investors Service assigned first-time ratings to Ashton Woods USA L.L.C., including a B1 corporate family rating, a B3 rating on the proposed $125 million issue of senior subordinated notes, and a Speculative Grade Liquidity rating of SGL-3. The ratings outlook is stable. BALLY TOTAL: Independent Directors Adopt Stockholder Rights Plan ---------------------------------------------------------------- Bally Total Fitness Holding Corporation's (NYSE: BFT) independent Directors have implemented a Stockholder Rights Plan designed to preserve the rights of all shareholders and to ensure investors realize the long-term value of their investment in Bally. The Board has been discussing the Rights Plan with its advisors for some time and approved its adoption subject to obtaining consent from the Company's lenders, which has now been obtained. The Rights Plan is being adopted in light of the significant accumulations of shares in recent months, and is not a response to any proposed takeover or other transaction. The adoption of the Rights Plan will not foreclose a fair acquisition bid for Bally Total Fitness or any other capital transaction, nor will it preclude any shareholder's ability to nominate directors. Under the Company's Stockholder Rights Policy, the Rights Plan will expire if it is not approved by shareholders prior to July 15, 2006, although it can be redeemed or terminated sooner by the Company. In the interim, this plan is intended to prevent an outside party from attempting to acquire the Company or its equity at prices that may not reflect Bally's true long-term value. The Board of Directors believes the Rights Plan will help create a level playing field, allowing all investors to make informed decisions based on greater visibility into the Company's operational and financial performance. The Rights Plan provides prudent protection and is particularly important at this time because Bally's financial statements for the first nine months of 2005, the year ended December 31, 2004 and for the prior years that are being restated, have not yet been issued. The Board of Directors believes shareholders should have and review such financial information before evaluating proposals from the Company or third parties. Details of the Rights Plan In connection with the Rights Plan, the Bally Board of Directors declared a dividend of one Preferred Share Purchase Right for each outstanding share of Bally common stock. The Rights distribution will be payable to shareholders of record on Oct. 31, 2005. The Rights distribution is not taxable to shareholders. After a triggering event, including a person or group acquiring 15% or more of Bally's common stock, the Rights provide shareholders (excluding the acquiring person) the ability to purchase one one- thousandth of a share of newly created Series B Junior Participating Preferred Stock of Bally at an exercise price of $13. The Bally Board will be entitled to redeem the Rights at $0.001 per Right at any time before a person has acquired 15% or more of the outstanding common stock. Should a person or group acquire more than 15% of the Company's common stock, each Right will entitle its holder to purchase, at the Right's then-current exercise price and in lieu of receiving shares of preferred stock, a number of common shares of Bally having a market value at that time of twice the Right's exercise price. In the same regard, the Rights of the acquiring person or group will become void and will not be exercisable. If Bally is acquired in a merger or other business combination transaction not approved by the Board of Directors, each Right will entitle its holder to purchase, at the Right's then-current exercise price and in lieu of receiving shares of preferred stock, a number of the acquiring company's common shares having a market value at that time of twice the Right's exercise price. The Rights Plan will terminate on July 15, 2006, unless the issuance of the Rights is ratified by Company shareholders prior to that time. The Board of Directors presently intends to submit the Rights Plan to shareholders for ratification prior to July 15, 2006, unless previously redeemed, exchanged or otherwise terminated. If the shareholders ratify the Rights at that meeting, the expiration date will be Oct. 18, 2015, subject to shareholder ratification every subsequent two years no later than July 31st of the applicable year beginning 2008. In 2004, in connection with redeeming its 1996 rights plan, Bally agreed with shareholders to adopt a Rights Policy giving it the ability to implement a new Rights Plan without prior shareholder approval if the Independent Directors on the Board determine the delay attendant to prior shareholder approval of the Rights Plan is not in the best interests of the Company's shareholders and the Rights Plan is submitted to a vote of shareholders on the later of its next annual meeting date or 270 days after adoption. Bally Total Fitness is the largest and only nationwide commercial operator of fitness centers, with approximately four million members and 440 facilities located in 29 states, Mexico, Canada, Korea, China and the Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM), Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R) and Sports Clubs of Canada(R) brands. With an estimated 150 million annual visits to its clubs, Bally offers a unique platform for distribution of a wide range of products and services targeted to active, fitness-conscious adult consumers. * * * As reported in the Troubled Company Reporter on Aug. 11, 2005, Moody's Investors Service affirmed the Caa1 corporate family (formerly senior implied) rating and debt ratings of Bally Total Fitness Holding Corporation. The affirmation reflects continued high risk of default and Moody's estimate of recovery values of the various classes of debt in a default scenario. Moody's said the ratings outlook remains negative. Moody's affirmed these ratings: * $175 million senior secured term loan B facility due 2009, rated B3 * $100 million senior secured revolving credit facility due 2008, rated B3 * $235 million 10.5% senior unsecured notes (guaranteed) due 2011, rated Caa1 * $300 million 9.875% senior subordinated notes due 2007, rated Ca * Corporate family rating, rated Caa1 BANK OF AMERICA: Fitch Upgrades Rating on Class 1-B-5 Certs. to BB ------------------------------------------------------------------ Fitch Ratings has taken rating actions on these Bank of America Mortgage Securities, Inc. securitizations: Series 2001-4, Group 1: -- Class 1-B-1 affirmed at 'AAA'; -- Class 1-B-2 affirmed at 'AAA'; -- Class 1-B-3 affirmed at 'AAA'; -- Class 1-B-4 affirmed at 'AAA'; -- Class 1-B-5 affirmed at 'AA-'. Series 2001-4, Group 2: -- Class 2-B-1 affirmed at 'AAA'; -- Class 2-B-2 affirmed at 'AAA'; -- Class 2-B-3 affirmed at 'AAA'; -- Class 2-B-4 affirmed at 'AA+'; -- Class 2-B-5 affirmed at 'A'. Series 2002-5: -- Class A-6 affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 affirmed at 'AA+'; -- Class B-4 affirmed at 'A+'; -- Class B-5 affirmed at 'BBB+.' Series 2002-9, Group 1: -- Classes 1-A-15 and 1-A-16 affirmed at 'AAA' -- Class 1-B-1 affirmed at 'AAA'; -- Class 1-B-2 upgraded to 'AA+' from 'AA'; -- Class 1-B-3 upgraded to 'AA-' from 'A'; -- Class 1-B-4 upgraded to 'A' from 'BBB'; -- Class 1-B-5 upgraded to 'BB' from 'B+'. Series 2002-9, Groups 2 and 3: -- Classes 2-A-1 and 3-A-1 affirmed at 'AAA'. Series 2002-10, Group 1: -- Classes 1-A-31 through 1-A-35 affirmed at 'AAA'; -- Class 1-B-1 affirmed at 'AAA'; -- Class 1-B-2 upgraded to 'AA+' from 'AA'; -- Class 1-B-3 upgraded to 'AA-' from 'A'; -- Class 1-B-4 upgraded to 'A' from 'BBB+'; -- Class 1-B-5 remains at 'BB'. Series 2002-10, Group 2: -- Classes 2-A-1 and 2-A-3 through 2-A-7 affirmed at 'AAA'. Series 2002-H: -- Classes 1-A-1, 1-A-2, and 2-A-1 affirmed at 'AAA'. Series 2002-J: -- Classes A-1 through A-4 affirmed at 'AAA'. Series 2002-K: -- Classes 1-A-1 through 1-A-7, 2-A-1, and 2-A-2, 3-A-1, 4-A- 1 affirmed at 'AAA'. Series 2002-L: -- Classes 1-A, 2-A, and 3-A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA+'; -- Class B-3 affirmed at 'AA-'; -- Class B-4 affirmed at 'A'; -- Class B-5 affirmed at 'BBB'. The underlying collateral for the Bank of America transactions consists of 15-year and 30-year fixed-rate and adjustable-rate mortgages extended to prime borrowers. As of the September 2005 distribution date, the aforementioned transactions are seasoned between 33 and 54 months, and the pool factors -- current mortgage loan principle outstanding as a percentage of the initial pool -- range from approximately 1% to 18%. The master servicer for the deals above is Bank of America Mortgage, Inc., which is currently rated 'RPS1' by Fitch. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $383.56 million in outstanding certificates. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect approximately $13.40 million of certificates. The CE levels for all the classes affected by the upgrades have more than tripled their original enhancement levels since closing date. BCBG MAX: S&P Assigns Low-B Ratings to $300 Million Loans --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Los Angeles-based apparel retailer and wholesaler BCBG Max Azria Group Inc. The outlook is stable. At the same time, Standard & Poor's assigned its 'BB' rating and a '1' recovery rating to the company's $100 million asset-based revolving credit facility due 2010. The ratings indicate Standard & Poor's high expectation for full recovery in the event of payment default. It also assigned a 'B+' bank loan rating and '2' recovery rating to the company's $200 million term loan due 2011. These ratings indicate an expectation for substantial -- 80% to 100% -- recovery in the event of payment default. The outlook is stable. "The speculative-grade ratings on BCBG reflect a rapid growth strategy, a relatively short record of operating results, high dependence on its founder, Max Azria, and increased debt leverage," said Standard & Poor's credit analyst Ana Lai. BCBG's good brand recognition, diversified distribution channels and positive operating performance temper these risks for the past two years. In August 2005, BCBG executed a $300 million refinancing and senior secured credit facility. Proceeds of the term loan and revolving credit facility were largely used to refinance about $123 million in existing debt and fund the acquisition of Alain Manoukian S.A. for about $79 million. Total debt outstanding was about $250 million as of Aug. 31, 2005. As a retailer and wholesaler of contemporary fashion apparel and accessories, BCBG participates in the highly competitive and fragmented apparel retailing industry. The BCBG Max Azria brand has performed well due to success with its merchandising and marketing campaigns. However, the brand faces stiff competition from numerous apparel brands both in the department store channel as well as other specialty retailers. BIRCH TELECOM: Bankruptcy Court Fixes November 4 Claims Bar Date ---------------------------------------------------------------- The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware set November 4, 2005, at 5:00 p.m., as the deadline for all creditors owed money on account of claims arising prior to August 12, 2005, against Birch Telecom, Inc., and its debtor-affiliates, to file proofs of claims. Governmental units have until February 8, 2006, to file proofs of claims. Creditors must file written proofs of claim on or before their corresponding Claims Bar Date and those forms must be sent to: The Clerk of the U.S. Bankruptcy Court District of Delaware 824 Market Street, 3rd Fl. Wilmington, DE 19801 Headquartered in Kansas City, Missouri, Birch Telecom, Inc. and its subsidiaries -- http://www.birch.com/-- owns and operates an integrated voice and data network, and offers a broad portfolio of local, long distance and Internet services. The Debtors provide local telephone service, long-distance, DSL, T1, ISDN, dial-up Internet access, web hosting, VPN and phone system equipment for small- and mid-sized businesses. Birch Telecom and 28 affiliates filed for chapter 11 protection on Aug. 12, 2005 (Bankr. D. Del. Case Nos. 05-12237 through 05-12265). When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. BLACK WARRIOR: Two Noteholder Groups Will Convert Notes to Shares ----------------------------------------------------------------- Black Warrior Wireline Corp. entered into Recapitalization Agreements with each of: * St. James Capital Partners, L.P. and SJMB, L.P., private investment partnerships; and * Charles E. Underbrink, a Director of the Company, and his family affiliates, which include: (a) Northgate, L.L.C., Hub, Inc.; (b) Charles E. Underbrink IRA; and (c) the Charles. E. Underbrink Irrevocable Trust dated 10/10/92 for the benefit of Piper Aurora Underbrink. The St. James Partnerships hold an aggregate of: -- $34,306,173 principal amount and accrued interest of the Company's outstanding Convertible Subordinated Notes; and -- 40,755,276 of the Company's common stock purchase warrants; and The Underbrink Family Entities hold an aggregate of: -- $3,082,604 principal amount and accrued interest of Convertible Notes; and -- 11,938,409 Warrants. The Recapitalization Agreements with the St. James Partnerships and the Underbrink Family Entities provide that these entities will convert, at the conversion price of $0.75 per share, the principal of and all accrued interest on their Convertible Notes into shares of the Company's Common Stock at the closing of an underwritten public offering of shares of the Company's Common Stock that the Company intend to undertake and sell to the Company those Conversion Shares at the closing of a proposed underwritten public offering. The price at which the shares are to be purchased by the Company is the price per share equal to the net price per share the Company receives in the underwritten offering, after deducting underwriting discounts and the underwriters' expenses. The agreement of the St. James Partnerships and the Underbrink Family Entities to sell the shares is subject to the net price per share to be received by them for each Conversion Share being not less than $0.75 per share. In addition to the Conversion Shares acquired by the St. James Partnerships and the Underbrink Family Entities, the shares to be sold include 5,017,481 shares of Common Stock held by SJMB, L.P. issued in December 2000 on conversion of principal and accrued interest on the Convertible Notes it holds. In the Recapitalization Agreement between the Company and the Underbrink Family Entities, the Underbrink Family Entities agreed to exchange, effective October 6, 2005, their 11,938,409 Warrants for 3,979,467 shares of Common Stock. The Underbrink Family Entities further agreed to sell to the Company at the closing of the underwritten offering their Exchange Shares at the price per share paid for one Conversion Share. The St. James Partnerships, as the holders of Warrants to purchase an aggregate of 40,755,276 shares of Common Stock, agreed to sell all their Warrants to the Company at the closing of the underwritten offering at a price for each three Warrants sold equal to the price per share paid for one Conversion Share. In the event the Company does not complete an underwritten public offering by June 30, 2006, the St. James Partnerships have agreed to exchange their Warrants for shares of the Company's Common Stock at an exchange rate of three Warrants for one share of Common Stock. Mr. Underbrink, is Chairman of St. James Capital Corp. and SJMB, L.L.C. St. James Capital Corp. and SJMB, L.L.C. are the general partners of St. James Capital Partners, L.P. and SJMB, L.P. Mr. James H. Harrison, also a Director of the company, is Chief Financial Officer of St. James Capital Corp. and SJMB, L.L.C. A full-text copy of the Recapitalization Agreement inked with the Underbrink Family Entities is available for free at http://ResearchArchives.com/t/s?264 Full-text copies of the Recapitalization Agreements inked with the St. James Partnerships are available for free at http://ResearchArchives.com/t/s?265and http://ResearchArchives.com/t/s?266 Black Warrior Wireline Corp. is an oil and gas service company providing services to oil and gas well operators primarily in the United States and in the Gulf of Mexico. It is headquartered in Columbus, Mississippi. At June 30, 2005, Black Warrior's balance sheet reflected a $25,209,000, equity deficit compared to a $20,849,000, deficit at Dec. 31, 2004. BOSTON COMMS: Enjoined from Infringing on Freedom Wireless Patent ----------------------------------------------------------------- Boston Communications Group, Inc. (Nasdaq: BCGI) reiterated that it will file an appeal in its ongoing patent infringement litigation with Freedom Wireless, after a federal judge granted Freedom Wireless' request for injunctive relief. The U.S. District Court denied Freedom Wireless' motion to award attorneys fees and enhanced damages awarded by the jury, including treble damages. However, the Court granted Freedom Wireless' request to add prejudgment interest and other costs totaling $20.1 million, bringing the total joint and several liability to $148.1 million. "Our fight is far from over," said E.Y. Snowden, President and CEO of bcgi. "We will bring our appeal to the U.S. Court of Appeals for the Federal Circuit, which has nationwide jurisdiction over patent issues and is especially skilled at reviewing complex patent cases, where we hope to prevail." The lawsuit was filed by Freedom Wireless, Inc., against: -- Boston Communications, -- AT&T Wireless PCS -- Airtouch Communications, Inc. -- Alltel Communications Products, Inc. -- Bell Atlantic Mobile -- Bellsouth Cellular, Corp. -- Bellsouth Mobility, Inc. -- CMT Partners -- Primeco Personal Communications, L.P. -- Rogers Wireless, Inc. -- Southwestern Bell Mobile Systems, Inc. -- Western Wireless Corporation -- Cingular Wireless LLC on Oct. 30, 2000 (Case No. 00-12234). bcgi continues to assert that it does not infringe the Freedom Wireless patents, and believes the patents are invalid in light of prior art and other reasons. In addition, the Company believes that the size of the award bears no relationship to a reasonable royalty that bcgi or any company would have paid for a license of the patents. Injunctive Relief The Court enjoined bcgi from offering three implementations of its U.S. service bureau, multi-frequency, common channel signaling system seven, and pre-intelligent network, to any wireless carrier other than a licensee of Freedom Wireless, subject to a 90-day grace period. During the 90-day grace period, the defendants would be required to pay Freedom Wireless a license fee equivalent to 2.5 cents per minute of use. On average, bcgi currently charges its customers approximately 1 cent per minute of use, which includes a full suite of real-time billing, rating and support services using bcgi's state-of-the-art proprietary software and network. In order to mitigate the severe impact of this injunction that was granted by the Court, bcgi will file an emergency motion to request a stay of the injunction pending appeal with the U.S. District Court. If the stay is denied by the District Court, bcgi will immediately appeal that decision to the U.S. Court of Appeals for the Federal Circuit and seek a stay of the injunction while the appeal of the judgment is pending. The request for a stay of the injunction would ask that bcgi be allowed to continue to serve carriers during the appeals process. If left standing, and applied broadly to all of bcgi's customers, the injunction would prohibit bcgi from providing its prepaid services to carriers which service millions of individuals -- many of whom due to income or age would otherwise not have access to wireless service. The injunction as granted would cause irreparable harm to bcgi's business as it applies to approximately 400,000 Cingular Wireless prepaid subscribers currently served by bcgi's prepaid wireless platform, as well as approximately 2.7 million additional prepaid subscribers of other carriers serviced by bcgi, representing approximately 70% of bcgi's total revenue as of June 30, 2005. Appeal Process and Appeal Bonds The defendants will appeal the Court's overall judgment in the lawsuit to the U.S. Court of Appeals for the Federal Circuit in Washington, D.C. The appeal process could last twelve to eighteen months, or longer. In order to stay execution of the judgment pending appeal, the defendants have posted appeal bonds totaling $141 million in security to cover the original judgment plus 10%. As of June 30, 2005, based on managements' assessment of the potential outcomes of the case at that time and in accordance with FAS 5 and FIN 14, the Company accrued an estimated loss of $24 million with respect to the Freedom Wireless judgment, excluding additional legal charges, which are expensed as incurred. The Company is in the process of reassessing the adequacy of this accrual in conjunction with its third quarter financial results. Prejudgment Interest Award On Oct. 12, 2005, the United States District Court of Massachusetts awarded prejudgment interest and costs of $20.1 million to Freedom Wireless in the patent infringement lawsuit against Boston Communications Group, Inc., Cingular Wireless and the other defendants. The interest is calculated based on the prime rate, compounded quarterly, from March 1, 1998 through the date of judgment, Sept. 1, 2005. Freedom Wireless Litigation The non-jury trial on inequitable conduct concluded on July 26, 2005, and the Court has ordered the parties to file findings and conclusions with the Court on Aug. 15, 2005. The Company intends to file motions for judgment as a matter of law and a motion for a new trial or, in the alternative, a reduction in the damages awarded by the jury. If the Court rules in favor of bcgi and its co-defendants in the non-trial, the patents held by Freedom Wireless would become unenforceable, a decision that Freedom Wireless may choose to appeal. If the Court rules against bcgi and the co-defendants in the non- jury trial: -- the Court could reduce the amount of the $128 million jury verdict based on the Company's expected motion for a reduction in the damages. However, the Court could also increase the damages, up to three times the award plus attorneys' fees. Interest as well as damages from Jan. 1, 2005 to the date of the judgment could also be applied to the damages award. The Court could also enter an injunction against use of the allegedly infringing technology. The entry of such an injunction could substantially impair bcgi's business and its ability to continue to provide its prepaid wireless or Real-Time Billing service bureau as currently offered in the United States. -- the Company expects to appeal the Court's decision to the Court of Appeals for the Federal Circuit. The Company has engaged the law firm of Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P to represent the Company in the appeal. -- the Court may require the Company to provide collateral or post a bond to stay execution of the Court's judgment and any injunction that the Court may enter, pending resolution of the appeal. The bond required to stay execution of the money judgment is ordinarily 110% of the final judgment, unless otherwise ordered by the Court. Depending on the amount of the final judgment, this could exceed bcgi's ability to pay. If the Company is unable to provide adequate collateral or to post a sufficient bond or is enjoined during the appeals process, or if the Company is unable to get an adverse judgment reversed and is unable to negotiate a commercially acceptable license with Freedom Wireless to allow bcgi to continue to provide its products and services, then it will not be possible for the Company to provide the prepaid wireless or Real-Time Billing service bureau as currently offered in the United States. In that event, the Company may not be able to continue its ongoing operations or may need to seek protections under Chapter 11 of the Bankruptcy Code. Boston Communications Group, Inc. (Nasdaq: BCGI) -- http://www.bcgi.net/-- develops products and services that enable wireless operators to fully realize the potential of their networks. bcgi's access management, billing, payment and network solutions help operators rapidly deploy and manage innovative voice and data services for subscribers. Available as licensed products and fully managed services, bcgi's solutions power carriers and enable MVNOs with market-leading implementations of prepaid wireless, postpaid billing, wireless account funding and m-commerce. bcgi was founded in 1988. BOYDS COLLECTION: Court Restricts Trading in Claims & Equity ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Maryland entered an order restricting certain transfers of claims against and equity security interests in The Boyds Collection, Ltd., on Oct. 18, 2005. Pending further hearing, which is set to occur on Oct. 31, 2005, at 10:00 a.m. EST, these transfers of claims are restricted: (a) any transfers by parties who currently own, or would own as a result of the proposed transfer, equity in the Company of 4.5% of total common shares outstanding or more; and (b) any transfer by parties who currently own, or would own as a result of the proposed transfer, claims against the Debtors with an aggregate principal amount of $3,000,000 or more. Any Restricted Transfers that occur prior to the hearing on Oct. 31, 2005, are prohibited and will be void. First Day Motions The Court approved Boyds and its debtor-affiliates' certain first day motions that are intended to support the Debtors' employees and provide other forms of operational and financial stability as Boyds proceeds with its reorganization. Headquartered in McSherrystown, Pa., The Boyds Collection, Ltd. -- http://www.boydsstuff.com/-- designs and manufactures unique, whimsical and "Folksy with Attitude(SM)" gifts and collectibles, known for their high quality and affordable pricing. The Company filed for chapter 11 protection on Oct. 16, 2005 (Bankr. Md. Lead Case No. 05-43793). Matthew A. Prohac Cantor, Esq., at Kirkland Ellis LLP, represents the Debtors in their restructuring efforts. As of June 30, 2005, Boyds reported $66.9 million in total assets and $101.7 million in total debts. BROOKFIELD PROPERTIES: Completes Acquisition of O&Y Entities ------------------------------------------------------------ The acquisition of Brookfield Properties Corporation (BPO:NYSE,TSX) and its Canadian-based subsidiary, BPO Properties Ltd. (BPP:TSX) of O&Y Properties Corporation (OYP:TSX), O&Y Real Estate Investment Trust (OYR.UN:TSX) is completed following the satisfaction of all of the conditions of the take-over bid for limited voting units of O&Y REIT made by a newly formed company owned by the "Brookfield Consortium," which consists of BPO Properties, CPP Investment Board and Arca Investments Inc., have been satisfied or waived. Under the take-over bid, Newco offered to acquire all of the outstanding limited voting units of O&Y REIT for C$16.25 cash per limited voting unit. Conditions Satisfied The Offer was conditional, among other things, on more than 50% of the issued and outstanding limited voting units of O&Y REIT, other than those owned by O&Y Properties, being tendered to the Offer. An aggregate of 30,327,053 limited voting units were validly deposited under the Offer, representing 86.6% of the outstanding limited voting units other than those owned by O&Y Properties. The Offer was also conditional on the satisfaction of all of the conditions to the arrangement involving O&Y Properties and the Brookfield Consortium, pursuant to which Newco proposed to acquire all of the issued and outstanding common shares of O&Y Properties for C$12.72 per share. Shareholders of O&Y Properties voted 99.9% in favour of this Arrangement on October 7, 2005, and the Arrangement was approved by the Ontario Supreme Court on October 11, 2005. Completion of the Arrangement and Offer Closing of the O&Y Properties Arrangement and the take-up of O&Y REIT limited voting units tendered to the Offer is anticipated to occur on October 21, 2005. The Brookfield Consortium intends to carry out a subsequent acquisition transaction in respect to O&Y REIT whereby all issued and outstanding limited voting units will be redeemed for C$16.25 per unit in cash, and expects that this subsequent acquisition transaction will be completed before the end of December. About O&Y Properties O&Y Properties Corporation is a Canadian commercial real estate company that is focused on the ownership, management and development of high-quality office buildings. Directly, and indirectly through its significant interest in O&Y REIT, O&Y Properties owns a portfolio of 24 multi-tenant and government office properties totaling approximately 9.3 million square feet in five Canadian markets, including the 2.7 million square foot Class AAA 72-storey First Canadian Place office complex in downtown Toronto. In addition, through O&Y REIT's subsidiary, O&Y Enterprise, the company is a leading third-party real estate services provider, specializing in property management and leasing services. About O&Y Real Estate Investment Trust O&Y Real Estate Investment Trust is a closed-end real estate investment trust created to invest in quality office buildings in major markets across Canada. O&Y REIT is a focused office REIT. It owns a national portfolio of 23 high-quality Class A and Class B multi-tenant and government office buildings across Canada totaling 6.7 million square feet and an indirect interest in First Canadian Place, a 2.7 million square foot Class AAA, 72-storey office complex in downtown Toronto. In addition, it owns O&Y Enterprise, one of Canada's leading third party real estate services providers, specializing in property management and leasing services. O&Y REIT has one class of trust units outstanding, which are designated as "Limited Voting Units." About BPO Properties BPO Properties, Ltd., -- http://www.bpoproperties.com/-- 89% owned by Brookfield Properties, is a Canadian company that invests in real estate, focusing on the ownership and value enhancement of premier office properties. The current property portfolio is comprised of interests in 17 commercial properties and development sites totaling 14 million square feet, including landmark properties such as the Exchange Tower, home of the Toronto Stock Exchange and Bankers Hall in Calgary. BPO Properties' common shares trade on the TSX under the symbol BPP. About Brookfield Properties Brookfield Properties Corporation -- http://www.brookfieldproperties.com/-- owns, develops and manages premier North American office properties. The Brookfield portfolio comprises 47 commercial properties and development sites totaling 46 million square feet, including landmark properties such as the World Financial Center in New York City and BCE Place in Toronto. Brookfield is inter-listed on the New York and Toronto Stock Exchanges under the symbol BPO. * * * As reported in the Troubled Company Reporter on Oct. 6, 2004, Standard & Poor's Ratings Services assigned its 'P-3(High)' Canadian national scale and 'BB+' global scale preferred share ratings to Brookfield Properties Corp.'s C$150 million -- with an underwriter's option of up to an additional C$50 million -- 5.20% cumulative class AAA redeemable preferred shares, series K. At the same time, Standard & Poor's affirmed its ratings outstanding on the company, including the 'BBB' long-term issuer credit rating. The outlook is stable. BULL RUN: Can Borrow Up to $61.9-Mil Under Bank Credit Facility --------------------------------------------------------------- Bull Run Corporation and these lenders: * Wachovia Bank, National Association, as Administrative Agent; * Deutsche Bank Trust Company Americas * Bank Of America, N.A. * Bank One, N.A., and * Fifth Third Bank. amended the Company's bank credit facility to, among other things, extend the facility's maturity date from November 30, 2005, to November 15, 2006, and increase the borrowing capacity under the facility by $3 million to approximately $61.9 million. As amended, the Company's bank credit agreement provides for: (1) two term loans for borrowings totaling approximately $35.9 million; and (2) two revolving loan commitments for aggregate maximum borrowings of $26 million. The agreement requires payments of principal on the Term Loans in the amount of $2.5 million on each of: -- February 28, 2006, -- May 31, 2006, -- August 31, 2006, and -- October 15, 2006. The Company anticipates that, if the debt is not repaid or refinanced prior to February 28, 2006, it will likely require its Chairman of the Board to provide to the Company cash advances in amounts necessary to meet such principal payment requirements, and the Chairman has committed to the Company to provide such funding, as and when necessary. All remaining amounts outstanding under the Term Loans and the Revolvers are then due on the November 15, 2006, maturity date. The amounts outstanding under the Term Loans and Revolvers bear interest at either the banks' prime rate or the London Interbank Offered Rate plus 2.75%, payable monthly. No additional bank funding for working capital purposes is available under the terms of the credit agreement beyond the additional $3 million made available under the amended agreement. However, the agreement provides that the Company may retain, for working capital purposes, up to $15 million in future cash proceeds, if any, from the issuance of the Company's debt or equity securities. As of October 14, 2005, substantially all borrowings under the Term Loans and Revolvers were subject to the LIBOR-based rate of 6.61%. The bank credit agreement, as amended, contains certain financial covenants, including the maintenance of minimum interest coverage ratios determined quarterly. Long-term debt is collateralized by all of the Company's assets. The Company is presently in compliance with all provisions of the credit agreement as last amended. A full-text copy of the First Amendment To Third Amended And Restated Credit Agreement is available for free at http://ResearchArchives.com/t/s?263 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. BULL RUN: Inks Merger Pact with Triple Crown & BR Acquisition ------------------------------------------------------------- Bull Run Corporation executed an Agreement and Plan of Merger with Triple Crown Media, Inc., and TCM's wholly owned subsidiary, BR Acquisition Corp. whereby the Company would merge into BR immediately following the planned spin-off of TCM from Gray Television, Inc. TCM has received a long-term financing commitment from bank lenders that would, among other things, refinance all of the Company's bank and subordinated indebtedness, in addition to providing TCM available borrowing capacity. The Company currently expects that the TCM Merger will occur prior to February 28, 2006, the date on which initial principal payment on the Company's $61.9 million term loans becomes due and payable. The TCM Merger is subject to certain closing conditions, including regulatory approvals and an affirmative vote of Bull Run's shareholders. 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. CALIFORNIA STEEL: Incurs $1.1 Million Net Loss in Third Quarter --------------------------------------------------------------- California Steel Industries, Inc., reported results for the quarter ended September 30, 2005. Net sales during the period decreased 26% to $287.7 million, compared to net sales of $390.3 million in the third quarter of 2004. Net tons shipped decreased 18% and average sales prices decreased 11% compared to third quarter 2004, while average slab consumption costs increased 16%. A resulting net loss of $1.1 million for the quarter is lower than third quarter 2004's net income of $46.1 million, attributed primarily to the above listed factors and to higher energy costs. Prices for electricity and for natural gas ran 16% and 34% higher, respectively, over third quarter 2004. Although electricity rates typically run slightly higher during the summer months, prices in third quarter 2005 rose 48% over second quarter 2005, while natural gas was up 8%. EBITDA for the quarter was $6.7 million, compared with 2004's third quarter results of $87.1 million, and $26.1 million in second quarter 2005. "Third quarter, usually our busiest time of year, was a difficult one for the steel industry. Lower sales volume and falling prices reflect a market that we believe reached its low point during this challenging year," said Masakazu Kurushima, President and CEO. "However, demand for our products, as well as sales prices, has increased, and we believe that fourth quarter financial results will improve," he continued. The balance under the Company's Revolving Credit Agreement was zero as of September 30, 2005, with availability of $108.0 million and a cash balance of $33.5 million. During third quarter 2005, CSI made its semi-annual bond interest payment of $4.6 million, on September 30. CSI also paid dividends to its shareholders of $15.9 million, representing the payment due from first semester 2005 net income. Additional cash outlay of $19.4 million was made as the Company exercised an early buyout option of a lease held on the equipment of its #2 continuous galvanizing line. California Steel Industries, Inc., headquartered in Fontana, California, produces and markets a wide range of flat rolled steel products and electric resistance welded pipe to western US customers. * * * As reported in the Troubled Company Reporter on Nov. 9, 2004, Moody's Investors Service upgraded its ratings for California Steel Industries, Inc., raising the rating on its senior unsecured notes to Ba2 from Ba3. These ratings were upgraded: * $150 million of 6.125% senior notes, due 2014 -- to Ba2 from Ba3, * senior implied rating -- to Ba2 from Ba3, * senior unsecured issuer rating -- to Ba2 from Ba3. As reported in the Troubled Company Reporter on Mar. 11, 2004, Standard & Poor's Ratings Services assigned its 'BB-' rating to Fontana, California-based California Steel Industries Inc.'s $150 million senior notes due 2014, series B. At the same time, Standard & Poor's affirmed all its existing ratings, including the 'BB-/Stable/--' corporate credit rating on CSI. Proceeds from the proposed notes issue will be used to refinance the company's $150 million 8.5% senior notes due 2009. CAPE SYSTEMS: Tackles Material Weaknesses in Controls & Procedures ------------------------------------------------------------------ Cape Systems Group, Inc., filed an amendment to its quarterly report for the period ended March 31, 2005, to the Securities and Exchange Commission on Oct. 7, 2005. The amended quarterly report incorporates information regarding the procedures management has taken to address significant deficiencies and material weaknesses discovered during the preparation of the Company's Form 10-QSB for the quarter ended March 31, 2005. Management discovered that the Company had failed to timely consider the beneficial conversation charges resulting from modification of the terms of its convertible debt instruments in January 2005. To address this weakness, the Company now requires the Controller to review the terms of all outstanding convertible debt instruments upon the issuance of new convertible debt instruments that may result in a beneficial conversion charge to the outstanding convertible debt. Note Payable Default As of June 30, 2005, Cape Systems has $1,227,500 of current liabilities consisting of past due notes payable to Renaissance Software, Inc. The Company issued approximately $1,500,000 in promissory notes, bearing interest at 8%, in connection with the purchase of Renaissance Software, Inc., in fiscal 2000, originally due on June 30, 2001. On Aug. 9, 2001, the Cape Systems renegotiated the terms of these notes and, in return for 147,000 shares of stock, $250,000 of the notes became payable on Aug. 15, 2001, and the remaining balance, plus accrued interest from June 30, 2001, was due on Sept. 30, 2001. The Company paid the Aug. 2001 installment but has failed to pay the remaining past due balance as of Dec. 10, 2004. Cape Systems is also party to a number of claims, which have been previously disclosed by the Company, and claims by vendors, landlords and other service providers seeking payment of balances owed. Management has indicated that the claims could lead to involuntary bankruptcy proceedings. March 31, 2005 Results In its Form 10-QSB/A for the quarter ended March 31, 2005, the Company reports a $2,201,072 net loss compared to $186,634 net loss for the same period in 2004. The Company's balance sheet showed $3,694,552 of assets at March 31, 2005, and liabilities totaling $27,061,179. Going Concern Doubt WithumSmith+Brown PC expressed substantial doubt about Cape Systems' ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. The auditors point to the Company's: -- working capital deficit and stockholder's deficit, -- recurring losses, -- historic rate of cash consumption, -- uncertainty arising from its default on one of its notes payable, -- uncertainty of its liquidity-related initiatives, and -- reasonable possibility of on-going negative impacts on its operations from the overall economic environment. About Cape Systems Cape Systems Group, Inc., provides supply chain management technologies, including enterprise software systems and applications, and software integration solutions, that enable its customers to manage their order, inventory and warehouse management needs, consultative services, and software and hardware service and maintenance. The Company serves its clients through two general product and service lines: 1) enterprise solutions; and 2) service and maintenance for its products and services, including service and maintenance of software and hardware it resells for third parties. CHAMPION ENTERPRISES: Earns $14.3 Mil. of Net Income in 3rd Qtr. ---------------------------------------------------------------- Champion Enterprises, Inc. (NYSE: CHB) reported results for the third quarter ended Oct. 1, 2005. Revenues for the third quarter of 2005 increased 21% to $335.7 million, compared to $276.9 million for the third quarter of 2004. Third quarter 2005 income from continuing operations increased 43 percent to $15.2 million, compared to $10.6 million, in the prior year period. Net income for the third quarter of 2005 was $14.3 million, compared to $10 million for the same period last year. Pre-tax income in the third quarter of 2004 was reduced by a $2.3 million non-cash charge to value the Company's then outstanding common stock warrant. Operating Highlights -- Manufacturing net sales increased 15 percent to $310.2 million from $269.5 million in the third quarter of 2004. -- Champion's average selling price increased 11 percent as the Company continues to successfully pass through higher raw material and transportation costs and achieve a more favorable mix. -- Manufacturing segment income for the quarter climbed 22 percent to $27 million from $22.1 million in the third quarter of 2004. -- The Company reported manufacturing margins of 8.7 percent compared to 8.2 percent in the third quarter of 2004 and 8.5 percent in the second quarter of 2005, representing its tenth consecutive quarter of year-over-year improving margins and the segment's highest quarterly margin since 1998. -- Revenues from the sale of modular homes totaled $72.3 million, an increase of 47 percent compared to last year's third quarter, partially driven by the New Era acquisition, and represented approximately 23 percent of manufacturing revenues. -- Excluding the previously announced Federal Emergency Management Agency (FEMA) order, Champion's backlog increased 47 percent to $170 million at the end of the third quarter of 2005 compared to $116 million at the end of the third quarter of 2004 and $91 million at the end of the second quarter of 2005. Including the FEMA order, total backlog was $228 million at the end of the third quarter. Approximately $14 million of this increase is a result of the New Era acquisition. -- The Company's California-based retail segment sales were $36.8 million compared to $34.3 million for the third quarter of 2004. -- Retail segment income grew 8 percent to $2.2 million. "The third quarter was marked by continued progress toward attaining our goals of improved margins and modular growth," said William Griffiths, president and chief executive officer. "Our lean manufacturing initiative is continuing to progress, and our pricing power remains strong in key markets." Mr. Griffiths concluded, "We are also enthusiastic about completing the debt refinancing. Together with our strong cash generation and cash position, the new credit facility will provide added flexibility for purposes of growing and managing our business." Headquartered in Auburn Hills, Mich., Champion Enterprises, Inc. -- http://www.championhomes.net/-- is the manufactured housing industry's leading producer, with 2004 revenues of $1.15 billion. Today, Champion operates 32 homebuilding manufacturing facilities in North America and partners with nearly 3,000 independent retailers, builders and developers. * * * As reported in the Troubled Company Reporter on June 17, 2005, Moody's Investors Services affirmed the ratings of Champion Enterprises, Inc. and changed the outlook to stable from negative to reflect the company's reduced debt balances, improvement in cash flows and margins, and recent sales growth. The speculative grade liquidity rating of SGL-2 has also been affirmed and indicates expected good liquidity for the coming 12 month period. Moody's affirmed these ratings for: Champion Enterprises, Inc.: * $89 million 7.625% senior notes, due 2009, rated B3; * Senior unsecured issuer rating, rated B3; * $400 million multiple seniority shelf registration, rated P(B3)/(P)Caa1/(P)Caa2; * Senior Implied, rated B1; * Speculative Grade Liquidity Rating, rated SGL-2. Champion Home Builders Co.: * $98 million 11.25% senior notes, due 2007, rated B2. Moody's changed Champion's ratings outlook to stable from negative. CHEMTURA CORP: Rescinds Resolution of Calif. & Conn. Class Suits ---------------------------------------------------------------- Chemtura Corporation (NYSE:CEM) has rescinded those parts of a Global Settlement Agreement covering rubber chemicals and EPDM that were intended to resolve consolidated direct purchaser class action lawsuits pending in the United States District Courts in the Northern District of California and the District of Connecticut. As reported last January, the Company reserved the right to rescind all or part of the Global Settlement Agreement based on the number of members of the applicable classes who exercised their opt out rights. As a result of opt outs in rubber chemicals and EPDM, the Company is currently negotiating settlements directly with the largest claimants in those actions. Chemtura does not intend to adjust the reserves previously established with respect to these lawsuits at this time. Under the Global Settlement Agreement, Chemtura agreed to pay a total of $97 million, consisting of $62 million with respect to rubber chemicals, $30 million with respect to EPDM and $5 million with respect to nitrile rubber. The nitrile rubber portion of the Global Settlement Agreement has been approved by the United States District Court for the Western District of Pennsylvania. The Company has also reached agreements with class claimants in Canada covering direct and indirect purchasers of EPDM for approximately USD $3.9 million and is working toward a resolution of similar claims with respect to rubber chemicals, urethanes and urethane chemicals. These Agreements will be subject to court approval and notice to class members, with opt out options for potential class members and a recovery by the Company of a portion of the settlement funds with respect to members of the classes who choose to opt out of the settlements. Chemtura said it cannot predict the outcome of these class actions. It will continue to seek cost-effective resolutions of these claims and others pending or hereafter asserted against Chemtura or any of its subsidiaries; however, the resolution of such claims could have a material adverse effect on the Company's financial condition, results of operations and prospects. Chemtura Corporation -- http://www.chemtura.com/-- is a global manufacturer and marketer of specialty chemicals, crop protection and pool, spa and home care products. Headquartered in Middlebury, Connecticut, the company has approximately 7,300 employees around the world. * * * As reported in the Troubled Company Reporter on Sept. 26, 2005, Moody's Investors Service affirmed the ratings of Chemtura Corporation (Chemtura -- Corporate Family Rating of Ba1) and changed the outlook on the company's ratings to negative from stable. Ratings affirmed: * Corporate Family Rating -- Ba1 * Senior Unsecured Notes due 2012, $375 million -- Ba1 * Senior Unsecured Floating Rate Notes due 2010, $225 million -- Ba1 * Senior Unsecured Notes, $260 million due 2023 and 2026 -- Ba1 * Senior Unsecured Notes, $10 million due 2006 -- Ba1 * Senior Unsecured Notes, $400 million due 2009 -- Ba1 As reported in the Troubled Company Reporter on July 7, 2005, Standard & Poor's Ratings Services raised its ratings, including the corporate credit rating to 'BB+' from 'BB-', on Chemtura Corp. (fka Crompton Corp.). The ratings are removed from CreditWatch with positive implications, where they were placed on March 9, 2005. The outlook is stable. The rating actions follow Middlebury, Connecticut-based Chemtura's recently completed acquisition of Great Lakes Chemical Corp. for approximately $1.6 billion in common stock, plus the assumption of debt. The upgrades reflect an immediate strengthening of Chemtura's business mix and cash flow protection and debt leverage measures as a result of the equity-financed acquisition of a much higher-rated company. COLLINS & AIKMAN: Closing Mfg. Facility in Westland, Michigan ------------------------------------------------------------- Collins & Aikman Corporation (CKCRQ) intends to close its Westland, Michigan manufacturing facility during the first quarter of 2006. The Westland facility currently has approximately 250 employees who manufacture interior products, which include injection molded hard trim and headliners, for a variety customers. The Company intends to consolidate the plant operations into existing Collins & Aikman facilities, including other operations in Michigan. "We have had to make adjustments to our manufacturing footprint in order to become consistent with our sales and production levels," said Frank Macher, Collins & Aikman's President and CEO. Further consolidation is expected as the Company evaluates its operations and implements a number of cost reduction and efficiency improvement initiatives aimed at creating a viable entity that could successfully emerge from bankruptcy. Company officials met late last week with employees, customers and union officials to announce the planned closure. 