text: TCR_Public/041214.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, December 14, 2004, Vol. 8, No. 275 HeadlinesAADCO AUTOMOTIVE: Sept. 30 Balance Sheet Upside Down by $2.8 Mil.AIR CARGO: Wants to Hire Tydings & Rosenberg as Bankruptcy CounselAIR CARGO: Wants to Use Silicon Valley's Cash CollateralALLIANCE IMAGING: S&P Puts 'B-' Rating on $150 Million Sr. NotesAMERICAN EQUITY: Fitch Rates $250 Million Senior Debt at 'BB-'AMERISOURCEBERGEN: Moody's Reviewing Low-B Ratings & May DowngradeASSET BACKED: Fitch Puts 'BB+' on $3.5 Million Private OfferingATA AIRLINES: Wants to Reject John Hancock Aircraft LeaseATLANTIC EXPRESS: Liquidity Pressures Prompt S&P to Junk RatingsAVAYA INC: Completes Acquisition of Tenovis GmbH & Co.AVAYA INC: Redeeming Liquid Yield Option(TM) Notes Until Dec. 20AVOTUS CORP: Sept. 30 Stockholders' Deficit Narrows to $536,144BERWALD PARTNERSHIP: Hall Law Firm Approved as Committee CounselBOCA RESORTS: Completes Merger with Blackstone AffiliateBOCA RESORTS: S&P Withdraws B+ Rating After Blackstone AcquisitionBORGER ENERGY: Moody's Pares Senior Secured Debt Rating to Ba1CATHOLIC CHURCH: Spokane Creditors Must File Claims by Apr. 5CELESTICA INC: Moody's Reviewing Low-B Ratings & May DowngradeCENVEO INC: Low Profit Expectations Trigger S&P to Slice RatingsCITATION CAMDEN: Files Schedules of Assets and LiabilitiesCOPAMEX: Fitch Rates Sr. Unsecured Foreign & Local Debt at 'BB-'CORRECTIONS CORP: Moody's Revises Outlook on Ratings to PositiveDANA CORP: Completes Private Placement of $450 Million Sr. NotesDIVERSIFIED ASSET: Moody's Pares Rating on Class B-1L Notes to B3E*TRADE: S&P Assigns 'BB' Rating to $6.952 Million Class E NotesEL-BETHEL MISSIONARY: Voluntary Chapter 11 Case SummaryENRON CORP: Nahem Fine Art Agrees to Settle Claim for $628,000EPCO INC: Case Summary & 10 Largest Unsecured CreditorsEXIDE TECH: William Martin Wants Debtors to Comply with PlanFOUNDATION COAL: Prices Initial Public Offering of Common StockFRIEDMAN'S INC: Allan Edwards Leaves Post as Executive ChairmanGENERAL NUTRITION: S&P Junks Sub. Debt & Preferred Stock RatingsGITTO GLOBAL: Has Until Jan. 23 to Make Lease-Related DecisionsGLOBAL CROSSING: Files Registration Statement for 4.9 Mil. SharesGLOBAL CROSSING: GCUK to Sell $350M Sr. Debt via Private PlacementGLOBAL CROSSING: Adopts Leadership Program to Keep Key ExecutivesGLOBAL DIGITAL: Reduces Workforce Following Default NoticeGOODMAN GLOBAL: S&P Rates Proposed $500M Sr. Sec. Facility at 'B+'HAYES LEMMERZ: Creditor Trust Wants to Clarify Modified PlanHAYES LEMMERZ: Posts $9.5 Million Net Loss in Third QuarterHEI INC: Waives & Amends Term Loan Pacts with Commerce BankIESI CORP: Gets Requisite Consents to Amend IndentureIESI CORP: Moody's Puts B1 Rating on $375M Senior Secured FacilityINTEGRATED HEALTH: Will File Removal Notices Until Feb. 7INTELLIVEX INC: Case Summary & 20 Largest Unsecured CreditorsINTERMEDICAL HOSPITAL: Case Summary & Largest Unsecured CreditorsINTERSTATE BAKERIES: Discloses Pension Accounting ProblemsJ.P. MORGAN: Fitch Affirms Class B-5 Mortgage Trust Rating at 'B'JOBS.COM: Fifth Circuit Says Warrant Rights are Equity InterestsKAISER ALUMINUM: Asks Court to Establish Solicitation ProceduresKING SERVICE: Wants Exclusive Period Extended Through June 11KMART CORP: Settles Noritsu Dispute with $4,750,000 Cash PaymentLITFUNDING CORP: Inks $5 Million Multi-Stage Financing PactMAGELLAN HEALTH: Aetna to Purchase Health Care OperationsMERRILL LYNCH: Completes Exchange Offer for Convertible SecuritiesMEZZ CAP: Fitch Puts Low-B Ratings on Three Series 2004-C2 Certs.MILPITAS MOTORCYCLES: Case Summary & Largest Unsecured CreditorsMIRANT CORP: District Court Rules in Favor of Pepco ContractsNAVISITE INC: First Qtr. EBITDA Up $1.2 Mil. Over Previous QuarterNEXIA HOLDINGS: Working Capital Deficit Spurs Going Concern DoubtNORTEL NETWORKS: Export Development Canada Waives Filing DefaultNRG ENERGY: Moody's Rates Proposed $950M Secured Facility at Ba3OMEGA HEALTHCARE: Prices 3.5 Million Shares in Public OfferingPILLOWTEX CORP: Declares Castle & Cooke's $4.25-Mil. Bid HighestPREMIER CONCEPTS: Emerges From Chapter 11 ProtectionPURE MORTGAGES: Moody's Places Ba2 Rating on $23.5M Class F NotesRAINIER CBO: Fitch Assigns Low-B Ratings on Classes B-1L & B-2REAL MEX: S&P Places Single-B Ratings on CreditWatch NegativeREGAL ROW: Bankr. Ct. Will Hear Lawsuit Against Washington MutualRELIANCE GROUP: High River Objects to Disclosure StatementROLLIE R. FRENCH: Case Summary & 20 Largest Unsecured CreditorsSEQUILS-MINCS: Fitch Puts 'BB-' Rating on $58 Mil. MINCS NotesSEQUOIA MORTGAGE: Fitch Puts Low-B Ratings on 4 Cert. ClassesSIMMONS BEDDING: S&P Rates Planned $165M Sr. Discount Notes at B-SIMMONS COMPANY: Moody's Junks $165 Million Senior Discount NotesSINGH BROTHERS LLC: Case Summary & 4 Largest Unsecured CreditorsSTANDARD PARKING: Moody's Withdraws Junk Ratings After RedemptionSTELCO INC: Utilizes $257.6 Million of Credit FacilitySTRUCTURED ASSET: Fitch Assigns Low-B Ratings on Four CertificatesTENET HEALTHCARE: Subsidiary to Sell St. Charles General HospitalTENGTU INTL: Working Capital Deficiency Spurs Going Concern DoubtTOWER PARK: Unsatisfactory Cash Flows Trigger Going Concern DoubtTRAPEZA CDO: Fitch Affirms $6.9 Mil. Class E Debt Rating at 'BB'TRUSSWAY LTD.: Involuntary Chapter 11 Case SummaryUAL CORP: Permanent Salary Reductions to Save $112 Mil. AnnuallyUAL CORP: IFS Wants Pension Payments Under Administrative ClaimUS AIRWAYS: Flight Attendants Authorize StrikeUS AIRWAYS: Passenger Load Hits Record 73.1% in November 2004USGEN: HSBC Bank Issues Notice to Bear Swamp CertificateholdersWEIRTON STEEL: Court Approves HSBC Bank Settlement AgreementWILLIAMS CO: Fitch Upgrades Senior Secured Debt Rating to 'BB'WINN-DIXIE: Grants Restricted Stock Award to New President & CEO* Jonathan Halpern Joins Winston & Strawn as Partner in NY Office* Davis Polk Elects Five New Counsel* Large Companies with Insolvent Balance Sheets *********AADCO AUTOMOTIVE: Sept. 30 Balance Sheet Upside Down by $2.8 Mil.-----------------------------------------------------------------AADCO Automotive, Inc., reported its financial results for first quarter fiscal year 2004-2005, ending September 30, 2004.Sales for the first quarter ended September 30, 2004, increased by $578,310 or 56% to $1,605,342 compared to $1,027,032 in the same period in 2003. The sales increase was due to the following main factors. Firstly, the acquisition of Coreline on April 1st, 2004 added $393,344 to sales revenue for the first quarter. Secondly, the addition of major preferred supplier arrangements with large corporate body shops and AADCO's continued focus on sales reorganization provided the balance of the improvement.Throughout the fall of 2003, sales were increasing due to initial implementation of the Company's new sales strategies. These new sales strategies include increasing sales and sales operations staff by 30%, upgrading phone and order processing systems, installing the latest version of inventory management systems, introducing a unique and proprietary reporting system for its major clients, and refining sales methodologies to better target and service its growing client base. Aadco does anticipate a decrease in sales of LKQ parts in the second quarter due to the two-month move of its premises from 220 Walker Drive to its new facility on 38 Hansen Road. With the finalizing of the physical move by December 1, 2004, and the setup of the new facility being fully operational by December 31, 2004, the negative effect of the move on sales revenues should dissipate by the end of the second quarter.Gross Margin decreases to 40% from 54% during the quarter. Margin is greatly affected by the source of product. Traditionally, product is either procured through a regulated auction system utilized by insurance companies as a means of disposing of their salvage vehicles. Aadco purchases over 90% of its vehicles through the auction system. Conversely, Aadco may choose to purchase product from one of its exchange partners. Currently Aadco has over 45 partners, most of whom are located throughout Ontario. Parts are readily available from these partners but margins are substantially less than if the part being sold originates from Aadco's inventory. Typical margins on parts purchased from other yards are in the range of 20-25%, where margins from Aadco inventory have margins in the 60% range.Gross margin for the first quarter of fiscal 2005 was $642,766 or 40% compared to $556,834 or 54% for the same period last year. The reasons for this are twofold. Firstly, the Coreline revenues carry a slightly lower margin than the sale of LKQ parts. Secondly, the company has seen an increase in the parts it has to source from outside suppliers as compared to having those parts in its own inventory. During the later part of the quarter the company became more reliant on outside sources of parts due to capital constraints and as a result of preparing for the move to its new premises. These capital constraints caused a reduction in the number of auctions the company attended thereby limiting the amount of new inventory coming into the company. This disruption is seen as temporary in nature and will be rectified once the company finalizes its current negotiations for additional capital and commences dismantling during December of 2004. Balance SheetAs at September 30, 2004, current assets were $4,489,614 and current liabilities were $3,028,992 compared to $4,543,143 and $3,267,277 at June 30, 2004, resulting in an increase in working capital at September 30, 2004 to $1,460,622 from $1,275,866 at June 30, 2004. The increase in working capital is due to the release of the $750,000 promissory note to the company's old landlord offset by an increase in accounts payable.The company is in the midst of finalizing a $2,620,000 financing with Quorum Managed Funds. These funds will be brought into the company by way of a 6% convertible debenture. The proceeds of this debenture issue will be used for working capital, inventory replenishment and acquisitions. The net effect on the balance sheet will be reduction of long-term debt of approximately $2,100,000.At September 30, 2004, stockholders' deficit narrowed to $2,820,275 compared to a $2,928,010 deficit at September 20, 2003. Financial PositionThe Corporation closed its Series 4 convertible dentures on February 10, 2004. A total of $1,875,000 was paid on a short-term basis to the Corporation in the first, second and third quarters of fiscal 2004 and these loans have now been converted to the Series 4 Convertible debentures. The advance of these funds has allowed the Corporation to expand its operations, fund its operating losses during fiscal 2004 and acquire certain assets of Coreline Auto Parts, Inc.During fiscal 2004, the Corporation entered into a financial agreement with a third party to facilitate improved turnover/cash flow from its trade accounts receivables. Under the terms of this agreement, the Corporation may draw up to $300,000 based on a certain ratio of its trade receivables. This financial agreement is secured by a first charge on trade accounts receivables covered by the agreement. During fiscal 2004, an additional $837,500 in cash was received from the exercise of 6,979,167 warrants at $0.12 per Common Share and 6,979,167 Common Shares were issued.The Corporation is raising additional capital through Quorum Managed Funds in order to support the business and carry out its planned activities. The initial tranche of $1,060,000 of the funding is expected to close before the end of the second quarter of fiscal 2005. In the absence of the completion of new financing arrangements, the Corporation may default in its debt obligations, which could cause the debt obligations to become immediately payable. About AADCO Automotive, Inc.AADCO Automotive, Inc., is a rapidly growing, Canadian public company committed to complete vehicle dismantling and providing quality used parts and core from insurance salvage. AADCO serves mechanical and body shop clients across Ontario through its LKQ parts division. AADCO maintains the largest unbolted inventory of quality used OEM parts in Canada at its 118,000 sq. ft. facility in Brampton, Ontario and is the only auto recycler to have been awarded the Ecologo for environmental stewardship.AIR CARGO: Wants to Hire Tydings & Rosenberg as Bankruptcy Counsel------------------------------------------------------------------ Air Cargo, Inc., asks the U.S. Bankruptcy Court for the District of Maryland for permission to employ Tydings & Rosenberg LLP as its general bankruptcy counsel.Tydings & Rosenberg is expected to: a) provide the Debtor with legal advice with respect to its powers and duties as a Debtor-in-Possession and in the operation of its business and management of its property; b) represent the Debtor in defense of any proceedings instituted to reclaim property or to obtain relief from the automatic stay under Section 362(a) of the Bankruptcy Code; c) prepare any necessary applications, answers, orders, reports and other legal papers, and appear on the Debtor's behalf in proceedings instituted by or against the Debtor; d) assist the Debtor in the preparation of schedules, statements of financial affairs, and any amendments to those documents that the Debtor may be required to file in its chapter 11 case; e) assist the Debtor in the preparation of a plan of reorganization and a disclosure statement; f) assist the Debtor with all bankruptcy legal work; g) provide the Debtor with general corporate legal advice; and h) perform all of the legal services for the Debtor that may be necessary or desirable in its chapter 11 case.Alan M. Grochal, Esq., a Partner at Tydings & Rosenberg, is the lead attorney for the Debtor's restructuring. Mr. Grochal discloses that the Firm received a $35,000 retainer. Tydings & Resenberg has not yet submitted its professionals' compensation rates to Air Cargo at the time that Air Cargo submitted its motion to the Court to employ the Firm as its bankruptcy counsel.Tidings & Rosenberg assures the Court that it does not represent any interest adverse to the Debtor or its estate. Headquartered in Annapolis, Maryland, Air Cargo, Inc., provides contract management, freight bill auditing and consolidated freight invoicing and payment services for wholesale cargo customers. The Company filed for chapter 11 protection on Dec. 7, 2004 (Bankr. D. Md. Case No. 04-37512). When the Debtor filed for protection from its creditors, it listed total assets of $16,300,000 and total debts of $17,900,000. AIR CARGO: Wants to Use Silicon Valley's Cash Collateral -------------------------------------------------------- Air Cargo, Inc. asks the U.S. Bankruptcy Court for the District of Maryland for permission, on an interim basis, to use cash collateral securing repayment of prepetition obligations to its primary lender, Silicon Valley Bank. The Debtor needs access to the cash collateral to avoid immediate and irreparable harm to its estate and to pay the necessary costs and expenses required for its ongoing business operations. The Debtor owes Silicon Valley $2,973,119.63, plus accrued interest, fees and costs, under a prepetition Loan and Security Agreement dated February 28, 2004. Under the terms of the Loan and Security Agreement, the loan from Silicon Valley is secured by all the proceeds from the Debtor's assets, including accounts receivable, deposit accounts, instruments, general intangibles, chattel paper, inventory, equipment, fixtures, goods and accounts. The Debtor's use of the cash collateral on an interim basis is in accordance with a budget for a five-week period commencing from December 10, 2004, up to January 7, 2005. (in thousands of dollars) For the Week Ending Dec. 10 Dec. 17 Dec. 24 Dec. 31 Jan. 7 ------- ------- ------- ------- -------Total Wages and Temporary Help (1,350) (61,905) (1,350) (52,351) (62,352)Total Non-PayrollOperating CashExpenditures (57,150) (145,134) (24,859) (14,500) (42,167)Total CashDisbursement Operations (58,500) (207,039) (26,209) (66,851) (104,519)To adequately protect Silicon Valley's interest, the Debtor has agreed to grant Silicon a continuing security interest having the same priority and extent as the prepetition interest of Silicon in the cash collateral. The Debtor has also agreed to grant a superpriority claim to Silicon for any diminution of the value of the cash collateral. Headquartered in Annapolis, Maryland, Air Cargo, Inc., provides contract management, freight bill auditing and consolidated freight invoicing and payment services for wholesale cargo customers. The Company filed for chapter 11 protection on Dec. 7, 2004 (Bankr. D. Md. Case No. 04-37512). Alan M. Grochal, Esq., at Tydings & Rosenberg, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $16,300,000 and total debts of $17,900,000. ALLIANCE IMAGING: S&P Puts 'B-' Rating on $150 Million Sr. Notes----------------------------------------------------------------Standard & Poor's Ratings Services assigned a 'B-' rating to medical diagnostic imaging provider Alliance Imaging Inc.'s $150 million senior subordinated notes due December 2012. The proceeds, along with proceeds from the company's amended term loan C, will be used to retire $260 million of outstanding 10 3/8% senior subordinated notes due 2011, which were tendered on November 30. The 'B+' corporate credit rating is affirmed. The outlook is stable."Alliance Imaging Inc.'s ratings reflect the highly fragmented and competitive nature of the medical imaging industry, the company's concentration in mobile MRI facilities, and the risk of changes to reimbursement," said Standard & Poor's credit analyst Cheryl Richer. "These concerns overshadow favorable industry demographics, the company's national presence, and its industry reputation for quality. The rating is also supported by the company's positive free cash flow generation and strong financial metrics," Ms. Richer added.With 481 diagnostic imaging systems (including 362 MRI systems and 53 PET or PET/CT systems) and more than 1,000 customers in 43 states, Anaheim, California-based Alliance is the largest U.S. mobile scan provider, offering MRI scan services to hospitals based on the number of scans or the length of use. It also offers PET services to large hospitals with oncology practices. The company's competitors include: -- InSight Health Service Corporation, -- MedQuest Inc., and -- Radiologix Inc. While mobile operations provide higher margins, they add risk to the portfolio; about one-third of contracts renew annually, and competition centers largely on price. Over the past couple of years, contract renewals have been even more uncertain as attractive vendor-finance arrangements have increased the likelihood that higher volume customers will acquire their own imaging equipment. Alliance has grown through small acquisitions and contract-linked equipment purchases. The company is rationalizing its mobile fleet in an attempt to reduce its revenue gap, which it defines as (annualized) contractual revenues lost net of (annualized) contractual revenues gained. In addition, the company has begun to diversify into fixed-site centers, and plans to add between 12-15 new sites per year. Its strategy is to partner with hospitals that offer a known and relatively secure level of patient throughput. The fixed-site initiative also effectively replaces riskier contract-based relationships with ones in which both parties are invested in the success of the venture. In addition, Alliance is adding PET/CT facilities to capitalize on the expanding number of indications reimbursed by third parties; the average number of PET systems in its fleet grew to 50 in the third quarter of 2004 from 41 in the third quarter of 2003. Alliance receives about 88% of revenues from wholesale (hospital and health care) providers. Although its sales profile minimizes its direct exposure to Medicare and provides a measure of revenue visibility, future reductions in pricing are possible given ongoing pressures on health care costs. In November 2004, the Center for Medicare and Medicaid Studies announced a 21% reduction in PET hospital reimbursement rates effective Jan. 1, 2005.AMERICAN EQUITY: Fitch Rates $250 Million Senior Debt at 'BB-'--------------------------------------------------------------Fitch Ratings has assigned a 'BB-' senior debt rating to American Equity Investment Life Holding Co.'s -- AEL -- $250 million contingent, convertible, senior debt due 2024 recently issued under SEC Rule 144a. At the same time, Fitch has assigned a 'BBB' insurer financial strength -- IFS -- rating to AEL's subsidiary life insurers, American Equity Investment Life Insurance Company and American Equity Investment Life Insurance Company of New York. The Rating Outlook is Stable.Rationale for AEL's senior debt rating includes elevated levels of financial leverage at approximately 55% debt and preferred stock at the holding company level after the issuance of the $250 million of senior debt. Fitch's equity adjusted financial leverage that gives equity credit for trust preferred securities is approximately 48% and does not include notes payable to a related party service company. As a result of rapid growth in recent years, the company has a large DAC asset on its balance sheet, exceeding 210% of shareholders equity at Sept. 30, 2004, reducing the quality of GAAP equity.Statutory cash dividend, fixed-charge coverage for 2005 is expected to be approximately 2 times while GAAP-based EBIT coverage is expected to be greater at approximately 4x. Fitch believes that the positive GAAP based earnings trend could improve coverage levels.The notes are unsecured obligations of AEL and pay interest of 5.25% with a contingent interest feature beginning in 2012. The notes mature Dec. 6, 2024, and may be not be redeemed by the company before Dec. 15, 2011. Holders of the notes may require AEL to repurchase all or a portion of their notes on Dec. 15, 2011, 2014 and 2019. Fitch views the put feature as potentially limiting the permanency of the capital to AEL. The notes are convertible under certain circumstances into cash and shares of AEL's common stock at an initial conversion price of $14.47 per share. Rationale for the 'BBB' IFS rating for AEL's main operating subsidiary, American Equity Investment Life, include the company's position as a leading producer in the U.S. equity index annuities marketplace, strong service to its national marketing organization based distribution, improving GAAP earnings profile, and low credit risk in its asset portfolio. Substantially, all the proceeds from the offering are expected to be contributed over time to American Equity Life to increase the capital and surplus position and support future growth.Fitch's concerns include AEL's business line concentration and rapid growth with over 95% of its earnings tied to fixed and equity index annuities. Fitch views AEL Life as currently adequately capitalized, but believes that statutory capitalization could be pressured in the future due to strong projected sales growth. American Equity Life of New York's 'BBB' IFS rating is based upon Fitch's consideration that the company is a core operation of American Equity Life Investment. Fitch also believes that AEL Life has elevated levels of operational risk due to its asset liability profile. Fitch observes that many of AEL products are designed with features to reduce lapses in its annuity book of business and that its equity index annuity products have adequate hedge management. However, Fitch believes that the current bond portfolio has above average interest rate risk, especially in rising interest rate scenarios due to its large investment in zero coupon, long duration federal agency securities. In addition, in declining interest rate scenarios earnings and surplus could be pressured due to reinvestment risk present in the significant investment in callable, federal agency securities. Fitch views favorably AEL's progress in enhancing its asset liability management techniques and in taking investment strategy initiatives to diversify its investment portfolio in conjunction with asset growth.AMERISOURCEBERGEN: Moody's Reviewing Low-B Ratings & May Downgrade------------------------------------------------------------------Moody's Investors Service placed the ratings of AmerisourceBergen Corporation (Ba2 senior implied) under review for possible upgrade due to continued debt reduction, reduced reliance on external liquidity sources and expectations of good free cash flow generation relative to debt. Moody's believes that improved financial flexibility -- achieved through sustained debt reduction -- would help to offset the transition to a new business model and the loss of two key contracts. Further, the establishment of a new unsecured bank facility will be considered in this review.Moody's affirmed ABC's SGL-2 speculative grade liquidity rating. In addition to withdrawing the rating on Bergen Brunswig's TOPrS, which were redeemed earlier this year, Moody's is withdrawing the rating on the company's old credit facility. Moody's has not rated the company's new credit facilities.Ratings placed under review for possible upgrade: * AmerisourceBergen Corporation: -- Ba3 senior unsecured notes; -- Ba3 issuer rating; -- Ba2 senior implied rating. * Amerisource Health Corporation: -- B1, 5% convertible subordinated notes, due 2007.Ratings withdrawn: * AmerisourceBergen Corporation: -- Ba1 secured bank facility rating. * Bergen Brunswig Corporation: -- B1, 7.8% Trust Originated Preferred Securities (TOPrS), due 2039.Rating affirmed: * AmerisourceBergen Corporation: -- SGL-2 speculative grade liquidity rating.The rating review is supported by ABC's recent announcement that it has repaid its $180 million secured bank term loan and is redeeming its 5% convertible debt, which follows $300 million of debt reduction earlier this year.Under ABC's previous secured bank credit facility, the secured bank lenders benefited from their security in a significant amount of assets of the company -- primarily in the form of inventory. This resulted in secured bank debt being notched upward from the senior implied rating and the unsecured note holders being notched below the senior implied rating.Moody's review will consider: (1) the sustainability of lower debt levels given the potential for more share buybacks and acquisitions as the company achieves greater flexibility with new bank facility; (2) the likelihood that convertible debt will be redeemed with equity; (3) the effects of a changing business model; (4) the effects of the recent loss of several large contracts; and (5) the notching implications associated with the removal of secured debt from the company's capital structure.The affirmation of the SGL-2 rating reflects Moody's updated assessment of ABC's near-term liquidity position, recognizing the company's significantly