text: TCR_Public/050216.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, February 16, 2005, Vol. 9, No. 39 HeadlinesACCESS FINANCIAL: Fitch Junks Three 1995-1 Issue ClassesACCIDENT & INJURY: Case Summary & 87 Largest Unsecured CreditorsACS HOLDINGS: KMA Capital Says Bankruptcy Filing is PossibleADELPHIA COMMS: Board Lifts Joseph Bagan's Pay by 3.8%AES CORP: Moody's Lifts Rating on Sr. Unsec. Notes to B2 from B1AFTON FOOD: Courts Extends CCAA Protection Until February 23ALOHA AIRLINES: Court Approves Labor Pacts with Largest UnionsAMERICAN COMMERCIAL: Completes $450 Million RefinancingAMERICAN LAWYER: S&P Junks Proposed $78.5M Loan & $27.3M NotesAMOROSO CONSTRUCTION: Plan Confirmation Hearing Set for Mar. 18ARTHUR J. GALLAGHER: $175 Mil. Headwater Verdict May Be a ProblemATA AIRLINES: Cockpit Crewmembers Agree to 20% Short-Term Pay CutBOISE CASCADE: S&P's Ratings Unchanged Despite IPO NoticeBOMBARDIER INC: Names Dr. H. Weiss & M.J. Durham to BoardC-BASS: Moody's Puts Ba2 Rating on $10.95MM Class-B4 Senior Certs.CAESARS ENT: Earns $20 Million of Net Income in Fourth QuarterCATHOLIC CHURCH: Spokane Litigants Want Avoidance Trials InitiatedCITATION CAMDEN: Has Until Feb. 21 to File a Chapter 11 PlanCITIGROUP MORTGAGE: Moody's Rates Classes B-4 & B-5 at Low-BCLINTON CHEVRON: Voluntary Chapter 11 Case SummaryCONCENTRA OPERATING: Dec. 31 Balance Sheet Upside-Down by $62.9MMCOVENTRY ASSOCIATES: Case Summary & 7 Largest Unsecured CreditorsDAN RIVER: Exits Bankruptcy Following Plan ConsummationDAYTON POWER: Equity Portfolio Sale Cues Fitch to Review RatingsDESA HOLDINGS: Plan Confirmation Hearing Set for March 29DESERT RIDGE: S&P Slices Senior Debt Rating to BB+ from BBB+DMX MUSIC: Files for Chapter 11 Protection in DelawareDMX MUSIC INC: Case Summary & 6 Largest Unsecured CreditorsDPL INC: S&P May Lift Ratings Due to Private Funds Interest SaleDUALSTAR TECHNOLOGIES: Winding Down BusinessENDURANCE BUSINESS: Moody's Puts B1 Rating on $120MM Sr. Sec. LoanENDURANCE BUSINESS: S&P Puts B Rating on $120 Million Bank LoanENRON CORP: Court Extends Some Claim Objection DeadlinesEXIDE TECH: Agrees to Amend Credit Agreement with Deutsche BankFAIRFAX FINANCIAL: Incurs $17.8 Million Net Loss for 2004FALCON PRODUCTS: Can Use Up to $45 Million in DIP FinancingFRANK'S NURSERY: Soliciting Offers for Certain PropertiesFREEDOM MEDICAL: Wants Until Plan Confirmation to Decide on LeasesFRIEDMAN'S INC: Will Close 165 Underperforming StoresHILL CITY: Committee Taps Mesirow Financial as Financial AdvisorsHYTEK MICROSYSTEMS: To Become Natel Subsidiary Under Merger PactIMPERIAL PLASTECH: Directors & Executives Resign from PostsINDIAN SPRINGS: Case Summary & 8 Largest Unsecured CreditorsINNOVATIVE WATER: Plans to Raise Up to $3M from Equity PlacementINTERSTATE BAKERIES: Court Okays Miller Buckfire as AdvisorJHMAC TRUST: Moody's Withdraws Ratings on All Three Note ClassesLAIDLAW INT'L: Mac-Per-Wolf Discloses 8.4% Equity StakeMCI INC: Board Approves $5.3 Billion Acquisition by VerizonMCI INC: Fitch May Upgrade Ratings Due to Verizon AcquisitionMERIDIAN AUTOMOTIVE: S&P Cuts Corporate Credit Rating to CCC+MEYER'S BAKERIES: Trustee Appoints 7-Member Creditors CommitteeMIRANT: U.S. Trustee Amends MAGi Creditors Committee MembershipMIRANT CORP: Brazos Holds $3,543,089 Allowed Unsecured ClaimML CBO: S&P's Rating on Class A $16.89MM Notes Tumbles to DMURRAY INC: Wants Until July 6 to File a Chapter 11 PlanNORTHERN HOTELS: Court Convenes Sale Hearing for Hotel PropertyNORTHWESTERN CORP: Violates Ch. 11 Plan, Says Harbert Master FundOFFICEMAX INC: S&P Puts BB Corp. Credit Rating on CreditWatch Neg.OWENS CORNING: Won't Sue Doctors for False X-Ray ReadingsPACIFIC GAS: Asks Court to Approve Mirant Settlement AgreementPEGASUS SATELLITE: Court Approves Secured Lenders Settlement PactPILGRIM'S PRIDE: Higher Free Cash Flow Cues Moody's to Up RatingsPUERTO VEN QUARRY: Case Summary & 20 Largest Unsecured CreditorsRIVERSIDE FOREST: Redeeming $52.5 Million 7-7/8% Senior NotesSEGA GAMEWORKS: Selling All Assets to SS Entertainment for $8.1MSTELCO INC: Severstal Group Makes Offer & Bid Must Top $727 Mil.SOLUTIA INC: Wants to Enter into Astaris Consent AgreementTRUMP HOTELS: Judge Wizmur Approves Amended Disclosure StatementUAL CORP: Names Cindy Szadokierski Corporate Real Estate VPUS AIRWAYS: Court Approves GE Capital Global SettlementUS AIRWAYS: Agrees with GE Capital to File Ch. 11 Plan Next MonthUS AIRWAYS: EDS Holds Superpriority Admin. Claim Up to $28 MillionUS AIRWAYS: Wants Court to Okay Philadelphia Sale/Leaseback DealUNITED REFINING: Looks to Raise $25M from 10-1/2% Sr. Notes OfferVERIZON GLOBAL: Fitch May Downgrade Ratings Due to MCI AcquisitionWESTERN WATER: Will Exhaust Cash by March 31 Absent FinancingWHEELING-PITTSBURGH: Assigning Central W. Va. Energy Coal PactWINN-DIXIE: Three Critical Deadlines -- Mar. 1, Mar. 31 & May 31WINN-DIXIE: Moody's Junks Series 1999-1 Trust CertificatesWORLDCOM INC: Settlement Agreement with 10 Directors TerminatedWORLDSPAN LP: S&P Junks $300 Million Second-Lien Secured NotesYUKOS OIL: Russia Borrows $6 Billion from China to Acquire YuganskYUKOS OIL: Khodorkovsky Gives 60% Menatep Stake to Leonid Nevzlin* NASD to Hold 3-Day Mediator Skills Training Starting March 7* Upcoming Meetings, Conferences and Seminars *********ACCESS FINANCIAL: Fitch Junks Three 1995-1 Issue Classes--------------------------------------------------------Fitch Ratings takes rating actions on two Access FinancialManufactured Housing issues: Series 1995-1: -- Class A-3 is affirmed at 'AAA'; -- Class A-4 is affirmed at 'AA-' -- Class B-1 is downgraded to 'CCC' from 'BBB-'; Series 1996-1: -- Class A-5 is affirmed at 'AAA'; -- Class A-6 is affirmed at 'AA-' -- Class B-1 is downgraded to 'CCC from 'BB-'; -- Class B-2 remains at 'C'.The affirmations affect approximately $47.7 million in principalwhile the downgrades affect approximately $37.5 million.Losses on series 1995-1 have reduced the collateral at a fasterrate than payments on the related certificates and haveconsequently created an undercollateralized amount of $723,000.The current pool factor (mortgage loan principal outstanding as apercentage of the initial pool) is 27%. Cumulative losses to dateon the pool are 23% of the original balance.Series 1996-1 has also experienced higher losses than initiallyexpected. Currently, the certificates are undercollateralized by$6.5 million, while cumulative losses are 25% of the initial poolbalance. The pool factor is 29%.As of June of 1998, Vanderbilt Mortgage & Finance Inc. has beenservicing the Access Financial portfolio.Further information regarding current delinquency, loss, andcredit enhancement statistics is available on the Fitch Ratingsweb site at http://www.fitchratings.com/ACCIDENT & INJURY: Case Summary & 87 Largest Unsecured Creditors----------------------------------------------------------------Lead Debtor: Accident & Injury Pain Centers, Inc. dba Accident & Injury Chiropractic Centers dba Accident & Injury Pain Group 8080 Park Lane, Suite 500 Dallas, Texas 75231 Tel: (214) 378-4499Bankruptcy Case No.: 05-31688Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- White Rock Open Air MRI, L.L.C. 05-31689 North Texas Open Air MRI, L.L.C. 05-31690 Rehab 2112, L.L.C. 05-31691 Receivable Finance Company L.L.C. 05-31692 Lone Star Radiology Management, L.L.C. 05-31693 A & I Pain Center Oak Cliff-South, Inc. 05-31694 A&I Pain Center of Mesquite, Inc. 05-31695 A&I Pain Center of North Garland, Inc. 05-31696 Metroplex Pain Center, Inc. 05-31697Type of Business: The Debtors operate clinics that treat patients with highly advanced therapy equipment and techniques. See http://www.accinj.com/Chapter 11 Petition Date: February 10, 2005Court: Northern District of Texas (Dallas)Judge: Harlin DeWayne HaleDebtors' Counsel: Glenn A. Portman, Esq. Bennett, Westion & LaJone, P.C. 1750 Valley View Lane, Suite 120 Dallas, Texas 75234 Tel: (214) 691-1776 extension 207 Fax: (214) 393-4007 Total Assets Total Debts ------------ -----------Accident & Injury Pain $10MM to $50MM $10MM to $50MMCenters, Inc.White Rock Open Air $1MM to $10MM $1MM to $10MMMRI, L.L.C.North Texas Open Air $1MM to $10MM $1MM to $10MMMRI, L.L.C.Rehab 2112, L.L.C. $1MM to $10MM $1MM to $10MMReceivable Finance $500,000 to $1MM $1MM to $10MMCompany L.L.C.Lone Star Radiology $500,000 to $1MM $1MM to $10MMManagement, L.L.C.A & I Pain Center Oak $0 to $50,000 $0 to $50,000Cliff-South, Inc.A&I Pain Center of $0 to $50,000 $0 to $50,000Mesquite, Inc.A&I Pain Center of $0 to $50,000 $0 to $50,000North Garland, Inc.Metroplex Pain Center, Inc. $0 to $50,000 $0 to $50,000A. Accident & Injury Pain Centers, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------Allstate Insurance Company Judgment Creditor $2,750,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Andrews & Kurth LLP Legal Fees $712,5971717 Main Street, Suite 3700Dallas, TX 75201Attn: Michael MearsTel: (214) 659-4569Jones, Allen & Fuquay Vendor Law Firm $463,0318828 Greenville AvenueDallas, TX 75243Attn: Lindy D. JonesShields, Britton & Fraser Vendor Law Firm $275,3895401 Village Creek DrivePlano, TX 75093Attn: James D. ShieldsTel: (972) 788-2040First Insurance Funding Vendor $219,120Corporation450 Skokie Boulevard, Suite 1000Northbrook, IL 60065-3306Harvest/NPE, L.P. CBRE AAF Landlord $196,000Department 38836PO Box 200388Dallas, TX 75320-0388Platinum Plus for Business Loans Expense $124,655PO Box 15463 AccountsWilmington, DE 19850-5463Bank of America Loan $98,982Encompass Judgment Creditor $95,000c/o David KassabianKassabian & DoyleClear Channel Outdoor Vendor $82,104KWEX-TV Univision Channel 41 Advertising Services $75,882Hughes & Luce, LLP Vendor Law Firm $73,752KPRC-TV NBC Channel 2 Advertising Services $70,568KXAS-TV NBC Channel 5 Advertising Services $68,813Arter & Hadden LLP Law Firm creditor $63,499KUVN-TV Univision Channel 23 Advertising Services $60,483KABB-TV Fox Channel 29 Advertising Services $58,876KDAF-TV WB Channel 33 Advertising Services $50,418KHWB-TV WB Channel 39 Advertising Services $49,108Office Depot Services and Supplies $40,720B. White Rock Open Air MRI, L.L.C.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------Allstate Insurance Company Judgment Creditor $2,750,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Weil & Petrocchi, P.C. Vendor Law Firm $250,0001601 Elm Street1900 Thanksgiving TowerDallas, TX 75201Tel: (214) 969-7272Encompass Judgment Creditor $95,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Hitachi Medical Vendor $34,712Systems AmericaFirst Insurance Funding Vendor $31,204CorporationFarmer, Fuqua & Huff P.C. Vendor Accounting $16,800 FirmDavid Childs Tax Assessor Taxes $16,289David Childs Tax Assessor Taxes $6,551Southwest X-Ray Vendor $4,608Transcription Services Vendor $3,941Eastman Kodak Company, Inc. Vendor $1,500Office Depot Vendor $851Cascade/Friedel Linen Service Vendor $465Bizzy Bees Pest Control Vendor $433Southwestern Bell Vendor $398Friedel Linen Services Vendor $395Muzak-MID Continent Vendor $336Jones, Allen & Fuquay Vendor Law Firm $295Physician Sales & Service Vendor $286Totowa Systems Vendor $248C. North Texas Open Air MRI, L.L.C.'s 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------Allstate Insurance Company Judgment Creditor $2,750,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Weil & Petrocchi, P.C. Vendor Law Firm $250,0001601 Elm Street1900 Thanksgiving TowerDallas, TX 75201Tel: (214) 969-7272Encompass Judgment Creditor $95,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Betsy Price Tax Assessor Taxes $52,262CollectorTarrant County 100East WeatherfordFort Worth, TX 76196Sylvia S. Romo Taxes $15,201Bexas Company Tax AssessorSouthwest X-Ray Vendor $13,785Eastman Kodak Company, Inc. Vendor $12,514Farmer, Fuqua & Huff P.C. Vendor Accounting $11,505 FirmCity of Jacinto Taxes $10,820Texas Linen Company, Ltd. Vendor $6,788Transcription Services Vendor $4,089Cascade/Friedel Linen Service Vendor $2,975Houston I.S.D. Taxes $1,964Office Depot Vendor $1,945Tartan Textile Services Austin Vendor $1,683Dallas Morning News Vendor $1,348Muzak-MID Continent Vendor $1,114Merry X-Ray Vendor $1,025Staples Business Advantage Vendor $1,008Department TEXD. Rehab 2112, L.L.C.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------Allstate Insurance Company Judgment Creditor $2,750,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Weil & Petrocchi, P.C. Vendor Law Firm $250,0001601 Elm Street1900 Thanksgiving TowerDallas, TX 75201Tel: (214) 969-7272Encompass Judgment Creditor $95,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158CRO Catering Services $38,12912200 Stemmons FreewayDallas, TX 75234Supplemental Health Care Service $23,6069441 LBJ Freeway, Suite 101Dallas, TX 75243David Childs Tax Assessor Ad Valorem Taxes $16,021Jones, Allen & Fuquay Vendor Law Firm $12,827Comphealth Medical Service $8,660Staffing, Inc.Betsy Price Taxes $8,106Tarrant County Tax AssessorFarmer, Fuqua & Huff P.C. Vendor Accounting $6,700 FirmOffice Depot Vendor $5,741Southwestern Bell Vendor $2,930H. Douglas Pruitt, P.C. Services $2,758Staples Business Advantage Vendor $2,105American Healthcare Linen Vendor $1,845ServiceBTE Technologies, Inc. Vendor $1,409Cascade/Friedel Linen Service Vendor $1,368Joe Daniels, Inc. DBA Vendor $1,315Creative Grafx Inc. Vendor $1,250P.E.R. Construction Vendor $1,234D. Rehab 2112, L.L.C.'s 5 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------Allstate Insurance Company Judgment Creditor $2,750,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Weil & Petrocchi, P.C. Vendor Law Firm $250,0001601 Elm Street1900 Thanksgiving TowerDallas, TX 75201Tel: (214) 969-7272Encompass Judgment Creditor $95,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Farmer, Fuqua & Huff P.C. Vendor Accounting $6,700 FirmJones, Allen & Fuquay Vendor Law Firm $0E. Lone Star Radiology Management, LLC's 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------Allstate Insurance Company Judgment Creditor $2,750,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Encompass Judgment Creditor $95,000c/o David KassabianKassabian & Doyle1521 North Cooper StreetSuite 650 LB 21Arlington, TX 76011-3158Transcription Services Vendor $1,9764824 Abbott AvenueArlington, TX 76018ACS HOLDINGS: KMA Capital Says Bankruptcy Filing is Possible------------------------------------------------------------ACS Holdings, Inc. (OTCBB:ACSJ), has engaged KMA Capital Partners,LTD. of Orlando, Florida on Nov. 11, 2004, to reorganize theCompany. As part of the transaction KMA has acquired acontrolling interest in the Company. KMA stated that thereorganization is proceeding and that it is the Company'sintention to remain a Business Development Company regulated underthe Investment Act of 1940. The Company has discontinued thedebit card business and at present has no operations. It cannotbe ruled out that the Company may need to seek bankruptcyprotection. However, KMA has been working diligently withcreditors and investors to effectuate a settlement outside ofbankruptcy.KMA and its consultants are taking all the required steps to keepthe Company current in its SEC filings, as well as compliance as aBusiness Development Company.KMA plans a series of press releases to keep the investing publicaware of the progression of the reorganization plan. Going Concern DoubtIn its Form 10-QSB for the quarterly period ended Sept. 30, 2004,filed with the Securities and Exchange Commission, ACS Holdingsincurred a net loss of $1,257,665 and $2,200,952 for the three-and nine-months ended Sept. 30, 2004, and reports limited sales.At Sept. 30, 2004, ACS Holdings' balance sheet showed a $2,747,543stockholders' deficit, compared to a $1,540,652 deficit atDec. 31, 2003. The future of the Company is dependent upon itsability to obtain financing and upon future profitable operationsfrom the development of its business. These conditions raisesubstantial doubt about the Company's ability to continue as agoing concern. About the CompanyACS Holdings, Inc., is a Business Development Company under theInvestment Act of 1940 and upon the completion of thereorganization will aggressively seek opportunities in emergingand fast growth industries.ADELPHIA COMMS: Board Lifts Joseph Bagan's Pay by 3.8%------------------------------------------------------In a regulatory filing with the Securities and ExchangeCommission, Adelphia Communications Corporation disclosed that onJanuary 28, 2005, its Board of Directors' Compensation Committeeapproved a fiscal 2005 base salary increase for Joseph W. Bagan,Senior Vice President, Southeast Region.According to ACOM Executive Vice President, General Counsel andSecretary Brad M. Sonnenberg, Mr. Bagan's fiscal 2005 base salarywill be $270,000, representing an increase of 3.8% over his basesalary for 2004.Headquartered in Coudersport, Pennsylvania, AdelphiaCommunications Corporation (OTC: ADELQ) is the fifth-largest cabletelevision company in the country. Adelphia serves customers in30 states and Puerto Rico, and offers analog and digital videoservices, high-speed Internet access and other advanced servicesover its broadband networks. The Company and its more than200 affiliates filed for Chapter 11 protection in the SouthernDistrict of New York on June 25, 2002. Those cases are jointlyadministered under case number 02-41729. Willkie Farr & Gallagherrepresents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No.79; Bankruptcy Creditors' Service, Inc., 215/945-7000)AES CORP: Moody's Lifts Rating on Sr. Unsec. Notes to B2 from B1----------------------------------------------------------------Moody's Investors Service upgraded the ratings of The AESCorporation, including its senior unsecured debt, which wasupgraded to B1 from B2. This rating action concludes the reviewfor possible upgrade that was initiated on December 3, 2004. Therating outlook is stable.The rating action reflects a substantial reduction of debt at theparent company level, an expectation that there will be additionalnear-term debt reduction and the company's good liquidity profile.Debt reduction has been the primary driver for AES Corp.'simproving credit profile. Parent level debt was reduced by$800 million in 2004 to approximately $5.1 billion (compared to$7.1 billion at December 31, 2002) and AES Corp. plans to reducedebt by an additional $600 million in late 2005/early 2006.Distributions from subsidiaries, less overhead and interestexpense, increased to approximately 7.3% of year-end parentcompany debt in 2004, compared to 5.8% in 2003. Interest coverageimproved to approximately 1.8 times in 2004 compared to 1.6 timesin 2003. The rating upgrade incorporates Moody's expectation thatthese financial metrics will improve to approximately 9% and2 times in 2005, due to lower debt balances.Going forward, we anticipate that annual distributions fromsubsidiaries will remain at approximately $1 billion per annum,with the majority coming from AES Corp.'s lower risk largeutilities and contracted or hedged generation subsidiaries. Thelevel and continuity of subsidiary distributions is supported bythe diversification of AES Corp.'s asset ownership, withsignificant distributions from over 20 subsidiaries.The rating action also recognizes AES Corp.'s good liquidityprofile, which is supported by minimal near-term scheduledprincipal repayments and expected positive free cash flow. Parentliquidity, including availability under its multi-year revolvingcredit facility, totaled $643 million at December 31, 2004.Moody's expects AES Corp. to maintain $400-$600 million ofreliable liquidity sources going forward. AES Corp. has aliquidity rating of SGL-2.The stable rating outlook considers the fairly stable andpredictable nature of cash distributions from AES Corp.'s largeutilities and contracted generation subsidiaries. Although AESCorp. continues to focus on reducing debt, it is showing increasedinterest in new investment opportunities. The stable outlookincorporates an expectation that the Company will fund any largenew investments in a way that allows it to continue to improve itscredit profile.The ratings upgraded are: * senior secured credit facilities, upgraded to Ba2 from Ba3; * second priority secured notes and Senior Implied rating, upgraded to Ba3 from B1; * senior unsecured notes, upgraded to B1 from B2; * senior subordinated notes, upgraded to B2 from B3; * trust preferred stock, upgraded to B3 from Caa2; and * shelf registration for senior unsecured debt, senior subordinated debt, trust preferred, and preferred stock upgraded to (P)B1, (P)B2, (P)B3, and (P)Caa1 from (P)B2, (P)B3, (P)Caa2, and (P)Caa2, respectively.The Company's $142 million 4.5% junior subordinated notes due 2005were confirmed at B3.The AES Corporation is a global power company with generation anddistribution assets in Europe, Asia, Latin America, Africa and theUnited States.AFTON FOOD: Courts Extends CCAA Protection Until February 23------------------------------------------------------------The Ontario Superior Court granted the fourth extension of AftonFood Group Ltd.'s restructuring under CCAA to February 23, 2005.The Company has entered into negotiations with a potentialpurchaser for the sale of certain assets of the business.Negotiations are in process with the potential purchaser with thehope of returning to Court on or before February 23, 2005, forapproval of the asset purchase agreement and the necessary vestingorder. The senior secured lender has advised that the purchaseprice in the proposed transaction would be acceptable to them.Management estimates that the proposed asset sale, if approved,would be expected to close on or around the end of February. Ifthe transaction closes, the proceeds of the asset sale will bepaid to the secured creditors leaving the Company without assets.Afton Food Group Ltd. (TSX VENTURE:AFF), through its subsidiaries,is a franchisor in the Quick Service Restaurant industry withlocations throughout Canada operating under two principal brands,241 Pizza(R) and Robin's Donuts(R). On July 16, 2004, Afton Foodwas granted protection under the Companies Creditors ArrangementAct (Canada).ALOHA AIRLINES: Court Approves Labor Pacts with Largest Unions--------------------------------------------------------------The U.S. Bankruptcy Court for the District of Hawaii has approvedletters of agreement modifying Aloha Airlines' collectivebargaining agreements with three of its largest employee unions.The Court approved new agreements ratified by members of theInternational Association of Machinists and Aerospace Workers --IAM -- District Lodge 141, the Association of Flight Attendants --AFA -- and the Air Line Pilots Association -- ALPA. Approval ofthese agreements so early in the reorganization processdramatically illustrates how quickly Aloha is moving towardemerging from Chapter 11 protection."This is a giant step forward," said David A. Banmiller, Aloha'spresident and chief executive officer. "Thanks to the cooperationof our employees and their dedication to Aloha Airlines, we aremoving ahead rapidly on our business plan. With Court approval ofthese contracts, and the progress we are making with the othergroups, we are closer to our goal of cutting annual expenses by$60 million."Each of Aloha's employee groups, including its non-unionizedworkforce of employees, managers and executives, will accept a10-percent wage concession for 2005 and 2006 as part of theCompany's plan to cut $40 million a year off labor expenses.The agreements with the IAM District Lodge 141, AFA and ALPA unitscover approximately 2,900 of Aloha's 3,300 union-representedemployees.Aloha also notified the Court that it has negotiated tentativeagreements with the remaining employee unions -- IAM DistrictLodge 142, representing mechanics and inspectors, and theTransport Workers Union (TWU) representing dispatchers.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. AlohaAirgroup and its subsidiary Aloha Airlines, Inc., filed forchapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No.04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., andSimon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevanskyrepresent the Debtors in their restructuring efforts. When theDebtor filed for protection from its creditors it listed more than$50 million in estimated assets and debts.AMERICAN COMMERCIAL: Completes $450 Million Refinancing-------------------------------------------------------American Commercial Lines, Inc., has successfully completed$450 million in refinancing transactions through the closing of anew $250 million asset-backed revolving line of credit initiallypriced at LIBOR plus 225 basis points or base rate plus 100 basispoints, and the sale of $200 million of 9.5% Senior Notes. Thenew revolving line of credit was led by Bank of America, N.A. andUBS Securities LLC, who also served as the joint book-runningmanagers, with Merrill Lynch & Co. as co-manager, on the sale ofthe notes.Commenting on the refinancing, Mark R. Holden, President and CEO,stated, "We are extremely pleased with the results of ourrefinancing. Our new capital structure will allow us theflexibility to run our business for the long-term at a verycompetitive cost. Within the past 30 days we have emerged fromour Chapter 11 reorganization; constituted our new Board ofDirectors; taken steps to build a permanent management team; andrefinanced the business. Industry fundamentals continue to trendpositive which, combined with our recent accomplishments,positions the Company for ratable, predictable growth."The private offering of Notes was conducted pursuant to Rule 144Aof the Securities Act of 1933. The Notes were not registeredunder the Securities Act of 1933, as amended, or under any statesecurities or blue sky laws and may not be offered or sold in theUnited States absent registration or any applicable exemption fromregistration requirements.Headquartered in Jeffersonville, Indiana, American CommercialLines LLC -- http://aclines.com/-- an integrated marine transportation and service company transporting more than70 million tons of freight annually using 5,000 barges and 200towboats in North and South American inland waterways, filed forchapter 11 protection on January 31, 2003 (Bankr. S.D. Ind. CaseNo. 03-90305). American Commercial is a wholly owned subsidiaryof Danielson Holding Corporation (Amex: DHC). Suzette E. Bewley,Esq., at Baker & Daniels represents the Debtors in theirrestructuring efforts. As of September 27, 2002, the Debtorslisted total assets of $838,878,000 and total debts of$770,217,000. The Bankruptcy Court approved the Debtors' Plan ofReorganization on Dec. 30, 2004, which allowed the Debtors toemerge from bankruptcy on Jan. 11, 2005. * * *As reported in the Troubled Company Reporter on Jan. 31, 2005,Standard & Poor's Ratings Services assigned its 'B' corporatecredit rating to American Commercial Lines, Inc., and a 'B-'rating to American Commercial Lines LLC's $200 million seniorunsecured notes due 2015 being issued under Rule 144A. AmericanCommercial Lines LLC is a wholly owned subsidiary of AmericanCommercial Lines Inc., which guarantees the debt. The outlook isstable.AMERICAN LAWYER: S&P Junks Proposed $78.5M Loan & $27.3M Notes--------------------------------------------------------------Standard & Poor's Ratings Services assigned a 'B-' rating and arecovery rating of '3' to the American Lawyer Media Inc.'sproposed $266 million first-priority bank credit facility,indicating expectations for a meaningful recovery of principal(50%-80%) in a payment default scenario.At the same time, Standard & Poor's assigned a 'CCC' rating and arecovery rating of '5' to the company's proposed $78.5 millionsecond-priority term loan, indicating negligible (0%-25%) recoveryof principal in a default scenario.In addition, Standard & Poor's assigned a 'CCC' rating to AmericanLawyer Media Holdings Inc.'s proposed $27.3 million 13% seniordiscount notes due 2013. The new ratings are based on preliminaryterms and conditions. The 'CCC' corporate credit ratings forAmerican Lawyer Media Inc. and its parent company American LawyerMedia Holdings Inc., which are analyzed on a consolidated basis,remain on CreditWatch with positive implications where they wereplaced on Feb. 4, 2005."The CreditWatch listing continues to reflect the expectedimprovement in the company's capital structure resulting from theplanned refinancing and the moderate profit potential of a recentand a pending acquisition. If the proposed acquisitions and debtrefinancing are completed as proposed, Standard & Poor's willupgrade the corporate credit ratings on the holding company andthe operating company to 'B-', based on the resulting improvedliquidity and relief from the significant June 2005 step-up incash interest. Failure to complete the proposed deals as outlinedwould result in the withdrawal of the new ratings and the positiveCreditWatch listing," said Standard & Poor's credit analyst SteveWilkinson.AMOROSO CONSTRUCTION: Plan Confirmation Hearing Set for Mar. 18---------------------------------------------------------------The Honorable Alan Jaroslovsky of the U.S. Bankruptcy Court forthe Northern District of California will convene a hearing at10:00 a.m., on March 18, 2005, to consider confirmation of theJoint Liquidating Plan of Reorganization filed by Dennis J.Amoroso Construction Co., Inc.Judge Jaroslovsky approved the adequacy of the Debtors' DisclosureStatement on Feb. 4, 2005.As reported on the Troubled Company Reporter on Jan. 7, 2005, thePlan contemplates the appointment of a Liquidating Agent, who ischarged with the obligation to take over the Debtors' remainingassets in trust, including principally the construction accountsreceivable and the Travelers Bad Faith Litigation, reduce them tocash, and distribute them to creditors in the priority set out inthe Bankruptcy Code.Full-text copies of the Disclosure Statement and Joint Plan areavailable for a fee at: http://www.researcharchives.com/download?id=040812020022All ballots accepting or rejecting the Plan must be returned byMarch 12, 2005. Objections to the Plan, if any, must be filed andserved by March 18, 2005.Headquartered in Novanto, California, Dennis J. AmorosoConstruction Co., Inc., is a general contractor. The Company andits debtor-affiliate filed for chapter 11 protection onSept. 21, 2004 (Bankr. N.D. Calif. Case No. 04-12244). John H.MacConaghy, Esq., at Law Offices of John H. MacConaghy representsthe Debtors in their restructuring efforts. When the Debtor filedfor protection from its creditors, it listed estimated assets anddebts of $10 million to $50 million.ARTHUR J. GALLAGHER: $175 Mil. Headwater Verdict May Be a Problem-----------------------------------------------------------------A jury in the Fourth District Court for the State of Utah awardedHeadwaters Incorporated $175 million in damages against Arthur J.Gallagher & Co.'s (NYSE: AJG) subsidiary, AJG Financial Services,Inc.AJG indicated in its financial statements for the year ending Dec.31, 2004, that "[i]f determined adversely to the subsidiary onsubstantially all claims and for a substantial amount of thedamages asserted, the lawsuit could have a material adverseeffect."In October 2000, Headwaters Incorporated filed a complaint againstGallagher's financial services subsidiary in the Fourth DistrictCourt for the State of Utah (Headwaters Incorporated v. AJGFinancial Services, Inc., Case No. 000403381) alleging thatGallagher's subsidiary failed to make payments and perform otherobligations under a technology license. Gallagher's subsidiaryentered into the agreement with Headwaters in connection withGallagher's investment in the synthetic fuel industry. In itsanswer to the complaint, Gallagher's financial services subsidiaryasserted counterclaims against Headwaters. The trial began onJanuary 11, 2005, with Headwater looking for $140 million indamages as well as a declaratory judgment that payments would beowing on future synfuel production through the end of 2007.Gallagher asserted counterclaims seeking $71 million in damages.Last week, the jury returned verdicts on three of Headwaters'claims againstAJG Financial Services, Inc.: -- First, the jury determined that AJG violated its license agreement with Headwaters by failing to pay royalties from four alternative fuel lines located in South Carolina. The jury found that AJG should pay Headwaters $175,294,532 for the breach of contract through 2004. -- Second, the jury found that Headwaters violated an agreement with AJG by not paying royalties in connection with a financing agreement and indicated that Headwaters should pay AJG $270,734 for the breach. -- Third, the jury rejected AJG's negligent misrepresentation claim against Headwaters."Over the past four years, the litigation has been a distraction.We are pleased that the jury agreed with our position," said KirkA. Benson, Headwaters' Chief Executive Officer. "But it willstill require time and expense to bring this litigation to itsfinal conclusion and collect the money owed to Headwaters."The court has not yet entered judgment on the verdict. Onceentered, the parties may seek relief from the judgment by motionto the trial court and by appeal from the final judgment.Headwaters anticipates that this case will be the subject of post-verdict motions and appeals.The court has not yet ruled on Headwaters' claim for declaratoryrelief concerning AJG's future obligation to pay royalties forproduction from the four alternative fuel lines.The jury made no award under AJG's counterclaims. AJG Says It Will AppealJ. Patrick Gallagher, Jr., President and CEO of Arthur J.Gallagher & Co., said it intends to file a prompt and timelymotion with the trial court to set aside the verdict and order anew trial. If the verdict is not set aside, Gallagher intends toask the court to reduce the amount of damages awarded. If therequest for a new trial is denied, Gallagher intends to pursue anappeal of the verdict."We strongly disagree with the jury's decision. We believe we havenot breached the contract nor owe any payments under thecontract," Mr. Gallagher said. About the CompanyArthur J. Gallagher & Co. is an international insurance brokerageand risk management services firm, headquartered in Itasca,Illinois, has offices in eight countries and does business in morethan 100 countries around the world through a network ofcorrespondent brokers and consultants. Financial ConditionAJG reported $188.5 million of net earnings for the year endingDec. 31, 2004. At Dec. 31, 2004, AJG's balance sheet shows $3.2billion in assets and $761 million of shareholder equity. AJG'sliquidity ratio was 1:1 at Dec. 31, 2004. Credit Agreement in JeopardyArthur J. Gallagher & Co., has access to working capital financingunder a Credit Agreement dated as of July 21, 2003, backed by: Revolving Swing Credit Line Commitment Commitment ---------- ---------- Harris Trust and Savings Bank $45,000,000 $30,000,000 111 West Monroe Street Chicago, Illinois 60690 Attn: Derek R. Cook Vice President Emerging Majors Illinois Telephone: (312) 461-3593 Telecopy: (312) 293-4856 Citibank, N.A. $35,000,000 111 Wall Street, 24th Floor New York, NY 10043 Attn: Christopher J. Soltis Vice President Telecopy: (212) 657-9272 Telephone: (212) 657-7237 LaSalle Bank National Association $25,000,000 135 South LaSalle Street, Suite 1126 Chicago, Illinois 60603 Attn.: Kyle Freimuth Vice President Telephone: (312) 904-4623 Telecopy: (312) 904-6546 Bank of America N.A. $25,000,000 231 S. LaSalle Chicago, Illinois 60697 Attn: Jim V. Miller Managing Director Telephone: (312) 987-0889 Telecopy: (312) 828-3734 Barclays Bank PLC $25,000,000 Financial Markets Team 54 Lombard Street, 1st Floor London EC3V 9EX UNITED KINGDOM Attn.: Rory Merchant Relationship Director Telephone: (020) 699-3309 Telecopy: (020) 699-2407 Union Bank of California, N.A. $25,000,000 445 South Figueroa St., 18th Floor Los Angeles, California 90071 Attn.: Christine Davis Vice President Telecopy: (213) 236-7636 Telephone: (213) 236-7283 U.S. Bank National Association $20,000,000 777 East Wisconsin Avenue Mail LOC: MK-WI-TGCB Milwaukee, Wisconsin 53202 Attn: R. Michael Newton Vice President Telephone: (414) 765-5027 Telecopy: (414) 765-4632 Fifth Third Bank (Chicago) $20,000,000 1701 Golf Road 7th Floor, Mail Drop GRLM7B Rolling Meadows, Illinois 60008 Attn.: Richard F. Wokoun Vice President Telecopy: (847) 354-7148 Telephone: (847) 354-7130 Comerica Bank $15,000,000 500 Wooward Ave. -- M.C. 3269 Detroit, MI 48226 Attn: Felicia M. Maxwell Assistant Vice President Telephone: (313) 222-3805 Telecopy: (313) 222-5516 PNC Bank, NA $15,000,000 One PNC Plaza, 2nd Floor 249 Fifth Avenue Pittsburgh, Pennsylvania 15222 Attn: Hana M. Deiter Vice President Telephone: (412) 762-8865 Telecopy: (412) 762-6484Section 10.1(h) of that Credit Agreement provides that an event ofdefault will be triggered by any "judgment or judgments, writ orwrits, or warrant or warrants of attachment, or any similarprocess or processes in an aggregate amount in excess of$10,000,000 shall be entered or filed against the Borrower or anySubsidiary or against any of their Property which remainsunvacated, unbonded, unstayed or unsatisfied for a period of 30days."ATA AIRLINES: Cockpit Crewmembers Agree to 20% Short-Term Pay Cut-----------------------------------------------------------------Cockpit crewmembers for ATA Airlines, a unit of ATA Holdings Corp.(ATAHQ), have ratified an agreement to provide short-term pay andwork rule concessions. The concessions will save the Companyapproximately $3 million per month, and are effective for fourmonths."We're extremely pleased that ATA's cockpit crewmembers supportthe Company's reorganization efforts," said Gilbert Viets, ATA'sExecutive Vice President and Chief Financial Officer.The concessions package reduces cockpit crewmembers' pay by 20percent. Certain work rules will also be changed to improveproductivity. Voting concluded yesterday with 78 percent of thevotes in favor of the concession package.Mr. Viets said, "The leadership of both the Air Line PilotAssociation and ATA worked together to win pilot support for thisconcession package. We are grateful for this cooperative approachand we thank our crewmembers for their support."ATA intends to seek a long-term agreement on pay rates and workrules as a part of its plan of reorganization. Actions taken toreduce salary expense to date include: -- In October 2004, ATA's flight attendants ratified an agreement to reduce their pay by 10 percent through 2006. -- In July 2004, pay for officers was reduced by 10 percent and pay for most other salaried employees was reduced between 5 and 7.5 percent. -- In June 2004, ATA's pilots voted to forego scheduled wage scale increases in 2004 and 2005. -- A general pay freeze is in effect for non-union employees, who have been under such a pay freeze since October 2003 and previously had their pay frozen from October 2001 through September 2002.Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATAHoldings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) andone of the nation's largest low-fare carriers. ATA has one of theyoungest, most fuel-efficient fleets among the major carriers,featuring the new Boeing 737-800 and 757-300 aircraft. Theairline operates significant scheduled service fromChicago-Midway, Hawaii, Indianapolis, New York and San Franciscoto over 40 business and vacation destinations. Stock of parentcompany, ATA Holdings Corp., is traded on the Nasdaq StockExchange. The Company and its debtor-affiliates filed for chapter11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case No. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker& Daniels, represents the Debtors in their restructuring efforts.When the Debtors filed for protection from their creditors, theylisted $745,159,000 in total assets and $940,521,000 in totaldebts.BOISE CASCADE: S&P's Ratings Unchanged Despite IPO Notice---------------------------------------------------------Standard & Poor's Ratings Services' ratings and outlook on forestproducts producer, Boise Cascade LLC (BB/Stable/--), are unchangedfollowing the company's announcement that it is planning aninitial public offering of common stock.Estimated proceeds of $500 million are expected to be paid toexisting stockholders and used for fees, subject to consent fromthe company's bank lenders. Following the recent sale oftimberlands for $1.65 billion and the use of those proceeds toreduce debt, Boise's pro forma debt outstanding, includingcapitalized operating leases, is about $1.7 billion.Standard & Poor's expects pro forma debt to 2004 EBITDA to be inlow- to mid-3x area. This significant reduction in debt wasalready incorporated into our original ratings, and the lower debtleverage ratio is in line with expectations.Separately, Standard & Poor's placement today of its ratings onOfficeMax Inc., on CreditWatch with negative implications has noimmediate impact on Boise's ratings or outlook. However, Boisesells almost one-half of its uncoated free sheet production toOfficeMax, and therefore any loss of volumes due to deteriorationin OfficeMax's business or financial condition is a risk.Standard & Poor's will continue to monitor developments atOfficeMax for any adverse impact on Boise's credit quality.BOMBARDIER INC: Names Dr. H. Weiss & M.J. Durham to Board---------------------------------------------------------Bombardier, Inc., (TSX:BBD.MV.A) appointed Dr. Heinrich Weiss andMr. Michael J. Durham to its Board of Directors."In our search for new board members, we sought individuals withvast business experience and expertise related to our two mainbusinesses," said Mr. Laurent Beaudoin, Chairman of the Board andChief Executive Officer of Bombardier "Dr. Heinrich Weiss is aprominent German entrepreneur with solid knowledge of themanufacturing sector. For the past 30 years, he has been at thehelm of SMS, an international group specialized in plantconstruction and mechanical engineering.""As for Mr. Durham, he brings a strong financial background andexperience in the aerospace sector, having spent 20 years with AMRCorporation, notably as Chief Financial Officer of AmericanAirlines and as CEO of Sabre. We look forward to the valuablecontribution these two seasoned professionals will bring toBombardier," Mr. Beaudoin added.These nominations have been recommended by the CorporateGovernance and Nominating Committee and approved by the Board ofDirectors. Dr. Heinrich WeissHeinrich Weiss is Chairman and Chief Executive Officer of SMSGmbH, an international group active in plant construction andmechanical engineering related to the processing of steel,non-ferrous metals and plastics. He is also a member of theSupervisory Boards of Commerzbank AG, Deutsche Bahn AG, HOCHTIEFAG, Thyssen-Bornemisza Group and Voith AG. He is Chairman of theForeign Trade Advisory Council to the German Secretary ofEconomics and Labour, a member of the Board of the Asia PacificCommittee of German Business as well as a member of the Board ofthe East-West Trade Committee. Michael J. DurhamMichael J. Durham was with AMR Corporation for 20 years. Heworked at American Airlines for the first 17 years, notably asSenior Vice President of Finance and Chief Financial Officer, thenfor three years as President and Chief Executive Officer of SabreInc., a NYSE-listed company providing information technologyservices to the travel industry. Mr. Durham currently serves asnon-executive Chairman of the Board of Asbury Automotive Group,and as Audit Committee Chairman and Board member of AGL Resources.A world-leading manufacturer of innovative transportationsolutions, from regional aircraft and business jets to railtransportation equipment, Bombardier Inc. --http://www.bombardier.com/-- is a global corporation headquartered in Canada. Its revenues for the fiscal year endedJan. 31, 2004 were $15.5 billion US and its shares are traded onthe Toronto and Frankfurt stock exchanges (BBD and BBDd.F). * * *As reported in the Troubled Company Reporter on Dec. 15, 2004,Standard & Poor's Ratings Services placed its ratings, includingits 'BB' long-term corporate credit ratings, on transportation-equipment manufacturer Bombardier, Inc., and its subsidiaries onCreditWatch negative."The CreditWatch placement reflects new uncertainty aboutBombardier's financial policies and strategic direction followingthe resignation of the company's CEO," said Standard & Poor'scredit analyst Kenton Freitag. The increased uncertainty adds toStandard & Poor's previously stated concerns, formerly reflectedin a negative outlook, that adverse developments in the U.S.airline industry could further affect the company's profitability.C-BASS: Moody's Puts Ba2 Rating on $10.95MM Class-B4 Senior Certs.