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. COMPANHIA PETROLIFERA: Moody's Lifts Notes' Rating to Baa3 from B1 ------------------------------------------------------------------ Moody's Investors Service upgraded the foreign currency rating of Companhia Petrolifera Marlim's senior secured medium-term notes to Baa3 from B1. The rating outlook is stable. The rating upgrade was prompted by Moody's upgrade of Brazil's long-term foreign currency ceiling for bonds and notes to Ba3 from B1. Companhia Petrolifera Marlim is a limited liability corporation headquartered in the city of Macae, State of Rio de Janeiro, Brazil. COMPOSITE TECHNOLOGY: Settles American China's $10 Million Claim ---------------------------------------------------------------- Composite Technology Corporation (OTC Bulletin Board: CPTCQ) disclosed the settlement of a $10,000,000 claim asserted by America China Technology Systems LLC together with the $192,600 claim by Ronald Morris. The settlement agreement will be filed with the court and is subject to the approval of the U.S. Bankruptcy Court for the Central District of California. The settlement provides for the payment of a 3% commission on net revenues of core sales to the Jiangsu Far East Group Company and 0.5% commission on net revenues of core sales to other Chinese entities, in each case for ACCC destined for use in China. These commissions are payable for a period of five years from the first sale. As an advance on the payment of these commissions the Company agreed to issue 200,000 shares of the Company's common stock on the effective date of the Company's Chapter 11 plan pursuant to Bankruptcy Code Section 1145. Benton H. Wilcoxon, the Company's Chairman and CEO stated: "settlement of the ACTS Claims provides the Company with certainty regarding the bankruptcy claims that must be paid in cash and will facilitate reorganization of the Company and approval of its Chapter 11 Plan of Reorganization." Headquartered in Irvine, California, Composite Technology Corporation -- http://www.compositetechcorp.com/-- provides high performance advanced composite core conductor cables for electric transmission and distribution lines. The proprietary new ACCC cable transmits two times more power than comparably sized conventional cables in use today. ACCC can solve high-temperature line sag problems, can create energy savings through less line losses, and can easily be retrofitted on existing towers to upgrade energy throughput. ACCC cables allow transmission owners, utility companies, and power producers to easily replace transmission lines without modification to the towers using standard installation techniques and equipment, thereby avoiding the deployment of new towers and establishment of new rights-of- way that are costly, time consuming, controversial and may impact the environment. The Company filed for chapter 11 protection on May 5, 2005 (Bankr. C.D. Calif. Case No. 05-13107). Leonard M. Shulman, Esq., at Shulman Hodges & Bastian LLP, represents the Debtor in its restructuring efforts. As of March 31, 2005, the Debtors reported $13,440,720 in total assets and $13,645,199 in total liabilities. CONSTELLATION BRANDS: Offers to Acquire Vincor for C$1 Billion -------------------------------------------------------------- Constellation Brands, Inc. (NYSE: STZ, ASX: CBR) is commencing a cash takeover bid for all of the outstanding common shares of Vincor International Inc. (TSX: VN) for C$31.00 (US$26.45) per share. Public records show there are 33,508,000 Vincor shares outstanding. At C$31 per share, that translates to a purchase price just over C$1 billion or US$886 million. "We are convinced that our C$31 per share cash offer is fully priced based on the information available to us, and is the best alternative for Vincor's shareholders, in terms of both value and certainty," said Richard Sands, Constellation Brands chairman and chief executive officer. "Our offer represents a 39 percent premium to Vincor's closing share price on Sept. 8, 2005, the day before we first proposed to acquire Vincor in a negotiated transaction. It provides substantial value to Vincor shareholders at a level well beyond what we believe Vincor could achieve on its own in the increasingly competitive global wine industry." "Vincor's management and board of directors have rejected our efforts to complete a negotiated transaction." Mr. Sands added, "If an auction process exists, as Vincor announced, we have been excluded from it. If Vincor has provided information to any other parties, we are entitled to the same information as any other bidder. By making this offer, we are ensuring Vincor's shareholders have the right to choose an opportunity to realize superior, immediate and certain value for their shares." "We believe Constellation is the best buyer for Vincor and that it is in the best interests of Vincor's shareholders, employees, suppliers and customers to consummate a transaction as soon as possible to limit any degradation of the business that may be caused by management prolonging this period of uncertainty," stated Sands. Constellation's offer has been unanimously approved by its Board of Directors. Constellation's offer is not conditional on financing or the completion of due diligence. The Company has received commitments for an all-debt financing that is sufficient to consummate the transaction. Constellation expects the offer to commence on Thurs., Oct. 20, 2005, and it is scheduled to expire at 5:00 p.m. Toronto time on Mon., Nov. 28, 2005, unless extended. The offer contains certain conditions that are customary to transactions of this nature, including the valid tender, and non-withdrawal, of at least 66-2/3% of Vincor's common shares and receipt of required regulatory consents and approvals. Citigroup Global Markets Inc. is Constellation's financial advisor for the offer. Osler, Hoskin & Harcourt LLP, Wachtell, Lipton, Rosen & Katz and Nixon Peabody LLP are the Company's legal counsel. The information agent for the offer is Innisfree M&A Incorporated which may be contacted toll-free at 1-877-825-8772 (English speakers) or 1-877-825-8777 (French speakers). (Banks and brokers may call collect at 212-750-5833). Constellation Brands, Inc. -- http://www.cbrands.com/-- is a leading international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao, Black Velvet, Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Chi- Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Stowells, Blackthorn, Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Nobilo, Alice White, Ruffino, Robert Mondavi Private Selection, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Simi and Robert Mondavi Winery brands. * * * As reported in the Troubled Company Reporter on Oct. 4, 2005, Moody's Investors Service placed the long-term ratings of Constellation Brands, Inc. under review for possible downgrade and lowered the company's speculative grade liquidity rating to SGL-2 from SGL-1. The review of Constellation's long-term ratings follows its announcement that it has offered to purchase all of the outstanding common shares of Vincor International Inc. in a transaction currently valued at approximately C$1.4 (US$1.2) billion, including approximately C$305 (US$260) million of assumed Vincor net debt. Ratings placed on review for possible downgrade: * Ba2 corporate family rating formerly senior implied rating) * Ba2 on the $2.9 billion senior secured credit facility consisting of a $500 million revolver, $600 million tranche A term loans and $1.8 billion tranche B term loans * Ba2 $200 million 8.625% senior unsecured notes, due 2006 * Ba2 $200 million 8% senior unsecured notes, due 2008 * Ba2 GBP 80 million 8.5% senior unsecured notes, due 2009 * Ba2 GBP 75 million 8.5% senior unsecured notes, due 2009 * Ba3 $250 million 8.125% senior subordinated notes, due 2012 Rating lowered: * Speculative grade liquidity rating to SGL-2 from SGL-1 As reported in the Troubled Company Reporter on Oct. 4, 2005, Standard & Poor's Ratings Services placed its 'BB' corporate credit rating and other ratings on beverage alcohol producer and distributor Constellation Brands Inc. on CreditWatch with negative implications. CONTINENTAL AIRLINES: Earns $61 Million of Net Income in 3rd Qtr. ----------------------------------------------------------------- Continental Airlines (NYSE: CAL) reported third quarter 2005 net income of $61 million, including a $3 million net special charge. Excluding the net special charge, Continental recorded net income of $64 million. Operating income of $109 million for the third quarter 2005 was an $87 million improvement over the third quarter 2004, primarily due to significant revenue improvements and savings from pay and benefit reductions. The record high cost of jet fuel continues to adversely affect the company's financial results. In the third quarter, Continental's mainline fuel expense totaled $684 million, up 65.2 percent over the same period last year. Fuel expense is now Continental's single largest expense item. In the week following Hurricane Rita, the price per barrel of Gulf Coast jet fuel increased nearly $32, closing at a then-record $124.36 per barrel on Sept. 28. Hurricanes Katrina and Rita adversely impacted Continental's operations. Rita forced the carrier to suspend service for 36 hours at its largest hub, Houston's Bush Intercontinental Airport, costing the company an estimated $25 million in the third quarter. "My co-workers did an incredible job to overcome tremendous challenges posed by Hurricanes Katrina and Rita," said Larry Kellner, chairman and chief executive officer. "Continental continues to grow and outdistance its competitors because of my co-workers' economic sacrifices, teamwork and tireless dedication." Mediation Talks During the quarter, Continental began mediation with its flight attendants in an effort to reach an agreement for pay and benefit reductions and work rule changes. In addition, the company's field service employees rejected representation sought by the Transport Workers Union of America. Third Quarter Financial Results Continental ended the third quarter with $1.92 billion in unrestricted cash and short-term investments. Although revenue trends have been improving, the company still expects to incur a significant loss in the fourth quarter and for the full year 2005. In July, Continental contributed $40 million cash to its defined benefit pension plans. The company subsequently contributed an additional $84 million cash to its plans ($19 million in September and $65 million in October), bringing its year-to-date pension contributions to $304 million and meeting its pension contribution requirements for 2005. Taking into consideration the expected fourth quarter loss, $356 million of debt and capital lease principal payments due in the fourth quarter of 2005 and the $65 million cash pension contribution Continental made in October 2005, the company currently expects that its unrestricted cash and short-term investments balance as of Dec. 31, 2005, will be approximately $1.4 billion, not including any fourth quarter capital market transactions or other financings, except for previously announced aircraft financing transactions. Continental also believes that under current conditions, absent adverse factors outside of its control, such as additional terrorist attacks, hostilities involving the United States, a further delay in the restart of the Gulf Coast refineries or further significant increases in crude oil prices, its existing liquidity and projected 2006 cash flows will be sufficient to fund current operations and other financial obligations through 2006. During the third quarter, Continental ordered two additional new Boeing 777-200ER widebody airplanes, with backstop financing provided by The Boeing Company. The aircraft are scheduled for delivery during the first quarter of 2007 and will serve the most profitable segment of today's aviation market -- long-haul international routes. Continental took delivery of four new Boeing 737-800s and three used Boeing 757-300s during the third quarter and expects to take delivery of three new Boeing 737-800s and three used Boeing 757- 300s during the remainder of the year. Continental recorded a net special charge of $3 million in the third quarter, consisting of an $18 million non-cash settlement charge related to lump-sum distributions from the frozen pilot defined benefit pension plan, and a $15 million reversal of previously recorded expense related to permanently grounded aircraft following negotiated settlements with the aircraft lessors in an improving aircraft market. Continental Airlines -- http://continental.com/-- is the world's sixth-largest airline, serving 128 domestic and 111 international destinations -- more than any other airline in the world -- and serving nearly 200 additional points via codeshare partner airlines. With 42,000 mainline employees, the airline has hubs serving New York, Houston, Cleveland and Guam, and carries approximately 51 million passengers per year. FORTUNE ranks Continental one of the 100 Best Companies to Work For in America, an honor it has earned for six consecutive years. FORTUNE also ranks Continental as the top airline in its Most Admired Global Companies in 2004. * * * As reported in the Troubled Company Reporter on Sept. 15, 2005, Moody's Investors Service assigned a Ba2 rating to the proposed Series 2005-ERJ1 Class A Pass Through Certificates of Continental Airlines, Inc. and affirmed Continental's long term debt ratings (corporate family rating at B3). Moody's said the rating outlook is negative. CONTINENTAL AIRLINES: Prices Public Offering of 18 Million Shares ----------------------------------------------------------------- Continental Airlines, Inc. (NYSE: CAL) disclosed the pricing of a public offering of 18 million shares of its Class B Common Stock at a price to the public of $11.35 per share. Continental has granted the underwriter a 30-day option to purchase an additional 2.7 million shares of common stock to cover over-allotments, if any. Continental expects the issuance and delivery of the shares to occur on Oct. 24, 2005. UBS Investment Bank is acting as sole underwriter for the offering. When available, copies of the prospectus supplement and prospectus relating to the offering may be obtained from UBS Investment Bank, 299 Park Ave., New York, New York 10171. Continental Airlines -- http://continental.com/-- is the world's sixth-largest airline, serving 128 domestic and 111 international destinations -- more than any other airline in the world -- and serving nearly 200 additional points via codeshare partner airlines. With 42,000 mainline employees, the airline has hubs serving New York, Houston, Cleveland and Guam, and carries approximately 51 million passengers per year. FORTUNE ranks Continental one of the 100 Best Companies to Work For in America, an honor it has earned for six consecutive years. FORTUNE also ranks Continental as the top airline in its Most Admired Global Companies in 2004. * * * As reported in the Troubled Company Reporter on Sept. 15, 2005, Moody's Investors Service assigned a Ba2 rating to the proposed Series 2005-ERJ1 Class A Pass Through Certificates of Continental Airlines, Inc. and affirmed Continental's long-term debt ratings (corporate family rating at B3). Moody's said the rating outlook is negative. CREDIT SUISSE: S&P Assigns Low-B Rating to Six Certificate Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Credit Suisse First Boston Mortgage Securities Corp.'s $2.9 billion commercial mortgage pass-through certificates series 2005-C5. The preliminary ratings are based on information as of Oct. 18, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-AB, A-4, A-1-A, A-M, A-J, B, C, and D are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool -- not including the coop loans -- has a debt service coverage of 1.46x, a beginning LTV of 96.0%, and an ending LTV of 85.4%. The residential cooperative portion of the pool -- 3.6% of the pool balance -- has a DSC of 7.69x, a beginning LTV of 24.7%, and an ending LTV of 21.1%. Overall, the collateral pool has a DSC of 1.68x, a beginning LTV of 93.4%, and an ending LTV of 83.1%. Preliminary Ratings Assigned Credit Suisse First Boston Mortgage Securities Corp. Recommended Class Rating Amount ($) credit support (%) ----- ------ ---------- ------------------ A-1 AAA 82,000,000 30.000 A-2 AAA 122,000,000 30.000 A-3 AAA 181,000,000 30.000 A-AB AAA 104,155,000 30.000 A-4 AAA 1,001,000,000 30.000 A-1-A AAA 545,372,000 30.000 A-M AAA 290,790,000 20.000 A-J AAA 225,362,000 12.250 B AA 72,697,000 9.750 C A+ 39,984,000 8.375 D A 29,079,000 7.375 E A- 36,349,000 6.125 F BBB+ 21,809,000 5.375 G BBB 32,714,000 4.250 H BBB- 32,714,000 3.125 J BB+ 7,269,000 2.875 K BB 14,540,000 2.375 L BB- 10,904,000 2.000 M B+ 3,635,000 1.875 N B 7,270,000 1.625 O B- 10,905,000 1.250 P N.R. 36,348,813 N/A A-X* AAA 2,907,896,813 N/A A-SP* AAA TBD N/A A-YSS* AAA 105,033,854 N/A * Interest-only class with a notional dollar amount. N.R. -- Not rated. N/A -- Not applicable. TBD -- To be determined. CROWN HOLDINGS: Launches Tender Offers for Subsidiary's Notes ------------------------------------------------------------- Crown Holdings, Inc. (NYSE: CCK) commenced concurrent tender offers for any and all of the outstanding notes of Crown European Holdings SA, a subsidiary of the Company, and consent solicitations to amend the terms of the related indentures. The tender offers and consent solicitations are part of the Company's plan to refinance its senior secured credit facilities and the Notes using proceeds from the recent sale of the Company's plastic closures business together with borrowings under new senior secured credit facilities and the issuance of new unsecured notes. The purpose of the refinancing plan is to increase operational and financial flexibility and reduce interest expense. The Notes subject to the tender offers are: Principal Outstanding/Note Series Cusip/ISIN Nos. --------------------------------- ---------------------- $1,085,000,000 9.5% Second Priority Senior Secured Notes due March 1, 2011 228344AA5/US228344A59; 228344AC1/US228344AC16; F2398RAA8/USF2398RAA89 euro 285,000,000 10.25% Second Priority 16000P9B6/XS0163227258; Senior Secured Notes due March 1, 2011 16000P9C6/XS0163227415; F2398JAB4/XS0176411584 $725,000,000 10.875% Third Priority Senior Secured Notes due March 1, 2013 228344AD9/US228344AD98 The consent solicitations will seek consents from the holders of the Notes to eliminate substantially all of the restrictive covenants, reporting requirements and certain events of default from the indentures governing the Notes and release the collateral securing the Notes. A valid tender of Notes is deemed to constitute such a consent and a consent may not be delivered without a tender of Notes. The tender offers and consent solicitations are being made pursuant to the terms and conditions set forth in the Company's Offer to Purchase and Consent Solicitation Statement dated Oct. 18, 2005, and the related Letter of Transmittal, which more fully set forth the terms and conditions thereof. The tender offers will expire at 5:00 p.m., New York City time, on Nov. 16, 2005, unless extended. No tender will be valid if submitted after the Expiration Time. The purchase price (calculated as described in the Statement) to be paid for each $1,000 principal amount or euro 1,000 principal amount, as applicable, of the applicable Notes purchased in a tender offer will be an amount in cash equal to: (1) the sum of the present value on the early settlement date of: (i) the earliest redemption price for such Notes and (ii) the interest that would accrue from the last interest payment date and that would be payable on each interest payment date occurring on and prior to the earliest redemption date for such Notes, in each case, determined on the basis of a yield to the earliest redemption date equal to the sum of: (a) the bid-side yield on the applicable reference security, plus (b) 50 basis points, minus accrued and unpaid interest from the last interest payment date to, but not including, the early settlement date (rounded to the nearest cent), minus (2) an amount equal to the Consent Payment. The Reference Yield will be calculated in accordance with standard market practice as of 2:00 p.m., New York City time, on Oct. 31, 2005, unless extended, as displayed on the applicable page of the Bloomberg Government Pricing Monitor or any recognized quotation source. Earliest Earliest Redemption Redemption Bloomberg Title of Security Date Price Reference Security Page ------------------ ---------- ---------- -------------------- ------ --- Dollar denominated March 1, $1,047.50 3.375% U.S. Treasury PX4 9-1/2% 2007 Note due February 28, Second Priority 2007 Senior Secured Notes due 2011 Euro denominated March 1, euro 1,051.25 4.0% OBL #139 due OBL 10-1/4% 2007 February 16, 2007 Second Priority Senior Secured Notes due 2011 10-7/8% Third March 1, $1,054.38 3.375% U.S. Treasury PX5 Priority 2008 Note due February 15, Senior Secured 2008 Notes due 2013 Holders who validly tender and do not validly withdraw their Notes before 5:00 p.m., New York City time, on Oct. 31, 2005, unless extended, will be entitled to receive the Purchase Price described above and a consent payment of $20.00 per $1,000 principal amount or euro 20.00 per euro 1,000 principal amount, as applicable, of Notes. The Purchase Price and the Consent Payment are expected to be paid on or promptly after the Consent Payment Deadline and following the satisfaction of the conditions to the offers described below, including the consummation of the Company's refinancing plan, although the Company reserves the right, in its sole discretion, to extend or forgo the Early Settlement Date. Holders who validly tender their Notes after the Consent Payment Deadline will receive only the Purchase Price, which does not include the Consent Payment, payable promptly after the Expiration Time. In each case, Holders whose Notes are accepted for payment in the offers will also receive accrued and unpaid interest in respect of such purchased Notes from the last interest payment date up to, but not including, the Early Settlement Date or the Final Settlement Date, whichever Settlement Date is applicable. Each tender offer is subject to the satisfaction or waiver of various conditions, including the receipt of consents from holders of at least 66-2/3% of the aggregate principal amount of the applicable Notes, the execution of a supplemental indenture amending the applicable indenture, the entry into new senior credit facilities and the issuance of new senior unsecured notes on terms satisfactory to the Company as part of the Company's refinancing plan, the consummation of the other tender offer and other customary conditions. The Company may amend, extend or terminate each tender offer and consent solicitation in its sole discretion. None of the Company, the dealer managers or the information agent makes any recommendations as to whether or not holders should tender their Notes pursuant to the tender offers or consent to the proposed amendments to the Notes and the related indentures, and no one has been authorized by any of them to make such recommendations. Holders must make their own decisions as to whether to consent to the proposed amendments to the Notes and the related indentures and to tender Notes, and, if so, the principal amount of Notes to tender. Crown Holdings, Inc., through its affiliated companies, is a leading supplier of packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, Pennsylvania. * * * As reported in the Troubled Company Reporter on June 9, 2005, Moody's Investors Service changed the ratings outlook for Crown Holdings and its rated operating subsidiaries to positive from stable reflecting the consistency of cumulative improvements in financial and operating performance as the company has been benefiting from realized working capital and efficiency gains, effective price increases mitigating higher input costs, and strategic leveraging of its global operations. The ratings for Crown and its subsidiaries are: -- Ba3 rating for the $500 million first lien credit facility consisting of a $400 million revolver and a $100 million US letter of credit facility -- Ba3 rating for approximately Euro 460 million ($565 million equivalent) 6.25% first lien notes, due 2011, issued by Crown European Holdings, S.A. -- B1 rating for the $1.4 billion second lien notes, due 2011, issued by European Holdings -- B2 rating for the $725 million third lien notes, due 2013, issued by European Holdings -- B3 rating for the $700 million senior unsecured notes, due 2023 - 2096, issued by Crown Cork & Seal Company, Inc. -- B3 rating for the $200 million (net of buybacks) senior unsecured notes, due 2006 issued by Finance PLC -- B2 senior implied rating at Crown Cork & Seal Company, Inc. -- SGL-1 Speculative Grade Liquidity Rating at Crown -- Caa1 senior unsecured issuer rating (non-guaranteed exposure) at Crown Cork & Seal Company, Inc. CROWN HOLDINGS: Earns $78 Million of Net Income in Third Quarter ---------------------------------------------------------------- Crown Holdings, Inc. (NYSE: CCK), reported its financial results for the third quarter and nine months ended September 30, 2005. Amounts related to the Company's plastic closures business have been reclassified to discontinued operations as a result of the October 2005 sale of that business. Third Quarter Results Net sales in the third quarter rose to $1,928 million, a 5.6% increase over the $1,826 million in the 2004 third quarter. Americas Division's net sales improved 4.5% to $769 million, the European Division's net sales grew 5.9% to $1,052 million and the Asia Division's net sales increased 10.3% to $107 million. Gross profit in the 2005 third quarter grew 8.8% to $272 million over the $250 million in last year's third quarter. As a percentage of net sales, gross profit expanded to 14.1% in the third quarter compared to 13.7% in the same quarter last year. The improvements reflect increased efficiencies and productivity throughout the Company partially offset by weaker foreign currencies. Segment income -- defined by the Company as gross profit less selling and administrative expense and provision for restructuring -- grew to $181 million in the third quarter, up 5.2% over the $172 million in the 2004 third quarter. Segment income as a percentage to net sales was 9.4% in the third quarters of both 2005 and 2004. A reconciliation from gross profit to segment income is provided as a note to the attached unaudited Consolidated Statements of Operations. Commenting on the quarter, John W. Conway, Chairman and Chief Executive Officer, stated, "We are pleased with the third quarter operating results. Continued benefits from operating improvements and resulting productivity gains enabled us to achieve an expanded gross margin. In our global business portfolio, overall volumes were in line with general market conditions." "The Company is on track to achieve its operating and financial targets for the year which include increasing segment income, expanding margins and generating significant free cash flow," Mr. Conway said. "Looking ahead, we remain excited about the opportunities presented by our customers' international growth plans as well as the growing interest in our can shaping and easy open end technologies." Interest expense in the third quarter was $94 million compared to $91 million in last year's third quarter. The increase reflects the impact of higher average interest rates partially offset by lower average debt outstanding. During the third quarter, the Company recorded a net charge of $4 million, or $0.02 per diluted share, reflecting a $17 million net loss on the disposal of the plastic closures business and a net loss of $3 million related to provisions for restructuring partially offset by a $16 million net gain related to the remeasurement of foreign currency exposures in Europe. For the 2004 third quarter, the Company reported a net charge of $9 million, or $0.05 per diluted share, for the loss on early extinquishments of debt and for restructuring provisions, partially offset by a gain on the remeasurement of foreign currency exposures in Europe. Net income in the third quarter was $78 million, or $0.45 per diluted share, compared to net income of $58 million, or $0.35 per diluted share, in the third quarter of 2004. Proceeds received of $690 million from the October 2005 sale of the Company's plastic closures business are not reflected in the above debt or cash amounts. Nine-Month Results For the first nine months of 2005, net sales increased 6.7% to $5,279 million over the $4,946 million in the first nine months of 2004. Americas Division net sales grew 5.7% in the first nine months of 2005 over the same period in 2004. European Division and Asia Division net sales were up 6.4% and 18.1%, compared to the first nine months of last year. Gross profit for the nine-month period grew to $710 million, or 13.4% of net sales, over the $632 million, or 12.8% of net sales in the first nine months of 2004. The improvements reflect increased operating efficiencies and productivity throughout the Company. Segment income in the first nine months of 2005 increased 12.7% to $445 million, or 8.4% of net sales, over the $395 million, or 8.0% of net sales in the first nine months of 2004. For the first nine months of 2005, interest expense was $283 million compared to $270 million for the same period last year. For the nine month period, the Company recorded a net charge of $57 million, or $0.33 per diluted share, reflecting a $64 million net loss related to the remeasurement of foreign currency exposures in Europe, a $17 million net loss on the disposal of the plastic closures business, a $3 million net loss related to provisions for restructuring and a $1 million net loss for the early extinguishments of debt, partially offset by a $19 million net gain on the sale of assets and a $9 million gain related to the reversal of tax valuation allowances. During the first nine months of 2004, the Company reported a net charge of $28 million, or $0.17 per diluted share, for the loss on the early extinguishments of debt and provisions for restructuring, partially offset by a gain on the remeasurement of foreign currency exposures in Europe. The Company reported net income of $96 million, or $0.56 per diluted share for the first nine months of 2005 compared to net income of $78 million, or $0.47 per diluted share for the same period in 2004. Crown Holdings, Inc., through its affiliated companies, is a leading supplier of packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, Pennsylvania. * * * As reported in the Troubled Company Reporter on Oct. 5, 2005, Standard & Poor's Ratings Services assigned its 'BB+' bank loan rating to Broomfield, Colorado-based Ball Corp.'s proposed $1.475 billion senior secured credit facilities, based on preliminary terms and conditions. Standard & Poor's also said that it affirmed its 'BB+' corporate credit rating on the company. S&P said the outlook is positive. As reported in the Troubled Company Reporter on June 9, 2005, Moody's Investors Service changed the ratings outlook for Crown Holdings and its rated operating subsidiaries to positive from stable reflecting the consistency of cumulative improvements in financial and operating performance as the company has been benefiting from realized working capital and efficiency gains, effective price increases mitigating higher input costs, and strategic leveraging of its global operations. The ratings for Crown and its subsidiaries are: -- Ba3 rating for the $500 million first lien credit facility consisting of a $400 million revolver and a $100 million US letter of credit facility -- Ba3 rating for approximately Euro 460 million ($565 million equivalent) 6.25% first lien notes, due 2011, issued by Crown European Holdings, S.A. -- B1 rating for the $1.4 billion second lien notes, due 2011, issued by European Holdings -- B2 rating for the $725 million third lien notes, due 2013, issued by European Holdings -- B3 rating for the $700 million senior unsecured notes, due 2023 - 2096, issued by Crown Cork & Seal Company, Inc. -- B3 rating for the $200 million (net of buybacks) senior unsecured notes, due 2006 issued by Finance PLC -- B2 senior implied rating at Crown Cork & Seal Company, Inc. -- SGL-1 Speculative Grade Liquidity Rating at Crown -- Caa1 senior unsecured issuer rating (non-guaranteed exposure) at Crown Cork & Seal Company, Inc. DANA CORP: Secures Credit Facility Waivers Until Nov. 30 -------------------------------------------------------- Dana Corporation (NYSE: DCN) received additional necessary waivers through Nov. 30, 2005, under its principal bank facility and accounts receivable securitization agreement. The company is currently in discussion with its lenders regarding possible modifications to its existing facilities, as well as alternative financing arrangements. The company is in the process of addressing possible non- compliance with covenants in two of its indentures and four leases with respect to furnishing financial statements in accordance with generally accepted accounting principles in the United States. The company is continuing to assess the impact of these developments on its obligations under other leases and agreements. Dividends The Board of Directors of Dana Corporation (NYSE: DCN) declared a dividend on the company's common stock of 1 cent per share, payable on Dec. 15, 2005, to shareholders of record on Dec. 1, 2005. The Board determined that the reduction from the 12-cent per share dividend rate that had been paid in recent quarters was appropriate given the challenging circumstances facing both the company and the automotive industry. Restatement Impact Estimated Dana's management and the Audit Committee of its Board of Directors had determined, as a result of their ongoing internal investigation, that the company had not properly accounted for certain items during 2004 and the first and second quarters of 2005, and that the company would restate its financial statements for those periods. These conclusions were reached in consultation with Dana's independent registered public accounting firm, PricewaterhouseCoopers LLP, and independent investigators retained by the Audit Committee. The primary purpose for the restatements is to correct issues involving customer pricing and transactions with suppliers in Dana's Commercial Vehicle business. Although the investigation is not yet complete, and the effect of the above restatements may require the restatement of financial statements for prior periods, the company currently expects that the net aggregate reduction in net income for all periods to be restated will be between $25 million and $45 million after tax. In connection with the restatements, Dana believes that there are material weaknesses in its internal control over financial reporting. The company's review of its internal control systems and procedures is ongoing. Dana Corporation -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. A leading supplier of axle, driveshaft, engine, frame, chassis, and transmission technologies, Dana employs 46,000 people in 28 countries. Based in Toledo, Ohio, the company reported sales of $9.1 billion in 2004. * * * As reported in the Troubled Company Reporter on Sept. 19, 2005, 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. DEL LABORATORIES: Offering $185 Million Notes in Private Placement ------------------------------------------------------------------ Del Laboratories, Inc., is offering $185 million in principal amount of senior secured floating rate notes due 2011 in a private placement. Del intends to use the net proceeds from the sale of the notes, together with borrowings under an asset-based revolving credit facility that it expects to enter into, to repay all outstanding borrowings under its existing senior credit facilities. The notes are being offered and sold only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933. The notes will not be registered under the Securities Act and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. This announcement will not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of the notes in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. Del Laboratories, Inc., with headquarters in Uniondale, NY, is a leading manufacturer and marketer of cosmetics and over-the- counter pharmaceuticals, primarily under the Sally Hansen and Orajel brands. Net sales for the twelve-month period ended March 2005 were approximately $403 million. * * * As reported in the Troubled Company Reporter on Sept. 21, 2005, Standard & Poor's Ratings Services affirmed its ratings on Del Laboratories Inc., including its 'B' corporate credit rating. The ratings were removed from CreditWatch where they had been placed on August 18, 2005, with negative implications. The outlook on Uniondale, New York-based cosmetics and pharmaceuticals manufacturer is negative. About $375 million of debt is affected by this action. "The ratings affirmation is based on our expectations that the company's recent management changes and other initiatives will focus on achieving better operating efficiencies in the near to intermediate term," said Standard & Poor's credit analyst Patrick Jeffrey. DELPHI CORP: CEO Steve Miller Cuts Salary to $1 Annually -------------------------------------------------------- Delphi Corp. Chairman and CEO Robert S. "Steve" Miller, will reduce his salary to $1 per year, effective Jan. 1, 2006, and continuing until Delphi successfully emerges from its reorganization in Chapter 11. In addition, the Delphi officers who were at Delphi at the time when Miller joined the company, volunteered to waive 10% of their base pay, 20% in the case of President Rodney O'Neal, to be effective Jan. 1, 2006. "I have given the subject of executive compensation a great deal of thought and planned to announce a reduction in my own compensation, as I had previously suggested," said Mr. Miller, Delphi Chairman and CEO. "In addition to my annual salary of $1, I will continue to receive zero bonus, zero severance, zero pension plan, and will have no other similar entitlements whatsoever. While I remain concerned about the below-market compensation paid to many of our key executives, Delphi's transformation message must be unambiguous and marked indelibly by the commitment of Delphi's leadership. To that end, Delphi's officers who were at Delphi when I joined, have unilaterally volunteered to give back 10-20 percent of their base pay -- a clear indication of their commitment." Delphi said that the balance of compensation arrangements for its executives would be decided by the Bankruptcy Court at the company's Nov. 29 omnibus hearing when the company's Key Executive Compensation Program (KECP) motion will be heard by the Court. Under the terms of the KECP motion, which was filed with the Bankruptcy Court on Oct. 8, Delphi will cancel previously authorized and disclosed retention bonus programs and unvested long-term incentive compensation programs and will replace them with incentive and emergence programs aligned with stakeholders' interests in the chapter 11 reorganization cases. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. DELPHI CORP: Judge Drain Approves Skadden Arps as Lead Counsel -------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Oct. 13, 2005, Delphi Corp., and its debtor-affiliates sought the U.S. Bankruptcy Court for the Southern District of New York's authority to employ Skadden, Arps, Slate, Meagher & Flom LLP and affiliates as their principal restructuring and bankruptcy counsel. Delphi Chairman and Chief Executive Officer, Robert S. Miller, Jr., relates that since July 12, 2005, Skadden has performed extensive legal work for the Debtors in connection with their ongoing restructuring efforts designed to complete their transformation plan and to preserve the value of the company. The Debtors entered into an engagement agreement with Skadden dated as of July 12, 2005. The Debtors believe that continued representation by their prepetition restructuring counsel, Skadden, is critical to their efforts to restructure their businesses because Skadden has become familiar with their business and financial and legal affairs and, accordingly, is well-suited to guide them through the chapter 11 process. According to Mr. Miller, Skadden has assisted the Debtors and their affiliates in connection with, among other things, acting as special corporate counsel to the Debtors and providing advice regarding, without limitation, their efforts to effectuate a consensual resolution with General Motors Corporation and the Debtors' major unions, attending board of directors meetings and internal company meetings from time to time, and the preparations for the filing of the Debtors' Chapter 11 cases. The Debtors have selected Skadden as their attorneys because of the firm's experience and knowledge in the field of debtors' and creditors' rights and business reorganizations under Chapter 11 of the Bankruptcy Code. John Wm. Butler, Jr., Esq., co-leader of Skadden worldwide corporate restructuring practice will coordinate the overall representation of the Debtors along with Peter Allan Atkins, Esq. Services To Be Rendered Skadden will be required to: (a) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their business and properties; (b) attend meetings and negotiate with representatives of creditors and other parties-in-interest; (c) advise and consult on the conduct of the case, including all of the legal and administrative requirements of operating in chapter 11; (d) advise the Debtors in connection with any contemplated sales of assets or business combinations, including the negotiation of asset, stock purchase, merger or joint venture agreements, formulate and implement bidding procedures, evaluate competing offers, draft appropriate corporate 11 documents with respect to the proposed sales, and counsel the Debtors in connection with the closing of those sales; (e) advise the Debtors on matters relating to the evaluation of the assumption, rejection or assignment of unexpired leases and executory contracts; (f) provide advice to the Debtors with respect to legal issues arising in or relating to the Debtors' ordinary course of business including attendance at senior management meetings, meetings with the Debtors' financial advisors and meetings of the board of directors, and advice on employee, workers' compensation, employee benefits, executive compensation, tax, environmental, banking, insurance, securities, corporate, business operation, contracts, joint ventures, real property, press and public affairs and regulatory matters and advise the Debtors with respect to continuing disclosure and reporting obligations, if any, under securities laws; (g) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any actions commenced against those estates, negotiations concerning all litigation in which the Debtors may be involved and objections to claims filed against the estates; (h) negotiate and prepare on the Debtors' behalf plan(s) of reorganization, disclosure statement(s) and all related agreements and documents and take any necessary action on behalf of the Debtors to obtain confirmation of those plan(s); (i) prepare on the Debtors' behalf all petitions, motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; (j) attend meetings with third parties and participate in negotiations; (k) appear before the Court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtors' estates before those courts and the U.S. Trustee; and (l) perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with the Debtors' chapter 11 cases and bring the Debtors' chapter 11 cases to a conclusion. Mr. Butler assures the Court that the members, counsel and associates of the firm of Skadden: (a) do not have any connection with any of the Debtors, their affiliates, their creditors, the U.S. Trustee, any person employed in the office of the U.S. Trustee, or any other party-in-interest, or their attorneys and accountants, (b) are "disinterested persons," as that term is defined in Section 101(14) of the Bankruptcy Code, and (c) do not hold or represent any interest adverse to the Debtors' estates. In addition, Skadden informed the Debtors that no other attorney at Skadden is related to any United States Bankruptcy Judge for the Southern District of New York or to the United States Trustee for that district, except that Adlai S. Hardin III, Esq., a Corporate Restructuring associate employed by Skadden in its New York office, is the son of Judge Adlai Hardin. Retainer The Engagement Agreement provided for the implementation of a retainer program pursuant to which the Debtors paid an initial retainer of $500,000. Skadden periodically invoiced the Debtors and drew down the Initial Retainer and was paid certain supplemental amounts to replenish the Initial Retainer: $1,600,000 on August 19, 2005, $2,000,000 on September 8, 2005, and $1,750,000 on September 27, 2005. Skadden received a filing retainer of $4,000,000 to be utilized in accordance with the Engagement Agreement to cover a portion of the projected fees, charges and disbursements to be incurred during the reorganization cases. Skadden will apply the Retainer to pay any fees, charges and disbursements which remain unpaid as of the Petition Date and will retain the remainder of the Retainer to be applied to any fees, charges and disbursements which remain unpaid at the end of the reorganization cases. As of October 7, 2005, the amount of the Retainer was $4,033,019. Skadden's books and records reflect that for the period July 12, 2005, through October 8, 2005, the firm received an aggregate of $9,850,000 from the Debtors, including payments received for services rendered prior to the filing on October 8, 2005, and is inclusive of the Retainer balance of $4,033,019. The aggregate amount applied to fees, charges and disbursements for the same period was $5,816,981, exclusive of the Retainer balance of $4,033,019. Skadden's fees are based in part on its guideline hourly rates, which are periodically adjusted. Skadden will be providing professional services to the Debtors under its standard bundled rate schedule and, therefore, Skadden will not be seeking to be separately compensated for certain staff, clerical and resource charges. As of September 1, 2005, the hourly rates under the bundled rate structure range from: $585 to $835 for partners and of counsel, $560 to $640 for counsel and special counsel, $295 to $540 for associates, and $90 to $230 for legal assistants and support staff. Skadden will continue to charge the Debtors for all other services provided and for other charges and disbursements incurred in the rendition of services. * * * The Honorable Robert D. Drain of the Southern District of New York Bankruptcy Court authorizes the Debtors to employ Skadden, Arps, Slate, Meagher & Flom LLP and affiliates as their principal restructuring and bankruptcy counsel, on an interim basis. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: FTI Consulting Approved as Financial Advisors ---------------------------------------------------------- Delphi Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to employ FTI Consulting, Inc., as their restructuring and financial advisors. John D. Sheehan, vice president and chief restructuring officer of Delphi Corporation, relates that prior to the Petition Date, the Debtors hired FTI Consulting to provide them with restructuring and financial advisory services. As a result, the firm has developed a significant amount of institutional knowledge regarding the Debtors' operations, finances and systems. The Debtors believe that FTI Consulting is well qualified and will be able to represent them in a cost-effective, efficient, and timely manner. Specifically, FTI Consulting will: (a) assist the Debtors with information and analysis required pursuant to their postpetition financing; (b) assist with the identification and implementation of short-term cash management procedures; (c) assist in the preparation of information and analysis necessary for the confirmation of a plan of reorganization, including information contained in the disclosure statement; (d) assist in the preparation of financial information for distribution to creditors and others, including cash receipts and disbursement analysis, analysis of various assets and liability accounts, and analysis of proposed transactions; (e) assist in developing accounting and operating procedures to segregate business transactions; (f) assist the Debtors in developing and implementing strategies to address financially troubled suppliers; (g) assist the Debtors in responding to and tracking calls received from suppliers in a vendor communication room, including the production of various management reports reflecting call center activity; (h) assist the Debtors in identifying executory contracts and unexpired leases and performing cost/benefit evaluations with respect to the assumption and rejection of each; (i) assist the Debtors in financial related disclosures required by the Court, including Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; (j) assist the Debtors in claims processing, analysis, and reporting, including plan classification modeling and claim estimation; (k) assist the Debtors in responding to and tracking reclamation claims; (l) provide assistance with implementation of court orders; (m) assist in the evaluation and analysis of avoidance action, including fraudulent conveyances and preferential transfers; (n) participate in meetings and provide support to the Debtors and their other professional advisors in negotiations with potential investors, banks and other secured lenders, the Official Committee of Unsecured Creditors, the Office of the United States Trustee, other parties-in-interest and other professionals, as requested; (o) assist the Debtors with plan distribution activities; (p) provide assistance with tax planning and compliance issues with respect to any proposed plans of reorganization, as well as any and all other tax assistance as may be requested from time to time; and (q) render other restructuring and other business consulting or other assistance for the Debtors or the Debtors' subsidiaries and affiliates as the Debtors' management or council may request, that are not duplicative of services provided by other professionals retained in the Debtors' cases. The Debtors will pay FTI Consulting based on the firm's customary hourly rates, subject to periodic adjustments: Senior Managing Directors $560 to $625 Directors and Managing Directors $415 to $560 Associates and Consultants $205 to $385 Paraprofessionals $95 to $168 The Debtors will also consider, in their sole discretion, a value-added fee at the conclusion of FTI Consulting's engagement that would be based on the firm's contribution to their successful restructuring. According to Mr. Sheehan, FTI Consulting has received a $525,000 retainer in connection with preparing for the filing of the Debtors' Chapter 11 cases. The unapplied residual retainer will: -- constitute a general retainer for postpetition services; -- not be segregated by the firm in a separate account; and -- be held until the end of the Debtors' cases and applied to the firm's final Court-approved fees. Dispute Resolution Provisions The Debtors and FTI Consulting agree that: (i) any controversy or claim arising out of, or in any way related to the firm's employment or the services it provided to the Debtors will be brought before the Bankruptcy Court or in the United States District Court for the Southern District of New York, if the District Court withdraws the reference; (ii) they consent to the jurisdiction and venue of that court as the sole and exclusive forum for the resolution of their claims, causes of actions, or lawsuits; (iii) they waive trial by jury; (iv) if the Bankruptcy Court, or the District Court if the reference is withdrawn, does not have or retain jurisdiction over the claims and controversies, they will submit first to non-binding mediation; and if mediation is not successful, then to binding arbitration, in accordance with the Dispute Resolution Procedures; and (v) judgment on any arbitration award may be entered in any court having proper jurisdiction. Randall S. Eisenberg, a Senior Managing Director at FTI Consulting, assures the Court that the firm: * has no connection with the Debtors, their creditors or other parties-in-interest; * does not hold any interest adverse to the Debtors' Chapter 11 estates; and * is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. * * * The Honorable Robert D. Drain of the Southern District of New York Bankruptcy Court approves the Debtors' application. With regard to assistance rendered postpetition to the Debtors in responding to and tracking calls received from suppliers in a vendor communication room, including the production of various management reports reflecting call center activity, FTI Consulting will only be required to maintain contemporaneous time records in half-hour increments. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: U.S. Trustee Appoints 7-Member Creditors Committee --------------------------------------------------------------- Deirdre A. Martini, the United States Trustee for Region 2, has appointed seven creditors to serve on the Official Committee of Unsecured Creditors in Delphi Corporation and its debtor- affiliates' Chapter 11 cases: 1. Electronic Data Systems Corp. 5505 Corporate Drive MSIA Troy, MI 48098 Attention: Michael Nefkens Phone: (248) 696-1729 2. General Electric Company One Plastics Avenue Pittsfield, MA 01201 Attention: Valerie Venable Phone: (704) 992-5075 3. Flextronics International Asia-Pacific, Ltd. c/o Flextronics International USA, Inc. 2090 Fortune Drive San Jose, CA 95131 Attention: Paul W. Anderson Phone: (408) 428-1308 4. IUE-CWA 2360 W. Dorothy Lane, Suite 201 Dayton, Ohio 45439 Attention: Henry Reichard Phone: (937) 294-7813 5. Capital Research and Management Company 11100 Santa Monica Blvd., 15th Floor Los Angeles, CA 90025 Attention: Michelle Robson Phone: (310) 996-6140 6. Wilmington Trust Company, as Indenture Trustee Rodney Square North 1100 North Market Street Wilmington, DE 19890 Attention: Steven M. Cimalore Phone: (302) 636-6058 7. Freescale Semiconductor, Inc. 6501 William Cannon Drive West Austin, TX 78735 Attention: Richard Lee Chambers, III Phone: (512) 895-6357 In an interview with Bloomberg News, Delphi's Chief Executive Officer Steve Miller said the Company was "mildly surprised" that three of its largest unsecured creditors, General Motors Corp., the Pension Benefit Guaranty Corporation and the United Auto Workers, were not appointed. Mr. Miller emphasized that Delphi respects the U.S. Trustee's decision. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Two Airports Question Amount Deposited in PFC Accounts ----------------------------------------------------------------- As reported in the Troubled Company Reporter on Oct. 5, 2005, before the Petition Date, Delta Air Lines Inc. and its debtor- affiliates deposited $33,257,033, the aggregate monthly average amount for all airports in one of two accounts with Citibank, N.A. The Debtors established the accounts to cover the passenger facility charges remittance liability of Delta Air Lines, Inc., and Comair, Inc. Six airports object to the amount escrowed by the Debtors: (1) City and County of Denver, owner and operator of Denver International Airport; (2) City and County of San Francisco, acting by and through the San Francisco Airport Commission, owner and operator of San Francisco International Airport; (3) City of Los Angeles, Department of Airports Division, owner and operator of Los Angeles World Airport and Ontario International Airport; (4) Greater Orlando Aviation Authority, operator of Orlando International Airport; (5) Palm Beach County, Florida through its Department of Airports, owner and operator of the Palm Beach International Airport; and (6) Metropolitan Nashville Airport Authority, operator of an airport in Nashville, Tennessee. Representing Denver and San Francisco, Douglas W. Jessop, Esq., at Jessop & Company, P.C., in Denver, Colorado, notes that the Debtors provided no documentation and calculations on how they came up with the amount. The Motion also provides that, on the 21st day of each month, the Debtors will reconcile the PCF Account by ensuring that the PFC Account balance equals the sum of: (i) Delta's actual PFC remittance obligation to the eligible airport operators, and (ii) 21 days of the Daily Amount deposits. Mr. Jessop asserts that the monthly reconciliation procedures proposed by the Debtors is contrary to the requirements of Section 40117(m) of the United States Transportation Code as it, perhaps unintentionally, drops the Monthly Average Amount from the reconciliation. Congress mandates that debtors must: (i) maintain at all times in the PFC Account an amount equal to the debtors' average monthly liability for PFCs and (ii) segregate all postpetition PFCs. Mr. Jessop notes that the Debtors appear to be combining these two separate requirements in their reconciliation formula. The reconciliation formula ignores the Monthly Average Amount and focuses solely on the Debtors' actual remittance obligation and an estimate for the postpetition PFCs. The Airport Operators assert that the amount, which should be in the PFC Account on the reconciliation day, should be the sum of: (i) the Monthly Average Amount, (ii) the amount actually collected by the Debtors for the preceding month, and (iii) an amount equal to 21 days' worth of the Daily Amount. According to Mr. Jessop, since PFCs are paid in arrears on the last day of the month for the preceding month, the amount actually remaining in the PFC Account will only be one month of estimated PFCs, which were supposed to be the actual PFCs held in a segregated account. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Court OKs Rejection of 12 Burdensome Contracts & Leases ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved on a final basis, Delta Air Lines Inc. and its debtor- affiliates motion to reject 12 Contracts and Leases. As reported in the Troubled Company Reporter on Oct. 3, 2005, the Debtors, as part of their prepetition and ongoing restructuring efforts, began to evaluate these agreements in the context of the Bankruptcy Code and have determined that 12 Contracts and Leases are not necessary to their continued business operations and do not benefit their estates. Accordingly, the Debtors asked the U.S. Bankruptcy Court for the Southern District of New York's authority to reject the 12 Contracts and Leases. The Debtors also want to abandon the personal property associated with the Rejected Leases. In addition, the Debtors asked Judge Beatty to order that: (i) if any Debtor has deposited monies with a counterparty or lessor or sublessor party to a Rejected Agreement as a security deposit or pursuant to another similar arrangement, that Counterparty or Lessor is not permitted to set off or otherwise use the monies from the deposit or other arrangement without prior Court order; and (ii) the holder of any claim for damages arising from the rejection of any Rejected Agreement or abandonment of Expendable Property be required to file a proof of claim on account of that claim against the Debtors in accordance with any order pursuant to Bankruptcy Rule 3003(c) establishing a deadline by which prepetition general unsecured claims must be filed, on or before the later of: (x) the Bar Date, or (y) 30 days after the effective rejection or abandonment date. Benjamin S. Kaminetzky, Esq., at Davis Polk & Wardwell, in New York, relates that it's costly to maintain the unnecessary contracts and leases. By rejecting the contracts and leases now, the Debtors will avoid incurring unnecessary costs and expenses. Mr. Kaminetzky also points out that the Expendable Property is of inconsequential value and of no benefit to the estates. The Expendable Property primarily consists of furnishings, carpeting, fixtures, ticket counters, millwork, bag systems, jetways, gate podiums and ground service equipment. "To the best of the Debtors' knowledge, the abandonment of the property is not in violation of any state statutes or regulations reasonably designed to protect the public health or safety from identified hazards," Mr. Kaminetzky says. A free copy of the list of Rejected Contracts and Rejected Leases is available at: http://bankrupt.com/misc/deltacontracts&leases.pdf 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. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) DENNY'S CORP: Issues Earnings Guidance for Fiscal Year 2005 ----------------------------------------------------------- Denny's Corporation (Nasdaq:DENN) updated its guidance for fiscal year 2005 based on recent events and year-to-date results. As reported in the Troubled Company Reporter yesterday, Denny's announced a settlement with the State of California's Division of Labor Standards Enforcement regarding a previously disclosed lawsuit. To avoid the time, expense and uncertainty of litigation, the parties agreed to settle all disputes and Denny's has agreed to pay a sum of approximately $7.75 million to former employees. In the second quarter of 2005, Denny's accrued $1 million of liabilities related to this litigation bringing the total reserve to $3 million. Pursuant to this settlement, Denny's will take an additional $4.75 million charge to legal settlement costs in the third quarter of 2005. In addition, Denny's will incur approximately $1.2 million of restructuring expense in the third quarter due to severance related costs. Denny's company restaurants reported same-store sales growth of 1.0% for the month of September and 1.5% for the third quarter of 2005. Six company restaurants remain closed as a result of the recent hurricanes. At this time, the Company said it cannot determine when these units will reopen. If all six units remained closed through year end the aggregate revenue loss in 2005 would be approximately $2.9 million. Commenting on the recent news, Nelson J. Marchioli, President and Chief Executive Officer, said, "We have worked hard to reach a final resolution to this dispute with the DLSE. The settlement will allow us to focus all of our energy on further strengthening the Denny's brand. "As for ongoing operations, we are encouraged by our performance compared with much of the restaurant industry, as we have benefited from a strong value message that is particularly compelling in this challenging economic environment. While same- store sales at company units increased a solid 1.5% in the third quarter, our franchisees continued their strong performance with preliminary sales estimates of 3.8% growth for the quarter. With franchised units accounting for two-thirds of the Denny's brand, we believe their performance is compelling evidence of the continued operational improvements across the chain. We expect our sales momentum will continue and that we will post positive same-store sales for the fourth quarter of 2005. "Our updated guidance for 2005 reflects our sales outlook in addition to the one-time expenses announced today. Considering the impact of approximately $5.75 million in year-to-date legal settlement costs related to the case in California, we have revised our 2005 Adjusted EBITDA guidance to $115 to $119 million, compared with our initial guidance estimate of $120 to $125 million," Mr. Marchioli concluded. Denny's Corporation -- http://dennys.com/-- is America's largest full-service family restaurant chain, consisting of 547 company-owned units and 1,040 franchised and licensed units, with operations in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. As of June 29, 2005, Denny's Corp.'s total liabilities exceed total assets by $260,141,000. DOCTORS HOSPITAL: Wants to Employ Wilton Burt as Management Expert ------------------------------------------------------------------ Doctors Hospital 1997 LP, dba Doctors Hospital Parkway-Tidwell asks the U.S. Bankruptcy Court for the Southern District of Texas for permission to Wilton M. Burt as its management consultant. Wilton Burt will: 1) consult with the Debtor's management regarding: a) developing limited partnership reconstitution strategies as part of a chapter 11 emergence strategy; b) reviewing and providing input for financial models depicting scenarios resulting from various reconstitution strategies; c) assisting in the development of pricing for reconstituted limited partnership units; d) developing a physician target list; e) meeting one-on-one and in group settings with physicians regarding emergence/workout strategies and new partnership strategies; f) profiling the practices of target physicians; g) working with the Debtor's legal counsel in preparing a confidential offering memorandum related to a reconstitution; h) working with the Debtor's legal counsel regarding various physician ownership vehicles that address the Debtor's needs and comply with fraud and abuse safe harbors; i) assisting the Debtor's management in preparing for physician presentations related to a potential limited partnership offering; j) assisting the Debtor's management in preparing for presentations to financing sources, bankers and potential equity investors; k) assisting in the preparation and the collection of limited partnership subscription documents and checks; 2) attend the Debtor's Governing Board Meetings; 3) attend the Debtor's limited partnership meetings; and 4) provide other assistance as requested by Porter & Hedges, L.L.P., and the Debtor's CEO. Mr. Burt will be paid $190 per hour, for a minimum of 24 hours per week. The Debtor estimates that Mr. Burt's engagement will cost the estate approximately $20,000 per month. To the best of the Debtor's knowledge, Wilton Burt is a "disinterested person," as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Houston, Texas, Doctors Hospital 1997 LP, dba Doctors Hospital Parkway-Tidwell, operates a 101-bed hospital located in Tidwell, Houston, and a 152-bed hospital located in West Parker Road, Houston. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. S.D. Tex. Case No. 05-35291). James M. Vaughn, Esq., at Porter & Hedges, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $41,643,252 and total debts of $66,306,939. EASTMAN KODAK: Syndication of $2.7 Billion Loan Packages Completed ------------------------------------------------------------------ Eastman Kodak Company (NYSE: EK) has increased its financial flexibility by successfully completing its $2.7 billion of Senior Secured Committed credit facilities. Kodak's new credit facilities are composed of two components: -- A five-year, $1.0 billion committed revolving credit line to be used for general corporate purposes, including the issuance of letters of credit. This new credit line replaces the company's existing $1.225 billion, five-year credit facility, which was terminated on the completion of this new credit line. At closing, this new credit line was unused except for the issuance of approximately $73 million of letters of credit. -- A $1.7 billion seven-year term loan with $1.2 billion drawn at closing used to repay existing debt primarily arising out of the acquisition of Creo, which was completed on June 15, 2005. The remaining $500 million is committed, undrawn, and available for use through June 15, 2006. "We are pleased to close this important transaction, as it strengthens our financial position and enhances our ability to successfully execute our digital growth strategy," said Robert H. Brust, Chief Financial Officer, Eastman Kodak Company. "Now that the major pieces of our digital transformation are in place, we are committed to paying down debt." Based in Rochester, New York, Eastman Kodak Company -- http://www.kodak.com/-- is a worldwide vendor of imaging products and services. The company is committed to a digitally oriented growth strategy focused on four businesses: Digital & Film Imaging Systems - providing consumers, professionals, and cinematographers with digital and traditional products and services; Health - supplying the medical and dental professions with traditional and digital imaging and information systems, IT solutions, and services; Graphic Communications - providing customers with a range of solutions for prepress, traditional and digital printing, document scanning, and multi-vendor IT services; and Display & Components - supplying original equipment manufacturers with imaging sensors as well as intellectual property and materials for the organic light-emitting diode and LCD display industries. * * * As reported in the Troubled Company Reporter on Oct. 5, 2005, Standard & Poor's Ratings Services lowered its debt ratings on Eastman Kodak Co. The corporate credit rating was lowered to 'BB-' from 'BB'. All ratings, with the exception of the '2' recovery rating on the company's proposed $2.5 billion-$2.7 billion secured bank loan (indicating the expectation for substantial {80%-100%} recovery of principal in the event of a payment default), remain on CreditWatch with negative implications, pending the satisfactory closing of the bank loan deal. The ratings were placed on CreditWatch July 21, 2005. As of June 30, 2005, the Rochester, New York-based imaging company had $3.7 billion in debt. As reported in the Troubled Company Reporter on Sept. 23, 2005, Moody's downgraded Eastman Kodak Company's corporate family debt rating to Ba3 from Ba2 and its senior unsecured notes rating to B1 from Ba3, concluding a review for possible downgrade initiated on July 21, 2005. Concurrently, Moody's assigned a Ba2 rating to the company's $2.7 billion senior secured credit facilities, comprised of: * a $1 billion to $1.2 billion revolving credit facility; * $1 billion Term Loan B (to refinance Creo acquisition debt); and * a $500 million delay draw Term Loan B (for refinancing flexibility for $500 million bonds due June 15, 2006). Moody's said the rating outlook is negative. ELEC COMMS: Balance Sheet Upside-Down by $2,642,674 at August 31 ---------------------------------------------------------------- eLEC Communications Corp. delivered its quarterly report on Form 10-QSB for the quarter ending August 31, 2005, to the Securities and Exchange Commission on October 17, 2005. The Company reported a $375,139 net loss on $4,146,759 of net revenues for the quarter ending August 31, 2005. At August 31, 2005, the Company's balance sheet shows $2,692,097 in total assets and a $2,642,674 stockholders deficit. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?267 eLEC Communications Corp. -- http://www.elec.net/-- is a Competitive Local Exchange Carrier that offers local and long distance calling plans to small business and residential customers. The Company sells under the names of New Rochelle Telephone and eLEC Communications, and the Company delivers telephone services. EMERITUS ASSISTED: Launches Exchange Offer for Conv. Sub. Notes --------------------------------------------------------------- Emeritus Assisted Living (AMEX: ESC) has commenced an offer to exchange $32 million principal amount of new Convertible Subordinated Debentures due 2008 for an equal principal amount of its outstanding 6.25% Convertible Subordinated Debentures due 2006. The new debentures will bear interest at 6.25% per year, payable semi-annually each January 1 and July 1, and will not be subject to redemption by the Company prior to maturity. The principal amount of the new debentures will be due on July 1, 2008. Like the existing debentures, the new debentures will be unsecured obligations of Emeritus, subordinated and subject in right of payment to all existing and future senior indebtedness and are convertible into common shares of Emeritus at a conversion price of $22.00 per share. U.S. Bank, National Association will serve as trustee. Entities holding approximately 65% of the existing debentures, including entities controlled by Daniel R. Baty, the Company's chief executive officer, and Saratoga Partners, which is represented on the Board by two directors, have indicated that they will tender for exchange all of their current debentures for the new debentures. The exchange offer will expire at 5:00 p.m. EST on November 16, 2005, unless extended or terminated by the Company. Holders must tender their outstanding debentures prior to the expiration date if they wish to participate in the exchange offer. Any existing debentures that are not exchanged will remain outstanding until the maturity date of the existing debentures in January 2006. U.S. Bank, National Association will act as exchange agent for the offer. Emeritus Assisted Living -- http://www.emeritus.com/-- is a national provider of assisted living and related services to seniors. Emeritus is one of the largest developers and operators of freestanding assisted living communities throughout the United States. These communities provide a residential housing alternative for senior citizens who need help with the activities of daily living with an emphasis on assistance with personal care services to provide residents with an opportunity for support in the aging process. Emeritus currently holds interests in 182 communities representing capacity for approximately 18,400 residents in 34 states. As of June 30, 2005, Emeritus Assisted's equity deficit narrowed to $122,990,000 from a $128,319,000 deficit at Dec. 31, 2004. ENDURANCE SPECIALTY: Completes $600 Million Capital Raising Plan ---------------------------------------------------------------- Endurance Specialty Holdings Ltd. (NYSE:ENH) completed the sale of its 6.15% Senior Notes due 2015. "Today we finalized the last step in our capital raising plan, raising a total of $600 million in capital over the past two weeks through a balanced combination of offerings of common equity, preferred equity and debt," Kenneth J. LeStrange, Chairman, President and Chief Executive Officer of Endurance, said. "Once again, Endurance has demonstrated its commitment to nimble and active capital management to optimize its financial position for both its shareholders and business partners." The joint book-running managers for the offering were Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., Merrill Lynch & Co., and Wachovia Securities. Endurance offered the Senior Notes under its Form S-3 shelf registration statement. Endurance expects to use a portion of the net proceeds from the offering of the Senior Notes to repay amounts currently outstanding under its credit facility, to provide additional capital to its subsidiaries and for other general corporate purposes. Any offering of the Senior Notes will be made only by means of a written prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Copies of the written prospectus relating to the announced offering of Senior Notes may be obtained from the offices of Deutsche Bank Securities Inc., 60 Wall Street, New York, New York 10005, J.P. Morgan Securities Inc., 270 Park Avenue, New York, New York 10017, Merrill Lynch & Co., 4 World Financial Center, North Tower, 250 Vesey Street, New York, New York 10080 and Wachovia Securities, 301 South College Street, Charlotte, North Carolina 28202. Endurance Specialty Holdings Ltd. -- http://www.endurance.bm/-- is a global provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance currently writes property per risk treaty reinsurance, property catastrophe reinsurance, casualty treaty reinsurance, property individual risks, casualty individual risks, and other specialty lines. Endurance's headquarters are located at Wellesley House, 90 Pitts Bay Road, Pembroke HM 08, Bermuda and its mailing address is Endurance Specialty Holdings Ltd., Suite No. 784, No. 48 Par- la-Ville Road, Hamilton HM 11, Bermuda. * * * As reported in the Troubled Company Reporter on June 10, 2005, Standard & Poor's Ratings Services affirmed its 'BBB' counterparty credit and senior debt ratings on Endurance Specialty Holdings Ltd. (NYSE:ENH; Endurance). S&P said the outlook is positive. At the same time, Standard & Poor's assigned its 'BBB' preliminary senior debt rating, 'BBB-' preliminary subordinated debt rating and 'BB+' preliminary preferred stock rating to Endurance following the company's increasing its existing universal shelf to $750 million in debt capacity from the existing $250 million. ENRON CORP: Court Directs U.S. Bank to Disburse $13.6 Million ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York directed Enron Corporation and its debtor-affiliates to direct U.S. Bank, N.A., to disburse $13,573,088 in asset sale proceeds to BV1 and Operational Energy Corp. As reported on May 30, 2002, the Bankruptcy Court approved the sale of certain assets of Enron Capital & Trade Resources Mexico Holdings B.V., a wholly owned non-Debtor subsidiary of Enron North America Corp., to Tractebel S.A. The Court also granted the assumption and assignment of agreements related to a cogeneration facility located in Nuevo Leon, Mexico, by BV1 and Operational Energy Corp. At the Official Committee of Unsecured Creditors' request, BV1 deposited the proceeds from the transaction in an escrow account held at U.S. Bank, N.A. The Escrow Agreement, dated August 20, 2002, between US Bank and BVI provides that the Proceeds may only be disbursed in accordance with the terms of a "final, non-appealable order of the Court." Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, told the Court that the Reorganized Debtors are in the process of dissolving the numerous direct and indirect non-debtor subsidiaries of Enron and ENA, including BV1. Ms. Gray asserted that, in furtherance of the dissolution of BV1, the Proceeds should be released from escrow to BV1 and ultimately disbursed by BV1 to ENA, BV1's sole shareholder, making the funds available for distribution to ENA's creditors under the Plan. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr.S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 158; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENTERGY NEW ORLEANS: Bond Default Prompts S&P to Cut Rating to D ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on electric utility Entergy New Orleans Inc.'s first mortgage bonds to 'D' form 'CC'. The ratings on the company's parent -- New Orleans, La.