reduced reliance on external sources of liquidity, good operating cash flow generation, anticipated future debt reduction and a solid near-term covenant compliance cushion. Although these factors are offset to some extent by lower free cash flow due to temporarily higher capital spending, the recent loss of two key contracts, a share buyback program and uncertainty associated with a new business model, the company is expected to have a good level of liquidity over the next 12 months.AmerisourceBergen Corporation, headquartered in Valley Forge, Pennsylvania, is one of the nation's leading wholesale distributors of pharmaceutical products and related services.ASSET BACKED: Fitch Puts 'BB+' on $3.5 Million Private Offering---------------------------------------------------------------Asset Backed Securities Corporation home equity loan trust, series 2004-HE10, certificates are rated: -- $186,030,000 class A-1 through A-3 'AAA'; -- $11,670,000 class M-1 'AA+'; -- $11,420,000 class M-2 'AA'; -- $12,640,000 class M-3 'A'; -- Privately offered $6,080,000 class M-4 'BBB+'; -- Privately offered $2,310,000 class M-5 'BBB'; -- Privately offered $2,790,000 class M-6 'BBB-'; -- Privately offered $3,532,000 class M-7 'BB+' by Fitch. The 'AAA' rating on the senior certificates reflects the 23.45% total credit enhancement provided by: * the 4.80% class M-1, * the 4.70% class M-2, * the 5.20% class M-3, * the 2.50% class M-4, * the 0.95% class M-5, * the 1.15% class M-6, * the 1.45% class M-7, and * the 2.70% initial overcollateralization -- OC. All certificates have the benefit of monthly excess cash flow to cover losses. In addition, the ratings reflect the quality of the loans and the integrity of the transaction's legal structure, as well as the primary servicing capabilities of Litton Loan Servicing rated 'RPS1' by Fitch, and U.S. Bank National Association as Trustee.As of the cut-off date, Dec. 1, 2004, the mortgage pool consists of 1,331 closed-end, first lien, fixed-rate, and adjustable-rate mortgage loans with an aggregate principal balance of $243,033,897. The weighted average mortgage loan rate is approximately 7.092%, and the weighted average remaining term to maturity is 353 months. The average principal balance of the mortgage loans as of the cut-off date is approximately $182,595. The weighted average original loan-to-value ratio -- OLTV -- is 79.91%, and the weighted average Fair, Isaac & Co. score is 607. The properties are primarily located in: * California (33.67%), * Florida (9.04%), and * Illinois (5.48%).ATA AIRLINES: Wants to Reject John Hancock Aircraft Lease---------------------------------------------------------As part of their ongoing efforts to reduce costs and maximize fleet flexibility, ATA Airlines and its debtor-affiliates have identified that the Boeing 727-290 aircraft leased from John Hancock Leasing Corporation no longer fits into their business plan and, accordingly, will no longer be utilized by them. The Debtors determined that the Aircraft does not have any marketable value in that the lease rates are substantially above market lease rates for comparable aircraft. Thus, the Aircraft is burdensome to the Debtors and no longer beneficial to them or their estates.Pursuant to Section 365 of the Bankruptcy Code, the Debtors seek the United States Bankruptcy Court for the Southern District of Indiana's authority to reject the lease of the Boeing 727-290 and its engines identifiable through these details: Tail No. Engine Model Engine Serial Number -------- --------------------- ------------------------ N775AYT Pratt & Whitney JT8-7 654698, 708341, & 709553Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, relates that on or before November 30, 2004, the Aircraft and its corresponding engines were taken out of service. John Hancock was notified of their location and informed of the Debtors' intent to reject the Lease effective November 30.Mr. Nelson assures the Court that the Debtors will continue the existing insurance coverage for the Aircraft and its engines and the existing FAA-approved maintenance program for 30 days after the Rejection Date.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) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago-Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company,ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. TheCompany and its debtor-affiliates filed for chapter 11 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 theDebtors filed for protection from their creditors, they listed$745,159,000 in total assets and $940,521,000 in total debts.(ATA Airlines Bankruptcy News, Issue No. 8; Bankruptcy Creditors'Service, Inc., 215/945-7000)ATLANTIC EXPRESS: Liquidity Pressures Prompt S&P to Junk Ratings----------------------------------------------------------------Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on Atlantic Express Transportation Corp. to 'CCC+' from 'B' and removed the ratings from CreditWatch, where they were placed July 6, 2004. The outlook is developing.The rating actions reflect the company's greater-than-expected liquidity pressures in recent months and Standard & Poor's belief that challenging market conditions will continue to put pressure on earnings and cash flow over the next few years, despite recent financing activities that have provided some breathing room for the company over the near term. The Staten Island, New York-based school bus transportation company, which emerged from Chapter 11 bankruptcy protection in December 2003, has about $150 million of lease-adjusted debt."Earlier this year, the company disclosed that it expects cash flow over the coming year to be adversely affected by a number of factors, including higher-than-expected fuel costs and other expenses," said Standard & Poor's credit analyst Lisa Jenkins. "Although the company subsequently tapped some additional sources of funding, liquidity remains tight and leaves the company extremely vulnerable to cost and revenue pressures." Adding to financial uncertainty is the fact that Atlantic Express derives a substantial portion of revenues, 42.7% in fiscal 2004 (fiscal year end is June 30), from the New York City Department of Education -- DOE. This contract is up for renewal in mid-2005. The loss of all or a portion of this contract or a failure to renew or rebid the contract on favorable terms would have a material negative impact on the company. The loss of certain other contracts would also have negative consequences for the company, given its modest size and limited liquidity. Financial risk is heightened by the fixed price nature of the company's contracts, which leaves it vulnerable to unexpected increases in costs. Despite its emergence from Chapter 11, Atlantic Express remains highly leveraged. For fiscal 2004, the company generated a loss from operations of $6.6 million. Debt to capital is currently about 70.4%.Atlantic Express is the fourth-largest (albeit in a very fragmented industry) provider of school bus transportation in the U.S. and the leading provider in New York City. School bus services account for about 88% of revenues. The company also provides paratransit services for physically and mentally disabled passengers and other services, including express commuter lines and tour buses. The company operates a fleet of approximately 6,000 vehicles.If the company renews or rebids contracts, including the important New York City contract, on favorable terms and is able to control costs such that the outlook for earnings, cash flow generation, and liquidity improves, ratings could be raised. Should the company lose a significant portion of its revenue base or experience increased costs such that earnings, cash generation, and liquidity come under renewed pressure, ratings could be lowered.AVAYA INC: Completes Acquisition of Tenovis GmbH & Co.------------------------------------------------------Avaya, Inc., (NYSE: AV) completed the acquisition of Tenovis GmbH & Co. KG, a major European provider of enterprise communications systems and services, from affiliates of Kohlberg Kravis Roberts & Co.Tenovis provides communications solutions, including telephony, call and contact centers, customer relationship management, messaging, networking and services to companies and public authorities across Europe. With the acquisition, Avaya adds more than 5,400 employees to its operations across Austria, Belgium, France, Germany, Italy, Spain, Switzerland and The Netherlands. The acquisition significantly increases the company's European customer base, market share and presence. Avaya, Inc. -- http://www.avaya.com/-- designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services -- Avaya helps customers leverage existing and new networks to achieve superior business results. * * * As reported in the Troubled Company Reporter on Nov. 18, 2004, Standard & Poor's Ratings Services raised its rating on Basking Ridge, New Jersey-based Avaya Inc.'s senior unsecured debt to 'B+' from 'B' to reflect lower amounts of priority secured debt in Avaya's capital structure. On November 16, 2004, Avaya announced it had successfully tendered for $271 million of its outstanding$284 million of senior secured notes. Avaya maintains access to an undrawn $250 million senior secured credit facility, although the senior unsecured debt holders would not be materially disadvantaged. The corporate credit rating is affirmed, with a positive outlook.AVAYA INC: Redeeming Liquid Yield Option(TM) Notes Until Dec. 20----------------------------------------------------------------Avaya, Inc., (NYSE: AV) will redeem for cash all of its outstanding Liquid Yield Option(TM) Notes due 2021 on Dec. 20, 2004. As provided pursuant to the indenture governing the LYONs, the redemption price is $545.67 per $1,000 principal amount at maturity of LYONs. Holders retain the right to convert their LYONs at any time before 5:00 p.m. Eastern time on December 20, 2004 into Avaya common stock. The LYONS are convertible into 37.4437 shares of Avaya common stock per $1,000 principal amount at maturity of LYONs. Any LYONs not converted on or before 5:00 p.m. Eastern time on December 20, 2004, will be automatically redeemed.A notice of redemption is being mailed by The Bank of New York, the trustee for the LYONs, to all registered holders of LYONs. Copies of the notice of redemption and additional information relating to the procedure for redemption may be obtained from The Bank of New York by calling 1-800-254-2826. Avaya, Inc. -- http://www.avaya.com/-- designs, builds and manages communications networks for more than one million businesses worldwide, including more than 90 percent of the FORTUNE 500(R). Focused on businesses large to small, Avaya is a world leader in secure and reliable Internet Protocol telephony systems and communications software applications and services. Driving the convergence of voice and data communications with business applications -- and distinguished by comprehensive worldwide services Avaya helps customers leverage existing and new networks to achieve superior business results. * * * As reported in the Troubled Company Reporter on Nov. 18, 2004, Standard & Poor's Ratings Services raised its rating on Basking Ridge, New Jersey-based Avaya Inc.'s senior unsecured debt to 'B+' from 'B' to reflect lower amounts of priority secured debt in Avaya's capital structure. On November 16, 2004, Avaya announced it had successfully tendered for $271 million of its outstanding $284 million of senior secured notes. Avaya maintains access to an undrawn $250 million senior secured credit facility, although the senior unsecured debt holders would not be materially disadvantaged. The corporate credit rating is affirmed, with a positive outlook.AVOTUS CORP: Sept. 30 Stockholders' Deficit Narrows to $536,144 ---------------------------------------------------------------Avotus Corporation (TSX Venture: AVS) reported its financial results for the third quarter of fiscal 2004. For the third quarter of 2004 revenue was $7.3 million compared to $8.1 million for the same period last year. EBITDA was a loss of ($105,000) vs. positive EBITDA of $307,000 for the same period in 2003, and the net loss was ($568,000) or ($0.04) per share vs. ($357,000) or ($0.02) per share in the same period in 2003. In accordance with Canadian GAAP, because the company was in a loss position, the loss per share does not take into account the effect of conversion of preferred shares, options and warrants into common shares. The 10% decline in revenue for the third quarter of 2004 compared to the corresponding prior year period was in part the result of the Company's planned shift in revenue mix, away from software licenses, where revenue is recognized upon shipping and billing, and toward Avotus hosted and managed solutions, where the customer pays on a monthly basis. The Company expects this shift in revenue mix to continue as it focuses on building its backlog of subscription-type business moving forward. In addition, approximately $160,000 of the decrease in revenue in the third quarter of 2004 over the same quarter in 2003 was due to the strong Canadian dollar as more than 50% of the Company's revenues are U.S. dollar denominated and the Canadian dollar appreciated from the third quarter of 2003 to the third quarter of 2004. Included in the net loss and EBITDA for the third quarter of 2004 is $243,000 of expense related to the adoption on January 1, 2004, of the new accounting standard requiring expensing of all stock-based compensation to employees. There was no stock-based compensation expense recorded in 2003. Also included in the net loss and EBITDA for the third quarter of 2004 was a gain of $418,000 from the sale of an investment. Expressed in U.S. dollars, the third quarter of 2004 revenue was US$5.8 million as compared to US$6.0 million in the prior year. EBITDA was a loss of (US$83,000) vs. positive EBITDA of US$228,000 in 2003, and the net loss was (US$451,000) or (US$0.03) per share compared with a net loss of (US$265,000) or (US$0.01) per share in 2003. Key accomplishments in the third quarter for Avotus included: -- acquired 49% of Applied Research Technologies (ART) of Salt Lake City, with an exclusive option to purchase the remaining 51%, exercisable at any time prior to June 4, 2005. Through the acquisition of ART with its innovative e- procurement technologies, including its online auction capabilities and best practices methodologies, Avotus further extends the leadership position of its Intelligent Communications Management(TM) (ICM) solution set; -- established US$4 million line of credit with Silicon Valley Bank for operating cash flow; -- sold first combined Avotus Expense Management and Avotus Usage solution; -- enrolled over 300 potential customers via the Company's Avotus Webinar program; and -- entered into new distribution agreements in Singapore, Great Britain, and a teaming agreement in North America."We are confident that our focus on communications spend management is exactly what the market is looking for," stated Fred Lizza, president and CEO of Avotus. "As always, these business shifts take time. We are growing our managed services backlog to the scale where it can more than compensate for the shift in focus from the legacy operations. Once the e-procurement operations of ART contribute to Avotus' financial results, the positive impact will be even greater." About AvotusAvotus Corporation -- http://www.avotus.com/-- provides solutions that dramatically reduce the cost and complexity of enterprise communications. Intelligent Communications Management is Avotus' unique model for a single, actionable environment that enables any company to bring together decision-critical information about communications expense management, procurement and systems usage for wired, wireless and VoIP systems. Deployed as an onsite or hosted application, or as a completely outsourced value-added managed solution, Avotus enables dramatic savings while improving productivity and efficiency. Avotus is empowering Fortune 500 companies as well as thousands of other organizations worldwide to gain insight into and control over their communications environment. Its solutions are strongly supported and endorsed by industry-leading partners such as Avaya, Cisco, and Nortel. At September 30, 2004, Avotus Corporation's balance sheet deficit narrowed to $536,144 compared to a $16,881,103 deficit at December 31, 2003.BERWALD PARTNERSHIP: Hall Law Firm Approved as Committee Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of South Dakota gave the Official Committee of Unsecured Creditors of Berwald Partnership permission to employ Hall Law Firm as its counsel. Hall Law Firm will: a) advise the Committee with respect to its statutory powers and duties in the Debtor's chapter 11 case; b) advise the Committee and consult with the Debtor concerning the administration of its chapter 11 case; c) advise the Committee with regards to the formulation of a plan of reorganization for the Debtor; d) prepare on the Committee's behalf and necessary and appropriate legal papers; e) represent the Committee in legal matters before the Court; and f) perform other legal services as necessary and appropriate to protect and advance the position of the Committee and its constituents.Ronald J. Hall, Esq., a Member at Hall Law Firm, is the lead attorney for the Committee, while Yvonne Lange is the Paralegal performing services for the Committee. Mr. Hall will charge at $150 per hour, and Ms. Lange will charge at $45 per hour. Hall Law Firm assures the Court that it does not represent any interest adverse to the Committee, the Debtor or its estate.Headquartered in Toronto, South Dakota, Berwald Partnership filed for chapter 11 protection on August 23, 2004 (Bankr. D.S.D. Case No. 04-10273). Clair R. Gerry, Esq., at Stuart, Gerry & Schlimgen, LLP, represents the Company in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. BOCA RESORTS: Completes Merger with Blackstone Affiliate--------------------------------------------------------Boca Resorts, Inc. (NYSE: RST) has completed its merger with an affiliate of The Blackstone Group. Under the terms of the merger agreement, the Company's stockholders will be entitled to receive $24.00 per share in cash, without interest. About The Blackstone GroupThe Blackstone Group, a private investment firm with offices in New York, Boston, Atlanta, London and Hamburg, was founded in 1985. Blackstone's Real Estate Group has raised five funds, representing over $6 billion in total equity, and has a long track record of investing in hotels and other commercial properties. In addition to Real Estate, The Blackstone Group's core businesses include Private Equity, Corporate Debt Investing, Marketable Alternative Asset Management, Mergers and Acquisitions Advisory and Restructuring and Reorganization Advisory. The Blackstone Group can be accessed on the Internet at http://www.Blackstone.com/ About Boca ResortsBoca Resorts, Inc. is the owner and operator of five distinctive destination resorts located in Florida with hotels, conference facilities, golf courses, spas, marinas and private clubs. The Company's resorts include the Boca Raton Resort & Club (Boca Raton), the Registry Resort at Pelican Bay (Naples), the Edgewater Beach Hotel (Naples), the Hyatt Regency Pier 66 Hotel and Marina (Fort Lauderdale) and the Radisson Bahia Mar Resort and Yachting Center (Fort Lauderdale). The Company also owns and operates two golf clubs located in Florida (Grande Oaks Golf Club in Fort Lauderdale and Naples Grande Golf Club in Naples) that serve as additional amenities to its resorts, as well as components of its exclusive social club, known as the Premier Club. In addition, the Company owns and operates two golf courses in Boca Raton that are part of the Boca Raton Resort & Club. Boca Resorts, Inc. can be accessed on the Internet at http://www.bocaresortsinc.com/ * * *As reported in the Troubled Company Reporter on Oct. 25, 2004, Standard & Poor's Ratings Services placed its 'B+' corporate credit rating on Boca Resorts Inc. on CreditWatch with developing implications, following the announcement that it has been acquired by The Blackstone Group for $24 per share. The total value of the transaction, including debt, is about $1.25 billion. The transaction is subject to shareholder approval and other customary conditions, and is expected to be completed in late 2004 or early 2005. Boca's Chairman and Chief Executive Officer, H. Wayne Huizenga, who controls about 98% of the company's voting shares, agreed to vote in favor of the transaction. Standard & Poor's expects to withdraw its ratings on the Fort Lauderdale, Florida-based luxury resorts owner and operator upon consummation of this transaction.BOCA RESORTS: S&P Withdraws B+ Rating After Blackstone Acquisition------------------------------------------------------------------Standard & Poor's Ratings Services withdrew its 'B+' corporate credit rating on Boca Resorts, Inc. The rating had been placed on CreditWatch with developing implications on Oct. 21, 2004. The rating withdrawal reflects the acquisition of Boca Resorts by the Blackstone Group for $24 per share or $1.25 billion. Stockholders of Boca Resorts approved the acquisition on December 6. Based in Fort Lauderdale, Florida, Boca Resorts owns and operates five luxury resorts and four golf clubs in Florida.BORGER ENERGY: Moody's Pares Senior Secured Debt Rating to Ba1--------------------------------------------------------------Moody's Investors Service downgraded the senior secured debt rating of Borger Energy Associates, L.P., to Ba1 from Baa3, concluding the review for downgrade that was initiated on November 1, 2004. The rating outlook is negative.The downgrade reflects the expectation that Borger's debt service coverage ratios will remain below the level that is consistent with the Baa3 rating through 2006, and the fact that Borger is not expected to be able to fully fund its major maintenance reserve in 2004. At year-end 2004, the project's major maintenance reserve is expected to be under funded by approximately $400,000.Debt service coverage for 2004 is projected to be between 0.91x and 0.95x. However, management expects that there will be no need to draw on the project's $5.3 million six-month debt service reserve. Debt service coverage ratios for 2005 are projected to be approximately 1.30x. Debt service coverage ratios are projected to stay in the range of 1.30x to 1.45x through at least 2006, assuming that the project returns to normal operating performance.The negative outlook reflects the potential for additional negative developments in conjunction with Borger's scheduled January 2005 major turbine overhaul of Unit #2. A portion of the overhaul costs will need to be funded out of 2005 cash flow. The outlook also reflects the uncertainty surrounding the project's longer term plans regarding its generators, which will require either additional maintenance or replacement.Borger's debt service coverage ratios in 2005 and 2006 are expected to be depressed due to the projected curtailment of ConocoPhillips steam usage, which will reduce revenues for the next two years. ConocoPhillips reduction in usage actually began in the fourth quarter and contributed to the project's lower than anticipated 2004 revenues. Borger's planned turbine overhaul of Unit #2 was moved from October 2005 to January 2005 so that the project would benefit from its improved performance earlier in the year. The decline in Unit #2's performance also contributed to the project's lower fourth quarter 2004 cash position. Uncertainty remains regarding Borger's long term generator related maintenance plans, including the magnitude of the costs, the manner in which these costs will be funded, and the risk of operational complications that could negatively impact cash flow.The current weakness in Borger's financial profile is due primarily to prolonged outages that occurred in 2004. The project was left with little financial flexibility to handle additional unforeseen events such as the reduction in steam revenues, additional expenses or other potential operating disruptions.Borger Energy Associates, L.P. is a 230 MW gas-fired cogeneration facility located near Borger Texas. Power generated by the project is sold to Southwestern Public Service Corporation (Baa1 senior unsecured), and steam is sold to ConocoPhillips (A3 senior unsecured).CATHOLIC CHURCH: Spokane Creditors Must File Claims by Apr. 5-------------------------------------------------------------The United States Bankruptcy Court for the Eastern District of Washington set April 5, 2005, as the deadline for all creditors owed money by the Diocese of Spokane on account of claims arising prior to the Petition Date, to file their proofs of claim.The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) onSeptember 20, 2004, and delivered a plan of reorganization to theCourt on the same day. Susan G. Boswell, Esq., and Kasey C. Nye,Esq., at Quarles & Brady Streich Lang LLP, represent the TucsonDiocese.The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Archdiocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000)CELESTICA INC: Moody's Reviewing Low-B Ratings & May Downgrade--------------------------------------------------------------Moody's Investors Service placed the debt ratings of Celestica, Inc., on review for possible downgrade. This review is precipitated by a combination of: (1) the expectation that current, subdued demand levels and inventory streamlining efforts involving the core high-end technology and telecommunications end markets (contribute 80% total company revenue) will continue to present a challenge for much of 2005; (2) associated concerns that the company's current, materially underutilized global infrastructure (55-60% utilization rates for the September quarter) will require further streamlining; and (3) the belief that the company's below peer margin levels and recent cash burn (five of past six quarters) will continue to hinder its operational results and fundamental business risk for the foreseeable future.These ratings have been placed under review: * $500 million 7.875% senior subordinate notes, due 2011, rated Ba3; * $335 million (accreted value) subordinate, zero coupon liquid yield option notes (LYONS) yielding 3 3/4% and due 2020, rated Ba3; * Universal shelf registration for unsecured senior or subordinated debt, and/or preferred stock rated (P)Ba3/(P)B1, respectively; * Senior implied rating of Ba2; and * Senior unsecured issuer rating of Ba3.This ratings review will consider the company's Q4 2004 operating results and future expectations, particularly for the high-end technology and telecommunication end markets. Moody's will also assess the company's prospects for securing more meaningful margin expansion, increasing its overall asset management efficiencies (i.e., utilization