------------------------------------------------------------------Moody's Investors Services has assigned a rating of Aaa to thesenior certificates in C-BASS's 2004-CB8 securitization ofsubprime residential mortgage loans. In addition, Moody'sassigned ratings ranging from Aa2 to Ba2 to the subordinatecertificates.Moody's said that the mortgage pool backing the transaction, whichis seasoned about 6 months, is slightly riskier than a typicalsubprime mortgage pool. The rating on each class reflects theamount of credit support available from subordination,overcollateralization and excess spread available to absorblosses.The strong servicing capabilities of the servicer, C-BASSaffiliate Litton Loan Servicing LP, will help reduce losses on theunderlying collateral pool. Moody's has conferred upon Litton itshighest servicer quality rating, SQ1, for both special servicingand primary servicing for prime and subprime quality mortgages.C-BASS (Credit-Based Asset Servicing and Securitization) is amortgage investment company that focuses on purchasing, servicing,and securitizing credit-sensitive residential mortgages, such asscratch and dent, subprime, and sub- and non-performing loans.C-BASS is also one of the top purchasers and special servicers ofrated and non-rated subordinate securities in both the prime andsubprime MBS markets.The complete rating actions are: -- Depositor: Merrill Lynch Mortgage Investors, Inc. Series: C-BASS Mortgage Loan Asset-Backed Certificates, Series 2004-CB8 Seller: Credit-Based Asset Servicing and Securitization LLC Servicer: Litton Loan Servicing LP * Class AV-1, $325,739,000, P&I, L+0.260%, rated Aaa * Class AF-1, $58,437,000, P&I, 3.633%, rated Aaa * Class AF-2, $23,344,000, P&I, 4.134%, rated Aaa * Class AF-3 , $17,798,000, P&I, 5.090%, rated Aaa * Class AF-4 , $11,064,000, P&I, 4.658%, rated Aaa * Class M-1 , $34,220,000, P&I, L+0.530%, rated Aa2 * Class M-2 , $28,197,000, P&I, L+0.880%, rated A2 * Class M-3 , $7,939,000, P&I, L+1.000%, rated A3 * Class B-1 , $7,665,000, P&I, L+1.500%, rated Baa1 * Class B-2 , $6,296,000, P&I, L+1.750%, rated Baa2 * Class B-3 , $5,475,000, P&I, L+2.750%, rated Baa3 * Class B-4, $10,950,000, P&I, 6.000%, rated Ba2CAESARS ENT: Earns $20 Million of Net Income in Fourth Quarter--------------------------------------------------------------Caesars Entertainment, Inc. (NYSE: CZR) reported record earningsfor the quarter and full year ended Dec. 31, 2004. Fourth Quarter 2004 ResultsFor the fourth quarter of 2004, Caesars Entertainment reported netincome of $20 million. That compares to a net loss of $84 millionfor the fourth quarter of 2003.Previously, the company's highest reported fourth quarter netincome was $17 million in 1999, resulting in earnings per dilutedshare of $0.05.Adjusted net income for the fourth quarter of 2004 was$27 million. Adjusted net income for the quarter excluded$4 million in net income from five properties scheduled to besold, an $8-million charge related to the termination of a leaseat Caesars Atlantic City and an $11-million gain related to thesale of real estate in Atlantic City. Adjusted net income alsoexcluded expenses of $16 million related to the company's pendingacquisition by Harrah's Entertainment, Inc.Adjusted net income for the fourth quarter of 2003 was$11 million. In that quarter, adjusted net income excluded a$57-million write-down (net of tax) of the book value of FlamingoLaughlin and a $38-million goodwill impairment at Caesars Tahoe,which is included in discontinued operations.Net revenue for the fourth quarter of 2004 was $1.008 billion --an all-time record after adjustment for discontinued operations.That compares to $946 million in the fourth quarter of 2003.Fourth quarter EBITDA -- earnings before interest, taxes,depreciation and amortization and charges and gains (and aftercorporate expense) -- was $216 million, compared to $188 millionin the fourth quarter of 2003. 2004 Year-End ResultsNet income for the full year 2004 -- including discontinuedoperations, charges, gains and income tax adjustment -- was$297 million, an all-time record. Net income for 2003 was$46 million, or $0.15 per diluted share.The previous high for annual net income was $143 million, reportedfor 2000.For the full year of 2004, Caesars Entertainment reported adjustednet income of $217 million. That compares to adjusted net incomeof $127 million for the year ended December 31, 2003.Adjusted net income for 2004 excludes: -- An $87-million gain (included in discontinued operations net of taxes) from the sale of the Las Vegas Hilton. -- $32 million in additional income from discontinued operations from the Las Vegas Hilton, the Atlantic City Hilton, Bally's Tunica, Bally's New Orleans, Caesars Tahoe and Caesars Gauteng. -- $22 million in expense related to the pending acquisition of Caesars by Harrah's Entertainment. -- An $11-million gain related to the sale of real estate in Atlantic City. -- An $8-million charge related to the lease termination at Caesars Atlantic City. -- $7 million in pre-opening expense primarily related to the production of the musical "We Will Rock You" at Paris Las Vegas. -- $7 million in income tax expense related to a 2004 Indiana Tax Court decision involving the deductibility of gaming taxes. -- A $6-million, after-tax write-down of assets at Caesars Tahoe, included in discontinued operations. -- $5 million in income tax expense related to the settlement of a tax arbitration with Lakes Entertainment. -- $3 million of investment gain associated with the sale of the company's interest in a Las Vegas office building. -- $2 million in expense related to executive contract terminations.Adjusted net income for 2003 excludes: * $57 million in asset impairments (net of taxes) related to Flamingo Laughlin; * a $38-million goodwill write-down related to Caesars Tahoe (included in discontinued operations); * $15 million in income from discontinued operations; and * $1 million in pre-opening expense associated with the premiere of "A New Day...." starring Celine Dion at Caesars Palace.Net revenue for the full year 2004 was $4.206 billion -- also anall-time record, after adjustment for discontinued operations --up from $3.945 billion reported for the full year 2003. EBITDA(after corporate expense) for 2004 was $1.062 billion, compared to$932 million for 2003. Strong Performance in Las Vegas"The strong performance of our Las Vegas resorts and better thanexpected results in Atlantic City drove record earnings in thefourth quarter," said Caesars Entertainment President and ChiefExecutive Officer Wallace R. Barr. "Las Vegas is one of thehottest tourist destination resorts in the nation right now -- andthe entire industry is benefiting."At Caesars, we are reaping additional and unique benefits frommajor capital development projects we have completed in the pastfew years -- including The Colosseum and The Roman Plaza atCaesars Palace -- and the efficiency-enhancing technology tools weare deploying in our casinos, our hotels, our lounges and ourrestaurants," Barr added. "Because of what we have put in placealready -- along with the planned opening of the new room tower atCaesars Palace -- 2005 is looking like a very good year for us." Fourth Quarter Financial Highlights -- Western Region EBITDA rose 43 percent, to $119 million, from $83 million in the fourth quarter of 2003. On the Las Vegas Strip, results were driven by a 23 percent increase in gaming win and a 13 percent rise in cash room rates. EBITDA margin for the Strip improved by more than 450 basis points, rising to 27 percent, driven largely by an 1100 basis point improvement at Caesars Palace. For the full year 2004, Caesars Palace reported all-time record EBITDA of $149 million. -- In the Eastern Region, EBITDA was $52 million, down seven percent from $56 million reported in the fourth quarter of 2003. Results for the region suffered as a result of a 34-day strike in October and early November by members of Local 54 of the Hotel Employees and Restaurant Employees union, which represents the majority of the region's food, beverageand hotel staff. -- The Mid-South Region recorded EBITDA of $46 million, down from $47 million in the fourth quarter of 2003. Full Year 2004 Highlights Corporate and Financial -- The company's Board of Directors in July accepted an offer from Harrah's Entertainment to acquire the company for approximately $1.9 billion in cash and 67.7 million shares of Harrah's common stock. Shareholders of both companies are scheduled to vote on the merger in separate meetings on March 11. The transaction is contingent on approval by federal and state regulatory agencies and is expected to close in the second quarter of 2005. -- The company paid down an additional $472 million of indebtedness, reducing its total debt to $4.15 billion as of December 31, 2004. Since the beginning of 2002, the company has reduced debt balances by nearly $1.2 billion. -- The company introduced a series of advanced technology initiatives intended to convert information about customer choices into usable business intelligence that will increase efficiency, improve margins and raise customer satisfaction. Among the new systems deployed were MindPlay MP 21(TM) from Bally Gaming and Systems and TableTouch from IGT (table game tracking systems); Slingshot from Avero, Inc. (a food and beverage intelligence system); Revelation from InfoGenesis (software that integrates food and beverage sales data); NetWORKS(TM) from Manugistics (an advanced room revenue management system); and E.piphany 6.5CRM (used to create targeted promotional offers). -- The company continued its leadership in deploying "ticket-in, ticket-out" slot technology. Excluding properties being sold, 87 percent of the slot machines in Caesars Entertainment's domestic casino resorts now are equipped with "ticket-in, ticket-out" technology. On the Las Vegas Strip, that figure is 97 percent. -- The number of customers participating in the Caesars Entertainment Connection Card rewards program grew to 29 million, increasing at an average rate of 6,600 each day. Cross property play among Caesars Entertainment guests grew 12 percent in Las Vegas. -- The Connection Card program inaugurated a new online capability, making it more convenient for players and guests to sign up and track their comp dollar balances. More than 72,000 customers signed up for the program online during the year. -- The company introduced its online "Best Rate Plus Guarantee." The program guarantees that guests who book Caesars Entertainment resort rooms through company web sites will receive the lowest rate for those rooms available anywhere on the Internet. -- Total room nights sold through the company's family of web sites rose 18 percent, to more than 700,000, while the average daily rate for rooms booked online rose by more than 18 percent. Revenue from online bookings rose 40 percent. Thirty-five percent of all independent travelers who booked rooms at the company's Las Vegas resorts booked their rooms through a company web site. -- The company launched a new web page intended to make it easier for minority and women-owned firms to communicate quickly and directly with senior procurement officials through a new, one-stop process. The site also offers key information about the company and minority enterprise certification. A direct link to the special supplier web page is featured prominently on Caesars Entertainment's main home page at http://www.caesars.com/ New Development Projects -- Caesars Entertainment announced its first venture into Europe with plans for a $600-million casino resort in London, to be built near the reconstructed Wembley National Stadium and adjacent to the soon-to-be renovated Wembley Arena. The project, a 50-50 partnership with London-based Quintain Estates and Development PLC, is subject to the enactment of gaming reform legislation by Parliament, subsequent license approval by the government of the United Kingdom, and the signing of a definitive agreement with Quintain. -- Following enactment of gaming legislation in Pennsylvania, the company unveiled preliminary plans for a casino and entertainment complex to be built in Philadelphia, on the Delaware River waterfront. The project, which would eventually include 5,000 slot machines and a 500-room hotel, is subject to license approval by Pennsylvania gaming authorities. The company recently purchased a waterfront site for the project, which includes an 18-acre development site. -- In California, the company signed formal agreements with the Big Sandy Band of Western Mono Indians to govern the development, construction and management of a new Tribal casino to be built on Tribal land near Fresno in the Central Valley. Under the terms of the agreements, the project would be owned by the Tribe and managed by Caesars Entertainment. -- In New York, the Saint Regis Mohawk Tribe concluded negotiations with the office of Governor George Pataki over a land claim settlement that is expected to lead to the signing of a gaming compact authorizing the operation of the Tribe's casino resort in Sullivan County, about 90 miles north of New York City. The Tribe and the governor formally signed the land claim settlement on February 2, 2005. Caesars Entertainment has signed agreements with the Tribe to develop and manage the Mohawk Mountain Casino Resort. Strategic Asset Sales -- In keeping with its strategy of focusing more directly on core operating assets, the company: * Agreed to sell the Atlantic City Hilton and Bally's Tunica to an affiliate of Colony Capital, LLC of Los Angeles for approximately $612 million. The sale is expected to close by the end of the first quarter of 2005. * Agreed to sell Caesars Tahoe for approximately $45 million and Bally's New Orleans for approximately $24 million to Columbia Sussex Corporation, a hotel, resort and casino operator based in Fort Mitchell, Kentucky. The sales are expected to close by the end of the second quarter of 2005. * Agreed to sell its ownership and management interests in Caesars Gauteng, the casino resort near Johannesburg, South Africa, for approximately $145 million to Peermont Global Limited, a South African luxury hotel and casino company, and its economic empowerment partner, Marang (East Rand) Gaming Investments. The sale is expected to close by the end of the second quarter of 2005. * Closed the sale of the Las Vegas Hilton in June to an affiliate of Colony Capital for approximately $286 million. * Concluded its casino management agreement with the owners of the Dover Downs race track in Dover, Delaware. Western RegionEBITDA for the Western Region's casino resorts was $119 million inthe fourth quarter of 2004, up 43 percent from $83 million in theyear-ago quarter. Results on the Las Vegas Strip were driven by a23 percent increase in gaming win and a nine percent increase inRevPAR. Cash room rates rose by 13 percent, compared to theprevious year's quarter.At Caesars Palace, net revenue in the quarter rose 39 percent, to$167 million, from $120 million in the fourth quarter of 2003.EBITDA was $44 million, up 144 percent from the $18 millionreported for the fourth quarter of 2003. EBITDA margin at theproperty was 26 percent, compared to 15 percent in the year-agoquarter. Gaming win rose 48 percent, the result of a nine percentincrease in table volume and a 13 percent increase in slot volume.Table hold improved to a more normal 17 percent, compared to theyear-ago period.RevPAR rose 13 percent, driven by a 19 percent increase in cashroom rates. For the full year 2004, Caesars Palace posted thehighest cash room rate in its history -- $162 -- 10 percent higherthan the previous record, which was set in 2003.EBITDA for the full year 2004 reached $149 million -- an all-timerecord -- up 54 percent from $97 million in 2003.At Paris Las Vegas, fourth quarter EBITDA was $30 million, up from$28 million in the fourth quarter of 2003. Net revenue was$104 million, compared to $98 million in the fourth quarter of2003. Results were driven by a five percent increase in gamingwin and a five percent increase in RevPAR. The average cash roomrate rose 11 percent.Fourth quarter EBITDA for Bally's Las Vegas was $20 million, up 25percent from the $16 million reported in the year-ago quarter.Net revenue was $72 million, compared to $71 million in the fourthquarter of 2003. Gaming win declined two percent, while RevPARrose 12 percent due to higher occupancy and room rates. Theaverage cash room rate increased nine percent.The Flamingo Las Vegas reported fourth quarter EBITDA of$21 million, compared to $19 million for the fourth quarter of2003. Net revenue was $83 million, up from $72 million in thefourth quarter of 2003.The property benefited from an eight percent increase in gamingwin, higher room rates and the inclusion of results from JimmyBuffett's Margaritaville restaurant, which opened in December2003. Despite lower occupancy, RevPAR rose three percent on an 11percent increase in cash room rates.Other Nevada properties -- the Reno Hilton and Flamingo Laughlin-- recorded combined EBITDA of $4 million in the fourth quarter,up from $2 million in the fourth quarter of 2003. Eastern RegionEBITDA from Caesars' two Atlantic City casino resorts andmanagement fees from its Dover Downs slot operation was$52 million, down seven percent from the $56 million reported forthe fourth quarter of 2003.Results in Atlantic City suffered in the quarter because of the34-day strike by members of Local 54 of the Hotel Employees andRestaurant Employees union, which represents the majority of thecompany's Atlantic City hotel employees. The strike, which endedon November 4, principally affected results for October andNovember.At Bally's Atlantic City, EBITDA for the fourth quarter was$24 million, down from $28 million in the fourth quarter of 2003.Net revenue was $134 million, compared to $151 million in theyear-ago quarter. Gaming win declined 10 percent, the result of a13 percent decline in gaming volume. RevPAR declined 23 percentfrom the fourth quarter of 2003 because of lower occupancy.Fourth quarter EBITDA for Caesars Atlantic City was $27 million,even with the year-ago period. Net revenue at the property was$106 million, down from $116 million for the fourth quarter of2003. Gaming win declined eight percent due to a 13 percentdecline in gaming volume. RevPAR was off 14 percent, largely as aresult of lower occupancy.Because operating results from the Atlantic City Hilton areclassified as "discontinued operations," they are not included inreported results for Atlantic City in the current or prior year.Net revenue at the property declined $6 million to $62 million.EBITDA was $5 million, compared to $10 million in the fourthquarter of 2003. Gaming win declined six percent, primarilybecause of lower slot volume. Mid-South RegionCaesars Entertainment casino resorts in Indiana and Mississippireported fourth quarter EBITDA of $46 million, compared to$47 million in the fourth quarter of 2003.At Caesars Indiana, fourth quarter EBITDA grew by 27 percent, to$19 million, up from $15 million in the year-ago quarter. Netrevenue increased by 5 percent, to $77 million. EBITDA margin atthe property grew by more than 400 basis points. The improvedresults were driven largely by a six percent increase in gamingwin and a 23 percent rise in RevPAR. The average cash room raterose 19 percent.In the fourth quarter, Grand Casino Biloxi reported EBITDA of$10 million, even with the $10 million reported for the fourthquarter of 2003. Net revenue rose five percent to $58 million,largely because of a seven percent increase in gaming win and afour percent rise in RevPAR. The average cash room rate grewseven percent.Fourth quarter EBITDA at Grand Casino Gulfport was $5 million,down from $8 million in the fourth quarter of 2003. Net revenuewas $40 million, off five percent from $42 million in the year-agoquarter. Lower gaming volumes and a lower hold percentageresulted in a four percent decline in gaming win. Higher roomrates and occupancy drove a 27 percent increase in RevPAR. Theaverage cash room rate rose 27 percent in the quarter.In Northern Mississippi, Grand Casino Tunica reported EBITDA of$6 million, down from $8 million in the fourth quarter of 2003.Net revenue was $47 million, compared to $48 million in the fourthquarter of 2003. Gaming win declined three percent because oflower gaming volumes and a lower hold percentage.Results for Bally's Tunica are included in discontinuedoperations. In the fourth quarter, Bally's Tunica reported$2 million in EBITDA, down from $4 million in the fourth quarterof 2003. Net revenue declined to $14 million from $16 million inthe year-ago quarter. InternationalIn the fourth quarter, the company's international propertiesreported combined EBITDA of $13 million, even with the fourthquarter of the previous year.Because of the reorganization of Conrad Punta del Este casinoresort in Uruguay, Caesars' ownership increased from approximately46 percent to about 86 percent. As a result, the company beganconsolidating results from that property in September 2004.On December 24, 2004, the company announced that it had enteredinto a definitive agreement to sell its ownership and managementinterests in the Caesars Gauteng casino resort, near Johannesburg,South Africa. For the periods reported, the revenue, expenses andEBITDA associated with this property are included in discontinuedoperations. Capital expendituresThe company invested $180 million of capital during the fourthquarter of 2004. Maintenance capital expenditures were $78million and investments in growth projects were $102 million.In the full year 2004, the company spent $582 million on capitalinvestments -- $225 million on maintenance capital and$357 million on growth projects. Growth capital invested in 2004largely was directed toward a new luxury room tower and additionalmeeting and convention space at Caesars Palace and a new parkinggarage at Caesars Atlantic City. These projects are expected tobe completed in 2005.The company currently expects to spend approximately $657 millionon capital investments in 2005. This includes maintenance capitalinvestments of $248 million and growth capital of $409 million.The 2005 growth capital budget includes: * $204 million for the new room tower and meeting space at Caesars Palace; * $31 million for the garage adjacent to Caesars Atlantic City; and * $15 million related to development of the Mohawk Mountain Casino Resort in New York State.Other significant new capital investments included in the 2005growth capital budget are: * $70 million to purchase its partner's 18 percent interest in the Caesars Indiana casino resort; * $45 million to purchase land in Philadelphia for the planned casino project; and * $12 million to construct a pedestrian bridge and other projects at Caesars Atlantic City in anticipation of the opening of The Pier at Caesars. Other itemsDepreciation and Amortization in the fourth quarter was$103 million, compared to $97 million in the fourth quarter of2003.There was no pre-opening expense in the quarter.The "impairment loss and other" item includes $11 million relatedto the gain on the sale of real estate in Atlantic City and$8 million related to the lease termination in Atlantic City.Merger costs of $16 million are expenses related to the proposedacquisition by Harrah's Entertainment.Corporate expense in the fourth quarter was $14 million, comparedto $11 million in the fourth quarter of 2003.Equity in earnings of unconsolidated affiliates primarily consistsof earnings from the company's share of ownership in CasinoWindsor in Windsor, Canada.For the fourth quarter, this item was $1 million, compared to$2 million in the fourth quarter of 2003. Previously, this itemalso included results of Conrad Punta del Este in Uruguay.Because of the reorganization of the Punta del Este casino resort,Caesars Entertainment's ownership stake in the property increasedfrom approximately 46 percent to approximately 86 percent,requiring the consolidation of results beginning in Sept. 2004.Net interest expense in the quarter was $68 million, compared to$71 million in the fourth quarter of 2003, due to lower debtbalances and reduced borrowing costs. The company's cost ofborrowing declined because of interest rate swaps and the decisionto issue convertible debt to replace existing, higher-cost debt.Capitalized interest was $4 million in the fourth quarter,compared to $1 million in the year-ago quarter. There was nointerest income in the quarter, compared to $1 million in thefourth quarter of 2003.The effective tax rate in the fourth quarter was 46.9 percent,compared to 35.7 percent in the fourth quarter of 2003.There were no share repurchases in the quarter. Balance sheetAs of December 31, 2004, the company had a cash balance of$299 million, which consisted entirely of funds held in thecompany's casinos. The company paid down $27 million ofindebtedness in the quarter, resulting in a debt balance of$4.15 billion on December 31, 2004.The company had $1.2 billion available on its credit facilities,subject to covenant restrictions. The ratio of the company's debtto its last 12 months of EBITDA was 3.6. The company has no debtmaturities until December 2005.The number of diluted shares outstanding was 320 million at theend of the fourth quarter, compared to 303 million at the end of2003. Other EventsOn January 11, 2005, the company announced that it had reachedagreements to acquire its partner's 18 percent interest in thecompany that owns and operates the Caesars Indiana casino resort.Caesars expects to complete the transaction, which is valued atapproximately $70 million, in the first quarter of 2005.At the conclusion of the transaction, Caesars Entertainment willown 100 percent of the property through its Indiana affiliate,which will be renamed Caesars Riverboat Casino, LLC upon approvalby the Indiana Gaming Commission.Also on January 11, 2005, the company completed the acquisition of30 acres of land along the Delaware River waterfront inPhiladelphia for approximately $64 million (of which $19 millionhad been previously paid). The company plans to use 18 acres ofthe property for the construction of a proposed casino and relatedretail and entertainment facilities. The project is subject tolicensing by the new Pennsylvania Gaming Commission and approvalby other agencies. GuidanceConsistent with the practice of other large-cap gaming companies,Caesars Entertainment will no longer provide quarterly or annualearnings guidance. Special shareholders meetingThe Board of Directors has established March 11, 2005 as the dateof the special shareholders meeting to vote on the proposedacquisition of the company by Harrah's Entertainment. The meetingwill be held at 8 a.m. PST at Caesars Palace in Las Vegas, Nevada.The record date for the meeting is January 18, 2005. Annual shareholders meetingThe Board of Directors has established June 24, 2005 as the dateof the regular annual shareholders meeting, which will be held at8 a.m. PDT at Caesars Palace in Las Vegas. The record date forthe meeting is April 25, 2005. Pursuant to the company's bylaws,any shareholder proposal must be submitted to the company'ssecretary between February 25, 2005 and March 17, 2005.Caesars Entertainment, Inc., (NYSE: CZR) is one of the world'sleading gaming companies. With annual revenue of $4.2 billion,27 properties on four continents, 26,000 hotel rooms, two millionsquare feet of casino space and 50,000 employees, the Caesarsportfolio is among the strongest in the industry. Caesars casinoresorts operate under the Caesars, Bally's, Flamingo, GrandCasinos, Hilton and Paris brand names. The company has itscorporate headquarters in Las Vegas.The company's Board of Directors in July 2004 accepted an offerfrom Harrah's Entertainment, Inc., to acquire the company forapproximately $1.9 billion in cash and 67.7 million shares ofHarrah's common stock. Shareholders of both companies arescheduled to vote on the merger in separate meetings on March 11.The transaction is contingent on approval by federal and stateregulatory agencies and is expected to close in the second quarterof 2005. * * *As reported in the Troubled Company Reporter on July 19, 2004,Fitch Ratings has affirmed the following long-term debt ratings ofHarrah's Entertainment and placed the long-term ratings of CaesarsEntertainment on Rating Watch Positive. HET -- Senior secured debt 'BBB-'; -- Senior subordinated debt 'BB+'. CZR -- Senior unsecured debt 'BB+'; -- Senior subordinated debt 'BB-'.CATHOLIC CHURCH: Spokane Litigants Want Avoidance Trials Initiated------------------------------------------------------------------On February 4, 2005, the Committee of Tort Litigants filed acomplaint for declaratory relief and substantive consolidationagainst the Diocese of Spokane and approximately 81 affiliatedentities, parishes, schools, and other institutions falling withinthe Diocese's network.The Complaint is based on theories that: -- the Affiliated Entities are not entities separate from the Diocese; -- the Diocese has complete domination and control over the Affiliated Entities; and -- the relationship between them warrants substantive consolidation under principles of bankruptcy law.John W. Campbell, Esq., at Esposito, George & Campbell, PLLC, inSpokane, Washington, tells the U.S. Bankruptcy Court for theEastern District of Washington that as a party-in-interest, theLitigants Committee had the right to file the Complaint.However, Spokane has significant strong-arm powers and avoidancepowers arising solely under the Bankruptcy Code, which couldmaterially enhance the bankruptcy estate. According to Mr.Campbell, the Litigants Committee did not include claims forrelief based on those powers because it could only allege them ifthe Court delegates those powers to it.Since its bankruptcy petition date, Spokane has made absolutelyclear that even though it holds record title to substantial andvaluable real and personal property, it does not own thebeneficial interest in those properties. Spokane's basis for thiscontention, Mr. Campbell says, is highly suspect as it has notproduced any recorded documents evidencing third party ownershipof the beneficial interests and, at the Section 341 examination,could not identify even a single specific recorded documentevidencing third party interests in the properties.Spokane's public statements also belie any belief that it will tryto bring the properties into the estate. In the December 16, 2004online edition of the Inland Register, Spokane stated: "Parish and school properties in the diocese are not listed as assets. Cross [Debtor's counsel] said that these properties are held in trust in the bishop's name and function as individual entities. Diocesan attorneys are working to ensure the safety of all parish and school properties throughout the Chapter 11 proceedings."Spokane has made these contentions at every opportunity inflagrant disregard of its fiduciary duty to exercise all of itslegal powers to maximize the assets of the estate and the returnto creditors. Without doubt, Spokane accepts the AffiliatedEntities' adverse claims, thereby, conceding the exclusion ofsubstantially all of its assets -- that is, the real and personalproperty of the Affiliated Entities -- from the estate. Theresult is to minimize the recovery for the Survivors whilemaintaining the status quo for the benefit of Spokane'soperations.Mr. Campbell tells Judge Williams that Spokane may have otheravoidance actions against the Affiliated Entities. Spokane hasidentified numerous transfers to the Affiliated Entities duringthe 90-day preference period. The transfers may be avoidablepreferences under Section 547 of the Bankruptcy Code. Inaddition, Spokane may have conveyed property to the AffiliatedEntities during the one-year prepetition period, which may berecoverable under Section 548.The Litigants Committee considers the Affiliated Entities as"insiders" and would have expected transfers to them to bereported on Spokane's Statement of Financial Affairs. While thetransfers do not appear on the Diocese's Statement of FinancialAffairs, Spokane's contention that the Affiliated Entities areindependent of the Diocese may have been the rationale for notdisclosing transfers, if any.Based on Spokane's statements and conduct, the LitigantsCommittee believes that Spokane will not take the actionsnecessary to exercise its strong-arm powers, to avoid anyinterests in the subject properties or avoid transfers to theAffiliated Entities.To fully address the Section 541 issues in the case and maximizethe estate, the Litigants Committee seeks Judge Williams'authorization to initiate avoidance actions against theAffiliated Entities under Sections 544, 545, 547, 548 and 550 ofthe Bankruptcy Code.The Roman Catholic Church of the Diocese of Spokane filed forchapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) onDec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocesein its restructuring efforts. When the Debtor filed forprotection from its creditors, it listed $11,162,938 in totalassets and $81,364,055 in total debts. (Catholic Church BankruptcyNews, Issue No. 17; Bankruptcy Creditors' Service, Inc.,215/945-7000)CITATION CAMDEN: Has Until Feb. 21 to File a Chapter 11 Plan------------------------------------------------------------Citation Camden Castings Center, Inc., and its debtor-affiliatessought and obtained an extension until Feb. 21, 2005, from theU.S. Bankruptcy Court for the Northern District of Alabama,Southern Division, of their exclusive period to file a chapter 11plan. The Debtors also have until May 20, 2005, to solicitacceptances of that plan.The Debtors need the extension to resolve some issues before aconsensual plan with the Official Committee of Unsecured Creditorscan be drafted. The Debtors assured the Court that noparty-in-interest will be prejudiced by this extension.Headquartered in Camden, Tennessee, Citation Camden CastingsCenter, Inc. -- http://www.citation.net/-- an affiliate of Citation Corporation, manufactures ductile iron parts for discbrakes. The Company filed for chapter 11 protection onDec. 7, 2004 (Bankr. N.D. Ala. Case No. 04-10781). Cathleen C.Moore, Esq., and Michael Leo Hall, Esq., at Burr & Formanrepresent the Debtor in its restructuring efforts. When theDebtor filed for protection from its creditors, it listed $655,575in total assets and $324,334,598 in total debts.CITIGROUP MORTGAGE: Moody's Rates Classes B-4 & B-5 at Low-B------------------------------------------------------------Moody's Investors Service assigned a Aaa rating to thenon-residual, senior certificates issued by the Citigroup MortgageLoan Trust, Series 2004-NCM2 transaction. Moody's also assignedratings ranging from Aa2 to B2 to the subordinate certificates inthe deal.The securitization is backed by National City Mortgage-originatedfixed-rate Alt-A mortgage loans acquired by Citigroup MortgageLoan Trust, Inc. The ratings are based primarily on the creditquality of the loans, and on the protection from subordination.The credit quality of the loan pool is in line with other loanpools backing recent Alt-A securitizations.National City Mortgage Co. will service the loans.The complete rating actions are: -- Issue: Citigroup Mortgage Loan Trust, Inc., Mortgage Pass-Through Certificates, Series 2004-NCM2 * Class IA-CB-1, rated Aaa * Class IA-CB-2, rated Aaa * Class IA-CB-3, rated Aaa * Class IIA-CB-1, rated Aaa * Class IIA-CB-2, rated Aaa * Class IIA-CB-3, rated Aaa * Class IIIA-CB-1, rated Aaa * Class IIIA-CB-2, rated Aaa * Class IVA-1, rated Aaa * Class IVA-2, rated Aaa * Class XS-1, rated Aaa * Class XS-2, rated Aaa * Class XS-3, rated Aaa * Class XS-4, rated Aaa * Class PO-1, rated Aaa * Class PO-2, rated Aaa * Class PO-3, rated Aaa * Class PO-4, rated Aaa * Class B-1, rated Aa2 * Class B-2, rated A2 * Class B-3, rated Baa2 * Class B-4, rated Ba2 * Class B-5, rated B2CLINTON CHEVRON: Voluntary Chapter 11 Case Summary--------------------------------------------------Debtor: Clinton Chevron Inc. P.O. Box 572335 Houston, Texas 77257Bankruptcy Case No.: 05-32169Chapter 11 Petition Date: February 11, 2005Court: Southern District of Texas (Houston)Judge: Jeff BohmDebtor's Counsel: Rodney E. Moton, Esq. 2626 South Loop West 230 Houston, TX 77054 Tel: 713-236-8184Estimated Assets: $1 Million to $10 MillionEstimated Debts: $1 Million to $10 MillionThe Debtor did not file a list of its 20-largest creditors.CONCENTRA OPERATING: Dec. 31 Balance Sheet Upside-Down by $62.9MM-----------------------------------------------------------------Concentra Operating Corporation reported results for the fourthquarter and year ended Dec. 31, 2004. The Company reportedconsolidated Adjusted Earnings Before Interest Taxes Depreciationand Amortization of $29,005,000 for the fourth quarter and$154,755,000 for the full year. Concentra computes AdjustedEBITDA in the manner prescribed by its bond indentures.Revenue for the fourth quarter of 2004 was $262,638,000 or 2.5%lower than the $269,407,000 reported for the year-earlier period.Operating income was $19,782,000 for the quarter as compared to$23,601,000 for the same quarter last year. Net income for thefourth quarter was $4,557,000, which compares to $13,520,000 forthe fourth quarter of 2003. Results for the quarter wereadversely affected by a number of factors, including there beingone less revenue day in the quarter, the impact of the change inCalifornia's workers' compensation fee schedule, the Company'sdecision to implement Section 404 of the Sarbanes-Oxley Act, andthe absence of flu shot revenue due to the nationwide shortage ofvaccine.For the year ended Dec. 31, 2004, revenue increased 4.9% to$1,102,250,000 from $1,050,688,000 for 2003. Operating income forthe year declined to $73,025,000 from $106,481,000 for 2003. Thedecrease in operating income was primarily due to a non-cashimpairment charge of $41,682,000 reported in the third quarterrelated to the write down of goodwill and other long-lived assetsof the Company's Care Management Services segment. Largelybecause of these impairment charges, the Company reported a netloss for the year of $9,975,000 compared with net income of$43,289,000 in 2003."We are pleased to have achieved a strong underlying performancefor the full year, despite experiencing the weakness weanticipated in our fourth quarter results," said Daniel Thomas,Concentra's President and Chief Executive Officer. "During 2004,our reported results were affected by a number of non-recurringitems. In total, we incurred expenses of $6.1 million associatedwith our second quarter dividend, severance expenses associatedwith certain senior executives, lease termination costs, and otherrelated expenses. After considering the impact of these items onour reported results, you will find that Concentra delivered asolid increase in its core EBITDA during 2004."Our Health Services division completed the best year in itshistory," Mr. Thomas continued. "With an overall 12.8% revenuegrowth rate and a 14.3% growth rate in gross profit, HealthServices contributed significantly to our results for the year.These growth rates would have been even stronger had there notbeen a nationwide shortage of flu vaccine during the fourthquarter. We reported $3.6 million in revenue from flu shotsduring the fourth quarter of 2003 and had no revenue from theseservices during the same period in 2004."During the quarter, our Network Services results were greatlyaffected by the California workers' compensation fee schedulechanges enacted in early 2004," said Mr. Thomas. "As we'vereported throughout this year, these changes have had asignificant effect on our financial performance. Since we had ourstrongest period of revenue from these affected services in thefourth quarter of 2003, we estimate this fee schedule changeresulted in a $4.4 million reduction in our fourth quarter revenueand a $5.6 million effect for the full year. These changes, alongwith other reductions in revenue from our workers' compensationPPO services, contributed to the slowing of our revenue andearnings growth from the Network Services segment during 2004."We believe Concentra is well positioned to achieve a solid growthin revenue and earnings during 2005," Mr. Thomas added. "Year inand year out, in good economies and bad, Concentra has continuedto expand and to grow. We believe our diversification and theconsistent investments we have made in our business will serve uswell during the year to come."The Company also noted that during 2004, it expended approximately$4.3 million associated with its implementation of Section 404 ofthe Sarbanes-Oxley Act. Of this amount, approximately$3.7 million was incurred during the second half of 2004. TheCompany currently estimates that it will spend approximately$2.6 million associated with these compliance activities during2005, with this amount being generally incurred in a ratablefashion throughout the course of the year.At Dec. 31, 2004, Concentra had no borrowings outstanding underits $100,000,000 revolving credit facility and had $61,319,000 incash and investments. At the conclusion of the fourth quarter,the Company had a Days Sales Outstanding of 61 days versus 58 daysfor the year-earlier period. About the CompanyConcentra Operating Corporation, a wholly owned subsidiary ofConcentra Inc., is the comprehensive outsource solution forcontaining healthcare and disability costs. Serving theoccupational, auto and group healthcare markets, Concentraprovides employers, insurers and payors with a series ofintegrated services which include employment-related injury andoccupational health care, in-network and out-of-network medicalclaims review and repricing, access to specialized preferredprovider organizations, first notice of loss services, casemanagement and other cost containment services. Concentraprovides its services to approximately 135,000 employer locationsand 3,700 insurance companies, group health plans, third-partyadministrators and other healthcare payors.At Dec. 31, 2004, Concentra Operating's balance sheet showed a$62,866,000 stockholders' deficit, compared to $44,010,000 inpositive equity at Dec. 31, 2003.COVENTRY ASSOCIATES: Case Summary & 7 Largest Unsecured Creditors-----------------------------------------------------------------Lead Debtor: Coventry Associates, L.P. 346 East Lancaster Avenue, Apt. 501 Wynnewood, Pennsylvania 19096Bankruptcy Case No.: 05-11798Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- JEEH, L.P. 05-11795Type of Business: The Debtor own and manage real property.Chapter 11 Petition Date: February 10, 2005Court: Eastern District of Pennsylvania (Philadelphia)Judge: Bruce I. FoxDebtors' Counsel: Kristin T. Mihelic, Esq. Spector Gadon & Rosen P.C. Seven Penn Center 1635 Market Street, Seventh Floor Philadelphia, PA 19103 Tel: 215-241-8888Estimated Assets: $1 Million to $10 MillionEstimated Debts: $1 Million to $10 MillionA. Coventry Associates, L.P.'s 5 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------Colliers Lanard & Axilbund Commissions $9,384399 Market StreetPhiladelphia, PA 19106Seligman Cupersmith Wilensky Services $3,000& Co., LLP10 Grove StreetCherry Hill, NJ 08002Alpha Fire Sprinklers, LLC Services $1,5009016 Collins AvenuePennsauken, NJ 08110Franklin Security System Security Services $210Verizon $48B. JEEH, L.P.'s 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------Seligman Cupersmith Wilensky & Co., LLP $3,20010 Grove StreetCherry Hill, NJ 08002Majek Fire Protection, Inc. $1,0511707 Imperial WayP.O. Box 39Thorofare, NJ 08086DAN RIVER: Exits Bankruptcy Following Plan Consummation-------------------------------------------------------Dan River Inc. has emerged from the Chapter 11 reorganizationprocess. The Company officially concluded its fast trackreorganization this week after completing all required actions andsatisfying all remaining conditions to its Third Amended andRestated Joint Plan of Reorganization.Barry Shea has assumed the role of President and Chief ExecutiveOfficer and Joseph L. Lanier, Jr. has become non-executiveChairman of the Board. Mr. Shea said, "This is a great day forthe new Dan River. The last ten and a half months have been verydifficult but the reorganization process has allowed us to emergefrom Chapter 11 with a greatly de-leveraged balance sheet and animproved expense structure which permits Dan River to be a leaderin the competitive home fashions and apparel fabrics markets thatwe serve. Approximately $225 million in unsecured obligationswill be converted into new equity in the reorganized company."Mr. Shea continued, "The Company emerges from Chapter 11 with arenewed vitality and an unwavering commitment to create valueadded products that will draw the attention of consumers and willallow our customers to differentiate themselves in the competitiveretail environment in which they participate."He concluded, "The fact that we were able to complete this processin under 11 months is a testament to the support of several groupsthat I want to thank. To our customers and suppliers, we aregrateful for your continued support. To our associates, we thankyou for your dedication, hard work and patience throughout thisprocess. To our bondholders, we are grateful for your continuedfinancial support and confidence in the Company's future success.To our Creditors' Committee, we thank you for being cooperativeand constructive partners during the reorganization process. Thesupport of each of these constituencies allowed us to exit Chapter11 quickly, which was a considerable achievement in the currentbusiness environment."The Company's emergence financing was comprised principally ofborrowings under a new senior secured financing facilitysyndicated by Abelco Finance in the amount of $120 million.Also, the Company obtained a $20 million secured term loan from agroup consisting of holders of the Company's pre- petition bondobligations. These financings which are secured by the assets ofDan River, replaces the Company's debtor in possession facilityand is available to Dan River to help meet its ongoing workingcapital needs.As part of the consummation of the Plan, the previouslyoutstanding shares of class A and class B common stock werecancelled effective Feb. 14, 2005. The Company will issue newcommon stock to certain of the Company's post-emergence lendersand to its unsecured pre-petition creditors, including the holdersof the Company's Senior Notes due 2009, as the Company completesthe claims reconciliation process.Upon emergence from Chapter 11, the Company will have fewer than300 holders of record of its new common stock. In accordance withthe rules and regulations of the Securities and ExchangeCommission, the Company expects to file a Form 15 to deregisterits common stock and will cease to be a public reporting company.Headquartered in Danville, Virginia, Dan River Inc.