-based Entergy Corp. -- and all other affiliates remain on CreditWatch with negative implications. The ratings were placed on CreditWatch Aug. 31, 2005. "The rating action on Entergy New Orleans reflects the company's statement to Standard & Poor's that its payment to bondholders due Oct. 17, 2005 was not made, resulting in the default of the bonds," said Standard & Poor's credit analyst John Kennedy. FAIR UNDERCAR: Case Summary & 36 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Fair Undercar Care Inc. dba Fair Muffler Shops dba Fair Car Care Center dba Fair Muffler dba Fair Muffler & Brake 15436 South Cicero Avenue Oak Forest, Illinois 60452 Tel: (708) 687-0776 Bankruptcy Case No.: 05-63070 Type of Business: The Debtor repairs mufflers and exhaust systems. Chapter 11 Petition Date: October 16, 2005 Court: Northern District of Illinois (Chicago) Debtor's Counsel: Lawrence G. Zdarsky, Esq. 36 West 65th Street #1 Westmont, Illinois 60559 Tel: (630) 434-8560 Fax: (630) 434-9467 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 36 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Stone Wheel Inc. $230,000 Attn: D. Renehan 7675 Quincy Street Willowbrook, IL 60621 Illinois Department of Revenue $224,327 Attn: Annie Jones Springfield, IL 62776 Fair Real Estate LLC $173,500 15436 South Cicero Avenue Oak Forest, IL 60452 Evergreen Muffler Inc. $130,000 17229 Oleander Avenue Tinley Park, IL 60477 DonTech $75,000 Attn: M. Leslie Kite One North Franklin Avenue, Suite 650 Chicago, IL 60606 Conway & Associates $66,500 Attn: Rich Quinn 920 Industrial Drive Aurora, IL 60506 Internal Revenue Service $50,000 3615 Park Drive, Building 6 Olympia Fields, IL 60461 SLK Management $46,000 Attn: Susan Kahttob 29 Birchwood Drive Palos Park, IL 60464 John C. Pelino $44,879 15239 LasRobles Court Oak Forest, IL 60452 J & B Properties $40,000 404 Roosevelt Road Glen Ellyn, IL 60137 Hubbard-Shemansky Properties $40,000 Attn: Doug Hubbard 1435 Second Avenue Des Plaines, IL 60018 Terrence M. Johannes $29,829 17229 Oleander Tinley Park, IL 60477 Goerlich's $28,000 Attn: Jack Donaldson 300 Dixie Trail, Building O Goldsboro, NC 27530 Lloyd Crawford $24,000 c/o John Billhorn Esq. 515 North State, Suite 2200 Chicago, IL 60610 Advanta Bank $19,000 P.O. Box 8088 Philadelphia, PA 19101 Capitol One $18,000 P.O. Box 34631 Seattle, WA 97123 American Express $16,000 P.O. Box 0002 Fort Lauderdale, FL 33336 CAL Limited Partnership $15,000 Attn: Mrs. Heywood 515 East End Avenue Calumet City, IL 60409 Plaitinum Plus Card $14,500 P.O. Box 15469 Wilmington, DE 19886 CitiBusiness Bankcard $11,000 P.O. Box 6309 The Lakes, NV 88901 Waste Management $10,500 1411 Opus Place, # 400 Downers Grove, IL 60515 Ratiel Patel $9,300 2607 West Farragut Avenue Chicago, IL 60625 Ameritech $9,000 Attn: Malorie Heard 200 East Randolph, 68th Floor Chicago, IL 60601 Leta Bruckner $8,000 114 North 8th Street Shelbyville, IL 63565 Nicor Gas $7,700 P.O. Box 310 Aurora, IL 60507 Bank of America $7,500 P.O. Box 60073 City Of Industry, CA 91716 Rose Financial $5,500 Attn: L. Lichtenstein 20 North Clark Street #801 Chicago, IL 60602 American Welding $5,100 801 Powell Avenue Joliet, IL 60432 Cabot Properties $5,000 Attn: Ray One Beacon Street, 17th Floor Boston, MA 02108 CJC Lombard $4,600 740 East Street, Charles Road Lombard, IL 60148 Leonard Schultz $4,000 10113 South Saint Louis Evergreen Park, IL 60805 Peoples Gas $3,200 130 East Randolph Chicago, IL 60601 IMCO International $2,200 Attn: Joyce Kozoba P.O. Box 1265 Houston, TX 77210 Cintass Corp. $1,200 P.O. Box 5 Bedford Park, IL 60499 ADP Inc. $1,200 100 Northwest Point Boulevard Elk Grove Village, IL 60007 Certegy Check Services $1,000 P.O. Box 30038 Tampa, FL 33630 FLY AMERICA: Files Notice Under Bankruptcy and Insolvency Act ------------------------------------------------------------- Fly America Furniture Inc. has initiated a restructuring process. As a first step, Fly America Furniture has filed a notice of intention pursuant to the Bankruptcy and Insolvency Act of Canada to make a proposal to its creditors in order to allow Fly America to facilitate an operational, commercial, financial and corporate restructuring. The Management of Fly America and its advisors are now working on a restructuring and revitalization plan in order to maximize the value of Fly America for all parties. All of five of the Fly America furniture and decorative accessory stores in Quebec are open for business. Fly America Furniture owns and operates five unique furniture and decorative accessories stores open in Quebec. FORD CREDIT: S&P Lifts Ratings on Six Certificate Classes --------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 14 classes of notes and certificates from six Ford Credit Auto Owner Trust securitizations, which were originated between 2002 and 2004. At the same time, ratings on 17 classes of notes and certificates from the same six transactions are affirmed. The rating actions primarily reflect the increased credit enhancement -- as a percentage of the current pool balance -- available to cover expected remaining losses as the collateral pools continue to amortize. In addition, each of the six transactions is displaying cumulative net losses that are below Standard & Poor's initial expectations. The sequential pay structure incorporated in each securitization has led to increased levels of subordination -- as a percent of the declining pool balances -- for the A, B, and C notes. At the same time, realized excess spread -- including excess spread generated by the yield-supplement over collateralization receivables -- has helped keep the non-amortizing, fully funded reserve account -- available to cover losses on all classes -- at its floor of 0.50% of the initial gross pool balance for each transaction. A pool of automobile retail, installment-sales contracts supports each securitization. As of the September 2005 distribution date, each securitization had between 16 and 38 months of performance, and had current collateral pool balances that represented between 10.72% and 50.63% of their initial balances. If any of the transactions experience losses, cash flow is reprioritized away from subordinated interest to pay senior principal. Additionally, each transaction is structured with a yield-supplement over collateralization amount that is used to cover shortfalls in yield stemming from the underwater contracts included in the transactions. However, the yield-supplement over collateralization amount is also available to cover losses. Standard & Poor's expects the remaining credit support will be sufficient to support the notes and certificates at their new rating levels. Ratings Raised Ford Credit Auto Owner Trust 2002-1 Rating ------ Class To From ----- -- ---- D BBB+ BB Ford Credit Auto Owner Trust 2002-2 Rating ------ Class To From ----- -- ---- C AAA AA D BBB+ BB Ford Credit Auto Owner Trust 2002-3 Rating ------ Class To From ----- -- ---- C AAA AA- D BBB+ BB Ford Credit Auto Owner Trust 2003-A Rating ------ Class To From ----- -- ---- C AAA A D BBB BB Ford Credit Auto Owner Trust 2003-B Rating ------ Class To From ----- -- ---- B-1 AAA AA+ B-2 AAA AA+ C AA+ A- D BBB BB Ford Credit Auto Owner Trust 2004-A Rating ------ Class To From ----- -- ---- B AA- A C A- BBB D BBB- BB Ratings Affirmed Ford Credit Auto Owner Trust 2002-1 Class Rating ----- ------ A AAA B AAA C AAA Ford Credit Auto Owner Trust 2002-2 Class Rating ----- ------ A AAA B AAA Ford Credit Auto Owner Trust 2002-3 Class Rating ----- ------ A AAA B AAA Ford Credit Auto Owner Trust 2003-A Class Rating ----- ------ A-4a AAA A-4b AAA B-1 AAA B-2 AAA Ford Credit Auto Owner Trust 2003-B Class Rating ----- ------ A-3a AAA A-3b AAA A-4 AAA Ford Credit Auto Owner Trust 2004-A Class Rating ----- ------ A-2 AAA A-3 AAA A-4 AAA FREEDOM MEDICAL: Court Confirms Chapter 11 Plan of Reorganization ----------------------------------------------------------------- The United States Bankruptcy Court for the Eastern District of Pennsylvania confirmed Freedom Medical Inc.'s Plan of Reorganization on October 12, 2005. The Court found that the Plan satisfies the 13 standards for confirmation required under Section 1129(a) of the Bankruptcy Code. The Plan will enable 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 repaid in 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 claims -- claims less than $____ or claims held by creditors who agree to reduce the amount of their unsecured claim to $_____ -- will recover ___% of the claim in cash, but no 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. GATEWAY EIGHT: Court Confirms Amended Plan of Reorganization ------------------------------------------------------------ The Honorable William C. Hillman of the U.S. Bankruptcy Court for the District of Massachusetts confirmed the First Modified Plan of Reorganization for Gateway Eight Limited Partnership proposed by the Employees' Retirement System of Rhode Island through the State Investment Commission. Judge Hillman determined that the Plan satisfies the 13 standards for confirmation required under Section 1129(a) of the Bankruptcy Code. About the Plan The Plan provides for the preservation of certain rights to sue creditors who received payments made by the Debtor out of the ordinary course of business after Sept. 1, 2004, the right to sue Boston Financial Data Services, and certain other parties. Under the Plan, General Administrative Claims, Priority Tax Claims, and Class 2 Allowed Miscellaneous Secured Claims will be paid in full. These Classes are impaired under the Plan: -- Class 1 Allowed ERS Secured Claims, -- Class 3 Allowed Unsecured Claims, -- Class 4 Allowed Equity Interests, and -- Class 5 Purported Ground Lease. Though impaired, ERS is willing to accept less than par under the terms of its Plan. Confirmation of the Plan will constitute ERS' foreclosure on its Collateral. ERS agrees to accept the ERS Cash Collateral (defined in the Plan), the ERS Lease Collateral (essentially claims against BFDS) and the ERS Property Collateral Proceeds in exchange for the cancellation and release of all Liens securing its loans. Allowed unsecured claims, including Trade Claims, will receive a pro rata share of a $30,000 "Trade Claim Gift". ERS believes that the Trade Creditors will not receive anything under the Plan, except from the Trade Claim Gift. Equity interest holders will receive their pro rata share of any Plan Trust Proceeds after payment in full of all allowed unsecured claims. Plan Implementation The ERS Property Collateral will be transferred pursuant to an Auction and Bidding Procedures. Under the Plan, ERS will make an opening bid of $17,900,000 for the Debtor's Gateway Building property located at One American Express Plaza, 99 Park Row, in Providence, Rhode Island. Developed by CGV, Inc., the four-story building consists of 113,609 rentable square feet and a 2-level subterranean parking garage with 150 parking spaces. Any competing Bid must offer at least $18,000,000 for the Property. Qualified buyers or lessees of the Property may be eligible for some tax or employment-related incentives through: Mr. Richard Reed Rhode Island Economic Development Corporation One West Exchange Street Providence, RI 02903 Tel: (401) 222-2601 extension 103 Fax: (401) 274-1381 Plan Trust On the effective date, the Plan Trust will be formed in a manner reasonably acceptable to the Successful Bidder. The Plan Trust will consist of: -- all Causes of Action that are not ERS Collateral; -- any other assets of the Debtor, which are ERS Collateral; -- any ERS Property Collateral Proceeds remaining after payment of Allowed Senior Secured Claims; -- the ERS Secured Claim and Miscellaneous Secured Claims against Boston Financial Data Services under the Tax ordinance; -- the ERS Plan Trust Funding Contribution; and -- cash portion of the CGV Realty Special Plan Contribution. William R. Baldiga, Esq., Kevin L. Nulton, Esq., and Meghan E. Walt, Esq., at Brown Rudnick Berlack Israels LLP represent the Employees' Retirement System of Rhode Island. A full-text copy of the First Modified Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=050831024241 Headquartered in Boston, Massachusetts, Gateway Eight Limited Partnership -- http://www.congressgroup.com/-- is a real estate development, construction, property & asset management and investment company. The Debtor filed for chapter 11 protection on Nov. 30, 2004 (Bankr. Mass. Case No. 04-19692). Macken Toussaint, Esq., at Goodwin Procter LLP, represents the Debtor. When the Company filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. GENTEK INC: Abrams Capital Commences Tender Offer for Warrants -------------------------------------------------------------- Abrams Capital, LLC, together with ACP Acquisition, LLC and Great Hollow Partners, LLC, commenced a tender offer to purchase all of the outstanding Tranche B Warrants and Tranche C Warrants of GenTek Inc. for a purchase price of $4.25 per Tranche B Warrant and $4.75 per Tranche C Warrant, each net to the seller in cash. The Tranche B Warrants and the Tranche C Warrants are principally quoted on the OTC Bulletin Board and trade under the symbols "GETIZ" and "GETIL". The tender price for the Tranche B Warrants represents a premium of 30.8% over the closing sales price of the Tranche B Warrants as reported by the OTC Bulletin Board on October 13, 2005, which was the last day that the Tranche B Warrants traded, and the tender price for the Tranche C Warrants represents a premium of 35.7% over the closing sales price of the Tranche C Warrants as reported by the OTC Bulletin Board on October 13, 2005, which was the last day that the Tranche C Warrants traded. Abrams is acquiring the Warrants for investment purposes and is not seeking to acquire control of GenTek. Given the relative illiquidity of the market for the Warrants, the tender offer represents the most effective way for Abrams to acquire the Warrants and increase its equity position in GenTek. The tender offer will expire at 12:00 midnight, New York City time, on Monday, November 14, 2005, unless the offer is extended. Tenders of Warrants must be made on or prior to the expiration date, and Warrants tendered may be withdrawn at any time on or prior to the expiration date. On the terms and subject to the conditions of the tender offer, warrantholders of GenTek will have the opportunity to tender all or a portion of their Warrants for a purchase price of $4.25 per Tranche B Warrant and $4.75 per Tranche C Warrant, each net to the sellers in cash. Abrams will pay the Purchase Price, without interest, promptly after expiration of the tender offer. Abrams has sufficient cash on hand to purchase any and all Warrants validly tendered and not withdrawn in the Offer. The tender offer is not conditioned on the tender of any minimum number of Warrants or any required financing, but is subject to certain customary conditions described in the Offer to Purchase. Mellon Investor Services, LLC is the depositary for the tender offer, and D.F. King & Co., Inc. is the information agent. Any questions concerning the tender offer may be directed to D.F. King & Co., Inc. at (800) 487-4870. Copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be obtained from D.F. King & Co., Inc., and copies will be furnished promptly at Abrams' expense. Neither GenTek Inc. nor its board of directors has made any recommendation to warrantholders as to whether to tender or refrain from tendering their Warrants. Within 10 business days, GenTek is required by law to publish, send or give to warrantholders a statement as to whether it recommends acceptance or rejection of the tender offer, that it has no opinion and is remaining neutral toward the tender offer or that it is unable to take a position with respect to the tender offer. Headquartered in Hampton, New Hampshire, GenTek Inc. (NASDAQ:GETI) -- http://www.gentek-global.com/-- is a technology-driven manufacturer of communications products, automotive and industrial components, and performance chemicals. The Company filed for Chapter 11 protection on October 11, 2002 (Bankr. D. Del. Case No. 02-12986) and emerged on Nov. 10, 2003 under the terms of a confirmed plan that eliminated $670 million of debt and delivered 94% of the equity in Reorganized GenTek to the Company's secured lenders. Old subordinated bondholders took a 4% slice of the equity pie and prepetition unsecured creditors shared a 2% stake in the Reorganized Company. Old Equity Interests were wiped out. Mark S. Chehi, Esq., and D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring. When the Debtors filed for protection from its creditors, they listed $1,219,554,000 in assets and $1,456,000,000 in liabilities. * * * As reported in the Troubled Company Reporter on Feb. 24, 2005, Moody's Investors Service has assigned the following new ratings to GenTek Inc., a diversified industrial company. The rating outlook is stable. The ratings and outlook are subject to review of the final documentation of the financing transaction. The new ratings assigned are: * B2 for the $60 million senior secured revolving credit facility, due 2010, * B2 for the $235 million senior secured term loan B, due 2011, * Caa1 for the $135 million second-lien term loan, due 2012, * B2 senior implied rating, and * Caa2 issuer rating. GENTEK INC: Plans to Prepay $3MM of 1st Lien Term Loan This Month ----------------------------------------------------------------- GenTek Inc. (NASDAQ: GETI) plans to voluntarily prepay an additional $3 million of its first lien term loan during the month of October. This October prepayment is in addition to the $6 million of voluntary prepayments made by the Company during the third quarter and is a result of continued operating and working capital improvements. "The action we are announcing today demonstrates the company's continued commitment to improving operating cash flow, further reducing leverage and driving shareholder value," said William E. Redmond, Jr., President and CEO of GenTek Inc., adding that "This payment will bring GenTek's total voluntary prepayments since August to $9 million, reflecting a sustained and coordinated effort by the company to reduce its outstanding debt and better position itself for future growth." Headquartered in Hampton, New Hampshire, GenTek Inc. (NASDAQ:GETI) -- http://www.gentek-global.com/-- is a technology-driven manufacturer of communications products, automotive and industrial components, and performance chemicals. The Company filed for Chapter 11 protection on October 11, 2002 (Bankr. D. Del. Case No. 02-12986) and emerged on Nov. 10, 2003 under the terms of a confirmed plan that eliminated $670 million of debt and delivered 94% of the equity in Reorganized GenTek to the Company's secured lenders. Old subordinated bondholders took a 4% slice of the equity pie and prepetition unsecured creditors shared a 2% stake in the Reorganized Company. Old Equity Interests were wiped out. Mark S. Chehi, Esq., and D.J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represented the Debtors in their restructuring. When the Debtors filed for protection from its creditors, they listed $1,219,554,000 in assets and $1,456,000,000 in liabilities. * * * As reported in the Troubled Company Reporter on Feb. 24, 2005, Moody's Investors Service has assigned the following new ratings to GenTek Inc., a diversified industrial company. The rating outlook is stable. The ratings and outlook are subject to review of the final documentation of the financing transaction. The new ratings assigned are: * B2 for the $60 million senior secured revolving credit facility, due 2010, * B2 for the $235 million senior secured term loan B, due 2011, * Caa1 for the $135 million second-lien term loan, due 2012, * B2 senior implied rating, and * Caa2 issuer rating. GRAPHIC PACKAGING: Lenders Agree to Relax Financial Covenants ------------------------------------------------------------- Graphic Packaging International, Inc., a wholly owned subsidiary of Graphic Packaging Corporation, has obtained an amendment to its $1.6 billion Credit Agreement to relax the terms of its Consolidated Interest Expense Ratio and its Consolidated Leverage Ratio covenants. "We appreciate the continued support of our lenders. The additional covenant flexibility provided by the amendment will enable management to focus on the Company's operations as opposed to its financial covenants," said Stephen M. Humphrey, the Company's President and Chief Executive Officer. Specifically, the Second Amendment relaxes the Consolidated Leverage Ratio and the Consolidated Interest Expense Ratio: Consolidated Consolidated For Fiscal Leverage Ratio Interest Expense Ratio Quarters Ending Existing As Amended Existing As Amended --------------- -------- ---------- -------- ---------- 2005 Sept. 30, 2005 6.15 to 6.75 to 2.25 to 1.75 to 1.00 1.00 1.00 1.00 Dec. 31, 2005 5.75 to 6.75 to 2.35 to 1.75 to 1.00 1.00 1.00 1.00 2006 March 31, 2006 5.75 to 6.75 to 2.35 to 1.75 to 1.00 1.00 1.00 1.00 June 30, 2006 5.75 to 6.75 to 2.35 to 1.75 to 1.00 1.00 1.00 1.00 Sept. 30, 2006 5.75 to 6.75 to 2.35 to 1.75 to 1.00 1.00 1.00 1.00 Dec. 31, 2006 5.25 to 6.75 to 2.50 to 1.75 to 1.00 1.00 1.00 1.00 2007 March 31, 2007 5.25 to 6.50 to 2.50 to 1.75 to 1.00 1.00 1.00 1.00 June 30, 2007 5.25 to 6.50 to 2.50 to 1.75 to 1.00 1.00 1.00 1.00 Sept. 30, 2007 5.25 to 6.50 to 2.50 to 1.75 to 1.00 1.00 1.00 1.00 Dec. 31, 2007 4.75 to 6.00 to 2.75 to 1.85 to 1.00 1.00 1.00 1.00 2008 March 31, 2008 4.75 to 6.00 to 2.75 to 1.85 to 1.00 1.00 1.00 1.00 June 30, 2008 4.75 to 6.00 to 2.75 to 1.85 to 1.00 1.00 1.00 1.00 Sept. 30, 2008 4.75 to 6.00 to 2.75 to 1.85 to 1.00 1.00 1.00 1.00 Dec. 31, 2008 4.50 to 5.50 to 2.90 to 2.00 to 1.00 1.00 1.00 1.00 2009 March 31, 2009 4.50 to 4.50 to 2.90 to 2.90 to and thereafter 1.00 1.00 1.00 1.00 In addition to the changes to the financial covenants, the Second Amendment modifies the pricing for the Term Loan by increasing the applicable margin by 0.25% if, and for so long as, Graphic Packaging's indebtedness under the Credit Agreement is rated less than B+ by Standard & Poor's Ratings Group (a division of The McGraw Hill Companies Inc.) or less than B1 by Moody's Investors Service, Inc. Graphic Packaging expects to close the amendment transaction within several days. Senior Secured Credit Agreement The Company entered into and borrowed under the Senior Secured Credit Agreement, dated as of August 8, 2003, among Graphic Packaging International and the several lender parties which provides for aggregate maximum borrowings of $1.6 billion under: (a) a term loan facility providing for term loans in an aggregate principal amount of $1.275 billion in two tranches, consisting of Tranche A term loans and Tranche B term loans; and (b) a revolving credit facility providing for up to $325 million in revolving loans (including standby and commercial letters of credit) outstanding at anytime, to Graphic Packaging International. The Senior Secured Credit Agreement is collateralized by substantially all of the Company's domestic assets. First Amendment to the Agreement On Oct. 1, 2004, the Company entered into the First Amendment to the Senior Secured Credit Agreement. The First Amendment consolidated the Company's $142.5 million Term Loan A and $1,113.8 million Term Loan B under the Senior Secured Credit Agreement into one $1,256.3 million Term Loan C, but did not change any of the terms of the Company's $325 million revolving credit facility under the Senior Secured Credit Agreement. The First Amendment reduces the interest rate on Graphic Packaging International's term loans by 25 basis points and provides a step- down provision that automatically reduces the interest rate another 25 basis points if the Company achieves a leverage ratio below 4.75 to 1.00. Covenant Restrictions The Credit Agreement imposes restrictions on the Company's ability to make capital expenditures and both the Senior Secured Credit Agreement and the indentures governing the Senior Notes and Senior Subordinated Notes limit the Company's ability to incur additional indebtedness. The covenants contained in the Credit Agreement, among other things, restrict the ability of the Company to dispose of assets, incur additional indebtedness, incur guarantee obligations, prepay other indebtedness, make dividend and other restricted payments, create liens, make equity or debt investments, make acquisitions, modify terms of indentures under which the Notes are issued, engage in mergers or consolidations, change the business conducted by the Company and its subsidiaries, make capital expenditures and engage in certain transactions with affiliates. At December 31, 2004, the Company was in compliance with the financial covenants in the Senior Secured Credit Agreement, as amended. Material Weakness In the Company's Form 10-Q for the quarter ended June 30, 2005 submitted to the Securities and Exchange Commission on Aug. 9, 2005, the Company reported that its management carried out an evaluation, with the participation of its Chief Executive Officer and Cheif Financial Officer, of the effectiveness of the Company's disclosure controls and procedures pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended. Based on the evaluation, the Company's management concluded that the Company's disclosure controls and procedures were not effective as of June 30, 2005, solely because of a material weakness in internal control over financial reporting with respect to accounting for deferred taxes. Headquartered in Marietta, Georgia, Graphic Packaging International, Inc. -- http://www.graphicpkg.com/-- is a leading provider of paperboard packaging solutions to multinational food, beverage and other consumer products companies. The Company's customers include some of the most widely recognized companies in the world. H&E EQUIPMENT: $200M IPO Prompts S&P to Review Credit Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on H & E Equipment Services LLC on CreditWatch with positive implications, including the 'B+' corporate credit rating on the company. H & E has filed an IPO for approximately $200 million in gross proceeds including over-allotments. "If completed, the offering will improve the company's credit profile and possibly lead to a slight upgrade," said Standard & Poor's credit analyst John R. Sico. H & E plans to use the net proceeds to make an acquisition, to buy equipment that is currently leased, and to repay borrowings under its revolving credit facility. The company is currently owned by Bruckmann, Rosser, Sherrill & Co. LP and by H & E management. They are not selling any stock in the company, and upon completion of the IPO, they will own about two-thirds of it. H & E has seen an improvement in operating performance in line with the recovery in the equipment rental industry, and 2006 prospects appear favorable. The company has recently filed its 2004 Form 10-K and its 10-Qs for the first and second quarters of 2005 following delays so that its new auditors could review financial statements for the two prior fiscal years. H & E, based in Baton Rouge, La., is a regional operator in the competitive equipment rental industry. The company offers construction and industrial equipment for sale or rent through a network of 41 locations in the intermountain and Gulf Coast regions of the U.S. Standard & Poor's will meet with management to review its business strategy and financial policies before taking any rating action. HEATING OIL: Gets Final Court Nod on $115 Million DIP Financing --------------------------------------------------------------- Heating Oil Partners, L.P., Heating Oil Partners Income Fund (TSX:HIF.UN) operating subsidiary, received final approval from the U.S. Bankruptcy Court for the District of Connecticut to utilize a $115 million debtor-in-possession revolving credit facility. The Company will be seeking an order in Canada recognizing the U.S. approval. The Company had previously received preliminary approval to utilize the DIP Facility as part of the initial Chapter 11 and CCAA filings. The Fund indirectly owns approximately 88.1% of HOP, one of the largest residential heating oil distributors in the United States. HOP delivered over 236 million gallons of heating oil and other refined liquid petroleum products for the twelve months ended June 30, 2005, to approximately 137,000 residential, fleet and commercial customers, primarily in Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New Hampshire, New York, Pennsylvania, Rhode Island, Virginia and the District of Columbia. HOP's operations are conducted through 16 regional distribution and service centers. From these centers, HOP provides its customers with a full range of value-added services, including the delivery of heating oil and the installation, maintenance and service of furnaces, boilers, heating equipment and air conditioners on a 24 hours-a-day, 365 days-a-year basis. Headquartered in Darien, Connecticut, Heating Oil Partners, L.P. -- http://www.hopheat.com/-- is one of the largest residential heating oil distributors in the United States, serving approximately 150,000 customers in the Northeastern United States. The Company's primary business is the distribution of heating oil and other refined liquid petroleum products to residential and commercial customers. The Company and its subsidiaries filed for chapter 11 protection on Sept. 26, 2005 (Bankr. D. Conn. Case No. 05-51271) and filed for recognition of the chapter 11 proceedings under the Companies' Creditors Arrangement Act (Canada). Craig I. Lifland, Esq., and James Berman, Esq., at Zeisler and Zeisler, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $127,278,000 in total assets and $155,033,000 in total debts. HMSC CORP: S&P Rates $210 Million Senior Credit Facility at B+ -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' counter party credit rating to HMSC Corp. and its 'B+' senior secured debt rating to HMSC's $210 million senior credit facility, which consists of a $190 million first lien term loan and a $20 million revolving credit line. At the same time, Standard & Poor's assigned its 'B-' senior secured subordinated debt rating to the company's $70 million second lien term loan. The outlook is stable. HMSC is the intermediate holding company of Swett & Crawford Group Inc., the nation's largest wholesale insurance broker. The ratings reflect the company's highly leveraged capital structure, limited financial flexibility, and low-quality balance sheet due to the large amount of intangibles. "Partially offsetting these negative factors are S&C's strong competitive position as the number one wholesale insurance broker in the country, and a seasoned management team that has historically delivered a very strong operating performance," observed Standard & Poor's credit analyst Taoufik Gharib. Standard & Poor's expects S&C, as a stand-alone entity, to organically grow its revenues by about 10% in 2006. It will continue to generate strong earnings in 2006 in both of its core divisions, brokerage and underwriting. As an independent entity, S&C will benefit from lower expenses, as Aon Corp.'s corporate cost allocations will be eliminated. The company's business margin is expected to continue to be healthy and to outperform its immediate competitors'. The pretax operating income and ROR will significantly decrease in 2006 because of interest expense on its debt -- first and second lien term loans, which will affect the company's results. However, this negative effect will be alleviated in the following years as the company gradually pays down its first lien term loan. The high free cash flow characteristics of the business are enhanced by the tax acquisition structure with $10 million in cash tax savings per year in the next 15 years. The debt leverage is expected to decrease to about 60% by year-end 2006, 52% in 2007, and 42% in 2008. EBITDA interest coverage is expected to be 3x in 2006 and improve further. Given its high leverage structure, S&C is vulnerable to unforeseen events that may increase its risk of financial distress and harm the rating. Alternatively, if the company performs within the aforementioned expectations, the outlook might be revised to positive. INDIANAPOLIS POWER: Fitch Raises Preferred Stock Rating to BBB- --------------------------------------------------------------- Fitch Ratings has upgraded and removed from Rating Watch Positive the ratings of Indianapolis Power & Light Company and IPALCO Enterprises, Inc., where they were initially placed on Jan. 18, 2005, pending completion of parent company AES Corporation's ratings review. The Rating Outlook is Stable. IPL and IPALCO's ratings reflect the low business risk associated with IPL's utility operations, the absence of fuel price volatility, and the constructive regulatory environment in Indiana. IPALCO's ratings also consider the structural subordination of IPALCO's debt to that of IPL, the reliance on distributions from IPL to service debt and operating expenses, and linkage to much weaker parent company AES. Various regulatory and contractual ring-fencing mechanisms limit IPL's ability to upstream dividend payments and provide some insulation from the credit risk of IPALCO and AES. However, Fitch recognizes that IPL and IPALCO have some exposure and credit linkage to AES. While recognizing the linkage with AES, the upgrades in the ratings of IPL and IPALCO acknowledge the significant progress made in improving AES' credit profile. Following the completion of its review, Fitch upgraded the ratings of AES to reflect the retirement of a substantial amount of parent company recourse debt and improved liquidity. In addition, AES has refinanced several near-term debt maturities and extended the company's debt maturity profile. The company has successfully accessed both the debt and equity markets on a number of occasions in the past 18 months. Furthermore, AES has in place a $450 million revolving credit facility, which significantly improves the company's liquidity position. Finally, AES management has affirmed the goal of continued debt reduction, committing to $600 million in parent company debt retirements in 2005. In this regard, AES called for early redemption of approximately $112 million of notes in May 2005. These notes were redeemed in full on June 1, 2005. IPALCO is a holding company whose principal subsidiary is IPL. IPL is a regulated electric utility, principally engaged in providing generation, transmission, distribution, and sale of electric energy to more than 460,000 customers in the Indianapolis metropolitan area. About 99% of the company's power generated -- 3,252 MW net summer capability -- is coal-fired. The company plans for a reserve margin of approximately 12%. IPALCO is a wholly owned subsidiary of AES. Fitch has upgraded these ratings: Indianapolis Power & Light Company -- First mortgage bonds to 'BBB+' from 'BBB'; -- Secured PCRBs to 'BBB+' from 'BBB'; -- Unsecured PCRBs to 'BBB' from 'BBB-'; -- Preferred stock to 'BBB-' from 'BB+'; -- Rating Outlook Stable. IPALCO Enterprises, Inc. -- Senior notes to 'BBB-' from 'BB'; -- Rating Outlook Stable. INTERNATIONAL PAPER: Appoints Marianne Parrs Executive VP & CFO --------------------------------------------------------------- International Paper (NYSE: IP) Chairman and Chief Executive Officer John Faraci reported the appointment of Marianne Parrs Executive Vice President and Chief Financial Officer, effective immediately. "Having previously served as our CFO and having served most recently as interim CFO, Marianne is the right person to lead IP's finance functions going forward. She has been at the center of our strategic planning and decision making, which makes her the ideal person to take the CFO role as we execute our transformation strategy," Mr. Faraci said. Mr. Parrs, 61, joined International Paper in 1974 as a pension trust investment manager. She became senior vice president and chief financial officer in September 1995. She has also been director of Investor and Shareowner Relations, director of Corporate Communications, controller of Printing Papers and staff vice president of Tax. She was named executive vice president in 1999. More recently, she has been responsible for information technology and the company's supply chain improvement project. International Paper Inc. -- http://www.internationalpaper.com/-- is the world's largest paper and forest products company. Businesses include paper, packaging, and forest products. As one of the largest private forest landowners in the world, the company manages its forests under the principles of the Sustainable Forestry Initiative (R) (SFI) program, a system that ensures the continual planting, growing and harvesting of trees while protecting wildlife, plants, soil, air and water quality. * * * As reported in the Troubled Company Reporter on July 22, 2005, Moody's Investors Service placed International Paper Company's ratings on review for possible downgrade. International Paper Company: * Senior Unsecured Baa2 * Subordinate Shelf (P)Baa3 * Preferred Shelf (P)Ba1 * Commercial Paper P-2 International Paper Capital Trust II: * Bkd Preferred Stock Baa3 * International Paper Capital Trust III: * Bkd Preferred Shelf Baa3 International Paper Capital Trust IV: * Bkd Preferred Shelf (P) Ba1 * International Paper Capital Trust VI: * Bkd Preferred Shelf (P) Ba1 Champion International Corporation: * Senior Unsecured Baa2 * Federal Paper Board Co., Inc. * Senior Unsecured Baa2 Union Camp Corporation: * Senior Unsecured Baa2 INTERPUBLIC GROUP: Fitch Junks Preferred Stock & Rates Bonds at B+ ------------------------------------------------------------------ Fitch Ratings assigns a 'CCC+' rating to The Interpublic Group of Companies' proposed cumulative convertible perpetual preferred stock and assigns a 'CCC+' to the existing 5.375% mandatory convertible preferred stock with an 'R6' recovery rating assigned to both. Proceeds of this issuance will be used for general corporate purposes. The Rating Outlook is Stable. Fitch's current ratings for IPG are as follows: -- Issuer default rating 'B+'; -- Senior unsecured credit facility 'B+', recovery rating 'R4'; -- Senior unsecured notes 'B+', recovery rating 'R4'. The ratings continue to reflect weak financial performance, which has been driven by numerous accounting and operational challenges; continued integration issues from the company's restructuring initiatives, including major management changes, the ongoing material weaknesses, and internal control issues, which have yet to be remedied; and ongoing risk of client losses. These risks are balanced somewhat by IPG's position in the industry as a leading global advertising holding company and its diverse client base with long-term relationships with key accounts. Also, the management team has made progress on its key initiatives of strengthening the balance sheet and improving financial flexibility, further demonstrated by this transaction. The company expects the new talent at its agencies to drive revenue growth in excess of the high compensation costs it incurred to attract the individuals. The Stable Rating Outlook reflects Fitch's belief that IPG has some additional room for operational shortfall within its rating category. Fitch believes that credit metrics will be strained through the remainder of 2005 but should improve thereafter. The Stable Outlook is also supported by adequate financial flexibility, which is enhanced by the planned transaction. IPG has demonstrated continued access to the capital markets during this period of financial stress. IPG amended and renewed its bank credit facility, retaining all 10 banks in its previous syndicate. The company also increased the capacity of the revolver to $500 million from $450 million on Oct. 17, 2005. IPG also issued $250 million senior unsecured notes in July 2005 to redeem its $250 million notes due October 2005. This issuance of $500 million cumulative perpetual preferred stock is expected to be used to fund its cash restatement-related obligations and to support general corporate purposes. Also, IPG spends between $150 million-$200 million on capital expenditures, but much of that is believed to be discretionary and available as necessary. IPG has minimal debt maturities in 2006 and 2007. By filing its financial statements and renewing its credit facility, Fitch believes that negative event risk has diminished but recognizes challenges still exist as it relates to a pending SEC investigation, remediation of its internal control weaknesses, and potential shareholder lawsuits. In addition, heightened operational risk, financial risk, and execution risk will likely persist for over 12 months. Fitch revised its Outlook on IPG to Stable from Negative on Oct. 13, 2005. See Fitch's press release, dated Oct. 13, 2005, on the Fitch web site at http://www.fitchratings.com/for additional details. INTERSTATE BAKERIES: Union Locals Ratify Extended Labor Contracts ----------------------------------------------------------------- Interstate Bakeries Corporation (OTC: IBCIQ) reached agreement with the International Brotherhood of Teamsters local bargaining units within the Northeast Profit Center to modify and extend through July 31, 2010, the existing collective bargaining agreements that govern their employment with IBC. Of the 14 proposed extension agreements for the region that includes New York, New Jersey, Massachusetts, Connecticut, Maine, Maryland, Delaware and Pennsylvania, 12 have been ratified by the union locals and the remaining two have been submitted for ratification. The 14 extension agreements cover approximately 2,100 employees. In anticipation that it will reach similar agreements with union locals in other parts of the country, the Company said it will move forward with the PC restructuring process that it deferred in August. IBC said it would recommence the consolidation of routes, depots and thrift stores in its Northern and Southern California PCs, and would close its bakery in Lakewood, Washington, and consolidate routes, depots and thrift stores in its Northwest PC. Subject to bankruptcy court approval, IBC expects to complete the consolidation in the Northwest PC by Dec. 17, 2005, at which time IBC's bread products will no longer be sold in the states of Washington and Oregon. Branded cake products, however, will continue to be available in those markets. The consolidation is expected to affect approximately 200 bakery production workers. As previously reported in the Troubled Company Reporter, IBC said that members of Bakery Drivers Union Local 550 and Bakery Drivers and Salesmen Local 701 (collectively approximately 500 employees) employed in the New York City metropolitan area had ratified long- term extensions of their labor contracts, and that efforts to consolidate operations elsewhere in the nation likely would be deferred until similar agreements by union locals had been negotiated. At the time, the Company also indicated that the agreements may result in fewer terminations of non-production employees than previously announced. "Negotiation and ratification of these extensions in the Northeast is a critical milestone in our restructuring efforts," said Tony Alvarez II, chief executive of IBC and co-founder and co-chief executive of Alvarez & Marsal, the global corporate advisory and turnaround management services firm. "In light of the lessons learned in our negotiations in the Northeast, we now believe that it is prudent to resume the consolidation process and reduce the uncertainty in the organization caused by the previously announced deferral." "We are hopeful that, using the union agreements negotiated with Richard Volpe, IBT International VP and Director of the Bakery Conference of the U.S. and Canada, in the Northeast as a framework, we will be able to negotiate similar agreements with IBT locals nationwide and thus move forward with the consolidation of our remaining PCs." In addition to the Northeast PC consolidation, the Company had earlier disclosed the consolidation of its Florida, Mid-Atlantic, Northern California and Southern California PCs. The consolidations in Florida and the Mid-Atlantic PCs had been completed prior to the Aug. 22 announcement to defer consolidations pending the union negotiations. Also in August, the Company disclosed the closing of its Davenport, Iowa, bakery. Given the large number of collective bargaining agreements to which the Company is a party, and notwithstanding the negotiations noted above, there can be no assurances that satisfactory agreements will be reached with other union collective bargaining units. Further, there can be no assurance that previously announced consolidation plans will remain unaltered or that further consolidation plans will be consistent with the consolidations that have been announced previously or already implemented. The preliminary estimate of charges to be incurred in connection with the bakery closing in the Northwest PC is approximately $15 million, including approximately $1.5 million of severance charges, approximately $11.5 million of asset impairment charges, and approximately $2 million in other charges. IBC further estimates that approximately $3.5 million of such costs will result in future cash expenditures and approximately $500,000 in capital expenditures and accrued expenses to effect the consolidation. The costs associated with the consolidation of routes, depots and thrift stores cannot be estimated at this time. Pension Plans As previously reported, IBC currently contributes to more than 40 multiemployer pension plans as required under various collective bargaining agreements, many of which are underfunded. The portion of a plan's under funding allocable to an employer deemed to be totally or partially withdrawing from the plan as the result of downsizing, job transfers or otherwise is referred to as "withdrawal liability." Certain of the plans have filed proofs of claim in IBC's bankruptcy case alleging that partial withdrawals have already occurred. IBC disputes these claims; however, there is a risk that the consolidation disclosed this week could significantly increase the amount of the liability to IBC should a partial withdrawal from the multiemployer pension plans covering the Northwest PC employees be found to have occurred. IBC is conducting the Northwest PC consolidation in a manner that it believes will not constitute a total or partial withdrawal from the relevant multiemployer pension plans. Nevertheless, due to the complex nature of this determination, no assurance can be given that withdrawal claims based upon IBC's prior action or resulting from this consolidation or future consolidations will not result in significant liabilities for IBC. Should a partial withdrawal be found to have occurred, the amount of any partial withdrawal liability arising from the underfunded multiemployer pension plans to which IBC contributes would likely be material and could adversely affect our financial condition and, as a general unsecured claim, any potential recovery to our constituencies. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts. INTRAWEST CORP: Discloses Realignments of Executive Positions ------------------------------------------------------------- Intrawest Corporation reported that that Gary Raymond, the head of Intrawest Placemaking, would be resigning from the company later this year to pursue other business interests. Drew Stotesbury, chief financial officer of Intrawest Placemaking, will assume the role of interim head of the division reporting directly to Joe Houssian, chairman, president and chief executive officer of Intrawest. "Gary embodies what Intrawest is today and he represents one of the cornerstones on which this company has been built," said Joe Houssian. "He has played a significant role in building Intrawest into one of the world's leading resort development companies, and has created a strong foundation of people and assets from which we will continue to prosper. On behalf of all of us at Intrawest, I would like to wish Gary all the best in his future endeavors." Intrawest also reported that Michael Hannan, former executive vice president of strategic and corporate development, has been appointed president of Abercrombie & Kent with responsibility for world-wide operations. Mr. Hannan will report to Geoffrey Kent, chairman and chief executive officer, and will remain at Intrawest's corporate offices in Vancouver, BC. A&K also reported that Joss Kent has rejoined the company as chief operating officer after a three year absence. In addition, Brad Miller, former vice president sales and marketing of Royal Caribbean Cruises is joining A&K as executive vice president and chief development officer with a focus on expanding the river and expedition cruise business. Intrawest Corporation (IDR:NYSE; ITW:TSX) -- http://www.intrawest.com/-- is one of the world's leading destination resort and adventure-travel companies. Intrawest has interests in 10 mountain resorts in North America's most popular mountain destinations, including Whistler Blackcomb, a host venue for the 2010 Winter Olympic and Paralympic Games. The company owns Canadian Mountain Holidays, the largest heli-skiing operation in the world, and a 67% interest in Abercrombie & Kent, the world leader in luxury adventure travel. The Intrawest network also includes Sandestin Golf and Beach Resort in Florida and Club Intrawest -- a private resort club with nine locations throughout North America. Intrawest is developing five additional resort village developments at locations in North America and Europe. Intrawest is headquartered in Vancouver, British Columbia. * * * As reported in the Troubled Company Reporter on May 12, 2005, Standard & Poor's Ratings Services revised its outlook to stable from positive on Vancouver, British Columbia-based ski resort operator Intrawest Corp. At the same time Standard & Poor's affirmed its 'BB-' corporate credit and 'B+' senior unsecured debt ratings on the company. As reported in the Troubled Company Reporter on Sept. 24, 2004, Moody's Investors Service assigned a B1 rating to Intrawest Corporation's U.S. dollar-denominated 7.5% senior unsecured note offering, due 2013 and Canadian dollar-denominated 7.5% senior unsecured note offering, due 2009, for an aggregate amount of approximately US$325 million. In addition, these rating actions were taken by Moody's: * Ratings assigned: -- U.S. dollar-denominated 7.5% senior notes, due 2013 rated B1 -- Canadian dollar-denominated 7.5% senior notes, due 2009 rated B1 * Ratings affirmed: -- Senior implied rating at Ba3 -- Senior unsecured issuer rating at B1 -- US$350 million 7.5% senior notes due 2013 rated B1 -- US$125 million 10.5% senior notes due 2010 rated B1 -- US$135 million 10.5% senior notes due 2010 rated B1 -- US$125 million 10.5% senior notes due 2010 rated B1 The ratings outlook is stable. IPALCO ENTERPRISES: Fitch Lifts Sr. Notes Ratings to BBB- from BB ----------------------------------------------------------------- Fitch Ratings has upgraded and removed from Rating Watch Positive the ratings of Indianapolis Power & Light Company and IPALCO Enterprises, Inc., where they were initially placed on Jan. 18, 2005, pending completion of parent company AES Corporation's ratings review. The Rating Outlook is Stable. IPL and IPALCO's ratings reflect the low business risk associated with IPL's utility operations, the absence of fuel price volatility, and the constructive regulatory environment in Indiana. IPALCO's ratings also consider the structural subordination of IPALCO's debt to that of IPL, the reliance on distributions from IPL to service debt and operating expenses, and linkage to much weaker parent company AES. Various regulatory and contractual ring-fencing mechanisms limit IPL's ability to upstream dividend payments and provide some insulation from the credit risk of IPALCO and AES. However, Fitch recognizes that IPL and IPALCO have some exposure and credit linkage to AES. While recognizing the linkage with AES, the upgrades in the ratings of IPL and IPALCO acknowledge the significant progress made in improving AES' credit profile. Following the completion of its review, Fitch upgraded the ratings of AES to reflect the retirement of a substantial amount of parent company recourse debt and improved liquidity. In addition, AES has refinanced several near-term debt maturities and extended the company's debt maturity profile. The company has successfully accessed both the debt and equity markets on a number of occasions in the past 18 months. Furthermore, AES has in place a $450 million revolving credit facility, which significantly improves the company's liquidity position. Finally, AES management has affirmed the goal of continued debt reduction, committing to $600 million in parent company debt retirements in 2005. In this regard, AES called for early redemption of approximately $112 million of notes in May 2005. These notes were redeemed in full on June 1, 2005. IPALCO is a holding company whose principal subsidiary is IPL. IPL is a regulated electric utility, principally engaged in providing generation, transmission, distribution, and sale of electric energy to more than 460,000 customers in the Indianapolis metropolitan area. About 99% of the company's power generated -- 3,252 MW net summer capability -- is coal-fired. The company plans for a reserve margin of approximately 12%. IPALCO is a wholly owned subsidiary of AES. Fitch has upgraded these ratings: Indianapolis Power & Light Company -- First mortgage bonds to 'BBB+' from 'BBB'; -- Secured PCRBs to 'BBB+' from 'BBB'; -- Unsecured PCRBs to 'BBB' from 'BBB-'; -- Preferred stock to 'BBB-' from 'BB+'; -- Rating Outlook Stable. IPALCO Enterprises, Inc. -- Senior notes to 'BBB-' from 'BB'; -- Rating Outlook Stable. J. CREW GROUP: All Holders of Senior Sub. Notes Tender Notes ------------------------------------------------------------ J. Crew Operating Corp. reported that pursuant to its previously announced tender offer and consent solicitation, holders of 100% of the outstanding principal amount of its 9-3/4% Senior Subordinated Notes due 2014 (CUSIP No. 46612GAC1) have tendered their Notes and delivered consents to proposed amendments to the Indenture pursuant to which the Notes were issued. The Company commenced the tender offer and consent solicitation on October 3, 2005. If the tender offer and consent solicitation are consummated, holders of Notes who tendered their Notes at or prior to the Consent Payment Deadline (which was October 14, 2005 at 5:00 pm New York City Time) will receive the Total Consideration equal to $1,015.07 per $1,000 principal amount of the Notes validly tendered, or 101.507% of their par value, plus accrued and unpaid interest up to, but not including, the settlement date. The right to withdraw tendered Notes and revoke consents will expire upon the execution of the supplemental indenture containing the proposed amendments to the Indenture, which is expected to occur on or about October 17, 2005. The proposed amendments will become effective upon the Company's acceptance for payment of the Notes tendered in the tender offer. The tender offer and consent solicitation are scheduled to expire at 9:00 am, New York City time, on November 1, 2005, unless extended. The consummation of the tender offer and consent solicitation are conditioned upon the simultaneous closings of the initial public offering of the Company's parent, J. Crew Group, Inc., and a new senior secured term loan to be entered into by the Company, as more fully described in the Company's offer to purchase dated October 3, 2005. Questions regarding the tender offer and consent solicitation should be directed to Goldman, Sachs & Co., the sole Dealer- Manager, at 212-357-7867 or 877-686-5059 (Attention: Credit Liability Management Group). Requests for assistance or additional sets of the offer materials may be directed to Global Bondholder Services Corporation, the Information Agent and Depositary for the tender offer and consent solicitation, at 866- 873-6300. J.Crew Group, Inc. is a nationally recognized multi-channel retailer of quality women's and men's apparel, shoes and accessories. The Company operates 156 retail stores, the J.Crew catalog business, j.crew.com and 44 factory outlet stores. * * * As reported in the Troubled Company Reporter on Aug. 23, 2005, Standard & Poor's Ratings Services placed its ratings on J. Crew Group Inc., including its 'B-' corporate credit rating, on CreditWatch with positive implications. The ratings on J. Crew Corp. and J. Crew Intermediate LLC were also placed on CreditWatch with positive implications. J. Crew had total debt (including preferred stock that is mandatorily redeemable in 2009) of about $577 million as of April 30, 2005. The CreditWatch listing follows J. Crew's S-1 filing with the SEC for an IPO of its common stock of up to $200 million. LAKESHORE LAUNDRY: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Lakeshore Laundry, Inc. 701 Sixth Street Cadillac, Michigan 49601 Bankruptcy Case No.: 05-20767 Chapter 11 Petition Date: October 16, 2005 Court: Western District of Michigan (Grand Rapids) Judge: James D. Gregg Debtor's Counsel: James L. Gilbert, Esq. Gilbert & Gilbert, PC 1010 South Main Cheboygan, Michigan 49721 Tel: (231) 627-5636 Total Assets: Not Provided Total Debts: $2,021,748 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ First National Bank $660,000 St. Ignace, MI 49781 First Bank $410,000 123 Main Street Mt. Pleasant, MI 48858 First Bank $400,000 123 Main Street Mt. Pleasant, MI 48858 Elizabeth Brown $100,000 Internal Revenue Service $100,000 State of Michigan $60,000 Bureau of Workers & Unemployment Michigan Department of Treasury $50,000 City of Cadillac $36,913 City Treasurer's Office Co-Energy $25,081 Accident Fund $25,000 DTE Energy $23,045 Utilities Department $18,275 EJ Thomas Co. $16,761 Constellation Newenergy $12,130 Harleysville Insurance $11,090 Exelon Energy $8,525 Dober Group $7,905 Bodman, Longley & Dahling $6,191 CFO Services $5,922 Kanneglesser2425 109th Street $5,025 LEVITZ HOME: Organizational Meeting Today to Appoint Committee -------------------------------------------------------------- The United States Trustee for Region 2, Deirdre A. Martini, will convene an organizational meeting of Levitz Homes Furnishings, Inc., and its debtor-affiliates' largest unsecured creditors today, Thursday, October 20, 2005, at 1:00 p.m. The meeting will be held at the Office of the United States Trustee, 2nd Floor, at 80 Broad Street in New York City. Paul K. Schwartzberg, Esq., trial attorney for the U.S. Trustee, explains that the sole purpose of the meeting will be to form a committee of unsecured creditors in the Debtors' cases. "This is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code," Mr. Schwartzberg emphasizes. Mr. Schwartzberg relates that a representative of the Debtors will attend and provide background information regarding the cases. Creditors who want to serve on the Committee are required to complete and return an acceptance form to the U.S. Trustee's office. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. (Levitz Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: Court Approves Hiring of Jones Day as Lead Counsel --------------------------------------------------------------- Levitz Home Furnishings, Inc., and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's permission, on an interim basis, to employ Jones Day as their principal restructuring and bankruptcy counsel. Coleen Colreavy, executive vice president and chief financial officer of Levitz Home Furnishings Inc., relates that Jones Day is particularly well qualified to serve as the Debtors' counsel in their Chapter 11 cases. Jones Day is one of the largest law firms in the world, with a national and international practice, and has substantial experience in virtually all aspects of the law that may arise in the Debtors' Chapter 11 cases, including bankruptcy, corporate, employee benefits, environmental, finance, intellectual property, labor and employment, litigation, real estate, securities, and tax expertise. Jones Day's restructuring practice group consists of more than 80 attorneys practicing in offices throughout the United States and overseas. The Debtors believe that the continued representation by Jones Day is critical to their restructuring efforts because the firm has become familiar with their corporate history, debt structure, and other business matters. As bankruptcy counsel, Jones Day will: (a) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their business and properties; (b) prepare all necessary and appropriate applications, motions, draft orders, other pleadings, notices, schedules, and other documents, and reviewing all financial and other reports; (c) advise the Debtors concerning, and preparing responses to, applications, motions, other pleadings, notices, and other papers, that may be filed by other parties in the chapter 11 cases; (d) advise the Debtors with respect to, and assisting in the negotiation and documentation of, financing agreements and related transactions; (e) review the nature and validity of any liens, asserted against the Debtors' property and advise the Debtors concerning the enforceability of the liens; (f) advise the Debtors regarding their ability to initiate actions to collect and recover property for the benefit of their estates; (g) advise the Debtors in connection with the formulation, negotiation, and promulgation of a plan or plans of reorganization, and related transactional documents; (h) advise and assist the Debtors in connection with any sales and potential property dispositions; (i) advise the Debtors concerning executory contract and unexpired lease assumptions, assignments, and rejections, and lease restructurings and recharacterizations; (j) assist the Debtors in reviewing, estimating, and resolving claims asserted against the Debtors' estates; (k) commence and conduct litigation necessary and appropriate to assert rights held by the Debtors, protect assets of the Debtors' chapter 11 estates, or otherwise further the goal of completing the Debtors' successful reorganization; (l) provide non-bankruptcy services for the Debtors to the extent requested by the Debtors; and (m) perform all other necessary and appropriate legal services in connection with the chapter 11 cases for or on behalf of the Debtors. The Debtors will pay Jones Day for its legal fees on an hourly basis in accordance with its ordinary and customary hourly rates. The firm's currently rates are between $450 and $825 for partners and between $230 and $430 for associates. The Jones Day lawyers expected to spend significant time on the Debtors' Chapter 11 cases are: Professional Position Hourly Rate ------------ -------- ---------- David G. Heiman Partner $825 Richard H. Engman Partner 505 Veerle Roovers Associate 380 Nicholas M. Miller Associate 350 Joshua P. Weisser Associate 230 Thomas A. Wilson Associate 200 Alicia Farington Legal Assistant 190 The Debtors will also reimburse Jones Day for actual and necessary out-of-pocket expenses. In the one-year period preceding the Petition Date, Jones Day received payments from the Debtors totaling $2,729,306. Notwithstanding the application of the prepetition payments, Jones Day estimates that it has incurred an additional $205,000 of fees and expenses that have not been paid before the Petition Date. Jones Day, however, has agreed to indefeasibly waive and release the Debtors from any obligation to pay the Outstanding Amount. Richard H. Engman, Esq., a partner at Jones Day, assures the Court that the partners, members, and associates of the firm of Jones Day: (a) do not have any connection with the Debtors, their creditors, the U.S. Trustee, or any other party-in interest, or their attorneys and accountants; (b) are "disinterested persons," as that term is defined in Section 101(14) of the Bankruptcy Code; and (c) do not hold or represent any interest adverse to the Debtors' estates. Mr. Engman discloses that Marc Kirschner, a former partner of Jones Day in New York, who left the firm in January 2001, serves as director of Levitz Home Furnishings since December 2001, and the managing director, chief operating officer, and general counsel of Resurgence Management Companies, which, together with its affiliates, is the largest and controlling shareholder of Levitz Home Furnishings. Mr. Engman also notes that Jones Day has in the past represented Resurgence in matters unrelated to the Debtors' Chapter 11 cases. However, Jones Day will not represent Resurgence in any matter while the Debtors' cases are pending. Jones Day has represented, and continues to represent, other parties-in-interest in matters unrelated to the Debtors. Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. (Levitz Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEVITZ HOME: Wants to Hire Blackstone Group as Financial Advisors ----------------------------------------------------------------- Levitz Home Furnishings, Inc., and its debtor-affiliates have determined that the size of their business operations, and the complexity of the financial difficulties attendant upon operations of the scope, require them to employ experienced professionals to render financial advisory services in connection with the Chapter 11 cases. The Debtors seek the U.S. Bankruptcy Court for the Southern District of New York's authority to employ The Blackstone Group L.P. to provide financial advisory services in connection with their Chapter 11 cases. The Debtors have selected Blackstone as their investment banker because of, among others, the firm's diverse experience, knowledge, and reputation in the restructuring field. Blackstone's Restructuring and Reorganization Advisory Services group is a leading advisor to companies as well as creditors in large, complex, and high profile restructurings and bankruptcies. Established in 1991, the Group has advised companies and creditors in more than 150 distressed situations, both in and out of bankruptcy proceedings, involving some $315 billion of total liabilities. Pursuant to a Letter Agreement dated September 29, 2005, Blackstone will: (a) assist in the evaluation of the Debtors' business and prospects; (b) assist in the development of the Debtors' long-term business plan and related financial projections; (c) assist in the development of financial data and presentations to the Debtors' Board of Directors, various creditors, and other third parties; (d) analyze the Debtors' financial liquidity and evaluating alternatives to improve the liquidity; (e) analyze various restructuring scenarios and the potential impact of the scenarios on the recoveries of the stakeholders impacted by the Debtors' reorganization; (f) provide strategic advice with regard to restructuring or refinancing the Debtors' various obligations; (g) evaluate the Debtors' debt capacity and alternative capital structures; (h) participate in negotiations among the Debtors and their creditors, suppliers, lessors, and other parties in interest; (i) prepare all necessary valuation analyses in connection with the confirmation of the Debtors' plan of reorganization, including valuing securities offered by the Debtors; (j) advise the Debtors and negotiating with their lenders with respect to potential waivers or amendments of various credit facilities; (k) assist in arranging debtor-in-possession financing for the Debtors, as requested; (l) provide expert witness testimony concerning any of the subjects encompassed by the other financial advisory services; (m) assist the Debtors in preparing marketing materials in conjunction with a possible sale as part of the Debtors' reorganization or any possible Transaction; (n) assist the Debtors in identifying potential buyers or parties in interest to a sale as part of the Debtors' reorganization or a Transaction and assisting in the due diligence process; (o) assist and advising the Debtors concerning the terms, conditions, and impact of any proposed reorganization or Transaction; and (p) provide other advisory services as are customarily provided in connection with the analysis and negotiation of a reorganization under Chapter 11 or a Transaction, as requested and mutually agreed. The Debtors will pay Blackstone: (i) a $150,000 monthly advisory fee payable in advance; (ii) a capital raising fee equal to 4.0% of the aggregate amount of capital; (iii) a $2,750,000 Restructuring Fee, payable upon the consummation of a restructuring; (iv) upon the consummation of a Transaction, a Transaction fee payable in cash directly out of the gross proceeds of the Transaction calculated as 1% of the Consideration provided that the minimum Transaction Fee with respect to any single transaction should be $1,000,000; and (v) reasonable out-of-pocket expenses in connection with the services provided. The Debtors agree to indemnify and hold harmless Blackstone for any claims and liabilities related to the engagement. Since September 2005, Blackstone has provided financial restructuring advisory services to the Debtors and has been paid $150,000 for services rendered. Before the Petition Date, it also received a $25,000 advance to be maintained against unbilled out-of-pocket expenses incurred with the services provided. Paul P. Huffard, senior managing director at Blackstone, informs the Court that the firm's Compliance Department led by Robert J. Gentile, as manager, has identified 32 possible conflicts of interest with respect to Blackstone's engagement as advisor: (1) Blackstone's Mergers & Acquisitions advisory group is engaged to provide advisory services to four parties-in- interest; (2) one or more of the Blackstone Private Equity Funds have or are considering potential investment transactions in which two parties-in-interest may be involved; (3) affiliates of Blackstone serve as general partners for and manage a number of Blackstone Funds of which the investors are primarily unrelated third parties but also include affiliates of Blackstone and various of its officers and employees. Twenty parties-in-interest, predominantly financial institutions, may have investments in Blackstone Funds; and (4) the Distressed Debt Group, managed by an affiliate and staffed with personnel independent of the Restructuring Group, invests primarily in distressed and defaulted debt securities and related equities of financially troubled companies. Blackstone did not disclose the identity of the parties due to confidentiality restrictions. Mr. Huffard, however, assures the Honorable Burton R. Lifland of the U.S. Bankruptcy Court for the Southern District of New York that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. (Levitz Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) MCLEODUSA INC: Solicits Lender Consent for Debt Restructuring ------------------------------------------------------------- McLeodUSA Incorporated has begun the solicitation process for approval from the Company's lenders for a restructuring of its approximately $777.3 million in bank debt plus accrued interest. If the required approvals are received, the restructuring will be accomplished through a prepackaged plan of reorganization for the Company and its subsidiaries pursuant to a Chapter 11 bankruptcy filing. The Company expects to continue to pay its employees and trade creditors in the normal course of business without disruption. Customers will be unaffected by the restructuring, and the Company will maintain its commitment to the highest levels of customer service and quality. Amounts outstanding under the Company's credit facilities as of Sept. 30, 2005, total approximately $773.3 million, comprised of: -- approximately $100 million in funded Senior Debt; and -- approximately $677.3 million of Junior Debt, plus accrued interest. Prepackaged Plan Under the terms of the prepackaged plan, the existing Senior Debt will be converted into a $100 million term facility, and obligations under the Junior Debt will be converted into 100% of the Company's equity. All of the Company's existing Preferred Stock and Common Stock will be cancelled, and holders of that stock will have no recovery. "After considering the available alternatives, we have concluded, in consultation with our lenders, that a consensual prepackaged reorganization under Chapter 11 of the bankruptcy code represents the best way to restructure our obligations under our credit facilities," Stan Springel, Chief Restructuring Officer of McLeodUSA, said. "This restructuring will significantly improve the Company's financial position thereby strengthening our ability to execute the VoIP product growth strategy launched earlier this year while continuing to provide the high quality voice and data services that our customers have come to expect." DIP Financing In addition, the Company's lenders have agreed to provide debtor- in-possession financing of up to $50 million that will be replaced with a $50 million revolving credit facility upon final confirmation of the plan of reorganization. "While substantial work remains, once this financial restructuring is complete, McLeodUSA will emerge a financially stronger and more stable company," stated Joseph Ceryanec, acting Chief Financial Officer. "We very much appreciate the continued dedication of our employees, vendors and customers as we continue to work through this process. We believe that this proposed restructuring will leave us even better able to provide the strong service, and innovative, technologically advanced products that our customers have come to expect." If the required lender approvals are received, the Company expects to promptly file the Chapter 11 voluntary bankruptcy cases and plan of reorganization. The Company will seek approval and consummation of the plan as quickly as possible; however, the completion and success of the debt restructuring will depend on many factors, including approval by the bankruptcy court of the Company's plan of reorganization, completion of the proposed financing and receiving the necessary regulatory approvals. Therefore, the specific timeframe for completing the restructuring process cannot be predicted at this time. Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services, in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Company filed for chapter 11 protection on Jan. 30,2002 (Bankr. D. Del. Case No. 02- 10288). Eric M. Davis, Esq., and Matthew P. Ward, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP represent the Debtor. When the Debtor filed for chapter 11 protection, it listed total assets of $4,792,600,000 and total debts of $4,566,200,000. The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and the Plan took effect on April 16, 2002. The Court formally closed the case on May 20, 2005. At June 31, 2005, McLeodUSA Inc.'s balance sheet showed an $84,715,000 stockholders' deficit, compared to a $63,941,000 deficit at Dec. 31, 2004. MARCO DEVELOPMENT: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Marco Development, LLC 6534 Wendy Drive Pineville, Louisiana 71360 Bankruptcy Case No.: 05-82839 Chapter 11 Petition Date: October 16, 2005 Court: Western District of Louisiana (Alexandria) Debtor's Counsel: Bradley L. Drell, Esq. Gold, Weems, Bruser, Sues & Rundell 2001 MacArthur Drive P.O. Box 6118 Alexandria, Louisiana 71307-6118 Tel: (318) 445-6471 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor has no Unsecured Creditors who are not insiders. MEBAKK INC: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: MEBAKK, Inc. d/b/a Pioneer Auction 659 Amherst Road Sunderland, Massachusetts 01375 Bankruptcy Case No.: 05-50496 Type of Business: The Debtor operates an auction gallery. See http://www.pioneer-auction.com/ Chapter 11 Petition Date: October 15, 2005 Court: District of Massachusetts (Worcester) Judge: Henry J. Boroff Debtor's Counsel: Peter M. Stern, Esq. Law Offices of Peter M. Stern 95 State Street, Suite 715 Springfield, Massachusetts 01103 Tel: (413) 737-9526 Fax: (413) 736-6074 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lake Hitchcock Development Contract $25,000 196 Plumtree Road Sunderland, MA 01375 Elaine Strzelewicz Consigner $17,440 37 Everett Avenue Shrewsbury, MA 01545 David Robinson Business debt $15,000 43 Bridle Path Amherst, MA 01002 Brian Youmatz Consigner $14,505 James Costello Consigner $10,540 Donna Smebakken Consigner $10,432 Moriarty & Connor, LLC Business debt $10,417 The Begin Family Trust Consigner $8,837 Hamid Oriental Rugs Consigner $7,994 Wade Evey Consigner $7,160 Albert Anthony Consigner $7,114 Discover Business debt $6,917 Stanley Dewey Consigner $6,635 John Adjami Consigner $6,423 Northside Village Antique Consigner $6,319 Rosemary Jablonski Consigner $5,517 Allen Krasneck II Consigner $5,214 Charles M. Johnson Consigner $5,121 Estate of Duane Eichholz Consigner $5,104 Timeless Pieces Antiques Consigner $5,008 MESABA AVIATION: Wants to Continue Using Cash Management System --------------------------------------------------------------- Mesaba Aviation, Inc., uses a centralized cash management system for operations conducted with third parties in the ordinary course of business. The Debtor maintains 10 bank accounts: Bank Account No. Purpose ---- ----------- ------- Bank of Montreal 0003-1084-761 Canadian Funds Cash Disbursements Chase Manhattan 910-2-443554 Airlines Clearing House Wells Fargo Money 20054508 Savings Market Wells Fargo Money 12697686 Restricted cash for Market LOCs Wells Fargo Operating 751082 Cash Disbursements Wells Fargo Accounts 12697686 Controlled Payable Disbursement Account Wells Fargo Health 9600032461 Controlled & Dental Disbursement Account Wells Fargo Payroll 4000020438 Zero Balance Account Wings Financial 174067 Liquor Receipts Credit Union Wings Financial 157671 Liquor Receipts Credit Union The Debtor maintains three primary operating accounts, which are used primarily for automated clearing house transactions, wire transactions, and to sweep funds to or from the Debtor's other operating Bank Accounts or into interest-bearing money market account maintained at Wells Fargo Minneapolis, Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman, in Minneapolis, Minnesota, relates. The Controlled Disbursement Accounts are used to pay the Debtor's operating expenses and direct-deposit payroll. The Payroll Account is used to disburse payroll and benefits to the Debtor's employees by check. Of the other Bank Accounts, only that at the Bank of Montreal is a checking account used by Debtor for disbursement. It is used primarily to pay employee related obligations, including some payroll, in Canada. Mr. Meyer notes that the Debtor's cash management system is typically employed by corporations of the Debtor's size for efficiency purposes. Businesses tend to use the same system because of the numerous benefits it provides, including the ability to: -- track tightly and thus control all corporate funds through an ability to provide near-continuous status reports on the location and amount of all the funds; -- invest idle cash; -- ensure cash availability; and -- reduce administrative expenses by facilitating the ease of account record keeping, movement of funds and the development of timely and accurate account balance, process, and presentment information. It would be difficult and impractical for the Debtor to establish an entirely new system of accounts and a new cash management system given the complexity and volume of funds that move in and out of its bank accounts, Mr. Meyer asserts. Preserving the "business as usual" atmosphere and avoiding the unnecessary distractions that would inevitably be associated with any substantial disruption in the Debtor's cash management system will facilitate the Debtor's reorganization efforts. By this motion, the Debtor seeks the U.S. Bankruptcy Court for the District of Minnesota's permission to continue utilizing its current integrated cash management system. It is critical that the Debtor continues to be able to consolidate its cash management and centrally coordinate funds transfers to efficiently and effectively operate its business operations, Mr. Meyer contends. Mesaba Aviation, Inc., d/b/a Mesaba Airlines,-- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) MESABA AVIATION: Wants Mercer Management as Consultant ------------------------------------------------------ Prior to the Petition Date, Mesaba Aviation, Inc., hired Mercer Management Consulting, Inc., to provide financial analytical support in connection with an out-of-court restructuring and, to the extent warranted, to assist the Debtor's preparation for a Chapter 11 filing. Mercer also supported the Debtor with its supply chain and sourcing efforts as well operational readiness and provided certification support for certain new aircrafts. With the commencement of its Chapter 11 case, the Debtor believes it needs Mercer's services for airline restructuring advice and assistance. Hence, the Debtor asks the U.S. Bankruptcy Court for the District of Minnesota for authority to continue Mercer's employment as its consultant pursuant to the terms of an engagement letter dated October 8, 2005. Mercer provides bankruptcy reorganization consulting services to financially troubled organizations. Mercer consultants have over 20 years of experience of providing those consulting services. Pursuant to the Engagement Letter, Mercer's services will include: -- reviewing and analyzing the Debtor's business operations and financial projections; -- assisting in determining the appropriate capital structure for the Debtor; and -- advising the Debtor on the creation of a central office to deal with bankruptcy issues and interface with interested parties. The Debtor believes that those services are necessary to enable it to maximize the value of its estate and to reorganize successfully. The Debtor does not currently have the resources to perform the services and believes that at least four full-time consultants and two part-time partners are required from the firm to assist the Debtor. The Debtor will pay Mercer a $344,000 monthly fee. In addition, the Debtor has agreed to pay the firm's reasonable out-of-pocket expenses, including counsel fees, incurred in connection with any matters related to its engagement. The Debtor will also provide indemnification to Mercer, subject to certain exceptions, and forego any rights the Debtor may have to recover consequential, indirect, special, incidental or similar damages, including, without limitation, loss of profits. Mercer Director Peter Walsh assures the Court that the Mercer professionals who will work on the engagement: a. do not have any connection with the Debtor or its creditors, or any other party-in-interest, or their respective attorneys or accountants except for services provided to some parties-in-interests in matters unrelated to the Debtor's proceedings; b. are "disinterested persons" under Section 101(14) of the Bankruptcy Code; and c. do not hold or represent an interest adverse to the Debtor. Mr. Walsh discloses that during the 90-day period prior to the Petition Date, the firm received $1,799,974 from the Debtor for professional services and expenses incurred. Included in the amount are retainers aggregating $900,000, of which $628,000 Mercer continues to hold. As of the Petition Date, the Debtor owes the firm $409,000 in fees and expenses for consulting services provided prepetition, which amount Mercer has agreed to waive upon final Court approval of its employment. Mr. Walsh also discloses that Mercer currently provides consulting services to UAL Corporation and its affiliated debtor, ATA Airlines, Inc., and Delta Airlines, Inc., in connection with their chapter 11 cases. Mr. Walsh, however, ascertains that the services the firm provides to the Airlines do not relate directly to the Debtor or this case. Mercer will continue its representation of the Airlines but will not do so with respect to matters directly relating to either parties' commercial relationship with the Debtor. Mesaba Aviation, Inc., d/b/a Mesaba Airlines,-- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) MESABA AVIATION: Wants Marr Hipp as Labor Counsel ------------------------------------------------- John Spanjers, president and chief operating officer of Mesaba Aviation, Inc., informs the U.S. Bankruptcy Court for the District of Minnesota that Mesaba intends to employ Marr Hipp Jones & Wang, LLLP, as its special labor counsel to perform these services: a. Advise and counsel on all issues arising under the Railway Labor Act, including but not limited to the negotiation, interpretation, and enforcement of collective bargaining agreements; b. Advise and counsel on any other issues that may arise relating to the Debtor's relationship with unions, collective bargaining, or collective bargaining agreements; c. Advise and counsel on any issues related to Sections 1113 and 1114 of the Bankruptcy Code; d. Advise and counsel on other labor or employment law issues as the Debtor determines to warrant the attention of special labor counsel; and e. Represent the Debtor in any litigation related to any of the foregoing and perform all other necessary legal services in furtherance of the firm's role as special labor counsel for the Debtor. Marr Hipp is a specialized labor and employment law firm. For many years, a number of its partners have represented numerous air carriers on a broad range of airline labor law issues under the Railway Labor Act. Mr. Spanjers explains that the Debtor has selected Marr Hipp largely because of its experience in airline labor law, collective bargaining, arbitration, airline bankruptcy proceedings, and the interplay between labor law and the Bankruptcy Code. Marr Hipp also has substantial experience in representing the Debtor prepetition. Cynthia M. Surrisi, a partner at Marr Hipp who is in charge of the engagement, has for over six years handled the Debtor's labor and employment law matters, particularly those concerning collective bargaining obligations arising under the Railway Labor Act. Among others, current Marr Hipp attorneys: -- have negotiated the Debtor's collective bargaining agreements with all of its labor groups, -- were involved in negotiations for an agreement with ALPA on the eve of a strike deadline, -- obtained injunctive relief to prevent AMFA-representated employees from secondary strike activities, and -- have handled grievance arbitrations under the Debtor's labor contracts. The Debtor believes that Marr Hipp is both well qualified and uniquely able to represent the Debtor in its Chapter 11 case in an efficient and timely manner. By this application, the Debtor asks the Court to authorize Marr Hipp's employment pursuant to Section 327(e) of the Bankruptcy Code. The Debtor proposes to pay Marr Hipp for legal services rendered on an hourly basis. The firm's current hourly rates, subject to change from time to time, are: Professional Hourly Rate ------------ ----------- Partners $230 to $310 Associates $150 to $180 Paraprofessionals & Staff $90 to $125 The Marr Hipp attorneys expected to be most active in the Debtor's Chapter 11 case and their hourly rates include: Professional Position Hourly Rate ------------ -------- ----------- Cynthia M. Surrisi, Esq. Partner $295 Kenneth B. Hipp, Esq. Partner $295 Barry W. Marr, Esq. Partner $295 Patrick H. Jones, Esq. Partner $285 Sarah O. Wang, Esq. Partner $260 Christopher S. Yeh, Esq. Partner $230 Daniel G. Mueller, Esq. Partner $230 Kaiulani E. Kidani Associate $180 Jennifer K. Murata Associate $150 These hourly rates, Mr. Spanjers points out, reflect a discount from Marr Hipp's standard hourly rates for work of this nature. The Debtor will also reimburse Marr Hipp for necessary expenses. Mr. Spanjers discloses that in the one-year before the Petition Date, the Debtor paid Marr Hipp $561,034, consisting of $540,397 for legal services provided to the Debtor and $20,638 for out-of- pocket expenses. None of the payment specifically related to the Debtor's Chapter 11 case. The Debtor and Marr Hipp believe that the payment was made in the ordinary course of the Debtor's business. However, to the extent that there is a determination otherwise, and to the extent that defenses do not apply, payments received in the 90 days prior to the Petition Date could be recoverable under Section 547, Mr. Spanjers says. Because the Debtor does not seek to employ Marr Hipp as general insolvency counsel, the potential preferential transfers do not affect the disinterestedness of Marr Hipp as special labor counsel with respect to the matters for which it will be engaged. Marr Hipp will have no involvement in decisions about who will be sued for recovery of preferences, claim objections or the prosecution of preference lawsuits. Thus, according to Mr. Spanjers, the firm does not hold or represent an adverse interest with respect to the limited areas in which it will be engaged. On October 12, 2005, Mr. Spanjers further discloses, the firm received $150,000 as a retainer for services to be rendered and expenses to be incurred in the Debtor's Chapter 11 case. Ms. Surrisi assures the Court that Marr Hipp does not: (a) represent or hold any interest adverse to the Debtor or its estate with respect to the matters on which Marr Hipp seeks to be employed; or (b) have any connection with any creditors or other parties- in-interest, their attorneys and accountants, or the United States Trustee or any of its employees. Ms. Surrisi, however, notes that Marr Hipp represents a number of participants in the aviation industry that are known to the firm to have relationships with the Debtor, including (i) Northwest Airlines, Inc. and its affiliates and subsidiaries on a variety of matters, including litigation and labor and employment law issues, and (ii) MAIR Holdings, Inc., providing labor and employment advice relating to business transactions. Marr Hipp regularly represents other commercial air carriers on labor and employment law issues, including, but not limited to, United Airlines, Inc.; Hawaiian Airlines, Inc.; Champion Air, Inc., all of which are competitors of the Debtor and which may be creditors of the Debtor or otherwise have interests adverse to the Debtor. Marr Hipp has also represented one or more of these carriers on selected litigation or regulatory matters over the years. Ms. Surrisi explains that it is common practice in airline labor law for counsel to an air carrier to regularly represent more than one air carrier. Ms. Surrisi, however, ascertains that Marr Hipp will not represent Northwest or MAIR in the Debtor's chapter 11 case without the Debtor's written consent, the United States Trustee's approval, and the Court's Authorization. In addition, Marr Hipp's representation of the other air carriers has been unrelated to the Special Counsel Matters. Marr Hipp will not represent any of these other air carriers in the Debtor's Chapter 11 case. Mesaba Aviation, Inc., d/b/a Mesaba Airlines,-- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Court Halts Wilson Law Firm's Negative Solicitations ----------------------------------------------------------------- Mirant (Pink Sheets: MIRKQ) and William Snyder, the examiner appointed in Mirant and its debtor-affiliates' chapter 11 proceedings, jointly filed a Verified Complaint for Declaratory Judgment and Injunctive Relief in the United States Bankruptcy Court for the Northern District of Texas against The Wilson Law Firm and certain individuals the firm purports to have as clients. The filing was made on Monday, Oct. 17, 2005. The complaint seeks to stop The Wilson Law Firm and these individuals from continuing to solicit votes against Mirant Corporation's Second Amended Plan of Reorganization on the basis of statements made through Internet Website and chat room postings. In the complaint, Mirant and Mr. Snyder contend that these statements are misleading, inaccurate and incomplete. Injunctive Order After a hearing, the Court issued a temporary restraining order requiring The Wilson Law Firm and the individual defendants to remove these materials from public access pending further consideration by the Court. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. MORGAN STANLEY: Low Values Spur Fitch to Cut Ratings on 2 Classes ----------------------------------------------------------------- Fitch Ratings downgrades two classes of Morgan Stanley 1997-XL1: -- $26.4 million class G to 'B-' from 'B'; -- $8.7 million class H to 'C' from 'CC'. In addition, Fitch upgrades these classes: -- $45.3 million class D to 'AAA' from 'AA'; -- $45.3 million class E to 'AAA' from 'BBB+'. Fitch affirms these classes: -- Interest-only class X at 'AAA'; -- $211.4 million class A-3 at 'AAA'; -- $22.6 million class B at 'AAA'; -- $22.6 million class C at 'AAA'; -- $41.5 million class F at 'BBB-'. The A-1 and A-2 classes have been paid in full. The downgrades are a result of the decline in performance at the Westshore Mall property. The property became REO in March 2005, and in August, the special servicer applied an appraisal reduction of $7.9 million. The reduction is the result of both a decline in appraised value and accumulated servicer advances. Upon disposition of the Westshore Mall, Fitch expects realized losses will exceed the balance of class H. The upgrades to classes D and E are the result of increases in credit enhancement levels. The improved levels are the result of amortization; realization of the net proceeds from the resolution of the West Gate Mall loan earlier this year, and the repayment of the Mansion Grove Apartment loan in September 2005. As of the Oct. 3, 2005 distribution date, the pool balance was $423.9 million, a 44% reduction from issuance. In addition, 61.1% of the current collateral has been defeased. In addition to the REO property and the defeased collateral, the transaction includes three remaining loans. The performance of the Westshore Mall in Holland Township MI has substantially declined since issuance. Currently, approximately 32% of the mall's in-line and adjacent shopping center space that is part of the collateral in this transaction is vacant. In addition, 25% of the anchor space is vacant. At issuance, 100% of the anchor space and 95.3% of the in-line and shopping center space were occupied. The mall has experienced a substantial increase in competition from the nearby development of big box stores, with the most recent being the opening of a Meijer superstore in April of this year. The Inter-Continental Hotel, formerly known as The Hotel Grand Kempinski, is a full-service hotel located in Dallas, TX. The Fitch-stressed debt service coverage ratio at year-end 2004 was 0.73x compared with 1.65x at issuance. Although Fitch is concerned with the substantial decline in net cash flow since issuance, the performance has improved over YE 2003 as a result of increased investment in the asset by the borrower in refurbishing hotel rooms and conference space. According to a study by Smith Travel Reports, occupancy at the hotel in July 2005 was 53.5% compared with 45.6% in July 2004 and 43.1% in July 2003. Fitch expects the loan to continue to stabilize. The remaining two loans in the pool continue to perform at or above expectations at the time of issuance. DSCR at the Fashion Mall property has increased to 2.62x at YE 2004 from 1.70x at issuance. The Mark Center loan has experienced a 16% increase in NCF since issuance and an increase in occupancy at YE 2004 to 87% from 81.5% at YE 2003. MOSAIC GROUP: Chapter 7 Trustee Hires Kane Russell as Counsel ------------------------------------------------------------- The Hon. Harlin DeWayne Hale of the U.S. Bankruptcy Court for the Northern District of Texas approved the request of Jeffrey H. Mims, the Chapter 7 Trustee of Mosaic Group Inc. and its debtor affiliates, to employ Kane, Russell, Coleman & Logan, P.C., as his counsel. Kane Russell will: a) give the Trustee legal advice with respect to his powers and duties; b) assist the Trustee in obtaining funds to which the Debtors' estate may be entitled; c) prepare any applications, motions, and other pleadings deemed necessary by the Trustee, and performing such other legal services that the Trustee and the firm may deem necessary and appropriate; d) represent the Trustee in any legal proceedings as the Trustee and the firm may deem necessary or appropriate to bring herein, including without limitation prosecuting avoidance actions pursuant to Chapter 5 of the Bankruptcy Code, which are proposed to be prosecuted under a separate fee structure; e) assist the Trustee with his investigation of the Debtors' assets, liabilities and financial affairs, including, without limitation, any causes of action the estate may possess; and f) perform all other legal services which may be necessary and in the best interests of the Debtors' estates and their creditors. The firm will bill the Debtors at its professional's current hourly rates: Attorney or Designation Hourly Rate ----------------------- ----------- Joseph M. Coleman $400 Joseph A. Friedman $325 David D. Ritter $240 Paralegals $75 - $115 Joseph M. Coleman, Esq., at Kane Russell, assures the Court that the firm does not represent any interest adverse to the Trustee or the bankruptcy estates. Headquartered in Irving, Texas, Mosaic Group (US) Inc., -- http://www.mosaic.com/-- a world-leading provider of results- driven, measurable marketing solutions for global brands, filed for chapter 11 relief on Dec. 17, 2002 (Bankr. N.D. Tex. Case No. 02-81440). Charles R. Gibbs, Esq., David H. Botter, Esq., and Kevin D. Rice, Esq., at Akin, Gump, Strauss, Hauer & Feld, represent the Debtors. When the Company filed for protection from its creditors, it estimated debts and assets of over $100 million each. Mosaic Group, Inc., also sought and obtained protection under the Companies' Creditors Arrangement Act in Canada. On June 15, 2004, Jeffrey H. Mims was appointed as Chapter 11 Trustee for the Debtors' estate. The case was converted to a chapter 7 liquidation on Aug. 31, 2005. NEXTMEDIA OPERATING: S&P Junks Proposed $100 Million Secured Loan ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B' bank loan rating and a recovery rating of '3' to NextMedia Operating Inc.'s proposed $290 million first-lien secured credit facilities, indicating an expectation of meaningful 50%-80% recovery of principal in the event of a payment default. The first-lien facilities consist of a $50 million revolving credit facility and a $240 million term loan. At the same time, Standard & Poor's assigned a 'CCC+' bank loan rating and a recovery rating of '5', indicating an expectation of negligible 0%-25% recovery of principal in a default situation, to NextMedia's proposed $100 million second-lien secured term loan. The corporate credit rating of 'B' was affirmed. The outlook is stable. NextMedia had approximately $261 million of debt outstanding at June 30, 2005. "The ratings on NextMedia reflect high financial risk from debt- financed expansion, the likelihood of additional acquisitions that could limit financial profile improvement, the presence of larger competitors in most markets, and the company's vulnerability to advertising downturns," said Standard & Poor's credit analyst Alyse Michaelson Kelly. "The company's debt to EBITDA ratio is a key rating concern." Borrowings under the facilities are expected to be used to refinance existing debt and help fund acquisitions, and for general corporate purposes. The negative factors are only partially offset by the company's expanding portfolio of radio and outdoor assets, broadcasting's good margin and discretionary cash flow potential, and sustainable asset values. NextMedia's radio operations contribute the bulk of its cash flow. Growth in radio advertising in 2005 has been minimal, in the very low single digits. Radio ad demand is under pressure from alternative media, repetitive programming, and the excess commercial loads that the industry is starting to address. NextMedia competes with much larger radio and outdoor advertising operators in most of its markets, which could limit upside ad pricing and overall revenue potential. However, the company's stations are geographically diversified, and many maintain respectable competitive positions. NUTRAQUEST INC: Has Until Feb. 7 to File Chapter 11 Plan -------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey extended Nutraquest Inc.'s period to exclusively file and solicit acceptances of a chapter 11 plan. Nutraquest has until Feb. 7, 2006, to file a plan and until April 7, 2006, to solicit acceptances of that plan. The Debtor needs more time to resolve numerous civil actions pending in several states and in Canada associated with the company's Xenadrine RFA-1 dietary supplement. Currently, the Debtor is in a mediation proceeding with personal injury cases resulting from the use of Xenadrine RFA. The mediation conducted in April to September resolved 95% of the Nutraquest's PI cases. The remaining cases are set for trial in November, December and January 2006. Headquartered in Manasquan, New Jersey, Nutraquest, Inc., is the marketer of the ephedra-based weight loss supplement, Xenadrine RFA-1. The Company filed for chapter 11 protection on October 16, 2003 (Bankr. N.J. Case No. 03-44147). Andrea Dobin, Esq., and Simon Kimmelman, Esq., at Sterns & Weinroth, P.C. represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. NUTRAQUEST INC: Court Extends Removal Period to April 11 -------------------------------------------------------- The Honorable Raymond T. Lyons Jr. of the U.S. Bankruptcy Court for the District of New Jersey extended until Apr. 11, 2006, the period within which Nutraquest, Inc., can remove prepetition civil actions pending in various state and federal courts to the District of New Jersey for continued litigation and resolution. As reported in the Troubled Company Reporter on Sept. 29, 2005, the Debtor asked for the extension disclosing that it didn't want to lose the valuable right to transfer lawsuits from remote courts to New Jersey. The Debtor said that the extension would provide them ample time to make decisions about which court should be asked to resolve each pending action. Headquartered in Manasquan, New Jersey, Nutraquest, Inc., is the marketer of the ephedra-based weight loss supplement, Xenadrine RFA-1. The Company filed for chapter 11 protection on October 16, 2003 (Bankr. N.J. Case No. 03-44147). Andrea Dobin, Esq., and Simon Kimmelman, Esq., at Sterns & Weinroth, P.C., represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it estimated assets between $10 million to $50 million and estimated debts between $50 million to $100 million. O'CHARLEY'S INC: Says 3rd Quarter Results Below Earnings Guidance ----------------------------------------------------------------- O'Charley's Inc. (NASDAQ/NM: CHUX) reported preliminary results for the third quarter ended October 2, 2005, and reported details for the release of its full results for the quarter. Although the Company has not yet finalized its financial results for the third quarter of fiscal 2005, it expects to report results for the quarter that are below its previously issued guidance of net income per diluted share of between $0.02 and $0.05. Excluding any charges related to asset impairment or dispositions that the company may be required to take in its fiscal third quarter, the Company now expects to report results for the quarter ranging from a net loss per diluted share of $0.03 to break even net income. Same store sales in the quarter declined by 1.5% at O'Charley's company-operated restaurants, and increased by 0.1% at Ninety Nine restaurants and by 1.4% at Stoney River Legendary Steaks. These same store sales combined with higher than expected payroll and benefits, food and beverage, and restaurant operating costs contributed to the Company's third quarter loss. These factors will be discussed more fully in the Company's third quarter earnings release and conference call. O'Charley's plans to issue its earnings release for the third quarter before the market opens on October 27, 2005, and will host a conference call on October 27, 2005, at 11:00 a.m. EDT. The number to call for this interactive teleconference is (973) 582-2952. A replay of the conference call will be available through November 4, 2005, by dialing (973) 341-3080 and entering the confirmation number, 6605765. The live broadcast of O'Charley's conference call will be available online at the Company's website, http://www.ocharleysinc.com/as well as http://www.streetevents.com/and http://www.earnings.com/on October 27, 2005, beginning at 11:00 a.m. EDT. The online replay will follow shortly after the call and continue through November 4, 2005. Headquartered in Nashville, Tenn., O'Charley's Inc. -- http://www.ocharleysinc.com/-- is a multi-concept restaurant company that operates or franchises a total of 349 restaurants under three brands: O'Charley's, Ninety Nine Restaurant and Pub, and Stoney River Legendary Steaks. The Company operates 229 company-owned O'Charley's restaurants in 17 states in the Southeast and Midwest, and has four franchised O'Charley's restaurants in Michigan and two joint venture O'Charley's restaurants in Louisiana. The Company operates Ninety Nine Restaurant & Pub restaurants in 107 locations throughout Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. The Company operates seven Stoney River Legendary Steaks restaurants in Georgia, Illinois, Kentucky, Ohio and Tennessee. * * * As reported in the Troubled Company Reporter on July 4, 2005, Standard & Poor's Ratings Services revised its outlook on casual dining restaurant operator O'Charley's Inc. to stable from negative and affirmed its ratings, including the 'BB-' corporate credit rating. O'SULLIVAN INDUSTRIES: Inks GECC Adequate Protection Stipulation ---------------------------------------------------------------- O'Sullivan Industries Holdings, Inc. and its debtor-affiliates are party to a Credit Agreement, dated as of September 29, 2003, with General Electric Capital Corporation, as agent, letter of credit issuer, and lender, and a consortium of lenders, providing for up to $40,000,000 of revolving loans and letters of credit. The Debtors also entered into an Indenture with The Bank of New York, as trustee. O'Sullivan Industries, Inc., issued $100 million principal amount of 10.63% senior secured notes due 2008. The Senior Secured Notes are guaranteed by O'Sullivan Industries Holdings, Inc., O'Sullivan Industries - Virginia, Inc., and O'Sullivan Furniture Factory Outlet, Inc. As of the Petition Date, the Debtors owe $100 million, plus accrued and unpaid interest, costs, fees and other charges under the Senior Secured Notes. GoldenTree Asset Management L.P., Mast Credit Opportunities I, (Master) Ltd., and BreakWater Fund Management, LLC, held, collectively, approximately $84.35 million principal amount of the Senior Secured Notes, which represents approximately 84% of the outstanding principal balance of the Senior Secured Notes. The Debtors' obligations under the Prepetition Credit Agreement and the Note Documents are secured by liens and security interest in the Debtors' assets, including accounts receivable, inventory, deposit accounts, certain books and records and certain intellectual property rights. GoldenTree, Mast and BreakWater, acting as an ad hoc committee of Senior Secured Noteholders, have discussed and negotiated the terms upon which they would consent to the Debtors' use of the collateral securing the Debtors' obligations under the Senior Secured Notes and the granting of the priming liens provided for in the DIP Agreement. The members of the Ad Hoc Committee and the Debtors have proposed to enter into a Stipulation and Consent Order Pursuant to Sections 361, 363 and 364(d)(1) of the Bankruptcy Code and Rule 4001 of the Federal Rules of Bankruptcy Procedure Providing Trustee for Senior Secured Noteholders with Adequate Protection in Connection with Debtors' Authorization to Obtain Secured Postpetition Financing and Use Cash Collateral. A full-text copy of the 21-page Adequate Protection Stipulation is available for free at: http://bankrupt.com/misc/o'sullivanSTIPULATION.pdf GoldenTree, Mast and BreakWater are represented by David. M. Friedman, Esq., and Richard F. Casher, Esq., at Kasowitz, Benson, Torres & Friedman LLP, in New York, and Dennis Connolly, Esq., at Alston & Bird LLP, in Atlanta, Georgia. The Debtors propose to use of their lenders' cash collateral in accordance with 21-week budget: O'Sullivan Industries, Inc. 21-Week DIP Cash Flow Projections DIP Cash Flow - Based on 5-Year Business Plan From October 16, 2005 to March 5, 2006 Gross Sales $89,184,000 Cash Receipts 78,157,000 Cash Disbursements: Manufacturing Related Disbursements (40,278,000) Payroll, Taxes and 401K (22,721,000) Insurance (5,622,000) GE Capital Credit Card (650,000) Commissions (575,000) Royalties - Lowe's (624,000) Royalties - Other (146,000) Utilities (1,924,000) Leases (175,000) Professional Fees (4,783,000) KERP - Trustee Fees (20,000) DIP Commitment Fees (800,000) Interest (561,000) CAPEX (612,000) Other Disbursements (4,222,000) ----------- Total Cash Disbursements (83,713,000) ----------- Net Cash Change (5,556,000) ----------- Adjusted Beginning DIP Balance 3,465,000 (Repayments) (3,714,000) Draw 9,269,000 ----------- Adjusted Ending DIP Balance $9,020,000 ----------- Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) O'SULLIVAN INDUSTRIES: Overview of Plan Of Reorganization --------------------------------------------------------- O'Sullivan Industries, Inc., and its debtor-affiliates delivered to the U.S. Bankruptcy Court for the Northern District of Georgia their Chapter 11 Plan of Reorganization and Disclosure Statement at the same time they filed for bankruptcy. The Plan groups claims against and interests in the Debtors into nine classes. Class Description Treatment ----- ----------- --------- n/a Administrative Claims Unimpaired Estimated Recovery: 100% n/a DIP Facility Claims Unimpaired Estimated Recovery: 100% n/a Tax Claims Unimpaired Estimated Recovery: 100% 1 Priority Claims Unimpaired Estimated Recovery: 100% 2A Senior Credit Facility Unimpaired Claims Holders as of the Effective Date will have an Allowed Claim for all amounts included in the definition of Senior Credit Facility Claims, if any. Estimated Recovery: 100% 2B Other Secured Claims Unimpaired against a debtor At their election, Reorganized O'Sullivan Industries, Reorganized O'Sullivan Virginia, or Reorganized OFFO will either: (a) pay the Allowed amount of the applicable Class 2B Claim in full on the later of the Effective Date or the Allowance Date of that Claim; (b) return the underlying collateral to the Holder of the Claim; (c) Reinstate the Claim in accordance with the provisions of Section 1124(2) of the Bankruptcy Code; (d) pay the Claim in the ordinary course; or (e) treat the Claim in a manner otherwise agreed to by the Holder thereof. Estimated Recovery: 100% 2C Senior Secured Notes Impaired and entitled to Claims vote; each Holder will receive the Holder's Pro Rata share of: (a) 10 million shares of New O'Sullivan Holdings Common Stock; and (b) the New Notes in the aggregate principal amount of $10 million. Estimated Recovery: 82.8% 3 General Unsecured Impaired and not entitled to Claims vote; No distribution of any kind will be made. These Claims will be discharged and cancelled. The Senior Subordinated Notes will all be cancelled and be deemed terminated of no force and effect. Estimated Recovery: 0% 4 All other claims vs. Impaired and not entitled to O'Sullivan Holdings vote; No distribution of any kind will be made. These claims will be discharged and cancelled. Estimated Recovery: 0% 5 Intercompany Claims Impaired and not entitled to vote; Except to the extent determined by the Debtors, all Intercompany Claims will be reviewed by the Debtors and adjusted, continued, or discharged, as appropriate. 6 Existing Equity Impaired and not entitled to Interests in vote; All outstanding shares O'Sullivan Holdings of O'Sullivan Holdings Preferred Stock and O'Sullivan Holdings Common Stock, and any and all other Interests in O'Sullivan Holdings, if any, will all be cancelled and be deemed terminated and of no force and effect. No distribution of any kind will be made. Estimated Recovery: 0% 7 Old Stock of the Unimpaired Debtors' Subsidiaries At the election of the Reorganized Debtors, each Old Stock equity interest: (a) will be unaffected by the Plan, in which case the holder will continue to hold the Interest following the Effective Date; or (b) will be cancelled and new equity will be issued pursuant to the Plan. Upon confirmation of the plan, some non-debtor subsidiaries will be dissolved. The Debtors do not identify these to-be-Dissolved Entities [but they most likely are Furniture Zone Australasia Pty. Ltd., ACN 090 567 052 Pty. Ltd., O'Sullivan Furniture Asia Pacific Pty. Ltd, O'Sullivan Industries (Australia) Pty. Ltd., and O'Sullivan Industries UK Ltd.]. As of the Effective Date, the Boards of Directors of each of the Reorganized Debtors will initially have the same seven-person board of directors consisting of: (i) the Chief Executive Officer of the Reorganized Debtors, and (ii) six directors to be designated by the Senior Secured Noteholders' Representative. The ownership of the capital stock of the Reorganized Subsidiaries following the Effective Date will be unaffected by the Plan. On the Effective Date, Reorganized O'Sullivan Holdings will issue new common stock and new notes. Valuation Analysis The Debtors' financial advisor, Lazard Freres & Co., conducted a valuation analysis for the purpose of determining value available for distribution to Holders of Allowed Claims and Allowed Equity Interests pursuant to the Plan and to analyze the relative recoveries. Based in part on information provided by the Debtors, Lazard has concluded solely for purposes of the Plan that estimated total value available for distribution to Holders of Allowed Claims and Allowed Equity Interests ranges from approximately $99 million to $118 million, with a midpoint of $108.5 million as of an assumed Effective Date of March 31, 2006. Based on a projected March 31, 2006 debt balance, net of cash, of approximately $29.1 million, Lazard's mid-point estimated Distributable Value implies a value for the New O'Sullivan Holdings Common Stock of $79.4 million. Assuming 10,000,000 shares of New O'Sullivan Holdings Common Stock are distributed to the Holders of Allowed Claims pursuant to the Plan, the value of New O'Sullivan Holdings Common Stock is equal to $7.94 per share. Reorganization Beats Liquidation The Debtors prepared a liquidation analysis, which reflects the estimated cash proceeds, net of liquidation-related costs, that would be available to their creditors as of October 14, 2005, pursuant to a Chapter 7 liquidation. Under the absolute priority rule, no junior creditor would receive any distribution until all senior creditors are paid in full, and no equity holder would receive any distribution until all creditors are paid in full. The Debtors have determined that confirmation of the Plan will provide creditors with a recovery that is not less than they would receive pursuant to a liquidation of the Debtors under Chapter 7 of the Bankruptcy Code. Liquidation Analysis (in thousands) Hypothetical Liquidation Range ------------------------------ Recovery % Amount Book ----------- ---------- Value Low High Low High ------ --- ---- --- ---- Assets Current Assets Cash and Cash Equivalents - - - Trade Receivables, Net $23,149 57.9% 73.3% $13,393 $16,965 Inventories, Net 37,543 24.4% 31.4% 9,170 11,790 Prepaid Expenses and other Current Assets 5,497 0% 0% - - ------- ------- ------- Total Current Assets 66,189 22,563 28,755 Non-Current (Fixed) Assets Property, plant and equipment, net 48,858 24.5% 30.7% 11,983 14,979 Goodwill, net and other non-current assets 44,354 0% 0% - - ------- ------- ------- 93,212 11,983 14,979 ------- ------- ------- TOTAL ASSETS $159,401 $34,546 $43,734 ======= ======= ======= Distribution of Liquidation Proceeds (in thousands) Amount Low High --- ---- Gross Current Asset Proceeds Available for Distribution $22,563 $28,755 Gross Non-Current (Fixed) Asset Proceeds Available for Distribution 11,983 14,979 ------- ------- Gross Liquidation Proceeds 34,546 43,734 Chapter 7 Administrative Claims Trustee and receiver fees 864 1,093 Counsel for trustee & other professional fees 2,700 2,700 Wind-down Costs 6,000 6,000 ------- ------- Chapter 7 Administrative Claims 9,564 9,793 ------- ------- Net Current Asset Proceeds Available for Distribution 16,317 22,315 Net Non-Current (Fixed) Asset Proceeds Available for Distribution 8,666 11,625 ------- ------- Total Net Proceeds Available for Distribution $24,983 $33,940 ======= ======= Less: Senior Credit Facility (Class 2A) Claims $14,417 $14,417 Recovery Amount 14,417 14,417 % Recovery 100% 100% Less: 10.63% Senior Secured Notes Claims $107,930 $107,930 Recovery Amount 10,566 19,524 % Recovery 9.8% 18.1% ------- ------- Net Proceeds Available for Unsecured Claims - - Less: General Unsecured (Class 3) Claims $110,330 $110,330 Recovery Amount - - % Recovery 0% 0% Less: All Other (Class 4) Claims against O'Sullivan Holdings(o) $29,053 $29,053 Recovery Amount - - % Recovery 0% 0% A full-text copy of O'Sullivan's Disclosure Statement and Chapter 11 Plan of Reorganization is available for free at: http://bankrupt.com/misc/o'sullivandisclosurestatement.pdf Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) OM GROUP: Reduced Earnings Prompt S&P to Affirm Low-B Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit and 'B-' subordinated debt ratings on Cleveland, Ohio-based OM Group Inc. Standard & Poor's also removed the ratings from CreditWatch with developing implications, where they were placed in August 2004, and assigned a stable outlook. "The ratings affirmation and stable outlook recognize sharply reduced earnings, reflecting in part lower cobalt prices, offset by cash flow protection measures and liquidity still satisfactory for the ratings," said Standard & Poor's credit analyst Wesley E. Chinn. The ratings on OM Group reflect wide swings in operating margins and profitability because of the volatility of cobalt and nickel prices, risks in its principal cobalt supplier country, long-term nickel supply uncertainties, and aggressive debt leverage. These negatives are tempered slightly by its position as an established provider of metal-based specialty chemical and refined metal products, the substantial geographic diversity of sales, satisfactory liquidity, and less reliance on debt leverage to meet growth objectives for the foreseeable future. OM is focused on applying proprietary technology to unrefined cobalt and nickel raw materials to market value-added products. Even with substantially lower earnings this year, cash flows protection measures and liquidity remain satisfactory for the ratings. The wide swings in earnings caused by volatile cobalt and nickel prices are a major risk factor when assessing prospective credit quality ratios. Still, a meaningful rebound in earnings could occur during 2006. New management's less aggressive financial policies might prevent debt increases in the foreseeable future, as the company focuses on improving the cost structure, expanding market share at existing accounts or into new markets, and increasing product line investments. Consequently, the outlook could be revised to positive within the next nine months to 12 months, if profitability begins 2006 on a strong note, debt levels are held in check, material weaknesses in the company's internal controls are addressed in a timely fashion, and Standard & Poor's gains insights on management's intermediate term business and financial strategies. ORBIT BRANDS: Files Chapter 11 Plan Leaving Existing Equity Intact ------------------------------------------------------------------ Orbit Brands Corporation (OTC: OBBCQ) has taken positive steps in its proposed restructuring by filing its plan of reorganization, and that it is now trading under a new ticker symbol. The Company's proposed plan of reorganization was filed with the U.S. Bankruptcy Court for the Central District of California in Los Angeles and noticed to its creditors on Oct. 6, 2005. As part of the plan, the Company proposes that the interests of common shareholders in the Company will not be impaired. The proposed plan is subject to amendment by the Company and additional input from the Official Committee of Unsecured Creditors and the Office of the United States Trustee, and must be approved by the Bankruptcy Court. New Ticker The Company also obtained approval from the Securities Exchange Commission to change its ticker symbol to OBBCQ from OBTV, and commenced trading under the new symbol OBBCQ on Oct. 12, 2005. The "Q" in the ticker symbol is an SEC designation for companies in bankruptcy status. Upon emergence from bankruptcy, the "Q" will be removed and the ticker will change to OBBC. The next scheduled hearing date for the Company to report on the status of its reorganization effort is Nov. 15, 2005. "This is a solid step forward in the reorganization of the Company," Joe Cellura, Chairman and Chief Executive Officer of the Company, said. "Our reorganization plan takes into account the best interests of our shareholders, and we appreciate their continued support in our reorganization process. The Company's objective is to clean up the balance sheet and eliminate costly, vexatious litigation that has been ongoing since 1998." Orbit Brands Corporation -- http://www.orbitbrandscorp.com/-- focus on the growth via the acquisition and development of early stage high growth companies in the technology, health and fitness, and consumer goods industries. Three of Orbit Brands' creditors, represented by Simon J. Dunstan, Esq., at Hughes & Dunstan, LLP, filed an involuntary chapter 11 petition against the company on June 25, 2004 (Bankr. C.D. Calif., L.A. Div., Case No. 04-24171. On Dec. 14, 2004, the Company consented to entry of an order for relief by filing a voluntary Chapter 11 petition. Orbit Brands said that it elected to file for chapter 11 protection to bring a halt to vexatious litigation in several states and to protect the interests of shareholders and legitimate creditors. Orbit Brands has filed its Schedules of Assets and Liabilities and Statement of Financial Affairs, and a creditors committee has been appointed to represent the interests of the Company's unsecured creditors. PASADENA GATEWAY: Wants Court to Close Chapter 11 Case ------------------------------------------------------ Pasadena Gateway Venture, Ltd., asks the U.S. Bankruptcy Court for the Southern District of Texas to enter a final decree and close its chapter 11 case nunc pro tunc to Sept. 30, 2005. As reported in the Troubled Company Reporter on July 22, 2005, the Court confirmed the Debtor's First Amended Plan of Reorganization on July 15, 2005. The Debtor tells the Court that it has implemented the confirmed plan of reorganization by: (a) concluding the closing of the compromise; and (b) selling its real property. The Debtor says that the sale of the real property was closed on Sept. 1, 2005 and that proceeds of the sale were disbursed in accordance with the terms of the amended plan. Headquartered in Houston, Texas, Pasadena Gateway Venture, Ltd., filed for chapter 11 protection on April 3, 2005 (Bankr. S.D. Tex. Case No. 05-34900). Marilee A Madan, Esq., at Russell & Madan, P.C., represents the Debtor. When the Debtor filed for protection from its creditors, it reported estimated assets of $10 million to $50 million and estimated debts of $1 million to $10 million. PERSISTENCE CAPITAL: Section 341(a) Meeting Slated for Nov. 15 -------------------------------------------------------------- The U.S. Trustee for Region 16 will convene a meeting of Persistence Capital LLC's creditors at 9:00 a.m., on Nov. 15, 2005, at 21051 Warner Center Lane, Woodland Hills, California. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Westlake Village, California, Persistence Capital LLC, filed a voluntary chapter 11 petition on Sept. 13, 2005 (Bankr. C.D. Calif. Case No. 05-16450). Lawrence R. Young, Esq., in Downey, California, represents the Debtor in its restructuring proceedings. When the Debtor filed for protection from its creditors, it listed $85,000,000 in total assets and $28,602,241 in total debts. PINKSTON-HOLLAR: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Pinkston-Hollar, Inc. 2887 A West Pioneer Parkway Arlington, Texas 76013 Bankruptcy Case No.: 05-95453 Type of Business: The Debtor specializes in metal roof installation. See http://pinkstonhollar.com/ Chapter 11 Petition Date: October 19, 2005 Court: Northern District of Texas (Ft. Worth) Debtor's Counsel: Northern District of Texas (Fort Worth) Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million A list of the Debtor's 20 largest unsecured creditors is not available at press time. PLEASURE COVE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Pleasure Cove Resort Asset Mgt Group LLC 346 Soscol Avenue Napa, California 94559-4006 Bankruptcy Case No.: 05-14070 Chapter 11 Petition Date: October 14, 2005 Court: Northern District of California (Santa Rosa) Judge: Alan Jarolovsky Debtor's Counsel: Craig K. Welch, Esq. Welch and Olrich 809 Petaluma Boulevard North Petaluma, California 94952 Tel: (707) 782-1790 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 ------ --------------- ------------ Onanno, Michael D. Sale of interest $180,000 134 South Jackson Way Alamo, CA 94507-1509 Donald Lombardi, Jr. Loan $139,542 c/o Berliner Cohen (Joseph Dworak) 10 Almaden Boulevard, 11th Fl San Jose, CA 95113-2226 Gary Freitas Sale of interest $30,000 635 Vine Hill Way Martinez, CA 94553-5363 Berryessa Garbage Trade debt $10,512 Phillips & Associates $10,000 SWRCB Trade debt $8,785 Pearson, Earl Pre-paid rent $4,500 First Insurance Funding Trade debt $4,415 Corp. Mcgowan, James Pre-paid rent $4,005 Straub, Richard Pre-paid rent $3,510 Smith, Dan Pre-paid rent $2,700 Fridoles, Mike Pre-paid rent $2,700 Johnson, Patrick Pre-paid rent $2,700 Curreri, Tony Pre-paid rent $2,700 Thomas, Steve Pre-paid rent $2,700 Goodwin, Charles Pre-paid rent $2,700 James, Terry & Pam Pre-paid rent $2,700 BC Stocking Trade debt $2,283 Rion, Ken Pre-paid rent $1,575 Barber, Susan Pre-paid rent $1,575 POINT TO POINT: Files Plan of Reorganization in W.D. Missouri ------------------------------------------------------------- Point to Point Business Development, Inc., filed its chapter 11 Plan of Reorganization, and a Disclosure Statement explaining the Plan, in the U.S. Bankruptcy Court for the Western District of Missouri. The Plan provides for the recovery of the bankruptcy assets, and the continuing operation of the Debtor to pay the amounts due under it. The Plan is drafted to allow for confirmation to proceed before final implementation of the Debtor's turn around and before any value can be realized from the bankruptcy assets, because it passes the value of those assets directly to creditors on a pro rata basis. Treatment of Claims Administrative Claims will be paid in full. Priority Claims will be paid in accordance with the priority as they appear in the schedules. Secured creditors will receive a lump sum payment of $121,500 out of funds held in escrow immediately upon entry of an order approving the settlement between the Debtor and the secured creditors, plus $218,500 from amounts recovered or released by the estate's prosecution of the Declaratory Judgment Action. General unsecured creditors will be paid: -- their pro rata share of a payment equal to 20% the amount of monthly net profit actually earned in accordance with Generally Accepted Accounting Principles, at the end of each calendar quarter following confirmation of the Plan; plus -- 50% of net cash held at the end of the calendar year starting in 2006, payable in January the following year, from the operation of the Debtor's business for a period of not less than the length of time needed to pay to creditors the gross amount paid through the Plan on hard assets plus 20% or 30 months. In addition, as soon as practicable, unsecured creditors will get a pro rata distribution from any net bankruptcy assets collected or received by the estate. Equity security holders will be retained in exchange for new value contributions as follows: -- $250,000 to be contributed to operations as needed to capitalize operations and cover cash shortfalls; plus -- the guarantee of an additional $250,000 in loans to be made to the Debtor. A full-text copy of the Debtor's chapter 11 plan of reorganization is available for a fee at http://researcharchives.com/t/s?262 Based in Liberty, Missouri, Point to Point Business Development, Inc. -- http://www.P2PMRO.com/-- says it helps clients lower costs through its maintenance, repair and operating (MRO) Web platform which enables manufacturers to streamline the process of supply ordering, reduce excess in inventory management, and more efficiently manage supply chains. Point to Point filed for chapter 11 protection (Bankr. W.D. Mo. Case No. 05-44642) on July 7, 2005. The Debtor estimated at the time of the chapter 11 filing that it had less than $50,000 in assets and more than $1 million of debt. POINT TO POINT: Taps Paul Fouts as Special Accountant ----------------------------------------------------- Point to Point Business Development, Inc., asks the U.S. Bankruptcy Court for the Western District of Missouri for permission to employ Paul J. Fouts, Jr., CPA, at Fouts & Co., LLC, as its special accountant. Mr. Fouts and his Firm will: -- work independent of the Debtor's regular accountant to: * investigate and pursue any actions on behalf of the Debtor in order to recover assets for the estate; and * investigate any issues raised by the Motion for Appointment of Examiner filed with the Court on Aug. 31, 2005; -- further investigate and pursue any actions on behalf of the estate in any issues raised by the cash collateral agreement objections filed with the Court on Sept. 6, 2005; and -- perform other accounting services as may be required and in the interest of the estate. The Firm's professionals bill: Designation Hourly Rate ----------- ----------- Paul J. Fouts, Senior Member $225 Paul D. Kluemper, Junior Member $135 Staff Accountant $75 To the best of the Debtor's knowledge, Mr. Fouts is a "disinterested person" as that term is defined in 11 USC Sec. 327. Based in Liberty, Missouri, Point to Point Business Development, Inc. -- http://www.P2PMRO.com/-- says it helps clients lower costs through its maintenance, repair and operating (MRO) Web platform which enables manufacturers to streamline the process of supply ordering, reduce excess in inventory management, and more efficiently manage supply chains. Point to Point filed for chapter 11 protection (Bankr. W.D. Mo. Case No. 05-44642) on July 7, 2005. The Debtor estimated at the time of the chapter 11 filing that it had less than $50,000 in assets and more than $1 million of debt. PPM AMERICA: Moody's Lowers $256 Million Sr. Notes' Rating to Caa1 ------------------------------------------------------------------ Moody's Investors Service lowered the ratings of Class A-1 of Notes co-issued by PPM America Structured Finance CBO I Ltd. and PPM America Structured Finance CBO I Corp. Moody's noted that this rating action results from the Issuer's exposure to the downward credit migration and interest deferral of certain portfolio securities. According to the deal surveillance report dated September 1, 2005, the Class A-1, Class A-2 and Class B Overcollateralization Tests are 90.44%, 82.94% and 79.18% (vs. limit 111.95%, 106.5% and 104.1% respectively). At the same time, the reported Weighted Average Rating Factor Test is 3093 (limit 450). PPM America Inc. is the Collateral Manager for the transaction. Rating action: Downgrade Issuer: PPM America Structured Finance CBO I Ltd. Description: U.S. $256,500,000 Class A-1 Floating Rate Senior Notes Due 2030. * Previous Rating: Ba2 (under review for possible downgrade) * Current Rating: Caa1 PRUDENTIAL MORTGAGE: Fitch Raises Ratings on Four Cert. Classes --------------------------------------------------------------- Fitch upgrades Prudential's ROCK commercial mortgage pass-through certificates, series 2001-C1, as follows: -- $38.6 million class C to 'AAA' from 'A+'; -- $9.1 million class D to 'AAA' from 'A'; -- $11.4 million class E to 'AA+' from 'A-'; -- $15.9 million class F to 'AA-' from 'BBB+'; -- $13.6 million class G to 'A from 'BBB'; -- $13.6 million class H to 'BBB+' from 'BB+'; -- $22.7 million class J to 'BB+' from 'BB'; -- $6.8 million class K to 'BB' from 'BB-'; -- $4.5 million class L to 'BB-' from 'B+'. In addition, Fitch affirms the following classes: -- $122.4 million class A-1 at 'AAA'; -- $536.1 million class A-2 at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $27.2 million class B at 'AAA'; -- $9.1 million class M at 'B'. The $4.5 million class N remains at 'CCC'. Fitch does not rate the $7.6 million class O. The upgrades reflect the continued strong pool performance and the defeasance of 12 loans since Fitch's last rating action. As of the October 2005 distribution date, the transaction's aggregate principal balance has decreased 7.1%, to $843.2 million from $908.2 million at closing. There are currently no delinquent or specially serviced loans. One loan, the RREEF America II Portfolio, representing approximately 11% of the pool, maintains an investment grade credit assessment. The $155.4 million loan is split into an A and B note. The $91 million A note is included in the transaction and the $64.4 million B note is held outside the trust. The loan is secured by a diverse portfolio of industrial, retail, office, and multifamily properties located in Delaware, Texas, California, Florida, Georgia, and Arizona. There are approximately 3.7 million square feet of commercial space and 176 multifamily units. The stressed debt service coverage ratio for year-end 2004 on the A note was 2.59 times compared to 2.65x as of YE 2003 and 2.63x at issuance. The Fitch stressed DSCR for the loan is calculated using servicer provided net operating income less reserves divided by the Fitch stressed debt service payment. PUTNAM CBO: Credit Enhancement Prompts Fitch to Lift Ratings ------------------------------------------------------------ Fitch Ratings upgrades the ratings of two classes of notes issued by Putnam CBO II, Limited/Corp, which closed Nov. 5, 1997. The following rating actions are effective immediately: --$51,617,351 senior notes upgraded to 'AA' from 'BBB+'; --$75,782,166 second priority notes upgraded to 'CC' from 'C'. Putnam CBO II is a collateralized bond obligation managed by Putnam Advisory Company LLC. The collateral of Putnam CBO II is composed of high yield corporate bonds and emerging markets corporate and sovereign debt. Included in this review, Fitch Ratings discussed the current state of the portfolio with the collateral manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates. The upgrades are based on the improved credit enhancement caused by the significant redemptions of the senior notes and the current interest that is now being paid to the second Priority notes. Since the last rating action on Dec. 17, 2004, approximately $18.5 million of the senior notes have been redeemed leaving 20.2% of the original balance outstanding. This deleveraging has caused the Senior Par Value Ratio to increase to 187.2% as of the Sept. 20, 2005 trustee report from 145.4% at the last review. In addition, Putnam CBO II is currently holding approximately $20 million of principal proceeds, the majority of which will be used to further redeem the senior notes on the November 2005 payment date. A small portion of the principal proceeds will be used to make up an interest shortfall to the second priority notes, as has been the case on previous payment dates. Although the second priority notes have deferred approximately $15.8 million of interest payments in the past, they are now receiving their current distributions due to the principal proceeds that are being applied to make up interest shortfalls. On the May 2005 payment date, approximately 36% of the second priority interest distribution was made with principal proceeds. While this class will not receive its full principal amount, it can be expected to recover a modest portion of its original balance. The rating of the senior notes addresses the likelihood that investors will receive full and timely payments of interest, as well as the aggregate outstanding amount of principal by the stated maturity date. The rating of the second priority notes addresses the likelihood that investors will receive ultimate interest and deferred interest payments, as well as the aggregate outstanding amount of principal by the stated maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/.For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004, and also available at http://www.fitchratings.com/. REFCO INC: Updated Case Summary & 50 Largest Unsecured Creditors ---------------------------------------------------------------- Lead Debtor: Refco Inc. One World Financial Center 200 Liberty Street, Tower A New York, New York 10281 Bankruptcy Case No.: 05-60006 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Refco Global Finance Ltd. 05-60007 Refco Information Services LLC 05-60008 Bersec International LLC 05-60009 Refco Capital Management LLC 05-60010 Refco Global Capital Management LLC 05-60011 Marshall Metals LLC 05-60012 Refco Financial LLC 05-60013 New Refco Group Ltd., LLC 05-60014 Refco Regulated Companies LLC 05-60015 Refco Finance Inc. 05-60016 Refco Capital Holdings LLC 05-60017 Refco Capital Markets, Ltd. 05-60018 Kroeck & Associates, LLC 05-60019 Refco Administration, LLC 05-60020 Refco Mortgage Securities, LLC 05-60021 Refco Capital LLC 05-60022 Refco F/X Associates LLC 05-60023 Refco Global Futures LLC 05-60024 Summit Management LLC 05-60025 Refco Capital Trading LLC 05-60026 Refco Group Ltd., LLC 05-60027 Refco Global Holdings LLC 05-60028 Refco Fixed Assets Management LLC 05-60029 Type of Business: The Debtors constitute a diversified financial services organization with operations in 14 countries and a global institutional and retail client base. Refco Inc.'s worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London, Paris and Singapore. In addition to its futures brokerage activities, Refco Inc. and its affiliates are major brokers of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products.. Chapter 11 Petition Date: October 17, 2005 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtors' Counsel: J. Gregory Milmoe, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Tel: (212) 735-3770 Fax: (917) 777-3770 Financial Condition as of August 31, 2005: Total Assets: $16,500,000,000 Total Debts: $16,800,000,000 Debtors' Consolidated List of 50 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Bawag International Finance $451,158,506 BAWAG P.S.K. Bank fur Arbeit und Wirtschaft und Osterreichische Postsparkasse Aktiengesellschaft Sietzergasse 2-4 A-1010 Vienna, Austria P: +43/1/534 53/3 12 10 F: +43/1/534 53/ 2284 Wells Fargo $390,000,000 Corporate Trust Services Mac N9303-120 Sixth & Marquette Minneapolis, MN 55497 P: 612-3 16-47727 Attn: Julie J. Becker VR Global Partners, LP $380,149,056 Avora Business Park 77 Sadovnicheskaya NAB. Building 1 Moscow, Russia 115035 Rogers Raw Materials Fund $287,436,182 c/o Beeland Management 141 West Jackson Boulevard, Suite 1340 Chicago, IL 60604 P: (312) 264-4375 Bancafe International Bank Ltd. $176,006,738 Carrera 11 82-76 Segundo 2 Bogota, Colombia P: 636-4349 - and - Bancafe International Bank Ltd. 801 Brickell Avenue Ph1 Miami, FL 33131 P: 305-372-9909 F: 305-372-1797 Markwood Investments $110,056,725 Via Lovanio #19 00198 Rome, Italy Capital Management Select Fund $109,009,282 Lynford Manor, Lynford Cay Nassau, Bahamas Leuthold Funds Inc $107,264,868 Leuthold Industrial Metals, LP 100 North 6th Street Suite 412A Minneapolis, MN 55403 P: 612-332-9141 F: 612-332-0797 Attn: David Cragg Rietumu Banka $100,860,048 JSC Rietumu Banka Reg. No. 40003074497 