levels, related capital return metrics) and its ability to sustainably fund internal operating needs.While Celestica continues to be challenged in its efforts to right-size the operations and generate positive free cash flow, at the present time the company possesses very good liquidity. As of the September quarter end, the company reported on-hand liquidity of approximately $975 million and access to an unutilized $600 million revolver (subject to pro forma covenant compliance).Headquartered in Toronto, Canada, Celestica, Inc., is a world leader in providing electronics manufacturing services to original equipment manufacturers in the information technology and communications industries. For the latest twelve months ending September 2004, the company generated adjusted EBITDA (excludes non-recurring charges) of approximately $255 million from total net sales of approximately $8.4 billion.CENVEO INC: Low Profit Expectations Trigger S&P to Slice Ratings----------------------------------------------------------------Standard & Poor's Ratings Services lowered its ratings on Cenveo, Inc., and operating subsidiary Cenveo Corp., including its corporate credit rating to 'B+' from 'BB-' following the company's announcement that EBITDA profitability in the December 2004 quarter would be lower than previous expectations. The outlook is stable. Lease adjusted total debt was $863 million as of September 2004. Cenveo is an Englewood, Colorado-based commercial printer."The downgrade reflects our belief that over the intermediate term, Cenveo will generate lower profitability and free cash flow levels, as well as report higher debt balance than previously expected," said Standard & Poor's credit analyst Emile Courtney. The lowered profitability guidance in the December 2004 quarter involves lower-than-expected volumes at large new customer accounts in the company's Resale segment, the cancellation and postponement of several large orders in its Commercial Print segment, as well as the inability to pass through paper price increases under certain customer contracts. While pricing power has improved in some high volume envelope lines, overall pricing is expected to remain under pressure in both of the company's industry segments, further challenging the pace of profitability and leverage improvements over the near term.The ratings on Cenveo reflect the company's narrow business focus on envelope and commercial print segments; competitive market conditions in the overall print sector; and high debt levels. These factors somewhat are tempered by the company's good market positions in its segments served and adequate liquidity.CITATION CAMDEN: Files Schedules of Assets and Liabilities ----------------------------------------------------------Citation Camden Castings Center, Inc., filed its Schedules of Assets and Liabilities with the U.S. Bankruptcy Court for the Northern District of Alabama, Southern Division, disclosing: Name of Schedule Assets Liabilities ---------------- ------ -----------A. Real Property $ 1B. Personal Property $ 655,574 C. Property Claimed as ExemptD. Creditors Holding $324,234,598 Secured ClaimsE. Creditors Holding Unsecured Priority ClaimF. Creditors Holding Unsecured Non-Priority Claim $100,000A full-text copy of this financial disclosure document is available for a fee at: http://www.researcharchives.com/bin/download?id=040812020022Headquartered in Camden, Tennessee, Citation Camden Castings Center, Inc. -- http://www.citation.net/-- an affiliate of Citation Corporation, manufactures ductile iron parts for disc brakes. The Company filed for chapter 11 protection on Dec. 7, 2004 (Bankr. N.D. Ala. Case No. 04-10781). Cathleen C. Moore, Esq., and Michael Leo Hall, Esq., at Burr & Forman represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $655,575 in total assets and $324,334,598 in total debts.COPAMEX: Fitch Rates Sr. Unsecured Foreign & Local Debt at 'BB-'----------------------------------------------------------------Fitch Ratings views the divestiture by Copamex, S.A. de C.V. of its consumer products division as neutral to the company's credit quality and ratings. Fitch rates Copamex's senior unsecured foreign and local currency debt at 'BB-'. Fitch also rates Copamex's MXP700 million of medium-term notes with a 15% partial guarantee by Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. -- FMO -- at 'A(mex)' and MXP600 million of short term notes at 'F2(mex)'. The Outlook for all ratings is Stable.On Dec. 8, 2004, Copamex announced that it intends to sell its 50% stake in the consumer products division, Copamex Productos al Consumidor S.A. de C.V. (CPG) to its joint venture partner Svenska Cellulosa Aktiebolaget SCA (SCA) for US$122 million. CPG produces tissue, feminine hygiene, and diaper products. This division earned US$348 million in revenues and US$54 million of EBITDA during 2003, accounting for approximately 46% and 56% of Copamex's consolidated sales and EBITDA, respectively. Copamex has indicated that it expects net proceeds of US$88 million from the transaction to be used to repay debt at the holding company level, which at Sept. 30, 2004, reached US$180 million. For the 12 month ended Sept. 30, 2004, Copamex had a ratio of consolidated total debt to EBITDA of 4.8 times and an EBITDA-to-interest expense ratio of 1.4x. Pro forma total debt to EBITDA at Copamex post-divestiture should reach 2.3x and the ratio of EBITDA-to-interest expense should exceed 3.0x. Following the divestiture, Copamex will be a producer of paper-based industrial products with operations in packaging (kraft paper, corrugated boxes, and specialty paper) and printing and writing paper (bond and copy paper). Pro forma 2004 annual revenues and EBITDA are approximately US$400 million and US$40 million, respectively. While the aforementioned transaction lowers Copamex's leverage, it is expected to increase the company's business risk, as the businesses that remain are more exposed to operating volatility than paper-based consumer products.CORRECTIONS CORP: Moody's Revises Outlook on Ratings to Positive----------------------------------------------------------------Moody's Investors Service has affirmed its B1 senior unsecured and Ba3 senior secured ratings of Corrections Corporation of America. The rating outlook was changed to positive, from stable. According to Moody's, this positive credit outlook is based on the significant improvement that Corrections Corporation has made in reducing overall leverage as well as secured debt. The company's total debt to gross assets has improved from 62% at year-end 2002 to 44% at the end of the third quarter 2004. Furthermore, Corrections Corporation has reduced secured debt as a percentage of gross assets from 33% to 12% in the same timeframe. In 2004 the company also redeemed all of its preferred stock.Moody's noted the strides made by Corrections Corporation in its credit metrics have been achieved while increasing its asset base, revenues and cash flow. Of particular note, the firm has achieved higher revenues in each segment-federal, state, and local-in recent years. This is in no small part due to the firm's sound operating track record, particularly its high contract renewal rate of 95% for the past four years. Occupancy has been high and increasing, averaging 95.5% in the first nine months of 2004 versus 92.1% for the same period in 2003. In addition, the company has had few escapes, with only one in 2004 and none in the previous two years.Moody's believes Corrections Corporation has well positioned itself as the leading entity in an industry with good growth prospects; the US prison population is expected to expand. With federal and state budgets strained, there will be little public money available for new facility construction. As the largest private owner of correctional facilities, the firm has the ability to capture increasing demand with vacant beds at existing facilities as there are few variable costs associated with filling this inventory. The increased flexibility resulting from lower leverage and unencumbering of assets will help Corrections Corporation to strengthen its position in the private corrections business.Moody's said that a rating upgrade would result from improvements in gross operating margins to the mid-to-upper 20% range. Should Corrections Corporation lower the ratio of debt to EBITDA below 4X, it would be viewed as a credit positive.Conversely, Moody's believes that a downgrade would be warranted should Corrections Corporation suffered a significant loss of contracts or occupancy falling below 90%. Negative rating pressure would also result from any development approaching 10% of assets. Moody's also would consider negative any reversal in the company's efforts to deleverage.These ratings were affirmed, with a positive outlook: * senior secured bank credit facility at Ba3; * senior secured shelf at (P)Ba3; senior unsecured debt at B1; * senior unsecured shelf at (P)B1; * senior subordinate shelf at (P)B2; * preferred shelf at (P)B3.Headquartered in Nashville, Tennessee, USA, Corrections Corporation of America [NYSE: CXW] is the USA's largest owner and operator of privatized correctional and detention facilities and one of the largest prison operators in the United States, behind only the federal government and three states. Corrections Corporation operates 63 facilities, including 38 company-owned facilities, with a total design capacity of approximately 67,000 beds in 19 states and the District of Columbia.DANA CORP: Completes Private Placement of $450 Million Sr. Notes----------------------------------------------------------------Dana Corporation (NYSE: DCN) completed its private placement of $450 million in unsecured senior notes maturing on Jan. 15, 2015.The notes bear a coupon of 5.85 percent and were priced at 99.953 to yield 5.855 percent.In conjunction with some of the cash on hand from the company's recently completed sale of its automotive aftermarket businesses, Dana will use the proceeds from the offering to pay for the notes that had been received under its recent tender offer. As previously announced: -- $169.5 million of the company's 10-1/8 percent notes due 2010; -- EUR163.7 million of its 9 percent Euro notes due 2011; and -- $445.4 million of its 9 percent notes due 2011 were tendered under the offer."We are extremely pleased with the success of both our notes offering and the results, to date, of the tender," said Dana Chief Financial Officer Bob Richter. "These transactions, in combination with the recent divestiture of our aftermarket business, position Dana well for the future by enhancing our strategic focus and strengthening our balance sheet."The securities offered have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.This press release is neither an offer to sell nor the solicitation of an offer to buy the notes or any other securities, and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such an offer, solicitation, or sale is unlawful. About the Company Dana Corporation is a global leader in the design, engineering, and manufacture of value-added products and systems for automotive, commercial, and off-highway vehicles. Delivering on a century of innovation, Dana employs approximately 45,000 people worldwide dedicated to advancing the science of mobility. Founded in 1904 and based in Toledo, Ohio, Dana operates technology, manufacturing, and customer-service facilities in 30 countries. Sales from continuing operations totaled $7.9 billion in 2003. Dana's Internet address is: http://www.dana.com/ * * *As reported in the Troubled Company Reporter on Dec. 09, 2004, Fitch Ratings has upgraded Dana Corporation's senior unsecureddebt rating to 'BBB-' from 'BB+' and assigns a rating of 'BBB-' tonew $450 million 10-year senior unsecured notes.The Positive Rating Watch put in place on Aug. 2, 2004 has nowbeen resolved as the proceeds from a new issuance of seniorunsecured notes and the sale of the Automotive Aftermarket Group -- AAG -- will be used to make a voluntary pension fundcontribution and to retire outstanding indebtedness in a tenderoffer currently in progress. Including the completion of thetender offer, approximately $2 billion of Dana's debt is affectedby this rating action.Fitch's rating action reflects Dana's enhanced liquidity, sharplyimproved credit metrics, and improved business profile, as well asDana's improved operational performance.DIVERSIFIED ASSET: Moody's Pares Rating on Class B-1L Notes to B3-----------------------------------------------------------------Moody's Investors Service lowered the ratings of four classes of notes issued by Diversified Asset Securitization Holdings III, L.P.: (1) to Aa2 (from Aaa on Watch for possible downgrade), the U.S. $215,000,000 Class A-1L Floating Rate Notes Due July 2036; (2) to Aa2 (from Aaa on Watch for possible downgrade), the U.S. $70,000,000 Class A-2 7.4202% Notes Due July 2036; (3) to Baa1 (from Aa2 on Watch for possible downgrade), the U.S. $30,000,000 Class A-3L Floating Rate Notes Due July 2036; and (4) to B3 (from Baa2 on Watch for possible downgrade), the U.S. $18,500,000 Class B-1L Floating Rate Notes due July 2036. This transaction closed on June 28, 2001. Moody's noted that all four classes of notes would remain on Watch for further possible downgrade.According to Moody's, its rating action results primarily from credit deterioration of the collateral pool and significant decline in the par coverage of the rated notes. According to the latest deal surveillance report dated November 29th, the deal is currently in violation of its Moody's Weighted Average Rating Test (currently reported at 602 versus a trigger level of 425) and all of its par overcollateralization tests.Rating Action: Downgrade and Review for DowngradeIssuer: Diversified Asset Securitization Holdings III, L.P.Class Description: U.S. $215,000,000 Class A-1L Floating Rate Notes Due July 2036Prior Rating: Aaa (on Watch for possible downgrade)Current Rating: Aa2 (on Watch for possible downgrade)Class Description: U.S. $70,000,000 Class A-2 7.4202% Notes Due July 2036Prior Rating: Aaa (on Watch for possible downgrade)Current Rating: Aa2 (on Watch for possible downgrade)Class Description: U.S. $30,000,000 Class A-3L Floating Rate Notes Due July 2036Prior Rating: Aa2 (on Watch for possible downgrade)Current Rating: Baa1 (on Watch for possible downgrade)Class Description: U.S. $18,500,000 Class B-1L Floating Rate Notes due July 2036Prior Rating: Baa2 (on Watch for possible downgrade)Current Rating: B3 (on Watch for possible downgrade)E*TRADE: S&P Assigns 'BB' Rating to $6.952 Million Class E Notes----------------------------------------------------------------Standard & Poor's Ratings Services assigned its preliminary ratings to E*TRADE RV and Marine Trust 2004-1's $307.5 million asset-backed notes series 2004-1.The preliminary ratings are based on information as of Dec. 10, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings.The preliminary ratings reflect the initial credit enhancement in the form of a nonamortizing reserve account (1.50%), overcollateralization (0.50%), subordination (2.25%-12.00%), and excess spread. The credit enhancement percentages are expressed as a percentage of the initial receivables pool balance, which, as of Nov. 30, 2004, was $308,996,120. The preliminary ratings also reflect the credit quality of the underlying pool of recreational vehicle and marine loans, the structural features that preserve the available credit enhancement, and the sound legal structure.A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web-based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned E*TRADE RV and Marine Trust 2004-1 Class Rating Amount (mil. $) ----- ------ --------------- A-1 AAA 60.900 A-2 AAA 65.600 A-3 AAA 76.400 A-4 AAA 32.700 A-5 AAA 34.772 B AA 10.042 C A 9.270 D BBB 10.815 E (not offered) BB 6.952EL-BETHEL MISSIONARY: Voluntary Chapter 11 Case Summary-------------------------------------------------------Debtor: El-Bethel Missionary Baptist Church 715 Bellevue Avenue Trenton, New Jersey 08618Bankruptcy Case No.: 04-48775Type of Business: The Company operates a church.Chapter 11 Petition Date: December 10, 2004Court: District of New Jersey (Trenton)Debtor's Counsel: John E Maziarz, Esq. Wolk and Maziarz, Esqs. 311 Whitehorse Avenue, Suite A Trenton, New Jersey 08610 Tel: (609) 581-0063Estimated Assets: $1 Million to $10 MillionEstimated Debts: $1 Million to $10 MillionThe Debtor did not file a list of its 20 Largest Unsecured Creditors.ENRON CORP: Nahem Fine Art Agrees to Settle Claim for $628,000--------------------------------------------------------------For the purchase of various works of art, Enron Corp. wired on June 5, 2001, $1,375,000 to Edward Tyler Nahem Fine Art, LLC's bank account, representing payment for two invoices: Invoice No. Amount ----------- ------ 10385 $595,000 10386 $785,000 On June 21, 2001, Enron remitted an additional $785,000 to Nahem Fine Art by check, also for Invoice No. 10386. In May 2002, Enron notified Nahem Fine Art that the June 21 payment by check was a duplicate payment for Invoice No. [10386], and that the payment had been made in error. Enron asked Nahem Fine Art to return the $785,000. On October 15, 2002, Nahem Fine Art filed Claim No. 14361 in Enron's Chapter 11 case. Nahem asserted that its claim against Enron represents lost commissions and unpaid fees for framing for no less than $204,614 plus interest. Nahem further asserted a right of set-off for any claims Enron may have against it. After engaging in negotiations, the parties entered into a settlement, which provides that: (a) Nahem Fine Art will pay the estate $628,000; (b) Nahem's Claim No. 14361 will be disallowed and expunged; and (b) The parties will exchange releases for all claims relating to: -- Enron's claim for the duplicate payment; and -- Claim No. 14361. Since it is compromising a claim and granting a release, Enron asks the Court to approve the Settlement. The Settlement is achieved without any litigation costs. It is a beneficial resolution and makes good business sense.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. Martin J. Bienenstock, Esq., and BrianS. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent theDebtors in their restructuring efforts.EPCO INC: Case Summary & 10 Largest Unsecured Creditors-------------------------------------------------------Debtor: EPCO Inc. fdba Man Can Construction PO Box 3222 Estes Park, Colorado 80517 Bankruptcy Case No.: 04-36685Type of Business: The Company is a building contractor.Chapter 11 Petition Date: December 9, 2004Court: District of Colorado (Denver)Judge: Howard R. TallmanDebtor's Counsel: Ken McCartney, Esq. PO Box 1364 Cheyenne, Wyoming 82003-1364 Tel: (307) 635-0555Total Assets: $ 2,028,264Total Debts: $ 1,271,497Debtor's 10 Largest Unsecured Creditors: Entity Claim Amount ------ ------------Mccoud & Nichols $76,654205 West Kansas StreetLiberty Mo 64068Estes Park Lumper $16,280P O Box 3160Estes Park Company 80517Westover Construction, Inc. $7,1201191 Woodstock #2Estes Park Company 80517Man Can $6,583Bacon & Vinton $5,281Flash Electric $5,279First National Bank $3,805David Trout Surveying $2,600Park Supply Company $1,194Allied Insulation $1,000EXIDE TECH: William Martin Wants Debtors to Comply with Plan------------------------------------------------------------On July 13, 1998, William T. Martin, doing business as Martin's Auto Electric, filed a complaint before a state court in South Carolina seeking to represent a class of battery resellers who had purchased batteries from Exide Corporation. The Complaint alleged that batteries manufactured at Exide's Greer, South Carolina plant were defective or otherwise substandard. The Complaint alleged cause of action for: -- breach of contract, -- breach of express and implied warranties, -- fraud, -- breach of contract accompanied by fraudulent act, -- negligent misrepresentation, and -- the Racketeer Influenced Organizations Act. According to Francis A. Monaco, Jr., Esq., at Monzack and Monaco, PA, in Wilmington, Delaware, the Plaintiffs include battery resellers who purchased batteries from Exide and reside in Alabama, Georgia, Florida, Tennessee, Mississippi, North Carolina, South Carolina, Louisiana and Kentucky -- States into which Greer batteries were primarily sold. On June 19, 2000, the parties appeared before the State Court to present the terms of a proposed settlement class that would avoid the need for a decision on the issue of class certification. The State Court indicated that the settlement on its face appeared to be reasonable and fair, and the Court invited the parties to submit a Motion for Certification of the Proposed Settlement Case. There were no challenges to the class counsel. On November 21, 2000, the State Court preliminarily approved and granted class certification for purposes of settlement. The Court also approved the proposed settlement agreement and allowed dissemination of an approved class notice. On March 1, 2001, the Court held a final hearing giving final approval to the settlement and dismissing the lawsuit consistent with the settlement agreement which was incorporated into the Court's final order. Mr. Monaco relates that pursuant to the Agreement, Exide would provide to the class members credits totaling $12,100,000, if used for the purchase of Exide batteries. Alternatively, the credits could be exchanged for a discounted cash payment. The credits will be distributed pro rata among the class members based on the volume of each class member's purchases of certain categories of batteries manufactured at the Greer plant. The date necessary for making the pro rata distribution was provided by Exide. Under the Agreement, the creditors could be used to obtain 25% discounts on the purchase of wholesale batteries from Exide branch locations. A class member using the credits could use up to 1/3 of his credits the first year, 2/3 the second year, and any remaining credits the third year. Individual class members had the option to elect to exchange their credits for cash payments. If they exchanged their credits for cash in years one or two, they would receive a cash payment equal to 25% of the value of their remaining credits. If they wait until three, the exchange value percentage went up to 35%. If a class member elected to cash out, all remaining credits held by the class member had to be cashed out at that time. Until Exide filed for bankruptcy, the Agreement was implemented according to its terms. Some class members cashed out while other chose to utilize the settlement credits to purchase Exide batteries. The balance of the obligation due by Exide as of the Petition Date was $6,219,671 for the remaining credits. On August 19, 2003, Mr. Martin objected to the Debtors' disclosure statement because it failed to adequately address the class action settlement and clarify the proposed treatment of the class. According to Mr. Monaco, the Settlement Agreement may be considered an executory contract as performance is due from both parties. As such, there are outstanding defaults which the Disclosure Statement fails to address its cure. In response, the Debtors clarified in their disclosure statement that: "The Debtors are still analyzing whether to assume or reject various executory contracts, including but not limited to a settlement agreement with William T. Martin and others similarly situated. Those contracts not rejected pursuant to the procedures described in preceding paragraphs will be assumed under the Joint Plan." Mr. Monaco says that the clarification resolved the Objection as it answered what treatment the Agreement was receiving -- it was an executory contract which would either be assumed or rejected. The Plan provided that executory contracts not rejected by separate motion or on a plan supplement would be assumed. The Agreement was never rejected or included on a plan supplement. On May 10, 2004, Mr. Martin's counsel sent a letter to the Debtors' counsel stating that since the Plan was confirmed and the Agreement assumed, the amount necessary to cure the default was $6,219,671. The Debtors eventually affirmatively responded to the letter in late July 2004. Mr. Martin was informed that the Debtors were taking the untenable position that they did not reject the Agreement because it was not an executory contract. Mr. Martin immediately asserted that the Debtors were bound by their disclosure statement and Plan. However, the Debtors assert that the inclusion of the Agreement as an executory contract was of no effect and not binding on them. Despite its best efforts to resolve the issue outside of the Bankruptcy Court, Mr. Martin has been unsuccessful. Thus, Mr. Martin asks Judge Carey to compel the Debtors to comply with the terms of the confirmed Plan.Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000)FOUNDATION COAL: Prices Initial Public Offering of Common Stock---------------------------------------------------------------Foundation Coal Holdings, Inc., has priced its initial public offering of 23,610,000 shares of common stock at $22.00 per share. The common stock begins trading Dec. 9 on the New York Stock Exchange under the symbol "FCL". Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc. are serving as joint book-running managers of the offering. UBS Securities LLC, Bear, Stearns & Co. Inc., Credit Suisse First Boston LLC, Lehman Brothers Inc., ABN AMRO Rothschild LLC and Natexis Bleichroeder Inc. are co-managers of the offering. Foundation Coal Holdings, Inc. has granted the underwriters an option to purchase up to an additional 3,541,500 shares at the public offering price. The public offering is being made by means of a prospectus, copies of which may be obtained from: Morgan Stanley & Co. Incorporated Prospectus Department 1585 Broadway New York, N.Y. 10036 Tel. No. 212-761-4000 -- or -- Citigroup Global Markets Inc. Brooklyn Army Terminal 8th Floor, 140 58th Street Brooklyn, New York 11220 Tel No. 718-765-6732This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. About the Company Foundation Coal Holdings, Inc. is the fourth largest coal producer in the United States, with operations in the four major coal producing regions in the United States: the Powder River Basin, Northern Appalachia, Central Appalachia and the Illinois Basin. Its primary business is to produce, process and sell steam coal, which it sells to producers of electric power, the majority of whom are large U.S.