-- http://www.danriver.com/--designs, manufactures and markets textile products for the home fashions, apparel fabrics andindustrial markets. The Company and its debtor-affiliates filedfor chapter 11 protection on March 31, 2004 (Bankr. N.D. Ga. CaseNo. 04-10990). James A. Pardo, Jr., Esq., at King & Spalding,represents the Debtors in their restructuring efforts. When theDebtors filed for protection from their creditors, they listed$441,800,000 in total assets and $371,800,000 in total debts. TheCourt confirmed the Debtors' Plan of Reorganization on Jan. 18,2005, and the plan took effect on Feb. 14, 2005.DAYTON POWER: Equity Portfolio Sale Cues Fitch to Review Ratings----------------------------------------------------------------Fitch Ratings has placed the ratings of DPL, Inc. - DPL -- andDayton Power and Light Company -- DP&L -- on Rating Watch Positivebecause of the positive credit implications anticipated to resultfrom the sale of the private equity investment fund portfolio.DPL's exit from the private equity business is expected to lowerthe company's business risk. In addition, a portion of theproceeds from the sale are likely to be used to reduce debt at theholding company level. Following progress on closure of thesales, clarity on the use of the sales proceeds and conclusion ofa full rating review, Fitch anticipates upgrading the ratings ofDPL to investment-grade levels and upgrading the ratings of DP&Lto the 'A' category, assuming significant paydown of debt at theparent company is accomplished using the proceeds from the privateequity portfolio.DPL entered into an agreement to sell its interests in 46 privateequity funds to AlpInvest/Lexington 2004 LLC. The sale isexpected to generate net pretax proceeds of $850 million, subjectto adjustments for distributions and capital calls and consent tothe transfer by the funds.Fitch places these ratings on Watch Positive: DPL, Inc. -- Senior unsecured debt 'BB'; -- Trust-preferred stock 'B+'; -- Short-term 'B'. Dayton Power & Light -- First-mortgage bonds 'BBB'; -- Collateralized PCRBs 'BBB'; -- Preferred stock 'BB+'; -- Short-term 'B'.DESA HOLDINGS: Plan Confirmation Hearing Set for March 29---------------------------------------------------------The United States Bankruptcy Court for the District of Delawarewill hold a hearing on March 29, 2005, at 2:00 p.m., to considerconfirmation of the Joint Plan of Reorganization of DESA HoldingsCorp. and its debtor-affiliate, DESA International LLC.March 7, 2005, at 4:00 p.m., is the deadline for filing andserving plan confirmation objections. All objections must statewith particularity the legal and factual grounds for suchobjection, describe the nature and amount of the objector's claim,and provide, where applicable, the specific text that theobjecting party believes to be appropriate to insert into thePlan.Objections, if any, to the plan must be in writing and must be: (1) filed with the Bankruptcy Court on or before March 7, 2005; and (2) served on: a) Counsel for the Debtors: James H.M. Sprayregen, Esq. James W. Knapp III, Esq. Kirkland & Ellis LLP 200 East Randolph Drive Chicago, Illinois 60601 Tel: 312-861-2000 Fax: 312-861-2200 -- and -- Laura Davis Jones, Esq. Curtis A. Hehn, Esq. Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. 919 North Market Street, 16th Floor P.O. Box 8705 Wilmington, Delaware 19899 Tel: 302-652-4100 Fax: 302-652-4400 b) Counsel for the Creditors Committee: Gerald C. Bender, Esq. Karyn B. Zeldman, Esq. Stroock & Stroock & Lavan LLP 180 Maiden Lane New York, New York 10038 Tel: 212-806-5400 Fax: 212-806-6006 -- and -- William P. Bowden, Esq. Ashby & Geddes 222 Delaware Avenue P.O. Box 1150 Wilmington, Delaware 19899 Tel: 302-654-1888 Fax: 302-654-2067 c) United States Trustee: David L. Buchbinder, Esq. Office of the U.S. Trustee J. Caleb Boggs Federal Building 844 N. King Street, Suite 2313 Lock Box 35 Wilmington, Delaware 19801 d) Counsel for the Prepetition Lenders: Fredric Sosnick, Esq. Shearman & Sterling LLP 599 Lexington Avenue New York, New York 10022 Tel: 212-848-4000 Fax: 212-848-7179Headquartered in Bowling Green, Kentucky, DESA International,Inc., manufactured and marketed high-quality zone heatingproducts, hearth products, security lighting and specialty toolsfor use in homes and commercial buildings. The Company and itsaffiliate filed for chapter 11 protection (Bankr. Del. Case No.02-11672) on June 8, 2002. James H.M. Sprayregen, Esq., James W.Kapp, III, Esq., and Scott R. Zemnick, Esq., at Kirkland & Ellis,LLP, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl YoungJones & Weintraub, P.C., represent the Company. When the Companyfiled for protection from its creditors, it listed $50 million inassets and $100 million in debts.DESERT RIDGE: S&P Slices Senior Debt Rating to BB+ from BBB+------------------------------------------------------------Standard & Poor's Ratings Services lowered its senior debt ratingon Desert Ridge Resort LLC to 'BB+' from 'BBB+' and placed it onCreditWatch with negative implications.Standard & Poor's also said that it withdrew its 'BB+'counterparty credit and financial strength ratings on sevencompanies within Royal & Sun Alliance Insurance Group PLC's U.S.insurance operations (RSA USA): -- American & Foreign Insurance Company, -- Globe Indemnity Company, -- Royal Insurance Company of America, -- Safeguard Insurance Company, -- Connecticut Indemnity Company, -- Fire & Casualty Insurance Company of Connecticut, and -- Guaranty National Insurance Company Connecticut."The ratings on the seven RSA USA companies were withdrawnfollowing various mergers and dissolutions of companies within thegroup," explained Standard & Poor's credit analyst Tom E. Thun.RSA USA now consists of 12 insurance companies, of which Standard& Poor's rates six."The organizational changes are expected to provide an improvedcorporate structure, allowing enhanced managerial oversight andother operating efficiencies," Mr. Thun added. Royal IndemnityCompany will remain the lead company, with a 62% share of the RSAUSA pool.The rating on Desert Ridge was lowered to align it with the ratingon Royal Indemnity. Royal Indemnity provides a reinsuranceagreement supporting the rating on Desert Ridge's two seniorsecured notes, both of which are due on Dec. 31, 2007. The ratingon Desert Ridge is on CreditWatch negative because of the need toreview and validate guarantees and insurance programs supportingthe debt issuance. If these guarantees and insurance programs arefound to be sound, it is expected that the rating will be take offof CreditWatch and affirmed.DMX MUSIC: Files for Chapter 11 Protection in Delaware------------------------------------------------------DMX MUSIC, Inc., a subsidiary of Maxide Acquisition, Inc., and itsU.S. affiliates filed voluntary chapter 11 petitions in the UnitedStates Bankruptcy Court for the District of Delaware to effectuatean Asset Purchase Agreement for the sale of its domestic andinternational operations to THP Capstar, Inc. The filing does notinclude its subsidiaries in Australia, Belgium, Canada, The CzechRepublic, France, Germany, Holland, Hungary, Poland, Spain, Japanor the United Kingdom.THP Capstar, Inc., is an affiliate of Capstar Partners, LLC, aprivate investment company led by Steve Hicks with a focus ontraditional and early stage investments in broadcast/media,distributed content and media technology. Partnering with Capstarin THP Capstar, Inc., is Trinity Hunt Partners, a Dallas-based,regionally-focused private equity firm specializing in investmentsin established middle market companies in the media,manufacturing, business services, healthcare and consumer productsindustries. Silver Point Finance, LLC, is providing debtfinancing for the transaction."This transaction represents very positive news for our customers,employees, affiliates and other constituents," said Mark D.Rozells, President and Chief Executive Officer of DMX MUSIC."Completing the sale through a Chapter 11 filing will allow us tosignificantly reduce our debt and undertake an orderly transitionto our new owners. Under THP Capstar's ownership, the businesswill be able to capitalize on its leading market position,proprietary technology and significant operational improvementsmade since 2002, while having greater access to financialresources necessary to support our future growth."Mr. Rozells noted that the Chapter 11 and sale processes will haveno impact on the Company's ability to fulfill its obligations toits customers and employees. "During the sale process, we willcontinue our commitment to provide the premier music, messagingand imaging services, audio/video systems, and client support thatour customers have come to expect. Our daily operations willcontinue as usual, our vendors will be paid for all suppliesfurnished and services rendered subsequent to the filing, and allday-to-day aspects of the business will continue withoutinterruption. Taking care of our customers is, and will remain,our number one priority." New Financing SecuredDMX MUSIC has received a commitment for up to $10 million indebtor-in-possession financing from its current bank group led byRoyal Bank of Canada, subject to court approval. The DIPfinancing will be used to maintain uninterrupted service anddelivery to DMX MUSIC customers during the completion of the saletransaction, and to ensure payment to vendors for post-petitionpurchases in the ordinary course of business."With our positive free cash flow, DIP financing, and theprotections provided under the Bankruptcy Code for post-petitionpurchases, we are confident our suppliers will continue theirlong-term support of us while we complete the sale. Throughoutthe sale process and beyond, we will continue to service ourexisting customers, renew current agreements and acquire newbusiness," Mr. Rozells said."[This] action lays the foundation for DMX MUSIC's futuregrowth by creating a capital structure that will enable DMX MUSICto maintain a dominant market presence for many years to come,"stated Mr. Rozells.In conjunction with the filing and pursuant to Section 363 of theBankruptcy Code, DMX MUSIC also filed a motion for theestablishment of bidding procedures to allow other qualifiedbidders to submit higher and better offers to purchase the assetsbeing sold. The Company anticipates the sale transaction will becompleted within 60 to 90 days.Headquartered in Los Angeles, California, DMX MUSIC, Inc. --http://www.dmxmusic.com/-- is majority-owned by Liberty Digital, a subsidiary of Liberty Media Corporation, with operations in morethan 100 countries. DMX MUSIC distributes its music and visualservices worldwide to more than 11 million homes, 180,000businesses, and 30 airlines with a worldwide daily listeningaudience of more than 100 million people. The Company and itsdebtor-affiliates filed for chapter 11 protection on Feb. 14, 2005(Bankr. D. Del. Case No. 05-10431). The case is jointlyadministered under Maxide Acquisition, Inc. (Bankr. D. Del. CaseNo. 05-10429). Curtis A. Hehn, Esq., Laura Davis Jones, Esq., andScotta Edelen McFarland, Esq., at Pachulski, Stang, Ziehl, Young,Jones & Weintraub P.C., represent the Debtors in theirrestructuring efforts. When the Debtors filed for protection fromtheir creditors, they estimated more than $100 million in debtsand assets.DMX MUSIC INC: Case Summary & 6 Largest Unsecured Creditors-----------------------------------------------------------Lead Debtor: Maxide Acquisition, Inc. 12300 Liberty Boulevard Englewood, Colorado 80112Bankruptcy Case No.: 05-10429Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- AEI Music Network, Inc. 05-10430 DMX Music, Inc. 05-10431 Tempo Sound, Inc. 05-10433Type of Business: Maxide Acquisition dba DMX Music is a leading distributor of commercial-free music to homes, businesses, and airlines in the U.S., Europe, Asia, Australia, and South America. The Debtors offer more than 500 styles of music organized into a variety of channels delivered by digital cable, satellite, DVD, and the Internet. DMX serves some 180,000 businesses, including retail chains (The Limited, Macy's, Nine West), as well as some 11 million homes and 30 airlines. The Debtors also provide sound and video systems engineering and consulting, proprietary delivery platforms, third-party systems equipment, installation, and other sound and video contracting services. See http://www.aeimusic.com/and http://www.dmxmusic.com/Chapter 11 Petition Date: February 14, 2005Court: District of DelawareJudge: Mary F. WalrathDebtors' Counsel: Curtis A. Hehn, Esq. Laura Davis Jones, Esq. Scotta Edelen McFarland, Esq. Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C. 919 North Market Street, 16th Floor Wilmington, Delaware 19801 Tel: (302) 652-4100 Fax: (302) 652-4400Notice, Claimsand BallotingAgent: Robert L. Berger & Associates, LLCEstimated Assets: More than $100 MillionEstimated Debts: More than $100 MillionConsolidated list of Debtors' 6 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------Royal Bank of Canada Senior Secured $20,640,000Administrative Agent Bank DebtOne Liberty Plaza Partially SecuredNew York, NY 10006-1404Tel: (212) 428-6200Fax: (212) 858-7475Credit Lyonnais Senior Secured $17,200,0001301 Avenue of the Americas Bank DebtNew York, NY 10019 Partially SecuredTel: (212) 261-7000Fax: (212) 459-3170Silver Point Capital L.P. Senior Secured $17,200,000Attn: Jesse C. Watson Bank DebtTwo Greenwich Plaza, 1st Floor Partially SecuredGreenwich, CT 06830Tel: (203) 542-4000Fax: (203) 542-4100Bank of Tokyo-Mitsubishi Senior Secured $10,320,0007-1 Marunouchi Bank Debt2-Chome, Chiyoda-Ku Partially SecuredTokyo, 100-8388, JapanTel: 81-3-3240-1111Fax: 81-3-3240-8203Bank of New York Senior Secured $10,320,000One Wall Street Bank DebtNew York, NY 10286 Partially SecuredTel: (973) 357-7523Fax: (973) 357-7899Deutche Bank Senior Secured $10,320,00060 Wall Street Bank DebtMail Stop NYC 60-3005 Partially SecuredNew York, NY 1005Tel: (212) 250-8196Fax: (212) 797-4567DPL INC: S&P May Lift Ratings Due to Private Funds Interest Sale----------------------------------------------------------------Standard & Poor's Ratings Services affirmed its 'BB-/B' corporatecredit ratings on utility holding company DPL Inc., and utilityaffiliate Dayton Power & Light Company and placed the ratings onCreditWatch with positive implications.The rating action is in response DPL's announcement that it hasentered into an agreement to sell the company's interest in46 private equity funds to a joint venture of AlpInvest Partnersand Lexington Partners Inc.Dayton, Ohio-based DPL had about $2 billion of debt outstanding asof Dec. 31, 2004."The sale of its higher-risk investment portfolio of privateequity funds would improve the company's overall business riskprofile and should also provide the company with proceeds of about$850 million pretax upon closing," said Standard & Poor's creditanalyst Brian Janiak."The future upward momentum for DPL's credit ratings will bestrongly correlated with the actual timing of the sale of itsinvestment portfolio and management's ultimate use of proceedstoward the balancing of debt reduction and re-investment needs inits core operations," continued Mr. Janiak.Nevertheless, DPL's new management remains challenged by thecompany's elevated debt levels, weak credit protection metrics,and increased capital expenditure needs for its core utilityoperations over the next few years.Furthermore, management also needs to continue to reconcile DPL'scredibility and improve the company's formerly weak internalcontrols and corporate governance issues, as well as resolve alloutstanding legal issues and current investigations by the SEC,the U.S. Attorney's Office, and the Public Utilities Commission ofOhio (PUCO).The next milestones for the company include the filing of its 2004form 10-K, providing 2005 operational guidance, as well as thetiming and specifics of its planned use of proceeds from itsinvestment sale.DUALSTAR TECHNOLOGIES: Winding Down Business--------------------------------------------DualStar Technologies Corporation incurred significant operatinglosses in the last several fiscal years in its communicationsbusiness, and, more recently, in its construction relatedbusinesses. The Company completed the discontinuance of itscommunications business in August 2003. The construction relatedbusinesses are not presently profitable. The Company implementedadditional cost containment measures, sought additional financing,and sought to renegotiate certain contractual obligations. Theseefforts have not made the Company profitable again. Given thecurrent U.S. economic climate and market conditions and thefinancial condition of the Company, the Company has been unable toraise additional funds to fund future operating losses that mayoccur through the operation of the construction businesses. TheCompany is unable to obtain surety bonds and maintain insurancecoverages in connection with its construction business. Thesefactors have created a concern among the Company's current andpotential customers and vendors as to whether it will be able tofulfill its contractual obligations. Employee concern about thefuture of the business and their continued prospects foremployment is causing them to seek employment elsewhere. As aresult, the Company has been unable to pursue new work and isbeing forced to cease operations and wind down its affairs.Accordingly, the Company will not be able to continue as a goingconcern.DualStar Technologies Corporation, through its wholly ownedsubsidiaries, used to operate electrical and mechanicalconstruction-related businesses.ENDURANCE BUSINESS: Moody's Puts B1 Rating on $120MM Sr. Sec. Loan------------------------------------------------------------------Moody's Investors Service has assigned a B1 rating to EnduranceBusiness Media, Inc.'s proposed senior secured credit facility.Moody's rating action are: * $20 million senior secured revolving credit facility -- B1 * $100 million senior secured term loan B -- B1 * Senior implied rating -- B1 * Issuer rating -- B2The rating outlook is stable.The ratings reflect Endurance Business' high leverage, which isexacerbated by the proposed special dividend payout, itsvulnerability to the real estate market and real estateadvertising, its competition from a number of better capitalizedrivals, and its reliance upon one title for over 90% of itspublishing revenues.The ratings are supported by the established reputation ofEndurance's flagship publication Homes & Land, the large number ofbooks published, the wide geographic range of markets covered, thediversification of its real estate customer base, and a franchisenetwork which supports relatively high margins. Moody'sattributes the stability and growth of Endurance Business' organicgrowth to the relative resilience of the real estate advertisingsector, despite the recent downturn experienced by the classifiedadvertising sector as a whole.At the end of December 2004, pro-forma for the proposed financing,Endurance Business' leverage (defined as total debt to EBITDA)increased to approximately 5.2 times compared to approximately2.5 times prior to the financing. According to Moody's estimates,Endurance will have the ability to reduce leverage toapproximately 4.1 times by the end of December 2005.At closing, Endurance Business expects to count on $19 million inundrawn availability under its bank revolver, representing anadequate liquidity profile. The excess cash flow recaptureprovision of the proposed credit facility will preclude anysignificant build-up in cash.Proceeds of the proposed rated financings will be used torefinance $50 million in existing debt, and to remit approximately$53 million in a special dividend to shareholders. This dividendrepresents an approximately 100% return on the 2004 investmentmade by owners Kelso & Company (82% controlling interest) andmanagement (18% ownership interest). Pro-forma for the proposedfinancing, Endurance Business expects to record total debt of$102 million, representing an increase over the total debt levelof approximately $50 million prior to the transaction.Despite a soft advertising environment and competition from rivalsincluding, Network Communications, Primedia and Trader Publishing,Endurance has strengthened its revenues through organic salesgrowth and through selective acquisitions. Its extensivefranchise network helps to reduce sales and marketing expenses andpermits a relatively low level of corporate overhead.Two wholly owned printing companies currently handle all ofEndurance's print production. These subsidiaries also performcommercial print jobs for unrelated customers, contributing asignificantly lower cash flow margin than Endurance's core realestate publishing business. Over time, and with the furthergrowth of print work for Endurance's own publications, the companyexpects to de-emphasize its third party commercial printingbusiness.Ratings lift would likely result if management can continue totransition into its higher margined publishing business anddemonstrate an ability to delever below four times debt to EBITDA.Conversely, ratings could be lowered if the real estate marketbecomes unable to support current levels of advertising spending,if a number of Endurance's properties experience market saturationor if competitors engage in predatory pricing strategies.The B1 senior secured revolver and term loan are rated at paritywith the senior implied rating, as facilities represent thepreponderance of Endurance's proposed capital structure. Lendersare secured by a pledge of the stock of the operating subsidiariesand a lien on all assets. Moody's expects that the $20 millionrevolving credit facility will receive only temporary seasonaldrawings.Headquartered in Tallahassee, Florida, Endurance Business Media,Inc., is a publisher of real estate guides and a commercialprinter. In 2004, the Company reported revenues of $83 million.ENDURANCE BUSINESS: S&P Puts B Rating on $120 Million Bank Loan---------------------------------------------------------------Standard & Poor's Ratings Services assigned its 'B' bank loanrating and its recovery rating of '3' to Endurance Business MediaInc.'s -- EBM -- $120 million senior secured credit facilities,indicating an expected meaningful recovery (50%-80%) of principalin the event of a payment default. The facilities consist of a$20 million revolving credit facility due 2011 and a $100 millionterm loan B due 2012.In addition, Standard & Poor's assigned a 'B' corporate creditrating to the company. Pro forma total debt was $102 million atDec. 31, 2004. Tallahassee, Florida-based EBM is a leadingpublisher of targeted real estate classified adverting magazines.The company was acquired in a $100 million January 2004 leveragedbuyout by Kelso & Company. Proceeds from the transaction will beused to refinance existing debt and make a $53 million shareholderdividend, matching their original equity investment. The ratingoutlook is stable."The rating on EBM reflects its niche position in the increasinglycompetitive and cyclical real estate classified advertisingmarket, its narrow product range and small earnings base, highfinancial leverage, and the risks arising from the migration ofits classified real estate advertising revenues to the Internet,"said Standard & Poor's credit analyst Hal Diamond."These negative factors are minimally offset by EBM's establishedposition in magazine-based real estate classified advertising, itsmoderately diverse customer and readership base, and itsrelatively high conversion of EBITDA to discretionary cash flow,"Mr. Diamond added.ENRON CORP: Court Extends Some Claim Objection Deadlines--------------------------------------------------------Pursuant to the Order confirming their Chapter 11 Plan,Reorganized Enron Corporation and its debtor-affiliates have untilMarch 14, 2005, to file objections to claims.As part of their claims reconciliation process, the ReorganizedDebtors have distributed around $19 million to entities holdingallowed secured, priority, administrative and convenience classclaims in accordance with the Plan. As of February 7, 2005, theDebtors have filed more than 70 omnibus objections contestingaround 16,000 claims. In addition to the Omnibus Objections, theDebtors filed numerous individual objections that contest about1,800 Claims.The Reorganized Debtors have also utilized Court-approvedprocedures regarding estimation of claims for all purposes.Pursuant to the Estimation Procedures, over 300 claims have beenestimated, resulting in the disallowance of over 250 claims.Furthermore, to minimize the number of objections that must befiled, the Reorganized Debtors convinced numerous claimants towithdraw claims that have little or no merit, and have engaged insettlement negotiations and consensually resolved thousands ofclaims by stipulation. In total, over 17,000 claims have beenfully resolved, representing over $797 billion in claims. Morethan 11,000 claims have been disallowed, expunging over$715billion in claims against the estates. More than 1,900 claims,totaling over $54 billion, have been withdrawn and more than2,300 claims have been either allowed or subordinated. Inaddition, the Debtors have identified roughly 2,400 claims forallowance.Objections to approximately 3,400 claims, representing about$40 billion in claims, are currently pending before the Court,which includes more than 2,500 claims subject to pending omnibusobjections. The Reorganized Debtors anticipate filing objectionsor otherwise resolving the vast majority of outstanding claims bythe Initial Claim Objection Deadline except under certain limitedcircumstances.At the Reorganized Debtors' request, the Court extends theobjection deadline for claims under these limited circumstances:A. Initial Objection With respect to claims that are subject to a pending or adjourned Omnibus Objection or individual objection as of March 14, 2005, the deadline for the Debtors to object to those claims is extended to the latter of: (i) 60 days from the date on which the Court denies the Initial Objection; and (ii) 60 days from the date on which any appellate court enters a final order from an appeal of the final order of the Bankruptcy Court granting the Initial Objection.B. MegaComplaint Litigation The Debtors have filed a complaint against numerous banks, investment banks and certain of their affiliates, seeking recovery of allegedly preferential or fraudulent transfers. The Debtors also want the Court to disallow and subordinate the claims filed by the MegaComplaint Defendants. The Debtors have already objected significantly to the claims filed by the MegaComplaint Defendants based on Section 502(d) of the Bankruptcy Code, but the objections were not based on the amount of the claim filed. If these claims are disallowed under Section 502(d), or subordinated, the MegaComplaint Defendants would not be entitled to receive any recovery on them. So as not to require the Debtors to expend estate assets to prepare and file objections to the MegaComplaint Defendants' Claims until after the conclusion of the MegaComplaint litigation, the Court extends the Claim Objection Deadline to the latter of: (i) 60 days from the date the Court enters a final order approving a motion under Rule 9019 of the Federal Rules of Bankruptcy Procedure resolving the MegaComplaint Litigation; (ii) 60 days from the date on which the Court enters a final judgment with respect to the MegaComplaint Litigation; and (iii) 60 days from the date on which any appellate court enters a final order from an appeal of the final judgment of the Bankruptcy Court with respect to the MegaComplaint Litigation.C. Pending Adversary Proceedings Included in the Debtors' pending adversary proceedings are five groups of avoidance actions: -- Vendor Avoidance Actions; -- Creditors' Committee Initiated Actions and Employment Related Issues Committee Initiated Actions; -- the Citigroup Action; -- Equity Transactions Avoidance Actions; and -- Guaranty Avoidance Actions. Pending Adversary Proceedings also include cases subject to that certain Mediation Order governing Trading Cases, which directs mediation for all adversary proceedings involving trading agreements, and stays all other litigation activity related to the proceedings. Many of the non-debtor parties to the Trading Cases have filed claims relating to the contracts at issue in the Trading Cases. Some of these claims are subject to an initial objection, asserted in the complaints commencing the Trading Cases, and there are some claims as to which no objection has been interposed as of February 7, 2005. The Debtors have had success settling claims as part of these Pending Adversary Proceedings and expect to continue to do so. Given that Rule 16 scheduling orders are or will be put in place with regard to many of these Pending Adversary Proceedings, the Court suspends the objection deadline for the claims filed by a claimant that is a party in a Pending Adversary Proceeding and sets the objection deadline for these claims as part of the Rule 16 scheduling process. For claims filed by a claimant that is a party in a Pending Adversary Proceeding where a Rule 16 scheduling order will not be put in place, and for claims filed by a claimant that is a party in any other Pending Adversary Proceeding not otherwise covered by a pending or adjourned Omnibus Objection or MegaClaim Litigation, the Court extends the Initial Claim Objection Deadline to the latter of: (i) 60 days from the date on which the Court enters a final order approving a Rule 9019 motion resolving the Pending Adversary Proceeding; (ii) 60 days from the date on which the Court enters a final judgment with respect to the Pending Adversary Proceeding; and (iii) 60 days from the date on which any appellate court enters a final order from an appeal of the final order of the Bankruptcy Court resolving the Pending Adversary Proceeding. For Trading Cases and Debt Declaratory Judgment Cases, the Court suspends the Initial Claim Objection Deadline for claims filed by the non-debtor parties that relate to the same contract or contracts at issue in the Trading Cases or Debt Declaratory Judgment Cases, and set the objection deadline for these claims as part of the Rule 16 scheduling process if applicable, or extends the Initial Claim Objection Deadline to the latter of: (i) 60 days from the date on which the Court enters a final order approving a Rule 9019 motion resolving the Trading Case or Debt Declaratory Judgment Case; (ii) 60 days from the date on which the Court enters a final judgment with respect to the Trading Case or Debt Declaratory Judgment Case; and (iii) 60 days from the date on which any appellate court enters a final order from an appeal of the final order of the Bankruptcy Court resolving the Trading Case or Debt Declaratory Judgment Case.D. Settlements With respect to claims that are subject to a signed settlement agreement between the Debtors and a claimant entered into on or before the Initial Claim Objection Deadline, the Court extends the objection deadline to the latter of: (i) 60 days from the date on which the Court enters an order denying the Rule 9019 Motion seeking approval of the Settlement Agreement; (ii) 60 days from the date that the Debtors determine that the Settlement Agreement cannot close; and (iii) 60 days from the date on which any appellate court enters a final order from an appeal of an order of the Bankruptcy Court resolving the Rule 9019 Motion. With regard to those circumstances where the Court has been apprised of a settlement between parties subject only to completion and submission of a final Settlement Agreement, Judge Gonzalez extends the objection deadline for those claims to the latter of: (i) 60 days from the date on which the Court enters an order denying the Rule 9019 Motion seeking approval of the Settlement Agreement; (ii) 60 days from the date that the Debtors determine that completion of the Court Apprised Settlement cannot be reached; and (iii) 60 days from the date on which any appellate court enters a final order from an appeal of the final order of the Bankruptcy Court with respect to the Rule 9019 Motion.E. Governmental Proceedings For claims arising from the resolution of certain governmental actions and proceedings, the Court extends the Debtors' deadline to object to those claims to the latter of: (i) 60 days from the date on which a final order in the relevant Governmental Proceeding is issued; or (ii) 60 days from the date on which any appellate court enters a final order reversing or vacating the final order of the relevant Governmental Proceeding.F. Unknown Claims For claims that are currently unknown to the Debtors or for some reason are filed after the Effective Date, the Court extends the objection deadline to the latter of: (i) 60 days after the date on which the Debtors receive notice of the claim; and (ii) 60 days after the Initial Claim Objection Deadline.The Reorganized Debtors reserve the right to seek a furtherextension of the Initial Claim Objection Deadline.Headquartered in Houston, Texas, Enron Corporation is in the midstof restructuring various businesses for distribution as ongoingcompanies to its creditors and liquidating its remainingoperations. Before the company agreed to be acquired, controversyover accounting procedures had caused Enron's stock price andcredit 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 theCompany's Modified Fifth Amended Plan on July 15, 2004, andnumerous appeals followed. The Confirmed Plan took effect onNov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen,Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors intheir restructuring efforts. (Enron Bankruptcy News, Issue No.135; Bankruptcy Creditors' Service, Inc., 15/945-7000)EXIDE TECH: Agrees to Amend Credit Agreement with Deutsche Bank---------------------------------------------------------------Exide Technologies, Exide Global Holding Netherlands, andDeutsche Bank AG New York, as administrative agent, agreed toamend their Credit Agreement dated May 5, 2004. First AmendmentAccording to J. Timothy Gargaro, Exide Technologies' ExecutiveVice President and Chief Financial Officer, the Credit Agreementrequires the Company to comply with financial covenants withrespect to certain ratios and tests, as defined in the CreditAgreement, including interest coverage, leverage, EBITDAR, assetcoverage and capital expenditures.Principally as a result of the dramatic increase in lead costsyear on year and the resultant adverse impact upon the Company'sresults, in November 2004, the Company was required to obtainamendments to certain financial covenants with respect toearnings before interest, taxes, depreciation, amortization andrestructuring and leverage contained in the Credit Agreement.In addition, the Credit Agreement has been amended with respectto the treatment of proceeds from insurance recoveries.A full-text copy of the First Amendment and Waiver to the CreditAgreement is available for free at: http://sec.gov/Archives/edgar/data/813781/000119312504197324/dex43.htm Second AmendmentDue to the fact that the Company failed to satisfy its leverageratio covenant as of December 31, 2004, under the CreditAgreement, in February 2005, the Company received a waiver of theleverage ratio covenant from its lenders, as well as amendmentsrelating to the Company's proposed senior note offering."Although there can be no assurances, the Company believes,taking into account the Credit Agreement amendments and basedupon its updated financial forecasts and plans, that it willcomply with these covenants for the foreseeable future," Mr.Gargaro says. "Failure to comply with such covenants, withoutwaiver, would result in an event of default under the CreditAgreement. If the Company were not able to maintain compliancewith these covenants, it would have to consider additionalactions, including refinancings, asset sales and furtherrestructurings."Mr. Gargaro notes that Credit Agreement borrowings are guaranteedby substantially all of Exide's subsidiaries and are secured bysubstantially all of the assets of the Company and the subsidiaryguarantors. The Credit Agreement also contains other customarycovenants, including reporting covenants and covenants thatrestrict the Company's ability to incur indebtedness, create orincur liens, sell or dispose of assets, make investments, paydividends, change the nature of the Company's business or enterinto related party transactions.Mr. Gargaro informs the Securities and Exchange Commission thattotal availability under the Credit Agreement as ofDecember 31, 2004, was $65,755,000 reflecting borrowings underthe Revolving Loan Facility and the issuance of $32,888,000outstanding letters of credit, principally to support certainenvironmental and workers' compensation obligations of theCompany.A full-text copy of the Second Amendment and Waiver to the CreditAgreement is available for free at: http://sec.gov/Archives/edgar/data/813781/000119312505029214/dex44.htmHeadquartered in Princeton, New Jersey, Exide Technologies is theworldwide leading manufacturer and distributor of lead acidbatteries and other related electrical energy storage products.The Company filed for chapter 11 protection on Apr. 14, 2002(Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., andKirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtorsin their restructuring efforts. Exide's confirmed chapter 11 Plantook effect on May 5, 2004. On April 14, 2002, the Debtors listed$2,073,238,000 in assets and $2,524,448,000 in debts. (ExideBankruptcy News, Issue No. 60; Bankruptcy Creditors' Service,Inc., 215/945-7000)FAIRFAX FINANCIAL: Incurs $17.8 Million Net Loss for 2004---------------------------------------------------------Fairfax Financial Holdings Limited (TSX:FFH.SV)(NYSE:FFH) reportedthat it had net earnings of $5.6 million in the fourth quarter of2004 and a net loss of $17.8 million for the 2004 year, and thatit ended the year with a very strong financial position.Operating highlights for 2004 were as follows: -- Earnings from operations before income taxes were $139.1 million in 2004 (2003 $527.5 million), after $252.7 million of losses from the third quarter hurricanes and $104.1 million of non-trading realized losses. -- The combined ratio of the company's continuing insurance and reinsurance operations improved to 90.6% in the fourth quarter of 2004 from 97.4% in 2003, and to 97.5% for the full year from 97.6% in 2003. The 97.5% combined ratio in 2004 included 5.1 combined ratio points arising from the third quarter hurricanes. -- In the fourth quarter, following an independent ground-up study, Crum & Forster increased its asbestos reserves by $100 million, all of which was covered by aggregate stop loss reinsurance, and the runoff group strengthened its construction defect reserves by $50 million. Crum & Forster's full-year net cost related to development of prior years' loss reserves, including redundancies and the fourth quarter $100 million increase of asbestos reserves, was $25 million. -- Net premiums written at the company's continuing insurance and reinsurance operations increased 7.1% in 2004 to $4.4 billion. -- Underwriting profit at the company's continuing insurance and reinsurance operations increased to $108.4 million in 2004 from $87.7 million in 2003. -- Cash flow from operations at Northbridge, Crum & Forster and OdysseyRe remained strong at $948.4 million in 2004 compared to $1,099.2 million in 2003. -- Total interest and dividends increased to $366.7 million in 2004 from $330.1 million in 2003, due primarily to an increase in yield resulting from the reinvestment of a significant portion of the cash and short term investments, primarily in U.S. treasury bonds, and to increased investment portfolios reflecting positive cash flow from continuing operations. -- Realized gains on investments in 2004 totalled $288.3 million, after $104.1 million of non-trading losses, compared to $845.9 million in 2003. The $104.1 million of losses consisted of $77.1 of mark to market changes in fair value, recorded as realized losses, primarily relating to the economic hedges put in place by the company against a decline in the equity markets, and $27.0 of costs, recorded as realized losses, in connection with the company's repurchase of outstanding debt at a premium to par. -- The company had $566.8 million of cash, short term investments and marketable securities at the holding company level at December 31, 2004. -- During 2004, the company issued $300 million of equity to long term investors, and through debt issues and a debt exchange offer issued $466.4 million of investment grade debt due in 2012, resulting in meaningful deleveraging and effectively removing any external debt maturities until 2012. -- Cash and investments (net of $539.5 of liabilities for economic hedges against a decline in the equity markets) increased to $13.5 billion at December 31, 2004 from $12.6 billion at the end of 2003. -- The unrealized gain on portfolio investments was $428.3 million at the end of 2004, compared to $244.9 million at the end of 2003. -- Total common shareholders' equity increased to $3.0 billion at Dec. 31, 2004, from $2.7 billion at Dec. 31, 2003, but because the 2004 equity issue was done below book value, common shareholders' equity per basic share decreased to $184.86 at Dec. 31, 2004 from $192.81 at the end of 2003. -- At Dec. 31, 2004, United States Fire Insurance, Crum & Forster's principal operating subsidiary, remained in a positive earned surplus position, with a dividend capacity in 2005 of approximately $88 million, while North River Insurance, Crum & Forster's other significant operating subsidiary, which previously lacked dividend capacity, moved to a positive earned surplus position (thereby achieving dividend capacity) of approximately $5 million.The results for the fourth quarter of 2004 were impacted by$62.6 million of mark to market changes in fair value, recorded asrealized losses, relating to the economic hedges put in place bythe company against a decline in equity markets; $24.8 of costs,recorded as realized losses, in connection with the company'srepurchase of outstanding debt at a premium to par; and thereserve strengthenings mentioned for asbestos claims at Crum &Forster and for construction defect claims at the runoffoperations.There were 13.9 and 14.0 million weighted average sharesoutstanding during 2004 and 2003 respectively (14.1 and13.9 million during the fourth quarters of 2004 and 2003respectively). At the end of 2004, there were 16,091,529 shareseffectively outstanding.Fairfax Financial Holdings Limited is a financial services holdingcompany, which, through its subsidiaries, is engaged in propertyand casualty insurance and reinsurance, investment management andinsurance claims management. * * *As reported in the Troubled Company Reporter on Nov. 12, 2004,Fitch Ratings commented that Fairfax Financial Holdings Limited'sratings and Rating Watch Negative status are unaffected by itsrecent disclosures via its third-quarter 2004 financial filingsand investor conference held on November 8, 2004.These ratings remain on Rating Watch Negative by Fitch: * Fairfax Financial Holdings Limited -- No action on long-term issuer rated 'B+'; -- No action on senior debt rated 'B+'. * Crum & Forster Holdings Corp. -- No action on senior debt rated 'B'. * TIG Holdings, Inc. -- No action on senior debt rated 'B'; -- No action on trust preferred rated 'CCC+'. * Members of the Fairfax Primary Insurance Group -- No action on insurer financial strength rated 'BBB-'. * Members of the Odyssey Re Group -- No action on insurer financial strength rated 'BBB+'. * Members of the Northbridge Financial Insurance Group -- No action on insurer financial strength rated 'BBB-'. * Members of the TIG Insurance Group -- No action on insurer financial strength rated 'BB+'. * Ranger Insurance Co. -- No action on insurer financial strength rated 'BBB-'.The members of the Fairfax Primary Insurance Group include: * Crum & Forster Insurance Co. * Crum & Forster Underwriters of Ohio * Crum & Forster Indemnity Co. * Industrial County Mutual Insurance Co. * The North River Insurance Co. * United States Fire Insurance Co. * Zenith Insurance Co. (Canada)The members of the Odyssey Re Group are: * Odyssey America Reinsurance Corp. * Odyssey Reinsurance Corp.Members of the Northbridge Financial Insurance Group include: * Commonwealth Insurance Co. * Commonwealth Insurance Co. of America * Federated Insurance Co. of Canada * Lombard General Insurance Co. of Canada * Lombard Insurance Co. * Markel Insurance Co. of CanadaThe members of the TIG Insurance Group are: * Fairmont Insurance Company * TIG American Specialty Ins. Company * TIG Indemnity Company * TIG Insurance Company * TIG Insurance Company of Colorado * TIG Insurance Company of New York * TIG Insurance Company of Texas * TIG Insurance Corporation of America * TIG Lloyds Insurance Company * TIG Specialty Insurance CompanyFALCON PRODUCTS: Can Use Up to $45 Million in DIP Financing-----------------------------------------------------------The U.S. Bankruptcy Court for the Eastern District of Missourigranted interim approval of a $45 million debtor-in-possession(DIP) credit facility, providing Falcon Products, Inc. (OTC: FCPR)with liquidity to enable it to maintain normal and uninterruptedoperations while it completes its financial restructuring.The Company received court approval of its first day motions,including the continued payment of employee salaries and benefits,the ability to honor warranties and other obligations to customersand the ability to honor obligations to the Company's independentsales representatives.Following interim approval of the DIP financing, which wasreceived on Feb. 4, the Company used initial borrowings to repaythe Company's existing revolving credit facility and to make post-petition payments to vendors. The Company said it expects toreceive approval of the balance of the DIP financing commitment ata hearing scheduled on Feb. 23, 2005."We are very pleased with the rapid progress of our consensualfinancial restructuring," said Frank Jacobs, chairman of FalconCompanies. "Together with our largest bond holders, OaktreeCapital Management, LLC, and Whippoorwill Associates, Inc., we arefinalizing an agreement in principal to reduce Falcon's debt by$145 million, which will lower annual interest costs by$17 million. The DIP financing that we have put in place willenable us to obtain goods and services from our vendors which, inturn, will allow us to provide uninterrupted service to our valuedcustomers."Jordon Kruse, vice president of Oaktree, which has over$28 billion of capital under management, said, "Falcon Products isfundamentally a strong company with a talented management team andclear industry leadership, but it is burdened with anunsupportable level of debt. We are committed to a restructuringof that debt which will enable Falcon to emerge as a financiallyhealthy company with the resources to support growth and long-termsuccess."Mr. Kruse said that the Chapter 11 process offers the fastest andmost efficient means of restructuring the company's balancesheet."Chapter 11 is expressly designed to allow sound operatingbusinesses like Falcon to reduce their debt levels," he said.Mr. Jacobs expressed appreciation to Falcon's customers for theirconfidence and to employees and vendors for their continuedsupport. He said that the company's management team and itsfinancial partners were committed to a timely completion of therestructuring and reorganization of the company.Headquartered in Saint Louis, Missouri, Falcon Products, Inc. --http://www.falconproducts.com/--design, manufacture, and market an extensive line of furniture for the food service, hospitalityand lodging, office, healthcare and education segments of thecommercial furniture market. The Debtor and its eight debtor-affiliates filed for chapter 11 protection on January 31, 2005(Bankr. E.D. Mo. Case No. 05-41108). Andrew M. Parlen, Esq., EveH. Karasik, Esq., Jeffrey C. Krause, Esq., Marina Fineman, Esq.,Robert A. Greenfield, at Stutman, Treister & Glatt, PC, and BrianWade Hockett, Esq., and Mark V. Bossi, at Thompson Coburn LLP,represent the Debtors in their restructuring efforts. When theDebtors filed for protection from their creditors, they listed$264,042,000 in assets and $252,027,000 in debts. On January 31,the Company entered into an agreement in principal with theholders of a majority in principal amount of its SeniorSubordinated Notes to convert $100 million of Falcon's SeniorSubordinated Notes into common stock and to create a $45 millionrights offering for holders of the Senior Subordinated Notes tofurther reduce its debt.FRANK'S NURSERY: Soliciting Offers for Certain Properties---------------------------------------------------------Frank's Nursery & Crafts, Inc., which filed for Chapter 11bankruptcy protection on Sept. 8, 2004, is soliciting offers forcertain properties at this time.The Company is continuing to explore its alternatives with respectto the remainder of its real property holdings.The sales of the properties will be subject to an auction processand Bankruptcy Court approval.To obtain information regarding participating in the sale processfor the above properties, contact the Company's real estateconsultants: Keen Consultants, LLC Michael Matlat Tel. No. : (516) 482-2700, x230 Fax: (516) 482-5764 E-mail: firstname.lastname@example.com in Troy, Michigan, Frank's Nursery & Crafts, Inc.,operated the largest chain (as measured by sales) in the UnitedStates of specialty retail stores devoted to the sale of lawn andgarden products. Frank's Nursery and its parent company, FNCHoldings, Inc., each filed a voluntary chapter 11 petition in theU.S. Bankruptcy Court for the District of Maryland onFeb. 