VAT No. LV40003074497 54 Brivibas str Riga, LV-1011 LATVIA P: +371-7025555 F: +371-7025588 Cosmorex Ltd. $91,393,820 CP 8057 28080 Madrid, Spain P: +34-607-745-555 F: +34-667-706-622 BCO Hipotecario Inv. Turistic $85,807,030 (Fidelicomiso Federal Forex Invest) Av Venezuela Torre Cremerca, Piso 2 Ofici B2 El Rosal Caracas, VENEZUELA VR Argentina Recovery Fund $77,710,311 Avrora Business Park 77 Sadovnicheskayanab BLDG 1 Moscow, 115035 Russia Rogers International Raw Materials $75,213,814 c/o Beeland Management 141 West Jackson Boulevard, Suite 1340 Chicago IL 60604 P: (312) 264-4375 Creative Finance Limited $65,111,071 Marcy Building, Purcell Estate P.O. Box 2416 Road Town, British Virgin Islands Cargill $67,000,000 PO Box 9300 Minneapolis, MN 55440-9300 P: (952) 742-7575 F: (952) 742-7393 JWH Global Trust $50,576,912 c/o Refco Commodity Management Inc. One World Financial Center 200 West Liberty St., 22nd Floor New York, NY 10281 RB Securities Limited $50,661,064 54 Brivibas Street LV-1011 Riga, Lativa P: + 371 702-52-84 F: + 371 702-52-26 Premier Trust Custody $49,365,415 Abraham De Veerstraat 7-A Curacao, Netherlands Antilles London & Amsterdam Trust Company $47,560,980 P.O. Box 10459 APO 3rd Floor Century Yard Cricket Square, Elgin Ave. Grand Cayman, Cayman Island Stilton International Holdings Trident Chambers, Wickhams Cay P.O. Box 146 Road Town, British Virgin Islands $46,820,415 Refco Advantage Multi-Manager Fund Futures Series $41,713,723 c/o Refco Alternative Investments Group One World Financial Center 200 West Liberty St., 22nd Floor New York, NY 10281 Banesco NY Banesco Banco Universal C.A. $39,596,609 Av Urdaneta, Esquina El Chorre, Torre Untbanca Caracas Venezuela Josefina Franco Sillier $32,862,419 Carretera Mexico-Toluca No. 4000 Col. Cuajimalpa D.R. 0500 Mexico Rovida $32,831,461 London & Amsterdam Trust Company P.O. Box 10459 APO 3rd Floor Century Yard, Cricket Sq. Caja S.A. $30,950,115 Sarmiento 299 1 Subsuelo (1353) Buenos Aires, Argentina P: (54 11) 4317-8900 F: (54 11) 4317-8909 Global Management Worldwide $28,976,612 Trident Corp. Service Floor 1 Kings Court Bay St. PO Box 3944 Nassau, Bahamas Abadi & Co. Securities $28,046,904 375 Park Avenue, Suite 3301 New York, NY 10152 P: (212) 319 -4135 Refco Winton Diversified Futures Fund $27,226,697 c/o Refco Global Finance One World Financial Center 200 West Liberty Street, 22nd Floor New York, NY 10281 Pioneer Futures, Inc. $25,932,000 One North End Ave., Suite 1251 New York, NY 10282 Daichi Commodities Co., Ltd. $24,894,833 10-10 Shinsen Cho, Shibuya-Ku Tokyo, I5O-0045 JAPAN GS Jenkins Portfolio LLC. $24,631,959 c/o Refco Capital Markets One World Financial Center 200 West Liberty Street, 22nd Floor New York, NY 10281 Winchester Preservation $23,349,765 c/o Joseph D, Freney Christiana Bank & Trust Co. 3801 Kennett Pike, Suite 200 Greenville, DE 19807 Banco Agri Banco Agricola (PANAMA) S.A. $22,314,386 Edificio Global Bank #17, Local F, Calle 50 PANAMA, PA - and - Banco Agricola, S.A. 1RA. Cakke Pte. Y 67 AV. Norte Final Blvd Constitucion #100 San Salvador, ES Peak Partners Offshore Master Fund Limited $22,205,344 P.O. Box 2199 GT Grand Pavilion Commercial Center 802 West Bay Road Grand Cayman, Cayman Islands Arbat Equity Arbitrage Fund $19,106,989 Trident Corporate Services 1st Floor Kings Court Bay Street P.O. Box N3944 Nassau, Bahamas Renaissance Securities (Cyprus) Ltd. $17,820,709 2-4 Arch Makarios 111 Avenue Capital Center, 9th Floor 1505 Nicosia Cyprus AQR Absolute Return $17,482,100 c/o Caledonian Bank & Trust Ltd. P.O. Box 1043 GT Caledonian House Grand Cayman, Cayman Islands Geshoa Fund $17,319,494 Corporate Center West Bay Road Po Box 31106 Smb GRAND CAYMAN RK Consulting $14,074,345 7, Kountouriotou Street 14563 Kifissia Greece VR Capital Group Ltd. $13,690,549 Avrora Business Park Calendonian House Mary Street NAB 77 Building 1 MOSCOW, RUSSIA 115035 P: +358 600 41 902 GTC Bank, INC. $12,971,439 Calle 55 Este Torre World Trade Center Piso 7 PANAMA GUATEMALA P: (507) 265-7371 F: (507) 265-7396 Inversiones Concambi $12,799,137 c/o AEROCAV 1029 P.O. BOX 02-5304 MIAMI, PL 33102 Miura Financial Services $12,150,213 AV. Francisco De Miranda TORRE LA PRIMERA PISO 3 CARACAS VENEZUELA NKB Investments Ltd. $11,699,430 199 Arch Makarios Ave 196 Makarios III Avenue Ariel Corner 3rd Floor Office 301 3030 Limassol CYPRUS Tokyo Forex Financial Inc $11,689,354 Shinjyuku Oak Tower, 35th Floor 6-8-1 Nishishinjyuku Shinjyuku-Ku, Tokyo JAPAN Birmingham Merchant S.A. $11,215,413 AV. ARGENTINA 4793 PISO 3 CALLAO PERU BAC International $10,906,506 Calle 43 Qnquillo De Laguar PANAMA P: (507) 265-8289 F: 507-205-4031 Total Bank $10,657,732 Calle Guaicaipuro Entre Av.Principalde Ias Mercedes Torre Alianza Piso 9 EL ROSAL, CAACAS, VENEZUELA P: (0212) 264.72.54/49.42 F: (0212) 266.58.12 Reserve Invest (Cypress) Limited $10,499,733 Maximos Plaza 3301 Block 3 3035 LIMASSOL CYPRUS Refco Commodity Futures Fund $10,166,045 c/o Refco Alternative Investments Group One World Financial Center 200 Liberty Street, 22nd Floor New York, New York 10281 P: 877 538 8820 F: 877 229 0005 REFCO INC: S&P Ratings Tumble to D After Bankruptcy Filing ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its 'CC' long-term counterparty credit rating, 'CC' senior debt rating, and 'C' subordinated debt rating on Refco Group Ltd. LLC to 'D'. All of the ratings were also removed from CreditWatch Negative where they had been placed on Oct. 10, 2005. "The downgrades are in response to the announcement by Refco Inc. -- the parent of Refco Group -- that it and certain subsidiaries filed for bankruptcy protection from creditors," said Standard & Poor's credit analyst Tom Foley. RF CUNNINGHAM: Wants Exclusive Period Extended to December 26 ------------------------------------------------------------- R.F. Cunningham & Company asks the U.S. Bankruptcy Court for the Eastern District of New York to extend until Dec. 26, 2005, the time within which it has the exclusive right to file a plan of reorganization. The Debtor also asks the Court to extend its exclusive period to solicit plan acceptances to Feb. 27, 2006. The Debtor and its professionals are analyzing the various rights of creditors, especially the producers that sold grain to the Debtor, under applicable state statutes, the Debtor says. The Debtor tells the Court that with respect to the New York producers, there remain outstanding issues regarding: (a) the total number of creditors and the overall effect of the alleged statutory trust; and (b) the agricultural producers fund pursuant to N.Y. Ag. & Mrkts. Law Section 250(a) and 250(b). The Debtor discloses that it is unclear at this point what its obligations are vis-a-vis: (1) the producers, (2) the New York State Department of Agriculture, and (3) the agricultural producers security fund. The Debtor reminds the Court that these issues were brought to the Court pursuant to the motion of Log City Milling, Inc. to compel immediate disbursement of the alleged statutory trust. The Debtor says that the reason it gave why it believed that it was not the appropriate time to disburse assets to Log City and then other creditors on a "first come first served" basis, also justify the need for additional time to formulate its Plan. The Debtor tells the Court that until the issues are resolved, it is in the best interest of the estate and all the creditors to extend its exclusivity period. Headquartered in Smithtown, New York, R.F. Cunningham & Company, is a grain dealer, licensed under the Agriculture and Markets Law of New York. The company filed for chapter 11 protection on June 13, 2005 (Bankr. E.D.N.Y. Case No. 05-84105). Harold S. Berzow, Esq., at Ruskin Moscou Faltischek, P.C., represents the Debtor in its restructuring efforts. When The Debtor filed for protection from its creditors, it listed $8,416,240 in total assets and $10,218,229 in total debts. RF CUNNINGHAM: Court Sets November 22 as Claims Bar Date -------------------------------------------------------- The Honorable Melanie L. Cyganowski of the U.S. Bankruptcy Court for the Eastern District of New York, established 4:00 p.m. on Nov. 22, 2005, as the deadline for all creditors owed money on account of claims arising prior to July 13, 2005 against R.F. Cunningham & Company, to file proofs of claim. Creditors must file their proofs of claim on or before the Nov. 22 Claims Bar Date and those forms may be filed in person, or sent by first class mail or by overnight courier to: Clerk of the Court United States Bankruptcy Court for the Eastern District of New York 290 Federal Plaza Central Islip, NY 11722 Proof of Claims shall be deemed filed only when actually physically received by the Clerk with a copy to: Ruskin Moscou Faltischek, P.C. East Tower, 15th Floor 1425 EAB Plaza Uniondale, NY 11556-1425 Attn: Sandra L. McGrath Headquartered in Smithtown, New York, R.F. Cunningham & Company, is a grain dealer, licensed under the Agriculture and Markets Law of New York. The company filed for chapter 11 protection on June 13, 2005 (Bankr. E.D.N.Y. Case No. 05-84105). Harold S. Berzow, Esq., at Ruskin Moscou Faltischek, P.C., represents the Debtor in its restructuring efforts. When The Debtor filed for protection from its creditors, it listed $8,416,240 in total assets and $10,218,229 in total debts. SAINT VINCENTS: Plaintiffs Object to Removal Period Extension ------------------------------------------------------------- Lynn Marziale, administratrix of the estate of Luke M. Parlatore, and Angela Robb, objects to Saint Vincents Catholic Medical Centers of New York and its debtor affiliates' request to extend the removal periods for causes of action asserted before the Petition Date. As reported in the Troubled Company Reporter, the Debtors asked the U.S. Bankruptcy Court for the Southern District of New York to extend the Removal Period until the confirmation of any plan of reorganization in their Chapter 11 cases. At the October 11, 2005 hearing, the Hon. Prudence Carter Beatty issued a bridge order extending the Debtors' Removal Period until further hearing on the matter. Ms. Marziale and Ms. Robb are plaintiffs to separate prepetition civil actions pending in the New York State Supreme Court against several defendants including Saint Vincent Catholic Medical Centers. Bradley A. Sacks, Esq., representing the Plaintiffs, asserts that the Debtors' request for an open-ended extension to file removal proceedings for causes of action filed before the Petition Date is overboard under the circumstances. According to Mr. Sacks, the defense in the Civil Actions was being provided through Medical Liability Mutual Insurance Co. Thus, the Debtors' resources will not be diverted from their attempt to restructure their business. The continued prosecution of the Civil Actions will not impact any other matter pending before the Court or affect the reorganization. On the other hand, the Plaintiffs will suffer immeasurable prejudice by the delay of the prosecution of their cases. Mr. Sacks points out that Ms. Robb, who has been rendered paraplegic since a neurosurgical procedure was performed on her on December 11, 2002, remains trapped in a long term nursing facility. She has no funds to move or modify her dwelling, which is not wheelchair accessible. Accordingly, the Plaintiffs ask the Court to lift the stay to allow their Civil Actions to proceed. The Plaintiffs are amenable to a limited extension of the removal period after the stay is modified to allow the Debtors to determine if removal of the Civil Actions is in their best interest. The Plaintiffs agree that the removal period may be extended: (a) for 60 days after the Court modifies the stay, as to the Marziale Action; and (b) not more than 90 days after modification of the automatic stay as to the Robb Action. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Taps Togut Segal as Special Conflicts Counsel ------------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for authority to retain Togut, Segal & Segal LLP as their special conflicts counsel. As previously reported, the Debtors sought and obtained the Court's approval to hire Garfunkel, Wild & Travis P.C., as their special healthcare, finance, and bankruptcy counsel. According to Elizabeth St. Clair, chief legal officer and general counsel of Saint Vincent Catholic Medical Centers, although Garfunkel was originally retained to also serve as conflicts counsel, the Debtors have determined that it would be better to have a separate conflicts counsel in their Chapter 11 cases. The Debtors will continue to employ Garfunkel in its traditional role as special health care counsel pursuant to Section 327(e) of the Bankruptcy Code for healthcare and finance matters. Ms. St. Clair explains that, given its smaller size and expertise, Togut Segal can efficiently handle matters that the Debtors may encounter which cannot be appropriately handled by Weil, Gotshal & Manges LLP, because of a potential or actual conflict of interest. Togut Segal will render professional services for discrete matters, which may include, but are not limited to: (a) advising the Debtors regarding their powers and duties as debtors-in-possession in the continued management and operation of their businesses and properties; (b) attending meetings and negotiate with representatives of creditors and other parties-in-interest; (c) taking necessary action to protect and preserve the Debtors' estates, including prosecuting actions on the Debtors' behalf, defending any action commenced against the Debtors and representing their interests in negotiations concerning litigation in which the Debtors are involved, including, but not limited to, objections to claims filed against the estates; (d) preparing, on the Debtors' behalf motions, applications, answers, orders, reports and papers necessary to the administration of the estates; (e) advising the Debtors in connection with any potential sale of assets; (f) appearing before the Bankruptcy Court and any appellate courts and protect the interests of the Debtors' estates before these courts; and (g) performing other necessary legal services and provide other necessary legal advice to the Debtors in connection with the Debtors' Chapter 11 Cases. The Debtors will pay Togut Segal its customary hourly rates for services rendered and reimburse the firm according to its customary reimbursement policies. The firm's current hourly rates are: Professional Rate ------------ ---- Partners $630 to $765 Counsel $545 Paralegals & Associates $125 to $525 As of the Petition Date, the Debtors did not owe Togut Segal any amounts for legal services rendered prior to that date. Mr. Togut, senior member of Togut Segal, affirms that the firm is a "disinterested person," as that phrase is defined in Section 101(14) of the Bankruptcy Code and as modified by Section 1107(b). After performing the necessary conflicts check, Togut Segal discloses that it has previously transacted with HP3, Inc., a party-in-interest in the Debtors' Chapter 11 cases. On August 9, 2005, Togut Segal was retained by Tallman, Hudders & Sorrentino, P.C., to assist with its representation of HP3 in connection with HP3's unexpired agreement to provide collection software to SVCMC. According to Mr. Togut, his firm's activity concerning HP3 was limited to participating in telephone conferences with counsel concerning the status of HP3's negotiations for assumption of its agreement by the Debtors, and a possible motion to compel assumption or rejection. According to Mr. Togut, Togut Segal never formally appeared in the Debtors' cases on behalf of HP3, and the firm was never asked to draft or file any motion or other pleading on behalf of HP3. Ultimately, it was determined Togut Segal's services were not necessary, and Tallman's engagement of Togut Segal ended on September 14, 2003. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Court Affirms St. Mary's Closure Order ------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York denied Kenneth Falk's request to stay its previous order approving the closure of St. Mary's Hospital of Brooklyn, New York. The Court finds that no new material issues of fact or law have been raised, which would have materially influenced the Court's decision to order the closing of the Hospital. On September 26, 2005, the Court received an unsigned letter from Kenneth Falk requesting reconsideration of a September 20, 2005 Order approving the closure of St. Mary's Hospital in Brooklyn, New York. On September 29, 2005, Mr. Falk submitted to Court another letter asking an order to stay the closing of the Hospital. Four days later, he filed an Order to Show Cause seeking for the third time in as many weeks an order to stop the closure. In consideration of Mr. Falk's claims that Lateef Sadiq of the Khidmah Corporation has made an offer to purchase St. Mary's Hospital, Judge Beatty points out that Mr. Sadiq has never filed papers with the Court indicating the desire or the financial wherewithal of Khidmah to purchase the Hospital, neither has Mr. Sadiq nor the Corporation's legal representative appeared at any of the many hearings regarding the matter. The Court finds that no new material issues of fact or law have been raised, which would have materially influenced the Court's decision to order the closing of the Hospital. Accordingly, Judge Beatty denies: a) Mr. Falk's second request for reconsideration; and b) the Order to Show Cause seeking a stay of the September 20 Order. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAKS INC: Earns $8.2 Million of Net Income in Second Quarter ------------------------------------------------------------ Retailer Saks Incorporated (NYSE: SKS) reported results for the second quarter and six months ended July 30, 2005, and outlined its outlook for the balance of 2005. The Company operates two business segments, Saks Department Store Group and Saks Fifth Avenue Enterprises. SDSG consists of the Company's department stores under the Younkers, Herberger's, Carson Pirie Scott, Bergner's, and Boston Store nameplates, Parisian specialty department stores, and Club Libby Lu specialty stores. The Company has announced it is exploring strategic alternatives for both NDSG and Club Libby Lu. SFAE is comprised of Saks Fifth Avenue luxury department stores, Saks Off 5th outlet stores, and saks.com. On July 5, 2005, the Company completed a transaction in which it sold substantially all of the assets directly involved in the Company's Proffitt's and McRae's operations to Belk, Inc., for approximately $622 million in cash plus the assumption of certain liabilities. On July 19, 2005, the Company successfully completed cash tender offers and consent solicitations, repurchasing approximately $586 million in principal amount of outstanding senior notes, substantially reducing the Company's leverage. These notes were repurchased at par, which included a consent fee. The Company did not timely file its Second Quarter Form 10-Q with the SEC primarily due to the delayed Sept. 1, 2005, filing of the Company's Annual Report on Form 10-K. Prior period financial information contained in this release has been restated to reflect adjustments primarily related to improperly collected markdown allowances at an SFAE merchandising division, the timing of recording of vendor markdown allowances, and lease accounting methods (related to accounting for rent holidays, tenant allowances, and symmetry of lease terms). Earnings Overview Saks Incorporated recorded net income of $8.2 million for the second quarter ended July 30, 2005. The quarter included a net gain of $57.0 million (net of taxes), primarily comprised of a $76.0 million gain on the sale of the Proffitt's/McRae's business (including an $88.0 million write-off of goodwill) netted against a non-cash $17.7 million loss on the extinguishment of debt related principally to the write-off of deferred financing costs on senior notes and a premium on previously exchanged notes. The Company recorded a loss of $25.3 million for the prior year second quarter ended July 31, 2004, which included a charge of $2.1 million (net of taxes), primarily related to the disposition of assets associated with store closings. For the current year second quarter, consolidated comparable store sales increased 2.1%, while total revenues fell 2.6%, reflecting the sale of the Proffitt's/McRae's business. The consolidated gross margin rate was 240 basis points below last year, and year- over-year selling, general, and administrative expenses grew 180 basis points. Six Months Ended Saks Incorporated recorded net income of $24.4 million for the six months ended July 30, 2005. The six months included a net gain of $58.5 million (net of taxes), primarily comprised of the $76 million gain on the sale of the Proffitt's/McRae's business (including an $88.0 million write-off of goodwill) netted against the $17.7 million non-cash loss on the extinguishment of debt related to the repurchase of senior notes. The six months also included approximately $5.6 million (net of taxes) of expenses associated with the recently completed investigations by the Company's Audit Committee of improper collections of vendor markdown allowances and approximately $3.5 million (net of taxes) of retention expenses. The Company recorded a loss of $5.2 million, for the prior year six months ended July 31, 2004, which included a charge of $4.7 million (net of taxes), primarily related to the disposition of assets associated with store closings. "The second quarter reflected consummation of the transaction to sell the assets of Proffitt's/McRae's, a reduction in total debt of over 40%, year-over-year operating improvement at the remaining SDSG businesses, and a disappointing SFAE performance," R. Brad Martin, Chairman and Chief Executive Officer of Saks, noted. "While SFAE continued to progress on a number of important strategic initiatives during the first half of 2005, execution at this business was simply not satisfactory. Actions associated with the Audit Committee investigations of improper markdown allowances clearly took their toll on the organizational focus and operating results of SFAE during the first half of the year. I expect improved business discipline and execution at SFAE going forward." Balance Sheet Highlights Inventories at July 30, 2005 totaled $1.28 billion, a 12% decrease over the prior year. Consolidated comparable store inventories decreased approximately 5% over last year, with levels at SDSG and SFAE both below last year. The decline in SFAE comparable store inventories reflected the timing of merchandise receipts, with some receipts falling into the third quarter this year versus the second quarter last year. The Company ended the quarter with approximately $250 million of cash on hand and no borrowings on its $800 million revolving credit facility. As a result of the July 2005 repurchase of approximately $586 million in principal amount of outstanding senior notes, total debt at July 30, 2005 declined over 40% to approximately $763 million, and debt-to-capitalization was 26.3%. Subsequent to quarter end, the Company repurchased an incremental $21.4 million in senior notes, bringing the total year-to-date debt reduction on the senior notes to approximately $607 million. The Company did not purchase any shares of Saks' common stock during the six months ended July 30, 2005. The Company has remaining availability of approximately 15.7 million shares under its repurchase programs. Saks Incorporated operates Saks Fifth Avenue Enterprises, which consists of 55 Saks Fifth Avenue stores, 50 Saks Off 5th stores, and http://www.saks.com/The Company also operates its Saks Department Store Group with 181 department stores under the names of Parisian, Younkers, Herberger's, Carson Pirie Scott, Bergner's, and Boston Store and 53 Club Libby Lu specialty stores. * * * As reported in the Troubled Company Reporter on Aug. 8, 2005, Moody's Investors Service changed the direction of Saks Inc. review to on review for possible upgrade from on review for possible downgrade as a result of the company effectively curing the defaults triggered by its failure to timely file its fiscal year end financial statements, as well as its improved liquidity as a result of a significant asset sale: * Corporate family of B2; * Senior unsecured debt guaranteed by operating subsidiaries of B2; As reported in the Troubled Company Reporter on July 22, 2005, Standard & Poor's Ratings Services raised its corporate credit and senior unsecured debt ratings on Saks Inc. to 'B+' from 'CCC+' to reflect the successful completion of a tender offer that reduced debt by $585 million. The ratings remain on CreditWatch with developing implications. SHOPKO STORES: Extending 9-1/4% Debt Tender Offer Until Nov. 10 --------------------------------------------------------------- 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. On Oct. 18, 2005, ShopKo had terminated the Agreement and Plan of Merger with an affiliate of Goldner Hawn Johnson & Morrison Incorporated and subsequently entered into a definitive merger agreement to be acquired by an affiliate of Sun Capital Partners. The Offer expired on Tuesday, Oct. 18, 2005 at 9:30 a.m., New York City time. The Offer will now expire at 9:30 a.m., New York City time, on Thursday, Nov. 10, 2005. All 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 Aug. 10, 2005. ShopKo disclosed on Aug. 15, 2005, that it had received the requisite consents to amend the indenture governing the Notes. ShopKo executed the supplemental indenture on Aug. 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 Oct. 18, 2005, approximately $94 million in aggregate principal amount of Notes had been tendered in the Offer. This amount represents approximately 94% 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. STATION CASINOS: Earns $39 Million of Net Income in Third Quarter ----------------------------------------------------------------- Station Casinos, Inc. (NYSE:STN) reported the results of its operations for the third quarter ended Sept. 30, 2005. Results of Operations The Company's net revenues for the third quarter ended Sept. 30, 2005, were approximately $276.3 million, an increase of 14% compared to the prior year's third quarter. The Company reported EBITDA for the quarter of $117.8 million, an increase of 30% compared to the prior year's third quarter. For the third quarter, Adjusted Earnings applicable to common stock were $44.2 million. This marks the fifteenth consecutive quarter of year-over-year growth of Adjusted EBITDA, EBITDA margin and EPS. During the third quarter, the Company incurred preopening costs related to projects under development of $1.7 million, a $3.4 million loss on the disposition of land, a $600,000 loss on the early retirement of debt, $300,000 in costs to terminate certain leases at Green Valley Ranch and $2 million in costs to develop new gaming opportunities, primarily related to Native American gaming. Including these items, the Company reported net income of $39 million. The Company's earnings from its Green Valley Ranch joint venture for the third quarter were $10.7 million, excluding the lease termination costs, which represents a combination of the Company's management fee plus 50% of Green Valley Ranch's operating income. For the quarter, Green Valley Ranch generated EBITDA before management fees of $24.4 million, a 29% increase compared to the prior year's third quarter. These numbers include results from the $125 million expansion of that property, which opened in December 2004 and included approximately 300 new hotel rooms and 25,000 square feet of additional meeting and convention space. Balance Sheet Items and Capital Expenditures Long-term debt was $1.74 billion as of September 30, 2005. Total capital expenditures were $260.5 million for the third quarter. Expansion and project capital expenditures included $173.9 million for Red Rock Resort and $43.5 million for the purchase of land. As of Sept. 30, 2005, the Company's debt to cash flow ratio as defined in its bank credit facility was 3.9 to 1. Dividend The Company's Board of Directors declared a quarterly cash dividend of $0.25 per share. The dividend is payable on Dec. 2, 2005, to shareholders of record on Nov. 11, 2005. Station Casinos, Inc. -- http://www.stationcasinos.com/-- is the leading provider of gaming and entertainment to the residents of Las Vegas, Nevada. Station's properties are regional entertainment destinations and include various amenities, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space, as well as traditional casino gaming offerings such as video poker, slot machines, table games, bingo and race and sports wagering. Station owns and operates Palace Station Hotel & Casino, Boulder Station Hotel & Casino, Santa Fe Station Hotel & Casino, Wildfire Casino and Wild Wild West Gambling Hall & Hotel in Las Vegas, Nevada, Texas Station Gambling Hall & Hotel and Fiesta Rancho Casino Hotel in North Las Vegas, Nevada, and Sunset Station Hotel & Casino, Fiesta Henderson Casino Hotel, Magic Star Casino and Gold Rush Casino in Henderson, Nevada. Station also owns a 50% interest in both Barley's Casino & Brewing Company and Green Valley Ranch Station Casino in Henderson, Nevada, and a 6.7% interest in the Palms Casino Resort in Las Vegas, Nevada. In addition, Station manages the Thunder Valley Casino near Sacramento, California, on behalf of the United Auburn Indian Community. * * * As reported in the Troubled Company Reporter on Aug. 26, 2005, Moody's Investors Service raised the ratings of Station Casino, Inc. and affirmed the company's SGL-2 speculative grade liquidity rating. Moody's also assigned a Ba3 rating to Station's $150 million add-on to its existing 6-7/8% senior subordinated notes due 2016. These ratings were raised: -- Corporate family rating, to Ba1 from Ba2; -- $450 million 6% senior notes due 2012, to Ba2 from Ba3; -- $450 million 6-1/2% senior subordinated notes due 2014, to Ba3 from B1; and -- $350 million 6-7/8% senior subordinated notes due 2016, to Ba3 from B1. This new rating was assigned: -- $150 million 6-7/8% senior subordinated note add-on due 2016 -- Ba3. This rating was affirmed: -- Speculative grade liquidity rating, at SGL-2. As reported in the Troubled Company Reporter on Mar. 29, 2005, Standard & Poor's Ratings Services revised its rating outlook on Las Vegas, Nevada-based Station Casinos, Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the owner of off-Strip casino properties, including its 'BB' corporate credit rating. STATION CASINOS: Reports 3rd Quarter Financial & Operating Results ------------------------------------------------------------------ Station Casinos, Inc. (NYSE:STN) reported the results of its operations for the third quarter ended September 30, 2005. Highlights include: -- same-store revenues from its Las Vegas operations increased 16% over the prior year's third quarter, marking the seventh consecutive quarter of double-digit same-store revenue growth on a year-over-year basis. Excluding Green Valley Ranch, revenues from its Major Las Vegas Operations increased 13% over the prior year's third quarter. -- record third quarter EBITDA(1) of $117.8 million, an increase of 30% over the prior year's third quarter. -- same-store EBITDA from its Las Vegas operations increased 30% over the prior year's third quarter. -- adjusted for non-recurring items and development expense, diluted earnings per share of $0.63 compared to $0.46 in the prior year's third quarter, an increase of 37%. -- same-store EBITDA margins for its Las Vegas operations increased to 40.7% from 36.3% in the prior year's third quarter. -- declaring a quarterly cash dividend of $0.25 per share payable on December 2, 2005, to shareholders of record on November 11, 2005. Results of Operations The Company's net revenues for the third quarter ended September 30, 2005, were approximately $276.3 million, an increase of 14% compared to the prior year's third quarter. The Company reported EBITDA for the quarter of $117.8 million, an increase of 30% compared to the prior year's third quarter. For the third quarter, Adjusted Earnings applicable to common stock were $44.2 million, or $0.63 per share, an increase of 37% over the prior year's $0.46 per share on a comparable basis. This marks the fifteenth consecutive quarter of year-over-year growth of Adjusted EBITDA, EBITDA margin and EPS. During the third quarter, the Company incurred preopening costs related to projects under development of $1.7 million, a $3.4 million loss on the disposition of land, a $0.6 million loss on the early retirement of debt, $0.3 million in costs to terminate certain leases at Green Valley Ranch and $2.0 million in costs to develop new gaming opportunities, primarily related to Native American gaming. Including these items, the Company reported net income of $39.0 million and diluted earnings applicable to common stock of $0.56 per share. The Company's earnings from its Green Valley Ranch joint venture for the third quarter were $10.7 million, excluding the lease termination costs, which represents a combination of the Company's management fee plus 50% of Green Valley Ranch's operating income. For the quarter, Green Valley Ranch generated EBITDA before management fees of $24.4 million, a 29% increase compared to the prior year's third quarter. These numbers include results from the $125 million expansion of that property, which opened in December 2004 and included approximately 300 new hotel rooms and 25,000 square feet of additional meeting and convention space. Las Vegas Market Results Same-store (Major Las Vegas Operations and Green Valley Ranch) net revenues for the quarter increased to $300.0 million, a 16% increase compared to the prior year's quarter, while EBITDA from those operations increased 30% to $122.2 million. "Our seventh consecutive quarter of double-digit same-store revenue growth was driven by the continued strength of the Las Vegas economy. We have not seen changes in consumer behavior in the Las Vegas local's market. All of the key metrics that influence our business were very robust during the third quarter including population growth, new job creation and extensive commercial and residential construction," said Lorenzo J. Fertitta, vice chairman and president. Balance Sheet Items and Capital Expenditures Long-term debt was $1.74 billion as of September 30, 2005. Total capital expenditures were $260.5 million for the third quarter. Expansion and project capital expenditures included $173.9 million for Red Rock Resort and $43.5 million for the purchase of land. As of September 30, 2005, the Company's debt to cash flow ratio as defined in its bank credit facility was 3.9 to 1. Dividend The Company's Board of Directors declared a quarterly cash dividend of $0.25 per share. The dividend is payable on December 2, 2005, to shareholders of record on November 11, 2005. Fiscal 2005 and 2006 Guidance For the fourth quarter of 2005, the Company expects EBITDA of approximately $115 million to $120 million and EPS of $0.59 to $0.64, excluding development expense and other non-recurring items. The guidance for the fourth quarter assumes approximately $7 million of construction disruption relating to the Santa Fe Station, Fiesta Henderson and Green Valley Ranch master-planned expansions. The projected revenue growth for the fourth quarter is 9% to 11% excluding the impact of the construction disruption. Including the impact of the construction disruption, the projected revenue growth for the fourth quarter is 6% to 8%. As a result, the Company now expects EBITDA for 2005 of approximately $472 million to $477 million, excluding development expense and non-recurring items and Adjusted Earnings applicable to common stock of approximately $2.57 to $2.62, assuming 69.5 million fully diluted shares. The full year guidance assumes revenue growth in the Major Las Vegas Operations (excluding Green Valley Ranch) for 2005 of 11% to 12% over the prior year, with an effective tax rate of 36.9%. The Company previously issued guidance for fiscal 2006 of approximately $545 million to $565 million of EBITDA and $2.70 to $2.89 of EPS, assuming approximately $16 million of construction disruption relating to the Santa Fe Station, Fiesta Henderson and Green Valley Ranch master-planned expansions. The Company intends to update this guidance on its fourth quarter conference call. This guidance also assumes the opening of Phase I of Red Rock Resort at the end of the first quarter of 2006, the completion of the Fiesta Henderson expansion in the third quarter of 2006, the completion of the Santa Fe Station expansion in phases beginning in the third quarter of 2006 through the fourth quarter of 2006 and the completion of the Green Valley Ranch expansion from the fourth quarter of 2006 through early 2007. This guidance further assumes an effective tax rate of 36.5% and 70 million diluted shares outstanding. Las Vegas, Nevada-based Station Casinos, Inc., is the largest owner of off-Strip casino properties. * * * Moody's Investors Service raised the ratings of Station Casino, Inc. and affirmed the company's SGL-2 speculative grade liquidity rating. Moody's also assigned a Ba3 rating to Station's $150 million add-on to its existing 6-7/8% senior subordinated notes due 2016. These ratings were raised: -- Corporate family rating, to Ba1 from Ba2; -- $450 million 6% senior notes due 2012, to Ba2 from Ba3; -- $450 million 6-1/2% senior subordinated notes due 2014, to Ba3 from B1; and -- $350 million 6-7/8% senior subordinated notes due 2016, to Ba3 from B1. This new rating was assigned: -- $150 million 6-7/8% senior subordinated note add-on due 2016 -- Ba3. This rating was affirmed: -- Speculative grade liquidity rating, at SGL-2. As reported in the Troubled Company Reporter on Mar. 29, 2005, Standard & Poor's Ratings Services revised its rating outlook on Las Vegas, Nevada-based Station Casinos, Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the owner of off-Strip casino properties, including its 'BB' corporate credit rating. STEEL HOUSE: Voluntary Chapter 11 Case Summary ---------------------------------------------- Debtor: Steel House Construction Service, Inc. 404 Parkview Lane Frankfort, Michigan 49635 Bankruptcy Case No.: 05-21168 Type of Business: The debtor is a steel erecting contractor. The Debtor's president filed a chapter 7 petition on Oct. 14, 2005 (Bankr. W.D. Mich. Case No. 05-20173) (Gregg, J.). Chapter 11 Petition Date: October 16, 2005 Court: Western District of Michigan (Grand Rapids) Judge: James D. Gregg Debtor's Counsel: Wallace H. Tuttle, Esq. Wallace H. Tuttle, P.C. 3189 Logan Valley Road P.O. Box 969 Traverse City, Michigan 49685-0969 Tel: (231) 941-0750 Fax: (231) 941-8568 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 Largest Unsecured Creditors. STEWART ENTERPRISES: Delays Third Quarter Reports Until Oct. 24 --------------------------------------------------------------- Stewart Enterprises, Inc. (Nasdaq NMS:STEI) will delay the filing of its third quarter 2005 results on Form 10-Q with the Securities and Exchange Commission due to: (i) Hurricane Katrina, (ii) the efforts to amend its Form 10-K for the year ended Oct. 31, 2004, due to the restatement reflecting the changes in reportable segments, and (iii) an account reconciliation process regarding the Company's deferred pre-need revenue balances. In connection with the Company's internal control assessment under Section 404 of Sarbanes-Oxley, the Company undertook a project earlier this year to verify the balances in deferred preneed cemetery revenue and deferred preneed funeral revenue by physically reviewing certain of the preneed cemetery and funeral service and merchandise contracts. While the Company has made significant progress, it has not completed its overall review and reconciliation. The Company had anticipated completing its review prior to filing its Annual Report on Form 10-K for fiscal year 2005. Although the progress of the project has been disrupted by Hurricane Katrina, the Company still plans to try to complete the project in time to file its Annual Report on Form 10-K for fiscal year 2005 by its due date. Financial Restatements Management believes that the deferred revenue project could result in a restatement of the Company's prior period financial statements. Management believes that to the extent there is an adjustment, a significant portion of that adjustment would relate to the cumulative effect of adopting Staff Accounting Bulletin 101 on Nov. 1, 2000, and could impact reported earnings for periods subsequent to the implementation of SAB 101. Management believes that the adjustment, if any, would result in an adjustment to deferred revenue and an adjustment to equity in an amount that should not exceed $60 million and could be materially less than that amount. In connection with its deferred revenue project, the Company is also evaluating whether there could be a material weakness in internal control related to the Company's deferred preneed revenue. Financial Filing The Company is currently considering filing with the SEC by Oct. 24, 2005, its Form 10-K/A for the year ended Oct. 31, 2004, and its Form 10-Q for the quarter ended July 31, 2005, without the effects of any potential adjustments that may result from the completion of the deferred revenue project, and accordingly, these documents would be filed without the auditor's opinion, and without the auditor's review being completed. At that time, the Company believes that, except for the results of the deferred revenue project, there should be no material outstanding issues on those reports; however, this cannot be assured. Once the project is completed, the Company would amend those filings to include the audit opinion for the Form 10-K/A and to note the completion of the review with respect to the Form 10-Q, and to make any adjustments, if necessary, as a result of the deferred revenue project. Waiver Talks As reported in the Troubled Company Reporter on Sept. 14, 2005, the Company has initiated contact with its lead lenders under the credit facility and expects to seek, and receive, waivers of any defaults in the near future. Additionally, the indenture governing the Company's 6-1/4% senior notes due 2013 requires the Company to furnish to the trustee the information required by Form 10-Q within the time periods required by the SEC's rules and regulations, and an event of default would occur under the indenture if the Company failed to provide that information within 30 days after receipt of written notice by the trustee or the holders of at least 25% of the principal amount outstanding. Founded in 1910, Stewart Enterprises is the third largest provider of products and services in the death care industry in the United States, currently owning and operating 231 funeral homes and 144 cemeteries. Through its subsidiaries, the Company provides a complete range of funeral merchandise and services, along with cemetery property, merchandise and services, both at the time of need and on a preneed basis. SUPREME REALTY: To Acquire Hotel Properties for $34 Million ----------------------------------------------------------- Supreme Realty Investments, Inc., filed another amendment to its annual report for the year ended Dec. 31, 2004, with the Securities and Exchange Commission on Oct. 6, 2005. The Company's annual report for the year ended Dec. 31, 2004, was originally submitted to the SEC on April 15, 2005. The second amendment reports on Supreme Realty's planned purchase of four hotel properties and its projected effect on the Company's finances. Planned Acquisitions Supreme Realty has entered into a formal letter of intent to acquire this portfolio of hotel properties from a Belgium-based company for a total acquisition cost of $34 million, plus transaction costs: -- 263-room, full service hotel in Detroit, Michigan (DoubleTree Hotel) -- 197-room, full service hotel in St. Louis, Missouri (DoubleTree Hotel) -- 185-room, full service hotel in Dayton, Ohio (DoubleTree Hotel); and -- 283-room, full service hotel in Tulsa, Oklahoma (Hilton Hotel) The Company will finance the transaction by issuing debentures and additional shares of its common stock to institutional investors. The properties currently have an average occupancy rate of 66% and approximately $23.1 million in gross revenues. At current discount rates and capitalization rates, Supreme has estimated the portfolio's current total value at $52 million and expects that with improved management and overall economic conditions it can increase that value by 10%-30% over the next 5 years. In the amended 10-K for the year ended Dec. 31, 2004, Supreme Realty included pro forma financial statements illustrating the possible future prospects of the Company if the transaction was consummated. The Company projects a $10,943,167 net income for the year ended Dec. 31, 2005 on $35,392,400 of revenues. At Dec. 31, 2005, the Company anticipates $56,228,807 of