-based utilities with an investment grade credit rating. Foundation Coal Holdings, Inc. also produces and processes metallurgical coal for use in the manufacture of steel. * * *As reported in the Troubled Company Reporter on July 12, 2004, Standard & Poor's Rating Services assigned its 'BB-' corporate credit rating to Linthicum Heights, Maryland-based Foundation Coal Corp. The outlook is stable.In addition, Standard & Poor's assigned its 'BB-' bank loan rating and recovery rating of '4' to Foundation PA Coal Co.'s proposed $785 million secured credit facility, consisting of a $350 million revolving credit facility maturing in 2009 and a $435 million term loan B facility maturing in 2011. The 'BB-' rating is the same as the corporate credit rating; this and the '4' recovery rating indicate a marginal expectation of full recovery of principal in the event of a default. Standard & Poor's also assigned its 'B' rating to Foundation PA Coal's proposed $335 million senior unsecured notes, maturing in 2014."The ratings on Foundation Coal reflect its aggressive financial leverage, limited operating diversity, inherent operating risks, and exposure to expiring western coal supply contracts that are currently above spot prices," said Standard & Poor's credit analyst Dominick D'Ascoli. Partially offsetting these risks are its competitive cost position and favorable coal industry conditions.FRIEDMAN'S INC: Allan Edwards Leaves Post as Executive Chairman---------------------------------------------------------------Friedman's Inc. (OTC: FRDM.PK), reported that Allan Edwards will step down from his position as an officer, Executive Chairman, at the end of his term in January 2005. Friedman's Board of Directors has selected Peter Thorner to serve in the newly created position of Vice Chairman of the Board. Mr. Thorner has been a member of the Board since October 2004.Mr. Edwards came to Friedman's in May 2004 in the midst of government investigations and numerous business challenges. During the seven months Mr. Edwards has served as Chairman, the Company has undergone significant changes, including hiring new management, refinancing the Company's credit facility, and the development of a trade creditor support program. Also, Mr. Edwards has led a restructuring of Friedman's Board in recent months. Including Mr. Edwards and a Class A director, six out of seven directors have been newly appointed to Friedman's Board, a majority of which is independent.Mr. Edwards said, "Important progress has been made in assembling new management at Friedman's. I feel that the Company has made significant strides and that I can now step back from the Executive Chairman position with the knowledge that we have senior management in place to move the Company forward.""Allan has absolutely devoted himself to Friedman's over the past several months," said Sheldon Whitehouse of Friedman's Board of Directors. "He has assembled a high-quality board and management and has jump-started the process of rebuilding Friedman's credibility. I think Allan deserves a great deal of credit for leading Friedman's in the right direction," added Mr. Whitehouse.The Company said that it plans to actively seek a new Chairman. Separately, Friedman's also disclosed key changes to its senior management team: -- Effective Dec. 10, 2004, Richard Hettlinger will no longer be serving as Chief Financial Officer of Friedman's. -- Ken Maher has been named interim CFO of Friedman's effective Dec. 13, 2004. Mr. Maher brings over twenty years of retail and financial experience to Friedman's. He most recently served as Vice President and Controller of Wickes Furniture, a furniture distribution and retailing company. -- Steve Zeringue has joined Friedman's as Vice President of Credit. Mr. Zeringue is a credit specialist with over 15 years of retail credit and financial experience. He joins Friedman's from Certegy Payment Recovery Services, where he was Vice President of Collections. Prior to Certegy, Mr. Zeringue served as Director of Credit Risk for Heilig Meyers Furniture and Assistant Vice President of Credit for Service Merchandise. About the Company Founded in 1920, Friedman's Inc. is a leading specialty retailer based in Savannah, Georgia. The Company is the leading operator of fine jewelry stores located in power strip centers and regional malls. For more information, go to: http://www.friedmans.com/ * * *As reported in the Troubled Company Reporter on Nov. 04, 2004, Friedman's Inc. said it anticipates a default under certain of the financial covenants contained in its amended and restated credit facility which it had entered into earlier this year. In particular, Friedman's expects that it will fail to meet cumulative EBITDA requirements for the period ending Oct. 30, 2004, constituting a default under its term loan, and will fail to meet a minimum ratio of Accounts Payable to Inventory as of Oct. 30, 2004, constituting a default under both its term loan and its revolving loan. Loan Renegotiated in September Friedman's completed the restructuring of its senior secured credit facility in September 2004. The new facility consists of a senior revolving loan of up to $67.5 million (maturing in 2006) and a $67.5 million junior term loan (maturing in 2007). Friedman's issued some warrants to Farallon Capital Management, L.L.C., in connection with that transaction. Friedman's also entered into a secured trade credit program providing security to vendors. Part of the deal allows Friedman's to stretch payment of invoices past due in July 2004 through 2005. The company's most recently published balance sheet -- dated June 28, 2003 -- shows $496 million in assets and $190 million in liabilities. The Company explains that its year-end closing process was delayed because of an investigation by the Department of Justice, a related informal inquiry by the Securities and Exchange Commission, and its Audit Committee's investigation into allegations asserted in a August 13, 2003, lawsuit filed by Capital Factors Inc., a former factor of Cosmopolitan Gem Corporation, a former vendor of Friedman's, as well as other matters. Ernst & Young has been working on a restatement of the company's financials. The company's signaled that a 17% or greater increase to allowances for accounts receivable can be expected.GENERAL NUTRITION: S&P Junks Sub. Debt & Preferred Stock Ratings----------------------------------------------------------------Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on General Nutrition Centers, Inc., to 'B' from 'B+'. At the same time, Standard & Poor's lowered the subordinated debt rating to 'CCC+' from 'B-' and the preferred stock rating to 'CCC' from 'CCC+'. The outlook is stable."The downgrade is based on concerns over weaker-than-expected sales and operating trends," explained Standard & Poor's credit analyst Kristi Broderick. "We believe that credit protection measures may deteriorate given that it is unlikely that GNC will be able to reverse its recent negative same-store sales results in the near term. Ratings on this leading specialty retailer of nutritional supplements reflect its recent weak operating performance, expectations of continued operational challenges, its product liability risk, and its high debt leverage."GNC's recent weak operating performance is due to softness in the diet category, a drop-off in sales of low-carb products, and poor execution of its operations, which has resulted in a loss of market share. The company's merchandise assortment has not been managed well. A healthy first quarter of 2004 was more than offset by a soft second quarter and an even weaker third quarter. This deteriorating trend is revealed in GNC's comparable-store sales figures for its company-owned domestic stores, which increased 6.7% in the first quarter, but fell 3.2% in the second quarter and then 10.7% in the third quarter. While other players in the nutritional supplements industry are feeling the softness in the diet category, they have not experienced the magnitude of GNC's recent weakness in comparable-store sales.GNC is implementing several initiatives to improve its competitive position and boost sales. This includes focusing on the merchandise assortment, leveraging its brand, and launching a new marketing program. Success from these initiatives will be key to the company's future. Because of the mature store base, store growth is expected to be limited and will come primarily from international franchising, which requires minimal capital investment.GITTO GLOBAL: Has Until Jan. 23 to Make Lease-Related Decisions --------------------------------------------------------------- The Honorable Joel B. Rosenthal of the U.S. Bankruptcy Court for the District of Massachusetts extended, until January 23, 2005, the period within which Gitto Global Corporation can elect to assume, assume and assign, or reject its unexpired nonresidential real property leases. The Debtor reminds the Court that it filed a motion to authorize the private sale of substantially all of its assets free and clear of liens, claims, encumbrances and interests to GGC Acquisition, LLC on November 5, 2004 under an Asset Purchase Agreement. The Debtor and GGC Acquisition are contemplating that the sale will closed on December 31, 2004 pending the Court's entry of a final order approving the sale of the Debtor's assets to GGC Acquisition. The Debtor explains to the Court that is a party to two unexpired leases: a) a Lease Agreement with Tradex Corporation dated September 18, 1998, located 140 Leominster-Shirley Road, Lunenburg, Massachusetts; and b) a Lease Agreement with FLIP Realty Trust located at 232 Airport Road, Fitchburg, Massachusetts.The Debtor adds it is also a party to other unexpired leases where it operates off-site warehouse space. The Asset Purchase Agreement contemplates the Debtor's assumption and assignment of certain of the unexpired real property leases The Debtor tells the Court that the extension will give it more time and opportunity to consummate any assumption and assignment of the unexpired leases resulting from the private sale of its assets to GGC Acquisition. The Debtor assures Judge Rosenthal that the extension will not prejudice the lessors under the leases and it is current on all post-petition rent payments under the terms of the leases. Headquartered in Lunenburg, Massachusetts, Gitto Global Corporation -- http://www.gitto-global.com/-- manufactures polyvinyl chloride, polyethylene, polypropylene and thermoplastic olefinic compounds. The Company filed for chapter 11 protection on September 24, 2004 (Bankr. D. Mass. Case No. 04-45386). Andrew G. Lizotte, Esq., at Hanify & King P.C., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million.GLOBAL CROSSING: Files Registration Statement for 4.9 Mil. Shares-----------------------------------------------------------------On December 8, 2004, Global Crossing Limited filed a registration statement on Form S-8 with the Securities and Exchange Commission under the Securities Act of 1933, as amended, in relation to 4,878,261 common shares of the Company of par value $0.01 each which may be issued in accordance with the 2003 Global Crossing Limited Stock Incentive Plan. Title of Proposed Proposed securities Amount maximum maximum to be to be offering price aggregate registered registered per share offering price ---------- ---------- -------------- -------------- Common Stock, par value $ .01 per share (1) 2,139,000 $10.16 $21,732,240 Common Stock, par value $ .01 per share (2) 2,739,261 $15.45 $42,321,582 ---------- TOTAL 4,878,261 (1) Consists of shares of Common Stock subject to outstanding options under the 2003 Global Crossing Limited Stock Incentive Plan. (2) Consists of shares of Common Stock available for future issuance under the Incentive Plan. That indeterminate number of additional shares as may be issuable pursuant to the recapitalization provisions under the Incentive Plan is also registered. A full-text copy of Global Crossing's Registration Statement is available at no charge at: http://sec.gov/Archives/edgar/data/1061322/000119312504209469/ds8.htm Appleby Spurling Hunter acted as legal counsel in Bermuda to the Company. The firm is of the opinion that when issued and when fully paid for pursuant to and in accordance with the terms of the Incentive Plan and the Resolutions and as contemplated by the Registration Statement, the Common Stock will be validly issued, fully paid, non-assessable shares of the Company. A full-text copy of Appleby Spurling Hunter's opinion letter is available at no charge at: http://sec.gov/Archives/edgar/data/1061322/000119312504209469/dex5.htmHeadquartered in Florham Park, New Jersey, Global Crossing Ltd. --http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-basednetwork, which reaches 27 countries and more than 200 major citiesaround the globe. Global Crossing serves many of the world'slargest corporations, providing a full range of managed data andvoice products and services. The Company filed for chapter 11protection on January 28, 2002 (Bankr. S.D.N.Y. Case No.02-40188). When the Debtors filed for protection from theircreditors, they listed $25,511,000,000 in total assets and$15,467,000,000 in total debts. Global Crossing emerged fromchapter 11 on December 9, 2003. (Global Crossing Bankruptcy News,Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000)GLOBAL CROSSING: GCUK to Sell $350M Sr. Debt via Private Placement------------------------------------------------------------------Global Crossing Limited's (Nasdaq: GLBC) indirectly wholly-owned subsidiary, Global Crossing (UK) Finance Plc, is planning to sell $350 million (currency equivalent) in senior secured notes due in 2014, denominated in U.S. dollars and British pounds sterling, through a private placement to institutional investors. The notes will be guaranteed by GCUK Finance's immediate parent company, Global Crossing (UK) Telecommunications Limited, and will be secured by certain of GCUK's assets. The private placement is expected to be completed within the next two weeks.The private placement is part of the previously announced recapitalization plan being implemented by Global Crossing Limited. Pursuant to the recapitalization plan, the proceeds of the private placement will be used to repay $75 million of existing indebtedness of a U.S. subsidiary of GCL and to fund the long-term liquidity requirements of GCL and its subsidiaries worldwide.The senior notes to be issued by GCUK Finance have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. This press release does not constitute an offer to sell or the solicitation of an offer to buy these securities in the United States or elsewhere, nor will there be any sale of these securities in any jurisdiction where such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The statements in this press release regarding the timing of the proposed offering and any other future aspects relating to the proposed offering and other statements which are not historical facts are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties, including, but not limited to, market conditions and the price and market for the securities proposed to be offered.Headquartered in Florham Park, New Jersey, Global Crossing Ltd. --http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-basednetwork, which reaches 27 countries and more than 200 major citiesaround the globe. Global Crossing serves many of the world'slargest corporations, providing a full range of managed data andvoice products and services. The Company filed for chapter 11protection on January 28, 2002 (Bankr. S.D.N.Y. Case No.02-40188). When the Debtors filed for protection from theircreditors, they listed $25,511,000,000 in total assets and$15,467,000,000 in total debts. Global Crossing emerged fromchapter 11 on December 9, 2003.GLOBAL CROSSING: Adopts Leadership Program to Keep Key Executives----------------------------------------------------------------- On Nov. 19, 2004, Global Crossing Limited's Board of Directors adopted a Senior Leadership Performance Program at the Compensation Committee's recommendation. The Leadership Program is a special long-term incentive program intended to retain key executives and to motivate them to help Global Crossing achieve its financial goals. The participants in the Leadership Program include all executive officers and a limited group of additional key executives. Daniel O'Brien, Global Crossing's Executive Vice President and Chief Financial Officer, discloses to the Securities and Exchange Commission that each Leadership Participant's aggregate potential award under the Leadership Program is an amount equivalent to the Leadership Participant's regular annual cash bonus target opportunity as of November 19, 2004, the date on which the Leadership Program was approved. For executive officers, this amount ranges from 55% to 100% of their base salary. Actual awards under the Leadership Program will be paid only if Global Crossing achieves specified performance goals relating to earnings and cash flow. Specifically, each Leadership Participant will be entitled to receive: -- a bonus equal to 50% of the Leadership Participant's Maximum Award if the EBITDA Goal is achieved by December 31, 2006; and -- a bonus equal to 50% of the Leadership Participant's Maximum Award if the Cash Flow Goal is achieved by December 31, 2006. Any bonus will be payable 50% in cash and, subject to approval of the proposal to increase the shares available under the 2003 Global Crossing Limited Stock Incentive Plan at the 2004 annual general meeting of shareholders scheduled for December 15, 2004, 50% in shares of Global Crossing common stock issued under the Share Plan. Shares awarded under the Leadership Program will be valued based on the closing price of the common stock on the Nasdaq National Market on November 19, 2004, the date on which the Leadership Program was approved. To earn a bonus award under the Leadership Program, a Leadership Participant must be employed by Global Crossing when performance goals are achieved and on the date of payment. If both the EBITDA Goal and the Cash Flow Goal are achieved, the aggregate bonus amount to be paid out under the Leadership Program would be approximately $5.5 million. Awards under the Leadership Program are in addition to any award payable under the annual cash bonus program or any other compensatory plan or arrangement. In addition, on November 19, 2004, the Board also modified the 2004 annual cash bonus program at the Compensation Committee's recommendation in light of changes to Global Crossing's business plan relating to its recently announced restructuring. The Bonus Program is an annual cash incentive program intended to retain employees and to motivate them to help Global Crossing achieve its financial goals. The participants in the Bonus Program include all Global Crossing executive officers and substantially all other employees other than sales employees and employees covered by collective bargaining agreements. When the Bonus Program was originally established in early 2004, Bonus Participants were given threshold, target and maximum bonus award opportunities based on their level of employment. Target opportunities for executive officers ranged from 55% to 100% of their base salary, with threshold opportunities equal to 60% of the target opportunity, and maximum opportunities equal to 130% of the target opportunity. Actual awards were to be made out of a Company-wide pool to be funded based on corporate performance against designated financial performance metrics relating to revenue, earnings and cash use. For performance at target, the pool was to be funded with an amount equal to the aggregate target bonus opportunities of all Bonus Participants, which would be approximately $36 million based on projected year-end headcount. For performance above or below target, the pool was to be funded with a greater or lesser amount determined using straight-line interpolation based on the threshold and maximum bonus opportunities and financial performance metrics, provided that no bonus was to be paid for performance below threshold, and the bonus for performance above maximum was to be capped at the maximum bonus opportunity. After giving effect to the modifications made to the Bonus Program on November 19, 2004, each Bonus Participant is deemed to have earned 12.5% of his or her target annual bonus opportunity for performance for the first three quarters of 2004. For the fourth quarter of 2004, each Bonus Participant has been given a new bonus opportunity equal to 25% of his or her target annual bonus opportunity. The fourth quarter opportunity is based on new corporate financial performance metrics relating to earnings and cash use established in light of the recently announced restructuring plan. The fourth quarter bonus opportunity is capped at the new target opportunity amount. For performance below the new corporate performance metric target, the award will be a lesser amount determined using straight-line interpolation based on the threshold and target bonus opportunities and financial performance metrics, provided that no fourth quarter bonus will be paid for performance below threshold. To earn a bonus award under the amended Bonus Program, a Bonus Participant must be employed by the Company when performance goals are achieved and on the date of payment. If the fourth quarter financial targets are achieved, the aggregate bonus amount to be paid out under the modified Bonus Program would be approximately $14 million based on projected year-end headcount.Headquartered in Florham Park, New Jersey, Global Crossing Ltd. --http://www.globalcrossing.com/-- provides telecommunications solutions over the world's first integrated global IP-basednetwork, which reaches 27 countries and more than 200 major citiesaround the globe. Global Crossing serves many of the world'slargest corporations, providing a full range of managed data andvoice products and services. The Company filed for chapter 11protection on January 28, 2002 (Bankr. S.D.N.Y. Case No.02-40188). When the Debtors filed for protection from theircreditors, they listed $25,511,000,000 in total assets and$15,467,000,000 in total debts. Global Crossing emerged fromchapter 11 on December 9, 2003. (Global Crossing Bankruptcy News,Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000)GLOBAL DIGITAL: Reduces Workforce Following Default Notice----------------------------------------------------------Global Digital Solutions, Inc., is significantly reducing its work force at its operation in California to minimal crews. This action is necessary because, until recently, Global Digital has been unsuccessful in raising sufficient equity capital required to execute its strategic business plan. The lack of capital combined with ongoing litigation on a large bonded contract, has caused Global Digital to be in a tight working capital position unable to meet its financial obligations. Also, on Sept. 13, 2004, Global Digital received notice from Laurus Capital Management, LLC, that Global Digital is in default for non-payment of interest due under its borrowing agreement.Global Digital has recently received commitments for bridge financing of $404,000. Upon receipt of this financing and long-term equity financing for Global Digital of at least $2,000,000 USD, Messrs. Sullivan and Artigliere have agreed to return approximately 14,100,000 common shares back to Global Digital. Global Digital is currently in negotiations for the long-term equity financing.The Compay is a company engaged in a highly competitive industry. It has experienced annual operating losses and negative operating cash flow. As of June 30, 2004, its current liabilities exceeded its assets by $3,974,069. Global will need to raise additional capital to continue as a going concern.The ability to become profitable will depend on a variety of factors, including the following: -- price, volume and timing of product sales; -- variations in gross margins on products, which may be affected by the sales mix and competitive pricing; -- changes in its levels of research and development, including the timing of any demonstration projects for regulatory approval; and -- acquisitions of products, technology or companies; and -- the ability to obtain performance bonding when required.Global's long-term success also will be affected by expenses, difficulties and delays encountered in developing and selling its products and services and competition.The Company has focused its efforts on developing its business in the Communications sector. Global will need to raise additional capital to implement fully its business plan and continue to establish adequate marketing, sales, and customer support operations. There can be no assurance that additional public or private financing, including debt or equity financing, will be available as needed, or, if available, on terms favorable to the Company. Any additional equity financing may be dilutive to the Company's stockholders and such additional equity securities may have rights, preferences or privileges that are senior to those of its existing common or preferred stock. Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on Global's operating flexibility. The failure to successfully obtain additional future funding may jeopardize the Company's ability to continue its business and operations. As of June 30, 2004, Global had a working capital deficit of $3,974,069. As a result of its operating losses incurred during the year ended June 30, 2004, the Company generated a cash flow surplus of $ 345,611 from operating activities.The Company will need additional capital to continue its operations and will endeavor to raise funds through the sale of equity shares and revenues from operations.There can be no assurance that the Company will generate revenues from operations or obtain sufficient capital on acceptable terms, if at all. Failure to obtain such capital or generate such operating revenues would have an adverse impact on the Company's financial position and results of operations and ability to continue as a going concern.Global Digital Solutions, Inc., formerly Creative Beauty Supply, Inc., is a holding company designed to target the United States government contract marketplace for audio and video services. The U.S. government and commercial marketplaces have budgeted over the long term to upgrade existing telephony, computer, and outsourcing systems across the spectrum of communications, security, and services marketplace segments. The three identified segments that will be pursued to expand Global through controlled internal growth and niche as well as strategic acquisitions are Communications, Security, and Service.GOODMAN GLOBAL: S&P Rates Proposed $500M Sr. Sec. Facility at 'B+'------------------------------------------------------------------Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to heating, ventilation, and air conditioning (HVAC) producer Goodman Global Holdings, Inc., in connection with the Houston, Texas-based company's proposed leveraged buyout transaction.At the same time, Standard & Poor's assigned its 'B+' bank loan rating and its recovery rating of '2' to Goodman's proposed $500 million senior secured credit facilities. The bank loan rating is the same as the corporate credit rating; this and the '2' recovery rating indicate that bank lenders can expect a substantial recovery of principal (80%-100%) in the event of a default.In addition, Standard & Poor's assigned its 'B-' senior unsecured debt rating to the company's proposed $200 million senior unsecured floating rate notes due 2012, and its 'B-' subordinated debt rating to Goodman's proposed $450 million senior subordinated notes due 2012, both to be issued under Rule 144A with registration rights. The allocation of amounts between the senior unsecured and senior subordinated notes is to be determined. Although the senior unsecured notes will rank ahead of the subordinated debt, they are rated two notches below the corporate credit rating, based on Standard & Poor's expectations that the level of Goodman's priority liabilities relative to its assets will place senior unsecured lenders at a material disadvantage to the secured lenders in a bankruptcy. All of these newly assigned ratings are based on preliminary terms and conditions. The outlook is negative."The ratings on Goodman reflect its mature and cyclical markets; established competition that includes larger and better capitalized companies; the relatively narrow focus of its product offerings; earnings vulnerability to weather and rising raw-material and transportation costs; a very aggressive financial profile; and exposure to rising interest rates," said Standard & Poor's credit analyst Cynthia Werneth. These negatives overshadow: (1) the company's good market position as the second-largest U.S. manufacturer of residential and light commercial air conditioning and heating equipment; (2) low-cost manufacturing; and (3) benefits associated with its captive distribution network.Transaction proceeds, along with approximately $478 million of equity, will be used to fund the $1.4 billion purchase of Goodman by an Apollo Management LP affiliate and to pay related fees. Pro forma total debt outstanding will be about $1 billion.HAYES LEMMERZ: Creditor Trust Wants to Clarify Modified Plan------------------------------------------------------------Norman L. Pernick, Esq., at Saul Ewing, in Wilmington, Delaware, relates that HSBC Bank USA is successor indenture trustee for Hayes Lemmerz International, Inc. and its debtor-affiliates' 11-7/8% Senior Notes due 2005. Pursuant to the ModifiedPlan, all claims relating to the Senior Notes were placed inClass 5. As confirmed, Section 4.7 of the Modified Plan provides that, on the Effective Date, the Senior Note Claims will be deemed Allowed Claims, aggregating $316,130,000.Pursuant to Section 4.3 of the Modified Plan, all secured claims relating to the BMO Synthetic Leases were placed in Class 3a.Section 4.3(c) of the Modified Plan states that: "[t]he BMO Synthetic Lessors shall be deemed to have an Allowed General Unsecured Claim in the amount of $8.1 million, provided that the BMO Synthetic Lessors shall assign $5.0 million of such Claim to the holders of Class 5 Senior Note Claims in exchange for treatment as the holder of an Allowed Claim in the amount of $5.0 million in Class 5."Neither section 4.3(c) nor 4.7 addresses the effect on the amount of the Class 5 Claims of the assignment by the BMO SyntheticLessors, Mr. Pernick remarks.Subsequent to the Effective Date, the BMO Synthetic Lessors assigned $5 million of their $8.1 million Allowed General Unsecured Claim to holders of Class 5 Senior Note Claims.The HLI Creditor Trust believes that the best reading of section4.7 of the Modified Plan is that, upon the assignment of theClaims by the BMO Synthetic Lessors, the aggregate amount ofAllowed Class 5 Claims was increased by $5 million, for a total of $321,130,000, comprised of the $316,130,000 Allowed Senior Claims, plus the $5,000,000 Allowed BMO Claim.In an abundance of caution, the Trust asks the United States Bankruptcy Court for the District of Delaware to clarifySection 4.7 of the Modified Plan to provide that, upon the assignment of the BMO Synthetic Lessors' Claims, in accordance with Sections 4.3 and 4.7 of the Modified Plan, the aggregate amount of the Allowed Class 5 Claims is increased to$321,130,000. Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Dela. Case No. 01-11490). Eric Ivester, Esq. at Skadden, Arps, Slate, Meager & Flom and Mark S. Chehi, Esq. at Skadden, Arps, Slate, Meager & Flom represent the Debtors' in their restructuring efforts. (Hayes Lemmerz Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000)HAYES LEMMERZ: Posts $9.5 Million Net Loss in Third Quarter-----------------------------------------------------------Hayes Lemmerz International, Inc. (Nasdaq: HAYZ) reported that sales for the fiscal third quarter ended October 31, 2004, rose 4.8% to $556.2 million, compared with $530.9 million in the fiscal third quarter of 2003. Sales for the nine months ended October 31, 2004 were $1,674.0 million compared with $1,549.0 million for the nine months ended October 31, 2003, an increase of 8.1%.The Company reported a net loss of $9.5 million for the fiscal third quarter ended October 31, 2004, compared with a loss of $10.0 million in the fiscal third quarter of 2003. For the nine months ended October 31, 2004, the Company reported a net loss of $22.2 million. Results for the prior year's period are not comparable because the Company emerged from financial reorganization on June 3, 2003.The Company reported a cash balance of $27.8 million as of Oct. 31, 2004 and $81.3 million of available liquidity under its $100 million revolving credit facility (net of outstanding letters of credit of $18.7 million). To further enhance liquidity, the Company announced on December 10, 2004 it completed the establishment of a $75.0 million receivables securitization program, which was instituted to replace liquidity lost by termination of domestic automakers' early payment programs. The Company expects to begin selling receivables pursuant to the securitization program during the fiscal fourth quarter."We are continuing to pursue our strategy of aggressive cost reductions, investment in the right geographic markets, and investment in the right products," said Curtis Clawson, Chairman, President, and CEO. "We are taking action for long-term value creation."Mr. Clawson cited acquisition of an aluminum wheel production facility in Mexico and establishment of a new joint venture aluminum wheel production facility in Turkey, as well as acquisition of a majority position in a truck wheel plant in Turkey, as important strategic expansions during 2004. "We expect to continue to expand aluminum wheel production in low-cost countries, including Mexico, Brazil, Thailand, and the Czech Republic, with a goal of having nearly two thirds of our aluminum wheel production in low-cost countries within five years," he said."During 2004, Hayes Lemmerz launched over $325 million of follow-on and conquest business globally and continues to build a strong book of business," Mr. Clawson said.Hayes Lemmerz International, Inc., is a world leading global supplier of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company filed for chapter 11 protection on December 5, 2001 (Bankr. D. Dela. Case No. 01-11490). The Debtors' confirmed chapter 11 Plan took effect on June 3, 2003. Eric Ivester, Esq., and Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meager & Flom, represented the Debtors in their restructuring efforts. HEI INC: Waives & Amends Term Loan Pacts with Commerce Bank-----------------------------------------------------------HEI, Inc. (Nasdaq: HEII) disclosed that on Dec. 3, 2004, it entered into waiver and amendment agreements to its term loan agreements and related promissory notes with Commerce Bank and Commerce Financial Group, Inc. Such waiver and amendment agreements are retroactively effective to Nov. 30, 2004. Among other things, such waiver and amendment agreements: (i) waive covenant violations included in each term loan agreement relating to accounting records and the delivery of annual financial statements; (ii) increase the time period for delivery of a copy of its annual financial statements from 90 days to 120 days after each fiscal year-end; (iii) extend the date for compliance with the stated debt service ratio from HEI's fiscal quarter ended Feb. 28, 2005, to its fiscal quarter ended February 28, 2006; (iv) increase the interest rate to be paid under HEI's promissory note with Commerce Bank beginning on March 1, 2005, to and including Oct. 31, 2006, from 6.5% to 7.5%; and (v) increase the interest rate to be paid under HEI's promissory note with Commerce Financial Group, Inc. beginning on March 1, 2005, to and including September 28, 2007, from 8.975% to 9.975%.HEI also reported that on Dec. 7, 2004, it entered into an amendment to its accounts receivable agreement with Beacon Bank to extend the term of such agreement to Jan. 1, 2006."The changes to our loan agreements with Commerce Bank and Commerce Financial Group and the extension of our credit agreement with Beacon Bank are both positive outcomes of our year-end audit process," said Mack V. Traynor, Chief Executive Officer and President of HEI. "These events strengthen our cash position, which we anticipate will enable us to aggressively pursue our key corporate strategies." About the Company HEI, Inc. -- http://www.heii.com/-- designs, develops and manufactures microelectronics, subsystems, systems, connectivity and software solutions for OEMs engaged in the medical equipment and medical device, hearing, communications and RFID industries. HEI provides its customers with a single point of contact that can take an idea from inception to a fully functional, cost effective and manufacturability product utilizing innovative design solutions and by the application of state-of-the-art materials, processes and manufacturing capabilities.IESI CORP: Gets Requisite Consents to Amend Indenture -----------------------------------------------------IESI Corporation reported that, as of 5:00 p.m., New York City time on Dec. 10, it had received tenders and consents from holders of $147,336,000 aggregate principal amount of its 10-1/4% Senior Subordinated Notes due 2012 (CUSIP No. 44950GAB8), which amount represents 98.224% of the outstanding principal amount of the Notes, in connection with the Company's previously announced cash tender offer and consent solicitation for the Notes. The percentage of consents received exceeds the requisite consents required to amend the indenture governing the Notes.The consents were delivered and the Notes were tendered pursuant to an Offer to Purchase and Consent Solicitation Statement dated Nov. 29, 2004, which more fully sets forth the terms and conditions of the tender offer and consent solicitation. Notes tendered at or prior to the Consent Time may no longer be withdrawn and the related consents may not be revoked. IESI and the trustee under the indenture intend to promptly execute and deliver a supplemental indenture containing the proposed amendments described in the Offer to Purchase, which eliminate substantially all of the restrictive and reporting covenants, certain events of default and certain other provisions contained in the indenture. The amendments will not become operative, however, unless and until IESI accepts the Notes for payment in accordance with the terms and subject to the conditions set forth in the Offer to Purchase. If the amendments become operative, any Notes that remain outstanding will be subject to the terms of the indenture as modified by the supplemental indenture.A consent payment of $20 per $1,000 principal amount of the Notes will be paid to holders of Notes who validly tendered and did not withdraw such Notes prior to the Consent Time, if and only if IESI accepts for payment Notes tendered in the tender offer. IESI will also pay the Consent Payment to holders whose valid tenders are received after the Consent Time, but prior to the expiration of the tender offer, if and only if IESI accepts for payment Notes tendered in the tender offer. The tender offer will expire at 5:00 p.m., New York City time, on Jan. 7, 2005, unless extended by IESI.The consummation of the tender offer is conditioned on, among other things, the closing of the Company's previously announced merger, as described in more detail in the Offer to Purchase.Credit Suisse First Boston LLC is the dealer manager and solicitation agent for the tender offer and the consent solicitation. Requests for documents may be directed to Morrow & Co., Inc., the Information Agent, at (800) 607-0088 (U.S. toll-free) or by email at firstname.lastname@example.com Questions regarding the tender offer and consent solicitation may be directed to Credit Suisse First Boston LLC at (800) 820-1653 (U.S. toll-free) or (212) 538-0652. About the Company IESI is one of the leading regional, non-hazardous solid waste management companies in the United States and has grown rapidly through a combination of strategic acquisitions and internal growth. IESI provides collection, transfer, disposal and recycling services to 272 communities, including more than 560,000 residential customers and 56,000 commercial and industrial customers, in nine states. * * *As reported in the Troubled Company Reporter on Dec. 02, 2004, Standard & Poor's Ratings Services placed its ratings, includingthe 'B+' corporate credit rating, on IESI Corp. on CreditWatchwith developing implications.Forth Worth, Texas-based IESI had about $375 million of total debtoutstanding at Sept. 30, 2004."The CreditWatch placement follows the public announcement thatBFI Canada Income Fund will acquire IESI in a transaction valuedat approximately C$1.1 billion," said Standard & Poor's creditanalyst Franco DiMartino.IESI CORP: Moody's Puts B1 Rating on $375M Senior Secured Facility ------------------------------------------------------------------Moody's Investors Service affirmed the senior implied rating of IESI Corporation. The action was prompted by the announcement of the purchase of IESI by BFI Canada Income Fund, "BFI Fund" for approximately $900 million dollars.The purchase of IESI will be funded in part by the proceeds of an equity offering at BFI Fund, which is expected to generate $220 million. Approximately $160 million will be downstreamed to IESI in the form of an intercompany subordinated note due 2016 and $36 million of common equity. The intercompany note will be guaranteed by the IESI and its operating subsidiaries and will bear interest at 12%. The proceeds from the intercompany note will be used to tender the company's $150 million issue of 12.5% senior subordinated notes due 2012. In addition, the proceeds from a proposed 7-year, $375 million guaranteed senior secured credit facility will refinance outstandings under the existing bank facility and pay related fees and expenses. IESI will retain its US corporate structure and management team.These ratings are affected: * Senior Implied affirmed at B1; * Senior Unsecured Issuer Rating affirmed at B2; * $400 million guaranteed senior secured credit facility due 2010 rated B1 will be withdrawn upon the closing of new credit facility; * $150 million issue of 10.25% guaranteed senior subordinated notes due 2012 rated B3 will be withdrawn upon completion of the tender.This rating was assigned: * $375 million guaranteed senior secured credit facility due 2012 rated B1.The outlook is stable.The ratings reflect the recent improvement in margins, leverage and cash generation of IESI for the twelve months ended Sept. 30, 2004 related to the integration of the Seneca Meadows landfill in New York and the capacity expansion at one of its Pennsylvania landfills. The rating also incorporates the weak cash generation to pro forma debt and the expectation that leverage may fluctuate to higher levels due to the acquisitive nature of the company and Moody's expectation that the company will use its revolver to fund dividends to BFI Trust. Cash generation to total debt, measured as twelve months ended September 30 2004 EBITDA to pro forma debt is low for the rating category at 3.3%. Moody's anticipates that the dividend policy will generate negative retained earnings for the foreseeable future.Moody's believes the purchase of IESI by a Canadian income fund ownership increases the risk profile of the company. Of concern is the significant drain of cash through dividends, the permitted size of intercompany debt under the subordinated note indenture, and the reliance on the proceeds of future equity issuances by BFI Fund to substantially reduce debt.The risks inherent in the Canadian income fund structure are somewhat mitigated by covenants within the bank agreement. The financial covenant tests include minimum net worth and maximum debt incurrence tests. Senior debt leverage is further restricted by the inclusion of triggers in the bank agreement, which provide for the deferral of dividends and of interest payments on the intercompany subordinated note, and therefore, cash conservation at more restrictive levels of senior debt to EBITDA. The tightest trigger point (the dividend stopper) is set at an EBITDA margin that is 310 basis points higher than that achieved by the company for fiscal year 2003.The lack of significant cash reserves and refinancing risk at IESI is somewhat mitigated by the common interest of the banks and the intermediate holding company, BFI Canada Newco "Holdings", which guarantees the bank debt. In the event of a liquidity crisis from poor operating performance or a short-term inability to tap the Canadian capital markets, Holdings could convert all or a portion of the intercompany loan into common equity at IESI. In addition, IESI might also cover a liquidity crisis from the downstream of cash or equity from the ultimate parent BFI Canada Income Fund. While much of the consolidated cash generated is paid out to unit holders, the fund retains roughly 14% of the distributable cash. At September 2004, BFI Canada Income Fund had cash on hand of Canadian dollars 22.9 million (US$ 17.95 million).The outlook on the ratings remains stable. In the event cash generation does not keep pace with debt creation, or capital expenditure levels are insufficient to maintain average fleet age or liquidity decreases (net of environmental liability assurance), the ratings could face negative pressure. Significant improvements in free cash generation to total debt, the creation of cash reserves and improved liquidity would be required for the ratings to improve.The B1 reflects the benefits of the collateral as well as the guarantee of the Canadian parent, Holdings. IESI and its current direct and indirect subsidiaries are joint and several borrowers under the credit facility agreement. The collateral package includes a first priority perfected lien on substantially all assets of the company, including a pledge of stock of the operating subsidiaries. Real estate, vehicles and landfills may be perfected at a later date. At closing approximately, $106 million will be available under the revolver after letters of credit.The B2 issuer rating reflects the lack of retained earnings in the structure and effective subordination to the guaranteed senior secured creditors.IESI Corporation, based in Fort Worth, Texas, provides non-hazardous collection, transfer, disposal, and recycling services in two geographic regions: its South Region, which includes 11 operating districts in Texas, Louisiana, Oklahoma, Arkansas, and Missouri; and its Northeast Region which includes 3 operating districts in New York, New Jersey, Pennsylvania, and Maryland. Revenues for fiscal 2003 were $256 million.BFI Canada Income Fund, based in Toronto, Ontario, Canada, indirectly owns BFI Canada Holdings, Inc., which provides non-hazardous solid waste collection, transfer, disposal and recycling services in the provinces of British Columbia, Alberta, Manitoba, Ontario and Quebec. The company had revenues of C$167 million for fiscal year 2003 (US$ 128 million).INTEGRATED HEALTH: Will File Removal Notices Until Feb. 7---------------------------------------------------------IHS Liquidating, LLC, is responsible for, inter alia, litigating, settling or otherwise resolving disputed claims against the IHS Debtors, some of which are the subject of actions currently pending in the courts of various states and federal districts. IHS Liquidating is also in the process of investigating the Prepetition Actions to determine which, if any, of these matters will be litigated, and if so, whether they should be removed pursuant to Rule 9027(a) of the Federal Rules of Bankruptcy Procedure.According to Alfred Villoch, III, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, IHS Liquidating has already resolved many of the Prepetition Actions through the claims reconciliation process. However, IHS Liquidating anticipates that removal may be appropriate with respect to certain of the unresolved Prepetition Actions. IHS Liquidating believes that it is prudent to preserve the estates' right to seek removal of civil actions pending on the Petition Date until it has completed analysis of the Prepetition Actions.At IHS Liquidating's request, the United States Bankruptcy Court for the District of Delaware extends the time within which IHS Liquidating may file notices of removal through and including February 7, 2005."The extension sought will afford [IHS Liquidating] an opportunity to make more fully informed decisions concerning the removal of each [Prepetition] Action and will assure that [IHS Liquidating] does not forfeit the valuable rights afforded to it under 28 U.S.C. Section 1452," Mr. Villoch says.The Court also finds that the rights of IHS Liquidating's adversaries will not be prejudiced by the extension, as any party to a Prepetition Action that is removed may seek to have it remanded to the state court pursuant to Section 1452(b) of the Bankruptcy Code.Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437debtor-affiliates filed for chapter 11 protection on February 2,2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporationand its direct and indirect debtor-subsidiaries broke away fromIHS and emerged under their own plan of reorganization on March26, 2002. Abe Briarwood Corp. bought substantially all of IHS'assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May12, 2003, and that plan took effect September 9, 2003. Michael J.Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq.,at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHSDebtors. On September 30, 1999, the Debtors listed $3,595,614,000in consolidated assets and $4,123,876,000 in consolidated debts.(Integrated Health Bankruptcy News, Issue No. 86; BankruptcyCreditors' Service, Inc., 215/945-7000)INTELLIVEX INC: Case Summary & 20 Largest Unsecured Creditors-------------------------------------------------------------Debtor: Intellivex, Inc. fdba Computer Power Technology, Inc. 3649 South 200 East #A1 Salt Lake City, UT 84107Bankruptcy Case No.: 04-39663Type of Business: The Debtor designs, builds, and manages infrastructure for e-business. See http://www.intellivex.com/Chapter 11 Petition Date: December 8, 2004Court: District of Utah (Salt Lake City)Judge: William T. ThurmanDebtor's Counsel: R. Mont McDowell, Esq. McDowell & Gillman 12th Floor, 50 West Broadway Salt Lake City, UT 84101 Tel: 801-359-3500Estimated Assets: $1 Million to $10 MillionEstimated Debts: $1 Million to $10 MillionDebtor's 20 Largest Unsecured Creditors:Entity Claim Amount------ ------------ASM Modular $254,1532880 Argentina Road, Unit 3Mississauga, ON L5N 7X8CanadaAmerican Express $100,453P.O. Box 0001Los Angeles, CA 90096America Cable Systems $72,515260 Duchaine Blvd.New Bedford, MA 02745Stulz Air Technology Systems $41,289Alarm Control Company $26,445Premier Services Group $25,272RLE Technologies, Inc. $20,388Utah State Tax Commission $20,328Greg Boyce, CPA PC $28,135Sterling Batteries (IPS) $16,959Robinson & Sheen $15,201Westfire, Inc. $13,000GS Metals $12,552FAA $12,000AFC ACS/UNI-FAB $9,907Premier Air Logistics $9,359Mountain Power $8,982On-Line Power $7,293Power Distribution, Inc. $5,161Delta Fire Systems, Inc. $4,950INTERMEDICAL HOSPITAL: Case Summary & Largest Unsecured Creditors-----------------------------------------------------------------Debtor: InterMedical Hospital of South Carolina, Inc. Taylor at Marion Streets Columbia, South Carolina 29220Bankruptcy Case No.: 04-14722Type of Business: The Debtor operates a hospital. See http://www.intermedicalhospital.com/Chapter 11 Petition Date: December 10, 2004Court: District of South Carolina (Columbia)Judge: Thurmond BishopDebtor's Counsel: Julio E. Mendoza, Jr., Esq. Nexsen Pruet Adams Kleemeier, LLC 1441 Main Street, Suite 1500 Columbia, SC 29201Total Assets: $3,641,273Total Debts: $8,876,236Debtor's 2 Largest Unsecured Creditors:Entity Nature Of Claim Claim Amount------ --------------- ------------Palmetto Health Alliance Money Loaned $8,777,799Attn: Paul Duane, Sr. VP/CFOP.O. Box 2266Columbia, SC 29202Centers for Medicaid and Medicare Patient UnknownMedicare Services Interim PaymentsUS Dept of Health and HumanServicesAtlanta Federal Center61 Forsyth Street, SWSuite 4T20Atlanta, GA 30303INTERSTATE BAKERIES: Discloses Pension Accounting Problems ----------------------------------------------------------Interstate Bakeries Corporation (OTC: IBCIQ), filed a Form 8-K with the Securities and Exchange Commission containing business and preliminary unaudited financial information for the year ended May 29, 2004. IBC is currently unable to file a fully compliant Annual Report on Form 10-K due to a review being undertaken in light of newly identified information with respect to the proper accounting treatment for a defined benefit pension plan to which the Company contributes on behalf of approximately 900 of its approximately 32,000 employees. The Company remains uncertain if and when it will file its delayed Annual Report on Form 10-K.Also, IBC announced certain preliminary unaudited financial information for the fiscal 2005 first quarter ended August 21, 2004. This preliminary unaudited information does not reflect significant asset impairment charges the Company expects to recognize when the financial results for the quarter are finalized or any impact of a potential change to the accounting treatment for the defined benefit pension plan discussed above. Preliminary Unaudited Fiscal 2004 Financial InformationWhile IBC believes that the fiscal 2004 report furnished today with the SEC has been prepared in accordance with accounting principles generally accepted in the United States (GAAP), except for the uncertainties related to the defined benefit pension plan discussed above, it can give no assurances that all other adjustments are final and that all other adjustments necessary to present its financial information in accordance with GAAP have been identified. No independent auditors have expressed any opinion or any other form of