19, 2001. The companies emerged under a confirmed chapter 11plan in May 2002. Frank's Nursery filed another chapter 11petition on September 8, 2004 (Bankr. S.D.N.Y. Case No. 04-15826).Allan B. Hyman, Esq., at Proskauer Rose LLP, represents theDebtor. In the Company's second bankruptcy filing, it listed$123,829,000 in total assets and $140,460,000 in total debts.FREEDOM MEDICAL: Wants Until Plan Confirmation to Decide on Leases------------------------------------------------------------------Freedom Medical, Inc., asks the U.S. Bankruptcy Court for theEastern District of Pennsylvania for an extension of its time todecide whether to assume, assume and assign, or reject unexpiredleases of nonresidential real property pursuant to Section365(d)(4) of the Bankruptcy Code. The Debtor asks that its leasedecision period be extended through confirmation of a chapter 11plan of reorganization.The Debtor is currently in the process of evaluating each of its16 leased locations to determine whether certain operations shouldbe consolidated or restructured. Also, Freedom Medical's decisionwill be affected by the retention of Penn Hudson Financial Group,Inc., as its restructuring consultants.The Debtor submits that at this stage, it is premature to assumeor reject leases, which might prove cumbersome or important in theultimate reorganization.Headquartered in Exton, Pennsylvania, Freedom Medical, Inc.,-- http://www.freedommedical.com/-- sells electronic medical equipment and related services to hospitals, alternate sitehealthcare providers, and EMS transport organizations. TheCompany filed for chapter 11 protection on December 29, 2004(Bankr. E.D. Pa. Case No. 04-37092). When the Debtor filed forprotection from its creditors, it listed estimated assets anddebts of more than $50 million.FRIEDMAN'S INC: Will Close 165 Underperforming Stores-----------------------------------------------------Friedman's, Inc., (OTC: FRDMQ.PK) will seek theU.S. Bankruptcy Court for the Southern District of Georgia'sapproval in its chapter 11 reorganization to close up to165 underperforming stores in 17 states and sell in excess of$25 million of inventory through a Court-approved dispositionprocess. Following the completion of the store-closing program,Friedman's will operate approximately 481 stores in 20 states.The store-closing program, which was previously reviewed with theOfficial Committee of Unsecured Creditors appointed in theCompany's chapter 11 cases, was approved by the Company's Board ofDirectors on Monday and pleadings were filed in the BankruptcyCourt on Monday evening. The Bankruptcy Court has scheduled ahearing on the store-closing program on March 2, 2005 and willconsider procedural matters related to the motion filed in supportof the store-closing program at a separate hearing onFeb. 22, 2005.The decision to close the stores followed a review of Friedman'sexisting store operations as part of the Company's reorganizationstrategy to improve operations and financial performance, saidPresident and Chief Executive Officer Sam Cusano. "In determiningwhich stores to close, we evaluated our store operations,including each store's historical operating results, recentperformance during the 2004 holiday selling season, the age,location, physical condition and operating lease for each store,each store's credit and collection performance, regional economicfactors and infrastructure costs to service these stores. AsFriedman's moves forward in its restructuring, this action willallow the company to focus its resources on those stores that havestronger prospects for future growth. While this decision was anextremely difficult one, we are focused on restructuringopportunities which should make a meaningful contribution to theCompany's reorganization and will maximize the Company's overallbusiness enterprise value for our stakeholders."The Company noted the stores plan to continue to operate until allmerchandise is sold. Mr. Cusano said the stores will remain openand operate as usual while the Company prepares for inventorydisposition sales, which, pending Court approval, are expected tobegin the first week of March. List of Closing Stores STORE # CENTER STREET ADDRESS CITYST 4000 Norgate Plaza 7255 North Keystone Ave, Suite A IndianapolisIN 4005 Dellview Market 1803 Vance Jackson, Place Suite 400 San AntonioTX 4006 Mustang Shopping 218 North Mustang Mall MustangOK Center Terrace 4008 Knoxville Center 3001 Knoxville Center Drive, Suite G10A KnoxvilleTN 4011 Shoppes at Fort 3450 Valley Plaza Parkway Fort WrightKY 4012 Centre at Lilburn 40360 Lawrenceville Hwy Suite 09 LilburnGA 4013 Indian Creek 10625 Pendleton Pike Suite A-5 IndianapolisIN 4014 Greenfield 1937 Melody Lane GreenfieldIN Station 4017 Taylor'S Square 3023 Wade Hampton Blvd Suite S TaylorsSC 4020 Wal-Mart 2480 E. Wabash Street FrankfortIN Supercenter 4021 Lawton Plaza 2413 Northwest 67th Street LawtonOK 4022 Quincy Commons 1978 Pat Thomas Parkway QuincyFL 4023 Millenia Plaza 4640 Millenia Plaza Parkway OrlandoFL 4026 Town & Country 16763 Clover Road Unit 7 NoblesvilleIN Shopping Center 4027 Irving Mall 3811 Irving Mall IrvingTX 4031 Wal-Mart 2308 Treasury Drive, Supercenter Suite A-1 ClevelandTN 4034 Waldon Park 10900-B Lakeline Mall Drive, Suite 250 AustinTX 4036 Tyler Shopping 6751 South Broadway TylerTX Center 5009 Ashland Square 123 Hill Carter Parkway AshlandVA Shopping Center 5015 College Park 3467 W. 86th St IndianapolisIN Plaza 5019 Jasper Mall 300 Hwy 78 East, Suite 154 JasperAL 5044 Centre at Evans 4455 Washington Road, Space 8 EvansGA 5046 Oliver Creek 6535 Atlanta Hwy, Shop 5 MontgomeryAL Crossing 5054 Whitewater Trade 2110 Park Road ConnersvilleIN Center 5062 Colonial Mall 10177 North King's Highway Myrtle BeachSC Myrtle Beach 5072 Shannon Mall 553 Shannon Mall Union CityGA 5078 Lakeland Plaza 543 Lakeland Plaza CummingGA 5079 Town Center Mall, 400 Earnest Barrett Pkyway KennesawGA Suite 160 5081 Cumberland Mall 1165 Cumberland Mall AtlantaGA 5082 Oak Hollow Mall 921 Eastchester Drive, Suite 2060 High PointNC 5089 College Mall 2862 East 3rd Street Suite B BloomingtonIN 5097 University Square University Square Mall, Mall Space 2159 TampaFL 5098 Ennis Plaza 1012 East Ennis Ave, Suite G EnnisTX 5102 Menger Crossing 1375 South Main Street, Suite 201 BoerneTX 5105 Fleming Island 5000 US Hwy 17 South Unit 15&16 Orange ParkFL 5106 Gulf View Mall 9409 US Hwy 19 Suite 215 A Port RicheyFL 5108 North Hill Centre 1186 North Hills Centre AdaOK 5109 Leigh Mall 1404 Old Aberdeen Road Space 2B ColumbusMS 5110 Clayton Town 12977 US Hwy 70 West ClaytonNC Center 5112 College Central 2886 South Rutherford Blvd MurfreesboroTN Shopping Center 5113 Crystal River 1801 North West Hwy 19, Mall Suite 413 Crystal RiverFL 5118 Bradford Plaza 701 N Main Street, Suite 701 StillwaterOK 5122 Colerain Towne 10206 Colerain Ave #21 CincinnatiOH Center 5123 Walmart Shopping 1539 Martin Luther King Blvd, Center Suite 108 HoumaLA 5124 Scioto Square 1637 US Route 36 East UrbanaOH 5128 Troy Towne Center 1875 West Main Street Suite A-102 TroyOH 5135 Grant Line Center 2936 Grant Line Road New AlbanyIN 5137 Riverboat Plaza 1800 Wayne Road Unit B SavannahTN Shopping Center 5138 Wal-Mart 2202 Hwy 431 BoazAL Shopping Center 5139 The Shoppes at 541 West Church Street, Lexington Suite E LexingtonTN 5142 The Shops at 1017 Mulberry Ave SelmerTN Selmer 5145 Mane Street 1866 N. Mane Street Centre Space A-7 ShelbyvilleTN 5147 Casselberry 1455 Semoran Blvd Square Suite 213 CasselberryFL 5149 Townfair Center 1987 S. Hurstbourne Parkway LouisvilleKY 5150 260 Forest Gate Brevard Center, Shop #7 (Pisgah Forest)NC 5153 Wilker Plaza 802 US 421 West WilkesboroNC Shopping Center 5161 Crossroads 1116 Crossroads Dr StatesvilleNC Statesville Center 5167 Wal-Mart Center 257 Premier Blvd Roanoke RapidsNC 5168 Expo Center 1301 Hervey Street, Suite A HopeAR 5169 North Summit 264 Summit Square Blvd Winston SalemNC Square 5171 Wal-Mart Plaza 2239 N Morton Street, Suite F FranklinIN 5173 Woodward Plaza 3305 First Street WoodwardOK 5180 Diamond Plaza 906-908 Ruth Street SallisawOK 5181 Davis Towne 8528 Davis Blvd Suite 205 North Richland Crossing SC HillsTX 5182 Durant Shopping 519 University Place Center Unit 201 DurantOK 5190 Northlite Commons 2239 Spider Drive North East ConcordNC 5193 The Shoppes at 5550 McFarland Blvd Northport Suite 400 NorthportAL 5195 Pulaski Shopping 1653 W. College Street PulaskiTN Center 5197 Salisbury Mall 1935 Jake Alexander Blvd West Suite B-F SalisburyNC 5200 Austin Highway 1432 Austin Hwy Suite 102 San AntonioTX Shopping Center 5213 Greenwood West 2326 Highway 82 West GreenwoodMS SC 5219 Monkey Junction 5120 South College Road Plaza Space 104 WilmingtonNC 5230 Columbus Corners 212 Columbus Corners WhitevilleNC 5231 The Oxford 2545 W. Jackson Ave. OxfordMS Marketplace 5234 Pemberton Square Pemberton Square Blvd, Mall Space 39 VicksburgMS 5245 Piedmont Mall 325 Piedmont Drive, Suite C DanvilleVA 5246 Wilders Grove 4111 New Bern Ave Wilders GroveNC Shopping Center 5250 Franklin Plaza 289 Franklin Plaza Shopping Center Shopping Center LouisburgNC 5254 Tri-Lake 105-3 John R. Lovelace Dr. BatesvilleMS Shopping Center 5266 Eastland Mall 5521 Central Ave, Space Dt 9 CharlotteNC 5280 Janaf Shopping 5900 Virginia Bch Blvd NorfolkVA Center, Unit 150 5310 Fort Henry Mall 2101 Fort Henry Drive, Space E-32 KingsportTN 5326 Prien Lake Mall 404 W. Prien Lake Road Lake CharlesLA G-7 5333 Crescent Commons 2016 Kildaire Farm Road CaryNC S.C. 5338 Jacksonville 2070 John Harden Drive, Plaza Suite M JacksonvilleAR 5351 Cades Center 1401 West Reelfoot Ave, Suite 107 Union CityTN 5353 Audubon Village 2480 US 41 North Suite T HendersonKY 5355 Eagle Ridge Mall 758 Eagle Ridge Drive Lake WalesFL 5363 Brazos Mall 100 Hwy 332 W., Suite 1320 Lake JacksonTX 5376 Talladega Commons 216 Haynes Street, Suite A TalladegaAL SC 5380 Arrowhead Mall 501 N. Main Street MuskogeeOK 5381 Fox Run Shopping 751 N. Solomns Island Road Prince Center FrederickMD 5384 1079 Hwy 90 E. Suite 2 Bayou VistaLA 5385 Golden Triangle 2201 South IH-35E, Mall Suite M-6 DentonTX 5395 Selma Plaza 2414 Kimble Road, Suite B SelmaAL 5404 Shawnee Shopping 4903 North Union Suite 121 ShawneeOK Center 5405 Surfside Commons 2723 Beaver Run Blvd Surfside BeachSC SC 5409 University Mall, 1235 East Main Street CarbondaleIL Suite A-13 5414 Mcalester Retail 522 S. George Nigh Shops Center Expressway, Suite A McAlesterOK 5418 Valley Mall, 1925 E. Market Street HarrisonburgVA Suite 500 5422 Heritage Park 6763 East Reno Street Midwest CityOK Mall, Suite F-7 5423 North Park 101 North Park Drive MonticelloAR Village SC 5441 Sunset Mall 1182 Sunset Mall, Space 1338 San AngeloTX 5442 Landmark Crossing 1312 Bridford Parkway, Suite 102 GreensboroNC 5443 Sampson Crossing 1407-G Sunset Avenue ClintonNC 5470 Post Oak Mall, 1500 Harvey Road College StationTX Space 4018 5480 Capital Plaza 5453 North IH-35 AustinTX 5495 Lexington Parkway 47 Plaza Parkway LexingtonNC Plaza 5498 North West 6731 Clinton Hwy KnoxvilleTN Crossing 5501 Tri-Rivers Plaza 3459 Old Halifax Road, Suite E South BostonVA 5522 Hickory Hollow 5252 Hickory Hollow Pkwy AntiochTN Mall 5530 South Central 639-B Veterans Parkway, Shopping Suite -2A MoultrieGA 5534 240 Century Plaza, Space Bu10 BirminghamAL 5538 Vernon Park Mall Vernon Park Mall, Suite H-8 KinstonNC 5555 2031 White Marsh 8200 Perry Hall Blvd BaltimoreMD Mall 5564 Quail Springs 2501 W Memorial Rd Oklahoma CityOK Mall 5568 North Star Mall 7400 San Pedro #132 San AntonioTX 5572 Ridge Park 1907 W. Parker Road, Suite #E JonesboroAR Shopping Center 5575 Anderson Mall 3101 N. Main Street, M-11 AndersonSC 5608 Golden East 1100 Wesleyan Blvd. #148 Rocky MountNC Crossing 5618 Shops On The 3500 Ross Clark Circle, Circle Suite 350 DothanAL 5634 Madison Shopping 1670 Eatonton Road MadisonGA Center 5640 Jasper Plaza, 860 West Gibson JasperTX Space #C-3.1 5651 Columbus Park 5555 Whittlesey Blvd Crossing Suite 2590 ColumbusGA 5654 Jennings Plaza 307 Interstate Drive, Suite JenningsLA 5660 Seminole Wal-Mart 3633 South Orlando Drive SanfordFL Center 5661 Atlantic Village 983 Atlantic Blvd Atlantic BeachFL Shopping Ctr 5672 Seguin Corners 580 State Highway 123 SeguinTX Shopping Center 5673 Village Square 3132 College Drive Bldg A, Suite E Baton RougeLA 5674 University Center 1655 East Industrial Loop ShreveportLA 5678 Carson Pointe 7458 Chapman Hwy KnoxvilleTN 5683 Hunting Hills 4208 I Franklin Road S.W. RoanokeVA 5691 Allen Central 210 Central Expressway Market Place South Suite 68 AllenTX 5697 Montgomery Mall 2739 Montgomery Mall, Suite D8 MontgomeryAL 5709 Pennyrile 3028 Ft. Campbell Blvd HopkinsvilleKY Marketplace 5718 Scottsboro 24833 John T. Reid Parkway ScottsboroAL Market Place 5722 Shady Brook Mall 800 South James Campbell Blvd, Ste 32 ColumbiaTN 5731 Athens Shopping 1001 Hwy 72 East Suite 4 AthensAL Center 5735 Dixieland Mall 100 N. Dixieland Road Room C-6 RogersAR 5743 Turfland Mall, Harrodsburg Road LexingtonKY Space #1246 5748 El Dorado Commons 2620 North West Avenue, Suite K EL DoradoAR 5752 Lexington Road 519 Marsailles Road VersaillesKY Plaza 5754 Three Star Mall 1410 Sparta Road, Space #37 McMinnvilleTN 5758 Kelley Street 242 Kelley Street Lake CitySC 5764 Shreveport Plaza 6205 West Port Avenue ShreveportLA 5766 Kerrville 1304 Junction Highway KerrvilleTX Junction Shopping Center 5768 Terrells Corner 177 Sam Walton Way TerrellTX 5770 Emporia Commons 301 Market Dr., Suite D EmporiaVA 5772 Castleton 6020 East 82nd St., Room 410 IndianapolisIN Mall 5781 Washington Square 100 N. Wolfe Nursery Road, Suite D1A StephenvilleTX 5797 Lafayette Square 3919 Lafayette Road, Mall Space 522 IndianapolisIN 5803 Wal-Mart Plaza 1611 U.S. Hwy 231 South, Space 101-A CrawfordvilleIN 5813 Shoppes at Murray 654 N. 12th Avenue MurrayKY Central 5825 Bandera Pointe 11321 State Hwy 16 North San AntonioTX Shopping Center 5830 Highland Lakes 7357 West Colonial Drive OrlandoFL Town Center 5834 Roanoke Landing 819 East Blvd WilliamstonNC 5836 Hamilton Meadows 1434 Main Street, Space 12 HamiltonOH SC 5841 Wal-Mart Plaza 8650 Hwy 20 N Space C MadisonAL 5860 The Henry Centre 3538 Tom Austin Highway Suite 14 SpringfieldTN 5868 Fayette Square Shopping Center 1359 Leesburg Avenue Washington Court HouseOH 5874 Atascosa Market 2087 W Oaklawn, Suite 208 PleasantonTX Retail Center 5882 Wal-Mart Center 185 Relco Drive ManchesterTN 5883 Calera Shopping 233 Supercenter Dr. Suite C2 CaleraAL Center 5894 Wal-Mart Plaza 2551 East Main Street PlainfieldIN 5898 Arkadelphia Plaza 112 W.P. Malone Drive, Suite 5-E ArkadelphiaARHeadquartered in Savannah, Georgia, Friedman's Inc. --http://www.friedmans.com/-- is the parent company of a group of companies that operate fine jewelry stores located in stripcenters and regional malls in the southeastern United States. TheCompany and its affiliates filed for chapter 11 protection on Jan.14, 2005 (Bankr. S.D. Ga. Case No. 05-40129). The cases werefiled to alleviate short-term liquidity issues which followedunanticipated limitations imposed in January by the Company'sprepetition lenders, continue Friedman's ongoing restructuringinitiatives, and facilitate the Company's turnaround.John W. Butler, Jr., Esq., George N. Panagakis, Esq., Timothy P.Olson, Esq., and Alexa N. Paliwal, Esq., at Skadden, Arps, Slate,Meagher & Flom LLP represent the Debtors in their restructuringefforts. When the Debtor filed for protection from its creditorsit listed $395,897,000 in total assets and $215,751,000 in totaldebts.HILL CITY: Committee Taps Mesirow Financial as Financial Advisors-----------------------------------------------------------------The U.S. Bankruptcy Court for the Eastern District of Louisianagave the Official Committee of Unsecured Creditors of Hill CityOil Company, Inc., permission to employ Mesirow FinancialConsulting, LLC, as its financial advisors.Mesirow Financial will: a. assist in the review of reports or filings as required by the Court or the Office of the U.S. Trustee, including schedules of assets and liabilities, statements of financial affairs and monthly operating reports; b. review the Debtor's financial information, including analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Bankruptcy Court approval is sought; c. review and analyze the reports regarding cash collateral and any debtor-in-possession financing arrangements and budgets; d. evaluate potential employee retention and severance plans and assist in identifying and implementing potential cost containment opportunities; e. assist in identifying and implementing asset redeployment opportunities and in the analysis of assumption and rejection issues regarding executory contracts and leases; e. review and analyze the Debtor's proposed business plans and the business and financial condition of the Debtor; g. assist in evaluating reorganization strategies and alternatives available to creditors and review the Debtor's financial projections and assumptions; h. prepare the Debtor's asset and liquidation valuations and assist in preparing documents necessary for plan confirmation; i. advise and assist the Committee in negotiations and meetings with the Debtors, the bank lenders and other parties-in- interest and on the tax consequences of a proposed plan of reorganization; j. assist with the claims resolution procedures including analyses of creditors' claims by type and entity and maintenance of a claims database; k. perform litigation consulting services and expert witness testimony regarding confirmation issues, avoidance actions or other matters; and l. perform all other functions as requested by the Committee or its counsel in the Debtor's chapter 11 case.Larry H. Lattig, a Senior Managing Director at Mesirow Financial,reports the Firm's professionals bill: Designation Hourly Rate ----------- ----------- Senior Managing Director & Managing Director $590 - $650 Senior Vice-President $480 - $570 Vice President $390 - $450 Senior Associate $300 - $360 Associate $190 - $270 Paraprofessional $140Mesirow Financial assures the Court that it does not represent anyinterest adverse to the Committee, the Debtor or its estate.Headquartered in Houma, Louisiana, Hill City Oil Company, Inc. --http://www.hillcityoil.com/--sells industrial oil, metalworking fluids, automotive and off-highway lubricants, oilfield products,and service products. The Company filed for chapter 11 protectionon October 25, 2004 (Bankr. E.D. La. Case No. 04-18007).W. Christopher Beary, Esq., at Orrill, Cordell & Beary, L.L.C.,represents the Debtor in its restructuring efforts. When theCompany filed for protection from its creditors, it listedestimated assets and liabilities of $50 million to $100 million.HYTEK MICROSYSTEMS: To Become Natel Subsidiary Under Merger Pact----------------------------------------------------------------Hytek Microsystems, Inc., (OTC Bulletin Board: HTEK) and NatelEngineering Co., Inc., have entered into a merger agreement.Under the terms of the merger agreement, Natel Engineering willpay $2.00 per share for all of the issued and outstanding sharesof common stock of Hytek. The transaction is conditioned onobtaining requisite shareholder approval from the shareholders ofHytek, necessary regulatory clearances and other customary closingconditions. Upon closing of the transaction, Hytek will become asubsidiary of Natel Engineering and will no longer be a publiccompany. The companies expect to close the transaction during thesecond quarter of 2005.Natel Engineering completed its most recent fiscal year(Jan. 31, 2005) with revenues of approximately $47 million. Natelsuccessfully acquired Power Microelectronics Division from Semtech(1992), Powercube from Unitrode (1994), and Scrantom, Inc., fromSolectron (2003). The recent acquisition of Scrantom, located inCosta Mesa, California, expanded Natel's capability to support lowtemperature co-fired ceramic (LTCC) requirements. In Jan. 2005,Natel announced the opening of its new 20,000-square-footstate-of-the-art LTCC and AlN (aluminum nitride) high volumeautomated ceramic substrate operation, located next to its currentmicroelectronic assembly operation in Chatsworth, Calif. Natelholds and maintains industry specific certifications ISO 9001:2000and MIL-PRF-38534 (DSCC) Class H and K. Natel is headquartered inChatsworth, Calif.Hytek Microsystems reported revenues of $7.6 million for the ninemonths ended October 2, 2004 and is headquartered in Carson City,Nevada. Hytek is a manufacturer of microelectronic assemblieswith expertise in custom advanced packaging technology used inhigh density microelectronic applications. Hytek principallyserves defense, space, medical and Hi-Rel commercial markets.Hytek holds and maintains industry specific certifications ISO9001:2000 and MIL PRF-38534 (DSCC) class H and K."Hytek is an excellent fit with Natel. Hytek's complementaryengineering strengths, technological and packaging breadth,excellent customer base and location should favorably add toNatel's core microelectronic business," said Sudesh Arora, Natel'sPresident.Arora also noted that "The acquisition is a solid strategic fit,and with additional investment without the burdens of being apublic company, Hytek should be able to profitably grow with itssolid customer base."John Cole, Hytek's President and Chief Executive Officer stated,"This transaction provides superior value to our shareholders. Weare a natural complement to Natel's microelectronic business base,and see the merger as enhancing overall new business opportunitiesand growth prospects."Hytek Microsystems and its executive officers and directors may bedeemed to be participants in the solicitation of proxies from theshareholders of Hytek Microsystems, Inc., with respect to thetransactions contemplated by the merger agreement. Informationregarding such officers and directors is included in HytekMicrosystems, Inc.'s Proxy Statement for its 2004 Annual Meetingof Shareholders filed with the Securities and Exchange Commissionon May 3, 2004. Going Concern DoubtThe report of Hytek's independent auditors on its financialstatements for fiscal 2003 includes an explanatory paragraphindicating there is substantial doubt about Hytek's ability tocontinue as a going concern, and it is likely that the auditor'sreport on fiscal 2004 (which has not yet been released) will alsocontain a "going concern" qualification. About the CompanyFounded in 1974 and headquartered in Carson City, Nevada, Hytekspecializes in hybrid microelectronic circuits that are used inmilitary applications, geophysical exploration, medicalinstrumentation, satellite systems, industrial electronics,opto- electronics and other OEM applications.IMPERIAL PLASTECH: Directors & Executives Resign from Posts-----------------------------------------------------------Imperial PlasTech, Inc., (TSX-VEN: IPG) has received theresignations of Mr. John Yarnell and Mr. William E. Thomson asdirectors of IPC. IPC has also received the resignations ofStamatis Astras, as an officer of IPC and its subsidiarycorporations and Mr. Rob Gallop as an officer of IPC's subsidiarycorporations. These resignations follow the earlier resignationsof both Mr. George Petzetakis and Ms. Bonnie Tarchuk.As a result of Mr. Yarnell's and Mr. Thomson's resignations, IPCwill no longer be in compliance with the provisions of theBusiness Corporations Act (Ontario) or the By-laws of the TorontoVenture Exchange which require that public companies have at least3 directors on their board of directors.IPC attended before the Registrar in Bankruptcy on Jan. 27, 2005,to dispute the Petition for Receiving Order issued by Gowlingsagainst IPC. The matter was put over until Monday, March 7, 2005.As reported in the Troubled Company Reporter on Feb. 1, 2005, IPCis in receipt of a formal demand from Century Services Inc. forthe repayment of all outstanding amounts owing by IPC and itssubsidiary companies, Imperial Building Products Corp. andImperial Pipe Corporation to Century. Century has been providingoperating and term facilities to IPC. IPC has met with Century towork out suitable arrangements for the repayment of said amounts.IPC is also seeking new sources of funding. About Imperial PlasTech Inc.Imperial PlasTech is a diversified manufacturer supplying a numberof markets and customers in the residential, construction,industrial, oil and gas and telecommunications and cable TVmarkets. The company currently operates manufacturing facilitiesin Atlanta, Georgia, Peterborough, Ontario, and Edmonton andNisku, Alberta. * * *As reported in the Troubled Company Reporter on Jan. 13, 2005,Gowlings, Imperial Plastech's former solicitors, has issued aPetition for Receiving Order under the Bankruptcy and InsolvencyAct against IPC, Imperial Pipe Corporation and Imperial BuildingProducts Corp. IPC said it will defend the petition and seekcourt assessment of the fees in dispute.INDIAN SPRINGS: Case Summary & 8 Largest Unsecured Creditors------------------------------------------------------------Debtor: Indian Springs Associates, LLC 6046 Edward Drive Mechanicsburg, Pennsylvania 17050Bankruptcy Case No.: 05-00791Chapter 11 Petition Date: February 14, 2005Court: Middle District of Pennsylvania (Harrisburg)Judge: Mary D. FranceDebtor's Counsel: Craig S. Sharnetzka, Esq. Lawrence V. Young, Esq. CGA Law Firm 135 North George Street York, PA 17401 Tel: 717-848-4900 Fax: 717 843-9039Estimated Assets: $0 to $50,000Estimated Debts: $1 Million to $10 MillionDebtor's 8 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------Walter I. and Thelma L. note for initial $130,000Diller purchase of6046 Edward Drive corporate assetsMechanicsburg, PA 17055Vivian Coy Real estate taxes $14,518200 Airport RoadShippensburg, PA 17257Vivian F. Coy county, township tax $3,000Tax Collector110 Railroad LaneShippensburg, PA 17257CFJMA Sewer charge $1,966East Coast Green Lawn seeding $1,800Southern Cumberland Water Water service $1,300Co.Verizon Phone service $133Sprint Yellow Pages Phone advertising $121INNOVATIVE WATER: Plans to Raise Up to $3M from Equity Placement----------------------------------------------------------------Innovative Water & Sewer Systems, Inc., (TSX-V:IWSI) disclosed itsintention to proceed with a brokered common share issue with grossproceeds between $2 million and $3 million. Shares will be soldfrom treasury at 56 cents per share. The price of the issuerepresents a twenty percent (20%) discount on the closing price of70 cents per share on February 11th, 2005. Subject to theapproval of the TSX Venture Exchange, this issue is expected toclose on or before February 21, 2005. The Company currently has17,945,693 shares outstanding and 22,885,888 shares on afully-diluted basis.As announced on October 28, 2004, James Edward Capital Corporationhas been engaged as the broker for this transaction. Since thetime of that announcement, the Company has contracted with SCStormont, Inc., to provide strategic direction to the Company,including the Chief Executive Officer, and has signed a NationalPartnership Agreement with the PCL Family of Companies to deliverall IWSSI client contracts.The offering will be exempt from prospectus requirements andavailable to residents of Ontario, Alberta and the U.S.IWSSI designs and implements waste water management systemsutilizing the SBS(TM) patented solid and liquid waste collectionsystems. For many communities the system can provide communitysewer and water systems with superior performance at costs, whichare significantly lower than the cost of traditional methods.IWSSI systems have been in operation in Ontario communities since1989 are approved by the Ontario Ministry of the Environment andmeet the Ten-State Standard in the United States.IWSSI -- http://www.iwssi.com/-- provides high quality, innovative solutions for water and wastewater management bringingenvironmental, social, and economic benefits to communities.IWSSI designs, constructs, operates and finances infrastructureprojects, utilizing its' state-of-the-art small diameter gravitysewer concept, patented as Small Bore Sewer(TM) technology.IWSSI's water and wastewater solutions, which use advancedprocesses and materials, provide measurable benefits such as:environmentally superior water and wastewater management, dramaticproject cost reductions, minimal community disruption with nodetours or road closures, easy operation and maintenance, andlong-term reliability. IWSSI is uniquely positioned to takeadvantage of the market in North America for rural communal waterand wastewater facilities. In Ontario alone there are more than500,000 septic systems. At least forty percent of these systemsare failing and jeopardizing the environment. IWSSI is committedto maximizing long-term value to governments and taxpayers,through public private partnerships and utility models. * * * Going Concern DoubtInnovative Water & Sewer, Inc., has incurred a loss of $522,135for the nine months ended Sept. 30, 2004, and has had lossesduring the last three years. In addition, the Company generatednegative cash flow from operations of $518,738 for the nine monthsended Sept. 30, 2004 and has accumulated losses of $3,548,925 asof Sept. 30, 2004.The Company's management has focused on sales growth of itscommunal water and wastewater systems, which involve initialdesign contracts possibly leading to full design/build contracts.The Company's revenue has not yet reached a level sufficient tofinance current operations. This is due to factors including thetime delays and risks associated with customers both obtainingproject financing and obtaining the necessary approvals to proceedon projects.All of these factors raise doubt about the Company's ability tocontinue as a going concern. Management's plans to address theseissues include executing on existing customer contracts,continuing to grow revenue through new design/build contracts,minimizing operating expenses and consideration of obtainingadditional equity financing. The Company's ability to continue asa going concern is subject to management's ability to successfullyimplement these plans. Failure to implement these plans couldhave a material adverse effect on the Company's position andresults of operations and may result in ceasing operations.INTERSTATE BAKERIES: Court Okays Miller Buckfire as Advisor-----------------------------------------------------------Interstate Bakeries Corporation and its debtor-affiliates seek theauthority of U.S. Bankruptcy Court for the Western District ofMissouri to employ Miller Buckfire Lewis Ying & Co., LLC, as theirfinancial advisor and investment banker, pursuant to an engagementletter dated December 29, 2004. The Debtors want to indemnify theMiller Buckfire, nunc pro tunc to the Petition Date, although thefirm has agreed that it will not be compensated for itspostpetition fees for professional services before entering intothe Engagement Letter.Ronald B. Hutchison, Interstate Bakeries Corp.'s Chief FinancialOfficer, informs Judge Venters that, before the Petition Date,Miller Buckfire has familiarized itself with the Debtors'business and has provided advice regarding financingalternatives. Since then, the firm has continued to provideadvice and services to the Debtors on an informal basis free ofcharge for professional fees in contemplation of negotiating theEngagement Letter with and being retained by the Debtors in theirbankruptcy cases. By working closely with the Debtors' seniormanagement, financial staff, and other professionals and becomingacquainted with the Debtors' financial restructuring needs, thefirm, Mr. Hutchison believes, has developed significant relevantknowledge that will assist it in providing effective andefficient services in the Debtors' bankruptcy cases.Mr. Hutchison adds that Miller Buckfire's professionals haveextensive experience in providing financial advisory andinvestment banking services to financially distressed companiesand to creditors, equity constituencies and government agenciesin reorganization proceedings and complex financialrestructurings, both in and out of court. The firm has providedfinancial advisory and investment banking and other services inconnection with the restructurings of: -- AT&T Latin America, -- Burlington Industries, Inc. -- Kmart Corporation, -- Loewen Group, and -- The Spiegel Group.The Debtors anticipate that Miller Buckfire's services arefinancial in nature and would include valuation and debt capacityanalysis, capital structure design, plan formulation andnegotiation and private equity and debt placement."[Miller Buckfire] fulfills a critical service that complementsthe services provided by the Debtors' other professionals," Mr.Hutchison says. "[Miller Buckfire's] primary services will befocused on assisting the Debtors to restructure or recapitalizetheir financial obligations during their chapter 11 cases."As financial advisor and investment banker for the Debtors,Miller Buckfire will: (a) assist the Debtors in the analysis, design and formulation of various options in connection with restructuring, which may include financing and sales; (b) advise and assist the Debtors in the structuring and effectuation of the financial aspects of their transaction or transactions; (c) provide financial advice and assistance to the Debtors in developing and seeking approval of a plan of reorganization, including assisting the Debtors in negotiations with the Debtors' constituencies; and (d) if applicable, identify, solicit and negotiate with potential Investors in connection with any financing or potential acquirors in connection with any sale.The Debtors will pay Miller Buckfire: (1) a $150,000 monthly financial advisory fee; and (2) a $5,000,000 Transaction Fee, contingent on a consummation of a Restructuring or Sale and payable at the closing of a Restructuring or Sale.Before the Petition Date, the Debtors paid Miller Buckfire$250,000 for prepetition fees and expenses, including a $25,000retainer, from the Debtors' operating cash.The Debtors intend to reimburse the firm for travel and otherreasonable out-of-pocket expenses. In addition, the Debtors willpay the firm a $50,000 expenses retainer, which will be held bythe firm until the conclusion of their engagement and appliedagainst any unreimbursed expenses.David Y. Ying, a Managing Director at Miller Buckfire, atteststhat the firm has no connection with the Debtors, theircreditors, the U.S. Trustee, or any other party with an actual orpotential interest in the Debtors' cases or their attorneys oraccountants. Mr. Ying assures the Court that Miller Buckfire isa "disinterested person," as defined in Section 101(14) of theBankruptcy Code, and as required by Section 327(a). Committee ObjectsThe Official Committee of Unsecured Creditors believes that thevirtually guaranteed $5,000,000 Transaction Fee for MillerBuckfire is unreasonable under Section 328 of the BankruptcyCode."