assets and liabilities totaling $44,528,438. Pro Forma 2004 Results Supreme Realty also provided restated financial results for the year ended Dec 31, 2004, disclosing the estimated financial impacts of the proposed hotel acquisitions. The Company adjusted net loss in 2004 to $130,998 on $63,405 of revenues. The Company's revised balance sheet as of Dec. 31, 2004, showed $1,292,101 of assets and liabilities totaling $851,017. Actual 2004 Results Supreme Realty incurred a $212,399 net loss from operations for the year ended Dec. 31, 2004 compared to a $74,288 net loss for the year ended December 31, 2003. Management attributes the net loss in 2004 to expenses associated with the Coronation Acquisition Corp. merger, loss of rental revenues, and interest on mortgage indebtedness charges. The Company's balance sheet showed $1,292,101 of assets at Dec. 31, 2004, and liabilities totaling $851,017. Going Concern Doubt George Stewart, CPA, expressed substantial doubt about Supreme Realty's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. Mr. Stewart pointed to the Company's recurring losses and significant working capital deficiency. About Supreme Realty Supreme Realty Investments, Inc. is a real estate operating company primarily engaged in the acquisition, operation, and disposition of real properties and loans secured by real properties. Through its and its wholly-owned subsidiary, Supreme Capital Funding, Inc., it also engages in mortgage banking activities such as loan origination, servicing, and brokering real estate loans to and from lending institutions and institutional investors. The Company acquires hotels and other real properties either directly in fee simple, or indirectly through ownership of beneficial interests in land trusts or partnerships that hold title to the real property. TEVEAMERICA NETWORKS: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: TeveAmerica Networks, LLC fdba TeleAmerica Networks 2700 Stemmons Freeway, Suite 1100 Dallas, Texas 75207 Bankruptcy Case No.: 05-86702 Chapter 11 Petition Date: October 19, 2005 Court: Northern District of Texas (Dallas) Debtor's Counsel: Eric A. Liepins, Esq. Eric A. Liepins, P.C. 12770 Coit Road, Suite 1100 Dallas, Texas 75251 Tel: (972) 991-5591 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million A list of the Debtor's 20 largest unsecured creditors is not available at press time. TIRO ACQUISITION: Wants Exclusive Period Stretched to December 8 ---------------------------------------------------------------- Tiro Acquisition, LLC, and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend until December 8, 2005, the time within which they can have the exclusive right to file a chapter 11 plan. The Debtors also want their exclusive right to solicit plan acceptances extended through February 6, 2006. The Debtors tell the Court that the exclusivity extensions are necessary to facilitate an orderly, efficient and cost-effective wind-down process for the benefit of all creditors. The Debtors' time and effort has been devoted to negotiating a liquidating plan and investigating potential litigation. Headquartered in Southport, Connecticut, Tiro Acquisition -- http://www.tiroinc.com/-- develops, manufactures and packages hair care and other products for professional salons. The Company and its debtor-affiliates filed for chapter 11 protection on October 12, 2004 (Bankr. D. Del. Case No. 04-12939). When the Debtor filed for protection, it listed more than $10 million in assets and debts. TODD MCFARLANE: Wants Until Feb. 17 to File Chapter 11 Plan ----------------------------------------------------------- Todd McFarlane Productions, Inc., asks the U.S. Bankruptcy Court for the District of Arizona for an extension of its time to file and solicit acceptances of a chapter 11 plan. The Debtor wants until Feb. 17, 2006, to file a plan and until April 17, 2006, to solicit acceptances of that plan. The Debtor relates that for the past six months, its professionals were engaged in due diligence of over 35 insurance policies. Also, the Debtor filed consolidated litigation against several insurance carriers in the District Court of Missouri, and asked for the transfer of those cases to be moved to the Bankruptcy Court of Arizona. The Debtor says it needs the extension to resolve: * the Gaiman litigation, * the insurance coverage litigation, and * the Twist litigation. If Todd McFarlane can't resolve the three cases, it hopes to at least gather enough information to formulate a viable plan. The Twist Litigation In July 2004, Tony Twist, a former professional hockey player, obtained a $15 million judgment on a right-of-publicity claim against Todd McFarlane. Mr. Twist complained that the Debtor had unlawfully used his identity as "Mr. Twist" when it used the name on a Spawn comic book series and in a Home Box Office animated series. Mr. Twist sought to enforce the judgment by demanding immediate turnover of the Debtor's property. In December 2004, the Debtor's checking account at Bank of America and Wells Fargo Bank were debited to a suspense account pending further order from the Superior Court of Arizona. The event led to the Debtor's bankruptcy filing on Dec. 17, 2004. The Debtor expects to resolve the Twist appeal by December. The Gaiman Litigation Neil Gaiman, a freelance artist, was awarded $45,000 in damages from a lawsuit he filed against the Debtor for breach of contract, copyrights co-ownership and violation of the right of publicity. The Wisconsin District Court ordered an accounting of the profits generated by Mr. Gaiman's intellectual property and the liquidation of his claim. The Court is expected to enter a final judgment after completion of the accounting. The lawsuit is currently stayed pursuant to Section 362(a) of the bankruptcy code. Insurance Claims The Debtor is currently evaluating whether to consolidate the indemnification claims filed against Hanover Insurance Company with other similar lawsuits that may be commenced as part of the Debtor's efforts to recover estate assets for the benefit of all its creditors. Hanover Insurance had repudiated its duty to defend the first six and one half years of the Twist Lawsuit and claimed that the insurance policy it sold to the Debtor does not cover any loss resulting from the Twist litigation. The Debtors have asserted counterclaims against Hanover Insurance for breach of contract, promissory estoppel and bad faith. The Debtor has also sought for a Declaratory Judgment against American International Insurance Company in connection with claims arising from the Gaiman litigation. The Debtor has initiated an investigation regarding its insurance coverage to identify potential sources of funding for its plan of reorganization. Traveler's Property & Casualty Corp and General Star Indemnity Company and Citizens Insurance Co. of America are subject to this investigation. Headquartered in Tempe, Arizona, Todd McFarlane Productions, Inc. -- http://www.spawn.com/-- publishes comic books including Spawn, Hellspawn, & Sam and Twitch. The Company filed for chapter 11 protection on Dec. 17, 2004 (Bankr. D. Ariz. Case No. 04-21755). Kelly Singer, Esq., at Squire Sanders & Dempsey, LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed more than $10 million in assets and more than $50 million in debts. TOM'S FOODS: Lance Inc. Wins Asset Auction with $37.9 Million Bid ----------------------------------------------------------------- Lance, Inc. (Nasdaq: LNCE) is the successful bidder in a U.S. Bankruptcy Court directed auction of the assets of Tom's Foods, Inc. The completion of the transaction is subject to approval of the sale by the U.S. Bankruptcy Court for the Middle District of Georgia. Tom's products include potato chips, nuts, sandwich crackers and other snack food items that are distributed through a combination of independent distributors and company-owned direct store delivery routes. Primary retail outlets for Tom's products are convenience stores and vending machines in the Southeast U.S. Tom's assets include five manufacturing facilities in the U.S., which employ approximately 1,400 employees. The purchase price for the assets of Tom's is $37.9 million plus the assumption of certain current liabilities. "Tom's has a strong heritage and solid reputation in the snack food business, and we believe that this opportunity will make our company stronger," David V. Singer, President and Chief Executive Officer of Lance, Inc., said. "The transaction developed quickly, and we are still developing our plans. In the near term we intend to continue business as usual while we develop a plan to effectively meet the needs of our customers and consumers. We are confident that the combination of increased sales and operating synergies will create value for Lance, Inc. stockholders." As reported in the Troubled Company Reporter on Oct. 7, 2005, the Debtor told the Court that it needs to consummate a sale of its business by Oct. 21, 2005, anticipating that it will run out of cash by then. The Debtor says it is in jeopardy of liquidation due to soaring administrative costs in their bankruptcy proceedings and continuing defaults under its DIP Loan Agreement. Exclusive Period The Debtor has sought an extension with the Court of its time to file and solicit acceptances of a chapter 11 plan. The Debtor wants until Dec. 2, 2005 to, file a plan and until Jan. 31, 2006, to solicit acceptances of that plan. The Debtor said it will be in a position to determine whether a plan of reorganization is feasible after it consummated the sale of its assets. Lance, Inc., manufactures and markets snack foods throughout most of the United States and other parts of North America. Headquartered in Columbus, Georgia, Tom's Foods Inc. manufactures and distributes snack foods. Its product categories include chips, sandwich crackers, baked goods, nuts, and candies. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. M.D. Ga. Case No. 05-40683). David B. Kurzweil, Esq., at Greenberg Traurig, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $93,100,000 and total debts of $79,091,000. TORCH OFFSHORE: Wants Until Nov. 14 to File Chapter 11 Plan ----------------------------------------------------------- Torch Offshore, LLC, and Torch Express, LLC, ask the U.S. Bankruptcy Court for the Eastern District of Louisiana for more time to formulate a chapter 11 plan, and solicit acceptances of that plan, without interference from other parties-in-interest. The Debtors explain that as a direct result of Hurricane Katrina their professionals have limited access to documents, records, and files necessary for the preparation of a plan of reorganization. The Debtors say that an extension until Nov. 14, 2005, to file a plan and until Jan. 16, 2006, to solicit acceptances of that plan, will be sufficient. Headquartered in Gretna, Louisiana, Torch Offshore, Inc., provides integrated pipeline installation, sub-sea construction and support services to the offshore oil and gas industry, primarily in the Gulf of Mexico. The Company and its debtor-affiliates filed for chapter 11 protection (Bankr. E.D. La. Case No. 05-10137) on Jan. 7, 2005. When the Debtors filed for protection from their creditors, they listed $201,692,648 in total assets and $145,355,898 in total debts. USA MANUFACTURING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: USA Manufacturing Corporation 409 Indianapolis Avenue Lebanon, Indiana 46052 Bankruptcy Case No.: 05-29477 Type of Business: The Debtor is a master distributor of surplus heating, cooling, and refrigeration equipment. USA Manufacturing supplies contractors and individuals with high quality, low cost heating and cooling equipment. USA Manufacturing also buys equipment, specializing in buying slow-moving and obsolete inventory. See http://www.usamfg.net/ Chapter 11 Petition Date: October 14, 2005 Court: Southern District of Indiana (Indianapolis) Judge: James K. Coachys Debtor's Counsel: James A. Knauer, Esq. Kroger Gardis & Regas, LLP 111 Monumnet Circle, Suite 900 Indianapolis, Indiana 46204-5125 Tel: (317) 692-9000 Fax: (317) 264-6832 Total Assets: $5,096,463 Total Debts: $6,549,877 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ William E. Daniels Business loan $2,800,000 10575 Hyde Park Value of security: Carmel, IN 46032 $5,074,222 Senior lien: $2,860,732 Perfection-Schwank, Inc. Trade debt, now $151,455 P.O. Box 749 judgment from the Waynesboro, GA 30830-0749 Richmond County (Georgia) Superior Court. 2002-RCCV-464 Koch Air Conditioning Trade debt $134,594 5620 Dividend Road Indianapolis, IN 46240 Carrier Corp. Trade debt $104,334 Coldmatic Refrigeration of Trade debt, now $60,323 Canada Ltd. attempt to domesticate foreign judgment. 06DO2-0308-CC-86 Park Supply Trade debt $54,979 Design Air Trade debt $41,750 US Air Conditioning Trade debt $30,000 Trader.com Trade debt $22,259 Federated Supply Trade debt $19,790 Copeland Corporation Trade debt $18,702 Fleetwoods Trade debt $17,333 Kelley Hardesty Smith Accounting services $16,096 Supco Trade debt $15,850 Emerson Transportation Trade debt $14,949 A-1 Components Trade debt $13,956 Alternative Business Trade debt $12,062 Lute Supply Trade debt $11,584 Alvan Motor Freight Trade debt $10,219 Baker Distributing Trade debt $10,000 UNISYS CORP: Poor Performance Prompts S&P's Negative Outlook ------------------------------------------------------------ Standard & Poor's Ratings Services revised the rating outlook on IT consulting and services company Unisys Corp. to negative from stable. In addition, Standard & Poor's affirmed its 'BB-' corporate credit and senior unsecured debt ratings on the Blue Bell, Pennsylvania-based company. "The outlook revision reflects weaker-than-expected operating performance in the company's third quarter, and the corresponding negative effect that this will have on free cash flow for the remainder of the year," said Standard & Poor's credit analyst Philip Schrank. Additionally, the company has announced strategic actions such as divestitures of non-strategic businesses and further actions to right-size its cost structure. The company expects to take restructuring charges of about $250-$300 million through 2006 for these actions. Ratings reflect deteriorating credit protection measures, coupled with uncertainties regarding the company's ability to improve profitability and cash flows over the near term in light of challenging market conditions and problematic contracts. Overall operating profitability has been affected by the reduction of operating income from its high-margin legacy enterprise server business, losses attributed to several services contracts, and a substantial increase in pension expense. Although Unisys will be challenged to increase revenues and profit margins over the near term because of a very intense competitive environment, results for the remainder of fiscal 2005 and beyond should gradually benefit as the cost structure realignment continues and the financial impact of problem contracts dissipates. Ratings support is provided by a meaningfully funded services backlog, which adds a measure of earnings predictability. Furthermore, Unisys maintains a good competitive position specifically in the Federal Government and public sector, strong client relationships, and increasing global scale. UNISYS CORP: Low 3rd Quarter Earnings Cue Fitch's Low-B Ratings --------------------------------------------------------------- Fitch Ratings has downgraded Unisys Corporation's issuer default rating, senior bank credit facility, and senior unsecured debt ratings to 'BB-' from 'BB'. The Rating Outlook is Negative. Fitch's action affects approximately $1.1 billion of debt. The downgrade and Negative Outlook are a result of Unisys's announcement today of weak preliminary earnings for the third quarter of 2005; significant new restructuring initiatives; inability to meet financial guidance; and continued declines in credit protection measures and financial performance. Fitch believes execution and operating risks have increased due to Unisys's announcement of a new restructuring program involving potential asset sales and a 10% reduction in the company's workforce, resulting in a total restructuring charge of $250 million to $300 million over the next five quarters. The release of earnings on a preliminary basis reflects the company's in-process evaluation of $1.6 billion of deferred tax assets, a portion of which Fitch expects to be written down. Although a write-down of deferred tax assets will have no impact on the company's near-term liquidity, it does indicate future profitability pressures. Also factored into the downgrade and outlook for the senior unsecured notes is Fitch's belief that there is a potential that Unisys's bank credit facility, which expires in May 2006, could be replaced with a secured facility, subordinating the current senior unsecured bondholders. Fitch believes the current bond indenture allows for security including up to $250 million of real property as well as receivables, inventories, or other assets, which totaled approximately $1.3 billion, as of Sept. 30, 2005. Unisys' deteriorating financial performance is the result of protracted difficulties with two significant transformational business process outsourcing contracts and continued weakness in the technology hardware segment. Although Unisys has reached a memorandum of understanding to restructure one of the problem contracts, its iPSL check-processing outsourcing joint venture in the U.K., Fitch expects services margins to remain weak in the near term as it takes Unisys longer than expected to resolve a secondary problem contract. Fitch also believes Unisys will continue to be challenged by its technology segment, which continues to suffer from persistent weakness in higher margin ClearPath system sales relative to ES7000 servers. For the latest 12 months ending Sept. 30, 2005, Unisys's pro forma leverage -- measured by total adjusted debt including A/R securitizations-to-pre-pension EBITDAR -- increased to approximately 6.7 times from 3.9x in the prior year. Interest coverage -- EBITDA/interest incurred -- declined to approximately 5.6x on a pre-pension expense basis from 8.3x for the same time period a year ago. Fitch believes these metrics will be pressured and possibly deteriorate further in the intermediate term. Free cash flow -- cash flow from operations minus capital expenditures -- has been negative in three of the past four quarters ended September 2005, with total free cash flow of negative $168 million over this period. Free cash flow has remained minimal the past few years due to profitability pressures, increased capital expenditures for revenue-generating IT services contracts, and significant cash restructuring charges. Fitch believes the aforementioned cash flow issues will continue for the intermediate term due to ongoing cash restructuring charges and the continued negative financial impact from the two large transformational outsourcing contracts. The company will receive approximately $225 million from the Nihon Unisys, Ltd. transaction, equally split between two payments in October 2005 and October 2006, and opportunities exist for the company to receive proceeds in 2006 from specific asset sales. While Fitch believes financial flexibility remains adequate, it continues to be pressured with cash balances nearly 33% lower at approximately $466 million at Sept. 30, 2005, from $661 million at year-end 2004, while debt has increased $66 million to $1.1 billion. Additional liquidity is provided by an undrawn $500 million bank facility expiring in May 2006. Unisys also has a mostly drawn $225 million accounts receivable securitization facility, which expires in November 2006. VARTEC TELECOM: Wants to Assume License Pacts with Edify Corp. -------------------------------------------------------------- Vartec Telecom, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Texas, Dallas Division, for permission to: -- assume a Software License and Services Agreement with Edify Corporation and the U.S. Associated Agreements, and -- assume and assign to ACN Canada Acquisition, Inc., the Canadian Associated Agreements. Under the Software License Agreement, Excel Management Service, Inc., and VarTec purchased certain perpetual licenses and related product support and software update services from Edify Corp. Certain of these licenses and support services were used in connection with the Debtors' domestic operations in the United States and others were used in connection with the operations of the Debtors' former Canadian subsidiaries. Prior to the expiration of the term of the U.S. Associated Agreements relating to the support services, EMS and VTI renewed the term of that support at a $67,000 cost for a term of 12 months commencing on July 1, 2005. The Debtors tell the Court that the U.S. Licenses and related support are valuable tools used in connection with the call centers with which the Debtors deal. The Debtors anticipate that they will continue to require the services provided under these agreements. The Debtors relate that no cost associated with cure of defaults exists with respect to the agreements, and Edify agrees to consent to the assignment to Comtel Investments L.L.C. Also, Edify agrees to permit the Debtors to terminate or reject the U.S. Associated Agreements and any related claims will be deemed to be general unsecured claims against Excel Management Service, Inc., and VarTec Telecom, Inc.'s respective bankruptcy estates. Canadian Associated Agreements On May 5, 2005, the Court approved the sale of the capital stock of the Canadian subsidiaries to ACN Canada Acquisition, Inc. The Debtors, ACN, and Edify completed the documentation needed to assign the Canadian Associated Agreements on Aug. 15, 2005. Pursuant to Section 365 of the U.S. Bankruptcy Code and with the agreement with Edify, the Debtors also seek to assign the Canadian Associated Agreements to ACN effective as of Aug. 15, 2005. The Hon. Harlin D. Hale will convene a hearing on Nov. 11, 2005, at 1:30 p.m., to consider the Debtors' request. Headquartered in Dallas, Texas, VarTec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04-81694). Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed more than $100 million in assets and debts. VTEX ENERGY: U.S. Energy to Acquire U.K. Assets for $60 Million --------------------------------------------------------------- U.S. Energy Systems, Inc. (Nasdaq: USEY) entered into an agreement with VTEX Energy Inc. and Marathon Capital, LLC, pursuant to which the parties agreed to jointly acquire certain energy assets in the United Kingdom. The assets include gas field licenses (with provable and recoverable gas reserves estimated to exceed 60 billion cubic feet), gas gathering and processing systems and a related gas turbine power plant with a capacity ranging from 40-45 megawatts. The purchase price for these assets is estimated to be approximately $60 million, of which approximately $5 million will be funded by U.S. Energy and additional funding will be provided through project financing secured by the acquired assets. No assurance can be given that the contemplated transaction will be completed or that if completed, will be profitable to U.S. Energy. U.S. Energy Systems, Inc., based in White Plains, N.Y., is a customer- focused provider of energy outsourcing services for large retail customers, including industrial, commercial and institutional end users. USEY owns and operates energy projects in the United States that generate electricity and thermal energy and use renewable fuels. Headquartered in Houston, Texas, VTEX Energy Inc., fka Vector Energy Corp., is an independent energy company engaged in the acquisition, development and production of oil and natural gas reserves. The Company currently has two properties, Bateman Lake Field located in St. Mary's Parish, Louisiana, and Mustang Island Field located offshore Kleberg County, Texas. * * * Going Concern Doubt Pannell Kerr Forster of Texas, PC, expressed substantial doubt about VTEX Energy's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended April 30, 2005. The auditing firm pointed to the Company's: -- significant loss from operations; -- working capital deficit; -- default on certain of its debt instruments; and -- additional capital funding requirements. WELLINGTON PROPERTIES: Taps John Kepley to Appraise Property ------------------------------------------------------------ Wellington Properties, LLC, asks the U.S. Bankruptcy Court for the Middle District of North Carolina, Durham Division, for permission to employ John T. Kepley of Pickett-Sprouse Real Estate, Inc., as its appraiser. The Debtor filed a proposed Plan of Reorganization and an accompanying Disclosure Statement explaining the Plan on Sept. 12, 2005. In conjunction with the Plan confirmation hearing scheduled for Dec. 6, 2005, the Debtor believes that the expert testimony of an appraiser will be necessary to: -- present future value to the Debtor's apartment complex known as Wellington Place; -- the adequacy of the property to secure the restructured payment of the existing secured debt held by LaSalle Bank as Trustee; -- the reasonableness of the projections; and -- the feasibility of the Plan. The property serves as a substantial part of the collateral securing LaSalle's secured claim, as well as being a valuable asset of the Debtor's estate. Mr. Kepley will: -- prepare an appraisal for the property; -- provide testimony concerning the present and future value of the property, the reasonableness of the projections, and the feasibility of the Plan, including but not limited to the offering of expert testimony and opinions as to value; -- assist counsel to the extent required with the presentation of testimony at the confirmation hearing. Mr. Kepley's current hourly rate is $200, and an estimated $10,000 fee for the services he will provide. To the best of the Debtors' knowledge, Mr. Kepley does not hold any interest adverse to their estates and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Durham, North Carolina, Wellington Properties, LLC, owns and operates a 501-unit apartment complex known as Wellington Place located in Durham, North Carolina. The Company filed for chapter 11 protection on March 29, 2005 (Bankr. M.D.N.C. Case No. 05-80920). John A. Northen, Esq., at Northen Blue, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $11,625,087 and total debts of $12,632,012. WELLS FARGO: Fitch Upgrades Low-B Ratings on Ten Cert. Classes -------------------------------------------------------------- Fitch Ratings has taken rating actions on these Wells Fargo Mortgage Backed Securities: Series 2002-10 -- Class A affirmed at 'AAA' -- Class B-1 affirmed at 'AAA' -- Class B-2 affirmed at 'AAA' -- Class B-3 upgraded to 'AA+' from 'AA-' -- Class B-4 upgraded to 'A+' from 'A-' -- Class B-5 upgraded to 'A' from 'BB' Series 2002-14 -- Class A affirmed at 'AAA' -- Class B-1 affirmed at 'AAA' -- Class B-2 affirmed at 'AAA' -- Class B-3 upgraded to 'AAA' from 'AA' -- Class B-4 upgraded to 'AA' from 'A' -- Class B-5 upgraded to 'A' from 'BB+' Series 2002-17 -- Class A affirmed at 'AAA' Series 2002-18 -- Class A affirmed at 'AAA' Series 2002-19 -- Class A affirmed at 'AAA' Series 2002-20 -- Class A affirmed at 'AAA' Series 2003-3 -- Class A affirmed at 'AAA' Series 2003-4 -- Class A affirmed at 'AAA' -- Class B-1 upgraded to 'AA+' from 'AA' -- Class B-2 upgraded to 'AA' from 'A' -- Class B-3 upgraded to 'A' from 'BBB' -- Class B-4 upgraded to 'BBB' from 'BB' -- Class B-5 upgraded to 'BB' from 'B' Series 2003-5 -- Class A affirmed at 'AAA' -- Class B-1 affirmed at 'AAA' -- Class B-2 upgraded to 'AA+' from 'AA' -- Class B-3 upgraded to 'AA-' from 'A' -- Class B-4 upgraded to 'BBB+' from 'BB+' -- Class B-5 upgraded to 'BB' from 'B+' Series 2003-9 -- Class I-A affirmed at 'AAA' -- Class II-A affirmed at 'AAA' -- Class I-B-1 affirmed at 'AA' -- Class I-B-2 upgraded to 'A+' from 'A' -- Class I-B-3 upgraded to 'BBB+' from 'BBB' -- Class I-B-4 affirmed at 'BB' -- Class I-B-5 affirmed at 'B' -- Class II-B-1 upgraded to 'AA+' from 'AA' -- Class II-B-2 upgraded to 'AA-' from 'A' -- Class II-B-3 upgraded to 'A-' from 'BBB' -- Class II-B-4 upgraded to 'BBB-' from 'BB' -- Class II-B-5 upgraded to 'BB-' from 'B' Series 2003-10 -- Class A affirmed at 'AAA' Series 2003-12 -- Class A affirmed at 'AAA' Series 2003-13 -- Class A affirmed at 'AAA' Series 2003-14 -- Class A affirmed at 'AAA' Series 2003-16 -- Class A affirmed at 'AAA' -- Class B-2 affirmed at 'A' -- Class B-5 affirmed at 'B' Series 2003-17 -- Class A affirmed at 'AAA' Series 2003-18 -- Class A affirmed at 'AAA' Series 2003-19 -- Class A affirmed at 'AAA' Series 2003-B -- Class A affirmed at 'AAA' -- Class B-1 affirmed at 'AAA' -- Class B-2 affirmed at 'AA' -- Class B-3 affirmed at 'A' -- Class B-4 affirmed at 'BB+' -- Class B-5 affirmed at 'B+' Series 2003-I -- Class A affirmed at 'AAA' -- Class B-1 upgraded to 'AA+' from 'AA' -- Class B-2 upgraded to 'A+' from 'A' -- Class B-3 upgraded to 'BBB+' from 'BBB' -- Class B-4 upgraded to 'BB+' from 'BB' -- Class B-5 upgraded to 'B+' from 'B' Series 2003-K -- Class A affirmed at 'AAA' Series 2003-M -- Class A affirmed at 'AAA' Series 2003-O -- Class A affirmed at 'AAA' Series 2004-4 -- Class A affirmed at 'AAA' -- Class B-1 affirmed at 'AA' -- Class B-2 affirmed at 'A' -- Class B-3 affirmed at 'BBB' -- Class B-4 affirmed at 'BB' -- Class B-5 affirmed at 'B' Series 2004-7 -- Class A affirmed at 'AAA' Series 2004-8 -- Class A affirmed at 'AAA' The mortgage loans consist of fixed-rate and adjustable-rate, 15- and 30-year mortgages extended to prime borrowers and are secured by first and second liens, primarily on one- to four-family residential properties. As of the September 2005 distribution date, the transactions are seasoned from a range of 14 to 40 months and the pool factors -- current mortgage loan principal outstanding as a percentage of the initial pool -- range from 10.12% to 86.42%. All of the loans are serviced by Wells Fargo Home Mortgage, which is rated 'RPS1' by Fitch. The affirmations reflect a stable relationship between credit enhancement and future loss expectations and affect approximately $8.458 billion of outstanding certificates. The upgrades reflect an increased amount of credit support and lower-than-expected delinquencies and affect approximately $37.27 million. For the 2002 vintage bonds, the credit enhancement has risen to an average of 5.5 times the original levels; for the 2003 vintage bonds, the credit enhancement has risen to an average of nearly 2 times the original. Fitch will continue to closely monitor these transactions. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings web site at http://www.fitchratings.com/. WEST SUBURBAN: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: West Suburban Imports Inc. 415 West Roosevelt Road Maywood, Illinois 60153 Tel: (630) 688-5052 Bankruptcy Case No.: 05-61043 Type of Business: The Debtor is a Volkswagen dealer. See http://www.westsuburbanvw.com/en_US/ Chapter 11 Petition Date: October 16, 2005 Court: Northern District of Illinois (Chicago) Judge: Susan Pierson Sonderby Debtor's Counsel: William L. Needler, Esq. William Needler & Associates 555 Skokie Boulevard Northbrook, Illinois 60062 Tel: (847) 559-8330 Fax: (847) 559-8331 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. XYBERNAUT CORP: Equity Panel Taps Executive Sounding as Advisor --------------------------------------------------------------- The Official Committee of Equity Security Holders of Xybernaut Corporation and its debtor-affiliate asks the U.S. Bankruptcy Court for the Eastern District of Virginia for permission to retain Executive Sounding Board Associates, Inc., as its financial advisor. Executive Sounding will: a) advise the Equity Committee with respect to the operational and financial condition of the debtor's businesses, identify opportunities to improve the operations and reduce the Debtors' operating losses, and monitor the Debtors' financial performance; b) assist the Equity Committee in evaluating the impact that transactions proposed by the Debtors will have on the equity security holders and, if necessary, assist in preparing appropriate responses; c) assist counsel in identifying and evaluating actions against third parties, potentially including former members of management and the Board of Directors and the former auditors; d) develop and evaluate reorganization alternatives and strategies to maximize asset recoveries; e) monitor, evaluate and challenge the performance of the Debtors' investment banker in the sale of the Debtors' intellectual property and operating business; f) assist the Equity Committee in its efforts to aid the Debtors in obtaining DIP financing; g) participate in Court hearings and, if necessary, provide expert testimony in connection with any hearings before the Court; and h) provide such other services, as requested by the Equity Committee or its counsel. The Firm will bill the Debtors based on the professional's current hourly rates: Designation Hourly Rate ----------- ----------- Managing Directors/Directors $285 - $425 Senior Consultants $200 - $335 Associate Professional & Consultants $75 - $250 To the best of the Equity Committee's knowledge, Executive Sounding does not represent an interest materially adverse to the Debtor's 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: Wants to Access $5MM DIP Financing from LC Capital ------------------------------------------------------------------ Xybernaut Corporation and its debtor-affiliate ask the U.S. Bankruptcy Court for the Eastern District of Virginia for permission to obtain post-petition financing from LC Capital Master Fund, Ltd. on an unsecured superpriority administrative expense basis and to approve the terms and conditions of the DIP Financing Facility Agreement that will govern the DIP financing. Under the agreement, the Debtors are entitled to borrow $5 million from LC Capital with 9% payable monthly in arrears. Any repayment not paid when due will bear interest at the rate per annum equal to 5% above the stated interest. To provide a collateral, LC Capital are granted a first priority lien on all of the Debtor's assets. Should the Debtors reorganize, the Lender will be entitled to receive 7-year warrants to purchase 10% of the capital stock of the Debtors at a $0.01 strike price, subject to anti-dilution protection and customary minority shareholder protections. Pursuant to the terms of the DIP Credit Facility, the Debtors will reserve funds of up to $1.5 million to pay their general unsecured creditors. The GUC Escrow will be funded: -- for each $1 of funds advanced for operating uses (and not funds advanced to pay fees and expenses payable to Lender under the DIP Credit Facility or to pay fees and expenses of professionals retained in the Debtors' bankruptcy cases), -- an additional $1 will be advanced to the GUC Escrow. With the exception of the GUC Escrow, the proceeds will be used solely for: * working capital needs, * general corporate purposes, * and the costs and expenses associated with the bankruptcy cases. Furthermore, the Debtors ask the Court's authority to pay the Lender $50,000 in respect of its time, efforts and expenses incurred in due diligence and in negotiating and drafting the documents related to the DIP Credit Facility, if for any reason the DIP Credit Facility is not approved by the Court. The Debtors tell the Court that their cash position continues to deteriorate. As a result, they seek to enter into DIP financing to avoid a disruption in their operations. 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: Blank Rome Approved as Committee's Lead Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Virginia gave the Official Committee of Unsecured Creditors of Xybernaut Corporation and its debtor-affiliate for permission to employ Blank Rome LLP as its lead counsel. As previously reported, 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 reported 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 assured 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. * McCarter & English Names Three New Partners to Firm ----------------------------------------------------- McCarter & English has named three new Partners: * Steven A Beckelman, Partner in the Newark office, practices in the area of securities litigation, including 10b5 litigation, and regularly represents financial institutions and other corporations in major commercial disputes. He has also served as counsel to corporate defendants and individual directors in class action securities litigation. Mr. Beckelman was formerly a Counsel. * James G. Koutras, Partner in the Baltimore office, focuses on general product liability and commercial litigation. He has experience in products liability defense, toxic tort defense, insurance defense, mass tort defense, and workman's compensation claims, as well as class action, insurance coverage, bankruptcy and pharmaceutical litigation. Mr. Koutras was formerly an Associate. * Joseph Scholz, Partner in the Newark office, practices complex commercial litigation. He represents financial institutions and other corporations in major commercial disputes, and has extensive experience with a broad spectrum of legal areas, including securities, intellectual property, real estate, environmental and debtor-creditor issues. Mr. Scholz was formerly an Associate. McCarter & English, established more than 160 years ago, has offices in seven cities along the Northeast Corridor. Its 360- plus attorneys represent Fortune 500 and mid-cap companies in their national, regional and local litigation and on important transactions. In addition to its Newark headquarters, the firm has offices in Baltimore, Hartford, New York, Philadelphia, Stamford and Wilmington. * Epstein Becker Adds Two Attorneys to New York Corporate Practice ------------------------------------------------------------------ Sharon L. Ferko, Esq., formerly of Morgan Lewis & Bockius, and Scott M. Drago, Esq., formerly of Bingham McCutchen, have joined Epstein Becker & Green, P.C. as members of the firm in its Corporate and Securities Law practice of the New York office. These additions will bring EBG's New York Corporate and Securities Law practice to more than 20 attorneys in New York and 45 nationwide. In addition, EBG also announced that it has completed its expansion of 25,000 square feet of office space at 250 Park Avenue in midtown Manhattan. EBG now occupies four floors at 250 Park Avenue, with 118 attorneys. Nationally, the firm is home to more than 370 attorneys in 11 offices. Ms. Ferko joins EBG from Morgan, Lewis & Bockius LLP where she had been a partner since 2001. Ms. Ferko has a diversified corporate practice with extensive experience representing domestic and foreign companies in a broad range of corporate finance and securities transactions, including initial public offerings, secondary offerings, high yield debt offerings, exchange offers, debt tender offers and private placements. She also regularly advises clients with respect to acquisition, and divestiture transactions and acts as counsel to companies on issues involving corporate governance, stock exchange listing requirements and general corporate and commercial matters. Ms. Ferko earned her undergraduate degree from the University of Notre Dame and her law degree from Harvard Law School. Mr. Drago comes to EBG from Bingham McCutchen where he was of counsel. Mr. Drago is a tax attorney with more than ten years of experience advising clients on tax matters including corporate tax planning, domestic and international business acquisitions, partnership and limited liability company structuring and restructuring, debt and equity offerings, bankruptcy, equity based executive compensation and, state and local taxation. He earned his undergraduate degree from Fordham University and his law degree from Fordham Law School. In addition, he holds an LL.M. degree in taxation from New York University School of Law. "Over the past several years our corporate and securities practice has grown by leaps and bounds," said George P. Sape, EBG's managing partner. Mr. Sape continued, "We are very excited about our firm's success in the corporate area, and believe that the recent addition of these attorneys, as well as expansion our office, is a positive indication of what the future holds for Epstein Becker & Green." Lowell Lifschultz, head of EBG's Corporate Practice, stated, "Sharon and Scott will build upon the substantial progress we have made in the corporate area in recent years. We are very excited to add their combined talents to our growing corporate practice." Epstein Becker & Green, P.C., founded in 1973, is a general practice law firm with more than 370 attorneys practicing in 11 offices throughout the United States - Atlanta, Chicago, Dallas, Houston, Los Angeles, Miami, New York, Newark, San Francisco, Stamford and Washington, D.C. EBG's practice areas include banking, construction, corporate and securities, employee benefits, environmental, government contracts, health care, immigration, intellectual property, labor and employment, litigation, personal planning, public sector, real estate, and technology. * Sheppard Mullin Continues N.Y. Growth With Edward Tillinghast --------------------------------------------------------------- Edward H. Tillinghast, III, has joined the New York office of Sheppard, Mullin, Richter & Hampton LLP as a partner in the Finance & Bankruptcy practice group. Mr. Tillinghast, most recently head of Coudert Brothers' Global Financial Restructuring and Insolvency Group and the coordinator of its Asia-Pacific Restructuring and Insolvency Group in New York, specializes in corporate reorganizations and restructurings, cross-border insolvencies, creditors' rights litigation, bondholder and bondholder committee representations, and distressed mergers and acquisitions for domestic and international clients in Asia, Europe and the United States. Also joining the firm's New York Finance & Bankruptcy practice are the other members of Mr. Tillinghast's group from Coudert: special counsel Mary L. Johnson and associate Malani Sternstein. James J. McGuire, managing partner of the firm's New York office, said, "We are very pleased to welcome Ed, who is the latest partner to join us from Coudert Brothers. Several of Coudert's best and brightest attorneys have come on board recently, including Kevin Goering in New York, David Huebner in Los Angeles and Ed Lozowicki in San Francisco. Ed Tillinghast joins the office at an exciting time, as we are now over forty attorneys strong after opening in New York just a year ago." "Sheppard Mullin is a dynamic and growing firm. I am excited about expanding Sheppard Mullin's insolvency and financial restructuring practice in New York and in the cross-border arena," commented Mr. Tillinghast. "The size and depth of Sheppard Mullin's bankruptcy and finance practice will help meet the increasing demand of clients in domestic and cross-border restructurings." Mr. Tillinghast advises clients such as American Express Financial, China Export & Credit Insurance Corporation, Capital Sports Properties who owns the Ottawa Senators, CSFB, DuPont Capital, JPMorgan Chase, Marathon Oil, Singapore Airlines and TIAA-CREF in many jurisdictions throughout Asia, Australia, Europe and the United States. He has represented creditors, debtors, institutional lenders, bondholder committees and distressed asset investors in bankruptcy cases, out-of-court restructurings, and distressed asset sales in many industries, including automotive, aviation, financial services, food and food products, gaming, health care, high technology, infrastructure projects, manufacturing, mining, new media, oil and gas, pharmaceuticals, publishing, real estate, retail, sporting goods, sports teams, steel, telecommunications and utilities. Mr. Tillinghast received his law degree from Chicago-Kent College of Law in 1983 where he was a member of the Chicago-Kent Law Review and a B.A., with honors, from Lake Forest College in 1980. Sheppard, Mullin, Richter & Hampton LLP -- http://www.sheppardmullin.com/-- is a full service AmLaw 100 firm with more than 450 attorneys in nine offices located throughout California and in New York and Washington, D.C. The firm's California offices are located in Los Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del Mar Heights and San Diego. Sheppard Mullin provides legal expertise and counsel to U.S. and international clients in a wide range of practice areas, including Antitrust, Corporate and Securities; Entertainment and Media; Finance and Bankruptcy; Government Contracts; Intellectual Property; Labor and Employment; Litigation; Real Estate/Land Use; Tax/Employee Benefits/Trusts & Estates; and White Collar Defense. The firm was founded in 1927. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Pinili, Jr., and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***