assurance on such information or its accuracy. For these reasons, the financial information contained in the report furnished today may not be indicative of the Company's financial condition or operating results. Consistent with preliminary unaudited information released in the Company's August 9, 2004 press release, for the full fiscal year ended May 29, 2004, the Company disclosed the following unaudited financial information before the potential adjustments described herein: -- Net sales of $3,467,562,000, a 1.7 percent decrease in comparison to the prior year's $3,525,780,000. -- An operating loss of $(6,679,000) compared to the previous year's operating income of $83,268,000. Included in fiscal 2004 and 2003 results were restructuring and other charges of $12,066,000 and $13,501,000, respectively. -- A net loss of $(25,678,000) compared to the previous year's net income of $27,450,000. -- Adjusted EBITDA of $101,427,000 compared to the previous year's $191,946,000.Consistent with preliminary information released in the Company's August 9, 2004 press release, for the twelve weeks ended May 29, 2004, the Company announced the following unaudited financial information before the potential adjustments described herein: -- Net sales of $803,038,000, a 1.8 percent decrease in comparison to the prior year's $818,019,000. -- An operating loss of $(10,245,000) compared to the previous year's operating income of $2,433,000. Included in fourth quarter fiscal 2004 and 2003 results were restructuring charges of $7,911,000 and $3,460,000, respectively. -- A net loss of $(12,388,000) compared to the previous year's net loss of $(4,568,000). -- Adjusted EBITDA (as defined below) of $18,555,000 compared to the previous year's $28,249,000. Preliminary Fiscal 2005 First Quarter Financial InformationIBC has delayed filing its Quarterly Report on Form 10-Q for the fiscal quarter ended August 21, 2004 due to, among other causes, the need to complete the analysis necessary to determine appropriate significant asset impairment charges related to its bankruptcy filing and in response to its fiscal 2005 financial performance. The Company's review of the accounting treatment for one of its defined benefit pension plans, more fully described above, has also contributed to the Company's inability to file this Quarterly Report on Form 10-Q. The Company remains uncertain if and when it will file this delayed report.IBC also announced preliminary financial information for the first quarter ended August 21, 2004 based on a review of information available under its financial reporting system. The Company anticipates that actual first quarter results, once finalized, will include asset impairment charges related to the Company's evaluation of the carrying value of its assets because of its bankruptcy filing and in response to its fiscal 2005 financial performance. Final first quarter results also may include the impact of a change in the accounting treatment for the defined pension benefit plan discussed above if the manner in which the Company has historically accounted for the plan is changed. The Company cannot predict with certainty the amount of the impairment charges or the impact of any potential change in accounting treatment with respect to the defined benefit plan, but expects that the combined effect on operating loss and net loss as announced today will be significant. While the Company believes that the preliminary financial information announced today has been prepared in accordance with accounting principles generally accepted in the United States (GAAP) except for the absence of the asset impairment charges discussed above and the uncertainties related to the above-noted defined benefit pension plan, it can give no assurances that all other adjustments are final and that all other adjustments necessary to present its financial information in accordance with GAAP have been identified. In addition, no independent auditors have examined, compiled or performed any procedures with respect to the Company's preliminary financial information, nor have they expressed any opinion or any other form of assurance on such information or its accuracy. For the reasons discussed above, the financial information for the first quarter of fiscal 2005 announced today is merely preliminary. For the twelve weeks ended August 21, 2004, the Company announced the following preliminary unaudited financial information before potential adjustments described herein: -- Net sales of $812,002,000, a 2.3 percent decrease in comparison to the prior year's $831,015,000. -- Operating loss of $(18,211,000), compared to the previous year's operating income of $26,507,000. -- Net loss of $(16,877,000), compared to the previous year's net income of $11,190,000. -- Adjusted EBITDA (as defined below) of $11,408,000, compared to the previous year's $48,381,000.Net sales decreased in the first quarter due primarily to a 4.5% decline in unit volume. Most notable were unit declines in both branded and private label white bread and individual snack cake items. While the Company also experienced some unit price decline related to its branded white bread, price increases for its private label bread and sweet goods, along with sales of its new super premium Baker's Inn products, favorably impacted net sales compared to the prior year.The Company's preliminary operating loss of $(18,211,000) as reported today does not reflect anticipated significant asset impairment charges related to the Company's evaluation of the carrying value of its assets because of its bankruptcy filing and in response to its fiscal 2005 financial performance or any impact of a change in the accounting treatment for the defined benefit pension plan discussed above. Preliminary operating loss for the first quarter includes restructuring charges of $8,162,000 principally related to bakery, bakery outlet and depot closings, including non-cash impairment charges of approximately $3,600,000. Preliminary operating loss also reflects the impact of the high fixed cost structure and normal inflationary cost increases associated with production and delivery against a lower net sales base, higher workers' compensation costs and increased advertising charges related to the promotion of the new Baker's Inn bread line.The Company's preliminary net loss of $(16,877,000) as reported today also does not reflect the significant asset impairment charges the Company expects to recognize or any impact of a change in the accounting treatment for the defined benefit pension plan discussed above. Non-GAAP Financial MeasuresEBITDA is the measure of the Company's earnings before interest, taxes, depreciation and amortization; the Company uses the term "Adjusted EBITDA" to reflect that its financial measure also excludes other income, restructuring charges and other charges. Adjusted EBITDA is not a GAAP measurement, but is commonly used as a measure of a company's performance. The Company has provided preliminary Adjusted EBITDA for the fiscal year ended May 29, 2004, for the twelve weeks ended May 29, 2004, and for the first quarter of fiscal 2005 as supplemental disclosure to provide information with respect to its ability to meet capital expenditures and working capital requirements, to monitor its compliance with certain financial covenants and to assess its performance relative to its competitors and its own performance in prior periods. IBC's debtor-in-possession credit facility contains covenants that, among other things, will require the Company to satisfy certain Adjusted EBITDA targets as a measure of its operating performance. The Company's preliminary Adjusted EBITDA should not be considered as an alternative to any measures of performance as promulgated under GAAP, such as income from operations as an indicator of operating performance or as an alternative to cash flows from operating activities as a measure of liquidity as determined in accordance with GAAP. The Company's calculation of preliminary Adjusted EBITDA may be different from calculations used by other companies and therefore may not be comparable to Adjusted EBITDA as reported by other companies. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 53 bakeries, more than 1,000 distribution centers and 1,100 bakery outlets throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014, on August 12, 2004) in total debts.J.P. MORGAN: Fitch Affirms Class B-5 Mortgage Trust Rating at 'B'-----------------------------------------------------------------Fitch Ratings has affirmed 12 classes of J.P. Morgan Residential Mortgage Acceptance Corp. mortgage pass-through trusts:J.P. Morgan Residential Mortgage Acceptance Corp., series 2003-A1: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B';J.P. Morgan Residential Mortgage Acceptance Corp., series 2003-A2: -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. These affirmations reflect credit enhancement consistent with future loss expectations and affect approximately $392.1 million of outstanding certificates detailed above. As of the November 2004 distribution date, the series 2003-A1 transaction is 13 months seasoned, with a pool factor (current mortgage loans outstanding as a percentage of the initial pool) of approximately 90%. The series 2003-A2 transaction is 12 months seasoned, with a pool factor of approximately 86%.JOBS.COM: Fifth Circuit Says Warrant Rights are Equity Interests----------------------------------------------------------------The United States Court of Appeals for the Fifth Circuit received an appeal from six individuals holding preferred shares and warrants to purchase stock in Jobs.com, Inc. The five shareholders -- John Carrieri, Anthony Carrieri, Steven M. Elliot, Dave Sergeant, Michael Slentz, and Sean Slentz -- filed a proof of claim in Jobs.com's chapter 11 case arguing that certain stock warrant redemption provisions gave rise to a claim, or "right to payment" as described in 11 U.S.C. Sec. 101(5). The Debtor argued that all rights under a stock warrant constitute an "equity security" as defined in 11 U.S.C. Sec. 101(16). Jobs.com objected to the shareholders' proof of claim. Judge Houser ruled against the shareholders, 283 B.R. 209, and Judge McBryde affirmed that decision at the District Court level, 301 B.R. 187.The Fifth Circuit reviewed the matter, says Judge Houser's analysis was correct, and holds: (1) a shareholders' right to require a debtor to repurchase their shares of preferred stock is in the nature of an "equity security"; (2) the rights of holders of preferred stock warrants issued by a Chapter 11 debtor to demand that the debtor repurchase warrants at a particular price also fall within the Bankruptcy Code's definition of "equity security"; (3) any rights of the shareholders to require the debtor to repurchase their shares of preferred stock, or to repurchase their stock warrants, if the debtor has "legally available funds," are not the in nature of independent rights to payment, and do not to come within the Bankruptcy Code's definition of "claim"; and (4) any claims that the shareholders' possessed are disallowed.A full-text copy of the Slip Opinion released by the Fifth Circuit on Dec. 7, 2004, is available at no charge at: http://www.ca5.uscourts.gov/opinions/pub/03/03-11268-CV0.wpd.pdf JOBS.COM, Inc., filed for chapter 11 protection on March 15, 2001 (Bankr. N.D. Ill. Case No. 01-41861-BJH-11) and subsequently sold its Jobs.com URL and trademark to TMP Worldwide Inc., the company that operates the Monster.com online recruiting Web site, for $800,000. Scott D. McDonald, Esq., and Deirdre B. Ruckman, Esq., at Gardere, Wynne & Sewell, represent the debtor.KAISER ALUMINUM: Asks Court to Establish Solicitation Procedures----------------------------------------------------------------Debtors Alpart Jamaica, Inc., and Kaiser Jamaica Corporation, Kaiser Alumina Australia Corporation and Kaiser Finance Corporation ask the United States Bankruptcy Court for the District of Delaware and its debtor-affiliates to establish procedures for the solicitation and tabulation of votes to accept or reject their plans of liquidation.The Liquidating Debtors also seek approval of notices and solicitation materials to be sent to creditors. Vote Tabulation ProceduresA. Approval of Form of BallotsRule 3017(d) of the Federal Rules of Bankruptcy Procedure requires the Liquidating Debtors to mail a form of ballot that substantially conforms to Official Form No. 14 only to "creditors and equity security holders entitled to vote on the plan." The Liquidating Debtors propose to distribute to creditors entitled to vote on the Plans one or more ballots. The Ballots are based on Official Form No. 14, but have been modified to address the particular terms of the Plans.Appropriate form of Ballot will be distributed to holders of claims in classes entitled to vote to accept or reject the Plan: Ballot No. lA Individual ballot to be returned directly to Logan & Company, Inc., the Solicitation and Tabulation Agent, for Subclass 3A Senior Note Claims or Subclass 3B Senior Subordinated Note Claims. Ballot No. 1B Individual ballot to be returned directly to a certain master ballot agent for Subclass 3A Senior Note Claims or Subclass 3B Senior Subordinated Note Claims. Ballot No. 2 Master Ballot for Subclass 3A Senior Note Claims or Subclass 3B Senior Subordinated Note Claims. Ballot No. 3 Ballot for Subclass 3C PBGC Claims. Ballot No. 4 Ballot for Subclass 3D Other Unsecured Claims.Classes l and 2 under each Plan are unimpaired and, therefore, are conclusively presumed to accept the applicable Plan in accordance with Section 1126(f) of the Bankruptcy Code. Furthermore, holders of claims in Class 4 and Kaiser Aluminum & Chemical Corporation as the holder of interests in Class 5 under each Plan are deemed to have accepted the applicable Plan. Solicitation of Classes 1, 2, 4 and 5 under each Plan is not required and no Ballots have been proposed for creditors and interest holders in these classes.Certain beneficial owners hold 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Notes through brokers, banks, dealers or other agents or nominees. Each Master Ballot Agent will receive both: (a) a Public Notes Master Ballot to be completed by the Master Ballot Agent; and (b) Form B Public Notes Individual Ballot to be completed by the beneficial owners of 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Notes for whom the Master Ballot Agent provides services.The Master Ballot Agent will make arrangements to distribute the Form B Public Notes Individual Ballots to the applicable Beneficial Owners, who will complete and return the Form B Public Notes Individual Ballots to the Master Ballot Agent. The Master Ballot Agent then will: (a) tally on the Public Notes Master Ballot the votes of the applicable Beneficial Owners that return the Form B Public Notes Individual Ballots; and (b) return the completed Public Notes Master Ballot to Logan & Company.B. Voting DeadlineBankruptcy Rule 3017(c) provides that, on or before approval of a disclosure statement, the Court may fix a time within which the holders of claims or equity interests may accept or reject a plan. The Liquidating Debtors anticipate commencing the Plan solicitation period by mailing Ballots and other approved solicitation materials no later than five business days after the Disclosure Statement is approved. Based on this schedule, the Debtors propose that, with respect to Form B Public Notes Individual Ballots, to be counted as votes to accept or reject the applicable Plan, all Ballots must be properly executed, completed and delivered to Logan & Company either by: (a) mail in the return envelope provided with each Ballot; (b) overnight courier; or (c) personal delivery,so that, in each case, the Ballots are received by Logan & Company no later than 4:00 p.m., Eastern Time, on January 24, 2005, or another date established by the Liquidating Debtors that is at least 25 days after the commencement of the solicitation period.In addition, to accommodate the additional tabulation activities that must be performed by Master Ballot Agents, the Liquidating Debtors further propose that Public Notes Master Ballots, if necessary, may be submitted by facsimile so that they are received by Logan & Company before the Voting Deadline.The Debtors believe that a 25-day solicitation period provides sufficient time for: (a) creditors to make informed decisions to accept or reject the Plans and submit timely Ballots; and (b) Master Ballot Agents to distribute Form B Public Notes Individual Ballots and complete and submit timely Public Notes Master Ballots.C. Tabulation ProceduresSolely for purposes of voting to accept or reject each Plan -- and not for the purpose of the allowance of, or distribution on account of, a claim and without prejudice to the rights of the Liquidating Debtors in any other context -- the Liquidating Debtors propose that each claim within a class of claims entitled to vote to accept or reject each Plan be temporarily allowed in accordance with these tabulation rules: (a) Unless otherwise provided in the Tabulation Rules, a claim will be deemed temporarily allowed for voting purposes in an amount equal to the lesser of the claim amount as set forth in: -- the Schedules; and -- in a timely filed proof of claim; (b) If a claim is deemed allowed in accordance with the applicable Plan, that claim will be temporarily allowed for voting purposes in the deemed allowed amount set forth in that Plan; (c) If a claim for which a proof of claim has been timely filed is marked as contingent or unliquidated, that claim will be temporarily allowed for voting purposes at $1.00; (d) If a claim has been estimated or otherwise allowed for voting purposes by Court order, that claim will be temporarily allowed for voting purposes in the amount so estimated or allowed by the Court; (e) If a claim is listed in the Schedules as contingent, unliquidated or disputed and a proof of claim was not timely filed, that claim will be disallowed for voting purposes; (f) If the Liquidating Debtors have filed and served an objection to a claim at least 15 days before the Voting Deadline, that claim will be temporarily allowed or disallowed for voting purposes in accordance with the relief sought in the objection; (g) If a claim holder identifies a claim amount on its Ballot that is less than the amount otherwise calculated in accordance with the Tabulation Rules, the claim will be temporarily allowed for voting purposes in the lesser amount identified on the Ballot; and (h) With respect to Senior Note Claims and Senior Subordinated Note Claims asserted by holders of 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Notes, the amounts of those claims for voting purposes will be the lesser of the amounts: -- provided to the Liquidating Debtors by the corresponding Indenture Trustee on the Record Holder Register or the Master Ballot Agent register, as Applicable; or -- identified by an Individual Record Holder in a Form A Public Notes Individual Ballot or by a Master Ballot Agent on a Public Notes Master Ballot.The Liquidating Debtors will utilize these additional procedures in tabulating the Ballots: (a) Any Ballot that is properly completed, executed and timely returned to Logan & Company but does not indicate an acceptance or rejection of the applicable Plan will not be counted as either a vote to accept or a vote to reject that Plan; (b) If a creditor casts more than one Ballot voting the same claim before the Voting Deadline, the last dated Ballot received before the Voting Deadline will be deemed to reflect the voter's intent, and thus, will supersede any prior Ballots; and (c) Creditors will be required to vote all of their claims within a particular class under the applicable Plan either to accept or reject the Plan, and may not split their votes.Thus, a Ballot -- or a group of Ballots within a Plan class received from a single creditor -- that partially rejects and partially accepts a Plan will not be counted. For purposes of determining whether the numerosity and claim amount requirements of Sections 1126(c) and 1126(d) have been satisfied, the Liquidating Debtors will tabulate only those Ballots cast by the Voting Deadline. Confirmation Hearing and Notice, Record Date and Distribution of Solicitation Packages ProceduresA. Confirmation HearingIn accordance with Bankruptcy Rule 3017(c) and consistent with the Liquidating Debtors' proposed solicitation schedule, the Liquidating Debtors ask the Court to schedule the Confirmation Hearing for January 31, 2005, to be continued on February 1 and 2, 2005, as necessary. The Confirmation Hearing may be continued from time to time by the Court without further notice. The Liquidating Debtors further propose that objections, if any, to the confirmation of each Plan must: (a) be in writing; (b) state the name and address of the objecting party and the nature of the claim or interest of the party; (c) state with particularity the basis and nature of any objection to the confirmation of the Plan; and (d) be filed with the Court and served on: -- the Clerk, -- the counsel to the Debtors, -- counsel to the official committees, -- counsel to the representatives, -- counsel to the Debtors' postpetition lenders, and -- the U.S. Trustee so as to be received no later than 4:00 p.m., Eastern Time, on January 24, 2005, or such other date established by the Liquidating Debtors that is at least 25 days after the commencement of the solicitation period.In accordance with Bankruptcy Rules 2002 and 3017(d), the Liquidating Debtors propose to serve on all creditors, as part of the Solicitation Packages and not less than 25 days before the Confirmation Objection Deadline, a copy of a notice setting forth: (a) the Voting Deadline for the submission of Ballots to accept or reject the applicable Plan; (b) the Confirmation Objection Deadline; and (c) the time, date and place of the Confirmation Hearing.In addition to mailing the Confirmation Hearing Notice as part of the Solicitation Packages, the Liquidating Debtors propose to publish a notice in an abbreviated form of the Confirmation Hearing Notice not less than 25 days before the Confirmation Hearing in the national edition of The Wall Street Journal.B. Record DateThe Liquidating Debtors propose to set December 13, 2004, as the record date to determine which creditors are entitled to receive Solicitation Packages and, where applicable, vote on the Plans.With respect to a transferred claim, the Liquidating Debtors further propose that the transferee will be entitled to receive a Solicitation Package and cast a Ballot on account of the transferred claim only if by the Record Date: (a) all actions necessary to effect the transfer of the claim pursuant to Rule 3001(e) have been completed; or (b) the transferee files: -- the documentation required by Rule 3001(e) to evidence the transfer; and -- a sworn statement of the transferor supporting the validity of the transfer.Each transferee will be treated as a single creditor for purposes of the numerosity requirements in Section 1126(c) and the other voting and solicitation procedures.C. Solicitation PackageConsistent with Bankruptcy Rule 3017(d), the Liquidating Debtors will mail Solicitation Packages containing copies of: (a) the Confirmation Hearing Notice; (b) the applicable Disclosure Statement, including the applicable Plan that have been filed with the Court before the mailing date; (c) letters recommending acceptance of the applicable Plan; and (d) for Solicitation Packages sent to holders of claims in classes entitled to vote to accept or reject the Plans, an appropriate form of Ballot, a Ballot return envelope, and other materials as the Court may direct.The Solicitation Packages for holders of claims against any Liquidating Debtor in a class under the applicable Plan that is deemed to accept or reject the Plan under Section 1126(f) or 1126(g) will not include a Ballot.The Solicitation Packages will be mailed not less than 25 days before the Confirmation Objection Deadline to: (a) all persons or entities that have filed proofs of claim on or before the Record Date or their transferees in accordance with the procedures; (b) all persons or, entities listed in the Schedules as holding liquidated, non-contingent, undisputed claims as of the Record Date, or their transferees; (c) all other known holders of claims against the Liquidating Debtors, if any, as of the Record Date; (d) all parties-in-interest that have filed notices in accordance with Rule 2002 in the Debtors' Chapter 11 cases on or before the Record Date; (e) counsel to the Debtors' postpetition lenders; (f) the Indenture Trustees; (g) the SEC; and (h) the U.S. TrusteeThe Debtors have mailed notices of the December 20, 2004 Disclosure Statement Hearing. To the extent notices of the Disclosure Statement Hearing are returned by the United States Postal Service as undeliverable as a result of incomplete or inaccurate addresses, the Liquidating Debtors believe that it would be costly and wasteful to mail Solicitation Packages to the Undeliverable Addresses. Therefore, the Liquidating Debtors request that they be excused from mailing Solicitation Packages to those entities for which the Liquidating Debtors have only Undeliverable Addresses unless the Liquidating Debtors are provided with accurate addresses for those entities, in writing, on or before the date of the Disclosure Statement Hearing. If a Solicitation Package is returned as undeliverable, Logan & Company will resend the Solicitation Package only once, provided that the Post Office has included a forwarding address at least five business days before the Voting Deadline. Special Solicitation Procedures for Public NoteholdersThe Liquidating Debtors currently lack the information necessary to solicit the votes of Public Noteholders. In particular, the Liquidating Debtors do not have information regarding the identities of the Public Noteholders or their holdings. Moreover, each of the Indenture Trustees filed a single proof of claim on behalf of all the Public Noteholders with respect to the Senior Note Claims or the Senior Subordinated Note Claims under the corresponding indenture. The proof of claim process, therefore, has not provided the Liquidating Debtors with the information necessary to solicit Plan votes from the individualPublic Noteholders. In addition, because the Indenture Trustees' records identify only registered holders, the Liquidating Debtors do not have direct access to information regarding the Beneficial Owners that hold their 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Notes in "street name" through brokers, banks or other agents.As a result of the circumstances, the Liquidating Debtors ask the Court to approve special procedures for the distribution of Solicitation Packages and tabulation of votes with respect to the Public Noteholders' Senior