[T]he language of Miller Buckfire's Engagement Agreementrelating to the events which trigger the entitlement to theTransaction Fee is so broad that it essentially guarantees MillerBuckfire the full amount of the $5 million Transaction Fee --even if it fosters just one asset sale (or for that matter anyasset sale) and regardless of the time and efforts devoted byMiller Buckfire's professionals," Paul D. Sinclair, Esq., atKutak Rock, LLP, in Wilmington, Delaware, says. "Therefore, theproposed Transaction Fee potentially enables Miller Buckfire toreceive a windfall -- for providing even a de minimis amount ofprofessional services -- to the detriment of the Debtors' estatesand creditors."The Committee believes that by expressly seeking approval ofMiller Buckfire's engagement pursuant to Section 328(a), theDebtors seek to preclude any meaningful scrutiny by parties-in-interest or the Court as to whether the firm's fees arereasonable in light of, among other things, the time actuallyexpended, the results achieved and attributable to the services,and customary compensation of comparable professionals.The Committee asserts that all of Miller Buckfire's fees shouldbe reviewable under the reasonable standard of Section 330 of theBankruptcy Code. Debtors RespondThe Debtors ask the Court to overrule the Committee's objectionsbecause: (1) The proposed Transaction Fee is reasonable, appropriate, and not premature. The Transaction Fee is the result of extensive negotiations, and is equal to or less than the transaction fees that were proposed by other investment banking firms that the Debtors interviewed or in other comparable Chapter 11 cases; and (2) Section 328 is appropriate as the standard of review, since it protects the firm against any unfair "retrading" of fees that might occur only after their work has been completed and a restructuring has been accomplished.The Debtors and Miller Buckfire have had discussions with theUnited States Trustee and representatives of the OfficialCommittee of Equity Holders, the Prepetition Lenders and theCreditors Committee. The parties have agreed to modify theproposed form of order approving Miller Buckfire's application toreflect certain agreements the parties have negotiated duringtheir discussions.The modified terms of the Proposed Order are: (a) Miller Buckfire will be retained pursuant to Section 328(a) of the Bankruptcy Code. The firm's fees will be subject only to the standard of review set forth in Section 328(a), except that: (1) the United States Trustee will have the sole right to object to the Monthly Fees paid to the firm pursuant to the standards set forth in Section 330; and (2) the United States Trustee, the Pre-Petition Lenders, and the Creditors Committee will retain the right to object to the Transaction Fee payable under the Engagement Letter after the conclusion of the engagement on these bases: (i) the fees prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of the terms and conditions; (ii) the fees are excessive when compared to the fees paid to other comparable investment banking and financial advisory firms in other Chapter 11 cases involving comparable services; or (iii) Miller Buckfire fails to provide the services it agreed to provide in the Engagement Letter; (b) The definition of "Sale" in the Engagement Letter has been revised to make clear that the proposed Transaction Fee is earned only if a sale involves "all or substantially all" of the Debtors' equity or assets; (c) Payment terms in the Engagement Letter is modified by eliminating the proposed $50,000 retainer for expenses and by providing that, in the event of a Sale, the Transaction Fee will be placed in escrow pending the entry of an Order by the Court approving an application for allowance and payment of the Transaction Fee; (d) Proposed indemnification provisions in the Engagement Letter is altered to reflect comments by the United States Trustee and to conform to the indemnification provisions that the Court has approved for the retention of Houlihan Lokey Howard & Zukin Capital, Inc., by the Official Committee of Equity Holders; and (e) Termination provisions in the Engagement Letter are altered to make clear that: (i) the Debtors will not be obligated to pay Monthly Fees pursuant to the Engagement Letter for months occurring after the date of any termination of the Engagement Letter; (ii) the Debtors' indemnification obligations, following a termination of the Engagement Letter, will apply to actions taken by Miller Buckfire before the termination date; and (iii) if the Engagement Letter is terminated, and if a Restructuring or a Sale is subsequently consummated, the firm will not be entitled to a Transaction Fee pursuant to the Engagement Letter if the firm performed no services that contributed to the Debtors' Restructuring or Sale. * * *Judge Venters approves the Debtors' application and theEngagement Letter, as modified.Headquartered in Kansas City, Missouri, Interstate BakeriesCorporation is a wholesale baker and distributor of fresh bakedbread 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 approximately32,000 in 54 bakeries, more than 1,000 distribution centers and1,200 thrift stores throughout the U.S.The Company and seven of its debtor-affiliates filed for chapter11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., atSkadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors intheir restructuring efforts. When the Debtors filed forprotection from their creditors, they listed $1,626,425,000 intotal assets and $1,321,713,000 (excluding the $100,000,000 issueof 6.0% senior subordinated convertible notes due August 15, 2014,on August 12, 2004) in total debts. (Interstate BakeriesBankruptcy News, Issue No. 12; Bankruptcy Creditors' Service,Inc., 215/945-7000)JHMAC TRUST: Moody's Withdraws Ratings on All Three Note Classes----------------------------------------------------------------Moody's Investors Service has withdrawn its ratings on all 3Classes of Notes issued by JHMAC Trust 1996. The ratings werewithdrawn because the Trust has been terminated at the election ofJohn Hancock Life Insurance Company. Please refer to Moody'sWithdrawal Policy on moodys.com.The ratings withdrawn are: * US $399.16 MM Senior Secured 6.500% Notes, Class A Due 12/01/2011 currently rated Aaa * US $75.00 MM Senior Subordinated Floating Rate Notes, Class B-1 Due 12/01/2013 currently rated Baa3 * US $25.00 MM Subordinated Floating Rate Notes, Class B-2 Due 12/01/2014 currently rated Ba3LAIDLAW INT'L: Mac-Per-Wolf Discloses 8.4% Equity Stake-------------------------------------------------------In a regulatory filing with the Securities and ExchangeCommission dated January 31, 2005, Gregory E. Wolf, Treasurer ofMac-Per-Wolf Company, reports that Mac-Per-Wolf beneficially owns8,704,703 shares of Laidlaw International, Inc., Common Stock,which represents 8.4% of the total outstanding shares.Mac-Per-Wolf is filing on behalf of its two subsidiaries: (1) PWMCO, LLC, a wholly owned subsidiary, is both a broker dealer registered under Section 15 of the Act and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940; and (2) Perkins, Wolf, McDonnell and Company, LLC, a subsidiary, is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940.Perkins, Wolf, McDonnell and Company, LLC, furnishes investmentadvice to various investment companies registered under Section 8of the Investment Company Act of 1940 and to individual andinstitutional clients -- Managed Portfolios.The Managed Portfolios have the right to receive all dividendsand proceeds from the sale of the securities held in theiraccounts.The interest of any of the Managed Portfolios does not exceed 5%of the class of securities.Mr. Wolf says these shares were acquired in the ordinary courseof business, and not with the purpose of changing or influencingcontrol of Laidlaw.Headquartered in Arlington, Texas, Laidlaw, Inc., now known asLaidlaw International, Inc., -- http://www.laidlaw.com/--is North America's #1 bus operator. Laidlaw's school buses transport morethan 2 million students daily, and its Transit and Tour Servicesdivision provides daily city transportation through more than 200contracts in the US and Canada. Laidlaw filed for chapter 11protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099).Garry M. Graber, Esq., at Hodgson Russ LLP, represents theDebtors. Laidlaw International emerged from bankruptcy onJune 23, 2003. * * *As reported in the Troubled Company Reporter on Dec. 27, 2004,Moody's Investors Service has placed the long-term debt ratings ofLaidlaw International, Inc., under review for possible upgrade.The review is prompted by the recent announcement by the companythat it had entered into a definitive agreement to sell both ofits healthcare businesses to Onex Partners LP, an affiliate ofOnex Corporation, for $820 million. Net proceeds after fees andassumption of a small amount of debt by the buyer is estimated at$775 million, with a majority of the proceeds intended to be usedto repay substantial levels of Laidlaw's existing debt. Moody'shas also assigned a Speculative Grade Liquidity Rating of SGL-2 toLaidlaw International, Inc. As part of the rating action, Moody'shas reassigned to Laidlaw International, Inc., certain ratings,including the senior implied and senior unsecured issuer ratings,originally assigned at Laidlaw, Inc., in order to reflect moreappropriately the company's current organizational structure.As reported in the Troubled Company Reporter on Dec. 9, 2004,Standard & Poor's Ratings Services placed its ratings, includingits 'BB' corporate credit rating, on Laidlaw International, Inc.,on CreditWatch with positive implications. The rating actionfollows Laidlaw's announcement that it has entered into definitiveagreements to sell both of its health care companies, AmericanMedical Response and Emcare, to Onex Partners L.P. for$820 million. Laidlaw expects to receive net cash proceeds of$775 million upon closing of the transaction, which is expected bythe end of March 2005. Naperville, Illinois-based Laidlawcurrently has about $1.5 billion of lease-adjusted debt.MCI INC: Board Approves $5.3 Billion Acquisition by Verizon-----------------------------------------------------------Verizon Communications Inc. (NYSE: VZ) has agreed to acquireMCI, Inc. (Nasdaq: MCIP) for $4.8 billion in equity and$488 million in cash.The transaction adds new strength to the telecommunicationsservices both companies provide. It ensures that consumers andbusinesses will have a supplier with the financial strength tomaintain and improve MCI's Internet backbone network, which is thelargest in the world based on company-owned points of presence.The transaction will also mean better service for Enterprisecustomers by enhancing Verizon's ability to compete for and servelarge-business and government customers with a complete range ofservices, including wireless and the most sophisticated IP(Internet Protocol) based services.The Boards of Directors of both companies have approved theagreement.MCI shareowners will receive 0.4062 shares of Verizon common stockfor each common share of MCI. This is worth $4.795 billion andequivalent to $14.75 per MCI share, based on Verizon's closingprice on Friday, Feb. 11.MCI shareowners will also receive $1.50 per MCI share in cash,worth $488 million. This consideration is subject to adjustmentat closing and may be decreased based on MCI's bankruptcy claims-related experience.Also, MCI will pay its shareowners quarterly and special dividendsof $4.50 per share, worth $1.463 billion. This includes a 40-cent-per-share quarterly dividend approved by the MCI Board onFriday, Feb 11.In total, the transaction values MCI shares at $20.75 a share, or$6.746 billion.Verizon will assume MCI's net debt (total debt less cash on hand),targeted to be approximately $4 billion at closing, and customaryclosing conditions will apply.In addition to MCI shareowner approval, the acquisition requiresregulatory approvals, which the companies are targeting to obtainin about a year. 'The Right Deal'"This is the right deal at the right time," said Verizon Chairmanand CEO Ivan Seidenberg. "We have been evaluating a transactionwith MCI for some time, and now we have the opportunity to reachan agreement at the right price that works for both companies andat a time when MCI is gaining momentum. It is a natural andlogical extension of Verizon's strategy to transform our companyto serve growth markets and offer broadband technologies."This acquisition builds on and accelerates Verizon's growth planin the Enterprise market, and it facilitates our becoming a majorprovider in that market sooner and less expensively than if we hadcontinued on a path of organic growth. The acquisition willsignificantly enhance our customer service and competitivepositioning by giving us a global reach, a suite of IP-based andvalue-added services, and a powerful, broad base of large-businessand government customers."With the two companies' operational resources and investmentcapacity, we plan to drive efficiencies, increase cash flow andpursue new revenue opportunities. The company will have a strongbalance sheet and the financial flexibility to continue to rewardshareowners through investment and growth." 'The Right Partner'"With our heritage of innovation, global network and world-classEnterprise capabilities, MCI is the right partner for Verizon,"said Michael D. Capellas, MCI president and CEO. "Combined withVerizon's financial strength and record of operational excellence,we will accelerate delivery of next-generation services, broadenour product portfolio and better serve our customers." Key BenefitsMr. Seidenberg and Mr. Capellas emphasized that the transaction ispart of the continuing evolution of the industry that is driven bycustomers and technology. They highlighted several key benefitsthat the companies' complementary assets bring to the market:For Enterprise customers, the transaction creates a strongcompetitor that, in most markets, will challenge a largerincumbent. The more-efficient operating structure will drivebetter value, and Verizon will be able to offer a suite ofservices that address a full range of customer needs. Thetransaction also strengthens the long-term viability of MCI'sglobal network, which is a critical component of governmentcommunications systems, including those used by the Department ofDefense and the Department of Homeland Security.For consumers and other business customers, the post-transactioncompany will continue to have sufficient cash flow and capitalcapacity to sustain its rapid deployment of wireline and wirelessbroadband networks and services.Internet users in the United States will have a strong backboneplatform for their traffic, and together the two companies canmake greater investments in their backbones and offer the highestquality of service. In a multi-media market where technologyplatforms compete against one another to provide services, havingstrong backbone networks will enhance the post-transactioncompany's ability to deliver advanced services over owned andmanaged facilities to benefit consumers and small- and mid-sizedbusinesses.Internationally, the transaction creates a strong, U.S.-basedglobally competitive network and services provider, positioned toput an American company in a leadership role in the globalizationof telecommunications.For investors, the combination will enhance the company'scompetitive positioning and long-term financial flexibility. Financial EffectIn the first year following closing, the transaction is expectedto have an approximate 10-cent-per-share dilutive impact onVerizon's earnings per share, excluding acquisition costs and anyamortization of intangible assets that may be created at the timeof the acquisition. Verizon expects the transaction to beessentially breakeven in year three, and cash flow will turnpositive in year three.Verizon estimates that the acquisition will yield a net presentvalue of $7 billion in incremental revenues and operationalsavings, including investments in network and systems to achievethese savings. The costs are estimated to be approximately$1 billion to $1.5 billion in expense and $2 billion in capitalduring the first three years, as the company will commitappropriate resources to maintain and upgrade the MCI assets.The company expects a net annual run rate of $1 billion in pre-taxsavings in the third full year after closing.Verizon's $4.8 billion in equity to purchase MCI represents 132.1million Verizon shares, or approximately 4.5 percent of Verizon'soutstanding shares.The companies will determine operational plans, such as brandingstrategies and organizational structure, as the transaction movescloser to closing. About VerizonWith more than $71 billion in annual revenues, VerizonCommunications Inc. (NYSE: VZ) is one of the world's leadingproviders of communications services. Verizon has a diverse workforce of more than 210,000 in four business units: DomesticTelecom serves customers based in 29 states with wirelinetelecommunications services, including broadband, nationwide long-distance and other services. Verizon Wireless owns and operatesthe nation's most reliable wireless network, serving 43.8 millionvoice and data customers across the United States. InformationServices operates directory publishing businesses and provideselectronic commerce services. International includes wireline andwireless operations and investments, primarily in the Americas andEurope. For more information, visit http://www.verizon.com/Headquartered in Clinton, Mississippi, WorldCom, Inc., now knownas MCI, Inc. -- http://www.mci.com/-- is a pre-eminent global communications provider, operating in more than 65 countries andmaintaining one of the most expansive IP networks in the world.The Company filed for chapter 11 protection on July 21, 2002(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, theDebtors listed $103,803,000,000 in assets and $45,897,000,000 indebts. The Bankruptcy Court confirmed WorldCom's Plan on October31, 2003, and on April 20, 2004, the company formally emerged fromU.S. Chapter 11 protection as MCI, Inc.MCI INC: Fitch May Upgrade Ratings Due to Verizon Acquisition-------------------------------------------------------------Fitch Ratings has placed the 'A+' rating on Verizon GlobalFunding's outstanding long-term debt securities on Rating WatchNegative, and the 'B' senior unsecured debt rating of MCI, Inc.,on Rating Watch Positive following the announcement that VerizonCommunications will acquire MCI for approximately $4.8 billion incommon stock and $488 million in cash.Including MCI's estimated net debt of approximately $4 billion atthe time of the close of the transaction, the total value of thetransaction is approximately $9.3 billion. MCI, prior to theclose of the transaction, will pay out quarterly and specialdividends of $4.50 per share, or $1.463 billion, to its existingshareholders.The Rating Watch Negative also applies to the existing long-termdebt of other Verizon subsidiaries, as listed below. The 'F1'ratings assigned to Verizon Global Funding and Verizon NetworkFunding are not on Rating Watch Negative and have been affirmed.Verizon Global Funding primarily funds the nonregulated operationsof Verizon. Verizon Global Funding is a subsidiary of Verizon,and benefits from a support agreement with Verizon. VerizonCommunications' implied senior unsecured rating is also 'A+'.The rating action reflects the need to evaluate: -- The moderately higher business risk profile of Verizon following its acquisition of MCI; -- The potential synergies to be achieved; -- The outcome of the regulatory approval process. -- The potential for other bids to arise for MCI.Taking into account the remaining cash on MCI's balance sheet, thetransaction is not expected to have a material effect on Verizon'scredit protection measures. Verizon's debt-to-EBITDA in 2004 was1.4 times and on a stand-alone basis is expected to improveslightly in 2005, even allowing for a 10% increase in capitalspending and spending on spectrum acquisitions totaling$3.5 billion or more. MCI's EBITDA is expected to continue todecline in 2005, although its financial flexibility remainsadequate given its estimated year-end cash balance of$5.5 billion. Fitch estimates pro forma leverage for the combinedcompanies in 2006 could approximate 1.4x-1.5x. As the transactionis currently envisioned, a downgrade, should it occur, would belimited to one notch, but if Fitch can attain a high degree ofconfidence regarding the combined entity's financial and businessrisk profile, the current rating could be affirmed.Business risk elements surrounding the transaction include theweak fundamentals of the long distance industry, the risk thatanticipated synergies are materially less than originallycontemplated, and the impact of the integration costs on thecombined companies' cash flow. As with other long distancecarriers, in recent years MCI's revenues have declined in recentyears due to extreme pricing pressure for its products andservices. MCI also has suffered from a lack of growthopportunities in its core business. The potential negativebusiness risk aspects of the transaction are expected to bemoderated by the synergies that can be achieved in networkoperations, sales functions, information technology, and corporateoverheads.The transaction will be subject to regulatory and shareholderapproval. After the necessary approvals are obtained, thetransaction is expected to close, which could be in the first halfof 2006. Material conditions arising from the regulatory approvalprocess could have an impact on the final economics of thetransaction and the ultimate credit profile of the combinedcompany.At this time it has not been disclosed if Verizon will guaranteeor legally assume MCI's outstanding debt. Without a guarantee,MCI's debt would likely be upgraded to two notches below Verizon'srating, but the notching could be more or less depending on anevaluation of the integration of MCI's assets into Verizon'soperations.A critical consideration in Verizon's rating is that Verizon'srevenue mix is becoming increasingly oriented toward growth areas,with 39% of its total revenues derived from rapidly growingVerizon Wireless, and an additional 14% of its revenues comingfrom wireline growth areas such as long distance service,high-speed data services, and initiatives in the business market.The proportion of these revenues in the mix is expected tocontinue to grow, primarily as a result of the strong performanceof Verizon Wireless. On a volume basis, Verizon's totalconnections (defined as total switched access lines plus digitalsubscriber lines and wireless subscribers) grew 5.2% to100.4 million on a year-over-year basis at the end of 2004. Thegrowth factors are important, sustainable offsets to the impact ofsubstitution and competition in the traditional wireline business.With respect to potential activity regarding an increased stake inVerizon Wireless, Fitch believes Verizon will act to maintain acredit profile consistent with its current rating. Moreover, thecompany's current deleveraging 'path' is to enhance its financialflexibility should such an opportunity occur. Fitch believes thatan increased stake in Verizon Wireless is somewhat more likely tocome through negotiations rather than the currently existing putarrangement.Verizon's liquidity is strong, as it has an undrawn $5 billioncredit facility to back its commercial paper. The facilityexpires in June 2005, and has a two-year term-out option. In2004, free cash flow after dividends and capital spending wasapproximately $4.3 billion. Intermediate-term liquidity needs areexpected to be addressed through strong free cash flows and couldbe supplemented by additional asset sales. The company has alsostated that its stake in Omnitel, an Italian wireless operatorcontrolled by Vodafone, would be an important consideration in atransaction involving Vodafone's stake in Verizon Wireless.These subsidiary ratings are placed on Rating Watch Negative byFitch: GTE Corp. -- Debentures/notes 'A+'. NYNEX Corp. -- Debentures 'A+'. Verizon New York -- Debentures 'A+'. Verizon Credit Corp. -- Notes 'A+'. Verizon Florida -- Senior unsecured debentures 'A+'. Verizon New England -- Senior unsecured bonds 'A+'; -- Debentures 'A+'; -- Notes 'A+'. Verizon South -- Senior unsecured debentures 'A+'. GTE Southwest -- Senior unsecured debentures 'A+'. Verizon California -- First mortgage bonds 'A+'; -- Senior unsecured debentures 'A+'. Verizon Delaware -- Senior unsecured debentures 'A+'. Verizon Maryland -- Senior unsecured debentures 'A+'. Verizon New Jersey -- Senior unsecured debentures 'A+'. Verizon North -- First mortgage bonds 'A+' -- Senior unsecured debentures 'A+'. Verizon Northwest -- First mortgage bonds 'A+'; -- Senior unsecured debentures 'A+'. Verizon Pennsylvania -- Senior unsecured debentures 'A+'. Verizon Virginia -- Senior unsecured debentures 'A+'. Verizon Washington D.C. -- Senior unsecured debentures 'A+'. Verizon West Virginia -- Senior unsecured debentures 'A+'.These ratings remain on Rating Watch Negative where they wereplaced on May 25, 2004, due to the pending sale of Verizon Hawaii: Verizon Hawaii -- First mortgage bonds 'BBB-'; -- Debentures 'BB+'.These ratings are affirmed by Fitch: Verizon Global Funding -- Commercial paper 'F1'. Verizon Network Funding -- Commercial paper F1'.Fitch also places MCI on Rating Watch Positive: MCI Inc. -- Senior unsecured debt 'B'.MERIDIAN AUTOMOTIVE: S&P Cuts Corporate Credit Rating to CCC+-------------------------------------------------------------Standard & Poor's Ratings Services lowered its corporate creditrating on Dearborn, Michigan-based Meridian Automotive SystemsInc. to 'CCC+' from 'B+'. Meridian has total debt of about$600 million. The ratings outlook is negative."The action reflected increased concerns about the company'soperating performance, cash flow generation, and liquidity amidvery challenging industry conditions, including reduced vehicleproduction, pricing pressure, and higher raw material costs," saidStandard & Poor's credit analyst Martin King."Operating results are expected to remain under pressure duringthe next year. Ratings could be lowered should financialperformance remain weak, liquidity tighten, or debt leverageescalate, which may require the company to pursue a financialrestructuring," Mr. King added.Industry conditions for automotive suppliers have deteriorated inrecent months. Vehicle production levels of Meridian's twolargest customers, Ford Motor Co. (BBB-/Stable/A-3) and GeneralMotors Corp. (GM) (BBB-/Stable/A-3), declined 8% in the fourthquarter of 2004 as both companies attempted to reduce bloatedinventory levels, especially for sport utility vehicles andlight trucks. Ford and GM together make up more than 65% ofMeridian's revenue, and SUVs and light truck make up about 70% ofrevenue.Production cuts have continued into the current quarter, with eachcompany expecting to reduce production by 9% from year-ago levels.Additional cuts may be necessary later in the year if thelackluster sales pace does not improve and inventories remainhigh. The weak financial performance of some auto manufacturershas led to very aggressive pricing demands of their supplier baseas the automakers attempt to reduce their costs and improvetheir own financial performance.Auto suppliers have also had to absorb large increases in rawmaterial costs. Meridian, which makes bumper systems, compositeplastic modules, structural components, and interior components,is a large user of steel, plastic resin, and other commodities.Although some of the company's raw materials are purchased throughcustomer resale programs that insulate it from cost increases,Meridian is exposed to market price fluctuations for asignificant portion of its total material purchases.MEYER'S BAKERIES: Trustee Appoints 7-Member Creditors Committee---------------------------------------------------------------The United States Trustee for Region 13 appointed seven creditorsto serve on an Official Committee of Unsecured Creditors inMeyer's Bakeries, Inc., and its debtor-affiliate's chapter 11cases: 1. Cereal Food Processors Attn: Steve Heeney 2001 Shawnee Mission Parkway Mission Way, Kansas 66205 Tel: 913-890-6326, Fax: 913-890-6382 2. Ryder Truck Rental, Inc. Attn: David Clemons 6000 Windward Parkway Alpharetta, Georgia 30005 Tel: 770-569-6776, Fax: 770-569-6712 3. Fleischmann's Yeast Attn: Frank Schoonyoung 240 Larkin Williams Industrial Court Fenton, Missouri 63026 Tel: 636-349-8800, Fax: 636-305-2440 4. Paris Packaging, Inc. Attn: Bill Carver 800 W. Center - P.O. Box 1177 Paris, Texas 75461 Tel: 903-785-6411 5. International Paper Attn: Matthew D. Kreider 4044 Willow Lake Blvd. Memphis, Tennessee 38118 Tel: 901-419-1064, Fax: 901-419-1238 6. Jim Cox 11355 Turkey Roost Road Tallahassee, Florida 32317 Represented by: Roger D. Rowe, Atty. 11300 Cantrell Road, Suite 201 Little Rock, Arkansas 72212 Tel: 501-376-6565, Fax: 501-376-6666 7. Johnny Newton Clopp 7010 Live Oak Drive Texarkana, Arkansas 71854 Represented by: Roger D. Rowe, Atty. 11300 Cantrell Road, Suite 201 Little Rock, Arkansas 72212 Tel: 501-376-6565 Fax: 501-376-6666Official creditors' committees have the right to employ legal andaccounting professionals and financial advisors, at the Debtors'expense. They may investigate the Debtors' business and financialaffairs. Importantly, official committees serve as fiduciaries tothe general population of creditors they represent. Thosecommittees will also attempt to negotiate the terms of aconsensual chapter 11 plan -- almost always subject to the termsof strict confidentiality agreements with the Debtors and othercore parties-in-interest. If negotiations break down, theCommittee may ask the Bankruptcy Court to replace management withan independent trustee. If the Committee concludes reorganizationof the Debtors is impossible, the Committee will urge theBankruptcy Court to convert the Chapter 11 cases to a liquidationproceeding.Headquartered in Hope, Arkansas, Meyer's Bakeries, Inc., producesEnglish muffins, bagels, bread sticks, energy bars, and hearthbaked specialty breads and rolls at its facilities in Hope andWichita. The Company and its affiliate filed for chapter 11protection on Feb. 6, 2005 (Bankr. W.D. Ark. Case No. 05-70837).Charles T. Coleman, Esq., at Wright, Lindsey & Jennings LLPrepresents the Debtors in their restructuring efforts. When theCompany filed for protection from its creditors, it listed totalassets of $44,226,139 and total debts of $48,699,754.MIRANT: U.S. Trustee Amends MAGi Creditors Committee Membership---------------------------------------------------------------Pursuant to Section 1102(a)(1) of the Bankruptcy Code, William T.Neary, U.S. Trustee for Region VI, informs the Court that J.P.Morgan Chase & Co. and Lehman Brothers are no longer members ofthe Official Committee of Unsecured Creditors for Mirant AmericasGeneration, LLC. At January 28, 2005, the MAGi UnsecuredCreditors Committee consists of: 1. Tom Baker California Public Employees Retirement System Lincoln Plaza 400 P Street Sacramento, California 95814 Phone: (916) 341-2162 Fax: (916) 326-3330 email@example.com 2. Dan Gropper Elliott Associates, L.P. 712 Fifth Avenue, 36th Floor New York, New York 10019 Phone: (212) 506-2999 Fax: (212) 974-2092 Cell: (917) 692-6030 email@example.com 3. Don Morgan Mackay Shields Financial 9 West 57th Street New York, New York 10019 Phone: (212) 230-3911 Fax: (212) 754-9187 firstname.lastname@example.com 4. Charles Greer The Royal Bank of Scotland plc 101 Park Avenue New York, New York 10178 Phone: (212) 401-3757 Fax: (212) 401-3759 firstname.lastname@example.com 5. Thomas M. Korsman Wells Fargo Bank Minnesota, National Association MAC N9303-120 Sixth and Marquette Minneapolis, Minnesota 55479 Phone: (612) 466-5890 Fax: (612) 667-9825 firstname.lastname@example.com in Atlanta, Georgia, Mirant Corporation --http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in NorthAmerica, the Philippines and the Caribbean. Mirant Corporationfiled 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 theDebtors filed for protection from their creditors, they listed$20,574,000,000 in assets and $11,401,000,000 in debts. (MirantBankruptcy News, Issue No. 54; Bankruptcy Creditors' Service,Inc., 215/945-7000)MIRANT CORP: Brazos Holds $3,543,089 Allowed Unsecured Claim------------------------------------------------------------In 1998, Brazos Electric Power Cooperative, Inc., and SouthernCompany Energy Marketing, LP, the predecessor to Mirant AmericasEnergy Marketing, LP, entered into a Power Purchase and ExchangeFacilities Operation and Maintenance, and Fuel Supply Agreement.Pursuant to the Brazos PPA, MAEM was entitled to dispatch andreceive the output of Brazos' generating facilities, and MAEMprovided Brazos with the capacity and electric energy needed tomeet the requirements of Brazos' load, subject to certainexclusions. In 2002, the parties entered into a settlementagreement, which modified and supplemented the Brazos PPA.Southern Energy, Inc., the predecessor of Mirant Corp., guaranteedMAEM's obligations to Brazos under a Modified Brazos PPA up to atotal $55,000,000 liability cap for 2003.In 1999, Brazos and Southern Company entered into a Power Purchaseand Sale Enabling Agreement. Additionally, the parties enteredinto a "Transaction Confirmation" dated September 11, 1999.As part of their restructuring strategy, the Debtors sought andobtained the Court's authority to reject: (1) the Brazos PPA; and (2) the 2002 Settlement Agreement.Moreover, the Court established a methodology for calculating therejection damages arising from the rejection of the Contracts. Brazos Proofs of ClaimIn March 2004, Brazos filed four proofs of claim: -- Claim Nos. 7869 and 7947 against Mirant Corp. based on the Guarantee; and -- Claim Nos. 7870 and 7924 against MAEM, which assert liability for breach of contract.Each of the Claims assert an unsecured claim for rejection damagesaggregating $4,319,523, plus all interest, costs, and fees. TheClaims were calculated in accordance with the Rejection Order.The Debtors dispute Claim Nos. 7869, 7947, 7870, and 7924, on thegrounds that: (a) the Claims are overstated and were not calculated in accordance with Section 502(g) of the Bankruptcy Code; (b) Claim Nos. 7924 is a duplicate of Claim No. 7870, and Claim No. 7947 is a duplicate of Claim No. 7869; and (c) the Claims against Mirant Corp. assert a claim for the same liability as that asserted against MAEM, and a double recovery cannot be allowed. Settlement AgreementConsequently, the Debtors and Brazos enter into a settlementagreement, which steers clear of litigation between the partiesrelating to the calculation of damages under the Rejection Order.The terms of the Settlement Agreement include: (a) Brazos is allowed a $3,543,089 claim, in full and final satisfaction of all its prepetition claims against the Debtors; (b) The Allowed Claim is not an administrative claim and Brazos is not entitled to an administrative claim in connection with any prepetition claims against any of the Debtors; (c) Subject to a confirmed Chapter 11 plan of reorganization, to the extent that any portion of the Allowed Claim arising from the Modified Brazos PPA is not satisfied by MAEM, Brazos will have a residual, allowed claim -- the Guarantee Claim -- equal to the amount not paid by MAEM against Mirant Corp.; (d) The Settlement Agreement provides a mechanism for dealing with certain creditors and charges that the Electric Reliability Council of Texas, Inc., may impose upon MAEM as Qualified Scheduling Entity for Brazos in connection with the Rejected Contracts; and (e) The Settlement Agreement contains mutual releases of any and all claims by Brazos and the Debtors against each other arising under, or relating to, any and all agreements between them, including but not limited to the Rejected Contracts.At the Debtors' request, Judge Lynn approves the SettlementAgreement. Claim Nos. 7924 and 7947 are deemed withdrawn, and theamounts asserted in Claim Nos. 7869 an 7870 are deemed modifiedand amended as set forth in the Settlement Agreement.Headquartered in Atlanta, Georgia, Mirant Corporation --http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in NorthAmerica, the Philippines and the Caribbean. Mirant Corporationfiled 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 theDebtors filed for protection from their creditors, they listed$20,574,000,000 in assets and $11,401,000,000 in debts. (MirantBankruptcy News, Issue No. 53; Bankruptcy Creditors' Service,Inc., 215/945-7000)ML CBO: S&P's Rating on Class A $16.89MM Notes Tumbles to D-----------------------------------------------------------Standard & Poor's Ratings Services lowered its rating on the classA notes issued by ML CBO VI 1996-C-2, an arbitrage CBO transactionoriginated in October 1996 and managed by 40/86 Advisors, to 'D'from 'CC'.The lowered rating on the class A notes reflects the non-paymentof interest due to the class A noteholders on the Feb. 7, 2005payment date. Prior to the current rating action, the rating onclass A notes was lowered to 'CC' from 'CCC+' on Feb. 11, 2003. Rating Lowered ML CBO VI 1996-C-2 Rating ------ Class To From Current Balance (Mil. $) ----- -- ---- ------------------------ A D CC $16.89 Transaction Information Issuer: ML CBO VI 1996-C-2 Manager: 40/86 Advisors Inc. Underwriter: Merrill Lynch & Co Inc. Trustee: JPMorganChase Bank N.A. Transaction type: Cash flow arbitrage CBOMURRAY INC: Wants Until July 6 to File a Chapter 11 Plan--------------------------------------------------------Murray, Inc., asks the U.S. Bankruptcy Court for the MiddleDistrict of Tennessee, Nashville Division, for an extension untilJuly 6, 2005, of its exclusive period to file a plan ofreorganization. The Debtor also asks that its time to solicitacceptances of that plan be extended to Sept. 8, 2005.The Debtor needs more time to work on a chapter 11 plan becauseits efforts were focused on closing the sale of substantially allof its assets to Briggs & Stratton, Inc. The sale transactionwith Briggs & Stratton was completed on Feb. 1, and the Debtor cannow start negotiating with creditors to formulate a viable chapter11 plan.Murray assures the Court that the extension will not harm thecreditors or other parties-in-interest in its chapter 11 case.Headquartered in Brentwood, Tennessee, Murray, Inc. --http://www.murray.com/-- manufactures lawn tractors, mowers, snowthrowers, chipper shredders, and karts. The Company filed forchapter 11 protection on Nov. 8, 2004 (Bankr. M.D. Tenn. Case No.04-13611). Paul G. Jennings, Esq., at Bass, Berry & Sims PLC,represents the Debtor in its restructuring efforts. When theDebtor filed for protection from its creditors, it estimated morethan $100 million in total debts and assets.NORTHERN HOTELS: Court Convenes Sale Hearing for Hotel Property---------------------------------------------------------------The Honorable S. Martin Teel Jr. of the U.S. Bankruptcy Court forthe District of Columbia will convene a hearing today, Wednesday,Feb. 16, 2005, to approve Northern Hotels Corporation and itslargest secured creditor, Litchfield Financial Corporation jointrequest to sell the Debtor's hotel property free and clear ofliens, claims and encumbrances and approve the auction proceduresfor the hotel property.The Debtor's hotel property is a six-story, 92-roomhotel/timeshare facility with two restaurants and a bar situatedon a 1.1-acre parcel of land located at 122 Main Street, LakePlacid, New York.The Debtor owes Litchfield Financial approximately $6,150,000under a prepetition Mortgage and Renovation Loan for the hotelproperty. To secure the loan obligations to Litchfield, theDebtor granted Litchfield first priority liens and securityinterests in substantially of its assets, including a FirstMortgage on the hotel property.The Debtor had defaulted on its loan payments to LitchfieldFinancial since Sept. 2001, and on May 12, 2003, Litchfieldaccelerated the entire amount owing on the First Mortgage.The Debtor entered into a compromise agreement with Litchfield tosatisfy its claims, which was included in the Amended Plan ofReorganization filed by the Debtor on April 28, 2004. Judge Teelconfirmed the Debtor's Amended Plan on Dec. 17, 2004.The Debtor and Litchfield Financial explain that the sale of thehotel property by public auction to the highest qualified bidderis in the best interests of the Debtor's estate and its creditors.Litchfield is entitled to make an opening bid of $2.8 million,which is equal to the amount appraised by Cushman & Wakefield forthe hotel property.Headquartered in Washington, D.C., Northern Hotels Corporationowns and operates the Northwoods Inn located in Lake Placid, NewYork. The Company filed for chapter 11 protection onSept. 26, 2003. (Bankr. D.C. Case No. 03-01782). Steven H.Greenfeld, Esq., at Cohen, Baldinger & Greenfeld LLC, representsthe Debtor in its restructuring efforts.NORTHWESTERN CORP: Violates Ch. 11 Plan, Says Harbert Master Fund-----------------------------------------------------------------Harbert Distressed Investment Master Fund, Ltd., delivered thefollowing letter to the Board of Directors of NorthWesternCorporation (Nasdaq: NWEC). Harbert believes that NorthWesternhas taken actions that violate the terms of the recentlyconsummated NorthWestern bankruptcy reorganization plan and thatare prejudicial to the interests of holders of claims against thebankruptcy estate, including Harbert. THE HARBERT DISTRESSED INVESTMENT MASTER FUND, LTD. 555 Madison Avenue, 16th Floor New York, NY 10022 February 15, 2005 VIA FACSIMILE Members of the Board of Directors of NorthWestern Corporation c/o Dr. Ernest Linn Draper, Jr. Chairman of the Board NorthWestern Corporation 125 S. Dakota Avenue Sioux Falls, SD 57104-6403 Re: Failure to Adhere to the Plan of Reorganization and Objection to Flawed Settlement with Magten Asset Management Corporation and Law Debenture Trust Company of New York Gentlemen: Harbert Distressed Investment Master Fund, Ltd. ("Harbert") holds approximately 20% of the Class 7 prepetition claims against NorthWestern Corporation ("NorthWestern" or the "Company"), as well as approximately 20% of the common stock and approximately 33% of the warrants of reorganized NorthWestern. We received the latter securities by operation of the Second Amended and Restated Plan of Reorganization (the "Plan") in exchange for previously contracted bona fide debt of NorthWestern. We have been told by representatives of holders of what we believe are a majority of both the Class 7 prepetition claims and the new common stock that they share the concerns described in this letter. In an effort to protect the interests of Class 7 creditors such as Harbert, as well as shareholders, warrant-holders and other stakeholders in NorthWestern as they were negotiated by the participants to the bankruptcy proceeding and set forth in the Plan, I am writing to express Harbert's strong objection to (i) the excessive consideration proposed to be paid in the settlement agreement in principle that NorthWestern management, on February 9, 2005, announced it had reached with Magten Asset Management Corporation ("Magten") and Law Debenture Trust Company of New York LLC ("Law Debenture"); (ii) management's and NorthWestern's outside counsel's continued objections to our repeated requests to add creditors to the Plan Committee created to review settlements proposed by management, notwithstanding the lack of a role of the Company under the Plan in constituting the Plan Committee and the ongoing attempts by Harbert in good faith to accommodate the Company's concerns; and (iii) the failure by the Company, after requests by Harbert first made in December, to distribute over 375,000 common shares with a current value of more than $10 million to their proper owners in Classes 7 and 9, and to cancel more than 700,000 highly dilutive warrants, both of which are required by the Plan. We have been actively raising concerns with management and NorthWestern's outside counsel since December regarding compliance with the Plan. After the Company announced the settlement last week, we raised these concerns directly with the Board Chairman in an effort to resolve them before more events transpired. Yesterday our counsel received a letter from Paul Hastings, the Company's outside counsel, acknowledging our concerns and agreeing to further discuss them, and representing that no further action will be taken until we meet again. However, even this letter of yesterday raises yet another new objection to our serving on the Plan Committee, which we have considered and is without merit. Given the previous assurances we have received from Paul Hastings and the actions taken by management contrary to those assurances, and management's recent announcement of the Magten settlement without properly consulting with the Board or the Plan Committee, we believe a clearer statement of the position of the Board itself on these issues, which lie at the heart of implementing the Plan as approved by the Bankruptcy Court, is merited without further delay. As discussed below, we believe that the proposed settlement violates the plain terms of NorthWestern's confirmed Plan, is contrary to the interests of NorthWestern and its shareholders, and is the product of a negotiation and approval process that appears to have been impaired by the existence of conflicts of interest on the part of management and Paul Hastings and a premature announcement only because of an unauthorized "leak" by management. We ask that the Board (i) promptly announce its disapproval of the proposed settlement; (ii) instruct management to comply promptly with the Company's obligations under the Plan with respect to distributing or canceling certain of the common stock and warrants proposed to be distributed in connection with this settlement; and (iii) take steps to protect against the potential future recurrence of the procedural flaws that appear to have contributed to management's execution and announcement of this proposed settlement without appropriate Board consultation and while raising unwarranted objections to our role on the Plan Committee. The proposed settlement appears to be contrary to the interests of NorthWestern and its shareholders, and its negotiation and approval appear to have been tainted by conflicts of interest. Harbert was active in the reorganization proceedings of NorthWestern and in negotiating for rights and value under the Plan that will be impaired by the Company's actions to date which are the subject of this letter. As of October 2004, Harbert was in a position to assess the low likelihood of a recovery by Magten under its litigation. We understand that little has changed regarding the facts of that litigation since the Company's Plan was confirmed in October. Moreover, we received assurances in December from Gary Drook, the Company's CEO, and in December and January from Paul Hastings that the litigation continues to be without merit. While we understand the desire to end the distraction and legal fees associated with litigation, the amount of consideration proposed in this settlement cannot be justified. As described in NorthWestern's February 9, 2005 press release, the proposed settlement calls for NorthWestern to distribute to Law Debenture, on behalf of Magten and the other non- accepting Class 8(b) QUIPS holders, (i) approximately 870,000 shares of NorthWestern common stock that under the Plan's express terms were set aside in reserves established for Class 9 pending litigation claims, which the press release inaccurately characterizes as "worth $17.4 million" and which in fact are worth more than $24 million, and (ii) 382,732 shares of NorthWestern common stock and 710,449 warrants not distributed to Class 8(b) claimants because those holders had elected to litigate rather than settle. The proposed settlement appears, on its face, to be contrary to the interests of NorthWestern, its shareholders, warrant- holders, and pre-petition creditors. As noted above, the settlement calls for NorthWestern to distribute to Law Debenture approximately 1.25 million shares of NorthWestern common stock, as well as more than 710,000 warrants. Using yesterday's closing price of $28.05, the common stock to be distributed has a total value of approximately $35 million. In addition, the value of the warrants to be distributed using yesterday's closing price of about $5 is in excess of $3.5 million, for a total settlement value of more than $38 million. By contrast, Magten is seeking to recover only approximately $50 million -- i.e., the full amount of the prepetition debt (plus accrued interest) held by Magten and the other rejecting plaintiffs. In other words, the proposed settlement would pay Magten and the other plaintiffs a 75% recovery on their claim. A payment of this magnitude appears to be grossly excessive, particularly in light of what we understand to be Magten's very low chance of prevailing in its litigation. NorthWestern's chief executive officer, Gary Drook, informed me, during a December 21, 2004 meeting, that he understands Magten's chances of prevailing to be very low, a view that Paul Hastings confirmed with us last month. Furthermore, neither Mr. Drook nor Paul Hastings communicated any reason to believe a settlement was required on an expedited basis. Indeed, this lack of urgency in negotiating a settlement was the principal reason Harbert did not press the Company more forcefully until now on adding the appropriate members to the Plan Committee established to review settlements. Finally, the disparity between the high amount of the settlement and the lack of merit of the litigation, as communicated by comments by the Company in public disclosure and by the creditors in bankruptcy court, will make it more difficult for the Company to negotiate reasonable settlements with the other litigation claimants that remain. The signal sent by this settlement, if not promptly rejected by the Board, is that the Company is willing to settle litigation at almost any cost. Why did management announce a proposed settlement that appears to be so excessive in amount before properly vetting it with the Board and Plan Committee? We are concerned that the answer may rest, at least, in part, on the conflicts of interest that appear to have marred the process by which the settlement was negotiated and approved. These conflicts arose at several levels. First, it appears that management's interests in negotiating the settlement may not have been properly aligned with those of the Company, its shareholders generally and its creditors like Harbert whose rights and value were established under the Plan and are also now shareholders. We understand that at least one member of management, Michael Hanson, is a defendant in litigation brought by Magten, which the proposed settlement would have resolved. In addition, management may have been unduly influenced, in its settlement deliberations, by a desire to avoid the burden on management time and resources that a continuation of the Magten litigation might have entailed. Since the shares being proposed to be paid in the Magten litigation are already outstanding and are either held in reserve under the Plan for litigation or distributable to Class 7 and 9 creditors, payment of even a large amount of such shares is not dilutive to shares owned by management but is highly dilutive to most of the Company's shareholders. Finally, we understand that the Company's counsel, the Paul Hastings law firm, suffers from a conflict of its own, in that at least one of the suits that Magten is prosecuting and that the proposed settlement would have resolved names Paul Hastings as a defendant. As a defendant in the Magten litigation, and a direct beneficiary of any settlement, Paul Hastings is not in a position to evaluate and advise the Company objectively as to the merits of any proposed settlement of that litigation. The proposed settlement violates the express terms of the Company's confirmed Plan of Reorganization: Section 4.8 (b)(ii) of the Plan gives each member of Class 8(b) the right to elect either a settlement option, denominated "Option 1," or a litigation option, denominated "Option 2." Each holder who elects Option 1 is to receive its pro rata share of 1.4% of the new common stock of NorthWestern to be issued and outstanding on the Effective Date (prior to dilution), plus its pro rata share of warrants exercisable for an additional 2.3% of new common stock. Each holder who elects Option 2 is to receive its pro rata share of any recoveries eventually obtained upon resolution of the so- called QUIPS Litigation. As to each holder in Class 8(b) who chooses Option 2, Section 4.8(b)(ii) goes on to provide that any New Common Stock which otherwise would have been distributable to such holder if such holder had chosen Option 1, shall be distributed, pro rata to Class 7 and Class 9, and the Warrants which otherwise would have been distributable will be cancelled. The proposed settlement would contravene NorthWestern's express obligations under Section 4.8(b)(ii) of the Plan -- specifically, its obligations (i) to distribute to members of Class 7 and Class 9 the new common stock that would have been distributed to holders electing Option 2 had they chosen Option 1, and (ii) to cancel the warrants that would have been distributed to such holders had they chosen Option 1. There is no basis in the Plan for NorthWestern's continued failure to distribute these shares and cancel these warrants. The Board of Directors should disapprove the proposed settlement, instruct management to comply with the Company's obligations under the Plan, and take steps to cure the flaws that appear to have tainted the settlement process. We are confident that, having been apprised of the flaws that mar both the proposed settlement and the process that led management to approve it, the Board of Directors will take prompt and effective corrective action. As a creditor entitled under the Plan to rights and value established thereunder, we ask that the Board take the following steps, in addition to whatever other steps it may deem appropriate: 1. The Board should disapprove the proposed Magten settlement, and should instruct management not to take any further steps to consummate the settlement or to seek Bankruptcy Court approval for it. 2. The Board should instruct management to cause the Company promptly to comply with its obligations under Section 4.8(b)(ii) of the Plan -- specifically, its obligations (i) to distribute to members of Class 7 and Class 9 the new common stock that would have been distributed to Class 8(b) had it not rejected the Plan, and (ii) to cancel the warrants that would have been distributed to such holders had they not rejected the Plan. 3. The Board should take proper steps to protect against the potential future recurrence of the flaws that appeared to have marred the negotiation and approval of the pro posed Magten settlement. For example: (a) In instances where (as appears to have been the case here) members of management suffer from a conflict of interest, the Board should ensure that the settlement is negotiated by members of the Board or management who are free of any such conflict. (b) In instances where (as appears to have been the case here) the Company's counsel suffers from a conflict of interest, the Company should retain special counsel to advice it in connection with settlement negotiations and to advise the Board in connection with its review and approval of the settlement. (c) We understand from the Company's outside counsel that, in the present case, the Company was compelled to issue a press release disclosing the terms of the proposed Magten settlement, prior to Board approval, in response to an unauthorized "leak" by the Company concerning that settlement. We urge the Board to investigate the source of this leak and to take proper steps to prevent future leaks of the terms of other settlements. In the event (which we trust is very unlikely) that the terms of any future proposed settlement were to be leaked before the Board had reviewed and approved it, any press release issued by the Company should be drafted so as to minimize public misperceptions concerning the Company's level of support for the settlement in question. Specifically, any such press release should disclose that the settlement in question is subject to the Board's review and approval and has not yet been approved; that the settlement is also subject to review and potential objection by the Plan Committee; and that the press release was occasioned by an inadvertent disclosure, to which the Company felt compelled to respond. (d) Pursuant to Section 7.9 of the Plan, the Company is required to submit material proposed settlements to the Plan Committee for its review. For the past several months, Harbert -- as the Company's largest shareholder and one of the largest holders of its pre-petition debt -- has been requesting appointment to that Committee of itself and other creditors (most of which are also now shareholders) as contemplated by the Plan. This committee at present has only one member, Wilmington Trust. We understand that that Committee's one member has the power to appoint additional members of its choosing and is amenable to appointing Harbert. The Company and its counsel, however, has delayed Harbert's appointment by interposing a series of objections, which in our view lack merit. It is imperative that this process be completed without further delay, so that Harbert and one or more other appropriate creditor representatives can be added to the Plan Committee before any further material settlements are proposed. We appreciate the Board's consideration of these issues and urge the Board to take prompt and appropriate action. Sincerely, Philip Falcone Cc: Jesse Hibbard, HBK Investments, LP Robert Platek, MSD Capital Kevin Cavanaugh, Greenwich Capital Robert Fraley, Fortress Investment Robert Fields, MFP Investors LLC Mike Embler, Franklin Mutual Advisors Peter Faulkner, PSAM John Barrett, Avenue Capital Brett Haire, Brave Asset Management Sandra Ortiz, Wilmington Trust Alan Kornberg, Paul Weiss Phil Bentley, Kramer Levin Tom Knapp, NorthWestern General CounselAs reported in the Troubled Company Reporter on Feb. 10, 2005,NorthWestern reached an agreement in principle, which would settleall pending legal actions, appeals, claims and disputes by andamong NorthWestern, Magten Asset Management Corporation and LawDebenture Trust Company of New York LLC. The settlement issubject to completing mutually acceptable definitive documentationand ultimate approval by the United States Bankruptcy Court forthe District of Delaware.According to Gary G. Drook, NorthWestern President and ChiefExecutive Officer, the settlement, if approved by the BankruptcyCourt, will resolve the only pending appeal of NorthWestern'sconfirmed plan of reorganization and resolves a significant amountof pending legal actions, claims and disputes brought by Magtenand Law Debenture, in its capacity as Indenture Trustee on behalfof itself and the "non-accepting" Class 8(b) holders of theMontana Power QUIPs securities.Harbert Distressed Investment Master Fund, Ltd. is focused onhigh-yield (special situation) and distressed securities on boththe long and short sides, including debt and equity investments inturnarounds, restructurings, liquidations, event driven situationsand inter-capital structure arbitrage.Headquartered in Sioux Falls, South Dakota, NorthWesternCorporation (Pink Sheets: NTHWQ) -- http://www.northwestern.com/-- provides electricity and natural gas in the Upper Midwest andNorthwest, serving approximately 608,000 customers in Montana,South Dakota and Nebraska. The Debtors filed for chapter 11protection on September 14, 2003 (Bankr. Del. Case No. 03-12872).Scott D. Cousins, Esq., Victoria Watson Counihan, Esq., andWilliam E. Chipman, Jr., Esq., at Greenberg Traurig, LLP, andJesse H. Austin, III, Esq., and Karol K. Denniston, Esq., at Paul,Hastings, Janofsky & Walker, LLP, represent the Debtors in theirrestructuring efforts. On the Petition Date, the Debtors reported$2,624,886,000 in assets and liabilities totaling $2,758,578,000.The Court entered a written order confirming the Debtors' SecondAmended and Restated Plan of Reorganization, which took effect onNov. 1, 2004.At Sept. 30, 2004, Northwestern Corp.'s balance sheet showed a$602,981,000 stockholder's deficit, compared to a $585,951,000deficit at Dec. 31, 2003.OFFICEMAX INC: S&P Puts BB Corp. Credit Rating on CreditWatch Neg.------------------------------------------------------------------Standard & Poor's Ratings Services placed its ratings forOfficeMax Inc., including the 'BB' corporate credit rating, onCreditWatch with negative implications."This action reflects our concerns regarding the company'ssofter-than-expected results for the fourth quarter and theresignation of its CEO, Christopher C. Milliken," said Standard &Poor's credit analyst Stella Kapur. OfficeMax now needs to fillthree key senior management positions, including that of CEO, CFO,and president of the retail business.Management's revised guidance for full-year 2004 operating incomeis $125 million-$135 million. Based on this guidance, Standard &Poor's now expects that OfficeMax's credit measures will be weakerthan expected and weak for the current rating, with lease-adjusteddebt to EBITDA at around the mid 4x area.However, we recognize that the company has very good liquiditylevels, with more than $1 billion in cash following the recentmonetization of its timberland installment notes. This exceeds itsfunded debt and tax liabilities. Also, it does not appear thatthere will be a material impact to OfficeMax's financialstatements following the company's internal investigation intoaccounting for vendor income. This investigation is expected tobe completed by the third full week of February 2005.Standard & Poor's will resolve this CreditWatch listing afterreviewing the company's operating performance, business outlook,future strategy, and progress in filling its key senior managementpositions.OWENS CORNING: Won't Sue Doctors for False X-Ray Readings---------------------------------------------------------As reported in the Troubled Company Reporter on Jan. 21, 2005,Credit Suisse First Boston, as Agent for the prepetitioninstitutional lenders to Owens Corning and certain of itsaffiliates, wants permission to file lawsuits for fraud andnegligent misrepresentation against physicians who falselyreported chest radiograph (x-ray) readings as positive forasbestos-related disease when, in fact, the readings showed nocompensable injury. These physicians, include: (1) Raymond A. Harron; (2) Jay T. Segarra; (3) Philip H. Lucas; (4) James W. Ballard; and (5) 100 John Doe physicians. Debtors RespondNorman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington,Delaware, asserts that CSFB has not presented "cause" to warrantwithdrawal of the reference pursuant to Section 157(d) of theJudiciary Procedures Code. CSFB's request to commence anadversary proceeding is a "core proceeding" that is routinelydecided by the Bankruptcy Court. Thus, there is no reason why theDistrict Court, rather than the Bankruptcy Court should decide thecommencement of an adversarial case.Mr. Pernick notes that while the allegations in the proposedadversary complaint relate to asbestos, they are not relevant tothe estimation proceedings, for which the hearing has already beenheld."It is noteworthy that CSFB did not include in any of itspleadings, either to this Court or the Bankruptcy Court, theDebtors' response to its request that the Debtors institute anaction against particular B-Readers," Mr. Pernick says.Roger E. Podesta, Esq., at Debevoise & Plimpton LLP, in New Yorkwrote to CSFB's counsel Barry R. Ostrager, Esq., at SimpsonThatcher Bartlett LLP, why the Debtors are reluctant to pursue anadversary case against the B-readers. Mr. Podesta explained thatthe Debtors had previously considered suing several of theB-readers, particularly Dr. Raymond A. Harron. However, after dueconsultation, Owens Corning concluded that ILO X-ray readings weretoo subjective, and that variations in X-ray interpretationsbetween legitimate B-readers were too substantial, to make out anattractive fraud case. Thus, Owens Corning decided to focus theirRICO lawsuits (the Pitts and McNeese lawsuits) primarily onpulmonary function testing that it believed could be shown to beobjectively fraudulent.A full-text copy of Mr. Podesta's letter is available at no chargeat: http://bankrupt.com/misc/OwensResptoCSFBProposedComplaint.pdfOwens Corning may reconsider its objection to CSFB's prosecutionof the proposed complaint if CSFB agrees not only to bear thecosts of litigation but also to indemnify Owens Corning, itsdirectors, officers, agents, professionals and employees from anycounterclaims that may be filed by the B-readers.Headquartered in Toledo, Ohio, Owens Corning --http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patiodoors, rain gutters and downspouts. The Company filed for chapter11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom,represents the Debtors in their restructuring efforts. AtSept. 30, 2004, the Company's balance sheet shows $7.5 billion inassets and a $4.2 billion stockholders' deficit. The companyreported $132 million of net income in the nine-month periodending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No.99; Bankruptcy Creditors' Service, Inc., 215/945-7000)PACIFIC GAS: Asks Court to Approve Mirant Settlement Agreement--------------------------------------------------------------On Jan. 14, 2005, Pacific Gas & Electric Company, MirantCorporation and the California State Parties, including theCalifornia Attorney General, the California Public UtilitiesCommission, and the California Department of Water Resources,entered into a Settlement and Release of Claims Agreement.William J. Lafferty, Esq., at Howard, Rice, Nemerovski, Canady,Falk & Rabkin, informs the U.S. Bankruptcy Court for the NorthernDistrict of California that the Settlement Agreement resolves avariety of issues arising out of complex and disputed litigationand investigations related to the energy crisis in Californiaduring 2000 and 2001. It also resolves disputes between Mirantparties and PG&E regarding claims each has asserted in the other'sChapter 11 proceedings. Mirant ClaimsOn September 5, 2001, Mirant Americas Energy Marketing, LP,Mirant Delta, LLC, and Mirant Potrero, LLC, each filed proofs ofclaim against PG&E. Claim No. 8872 filed by MAEM sought recoveryof amounts allegedly due for unpaid for energy sales from MAEM tothe California Independent System Operator Corporation and theCalifornia Power Exchange, on PG&E's behalf, totaling in excessof $500 million. Claim No. 8875 filed by Mirant Delta and ClaimNo. 8876 filed by Mirant Potrero each asserted, inter alia,liability against PG&E: (i) on account of obligations under the Purchase and Sale Agreement, pursuant to which PG&E sold, and Mirant Delta and Mirant Potrero purchased, certain power plant assets and related assets in California, prior to the commencement of PG&E's bankruptcy case, and (ii) on account of the Reliability Must Run Agreements between the parties.PG&E objected to the Mirant Delta and Mirant Potrero Claims, andthese objections are pending before the Court. Pursuant to theconfirmed Amended Joint Plan of Reorganization, the time for PG&Eto object to the Claim filed by MAEM is extended until the timeas the FERC Refund Proceedings are concluded, which PG&E contendswill ultimately determine the amount, if any, of MAEM's Claim,subject to proceedings in the Bankruptcy Court to reconcile theallowed amount of MAEM's claim with the amount approved by theFERC and, Mirant contends, to its rights to have the amounts owedbe adjudicated in proceedings in Mirant's bankruptcy case.Mirant and its affiliated entities commenced proceedings underChapter 11 in the United States Bankruptcy Court for the NorthernDistrict of Texas, Fort Worth Division, on July 14, 2003. PG&E ClaimsOn Dec. 15, 2003, PG&E timely filed several proofs of claim invarious of the Mirant Debtors' cases. PG&E filed Claim No. 6518in MAEM's bankruptcy case, asserting claims in connection with netamounts owed PG&E as determined in the FERC Refund Proceedingsongoing at the FERC. In addition, the FERC Proceedings Claim alsoreserves PG&E's right to seek additional damages against MAEM,based on the conduct which is the subject of the FERC RefundProceedings or that may be asserted pursuant to the Claim orotherwise. In the FERC Proceedings Claim, PG&E asserted a rightof set-off of its claims against any claims asserted by MAEM inthe PG&E Bankruptcy Case, and, for that reason, asserted that theFERC Proceedings Claim was a secured claim.PG&E also filed claims in the Mirant Delta and Mirant Potrerocases, seeking recovery of amounts due under the RMR Agreements. Escrow for Class 5 and 6 ClaimsOn November 13, 2003, PG&E and a number of creditors holdingClass 6 claims under PG&E's Plan of Reorganization entered into astipulation to resolve objections to Class 6 claims. Pursuant tothe Class 6 Stipulation, PG&E agreed to deposit $1.6 billion intoa claims escrow account. Following the Debtor's Plan ofReorganization, the Court approved the creation of a separateescrow account for the disputed Class 6 claims.In addition to the Class 6 Escrow, PG&E established an escrow fordisputed claims in Class 5. In accordance with the Escrow order,PG&E set aside funds in the escrow account, including $19,543,645on account of the RMR claims of Mirant Delta and $4,601,224 onaccount of the RMR claims of Mirant Potrero, aggregating to$24,144,869, plus interest earned. The Settlement AgreementAs settlement of the FERC Refund and various civil claims, PG&E,San Diego Gas & Electric Company, Southern California Edison, andthe California State Parties will collectively receive anassignment of all of MAEM's rights to receive payment from theCAISO and the CalPX for approximately $320 million.The Agreement provides that PG&E, SoCal, San Diego will alsoshare a $175 million aggregate allowed claim against MAEM.Mr. Lafferty adds that other participants in the Californiaenergy market may decide to "opt-in" to the Settlement, providedthat if they do so, the settling participants must share thebenefit of the assigned receivables.In addition, on account of its RMR claims, PG&E will receive: (a) allowed claims against Mirant Delta for $63 million, with assurance that the claims will be paid in the face amount; (b) certain rights with respect to certain "wraparound agreements," which entitle PG&E to obtain power from certain units of power plants owned by Mirant entities; (c) the right to receive either (i) an assignment of all rights held by certain Mirant Debtors, or (ii) an allowed claim against Mirant Delta for either $70 million or $85 million, with assurances that the claim will be paid in the face amount; and (d) the parties to the Settlement Agreement will release each other and waive all claims against each other.PG&E believes the Settlement Agreement constitutes an"appropriate disposition" of its claims against the Mirantparties.Accordingly, PG&E asks the Bankruptcy Court to approve theSettlement Agreement.PG&E also seeks authority to withdraw $116,825,071 from the Class6 Escrow, plus interest earned, and the same amount from theMirant Class 5 Escrow Funds, plus related interest earned.The Settlement Agreement is also subject to approval of theMirant Bankruptcy Court.Judge Montali will convene a hearing on March 8, 2005, at 1:30p.m. to consider PG&E's request.Headquartered in San Francisco, California, Pacific Gas andElectric Company -- http://www.pge.com/-- a wholly owned subsidiary of PG&E Corporation (NYSE:PCG), is one of the largestcombination natural gas and electric utilities in the UnitedStates. The Company filed for Chapter 11 protection onApril 6, 2001 (Bankr. N.D. Calif. Case No. 01-30923). James L.Lopes, Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer,Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin representthe Debtors in their restructuring efforts. On June 30, 2001, theCompany listed $23,216,000,000 in assets and $22,152,000,000 indebts. Pacific Gas and Electric emerged from chapter 11 protectionon April 12, 2004, paying all creditors 100 cents-on-the-dollarplus post-petition interest.PEGASUS SATELLITE: Court Approves Secured Lenders Settlement Pact-----------------------------------------------------------------Pegasus Satellite Communications, Inc., and its debtor-affiliatesobtained the United States Bankruptcy Court for the District ofMaine's approval for a settlement agreement with the OfficialCommittee of Unsecured Creditors and a bank steering committee oflenders.Pursuant to the Stipulation, the parties agree that: (a) The Debtors will pay: * $9,229,296 to the Senior Secured Lenders in satisfaction of the Senior Lenders' Prepayment Premium. If not paid within the two-day period after Court approval of the Stipulation, the Senior Settlement Amount will accrue interest of $3,161 per diem for each day until the amount is paid in full. No amount will be payable by the Debtors on account of the Senior Default Interest Amount; and * $2,096,773 to the Junior Secured Lenders in satisfaction of the Junior Prepayment Premium. To the extent the Junior Settlement Amount is not paid within a two-day period after the Court approves the Stipulation, interest of $718 per diem will accrue for each day until the amount is paid in full. No amount will be payable by the Debtors on account of the Junior Default Interest Amount. Approximately $8,704,407 of the Senior Settlement Amount will be paid to Bank of America, N.A., as administrative agent, as a voluntary prepayment amount. Bank of America will distribute the amount to the Tranche D Lenders. Approximately $524,889 of the Senior Settlement Amount will be paid to Madeleine, LLC, who will distribute the amount to the Revolving Lenders. (b) Within two business days after the approval of the Stipulation has become final and payment of the Senior Settlement Amount and Junior Settlement Amount are received by the Senior Lenders and Wilmington Trust, the Bank Steering Committee and Wilmington Trust will withdraw the Premium Motions, with prejudice. (c) All reasonable professional fees and expenses incurred by the Senior Lenders and Wilmington Trust in connection with the Debtors' Chapter 11 cases will be paid by the Debtors within 10 calendar days of receipt of an invoice for the professional fees and expenses by the Debtors and counsel to the Committee. (d) Upon receipt by the Senior Lenders and Wilmington Trust of the Senior and Junior Settlement Amounts, the Debtors will no longer be required to comply with the provisions of the Cash Collateral Order with respect to the Senior Lenders and Wilmington Trust, and the Cash Collateral Order will no longer be in force or effect with respect to the Debtors' obligations to the Senior Lenders and Wilmington Trust, but all obligations of the Debtors contained in the Cash Collateral Order with respect to the Committee will remain in full force and effect.Headquartered in Bala Cynwyd, Pennsylvania, Pegasus SatelliteCommunications, Inc. -- http://www.pgtv.com/-- is a leading independent provider of direct broadcast satellite (DBS)television. The Company, along with its affiliates, filed forchapter 11 protection (Bankr. D. Me. Case No. 04-20889) onJune 2, 2004. Larry J. Nyhan, Esq., James F. Conlan, Esq., andPaul S. Caruso, Esq., at Sidley Austin Brown & Wood, LLP, andLeonard M. Gulino, Esq., and Robert J. Keach, Esq., at Bernstein,Shur, Sawyer & Nelson, represent the Debtors in theirrestructuring efforts. When the Debtors filed for protection fromtheir creditors, they listed $1,762,883,000 in assets and$1,878,195,000 in liabilities. (Pegasus Bankruptcy News, IssueNo. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000)PILGRIM'S PRIDE: Higher Free Cash Flow Cues Moody's to Up Ratings-----------------------------------------------------------------Moody's Investors Service upgraded Pilgrim's Pride's seniorimplied rating to Ba2 from Ba3, its senior unsecured note ratingto Ba2 from B1, and its senior subordinated note rating to Ba3from B2. The rating outlook is stable.The ratings upgrades reflect the impact of strong markets forchicken during 2004, which boosted Pilgrim's Pride's free cashflow and enabled the company to pay down debt taken on to fund theacquisition of ConAgra's chicken division in November 2003. Theupgrade also considers that Pilgrim's Pride has largely integratedthe ConAgra operations and has a comfortable financial cushion toweather the inherent volatility in the poultry business. Thetwo-notch upgrade of the senior unsecured and senior subordinatednotes conform the note ratings with Moody's notching practices forissuers with a senior implied rating of Ba2 or better.Moody's ratings actions for Pilgrim's Pride Corporation are: i) $300 million 9.625% Senior Unsecured Notes, due September 2011 -- to Ba2 from B1, ii) $100 million Senior Subordinated Notes, due May 2013 -- to Ba3 from B2, iii) Senior Implied rating -- to Ba2 from Ba3, iv) Unsecured Issuer rating -- to Ba2 from B2.Moody's does not rate the Company's $168 million senior securedrevolver, maturing 2007; its $500 million senior securedrevolver/term loan, maturing 2011; or $124 million of privatelyheld senior secured notes, maturing 2012/13. Pilgrim's Pride alsohas a $125 million accounts receivable facility and $7 million ofother debt (as of 1/1/05). The Company had no drawings under itsrevolvers or accounts receivable facility at 1/1/05; approximately$32 million of revolver commitments were used to back letters ofcredit.Pilgrim's Pride's ratings are supported by its scale ($5.7 billionof revenues) and market position. The Company has a diversecustomer base and wide distribution reach. Integration of theConAgra business has been largely accomplished, with synergies inexcess of initial estimates. Pilgrim's Pride now is the secondlargest chicken producer in the U.S. (16% market share, behindTyson, at 23%, and ahead of the 9% share of the third largestproducer, Gold Kist).Moody's expects the Company to remain one of the dominant NorthAmerican poultry producers as the industry continues toconsolidate. The ratings also recognize Pilgrim's Pride's longestablished focus on value-added, prepared products (about 45% ofchicken sales), which have higher margins and less volatility thancommodity fresh products. The Company's scale positions it wellto supply these value-added prepared chicken products to the largenational food service and quick-service restaurant channels, andthe company is building penetration of prepared products into theretail grocery channel. In addition, the ratings take intoaccount favorable underlying demand trends for poultry,particulary for value-added, prepared products.The ratings further consider that Pilgrim's Pride has built up astrong liquidity cushion, facilitated by the supportive chickenmarkets after acquiring the ConAgra business in November 2003.Free cash flow after dividends and capital spending has been ample($245 million in the LTM ending 1/1/05), amplified by the chickenmarket strength during 2004, which more than offset higher graincosts. Debt has been reduced to $534 million at 1/1/05, from$784 million at 1/3/04, while cash balances have increased to$171 million from $98 million.Although chicken markets are off their peaks, grain prices havemoderated, and export demand has remained solid, supporting cashflow generation over the near term. Moody's expects free cashflow to drop materially over the next year, however, due to alarge planned increase in capital spending (to $175-200 million inFY05 from $83 million in FY04). Nevertheless, Pilgrim's Pride'slarge cash balances and moderate leverage are expected to providean adequate cushion of financial flexibility to weather unexpectedbusiness pressures and weaker poultry markets.The ratings are restrained by Pilgrim's Pride's businessconcentration on chicken, primarily in the US, and the inherentearnings volatility of its business. Poultry processors areexposed to commodity input (grain) and output (meat) prices thatare highly variable. A material portion of Pilgrim's Pride'ssales remain in the low margin, fresh meat segment, which has widemargin variations resulting from commodity price swings. Poultrymarkets also can be impacted by international trade-relateddevelopments, such as tariff negotiations with Mexico and changingRussian import regulations.Export markets are important to US processors because they providean outlet for dark meat and other chicken products not valued bythe US consumer. In addition, poultry operations are exposed topotential disease and product contamination related losses, suchas Avian influenza and listeria contamination, both of whichsignificantly impacted Pilgrim's Pride's profitability in 2002/03.The stable ratings outlook assumes Pilgrim's Pride will maintainmoderate leverage and a comfortable financial cushion whilemarkets are favorable, so that leverage does not become undulyhigh when commodity markets become more challenging, unexpectedevents or pressures impact cash flow, or debt is added foracquisitions.The ratings could become pressured if free cash flow afterdividends and capital spending could be expected to drop andremain much below 5% of outstanding debt in a down cycle.Debt-financed acquisitions, as industry consolidation continues,also could pressure the ratings if the debt component leavesinsufficient financial cushion for periods of market weakness oradverse business developments following the acquisition. Theratings could gain support over time from continued growth in morestable, value-added products that reduce business volatility.Strategic acquisitions could be positive if well bought and fundedwith a balance of equity and debt.The senior unsecured notes are rated at the senior implied level.They are effectively subordinated to $131 million of seniorsecured debt (as of 1/1/05). The notes do not currently benefitfrom guarantees, but would be guaranteed on a senior unsecuredbasis by any domestic subsidiaries that were to incurindebtedness. Pilgrim's Pride currently does not have subsidiarydebt. Substantially all its domestic operations are helddirectly, not through subsidiaries.The senior subordinated notes are notched below the senior impliedrating to reflect their subordinated status in the capitalstructure. The one notch gap between the senior implied andsubordinated notes conforms to Moody's notching practices forissuers having a senior implied rating of Ba2 or better. Thesubordinated notes do not initially benefit from subsidiaryguarantees but would be guaranteed on a subordinated basis bydomestic subsidiaries that incur indebtedness in the futurePilgrim's Pride currently has moderate leverage and strongliquidity. Outstanding debt was $534 million at 1/1/05, cashbalances were $171 million, and LTM EBITDA was $444 million.Debt/LTM EBITDA was 1.2x (1.3x adjusted for operating leases).LTM free cash flow after $83 million of capital spending and$4 million of dividends was $245 million.Capital spending is expected to increase to $175-$200 million forFY05, however, which, combined with some weakening in poultrymarkets, is likely to result in lower free cash flow over the nextyear. The Company's cash balances and financial flexibility,nevertheless, should enable leverage to remain reasonable for therating level.Pilgrim's Pride Corporation, based in Pittsburg, Texas, is aproducer of fresh and further processed chicken and turkeyproducts in the U.S. and Mexico. The Company had revenues of$5.7 billion in the twelve months ending 1/1/05.PUERTO VEN QUARRY: Case Summary & 20 Largest Unsecured Creditors----------------------------------------------------------------Debtor: Puerto Ven Quarry Corporation P.O. Box 99 Mercedita, Puerto Rico 00715Bankruptcy Case No.: 05-01240Chapter 11 Petition Date: February 10, 2005Court: District of Puerto Rico (San Juan)Judge: Gerardo A. CarloDebtor's Counsel: Winston Vidal Gambaro, Esq. P.O. Box 193673 San Juan, PR 00919 Tel: 787-751-2864Total Assets: $100,000 to $500,000Total Debts: $1 Million to $10 MillionDebtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------Veronica Lee Barnes Loan $251,87627 North Moore St., Apt. 3CNew York, NY 10013CRIM Taxes $208,384P.O. Box 1195387San Juan, PR 00191KCIRE Corp. Royalty $80,122P.O. Box 414Mercedita, PR 00715RCS Equipment Inc. Lease $77,50012937 W. Okeechobee Rd.Condominium D, Units 2 & 3Hialeah Gardens, FL 33016PIM Geotechnical Services $37,993Internal Revenue Services Payroll tax $37,524RIMCO Inc. Rental $30,260Erick J. Rodriguez Loan $29,820Kevane Soto Pasarel Services $18,085Fondo Seguro Estado Insurance $17,587Departamento Haciendo Payroll tax $16,322Saint James Security Services $15,792Esso Standard Oil Supplies $9,948Environmental Power Services $9,527MB Investments & Service Supplies $7,155Depart. Del Trabajo Payroll tax $7,060Jose F. Rodriguez Loan $6,250Cartspro Supplies $5,600Valvila Petroleum, Inc. Supplies $5,300Marichal & Hernandez LLP Services $5,066RIVERSIDE FOREST: Redeeming $52.5 Million 7-7/8% Senior Notes-------------------------------------------------------------Riverside Forest Products Limited is redeeming US$52,500,000aggregate principal amount of the 7-7/8% senior notes due 2014pursuant to Section 3.07(a) of the Indenture dated as ofFebruary 25, 2004, between Riverside and Wells Fargo Bank,National Association as Trustee. The redemption date isFebruary 17, 2005. In accordance with the Indenture, theredemption price will be 107.875% of the principal amount of theNotes, plus accrued and unpaid interest to the date of redemption.The redemption of the Notes is being funded with the net cashproceeds from the issuance of 1,850,000 common shares to asubsidiary of Tolko Industries Ltd. at a price of Cdn$40 per sharefor aggregate proceeds of Cdn$74,000,000, pursuant to an agreemententered into on February 3, 2005, and approved by Riverside'sBoard of Directors, including all of its independent directors, onthat date.Riverside also announces that, effective on January 24, 2005,Tolko acquired all the remaining common shares of Riverside thatit did not own pursuant to the compulsory acquisition provisionsof the Business Corporations Act of British Columbia, with theresult that Tolko now holds 100% of the common shares. As aresult of that acquisition, Riverside's common shares have beende-listed from the Toronto Stock Exchange and, pursuant to anorder of the securities commissions in Canada, Riverside hasceased to be a reporting issuer in all Canadian jurisdictions.Riverside will continue to meet its US reporting obligations underSection 4.03 of the Indenture with respect to annual financialinformation on Form 20-F and all quarterly financial informationon Form 6-K that it would be required to provide under the laws ofBritish Columbia as if its securities remained listed on theToronto Stock Exchange whether or not they are so listed.Riverside expects to deliver and file its quarterly report for thefirst quarter ended Dec. 31, 2004, not later than Feb. 14, 2005.Riverside Forest Products Limited is the fourth largest lumberproducer in British Columbia with over 1.0 Bbf of annual capacityand an annual allowable cut of 3.1 million cubic metres. Thecompany is also the second largest plywood and veneer producer inCanada. * * *As reported in the Troubled Company Reporter on Oct. 8, 2004,Moody's Investors Service affirmed Riverside Forest ProductsLimited's B2 senior unsecured rating and changed the outlook todeveloping.As reported in the Troubled Company Reporter on August 27, 2004,Standard & Poor's Ratings Services placed its 'B+' long-termcorporate credit and senior unsecured debt ratings on Kelowna,B.C.-based Riverside Forest Products Ltd. on CreditWatch withdeveloping implications.SEGA GAMEWORKS: Selling All Assets to SS Entertainment for $8.1M----------------------------------------------------------------The U.S. Bankruptcy Court for the Central District of California,Los Angeles Division, approved the sale of substantially all ofSEGA Gameworks LLC's assets to SS Entertainment U.S.A., Inc., for$8,126,000. The Purchased Assets include, among others,intellectual property rights -- copyrights, domain names, computersoftware, source code and the like.The alternative bid of uWink, Inc., for $7,825,000 is the back-upbid. The Debtor is authorized to accept this bid untilMarch 3, 2005, if SS Entertainment and the Debtor fail to closethe Sale.The Debtor is also authorized to disburse the sale proceeds toHeller EMX, Inc., and Key Corporate Capital, Inc., on account ofthese creditors' secured claims. The amount of these claims isnot readily determinable from bankruptcy court records. TheDebtors' Schedule D, filed on April 24, 2004, reported $0 owed onaccount of these secured claims.Full text copies of the Court order and the Asset PurchaseAgreement are available for a fee at: http://www.researcharchives.com/download?id=040812020022Headquartered in Glendale, California, SEGA Gameworks LLC --http://www.gameworks.com/-- operates 16 video arcades in 11 US states, Canada, Guam, and Kuwait. The Company filed for chapter11 protection on March 9, 2004 (Bankr. C.D. Calif. Case No.04- 15404). Ron Bender, Esq., at Levene Neale Bender Rankin &Brill represents the Debtor in its restructuring efforts. Whenthe Company filed for protection from its creditors, it listedboth estimated debts and assets of $50 million.STELCO INC: Severstal Group Makes Offer & Bid Must Top $727 Mil.----------------------------------------------------------------Severstal Group has made a formal offer to Hamilton-based Stelco,Inc. Details of the terms of the offer will not be made public atthis time in compliance with the capital raising and sales processorder made by the Ontario Superior Court.As reported in the Troubled Company Reporter on Dec. 1, 2004, theSuperior Court of Justice (Ontario) approved the commitment ofDeutsche Bank Securities, Inc., and Deutsche Bank AG as the"stalking horse" in the Company's capital raising process.Deutsche Bank signed a term sheet providing for therecapitalization of Stelco involving a financing package of$900 million. The financing includes: (1) an asset-based loan facility co-underwritten by Deutsche Bank AG and CIT Business Credit Canada for which Deutsche Bank Securities will act as lead arranger, and (2) a purchase commitment by Deutsche Bank Securities of Stelco convertible notes and bridge notes.Dow Jones reports that the value of Deutsche Bank's bid is$727 million, so Severstal's offer needs to top that amount.As reported in the Troubled Company Reporter on Dec. 23, 2004,Algoma Steel, Inc., announced its possible interest inparticipating in the process. Island Energy Partnership -- IEP, ajoint venture between the Ontario Teachers' Pension Plan Board andSherritt International Corporation, announced that it hadsubmitted a $1.8 billion recapitalization and asset purchaseproposal. This $1.8 billion proposal includes the purchase ofassets and additional capital investment by IEP in the assetsafter they have acquired them from Stelco.Severstal Group is the principal operating company within a majorRussia-based industrial group with substantial assets inmetallurgy; mining; automobile manufacture; machinery;transportation and other businesses. The company's principalactivity is the production and sale of steel and steel products.It operates more than 30 plants in 14 regions of Russia and in theUnited States, produces approximately 14 million tons of steelannually, and exports to more than 100 countries.Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversifiedsteel producer. Stelco is involved in all major segments of thesteel industry through its integrated steel business, mini-mills,and manufactured products businesses. Consolidated net sales in2003 were $2.7 billion.SOLUTIA INC: Wants to Enter into Astaris Consent Agreement----------------------------------------------------------On April 29, 1999, Solutia, Inc., and FMC Corporation entered intoa joint venture agreement, under which each party was tocontribute its own phosphorus chemicals business and facilities toform Astaris, LLC. Astaris manufactures and sells phosphoruschemicals, phosphoric acid and phosphate salts used in foods,cleaners, water treatment and pharmaceuticals.On April 1, 2000, Solutia and FMC entered into a separate MasterLease and Operating Agreement with Astaris, pursuant to whichSolutia and FMC agreed to operate the facilities contributed toAstaris in exchange for payments to be made by Astaris to Solutiaand FMC, on account of the operating services rendered. TheOperating Agreements are consistent with other Solutia operatingagreements establishing a "guest/operator" arrangement.To reduce Astaris' cash flow deficits due to its operatingrestructuring, Astaris requested that Solutia and FMC each agreeto modify the payment terms under the Joint Venture Agreement, theOperating Agreements and two related agreements, so that Astariscould defer the payment of certain charges that would otherwisebecome due and payable during the 24 consecutive calendar monthsfrom October 2003 to September 2005. Solutia and FMC did agree tothe requested deferral. Solutia and FMC agreed to defer, on anequal basis, a portion of the fees and charges payable by Astarisduring the Deferral Period, up to a total of $27 million each.Beginning in October 2003, Astaris started deferring payments.Following the bankruptcy petition date, Astaris, Solutia and FMCagreed to formalize the prepetition agreement permitting theDeferrals. On September 28, 2004, the U.S. Bankruptcy Court forthe Southern District of New York approved and authorized thedocumentation of that prepetition agreement.As of December 31, 2004, the balance of Deferrals owed by Astaristo Solutia was about $15,900,000, and Solutia anticipates that thetotal amount of Deferrals owed to it as of the execution of theAstaris Credit Agreement will be about $16,400,000. The Astaris RefinancingOn September 4, 2000, Astaris entered into a secured creditagreement by and with certain lenders and Bank of America, N.A. asadministrative agent. Astaris' obligations to the lenders aresupported by Solutia in the form of a letter of credit issued forthe benefit of Bank of America in the undrawn face amount of$10,000,000 under Solutia's DIP financing facility.Astaris is in the process of refinancing its obligations under itsexisting credit facility with the proceeds of loans to be madeunder a new three-year revolving credit agreement with certainlenders and Citicorp. On execution of the Astaris CreditAgreement: (i) the Astaris LC will be surrendered for cancellation; and (ii) the accrued Deferrals will be paid off and the Deferral Agreement will be terminated by mutual agreement of the parties.By canceling the Astaris LC, Solutia will free up $10,000,000 ofavailable credit under the DIP Agreement and eliminate the$225,000 annual fee associated with the Astaris LC. Incombination with the cash infusion from the payment of the accruedDeferrals, the cancellation will result in an immediate$26,000,000 increase in Solutia's liquidity.In exchange for the payment of the accrued Deferrals prior to theexpiration of the Deferral Period, the lenders under the AstarisCredit Agreement will require that both Solutia and FMC consent tocertain restrictions in the Astaris Credit Agreement that impactthe Members on a going forward basis. The Astaris CreditAgreement prohibits certain payments on account of equity andindebtedness to the Members upon the occurrence and during thecontinuance of any default by Astaris under the Astaris CreditAgreement, and during the existence of other conditions related toAstaris' financial position. Thus, while the new Astaris CreditAgreement will allow Astaris to pay off the Deferrals, theprovisions of that credit agreement may require certain newdeferrals of payments coming due to Members in the future.However, the Astaris Payment Restrictions are not applicable toany payments for goods and services in the ordinary course ofbusiness, which payments represent the majority of obligationsowing to Solutia. Rather, Solutia estimates that the maximumamount of payments to Solutia that could potentially be deferredin the event that the Astaris Payment Restrictions were triggeredwould be approximately $7,000,000 during the first year and$2,000,000 during each of the two remaining years of the facility.Citicorp has required that each of the Members enter into aConsent Agreement with Citicorp, under which the Member: (i) acknowledges and consents to the Astaris Payment Restrictions; (ii) agrees not to declare a default under any agreement with Astaris caused by deferrals required by the Astaris Payment Restrictions; (iii) agrees not to take enforcement actions to collect any amounts deferred as required by the Astaris Payment Restrictions; and (iv) represents that the Astaris Payment Restrictions do not conflict with, or cause a default under, the Member's material contracts.In addition, the Consent Agreement includes a waiver by theMembers of any rights or claims that it may have against anyperson other than Astaris arising out of or relating to theinclusion of the Astaris Payment Restrictions in the AstarisCredit Agreement. In the case of Solutia, Citicorp has agreedthat effectiveness of certain provisions of the Consent Agreementmay be conditioned upon Bankruptcy Court approval.Solutia anticipates that deferrals of payments to Members requiredby the Astaris Payment Restrictions would be short-term in natureand a substantially smaller amount than the projected Deferralsunder the Deferral Agreement. Furthermore, Solutia believes thatthe Astaris Credit Agreement will improve the value of Solutia'sjoint venture interest, providing further business justificationfor Solutia's consent to the Astaris Payment Restrictions.Consenting to the Astaris Payment Restrictions and entering intothe Consent Agreement will not conflict with the provisions of theDIP Agreement. Set-off of Prepetition ObligationsPursuant to a Limited Liability Company Agreement, Solutia isobligated to reimburse Astaris in the event that any deteriorationin Solutia's creditworthiness results in an increased cost ofcredit to Astaris under Astaris' existing credit facility. TheInterest Reimbursement Obligations constitute prepetitionobligations owed by Solutia to Astaris. As a condition toagreeing to payment of the Deferrals at the time of itsrefinancing rather than at the expiration of the Deferral Period,Astaris has required that it be permitted to set off the accruedInterest Reimbursement Obligations against a portion of theprepetition Deferrals to be paid off in connection with itsrefinancing transaction. Solutia estimates that the amount of theInterest Reimbursement Obligations owing to Astaris equals$444,669.Solutia asks the Court: (a) for permission to enter into the Consent Agreement; (b) to approve its termination of the Deferral Agreement upon repayment of the Deferrals; and (c) to lift the automatic stay to the extent necessary to allow Astaris to exercise set-off rights with respect to the accrued Interest Reimbursement Obligations.Headquartered in St. Louis, Missouri, Solutia, Inc. --http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in abroad range of consumer and industrial applications. The Companyfiled for chapter 11 protection on December 17, 2003 (Bankr.S.D.N.Y. Case No. 03-17949). When the Debtors filed forprotection from their creditors, they listed $2,854,000,000 inassets and $3,223,000,000 in debts. (Solutia Bankruptcy News,Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000)TRUMP HOTELS: Judge Wizmur Approves Amended Disclosure Statement----------------------------------------------------------------The Hon. Judith Wizmur of the U.S. Bankruptcy Court for theDistrict of New Jersey approved on Feb. 14, 2005, the AmendedDisclosure Statement explaining the Amended Plan of Reorganizationfiled by Trump Hotels & Casino Resort, Inc., and itsdebtor-affiliates.The Debtors are now authorized to distribute the AmendedDisclosure Statement and solicit acceptances for the Amended Planof Reorganization.The Debtors made a number of material changes to their Plan ofReorganization.A full-text copy of the blacklined Chapter 11 Plan is availablefor free at: http://www.thcrrecap.com/pdfs/451-500/02-01-05-483.pdfA full-text copy of the blacklined Disclosure Statement isavailable for free at: http://www.thcrrecap.com/pdfs/451-500/02-01-05-484.pdfExhibits to the Amended Disclosure Statement include: -- THCR Debt Restructure http://www.thcrrecap.com/pdfs/451-500/02-01-05-488.pdf -- Preliminary Analysis of General Unsecured Claims http://www.thcrrecap.com/pdfs/451-500/02-01-05-491.pdfAs part of the amendments, the Debtors indicate that in additionto the support of the Debtors, Donald J. Trump, the TACNoteholder Committee, and the TCH Noteholder Committee to thePlan, Local 54, AFL-CIO, which represents the interests of about3,200 of the Debtors' employees, also supports the Plan. DJT TransactionsTo address objections on the disclosure relating to transactionswith Donald J. Trump, the Debtors makes it clear that Mr. Trumpwill, in addition to investing $55 million in cash, contributearound $16.4 million aggregate principal amount of TCH SecondPriority Notes to reorganized THCR Holdings on the EffectiveDate, upon the terms set forth in the DJT Investment Agreement.Pursuant to the DJT Investment Agreement, Mr. Trump will receiveamong others, the New DJT Warrant, THCR's 25% beneficial ownershipinterests in Miss Universe, LP, LLP, and the parcels of land andappurtenances in Atlantic City, constituting the former World'sFair site. Property Mr. Trump Will Receive Under the DJT Investment Agreement Estimated Value ----------------------- --------------- New DJT Warrant $5 million - $10 million THCR's 25% ownership Interests in Miss Universe $5 million World's Fair Site Properties $7.5 million * * * Valuation of DJT New Trademark AgreementUnder the Plan, the Debtors and Mr. Trump will enter into a NewTrademark License Agreement, which will grant Reorganized THCRHoldings a perpetual, exclusive, royalty-free license to use Mr.Trump's name and likeness in connection with the Debtors' casinoand gaming activities.The DJT New Trademark License Agreement has been valued atapproximately $124 million by an independent third-partyindependent appraiser, and the Debtors believe that the agreementis substantially more valuable than the prior trademark agreementexisting between THCR and DJT, which has been valued at between$50 and $82 million.The $124 million valuation takes into account THCR's option to payup to $5 million in annual royalties for continued use of Mr.Trump's name and likeness in the event that the DJT ServicesAgreement is terminated. Class A Nomination PeriodAs provided in the Amended Plan, the Nomination Period for Class ADirectors of reorganized THCR will begin on the Effective Date andterminate on the earlier of: (i) the date immediately after the date on which the sixth annual meeting of stockholders of reorganized THCR after the Effective Date will be held; and (ii) the time as the stockholders of reorganized THCR will fail to elect Mr. Trump to the board of directors of reorganized THCR. Currently Issued Old THCR Common StockTo specifically address the objection of the Official Committee ofEquity Security Holders on the Disclosure Statement's failure toidentify the number of currently issued shares of Old THCR CommonStock, the Debtors added this paragraph in the Amended DisclosureStatement:"There are 29,904,764 shares of Old THCR Common Stock issued andoutstanding, 9,960,884 of which are beneficially owned by DJT andhis controlled affiliates. In addition, DJT owns options topurchase up to 1,800,000 shares of Old THCR Common Stock, andbeneficially owns Old THCR LP Interests exchangeable at his optioninto 13,918,723 shares of Old THCR Common Stock, giving himbeneficial ownership of an aggregate of approximately 56.4% of OldTHCR Common Stock (as of September 30, 2004, assuming currentlyexercisable options and Old THCR LP Interests held by DJT areexercised or exchanged)." New Common StockTo explain what percentage each share of New Common Stock willrepresent of the total number of shares of New Common Stock to beissued, this has been added to the Disclosure Statement:"Upon the Effective Date, the authorized capital stock ofReorganized THCR will consist of 50,000,000 shares of New CommonStock, par value $0.001 per share, 41,334,460 of which shall beissued and outstanding (or reserved for issuance, including theReserve Shares and shares reserved for issuance upon exercise ofthe New DJT Warrant or upon exchange of the New THCR Holdings LPInterests beneficially owned by DJT, but excluding any sharesreserved for issuance under the New THCR Stock Incentive Plan)." DLJMB ClaimsTo address DLJ Merchant Banking Partners III, LP's assertion thatthe Disclosure Statement fails to adequately describe its claims,Debtors added this to the Disclosure Statement:"On January 26, 2005, DLJMB filed an objection to the DisclosureStatement stating, among other things, that DLJMB has asserted aClaim for payment of $25 million under the DLJMB Tail, plusexpenses of at least $1 million against the five Debtors that weresignatory to the Letter Agreements. . . The Debtors are evaluatingDLJMB's Claim and reserve all rights with respect thereto(including the right to dispute the amount of such Claim with theBankruptcy Court)." Power Plant Group LitigationTo address the objection of The Cordish Company, Power PlantEntertainment, LLC, Native American Development, LLC, Richard T.Fields, and Coastal Development, LLC, the Debtors included in theAmended Disclosure Statement information relating to the PowerPlant Group Litigation and counterclaims. The Debtors disclosedtwo lawsuits that Trump Hotels & Casino Resorts Development Co.,LLC, filed -- one against the Paucatuck Eastern Pequot IndianTribal Nation and the other against Power Plant and NativeAmerican.The Amended Disclosure Statement also included the Power PlantGroup's allegations against THCR Development and Trump Hotels &Casino Resorts Holdings, LP. Specifically, the Power Plan Groupalleges that the two Debtors "have engaged in willful andmalicious, tortious conduct, which has given rise to claims andcounterclaims which the Power Plant Group now asserts for damagesthat the Power Plant Group estimates will exceed $500 million."THCR Development disagrees with these allegations. Special CommitteeTHCR's board of directors formed a special committee ofindependent directors to monitor, assist with and advise THCR'sboard and management on the Debtors' restructuring efforts, andthe Special Committee retained Ropes & Gray LLP and Jefferies &Company, Inc., as the Special Committee's respective legal andfinancial advisors.The Special Committee will continue during the pendency of theChapter 11 Cases to exercise oversight of the Debtors' operatingbusinesses and affairs with a view towards, among other things,looking after the interests of the Debtors' public shareholders,with respect to the ongoing negotiation and documentation of therecapitalization plan that is the subject of the RestructuringSupport Agreement, which will be effectuated through the Plan. ProjectionsAt the end of 2009, the Debtors state, THCR is projected to have atotal leverage ratio of 3.9x down from 6.2x at assumed emergencefrom chapter 11 and an interest coverage ratio of 3.1x up from1.9x at assumed emergence from chapter 11. Execution of itsbusiness plan and the resulting deleveraging should facilitate arefinancing of the Debtors' projected indebtedness if theReorganized Debtors choose to do so.Moreover, the Debtors believe that Trump Casino Holdings, LLC,would not be able to survive on its own without participating inthe recapitalization transactions contemplated under the Plan. IfTCH were reorganized on a stand-alone basis and its approximately$493.8 million debt (plus interest, fees and penalties) werereinstated, existing interest payments would continue as currentlyscheduled (including the payment due in March 2005). Each sixmonths, TCH must pay approximately $17.9 million in interest.However, TCH's stand-alone cash flow is insufficient to serviceinterest payments on the reinstated notes. As of March 2005,after giving effect to the March 2005 interest payment, TCH's cashbalance would fall to a negative $18.5 million. Moreover, theState of Indiana has asserted a Priority Tax Claim of $20 million.After lengthy negotiations, TCH has reached an agreement to paysuch tax in full over a 12-month period; without therecapitalization contemplated by the Plan, TCH would not generalthe cash flows sufficient to pay that tax or reach a dealsatisfactory to the State of Indiana to pay the tax over time.During the first three months of the cases, TCH has been a netborrower under the existing DIP Facility; absent therecapitalization contemplated by the Plan, TCH would default underthe DIP Facility. Further, TCH would need to incur additionaloverhead and expenses in hiring a new management team andoperating independently from TAC. Finally, the assets of TCH(principally consisting of the Trump Indiana Casino and the TrumpMarina Casino) operate in highly competitive markets; to remaincompetitive, TCH needs to consistently dedicate approximately 5%of its current revenues to capital expenditures and an additional2-3% to catch up with capital expenditures the Debtors haveforegone over the past few years. As a result, the Debtors didnot independently value TCH's assets.The Court will consider confirmation of the Plan on April 5, 2005.Headquartered in Atlantic City, New Jersey, Trump Hotels & CasinoResorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages oneproperty under the Trump brand name. The Company and itsdebtor-affiliates filed for chapter 11 protection on Nov. 21, 2004(Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A.Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., atLatham & Watkins, LLP, and Charles Stanziale, Jr., Esq., JeffreyT. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia,Stanziale, Sedita & Campisano, P.A., represent the Debtors intheir restructuring efforts. When the Debtors filed forprotection from their creditors, they listed more than$500 million in total assets and more than $1 billion in totaldebts.UAL CORP: Names Cindy Szadokierski Corporate Real Estate VP-----------------------------------------------------------UAL Corporation, parent company of United Airlines, named CindySzadokierski as vice president of Corporate Real Estate. In hernew role, Ms. Szadokierski is responsible for United's domesticand international real estate holdings, airport relationships andconstruction activity. She succeeds Kathryn Mikells, who wasrecently named vice president and treasurer."I am very pleased to announce Cindy's appointment to thisposition," said Jake Brace, United's executive vice president,chief financial officer and chief restructuring officer. "Herleadership last summer was instrumental in United's successfulUnited Express transition at our Washington hub, and her 20 yearsof experience with the company in a variety of divisions willserve United well."Most recently, Ms. Szadokierski served as managing director forUnited Express, as well as the general manager of United's hub atWashington Dulles International Airport, where she led the teamthat focused on transitioning United Express operations fromAtlantic Coast Airlines to a number of new partner regionalcarriers. Originally hired in January 1985 as a reservationssales and service representative, she progressed through positionsof increasing responsibility in Reservations, Human Resources,Customer Service and Sales.Ms. Szadokierski holds an undergraduate degree in French andmasters' degrees in education, business administration andsupervision.Headquartered in Chicago, Illinois, UAL Corporation --http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largestair carrier. The Company filed for chapter 11 protection onDecember 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent theDebtors in their restructuring efforts. When the Debtors filedfor protection from their creditors, they listed $24,190,000,000in assets and $22,787,000,000 in debts.US AIRWAYS: Court Approves GE Capital Global Settlement-------------------------------------------------------US Airways, Inc., and its debtor-affiliates sought and obtainedthe authority of the U.S. Bankruptcy Court for the EasternDistrict of Virginia to amend and modify their Global Settlementwith General Electric Capital Corporation to: 1) reflect the priority of the liens granted on four CRJ-700 aircraft; and 2) increase the amount the Debtors are authorized to draw down under the 2001 Credit Facility from $10,000,000 to $21,500,000. The GECC LiensPursuant to the Global Settlement, the parties amended the 2001Credit Facility to grant GECC junior liens on four CRJ-700aircraft. This additional security takes the form of a third lienposition on the four CRJ-700 aircraft and a first lien position onone CF34 spare engine. The aggregate of any senior liens on thecollateral is not to exceed $62,000,000.Under the Global Settlement, GECC was granted a second lienposition on one CRJ-700 aircraft and third lien positions on threeCRJ-700 aircraft. Accordingly, the Debtors want to correct thiserror so that the Global Settlement Order reflects that, upon theDebtors' drawdown under the 2001 Credit Facility, GECC will hold asecond lien on one CRJ-700 aircraft and third liens on the threeCRJ-700 aircraft. The Credit Facility DrawdownThe Debtors also want to modify the drawdown amount under the 2001Credit Facility to reflect a credit against the outstandingprincipal balance made subsequent to the Order.Under the Global Settlement, GECC will purchase three A319s, threeA320s, five A321s, 14 CFM56-5B spare engines, 14 CFM56-3B spareengines and certain engine stands that secure the 2001 CreditFacility and the 2003 Liquidity Facility. GECC will also purchasenine CRJ-200s and one CRJ-700 aircraft that is currently amortgaged debt financed by GECC. The purchases total$640,420,000, subject to adjustment. The parties anticipatedthat, after application of the sale proceeds, the outstandingbalance on the 2001 Credit Facility would be $14,990,000. TheDebtors would then be permitted to drawdown $10,000,000, resultingin a balance of up to $24,99,000.Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado,states that the Settlement was formulated under the assumptionthat the transactions would be completed by February 15, 2005.However, this will not happen. On January 18, 2005, the Debtorsfulfilled their requirement under the 2001 Credit Facility to makea $11,500,000 principal payment. As a result, the balance on the2001 Credit Facility at the critical juncture will be $3,490,000,rather than $14,990,000. For the Debtors to fully realize thebenefits of the Global Settlement, the parties will increase thedrawdown from $10,000,000 to $21,500,000. By making thisadjustment, the outstanding principal balance of the 2001 CreditFacility will be $24,990,000, as originally provided for in theGlobal Settlement and approved by the Court.Mr. Leitch explains that the modifications will not alter theunderlying economics of the Global Settlement and its effect onthe Debtors' estates. By increasing the drawdown to adjust forthe January Payment, the 2001 Credit Facility Balance afterapplication of the Sale-Leaseback sale proceeds will remain thesame -- $24,990,000. Mr. Leitch has assured the Court that noother terms of the Global Settlement will be impacted.Headquartered in Arlington, Virginia, US Airways' primary businessactivity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC.Under a chapter 11 plan declared effective on March 31, 2003,USAir emerged from bankruptcy with the Retirement Systems ofAlabama taking a 40% equity stake in the deleveraged carrier inexchange for $240 million infusion of new capital.US Airways and its subsidiaries filed another chapter 11 petitionon September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). BrianP. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., andDouglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtorsin their restructuring efforts. In the Company's secondbankruptcy filing, it lists $8,805,972,000 in total assets and$8,702,437,000 in total debts. (US Airways Bankruptcy News, IssueNo. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000)US AIRWAYS: Agrees with GE Capital to File Ch. 11 Plan Next Month-----------------------------------------------------------------US Airways Group, Inc., and GE Capital Aviation Services and GEEngine Services (GEES) have reached agreement on a revisedschedule for the airline's filing of a Plan of Reorganization withthe U.S. Bankruptcy Court.The original schedule for a Feb. 15, 2005 filing of a Plan hasbeen moved to March 15, 2005, to make the schedule more consistentwith the court's granting US Airways exclusive rights to file aplan through March 31, 2005. The agreement with GECAS and GEESreconfirms US Airways' commitment to file a POR that seeksemergence from Chapter 11 no later than June 30, 2005.Headquartered in Arlington, Virginia, US Airways' primary businessactivity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC.Under a chapter 11 plan declared effective on March 31, 2003,USAir emerged from bankruptcy with the Retirement Systems ofAlabama taking a 40% equity stake in the deleveraged carrier inexchange for $240 million infusion of new capital.US Airways and its subsidiaries filed another chapter 11 petitionon September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). BrianP. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., andDouglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtorsin their restructuring efforts. In the Company's secondbankruptcy filing, it lists $8,805,972,000 in total assets and$8,702,437,000 in total debts.US AIRWAYS: EDS Holds Superpriority Admin. Claim Up to $28 Million------------------------------------------------------------------Electronic Data Systems Corporation and EDS Information Services,L.L.C., asked Judge Mitchell of the U.S. Bankruptcy Court for theEastern District of Virginia to require US Airways, Inc., anddebtor-affiliates to provide adequate assurance of payment forpostpetition services. As reported in the Troubled CompanyReporter on Jan. 4, 2005, the Debtors want the Court to deny therequest.The parties, after arm's-length negotiations, settled the matter.The Debtors and EDS will continue to operate under the ServicesAgreement in the ordinary course of business. EDS will be alloweda Superpriority Administrative Claim for accrued and unpaidpostpetition services rendered under the Contract, with a$28,000,000 cap. The Superpriority Claim is subordinate to: (a) all allowed secured claims; (b) all granted and allowed superpriority administrative claims; and (c) any allowed and unpaid postpetition claims incurred in the ordinary course of these proceedings by the Debtors' professionals.The parties will negotiate "diligently and in good faith in aneffort to reach mutually acceptable modifications to the Contractfor purposes of assumption." If the Debtors reject the Contract,EDS will provide post-rejection transition assistance for 12months and outsourced services for 15 months.Headquartered in Arlington, Virginia, US Airways' primary businessactivity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC.Under a chapter 11 plan declared effective on March 31, 2003,USAir emerged from bankruptcy with the Retirement Systems ofAlabama taking a 40% equity stake in the deleveraged carrier inexchange for $240 million infusion of new capital.US Airways and its subsidiaries filed another chapter 11 petitionon September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). BrianP. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., andDouglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtorsin their restructuring efforts. In the Company's secondbankruptcy filing, it lists $8,805,972,000 in total assets and$8,702,437,000 in total debts. (US Airways Bankruptcy News, IssueNo. 80; Bankruptcy Creditors' Service, Inc., 215/945-7000)US AIRWAYS: Wants Court to Okay Philadelphia Sale/Leaseback Deal----------------------------------------------------------------The City of Philadelphia owns and operates the PhiladelphiaInternational Airport. US Airways, Inc., and itsdebtor-affiliates and the City are parties to variousprepetition lease agreements for certain facilities at thePhiladelphia Airport.The Debtors seek Judge Mitchell's authority to enter into aPurchase Agreement with the City for the sale and lease-back of30 Jet Bridges. The Debtors will sell the Jet Bridges to the Cityand subsequently lease them back. The Agreement includes allmachinery and equipment attached to the Jet Bridges or necessaryfor operation at Terminals B and C of the Airport.Brian P. Leitch, Esq., at Arnold & Porter, in Denver, Colorado,explains that the Debtors will sell the Jet Bridges free and clearof all liens, claims and encumbrances. The Jet Bridges will betransferred to the City in their "as-is," "where-is," and "withall faults" condition, including customary warranties andrepresentations.A purchase price will be determined pursuant to an appraisal by anindustry-recognized appraiser. The City will enter into anagreement for a purchase price only upon acceptance of theAppraisal. At this stage, the parties expect the purchase priceto be approximately $6,000,000.The City will pay the Debtors through a Credit Memo. The Debtorswill apply the credits to obligations incurred to the City in 2005for goods, services, and rental obligations. The City willdeliver the Credit Memo to the Debtors when they will transfertitle to the Jet Bridges to the City.The Debtors have Equipment Use Credits from the City due to theoffset of $7,600,000 for use of baggage conveyor systems, loadingbridges, and other equipment from fiscal year 2002 through fiscalyear 2004. The City will set off a portion of the Equipment UseCredit allocable to the prepetition period against its fixed andnon-contingent prepetition claims against the Debtors, which total$3,900,000. The Debtors have another $4,767,000 in credits,subject to final reconciliation, which will be applied againsttheir obligations to the City for 2005.As partial consideration to the City for entering into thePurchase Agreement, the Debtors will provide an affirmativeMajority-in-Interest vote for a terminal expansion andmodernization request dated January 10, 2005.Once the City receives the title, the parties will enter into alease agreement for the use and maintenance of the Jet Bridges.Rent will be payable monthly, and will be based on amortization ofthe appraised value of the Jet Bridges over their useful life.Mr. Leitch states that through the Purchase Agreement, the Debtorswill conserve cash through $6,000,000 in credits with the City.The amount will be available to the Debtors in lieu of cashobligations otherwise due to the City on account of goods,services and rent obligations.Headquartered in Arlington, Virginia, US Airways' primary businessactivity is the ownership of the common stock of: * US Airways, Inc., * Allegheny Airlines, Inc., * Piedmont Airlines, Inc., * PSA Airlines, Inc., * MidAtlantic Airways, Inc., * US Airways Leasing and Sales, Inc., * Material Services Company, Inc., and * Airways Assurance Limited, LLC.Under a chapter 11 plan declared effective on March 31, 2003,USAir emerged from bankruptcy with the Retirement Systems ofAlabama taking a 40% equity stake in the deleveraged carrier inexchange for $240 million infusion of new capital.US Airways and its subsidiaries filed another chapter 11 petitionon September 12, 2004 (Bankr. E.D. Va. Case No. 04-13820). BrianP. Leitch, Esq., Daniel M. Lewis, Esq., and Michael J. Canning,Esq., at Arnold & Porter LLP, and Lawrence E. Rifken, Esq., andDouglas M. Foley, Esq., at McGuireWoods LLP, represent the Debtorsin their restructuring efforts. In the Company's secondbankruptcy filing, it lists $8,805,972,000 in total assets and$8,702,437,000 in total debts. (US Airways Bankruptcy News, IssueNo. 81; Bankruptcy Creditors' Service, Inc., 215/945-7000)UNITED REFINING: Looks to Raise $25M from 10-1/2% Sr. Notes Offer-----------------------------------------------------------------United Refining Company intends to commence a private placementoffering to eligible purchasers of an additional $25 millionprincipal amount of its 10-1/2% Senior Notes Due 2012. TheAdditional Notes are to be issued under an indenture dated as ofAugust 6, 2004, pursuant to which $200,000,000 of notes of thesame series were previously issued. The resale of the AdditionalNotes in connection with the private placement offering, which issubject to market and other conditions, will be made within theUnited States only to "qualified institutional buyers"(as definedin Rule 144A under the Securities Act of 1933, as amended) andoutside the United States only to non-U.S. investors underRegulation S of the Securities Act of 1933, as amended.The Company intends to use the net proceeds from this offering topay down a portion of its outstanding indebtedness under itsrevolving credit facility.United Refining Company -- http://www.urc.com/-- is an independent refiner and marketer of petroleum products. It fuelscars, trucks, airplanes and farm and construction equipment, aswell as the homes and industries in one of America's largestconcentrations of people and commerce. Their market includesPennsylvania and portions of New York and Ohio. * * *As reported in the Troubled Company Reporter on July 27, 2004,Standard & Poor's Ratings Services assigned its 'B-' rating toUnited Refining Company's $200 million senior notes due 2014.VERIZON GLOBAL: Fitch May Downgrade Ratings Due to MCI Acquisition------------------------------------------------------------------Fitch Ratings has placed the 'A+' rating on Verizon GlobalFunding's outstanding long-term debt securities on Rating WatchNegative, and the 'B' senior unsecured debt rating of MCI, Inc.,on Rating Watch Positive following the announcement that VerizonCommunications will acquire MCI for approximately $4.8 billion incommon stock and $488 million in cash.Including MCI's estimated net debt of approximately $4 billion atthe time of the close of the transaction, the total value of thetransaction is approximately $9.3 billion. MCI, prior to theclose of the transaction, will pay out quarterly and specialdividends of $4.50 per share, or $1.463 billion, to its existingshareholders.The Rating Watch Negative also applies to the existing long-termdebt of other Verizon subsidiaries, as listed below. The 'F1'ratings assigned to Verizon Global Funding and Verizon NetworkFunding are not on Rating Watch Negative and have been affirmed.Verizon Global Funding primarily funds the nonregulated operationsof Verizon. Verizon Global Funding is a subsidiary of Verizon,and benefits from a support agreement with Verizon. VerizonCommunications' implied senior unsecured rating is also 'A+'.The rating action reflects the need to evaluate: -- The moderately higher business risk profile of Verizon following its acquisition of MCI; -- The potential synergies to be achieved; -- The outcome of the regulatory approval process. -- The potential for other bids to arise for MCI.Taking into account the remaining cash on MCI's balance sheet, thetransaction is not expected to have a material effect on Verizon'scredit protection measures. Verizon's debt-to-EBITDA in 2004 was1.4 times and on a stand-alone basis is expected to improveslightly in 2005, even allowing for a 10% increase in capitalspending and spending on spectrum acquisitions totaling $3.5billion or more. MCI's EBITDA is expected to continue to declinein 2005, although its financial flexibility remains adequate givenits estimated year-end cash balance of $5.5 billion. Fitchestimates pro forma leverage for the combined companies in 2006could approximate 1.4x-1.5x. As the transaction is currentlyenvisioned, a downgrade, should it occur, would be limited to onenotch, but if Fitch can attain a high degree of confidenceregarding the combined entity's financial and business riskprofile, the current rating could be affirmed.Business risk elements surrounding the transaction include theweak fundamentals of the long distance industry, the risk thatanticipated synergies are materially less than originallycontemplated, and the impact of the integration costs on thecombined companies' cash flow. As with other long distancecarriers, in recent years MCI's revenues have declined in recentyears due to extreme pricing pressure for its products andservices. MCI also has suffered from a lack of growthopportunities in its core business. The potential negativebusiness risk aspects of the transaction are expected to bemoderated by the synergies that can be achieved in networkoperations, sales functions, information technology, and corporateoverheads.The transaction will be subject to regulatory and shareholderapproval. After the necessary approvals are obtained, thetransaction is expected to close, which could be in the first halfof 2006. Material conditions arising from the regulatory approvalprocess could have an impact on the final economics of thetransaction and the ultimate credit profile of the combinedcompany.At this time it has not been disclosed if Verizon will guaranteeor legally assume MCI's outstanding debt. Without a guarantee,MCI's debt would likely be upgraded to two notches below Verizon'srating, but the notching could be more or less depending on anevaluation of the integration of MCI's assets into Verizon'soperations.A critical consideration in Verizon's rating is that Verizon'srevenue mix is becoming increasingly oriented toward growth areas,with 39% of its total revenues derived from rapidly growingVerizon Wireless, and an additional 14% of its revenues comingfrom wireline growth areas such as long distance service, high-speed data services, and initiatives in the business market. Theproportion of these revenues in the mix is expected to continue togrow, primarily as a result of the strong performance of VerizonWireless. On a volume basis, Verizon's total connections (definedas total switched access lines plus digital subscriber lines andwireless subscribers) grew 5.2% to 100.4 million on a year-over-year basis at the end of 2004. The growth factors are important,sustainable offsets to the impact of substitution and competitionin the traditional wireline business.With respect to potential activity regarding an increased stake inVerizon Wireless, Fitch believes Verizon will act to maintain acredit profile consistent with its current rating. Moreover, thecompany's current deleveraging 'path' is to enhance its financialflexibility should such an opportunity occur. Fitch believes thatan increased stake in Verizon Wireless is somewhat more likely tocome through negotiations rather than the currently existing putarrangement.Verizon's liquidity is strong, as it has an undrawn $5 billioncredit facility to back its commercial paper. The facilityexpires in June 2005, and has a two-year term-out option. In2004, free cash flow after dividends and capital spending wasapproximately $4.3 billion. Intermediate-term liquidity needs areexpected to be addressed through strong free cash flows and couldbe supplemented by additional asset sales. The company has alsostated that its stake in Omnitel, an Italian wireless operatorcontrolled by Vodafone, would be an important consideration in atransaction involving Vodafone's stake in Verizon Wireless.These subsidiary ratings are placed on Rating Watch Negative byFitch: GTE Corp. -- Debentures/notes 'A+'. NYNEX Corp. -- Debentures 'A+'. Verizon New York -- Debentures 'A+'. Verizon Credit Corp. -- Notes 'A+'. Verizon Florida -- Senior unsecured debentures 'A+'. Verizon New England -- Senior unsecured bonds 'A+'; -- Debentures 'A+'; -- Notes 'A+'. Verizon South -- Senior unsecured debentures 'A+'. GTE Southwest -- Senior unsecured debentures 'A+'. Verizon California -- First mortgage bonds 'A+'; -- Senior unsecured debentures 'A+'. Verizon Delaware -- Senior unsecured debentures 'A+'. Verizon Maryland -- Senior unsecured debentures 'A+'. Verizon New Jersey -- Senior unsecured debentures 'A+'. Verizon North -- First mortgage bonds 'A+' -- Senior unsecured debentures 'A+'. Verizon Northwest -- First mortgage bonds 'A+'; -- Senior unsecured debentures 'A+'. Verizon Pennsylvania -- Senior unsecured debentures 'A+'. Verizon Virginia -- Senior unsecured debentures 'A+'. Verizon Washington D.C. -- Senior unsecured debentures 'A+'. Verizon West Virginia -- Senior unsecured debentures 'A+'.These ratings remain on Rating Watch Negative where they wereplaced on May 25, 2004, due to the pending sale of Verizon Hawaii: Verizon Hawaii -- First mortgage bonds 'BBB-'; -- Debentures 'BB+'.These ratings are affirmed by Fitch: Verizon Global Funding -- Commercial paper 'F1'. Verizon Network Funding -- Commercial paper F1'.Fitch also places MCI on Rating Watch Positive: MCI Inc. -- Senior unsecured debt 'B'.WESTERN WATER: Will Exhaust Cash by March 31 Absent Financing-------------------------------------------------------------Western Water Company's principal activity had been to acquire anddevelop water assets in California and in the Cherry Creek basinin Colorado. The Company did so because it believed that there isa growing demand for water resources in both of these areas inwhich demand is expected to exceed the water resources currentlyavailable. However, the Company has encountered significantregulatory obstacles in its attempts to develop and transfer waterfor delivery to potential customers in California. Theseregulatory obstacles were compounded by the electric energy crisisin California that rendered many transfers uneconomic because ofthe high and unrecoverable cost of pumping water over longdistances, and by the Company's weakened financial condition. TheCompany has also faced significant competition in arranging watertransfers from governmental agencies. In addition, the processfor developing the regulatory framework and physicalinfrastructure necessary to complete commercial deliveries inColorado has taken longer than originally anticipated.Over the last few years, the Company has investigated and activelypursued several potential alternatives for achieving profitableoperations in the emerging water market, or a sale or merger ofthe Company that would recover fair value for its investors. Inthat process, the Company has evaluated numerous assetdevelopment, asset sale, and business combination strategies inconcert with a variety of counter-parties. The Company hasentered into confidentiality agreements and due diligenceprocesses with several counter-parties. However, none of theseproposed transactions was successfully concluded and none iscurrently under consideration. Going Concern DoubtWestern Water Company has been and continues to be unable togenerate sufficient cash from operations to pay for operatingexpenses, to meet debt service obligations, and to pay preferredstock dividends. The Company had paid for these financialobligations using cash from its consulting activities, the sale ofassets, and short-term, asset-secured loans. There is substantialdoubt about the Company's ability to generate additional cash fromasset sales and loans to fund its operations throughSept. 