Note Claims and Senior Subordinated Note Claims.The Liquidating Debtors outline the Special Procedures: (a) The Liquidating Debtors will cause a Solicitation Package or Packages to be mailed by first class mail, postage prepaid, to: -- each holder of record of 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Notes as of the Record Date that hold such instruments in their own Name, rather than in street name as a Master Ballot Agent for Beneficial Owners; and -- each Master Ballot Agent for distribution to Beneficial Owners as of the Record Date; (b) Pursuant to Rules 1007(i) and 3017(e), to permit mailing and facilitate the transmittal of Solicitation Packages to Individual Record Holders and Beneficial Owners of 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Notes, the Indenture Trustee will be required to provide these documents to the Liquidating Debtors within three business days after the Record Date: -- A list in appropriate electronic or other format agreed to by the Liquidating Debtors containing the names, addresses and holdings of the respective Individual Record Holders as of the Record Date; -- A list containing the names and addresses of the Master Ballot Agents and, for each Master Ballot Agent, the aggregate holdings of the Beneficial Owners for whom such Master Ballot Agent provides services; and -- Accompanying mailing labels; (c) The Liquidating Debtors or their agent will send each Individual Record Holder a Solicitation Package containing the applicable Form A Public Notes Individual Ballot. The Form A Public Notes Individual Ballot must be completed and returned to Logan & Company so that it is received before the Voting Deadline; (d) Upon receipt of the Master Ballot Agent Register, Logan & Company will: -- contact each Master Ballot Agent to determine the number of Solicitation Packages needed by the Master Ballot Agent for distribution to the applicable Beneficial Owners for whom the Master Ballot Agent performs services; and -- deliver to each Master Ballot Agent a Public Notes Master Ballot and the requisite number of Solicitation Packages with Form B Public Notes Individual Ballots; (e) The Master Ballot Agents will be required to distribute the Solicitation Packages they receive as promptly as possible to the Beneficial Owners for whom they provide services. In particular, to obtain the votes of the Beneficial Owners, the Master Ballot Agents will include as part of each Solicitation Package sent to a Beneficial Owner a Form B Public Notes Individual Ballot and a return envelope provided by and addressed to the Master Ballot Agent. The Beneficial Owners then must return the Form B Public Notes Individual Ballots to the Master Ballot Agent in the manner and by the deadline in the instructions accompanying the Form B Public Notes Individual Ballots. Upon receipt of the completed Form B Public Notes Individual Ballots from the Beneficial Owners, the Master Ballot Agent will summarize the votes of its Beneficial Owners on a Public Notes Master Ballot in accordance to the instructions attached to the Public Notes Master Ballot. The Master Ballot Agent must return the Public Notes Master Ballot to Logan & Company so that it is received before the Voting Deadline; (f) The Liquidating Debtors will serve a copy of the Court order approving the solicitation procedures on: -- the Indenture Trustees; -- each known entity that is serving as a Master Ballot Agent; and -- ADP Proxy Services, which is an intermediary that processes voting materials for many brokerage firms and banks. Upon written request, the Liquidating Debtors will reimburse the entities -- or their agents -- in accordance with customary procedures for their reasonable, actual and necessary out-of-pocket expenses incurred in performing their tasks. No other fees, commissions or other remuneration will be payable to any Master Ballot Agent -- or their agents or intermediaries -- in connection with the distribution of Solicitation Packages to Beneficial Owners or the completion of Public Notes Master Ballots; (g) With respect to the tabulation of Ballots cast by Individual Record Holders and Beneficial Owners of 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Notes, these procedures will apply: -- All Master Ballot Agents will be required to retain the Form B Public Notes Individual Ballots cast by their Beneficial Owners for inspection for a period of one year after the Voting Deadline; -- Logan & Company will compare the votes cast by Individual Record Holders and Beneficial Owners to the Record Holder Register and the Master Ballot Agent Register. Votes submitted by an Individual Record Holder on a Form A Public Notes Individual Ballot will not be counted in excess of the record position in, as applicable, the 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Notes for that particular Individual Record Holder, as identified on the Record Holder Register. Votes submitted by a Master Ballot Agent on a Public Notes Master Ballot will not be counted in excess of the aggregate position in, as applicable, 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Notes of the Beneficial Owners for whom the Master Ballot Agent provides services, as identified in the Master Ballot Agent Register; -- To the extent that a Form A Public Notes Individual Ballot submitted by an Individual Record Holder contains an overvote or otherwise conflicts with the Record Holder Register, Logan & Company will tabulate the Individual Record Holder's vote to accept or reject the applicable Plan based upon the information contained in the Record Holder Register; -- To the extent that a Public Notes Master Ballot contains an overvote or votes that otherwise conflict with the Master Ballot Agent Register, Logan & Company will attempt to resolve the overvote or conflicting vote prior to the Voting Deadline; -- To the extent that an overvote or a conflicting vote on a Public Notes Master Ballot is not reconciled before the Voting Deadline, Logan & Company will: (i) calculate the percentage of the total stated amount of the Public Notes Master Ballot voted by each Beneficial Owner; (ii) multiply the percentage for each Beneficial Owner by the amount of aggregate holdings for the applicable Master Ballot Agent identified on the Master Ballot Agent Register; and (iii) tabulate votes to accept or reject the Plan based on the result of this calculation. The Liquidating Debtors reserve the right to challenge the appropriateness of the calculation in any given case by seeking a determination of the Court within three business days after the final voting results are certified by the Logan & Company; -- A single Master Ballot Agent may complete and deliver to Logan & Company multiple Public Notes Master Ballots summarizing the votes of Beneficial Owners of 9-7/8% Senior Notes, 10-7/8% Senior Notes or Senior Subordinated Note. Votes reflected on multiple Public Notes Master Ballots will be counted, except to the extent that they are duplicative of other Public Notes Master Ballots. If two or more Public Notes Master Ballots are inconsistent, the latest dated Public Notes Master Ballot received before the Voting Deadline will, to the extent of such inconsistency, supersede and revoke any prior Public Notes Master Ballot; and -- The tabulation of votes by Individual Record Holders and Beneficial Holders will be subject to the additional provisions.Headquartered in Houston, Texas, Kaiser Aluminum Corporation --http://www.kaiseral.com/-- operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products.The Company filed for chapter 11 protection on February 12, 2002(Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones Day, represent the Debtors in their restructuring efforts. OnJune 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 55;Bankruptcy Creditors' Service, Inc., 215/945-7000)KING SERVICE: Wants Exclusive Period Extended Through June 11------------------------------------------------------------- The King Service, Inc., asks the U.S. Bankruptcy Court for the Northern District of New York for an extension, through and including June 11, 2005, of the time within which it alone can file a chapter 11 plan. The Debtor also asks the Court for more time to solicit acceptances of that plan from their creditors, through August 22, 2005. This is the Debtor's first request for an extension of its exclusive periods.The Debtor gives the Court six reasons militating in favor of its request for more time to propose and file a chapter 11 plan without interference from other parties-in-interest: a) the Debtor has addressed and resolved a number of issues critical to its continued business operations; b) the Debtor has reduce payroll through reduction in staffing and voluntary salary reductions by family members; c) the Debtor believes it has made a turnaround necessary in establishing a profitable business operation by: (i) reducing expenses and continuing to service existing customers and maintain customer satisfaction, (ii) obtaining debtor-in-possession financing, and (iii) revamping it prepaid and budget programs for the 2005- 2006 heating season; d) the Debtor will be able to redirect its resources to formulating a proposed plan of reorganization once the 2004- 2005 winter heating season concludes because it will be in a better position to accurately project its future operations and cash flow projections; e) substantially all of the Debtor's post-petition expenses, including taxes, have been paid; and f) none of the Debtor's creditors will be prejudiced by the requested extension of its exclusive periods.The Court will convene a hearing 10:30 a.m., on December 16, 2004, to consider the Debtor's motion.Headquartered in Troy, New York, The King Service, operates gasoline service stations, convenience stores and a fuel oil business. The Company filed for chapter 11 protection on July 14, 2004 (Bankr. N.D.N.Y. Case No. 04-14661). Howard M. Daffner, Esq., at Segel, Goldman, Mazzota & Siegel, PC. represents the Debtor in its restructuring efforts. When the Debtor filed for protection, it listed $12,090,890 in total assets and $13,498,949 in total debts. KMART CORP: Settles Noritsu Dispute with $4,750,000 Cash Payment----------------------------------------------------------------In response to Noritsu America Corporation's complaint, Kmart denies certain of Noritsu's allegations and asserts a counterclaim against Noritsu for breach of a rebate program.Subsequently, Kmart and Noritsu each filed motions for summary judgment with respect to the Complaint. However, the BankruptcyCourt denied both parties' requests. Dispute ResolvedThe parties have agreed to consensually resolve their disputes with respect to the claims and cross-claims asserted in the Adversary Proceeding and certain related matters.In a Court-approved stipulation, the parties agreed that: (a) In full and complete settlement and satisfaction of all claims held by Noritsu against Kmart or its former bankruptcy estate, other than claims for ongoing servicing obligations with respect to the Mini-Labs, Kmart will pay $4,750,000 to Noritsu in immediately available funds. The Settlement Amount will be paid on December 15, 2004, by wire transfer to Noritsu's account; (b) Noritsu will be entitled to allocate and apply the Settlement Amount, in Noritsu's sole and absolute discretion, to any or all of its claims against Kmart or Kmart's former bankruptcy estate. Unless the Settlement Amount is paid to and received by Noritsu on or before December 15, 2004, the Stipulation will be null and void after the close of business on that date; (d) All rights, title, and interest of Noritsu in and to the Mini-Labs will transfer to and become vested in Kmart, free and clear of all liens, claims, and encumbrances. The Mini-Labs are deemed to include all of the equipment previously delivered by Noritsu to Kmart under the various documents, which formed the basis of Noritsu's claims in the Adversary Proceeding and its Claim No. 53191 in Kmart's bankruptcy case; (e) The parties will exchange mutual releases. All claims asserted by either of the parties in the Adversary Proceeding will be dismissed with prejudice, provided, however, that nothing contained in the mutual release provision will release: -- either party's obligations with respect to ongoing service arrangements for the Mini-Labs; -- rights, duties, or obligations arising under the Stipulation; or -- claims by one party against the other for breach of the Stipulation; (f) Claim No. 53191 will be reclassified as a Class 5 Claim and allowed for $8,795,509. The Allowed Claim, without reduction on account of the Settlement Amount, will be deemed transferred and assigned to Kmart without recourse, representation or warranty, and without need for further documentation by the parties. All other proofs of claim filed by Noritsu against Kmart or the former bankruptcy estates will be deemed expunged and disallowed without further Court order, and Noritsu will not file any other proofs of claim against Kmart or the former Kmart bankruptcy estates; and (g) Kmart agrees to pay and discharge any sales, use, exercise, or other transfer taxes arising out of the settlement transaction embodied in the Stipulation, and to indemnify and hold Noritsu harmless from and against any tax liability, if any, including Noritsu's attorney's fees and defense costs.Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- is the nation's second largest discount retailer and the third largest merchandise retailer. Kmart Corporation currently operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No.02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. (Kmart Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000)LITFUNDING CORP: Inks $5 Million Multi-Stage Financing Pact----------------------------------------------------------- LitFunding Corp. (LFC) (NASDAQ: LFDG) has signed a non-binding Letter of Intent with International Monetary Group Inc. (IMG) in Florida for a multi-stage $5 million round of funding. As proposed, IMG will either make a capital investment or make a loan to a limited liability company formed together with LitFunding USA, the new wholly owned operating subsidiary of LFC. Under the terms of the agreement, the limited liability company will receive fees for originating, servicing and managing investments made with these funds. After the return of capital invested to IMG, both the limited liability company and IMG will participate equally in the fees generated from the investments made. Morton Reed, Ph.D., chairman and president, announced that this third Letter of Intent for $5 million means that LFC has attracted $10 million in the five-month period following its emergence from bankruptcy. LFC is resuming its pre-eminence as a source of capital to the plaintiff's attorney's market and, as a result, LFC's growing appeal is clearly reflected by strong investing interest. LFC through its wholly owned subsidiary LitFunding USA (the company) remains one of the nation's largest public companies specializing in the funding of litigation primarily through plaintiff's attorneys. The company is in the litigation funding business making advances to plaintiff's attorneys primarily in the areas of personal injury. A fee is earned when the lawsuits so funded are settled or otherwise concluded by a court ruling. At that time both the funds advanced and the fee contractually agreed to are repaid to the company. * * *As reported in the Troubled Company Reporter on Aug. 23, 2004, LitFunding Corp. and its subsidiary, California LitFunding, both Nevada corporations reported that their Second Amended Joint Plan of Reorganization (Plan) under Chapter 11 of the Bankruptcy Code was confirmed by the United States Bankruptcy Court, Central District of California, Los Angeles Division, on May 26, 2004. The order confirming that ruling was entered into the court record on June 17, 2004 and became effective on June 21, 2004.MAGELLAN HEALTH: Aetna to Purchase Health Care Operations--------------------------------------------------------- Magellan Health Services, Inc. (Nasdaq:MGLN) has been informed that Aetna plans to exercise its option to purchase the Magellan operations that manage behavioral health care for its members. The sale of the Company's Aetna-dedicated operations will be consummated on Dec. 31, 2005, pursuant to an Asset Purchase Agreement executed by the parties as part of the Company's bankruptcy case earlier this year, at which time the Company's contract with Aetna will terminate. Net revenue from the Aetna contract was $170.4 million for the nine months ended Sept. 30, 2004. The purchase price of the Aetna-dedicated assets is based in part on the number of Magellan providers that agree to provide services to Aetna as well, and is estimated to be approximately $50 million to $55 million. Also, as part of the terms of the Company's bankruptcy case, the Company will repay its $49 million note to Aetna on Dec. 31, 2005. "We are very proud of our track record in managing behavioral health care for many of the nation's largest and most respected health plans and particularly proud of our work in creating clinically innovative programs and service-oriented and efficient operations," said Steven J. Shulman, chairman and CEO of Magellan. "We have demonstrated tremendous value to customers by the delivery of excellent quality services and the mitigation of care costs through focused management initiatives that we believe have held our cost of care trends below industry levels. This strong performance has further strengthened our long-term partnerships with our core customer base of leading Blue Cross Blue Shield plans, employers and government entities. Furthermore, the development of innovative new products enhances and expands our continued role as a strategic partner in helping our customers to achieve their goals." "While we had hoped to continue our productive association with Aetna, we also have known that Aetna has been faced with its own unique strategic imperatives that could lead to this decision. The agreements they obtained in our bankruptcy case reflected that potential and we have considered this in our strategies and planning," Mr. Shulman said. "We have achieved a comprehensive operational and financial turnaround at Magellan, and as a result we are very confident in our current position as the leading player in our market segment. Because of our strong cash position, we have a great deal of flexibility to address the change in our revenue and earnings that will result from this development. I am confident in Magellan's prospects, particularly given our recent progress in product development and initiatives to leverage our behavioral health expertise to positively impact physical health with our current long-standing customer base as well as new prospects," Shulman concluded. Magellan's Aetna-dedicated care management operations are located in El Segundo, Calif., Sandy, Utah, and King of Prussia, Pa., and employ approximately 550 staff.Magellan Health Services is headquartered in Columbia, Maryland, and is the leading behavioral managed healthcare organization in the United States. Its customers include health plans, corporations and government agencies. The Company filed for chapter 11 protection on March 11, 2003, and confirmed its Third Amended Plan on October 8, 2003. Under the Third Amended Plan, nearly $600 million of debt dropped from the Company's balance sheet and Onex Corporation invested more than $100 million in new equity.MERRILL LYNCH: Completes Exchange Offer for Convertible Securities------------------------------------------------------------------ Merrill Lynch & Co., Inc. (NYSE: MER) has completed its offer to exchange Liquid Yield Option(TM) Notes due 2032 for a new issuance of Exchange Liquid Yield Option Notes due 2032. The exchange offer expired at 5:00 p.m., Eastern Standard Time, on Dec. 9, 2004. As of the expiration of the exchange offer, approximately $2,232,108,000 aggregate principal amount of Old LYONs, representing approximately 97 percent of the total original principal amount of Old LYONs outstanding, had been tendered in exchange for an equal principal amount of New LYONs. All Old LYONs that were properly tendered have been accepted for exchange. The exchange of New LYONs for Old LYONs is expected to take place today, Dec. 14, 2004. Following the consummation of the exchange offer, approximately $67,892,000 aggregate original principal amount of Old LYONs will remain outstanding. Merrill Lynch has repurchased $2,874,876,000 aggregate principal amount at maturity of its Liquid Yield Option(TM) Notes due 2031. Information concerning the exchange offer and copies of the Exchange Circular and related documents may be obtained from the information agent: Global Bondholder Services Corporation 65 Broadway - Suite 704 New York, New York 10006 Attn: Corporate Actions Banks and Brokers call: (212) 430-3774 (866) 470-3800 (toll-free)The financial advisor is: Merrill Lynch, Pierce, Fenner & Smith Incorporated 4 World Financial Center New York, New York 10080 Attn: Liability Management Group Toll-Free: (888) 654-8637 (212) 449-4914Merrill Lynch is one of the world's leading financial management and advisory companies, with offices in 36 countries and total client assets of approximately $1.5 trillion. As an investment bank, it is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets. Firmwide assets under management total $478 billion. For more information on Merrill Lynch, please visit http://www.ml.com/ * * *As reported in the Troubled Company Reporter on Nov. 08, 2004, Fitch Ratings has taken rating actions on these Merrill Lynch Mortgage Loans, Inc. mortgage pass-through certificates: * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2000-3 -- Class A is affirmed at 'AAA'; -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AAA'; -- Class B-3 upgraded to 'AAA' from 'AA+'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-A -- Classes 1-A and 2-A are affirmed at 'AAA'; -- Class B-1 is affirmed at 'AA+'; -- Class B-2 is affirmed at 'A+'; -- Class B-3A is affirmed at 'A'; -- Class B-3B is affirmed at 'BBB+'; -- Class B-4 is affirmed at 'BBB-'; -- Class B-5 is affirmed at 'B+'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-A1 -- Classes 1-A, 2-A and 3-A are affirmed at 'AAA'; -- Class M-1 upgraded to 'AAA' from 'AA'; -- Class M-2 upgraded to 'AA' from 'A'; -- Class M-3 upgraded to 'A' from 'BBB'; -- Class B-1 upgraded to 'BBB' from 'BB'; -- Class B-2 affirmed at 'B'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-A3 -- Class I-A is affirmed at 'AAA' -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 affirmed at 'BB'; -- Class B-2 affirmed at 'B'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-B -- Classes A-1 and A-2 are affirmed at 'AAA'; -- Class B-1 is affirmed at 'AA+'; -- Class B-2 is affirmed at 'A+'; -- Class B-3 is affirmed at 'BBB+'; -- Class B-4 is affirmed at 'BBB-'; -- Class B-5 is affirmed at 'B+'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-C -- Classes A-1 and A-2 are affirmed at 'AAA'; -- Class B-1 is affirmed at 'AA+'; -- Class B-2 is affirmed at 'A+'; -- Class B-3 is affirmed at 'BBB+'; -- Class B-4 is affirmed at 'BB+'; -- Class B-5 is affirmed at 'B+'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-D -- Class A-1 is affirmed at 'AAA'; -- Class B-1 is affirmed at 'AA+'; -- Class B-2 is affirmed at 'A+'; -- Class B-3 is affirmed at 'BBB+'; -- Class B-4 is affirmed at 'BB+'; -- Class B-5 is affirmed at 'B+'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-E -- Classes A-1 and A-2 are affirmed at 'AAA'; -- Class B-1 is affirmed at 'AA+'; -- Class B-2 is affirmed at 'A+'; -- Class B-3 is affirmed at 'BBB+'; -- Class B-4 is affirmed at 'BB+'; -- Class B-5 is affirmed at 'B+'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-F -- Classes A-1, A-2 and A-3 are affirmed at 'AAA'; -- Class B-1 is affirmed at 'AA+'; -- Class B-2 is affirmed at 'A+'; -- Class B-3 is affirmed at 'BBB'; -- Class B-4 is affirmed at 'BB'; -- Class B-5 is affirmed at 'B+'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-G -- Classes A-1, A-2, A-3 and A-4 are affirmed at 'AAA'; -- Class B-1 is affirmed at 'AA+'; -- Class B-2 is affirmed at 'A+'; -- Class B-3 is affirmed at 'BBB+'; -- Class B-4 is affirmed at 'BB+'; -- Class B-5 is affirmed at 'B+'. * Merrill Lynch Mortgage Loans, Inc., mortgage pass-through certificates, series 2003-H -- Classes A-1, A-2 and A-3 are affirmed at 'AAA'; -- Class B-1 is affirmed at 'AA+'; -- Class B-2 is affirmed at 'A+'; -- Class B-3 is affirmed at 'BBB+'; -- Class B-4 is affirmed at 'BB+'; -- Class B-5 is affirmed at 'B+'.The upgrades reflect an increase in credit enhancement relative to future loss expectations and represent approximately $10.9 million of outstanding principal.As of October 25, 2004, class B-3 of MLMI series 2000-3 has seen an increase to 13.33% (from 0.60% at closing) in credit enhancement provided by subordination from the nonrated class B-4. In addition, the collateral pool has experienced no loan level losses to date and current nonperforming loans are limited to the 30-day delinquency bucket. Only 1% of the original mortgage pool remains outstanding.The current credit enhancement of MLMI series 2003-A1 classes M-1, M-2, M-3, and B-1 is 4.34%, 2.61%, 1.59%, and 1.01% respectively. Currently, 66% of the collateral has paid down. Only 0.71% of the current pool is delinquent. There have been no losses to the pool. The collateral consists of conventional, first lien, one- to four-family, 30-year adjustable-rate residential mortgage loans.The affirmations, representing approximately $7.6 billion of outstanding principal, reflect credit enhancement consistent with future loss expectations. The pools are seasoned from a range of 10 to 21 months. The pool factors (current principal balance as a percentage of original) also range from approximately 58% to 91% outstanding.MEZZ CAP: Fitch Puts Low-B Ratings on Three Series 2004-C2 Certs.