30, 2005, and beyond, or to meet other financial obligationsfollowing the expenditure of its current cash balance. Unless theCompany is able to sell additional assets and arrange additionalfinancing, the Company will run out of cash in the quarter endingMarch 31, 2005. Therefore, the Company is taking steps to selladditional assets and is pursuing a short-term, asset-securedinterim operating loan. The Company can give no assurance that itwill be successful in completing additional asset sales orarranging the financing. Likely Default in SeptemberThe Company is dependent upon the orderly and timely sales of itsCalifornia assets as well as interim financing to provide aportion of the cash necessary to fund the Company's operations forthe period of the Company's current planning horizon endingSeptember 30, 2005. The Subordinated Debentures mature onSeptember 30, 2005. The Company currently plans to meet itsobligation to pay the Subordinated Debentures ($8,318,000 inprincipal amount) through the monetization of the Cherry CreekProject in Colorado. However, there can be no assurance regardingthe Company's ability to sell its remaining California assets atfair value, or to fund operations, or to monetize the Cherry CreekProject for an amount, or within the time necessary, to pay theSubordinated Debentures.The Company plans to fund its foreseeable working capital needsfrom existing cash, net proceeds of the anticipated sale ofcertain existing assets, the proceeds of asset-secured loans, andthe outright sale of the Cherry Creek Project. No assurance can begiven that the Company will be able to sell its assets as plannedor that the Company will be able to raise additional funds whenand if needed to sustain its operations, including Cherry CreekProject development activities. The inability of the Company tosell its assets as planned or raise additional funds when and ifneeded could impair the Company's ability to operate as a goingconcern. In addition to the Company's outstanding SubordinatedDebentures maturing on September 30, 2005, its Amended PromissoryNotes and Promissory Notes mature on October 1, 2005, and theSeries C Preferred Stock and Series F Preferred Stock are subjectto mandatory redemption beginning in fiscal 2007 and fiscal 2010,respectively.In light of the ongoing uncertainties associated with theCompany's ability to continue as a going concern, the Company'sprevious independent registered public accounting firm provided agoing concern uncertainty explanatory paragraph in its unqualifiedopinion with respect to the Company's consolidated financialstatements for the year ended March 31, 2004. Consistent with thefiscal 2004 consolidated financial statements, the unauditedcondensed consolidated financial statements do not include anyadjustments that might be necessary should the Company be unableto continue as a going concern.As of December 31, 2004, the Company had cash and cash equivalentsof $486,252. Based on the Company's current cash balances, unlessit successfully monetizes the West Basin water rights, obtainsinterim operating financing and otherwise generates additionalcash, the Company's current cash reserve is expected to beexhausted prior to March 31, 2005. As of December 31, 2004, theCompany had a working capital deficit and a current ratio of$9,135,000 and 0.12:1, respectively, as compared to workingcapital and a current ratio of $2,111,000 and 2.98:1,respectively, at March 31, 2004. During the nine months endedDecember 31, 2004, the Company operated at a net loss of$2,208,000 and used cash and cash equivalents of $930,000. Thenet use of cash and cash equivalents resulted from the net cashuse of $2,042,000 for operating activities that was offset by netcash of $1,111,000 provided by investing activities. Theprincipal uses of cash for operating purposes were general andadministrative expenses, consisting mainly of compensation,professional fees relating to periodic reporting requirements,consulting fees for services provided to supplement the Company'sreduced staff, and insurance expenses. The net cash of $1,111,000provided by investing activities resulted principally from thesale of certain of the Company's real estate assets in California. Liquidity PressureThe Company faces acute pressure on its liquidity. During thenine months ended December 31, 2004, the Company's operatingexpenses have consumed cash while the sale of real estate assetshas partially replenished cash. Because the Company does notgenerate operating revenues sufficient to meet its operatingexpenses, the Company is dependent on projected asset sales thatare not certain of completion to replenish its cash and maintainoperating liquidity until such time as the Company can monetizeits Cherry Creek Project, including through the potential outrightsale of the Project. However: (i) there is material uncertainty regarding the Company's ability to negotiate and sell assets at fair value in a timely manner in order to fund operations; (ii) the Company has few assets left to sell; and (iii) while management believes that demand for the Company's water resources in Colorado continues to increase, the schedule for monetizing the value of the Cherry Creek Project is uncertain in light of the Colorado Office of the State Engineer's adverse decision with respect to the Company's application for a substitute water supply plan.In light of recent and planned property sales and the consequencesof the decision of the Colorado Office of the State Engineer, theCompany has revised its cash forecast and operating plans. Basedon its current forecast of operating expenses, further expectedasset sales, the expectation that it will be able to arrangeinterim financing on a secured basis, if necessary, and the amountof its cash, the Company believes that it has sufficient capitalresources to fund its operations until approximately September2005. However, in the event that the Company is unable toreplenish its cash resources from some combination of the forgoingsources, the Company expects to exhaust its current cash resourcesby approximately March 31, 2005.Western Water Company is a leading water resource company in thewholesale, non-regulated water market in the Western UnitedStates.Acquiring, developing and marketing wholesale water supplies tocities and water districts in the Western United States, thecompany actively pursues opportunities to purchase reliable watersupplies that can be used to augment or supplement local municipalsupplies and thereby participate in the growth of the region.WHEELING-PITTSBURGH: Assigning Central W. Va. Energy Coal Pact--------------------------------------------------------------Wheeling-Pittsburgh Steel Corporation asks the U.S. BankruptcyCourt for the Northern District of Ohio for authority to assign aCoal Supply Agreement with CENTRAL WEST VIRGINIA ENERGY COMPANYdated as of November 15, 1993, as modified by a letter agreementdated as of March 30, 2002 and a May 2, 2002 Order from theBankruptcy Court authorizing the Debtor to assume the contract.The Honorable Kay Woods will review the Debtor's request at ahearing in Youngstown on Tuesday, March 15, 2005. Agreement Assumed in 2002Wheeling-Pittsburgh tells Judge Woods that it owns and operatescoke-making facilities located in Follansbee, West Virginia. ThePlant uses several types of metallurgical coal as raw materials inthe production of coke, which in turn is used in the production ofsteel. WPSC and CWVEC entered into the Coal Supply Agreement in1993. Under the Coal Supply Agreement, CWVEC agreed to supplyWPSC with WPSC's annual requirements for "high volatile cokingcoal" meeting certain specifications. The Coal Supply Agreementoriginally was to have a 10-year term. In early 2002,representatives of WPSC and representatives of CWVEC discussed theterms on which the Coal Supply Agreement might be amended and thenassumed by WPSC pursuant to section 365 of the Bankruptcy Code.The parties ultimately agreed to enter into the Letter Agreementdated as of March 30, 2002, which set forth the terms on which theCoal Supply Agreement would be modified as simultaneously assumed.One of the agreed modifications was an extension of the term ofthe Coal Supply Agreement through 2010. In the Letter Agreement,WPSC agreed to make a $7,205,515.56 cure payment of in 60 equal$120,091.93 monthly installments, commencing Nov. 2, 2002. WPSCalso agreed to pay $724,780 as a "Price Adjustment Receivable";that payment was to be made in 12 equal monthly installments,commencing June 2, 2002. The Letter Agreement modified the termsof the original Coal Supply Agreement and gave WPSC the authorityto assign WPSC's rights under the Coal Supply Agreement, subjectto Bankruptcy Court approval. Judge Bodoh approved the contractassumption on May 2, 2002. The Proposed AssignmentOn December 28, 2004, WPSC announced that it had signed a non-binding letter of intent to enter a joint venture with flat rolledsheet steel producer Severstal North America Inc. If consummated,the agreements would require Severstal to contribute $140 millionover four years to rebuild the Plant. Severstal also would payWPSC $20 million when a joint venture deal closes. In return,after making its capital contributions, Severstal would own 50%of the joint venture and would be entitled to 50% of the cokeproduced by the Plant. WPSC would continue to operate the Plantfor the joint venture.The proposed joint venture agreements will be of substantialbenefit to WPSC, Michael E. Wiles, Esq., at Debevoise & PlimptonLLP, tells the Court, because they will enable neededmodifications and repairs to the Plant, thereby helping to assurea continued source of coke supplies.The assignment of the Coal Supply Agreement to the new entity thatwill be formed as part of the planned joint venture is animportant part of the joint venture. The Coal Supply Agreementprovides an assured source of supply at favorable prices. Theproposed assignment of the Coal Supply Agreement will not have anycredit implications for CWVEC, because WPSC (as well as it jointventure partner) will continue to be liable for all obligationsowed to CWVEC under the Coal Supply agreement if, for somereason, those obligations are not paid by the joint ventureentity. In addition, the planned repairs to the Plant will notincrease the Plant's capacity and therefore will not increase thePlant's coal requirements.Wheeling-Pittsburgh Steel Corporation and eight debtor-affiliatesfiled for Chapter 11 protection on Nov. 16, 2000 (Bankr. N.D. OhioCase No. 00-43394). WPSC was the nation's seventh largestintegrated steelmaker at the time, reporting $1.3 billion inassets and liabilities exceeding $1.1 billion. In September 2002,Royal Bank of Canada filed an application on behalf of the companywith the Emergency Steel Loan Guarantee Board to obtain a $250million federal steel loan guarantee. The application for the loanguarantee was approved in March 2003. The Debtors' plan ofreorganization was confirmed on June 18, 2003, and the plan becameeffective on August 1, 2003. Michael E Wiles, Esq., at Debevoise& Plimpton LLP, and James M. Lawniczak, Esq., at Calfee, Halter &Griswold LLP, represent the Debtor.WINN-DIXIE: Three Critical Deadlines -- Mar. 1, Mar. 31 & May 31----------------------------------------------------------------As previously reported in the Troubled Company Reporter, WINN-DIXIE STORES, INC., WINN-DIXIE SUPERMARKETS, INC., WINN-DIXIEMONTGOMERY, INC., WINN-DIXIE PROCUREMENT, INC., and WINN-DIXIERALEIGH, INC., as Borrowers under a Second Amended and RestatedCredit Agreement dated as of June 29, 2004, obtained a waiver ofan EBITDA test through June 29, 2005, from the consortium oflenders under that credit facility. Winn-Dixie had promised thelenders that EBITDA would hit $132 million on a trailing 13-weekbasis by this time. The waiver restored up to $100 million ofborrowing availability under the facility, subject to Winn-Dixie'scompliance with three key requirements by three criticaldeadlines: -- Financial Advisor. By no later than March 1, 2005, Winn- Dixie must engage, at it own expense, a Financial Advisor acceptable to the Lenders; -- Operating Plan. The Financial Advisor must deliver to the Lenders, no later than May 31, 2005, a report describing in reasonable detail Winn-Dixie's projections, financial and operating plans, in satisfactory scope, form and substance; -- Leasehold Mortgages. By no later than March 31, 2005, Winn-Dixie must receive duly executed counterparts of mortgages, in form and substance reasonably satisfactory to them, pledging properties as collateral to secure repayment of the company's obligations to the Lenders. The leasehold properties must be acceptable to the Collateral Monitoring Agent, and must have an appraised value on a net orderly liquidation basis (as demonstrated by an appraisal satisfactory to the Collateral Monitoring Agent from appraisers satisfactory to the Collateral Monitoring Agent) such that 37.5% thereof is equal to at least $75 million.Winn-Dixie paid the Lenders a $600,000 fee (0.10% of the total$600 million commitment) in connection with this waiver, and paidall of the lenders' legal fees and expenses. The knownparticipants in the lending consortium are: * WACHOVIA BANK, NATIONAL ASSOCIATION, as the Administrative Agent, Issuer and Swing Line Lender * WACHOVIA CAPITAL MARKETS, LLC, as the Arranger * WACHOVIA BANK, NATIONAL ASSOCIATION (successor by merger to Congress Financial Corporation (Florida)), as the Collateral Monitoring Agent * GMAC COMMERCIAL FINANCE LLC, as the Syndication Agent * WELLS FARGO FOOTHILL, LLC, as Co-Documentation Agent * GENERAL ELECTRIC CAPITAL CORPORATION, as Co-Documentation Agent * THE CIT GROUP/BUSINESS CREDIT, INC., as Co-Documentation AgentAt June 20, 2004, the Lending Syndicate was comprised of: * AMSOUTH BANK * BANK ONE * FLEET RETAIL GROUP, INC. * ISRAEL DISCOUNT BANK * MERRILL LYNCH CAPITAL * NATIONAL CITY BUSINESS CREDIT, INC. * PNC BUSINESS CREDIT * RZB FINANCE LLC * SIEMENS FINANCIAL SERVICES, INC. * SUNTRUST BANK * UBS AG, STAMFORD BRANCH, and * WEBSTER BUSINESS CREDIT CORP. About the CompanyWinn-Dixie Stores, Inc., -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. Founded in 1925, theCompany is headquartered in Jacksonville, Florida. Winn-Doxieoperates 1,078 supermarkets primarily in the Southeast. Revenuefor the 12 months ending January 12, 2005 was about $10.4 billion. * * *As reported in the Troubled Company Reporter on Nov. 1, 2004,Standard & Poor's Ratings Services lowered its ratings on Winn-Dixie Stores Inc., to 'B-' from 'B', and said the outlook isnegative."The downgrade is based on weaker-than-expected profitability andcash flow," explained Standard & Poor's credit analyst Mary LouBurde. "Although the company should have sufficient liquidityto fund its near-term operating and capital needs, improvedoperating results or additional funding will be needed to executelonger-term strategic initiatives."WINN-DIXIE: Moody's Junks Series 1999-1 Trust Certificates----------------------------------------------------------Moody's Investors Service downgraded the ratings of three classesof Winn-Dixie Pass-Through Trust Certificates, Series 1999-1 toCaa3 from B3. The Certificates were downgraded to Caa3 based onthe support of the triple net leases guaranteed by Winn-DixieStores, Inc., which was downgraded to Caa3 by Moody's onFebruary 14, 2005.Moody's stated that the Winn-Dixie Stores, Inc. downgrade wasprompted by: 1) Moody's concern that the continued deterioration in the Company's operating performance could continue to pressure liquidity despite the improvement in near term borrowing availability under the Company's recently amended bank facility; and 2) the difficulty of reversing these negative operating trends given the challenge of boosting customer transactions in the highly competitive and promotional southeastern markets.The rating outlook remains negative.The lowered ratings are: * Class A-1 Certificates due September 1, 2017, to Caa3 from B3 * Class A-2 Certificates due September 1, 2024, to Caa3 from B3 * Class A-3 Certificates due September 1, 2024, to Caa3 from B3Winn-Dixie Stores, Inc., with headquarters in Jacksonville,Florida, operates 1,078 supermarkets primarily in the Southeast.Revenue for the 12 months ending January 12, 2005 was about$10.4 billion.WORLDCOM INC: Settlement Agreement with 10 Directors Terminated---------------------------------------------------------------On October 11, 2002, the New York State Common Retirement Fund ledthe filing of a Consolidated Class Action Complaint, which chargedformer directors of WorldCom, Inc., with violations of Sections 11and 15 of the Securities Act of 1933 and Section 20(a) of theSecurities Exchange Act of 1934; and also charged certain of theFormer Directors with violations of Section 10(b) of theSecurities Exchange Act of 1934 and Rule 10b-5 promulgated by theSecurities and Exchange Commission.The Fund as Lead Plaintiff pursues claims on behalf of persons orentities that purchased or otherwise acquired publicly tradedsecurities of WorldCom, Inc., from April 29, 1999, throughJune 25, 2002.Barrack Rodos & Bacine and Bernstein Litowitz Berger & GrossmanLLP serve as lead counsel for the Lead Plaintiff and the putativeclass.After extensive negotiations under the supervision of MagistrateJudge Michael H. Dolinger, the Plaintiffs, 10 Former Directors andseven insurers entered into a stipulation, which settles thealleged liabilities of the 10 Directors.The Parties to the Stipulation are: (a) Plaintiffs: * Alan G. Hevesi, Comptroller of the State of New York, as Administrative Head of the New York State and Local Retirement Systems and as Trustee of the New York State Common Retirement Fund, * Fresno County Employee Retirement Association, * County of Fresno, * California, * HGK Asset Management, Inc., and * the Class, (b) 10 Director Defendants: * Allen, James C. * Areen, Judith * Aycock, Carl. J. * Bobbitt, Max E., * Alexander, Jr., Clifford L. * Kellett, Stiles, A. Jr. * Macklin, Gordon S. * Porter, John A. * The Estate of John W. Sidgmore, and * Tucker, Lawrence C., and (c) the Insurance Companies: * Associated Electric & Gas Insurance Services Limited, * Continental Casualty Company, * Gulf Insurance Company, * National Union Fire Insurance Company of Pittsburgh, Pennsylvania, * SR International Business Insurance Company, * Starr Excess Liability Insurance International Limited, and * Twin City Fire Insurance Company.The salient terms of the Stipulation are:A. Claims Settlement The Settling Directors and Insurers will pay the Lead Plaintiff, for the Class' benefit, $54 million. The Settlement Amount will consist of: -- $18 million to be paid by the Settling Directors; -- $36 million to be paid by the Insurers; and -- any interest earned pursuant to the terms of the Stipulation. The Lead Plaintiff understands that the payment constitutes over 20% of the cumulative net worth of the Settling Director's individual assets. The Settling Director and the Insurers consent to the use by Lead Counsel of up to $2 million, with the Lead Plaintiff's approval, for reasonable out-of-pocket costs in connection with providing notice of the Settlement to the Class Members and for other administrative expenses.B. Plan of Allocation The Net Settlement Fund will be allocated to members of the Class according to a Plan of Allocation: -- 13.02% of the Net Settlement Fund to claims asserted under the Securities Act of 1933 by purchasers of debt securities issued in the May 2000 Offering; -- 41.33% of the Net Settlement Fund to claims asserted under the Securities Act by purchasers of debt securities issued in the May 2001 Offering; and -- 45.65% of the Net Settlement Fund to claims asserted under the Securities Exchange Act of 1934 by class members who, during the Class Period, purchased WorldCom common stock or publicly traded debt securities issued prior to the beginning of the Class Period.C. Releases The Plaintiffs will release all claims against the Settling Directors. The Plaintiffs and the Settling Directors will release all Claims against the Insurers. Continental Casualty, Twin City and SRI will voluntarily dismiss certain related lawsuits. Court approval of the Stipulation will, as a condition for the Settlement, permanently bar, enjoin and restrain all of the other defendants in the Securities Litigation, including: * Bernard Ebbers, * Scott Sullivan, * David Myers, * Buford Yates, * Bert C. Roberts, Jr., * Francesco Galesi, * Arthur Andersen LLP, * Citigroup Inc., * Citigroup Global Markets Inc., * Citigroup Global Markets Limited, * Jack B. Grubman, * J.P. Morgan Chase & Co., * J.P. Morgan Securities, Inc., * J.P. Morgan Securities Ltd., * Banc of America Securities LLC, * Deutsche Bank Alex Brown Inc., * Chase Securities Inc., * Lehman Brothers Inc., * Blaylock & Partners, L.P., * Credit Suisse First Boston Corp., * Goldman, Sachs & Co., * UBS Warburg LLC, * ABN/AMRO Inc., * Utendahl Capital Partners, L.P., * Tokyo-Mitsubishi International plc, * Westdeutschc Landesbank Girozentrale, * BNP Paribas Securities Corp., * Caboto Holding SIM S.p.A., * Fleet Securities, Inc., * Mizuho International plc, and * any other person or entity later named as a defendant: -- from commencing, prosecuting, or asserting any claim for indemnity or contribution against the Settling Directors; and -- commencing, prosecuting or asserting any claim against the Insurers and Settling Directors arising out of or related to the claims or allegations asserted by the Plaintiffs in the Complaint.D. Administration and Distribution of the Settlement Fund The Lead Counsel, through The Garden City Group, as the Court- appointed Notice and Claims Administrator, will administer and calculate the Claims submitted by Class Members and will oversee distribution of the Settlement Fund. The Settlement Fund will be applied to, among others: -- pay all costs and expenses incurred in connection with providing notice to Class Members, locating Class Members, soliciting claims, assisting with the filing of claims, administering and distributing the Settlement Fund to the Class, processing proofs of claim, processing requests for exclusion, escrow fees and costs; -- pay attorneys' fees, plus interest, and certain costs and expenses, including fees of experts and consultants; and -- pay Taxes and Tax Expenses owed by the Settlement Fund.E. Termination of the Stipulation The Stipulation will terminate if no Judgment similar to the terms of the Stipulation is entered.A full-text copy of the Stipulation is available for free at: http://bankrupt.com/misc/classactionsettlement_wdirectors.pdf Settling Parties Want to Segregate Class Claims Against DirectorsIn a letter dated January 7, 2005, the Settling Parties ask JudgeCote to: (a) sever the Class' claims against the Settling Director Defendants from those asserted against the other defendants who will proceed to trial on February 28, 2005; (b) set a date for a hearing on or after February 25, 2005, to consider preliminary approval of the settlement and related matters; and (c) stay any litigation over insurance coverage pending further Court order.According to John P. Coffey, Esq., at Bernstein, Litowitz, Berger& Grossman, LLP, the proposed severance contemplates that, if thesettlement is not consummated, it would be virtually impossiblefor the Lead Plaintiff and the Settling Director Defendants tofinish preparations in time to try the claims between them at thetrial [scheduled at the end of February].A full-text copy of the January 7 Letter is available for free at: http://bankrupt.com/misc/ERISAplaintiffs_jan7letter.pdf District Court Rejects Key Settlement TermJudge Denise Cote of the United States District Court for theSouthern District of New York denied the Class Action Plaintiffs'request for approval of the judgment reduction formula containedin the Stipulation of Settlement, in so far as the "ContributionCredit" is adjusted to reflect any limitation on the financialcapability of the Settling Director Defendants. The DistrictCourt holds that the Contribution Credit provision is a violationof 15 U.S.C. Section 78u-4(f)(7)(B)(i).Judge Cote will issue a detailed Opinion soon. Lead Plaintiff Terminates SettlementAfter reviewing Judge Cote's order regarding the "ability to pay"adjustment to the "Contribution Credit", Lead Plaintiff exercisedits right to terminate the Stipulation."[T]his cap on the judgment reduction to any verdict against thenon-settling Defendants was a material term of the Settlement forLead Plaintiff and the Class," Mr. Coffey relates.According to Mr. Coffey, the Lead Plaintiff cannot proceed tosettle at the risk of a substantial reduction in any judgmentagainst the remaining Defendants.A full-text copy of Mr. Coffey's February 2, 2005, Letter toJudge Cote is available for free at: http://bankrupt.com/misc/feb2letter_pacttermination.pdf Alan Hevesi's StatementNew York State Comptroller Alan G. Hevesi, sole trustee of the NewYork State Common Retirement Fund and lead plaintiff in theWorldCom class action lawsuit, today issued the followingstatement on today's WorldCom development:"While we respect the decision rendered by Judge Cote today, weare disappointed that it invalidated what was an integralprovision in the Settlement Agreement with the Settling DirectorDefendants. The so-called 'ability-to-pay' provision at issue wasa necessary part of the Settlement with the Settling DirectorDefendants so that any judgment we obtain on behalf of WorldCominvestors at trial against the remaining defendants, including theinvestment banks and Andersen, would not be reduceddisproportionately when compared to the amounts that the SettlingDirector Defendants could afford to pay to the Class in theirsettlement. As a result, we are constrained to terminate theSettlement, and we are continuing to prepare for trial against anyand all defendants remaining in the case. To be clear, theJudge did not rule against the personal payments by SettlingDirector Defendants and that is not the reason for the terminationof the settlement. The settlement is being terminated solelybecause of the potential impact on the amount other defendantsmight pay if the suit is successful."Headquartered in Clinton, Mississippi, WorldCom, Inc., now knownas MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries andmaintaining one of the most expansive IP networks in the world.The Company filed for chapter 11 protection on July 21, 2002(Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, theDebtors listed $103,803,000,000 in assets and $45,897,000,000 indebts. The Bankruptcy Court confirmed WorldCom's Plan onOctober 31, 2003, and on April 20, 2004, the company formallyemerged from U.S. Chapter 11 protection as MCI, Inc. (WorldComBankruptcy News, Issue No. 71; Bankruptcy Creditors' Service,Inc., 215/945-7000)WORLDSPAN LP: S&P Junks $300 Million Second-Lien Secured Notes--------------------------------------------------------------Standard & Poor's Ratings Services lowered its corporate creditrating on Worldspan L.P. to 'B' from 'B+', after the companycompleted a recapitalization.Standard & Poor's affirmed its 'B' rating on the new $490 millionsecured credit facility due 2010, with a recovery rating of '2',and 'CCC+' rating on the new $300 million second-lien securedfloating rates notes due 2011, with a recovery rating of '5'.Proceeds were used to redeem the 'BB-' rated ('1' recovery rating)$175 million secured credit facility due 2007 and the 'B-' rated$280 million senior notes due 2011, whose ratings have beenwithdrawn.The outlook is stable."The ratings downgrade is based on the company's weaker financialprofile as a result of its recapitalization," said Standard &Poor's credit analyst Betsy Snyder. "The incremental debt thecompany will add to its balance sheet to redeem preferred stockand other outstanding debt will not only ncrease its interestexpense, but also indicates a more aggressive financial policy."The ratings on Worldspan reflect its weak financial profile andlimited financial flexibility, pro forma for its recapitalization.The recapitalization will add debt to redeem all the preferredstock held by the company's owners, Citigroup Venture Capital andTeachers' Merchant Bank (which acquired the company from AmericanAirlines Inc., Delta Air Lines Inc., and Northwest Airlines Inc.in mid-2003 for $901.5 million). However, Worldspan benefits fromits leading position in processing on-line travel bookings, thefastest-growing segment of the travel distribution industry. Thissegment accounts for approximately 90% of Worldspan's revenues.Worldspan is the leading processor of GDS (global distributionsystem) transactions for on-line travel agencies. A GDS is acomputerized system that is used by suppliers of travel andtravel-related products and services (e.g., airlines, car rentalcompanies and hotels) to sell their services either through thesuppliers themselves or through travel agencies. GDS's are theprimary distributor of airline travel. Fees are typically paid bythe travel suppliers for bookings made through the systems. Thisis a highly concentrated industry, with only three majorparticipants other than Worldspan. In the U.S., Worldspan is thesecond largest participant, behind Sabre Holdings Corp., with amarket share of around 32%. However, in the past few years, theInternet has become the growth engine for travel distribution, andnow accounts for over 30% of U.S. GDS transactions. In thissegment, Worldspan is the largest participant, with a market shareof around 64%. It is also the only independent provider, andhas long-term contracts with Expedia, Priceline, Orbitz, andHotwire, all major on-line travel agencies.Worldspan's financial profile will weaken as a result of therecapitalization, resulting in added debt and interest expense.However, over the next several years, growth in Internet travelbookings should add to its revenues. In addition, a modest levelof capital spending should allow the company to use free cash flowto reduce debt, aiding both its earnings and debt levels. As aresult, the company's credit ratios are expected to improvemodestly over the intermediate term. If the company were to usefree cash flow to materially reduce debt, the outlook could berevised to positive.YUKOS OIL: Russia Borrows $6 Billion from China to Acquire Yugansk------------------------------------------------------------------Erin Arvedlund of The New York Times reports that Alexei Kudrin,the Russian Finance Minister, revealed on Feb. 1 that thestate-owned Vnesheconombank borrowed $6 billion from Chinese banksto allow Rosneft to purchase Yuganskneftegas. In exchange,Rosneft committed to supplying oil to China over the next fewyears. The terms of the oil pledges were not clear.Ms. Arvedlund notes that Sergei Oganesian, head of the RussianFederal Energy Agency, had a slightly different version. In anews conference Tuesday, Mr. Oganesian said Rosneft obtained $6billion from the government-owned China National PetroleumCorporation, which was guaranteed by future crude oil deliveries.According to Mr. Oganesian, both companies have agreed to a five-to six- year prepayment term. Russia Clarifies Kudrin's StatementsThe Russian Finance Ministry has elaborated on recent statementsmade by its head, Alexei Kudrin, with regard to Vnesheconombank'sborrowing from Chinese banks for Rosneft to buy Yuganskneftegaz,the controversial production subsidiary of Yukos."Finance Minister Alexei Kudrin has never claimed thatVnesheconombank drew credits from Chinese banks to finance thepurchase of Yuganskneftegaz shares," the Prime-Tass news agencyquoted the ministry's press service as saying.Responding to a question from the press about the Central Bank'sreport on increased borrowing by government bodies and to arequest to confirm whether it was connected with the purchase ofYuganskneftegaz, Mr. Kudrin said, "I can't quite comment on yourfigure. I can only say that apparently it refers toVnesheconombank's borrowing six billion U.S. dollars from certainChinese banks to credit Rosneft," the press service said.Speaking about the purchase of Yuganskneftegaz by Rosneft, theminister said he had no relation to this transaction. "I am not amember of the (Yuganskneftegaz) Board of Directors. Nor do Irepresent a corresponding ministry or agency in this matter,"Mr. Kudrin said."Regarding the credits, Vnesheconombank drew credits from Chinesebanks. But I can't give you a more detailed answer right now,"the press service quoted the minister as saying. DenialsRosBusiness Consulting reports that Vnesheconombank denies anyparticipation in Rosneft's acquisition of Yuganskneftegas.Vnesheconombank said it merely served as Russia's agent inacquiring certain loans from Chinese banks in exchange forRussia's long-term oil supplies to China.Vladimir Todres at Bloomberg News says Rosneft also denies the useof the $6 billion loan to buy Yuganskneftegas.Chinese Banks also deny the alleged loans. Bloomberg Newscorrespondent Koh Chin Ling reports that Beijing Foreign MinistrySpokesman Kong Quan said Chinese banks did not provide any loansto help Rosneft acquire Yuganskneftegas.Headquartered in Houston, Texas, Yukos Oil Company --http://www.yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved inthe energy industry substantially through its ownership of itsvarious subsidiaries, which own or are otherwise entitled to enjoycertain rights to oil and gas production, refining and marketingassets. The Company filed for chapter 11 protection on Dec. 14,2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq.,C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq.,Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright &Jaworski, LLP, represent the Debtor in its restructuring efforts.When the Debtor filed for protection from its creditors, it listed$12,276,000,000 in total assets and $30,790,000,000 in totaldebts. (Yukos Bankruptcy News, Issue No. 8; Bankruptcy Creditors'Service, Inc., 215/945-7000)YUKOS OIL: Khodorkovsky Gives 60% Menatep Stake to Leonid Nevzlin-----------------------------------------------------------------Vladimir Todres at Bloomberg News reports that MikhailKhodorkovsky, founder and former CEO of Yukos Oil Company, hashanded over 60% of his stake in Group Menatep to Leonard Nevzlinon December 19, 2004. Group Menatep holds approximately 40% ofYukos shares.Mr. Nevzlin, a close ally of Mr. Khodorkovsky, has occupied toppositions in Yukos and Menatep since 1991, and used to own 8% ofGroup Menatep shares, according to MosNews. After Russia issuedan arrest warrant for him, Mr. Nevzlin has taken up residence inIsrael. Nevzlin's Statement on Change in Ownership "I intend to act in the interests of all YUKOS shareholdersby defending their interests using the most effective meanspossible. It has never been more important to have the continuedsolidarity of our shareholders. "On behalf of the principal shareholders, I express my deepappreciation to Victor Gerachenko, co-chairman of the Group'sboard of directors, and to the members of the board themselves.They have defended the interests of the company and itsshareholders with the highest level of professionalism in theface of pressure exerted by authorities within the Russiangovernment. "Despite the continuing attack on the company, we want tobelieve in the pragmatism and rationalism of government leaders.We have not lost all hope that the authorities may decide toadopt a more balanced and constructive conclusion to the crisisthe government has created. "Unfortunately, YUKOS employees are the victims. "They bear the brunt of the consequences from the forceddestruction of the most successful company in Russia. I feel aresponsibility for the future of these employees and will do myutmost to support those affected by the persecution of YUKOS. "I am sincerely grateful to those who have supported us notonly abroad, but in Russia, where an individual making the mostsymbolic expression of solidarity is threatened with the loss ofpersonal rights and freedoms."Headquartered in Houston, Texas, Yukos Oil Company --http://www.yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved inthe energy industry substantially through its ownership of itsvarious subsidiaries, which own or are otherwise entitled to enjoycertain rights to oil and gas production, refining and marketingassets. The Company filed for chapter 11 protection on Dec. 14,2004 (Bankr. S.D. Tex. Case No. 04-47742). Zack A. Clement, Esq.,C. Mark Baker, Esq., Evelyn H. Biery, Esq., John A. Barrett, Esq.,Johnathan C. Bolton, Esq., R. Andrew Black, Esq., Fulbright &Jaworski, LLP, represent the Debtor in its restructuring efforts.When the Debtor filed for protection from its creditors, it listed$12,276,000,000 in total assets and $30,790,000,000 in totaldebts. (Yukos Bankruptcy News, Issue No. 8; Bankruptcy Creditors'Service, Inc., 215/945-7000)* NASD to Hold 3-Day Mediator Skills Training Starting March 7--------------------------------------------------------------NASD Dispute Resolution, in conjunction with the U.S. BankruptcyCourt for the Southern District of New York and the U.S.Bankruptcy Court for the Eastern District of New York will hold athree-day Mediator Skills Training on March 7-9, 2005, from 9 a.m.to 5 p.m., at: The United States Bankruptcy Court Alexander Hamilton Custom House One Bowling Green New York, NY 10004-1408The training program covers dispute resolution methods, ethicalissues confronting mediators, and impasse-breaking techniques. Itwill also provide participants significant role-play opportunitiesand experienced coaches. The program will cover topics including: -- Practical mediator skills -- Effective negotiation strategies -- Generating creative options -- Information gathering tools -- Relevant role play situations -- Skill-integrating exercises -- Advanced techniques sampler -- Moving beyond positions to focus on interests -- Behavioral and conflict styles -- Strategies for closing the gap -- Collaborative problem-solving -- Communication and gender issues -- Diversity and intercultural issues -- Personal role play coaches -- Practical workbooks with checklistsA $750 registration must be received on or before Feb. 21, 2005,together with a completed registration form. The cost includescontinental breakfast and lunch each day, plus program materials.Since space is limited, reservations are required. Make checkspayable to NASD Dispute Resolution. To register, please mail acompleted registration form and a check covering full payment to: Mediation Department/Elizabeth Bowers NASD Dispute Resolution One Liberty Plaza, 27th Floor 165 Broadway New York, N.Y. 10006 About the TrainersHesha Abrams has been an attorney for over twenty years, and anactive commercial and IP mediator since 1986. She was a pioneerin the mediation field serving on the legislative task force thatdrafted the landmark Texas ADR law. She has trained thousands ofprofessionals in negotiation, conflict management, mediationskills, and dispute resolution systems design since 1986. Beforebecoming a mediator, she worked as a trial lawyer handling complexbusiness litigation. Ms. Abrams has successfully mediated forthousands of parties and is known for crafting highly creativesettlements in very difficult cases. She specializes in IP andhighly complex and/or emotionally charged cases. She mediates andtrains in experiential models of mediation, conflict resolution,diversity, sexual harassment, team building, partnering andcommunication skill building. Ms. Abrams is a popular and dynamicspeaker and is a member of the Texas Bar. She mediates, consultsand trains both nationally and internationally.Jeff Abrams has been an attorney for over twenty-two years, and anactive mediator since 1986. Mr. Abrams has successfully mediatedfor hundreds of parties and specializes in trademark cases,commercial litigation, employment and business matters. He was apioneer in the mediation field, serving on the legislative taskforce that drafted the landmark Texas ADR law. He has beentraining attorneys, judges and executives in communication andnegotiation, conflict management, mediation skills, and disputesystems design since 1986. Before becoming a mediator, he workedas a trial lawyer handling complex business litigation. He servedas founding Editor of the ADR Report, a publication of the OregonState Bar. Mr. Abrams is a frequent and popular speaker on ADRand workplace issues. He is a member of the Oregon and TexasBars. Mr. Abrams was also President and CEO of a nationalfitness/trucking company. His substantial expertise in bothbusiness and law enhances his mediation skill set and enables himto resolve even the most difficult and challenging cases.Mr. & Ms. Abrams drafted the landmark ADR law in the state ofTexas, which created a statewide dispute resolution system forcivil cases (S.B. 1436,Chapter 154, Texas ADR act). Visit theirwebsite at http://www.abramsmediation.com/ About NASDNASD -- http://www.nasd.com/-- is the leading private-sector provider of financial regulatory services, dedicated to investorprotection and market integrity through effective and efficientregulation and complementary compliance and technology-basedservices. NASD touches virtually every aspect of the securitiesbusiness - from registering and educating all industryparticipants, to examining securities firms, enforcing both NASDrules and the federal securities laws, and administering thelargest dispute resolution forum for investors and member firms.* Upcoming Meetings, Conferences and Seminars---------------------------------------------March 2-3, 2005 PRACTISING LAW INSTITUTE 27th Annual Current Developments in Bankruptcy & Reorganization New York, NY Contact: 1-800-260-4PLI; 212-824-5710; or email@example.com 3, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (L.A.) The Century Plaza Los Angeles, California Contact: 1-703-739-0800 or http://www.abiworld.org/March 4, 2005 AMERICAN BANKRUPTCY INSTITUTE 12th Annual Bankruptcy Battleground West Looking Ahead to the Next Bankruptcy Cycle The Westin Century Plaza Hotel & Spa Los Angeles, Calif. Contact: 1-703-739-0800 or http://www.abiworld.org/March 7-9, 2005 THE U.S. BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK AND THE U.S. BANKRUPTCY COURT EASTERN DISTRICT OF NEW YORK Mediator Skills Training USBC Alexander Hamilton Custom House, One Bowling Green, New York, NY Contact: http://www.nysb.uscourts.gov/pdf/mediator_training.pdfMarch 9-12, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Spring Conference JW Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900 or http://www.turnaround.org/March 10-12, 2005 AMERICAN BAR ASSOCIATION Bench and Bar Bankruptcy Conference Washington, DC Contact: 800-238-2667-5147 or http://www.abanet.org/jd/bankruptcy/April 7-8, 2005 PRACTISING LAW INSTITUTE 27th Annual Current Developments in Bankruptcy & Reorganization San Francisco, CA Contact: 1-800-260-4PLI; 212-824-5710 or email@example.com 13, 2005 TURNAROUND MANAGEMENT ASSOCIATION Mediation in Turnarounds & Bankruptcies Milleridge Cottage Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/April 14-15, 2005 BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES The Sixth Annual Conference on Healthcare Transactions Successful Strategies for Mergers, Acquisitions, Divestitures and Restructurings The Millennium Knickerbocker Hotel, Chicago Contact: 1-800-726-2524; 903-595-3800 or firstname.lastname@example.com 28, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (East) J.W. Marriott Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/April 28- May 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriot, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/May 9, 2005 AMERICAN BANKRUPTCY INSTITUTE New York City Bankruptcy Conference Millenium Broadway New York, New York Contact: 1-703-739-0800 or http://www.abiworld.org/May 12-14, 2005 ALI-ABA Fundamentals of Bankruptcy Law Washington, D.C. Contact: 1-800-CLE-NEWS or http://www.ali-aba.org/May 12-14, 2005 ALI-ABA Fundamentals of Bankruptcy Law Santa Fe, NM Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/May 13, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (N.Y.C.) Association of the Bar of the City of New York, New York Contact: 1-703-739-0800 or http://www.abiworld.org/May 19-20, 2005 BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES The Second Annual Conference on Distressed Investing Europe Maximizing Profits in the European Distressed Debt Market Le Meridien Piccadilly Hotel London UK Contact: 1-800-726-2524; 903-595-3800 or firstname.lastname@example.com 23-26, 2005 AMERICAN BANKRUPTCY INSTITUTE Litigation Skills Symposium Tulane University Law School New Orleans, Louisiana Contact: 1-703-739-0800 or http://www.abiworld.org/June 2-4, 2005 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities and Bankruptcy Omni Hotel, San Francisco Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/June 9-11, 2005 ALI-ABA Chapter 11 Business Reorganizations Charleston, South Carolina Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/June 16-19, 2005 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/June 23-24, 2005 BEARD GROUP AND RENAISSANCE AMERICAN MANAGEMENT CONFERENCES The Eighth Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel, Chicago Contact: 1-800-726-2524; 903-595-3800 or email@example.com 14 -17, 2005 AMERICAN BANKRUPTCY INSTITUTE Ocean Edge Resort, Brewster, Massachusetts Contact: 1-703-739-0800 or http://www.abiworld.org/July 27- 30, 2005 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop Kiawah Island Resort and Spa, Kiawah Island, S.C. Contact: 1-703-739-0800 or http://www.abiworld.org/August 4, 2005 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Cambridge, Maryland Contact: 1-703-739-0800 or http://www.abiworld.org/September 8-11, 2005 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference (Including Financial Advisors/Investment Bankers Program) The Four Seasons Hotel Las Vegas, Nevada Contact: 1-703-739-0800 or http://www.abiworld.org/September 26, 2005 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Workshop Site to Be Determined London, England Contact: 1-703-739-0800 or http://www.abiworld.org/October 7, 2005 AMERICAN BANKRUPTCY INSTITUTE Views from the Bench Georgetown University Law Center Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/October 19-23, 2005 TURNAROUND MANAGEMENT ASSOCIATION 2005 Annual Convention Chicago Hilton & Towers, Chicago Contact: 312-578-6900 or http://www.turnaround.org/November 2-5, 2005 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES Seventy Eighth Annual Meeting San Antonio, Texas Contact: http://www.ncbj.org/December 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners (West) Hyatt Grand Champions Resort Indian Wells, California Contact: 1-703-739-0800 or http://www.abiworld.org/December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, Calif. Contact: 1-703-739-0800 or http://www.abiworld.org/March 30 - April 1, 2006 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Scottsdale, AZ Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/April 18-22, 2006 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting JW Marriott Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org/June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort Traverse City, Michigan Contact: 1-703-739-0800 or http://www.abiworld.org/July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott Newport, Rhode Island Contact: 1-703-739-0800 or http://www.abiworld.org/July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island Amelia Island, Florida Contact: 1-703-739-0800 or http://www.abiworld.org/October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage Long Island, NY Contact: 312-578-6900 or http://www.turnaround.org/November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch Scottsdale, Arizona Contact: 1-703-739-0800 or http://www.abiworld.org/The Meetings, Conferences and Seminars column appears in theTroubled Company Reporter each Wednesday. Submissions via e-mailto email@example.com are encouraged. *********Monday's edition of the TCR delivers a list of indicative pricesfor bond issues that reportedly trade well below par. Prices areobtained by TCR editors from a variety of outside sources duringthe prior week we think are reliable. Those sources may not,however, be complete or accurate. The Monday Bond Pricing tableis compiled on the Friday prior to publication. Prices reportedare not intended to reflect actual trades. Prices for actualtrades are probably different. Our objective is to shareinformation, not make markets in publicly traded securities.Nothing in the TCR constitutes an offer or solicitation to buy orsell any security of any kind. It is likely that some entityaffiliated 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 withinsolvent balance sheets whose shares trade higher than $3 pershare in public markets. At first glance, this list may look likethe definitive compilation of stocks that are ideal to sell short.Don't be fooled. Assets, for example, reported at historical costnet of depreciation may understate the true value of a firm'sassets. A company may establish reserves on its balance sheet forliabilities that may never materialize. The prices at whichequity securities trade in public market are determined by morethan a balance sheet solvency test.A list of Meetings, Conferences and Seminars appears in eachWednesday's edition of the TCR. Submissions about insolvency-related conferences are encouraged. Send announcements firstname.lastname@example.com Friday's edition of the TCR includes a review about a book ofinterest to troubled company professionals. All titles areavailable at your local bookstore or through Amazon.com. Go tohttp://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday editionof the TCR.For copies of court documents filed in the District of Delaware,please contact Vito at Parcels, Inc., at 302-658-9911. Forbankruptcy documents filed in cases pending outside the Districtof 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 NTroubled Company Reporter is a daily newsletter co-published byBankruptcy 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, DylanCarlo Gallegos, Jazel P. Laureno, Cherry Soriano-Baaclo, MarjorieSabijon, Terence Patrick F. Casquejo and Peter A. Chapman,Editors.Copyright 2005. All rights reserved. ISSN: 1520-9474.This material is copyrighted and any commercial use, resale orpublication in any form (including e-mail forwarding, electronicre-mailing and photocopying) is strictly prohibited without priorwritten permission of the publishers. Information containedherein is obtained from sources believed to be reliable, but isnot guaranteed.The TCR subscription rate is $675 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firmfor the term of the initial subscription or balance thereof are$25 each. For subscription information, contact Christopher Beardat 240/629-3300. *** End of Transmission ***