-----------------------------------------------------------------Fitch Ratings assigns these ratings to the Mezz Cap Commercial Mortgage Trust, series 2004-C2, commercial mortgage pass-through certificates: -- $34,583,000 class A 'AAA'; -- $52,399,318 class X* 'AAA'; -- $2,096,000 class B 'AA'; -- $1,638,000 class C 'A'; -- $2,554,000 class D 'BBB'; -- $1,048,000 class E 'BBB-'; -- $1,834,000 class F 'BBB-'; -- $1,179,000 class G 'BB'; -- $3,930,000 class H 'B'; -- $524,000 class J 'B-'; -- $3,013,818 class K not rated (NR);*Notional amount and interest only.All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 81 fixed-rate loans having an aggregate principal balance of approximately $52,399,818, as of the cut-off date. For a detailed description of Fitch's rating analysis, see the report 'Mezz Cap 2004-C2,' dated Nov. 17, 2004, available on the Fitch Ratings web site at http://www.fitchratings.com/ MILPITAS MOTORCYCLES: Case Summary & Largest Unsecured Creditors----------------------------------------------------------------Debtor: Milpitas Motorcycles, Inc. dba Honda Kawasaki of Oakland dba San Jose Powersports, LLC 10550 A International Boulevard Oakland, California 94603 Bankruptcy Case No.: 04-46542Type of Business: The Company is a motorcycle dealer.Chapter 11 Petition Date: December 9, 2004Court: Northern District of California (Oakland)Judge: Leslie J. TchaikovskyDebtor's Counsel: Michael W. Malter, Esq. Binder and Malter, LLP 2775 Park Avenue Santa Clara, California 95050 Tel: (408) 295-1700Estimated Assets: $1 Million to $10 MillionEstimated Debts: $1 Million to $10 MillionDebtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------American Honda Finance Line of Credit - $634,671Corporation Credit Line Milpitas21041 South Western Avenue, Suite 200Torrance, California 90501Attn: Gary Tokumori, Esq.Tel: (213) 624-0222Kawasaki Motors Finance Corp. Trade Debt $256,248c/o Steven T. Gubner, Esq.Ezra, Brutzkus & Gubner, LLP16830 Ventura Boulevard, Suite 310Encino, California 91436Wells Fargo Bank Line of Credit $95,564Line of Credit Account #:PO Box 54349 5474-6431-7158-9148Los Angeles, California 90054Bank of the West Trade Debt $65,105c/o Rodney L. Levin, Esq.McArthur & Levin, LLP14375 Saratoga Avenue. Suite 206Saratoga, California 95070American Honda Finance Line of Credit - $51,88621041 South Western OaklandAvenue, Suite 200Torrance, California 90501Attn: Gary Tokumori, Esq.Tel: (213) 624-0222Sears Point Raceway Trade Debt $47,000Parts Unlimited Trade Debt $30,038Wave Media Trade Debt $26,800Fox Trade Debt $25,370Tax Collector Trade Debt $18,432County Government CenterSBC (Pacific Bell Yellow Pages) Trade Debt $12,354Tucker Rocky Trade Debt $6,421Gilroy Honda Trade Debt $6,208Dugan Publications/ISM PMB 161 Trade Debt $5,956Helmet House Trade Debt $5,914Race Promotion Management Trade Debt $5,700GMD Computrack Australia Trade Debt $4,000Universal Underwriters Trade Debt $3,854Insurance Shields Trucking Trade Debt $3,505Tucker Rocky Distributing Trade Debt $2,738MIRANT CORP: District Court Rules in Favor of Pepco Contracts-------------------------------------------------------------The United States District Court for the Northern District of Texas denied Mirant Corp.'s request to reject its obligations to pay Pepco as required by contract. These payments are required as part of the Back-to-Back Agreement in the Asset Purchase and Sale Agreement (APSA) under which Mirant purchased Pepco's generating assets in December 2000. The Court found that the Back-to- Back Agreement is part of a larger contract that cannot be rejected in part, as Mirant sought to do. Under the Back-to-Back Agreement, Mirant is required to purchase from Pepco, at the price Pepco is obligated to pay, the capacity and energy that Pepco must buy under power purchase agreements with FirstEnergy Corp. and Panda-Brandywine L.P. Pepco is a subsidiary of Pepco Holdings, Inc. (NYSE: POM). "Now that their legal obligation has been clarified by the Court, we presume Mirant will follow the law and continue to meet their obligations to pay Pepco," said Dennis Wraase, Chairman of the Board, President and Chief Executive Officer, Pepco Holdings. "If not, we will take appropriate legal action."Since declaring bankruptcy in July 2003, Mirant has repeatedly and unsuccessfully attempted to obtain legal approval to terminate its contractual obligations to pay Pepco for the cost of electricity which Pepco provides to Mirant. Contrary to prior representations made before the courts, Mirant issued a Notice that it would suspend payments to Pepco. Friday's Order reaffirms that Mirant is legally required to make the payments. About PHI Pepco Holdings, Inc. is a diversified energy company with headquarters in Washington, D.C. Its principal operations consist of Pepco and Conectiv Power Delivery, which deliver 50,000 gigawatt-hours of power to more than 1.8 million customers in Washington, Delaware, Maryland, New Jersey and Virginia. PHI engages in regulated utility operations by delivering electricity and natural gas, and provides competitive energy and energy products and services to residential and commercial customers.Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts.NAVISITE INC: First Qtr. EBITDA Up $1.2 Mil. Over Previous Quarter------------------------------------------------------------------NaviSite, Inc. (Nasdaq SC: NAVI), a leading provider of managed application services and a broad range of outsourced hosting services, reported financial results for its first quarter of fiscal year 2005, which ended Oct. 31, 2004. In the first quarter of fiscal year 2005, NaviSite posted, for the fifth consecutive quarter, positive EBITDA, improving $1.2 million over the prior quarter, while increasing revenue and decreasing its net loss. NaviSite's operating loss was $4.8 million for the first fiscal quarter of fiscal year 2005, as compared to an operating loss of $10.7 million in the prior quarter and $2.8 million in the first quarter of fiscal year 2004. Specifically, during the first quarter of fiscal year 2005 the Company: -- Increased revenue by 15% sequentially to $28.9 million, up from $25.2 million in the prior quarter; -- Increased revenue by 23% year over year, up from $23.5 million in the same period in the prior year; -- Posted positive EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), excluding impairment and other one-time charges, for the fifth consecutive quarter in the amount of $1.3 million, up from $23,000 in the prior quarter; and -- Decreased net loss to $6.6 million for the first quarter of fiscal year 2005, as compared with a net loss of $11.5 million for the prior quarter. Net loss for the first quarter of fiscal year 2004 was $3.4 million. Key Highlights and Subsequent Events The first quarter of fiscal year 2005 marked the first full quarter that NaviSite included operating results from its recent acquisition of the Surebridge business. As a result, revenue increased 15% to $28.9 million from $25.2 million in the prior quarter. Operating expenses, excluding impairment, restructuring and other costs, were reduced by nearly 21% to $9.8 million in the first quarter of fiscal year 2005, as compared to $12.4 million in the prior quarter. NaviSite continues to execute on its strategic initiatives for growth. Since the start of the first quarter of fiscal year 2005, more than 50 NaviSite customers have proactively signed renewal and contract change orders, including a 4,000 seat managed messaging contract for a major media company and a current hosted customer, and a $480,000 contract addition of an existing managed messaging agreement with a Fortune 50 manufacturer. We have also extended existing global Electronic Software Distribution contracts with two of the largest software vendors for combined annual minimum revenue of $2.8 million. "We are pleased with our ability to gain new sales from both new customers and our existing installed base which is a key piece of our Company's growth strategy. Our customers are responding positively to our customer-centric business model and new service offerings," said Arthur Becker, CEO of NaviSite. "This growth also underscores that companies are adopting the hosted model and are turning to NaviSite to run their business applications while they focus on their core initiatives." Customer churn, defined as the loss of a customer or a reduction in a customer's monthly revenue run rate, excluding our major accounts, continued to improve in the first quarter of fiscal year 2005, averaging 1.4% per month as compared to a rate of slightly lower than 2% per month during the fourth quarter of fiscal year 2004. Continuing the strategy to emerge as a leader in the Software as a Service (SaaS) enablement business, during the first quarter, NaviSite announced a partnership with industry leader and On Demand delivery platform provider, JamCracker. This partnership creates a turn-key SaaS enablement package that allows Independent Software Vendors (ISVs) to create On Demand application services which will allow them to offer their Software as a Service without the requirement to make changes in their software. In this context, the Company also announced deals during the quarter to provide infrastructure and SaaS enablement services to ISVs, Mitratech, a process automation solutions provider, and DMSI, the leading provider of software for the building materials and inventory industry. NaviSite currently provides these services for more than 75 ISV customers. In support of its Peoplesoft practice which was a part of the Surebridge acquisition, NaviSite announced the launch of its SureStart(TM) service. This template driven approach delivers cost-effective Peoplesoft functionality to mid-market companies in a 12 week time frame. SureStart ensures a rapid return on investment by combining the cost-effectiveness of a packaged software solution with the flexibility to accommodate customer's specific needs. The Company earlier announced that it has signed a reseller agreement with PeopleSoft, Inc. to sell its PeopleSoft(R) EnterpriseOne and PeopleSoft(R) World software packages directly to companies with revenues of $100 million and below. With this agreement, NaviSite is enabled to extend to its clients the benefits of its end-to-end solutions for business application strategy, implementation, integration, and optimization services to smaller and mid-market enterprises. NaviSite has successfully completed a SAS 70 (Statement on Auditing Standards No. 70) Type II Audit on its data center processes, procedures and general controls by a nationally recognized public accounting firm. Successful completion of the SAS 70 Type II Audit is a critical element in Sarbanes-Oxley compliance for NaviSite's public company customers and will help to assure them that NaviSite has instituted best practices and the appropriate systems and processes to safeguard the applications they outsource to NaviSite. First Quarter Financial Results Total revenue for the first quarter of fiscal year 2005 increased 15% to $28.9 million from $25.2 million in the prior quarter and increased 23% from $23.5 million in the first quarter of fiscal year 2004. NaviSite posted a gross profit of $6.1 million for the first quarter fiscal year 2005, an increase of 12% from $5.4 million in the prior quarter, and 24% over a gross profit of $4.9 million reported for first quarter fiscal year 2004. Net loss decreased to $6.6 million for the first quarter of fiscal year 2005, as compared with a net loss of $11.5 million for the prior quarter. Net loss for the first quarter of fiscal year 2004 was $3.4 million. Net loss per share decreased to $0.24 per share for first quarter of fiscal year 2005, from a loss of $0.43 per share for the prior quarter. Net loss per share for the first quarter of fiscal year 2004 was $0.14. NaviSite posted positive EBITDA, excluding impairment and other one-time charges, of $1.3 million for the first quarter or fiscal year 2005, as compared to $23,000 of EBITDA for the prior quarter and $2.0 million of EBITDA, excluding impairment and other one-time charges, for the first quarter of fiscal year 2004. "The results from the first quarter of fiscal 2005 highlight the continuation of our integration of Surebridge. We increased revenue, lowered expenses, improved gross profit and continued to move toward our goal of being a profitable leader in outsourced managed application services for the mid-market," said Arthur Becker, CEO and President of NaviSite. "We anticipate revenue for the second quarter of fiscal year 2005, ending January 31, 2005, will be in the range of $28.7 million to $29.3 million and forecast EBITDA, excluding impairment and other one-time charges, to be between $1.6 million and $2.2 million as we begin to see the realization of the first full quarter of synergies from the acquisition of Surebridge." EBITDA EBITDA is not a recognized measure for financial statement presentation under United States generally accepted accounting principles (U.S. GAAP). The Company believes that the non-GAAP measure of EBITDA provides investors with a useful supplemental measure of the Company's actual and expected operating and financial performance by excluding the impact of interest, taxes, depreciation, amortization and non-cash compensation. The Company also excludes impairment and other one-time charges from its non-GAAP measure, as such items may be considered to be of a non-operational nature. EBITDA does not have any standardized definition and therefore may not be comparable to similar measures presented by other reporting companies. Management uses EBITDA to assist in evaluating the Company's actual and expected operating and financial performance. These non-GAAP results should not be evaluated in isolation of, or as a substitute for, the Company's financial results prepared in accordance with U.S. GAAP. A table reconciling the Company's net loss, as reported, to EBITDA is included in the consolidated financial statements in this release. The Company believes that using expected EBITDA as a performance measure, together with expected net loss, will help investors better understand the Company's underlying financial performance. A table reconciling expected net loss to expected EBITDA for the second quarter of fiscal year 2005 is also included in this release. About NaviSite NaviSite, Inc. (NASDAQ SC: NAVI) deploys, manages and enables software applications and infrastructure for middle-market organizations, which include mid-sized companies, divisions of large multi-national companies and government agencies. The Company offers a full range of services including design, implementation, optimization, upgrade, application development, fully hosted and remote application management, managed services, content delivery, colocation, and Software as a Service enablement. NaviSite is a Microsoft Gold Certified Partner, PeopleSoft Distributor and Silver Services Partner, and a Siebel Reseller Partner. The Company offers vertical expertise in the manufacturing/distribution, financial services, healthcare/pharmaceutical, services, publishing/media & communications, and public sector industries. NaviSite was founded in 1997 and is headquartered in Andover, Massachusetts, with offices and data centers across the United States and in the UK. The Company has approximately 500 employees servicing approximately 1,100 customers worldwide. For more information, please visit http://www.navisite.com/or call 978.682.8300. * * *As reported in the Troubled Company Reporter on Nov. 09, 2004, NaviSite, Inc., disclosed last week that it received an audit report on its fiscal year 2004 consolidated financial statements from KPMG LLP, and the report contains an explanatory paragraph stating that the Company's recurring losses since inception and accumulated deficit, as well as other factors, raise substantial doubt about NaviSite's ability to continue as a going concern. NaviSite anticipates it will continue to incur net losses in the future, and notes that it has significant fixed commitments for real estate, bandwidth commitments, machinery and equipment leases. NaviSite says that it needs to obtain additional financing. NaviSite filed a registration statement with the SEC in early 2004 to register shares of common stock to issue and sell in a public offering to raise additional funds.NEXIA HOLDINGS: Working Capital Deficit Spurs Going Concern Doubt-----------------------------------------------------------------Nexia Holdings, Inc., incurred cumulative operating losses through June 30, 2004 of $11,373,703 and its balance sheet showed a working capital deficit of $1,384,742 at June 30, 2004, all of which raises substantial doubt about the Company's ability to continue as a going concern.Revenues have not been sufficient to cover the Company's operating costs. Management's plans to enable the Company to continue as a going concern include: * Increasing revenues from rental properties by implementing new marketing programs. * Making certain improvements to certain rental properties in order to make them more marketable. * Reducing negative cash flows by selling rental properties that do not at least break even. * Refinancing high interest rate loans. * Increasing consulting revenues by focusing on procuring clients that pay for services rendered in cash or highly liquid securities. * Reducing expenses through consolidating or disposing of certain subsidiary companies. * Raising additional capital through private placements of the Company's common stock.Nexia operates in two primary areas of business: Nexia acquires, leases and sells real estate; and, Nexia provides financial consulting services. Gross revenues for the three and six month periods ended June 30, 2004, were $153,683 and $303,444 respectively as compared to $174,936 and $350,057 for the same periods in 2003. The decrease in six-month revenues of $46,613 is due to a decrease in consulting revenues due to restructuring efforts. LossesNexia recorded operating losses of $502,253 and $1,408,653 for the three and six-month periods ended June 30, 2004, respectively, compared to losses of $29,122 and $105,188 for the comparable periods in the year 2003.Nexia recorded net losses of $397,671 and $1,149,236 for the three and six months ended June 30, 2004, respectively, as compared to net income of $209,914 and $118,851 for the same periods in 2003. The increase in losses is attributable primarily to the issuance of shares of common stock to pay for services rendered which increased expenses accompanied by a decrease in consulting revenues.Nexia does not expect to operate at a profit through fiscal 2004. Since Nexia's activities are closely tied to the securities markets and the ability to operate its real estate properties at a profit, future profitability or its revenue growth tends to follow changes in the securities and real estate market place. There can be no guarantee that profitability or revenue growth can be realized in the future. ExpensesGeneral and administrative expenses for the three and six months ended June 30, 2004, were $290,674 and $859,419, respectively, compared to $20,436 and $24,360 for the same periods in 2003. The increase in expenses is due primarily to directors fees of $480,000 and $107,153 in legal and accounting fees. The Company issued 10,000,000 shares of restricted stock to each director as fees during the first quarter of the year. Capital Resources and LiquidityOn June 30, 2004, Nexia had current assets of $312,219 and $3,460,986 in total assets. Nexia had a net working capital deficit of $1,384,742 at June 30, 2004. The working capital deficit is due primarily to mortgages, which will, or may, come due in the next twelve months and are thus considered as current liabilities.Net cash used in operating activities was $131,346 for the six months ended June 30, 2004, compared to net cash used in operating activities of $403,764 for the six Nexia operates in two primary areas of business: Nexia acquires, leases and sells real estate; and, Nexia provides financial consulting services. Cash used in investing activities was $117,030 for the six months ended June 30, 2004, compared to cash used by investing activities of $2,761 for the same period in 2003.Cash provided by financing activities was $229,292 for the six months ended June 30, 2004, compared to cash provided of $129,177 for the same period in 2003.Nexia Holdings, Inc., provides a variety of financial consulting services to a range of clients through its subsidiary, Hudson Consulting Group, Inc.NORTEL NETWORKS: Export Development Canada Waives Filing Default----------------------------------------------------------------Nortel Networks Corporation's (NYSE:NT)(TSX:NT) principal operating subsidiary, Nortel Networks Limited, has obtained a new waiver from Export Development Canada under the EDC performance-related support facility of certain defaults related to the delay by the Company and NNL in filing their respective 2003 Annual Reports on Form 10-K and Q1, Q2 and Q3 2004 Quarterly Reports on Form 10-Q, in each case with the U.S. Securities and Exchange Commission, the trustees under the Company's and NNL's public debt indentures and EDC. The waiver also applies to certain additional breaches under the EDC Support Facility relating to the delayed filings and the planned restatements and revisions to the Company's and NNL's prior financial results. The new waiver from EDC will remain in effect until the earlier of certain events including: -- the date on which the Reports have been filed with the SEC; or -- January 15, 2005. NNL's prior waiver from EDC, previously announced on November 19, 2004, was set to expire on December 10, 2004. NNL and EDC have also agreed to amend the EDC Support Facility to extend its termination date from December 31, 2005 to December 31, 2006. As previously announced, the Company expects that it and NNL will commence filing their respective 2003 Annual Reports on Form 10-K and Q1 and Q2 2004 Quarterly Reports on Form 10-Q on January 10, 2005 and follow thereafter, as soon as practicable, with the filing of their respective Q3 2004 Quarterly Reports on Form 10-Q. If the Company and NNL fail to file the Reports by January 15, 2005, EDC will have the right, on such date (absent a further waiver in relation to the delayed filings and the Related Breaches), to terminate the EDC Support Facility, exercise certain rights against collateral or require NNL to cash collateralize all existing support. If the Company and NNL fail to file the Reports by January 15, 2005, there can be no assurance that NNL would receive any further waivers or any extensions of the waiver beyond its scheduled expiry date. In addition, the Related Breaches will continue beyond the filing of the Reports. Accordingly, EDC will have the right (absent a further waiver of the Related Breaches) beginning on the earlier of the date upon which the Reports are filed and January 15, 2005 to terminate or suspend the EDC Support Facility notwithstanding the filing of the Reports. While NNL expects to seek a permanent waiver from EDC in connection with the Related Breaches, there can be no assurance that NNL will receive a permanent waiver, or any waiver or as to the terms of any such waiver. The EDC Support Facility provides up to US$750 million in support, all presently on an uncommitted basis. The US$300 million revolving small bond sub-facility of the EDC Support Facility will not become committed support until all of the Reports are filed with the SEC and NNL obtains a permanent waiver of the Related Breaches. As of December 9, 2004, there was approximately US$290 million of outstanding support utilized under the EDC Support Facility, approximately US$206 million of which was outstanding under the small bond sub-facility. About Nortel Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at http://www.nortel.com/ * * *As reported in the Troubled Company Reporter on Dec. 10, 2004, Standard & Poor's Ratings Services placed its B-/Watch Developingcredit rating on Nortel Networks Lease Pass-Through Trustcertificates series 2001-1 on CreditWatch with negativeimplications.The rating on the pass-through trust certificates is dependentupon the ratings assigned to Nortel Networks Ltd. and ZC SpecialtyInsurance Co. This CreditWatch revision follows the Dec. 3, 2004,withdrawal of the ratings assigned to ZC Specialty Insurance Co.Previously, the rating had a CreditWatch developing status due tothe CreditWatch developing status on the rating assigned toNortel.The pass-through trust certificates are collateralized by twonotes that are secured by five single-tenant, office/R&D buildingsthat are leased to Nortel ('B-'). Nortel guarantees the paymentand performance of all obligations of the tenant under the leases.The lease payments do not fully amortize the notes. A surety bondfrom ZC Specialty Insurance Co. insures the balloon amount.The notes mature in August 2016, at which time a final principalpayment of $74.7 million is due. If this amount is not repaid,the indenture trustee can obtain payment from the surety, providedcertain conditions are met.The notes will remain on CreditWatch while Standard & Poor'sexamines the impact of the withdrawal of the ratings on ZCSpecialty Insurance Co.NRG ENERGY: Moody's Rates Proposed $950M Secured Facility at Ba3----------------------------------------------------------------Moody's Investors Service upgraded all of the debt ratings of NRG Energy, Inc. (NRG: Senior Implied to B1 from B2). Moody's also assigned a Ba3 senior secured rating to the company's proposed $950 million secured revolving credit and term loan facility, a B2 Issuer Rating, and a Speculative Grade Liquidity Rating of SGL-1. This rating action concludes the review for possible upgrade that was initiated on November 15, 2004. The rating outlook is stable.The rating action reflects NRG's substantially stronger than anticipated cash flow and earnings since the company's December 2003 emergence from bankruptcy. These results reflect higher than expected energy margins from its merchant coal fleet of power plants as well as a substantial improvement in the financial performance of its NEPOOL generating assets following the settlement agreement with Connecticut Light & Power. NRG reported earnings of $167 million for the first nine months of 2004, and the company's operating cash flow for 2004 is expected to be about 30% higher than the level anticipated at the time the company emerged from bankruptcy.The rating action also reflects the largely completed execution of the company's divesture plans which when completed by year-end 2004 will reduce consolidated debt by nearly $1 billion and provide cash proceeds of about $150 million. To that end, NRG recently completed the sale of its Kendall Generating Station, which deconsolidated a substantial amount of project level debt from NRG's balance sheet. The combination of higher than expected operating cash flow and asset sales proceeds have resulted in lower consolidated debt levels for 2004 and an approximate $600 million increase in NRG's balance sheet cash to $1.2 billion at September 30, 2004.The rating also considers the company's longer-term growth strategies, which could include future plant and asset acquisitions, and acknowledges the company's plans to conservatively manage its balance sheet leverage. As of September 30, 2004, Moody's calculates the company's current total debt to total capitalization ratio to be around 58%.Moody's expects NRG's funds from operations for 2004 and for the next several years to remain at or above 10% of total consolidated debt under most reasonable scenarios. Moody's also notes that while the company's cash flow can be impacted by volatility in energy prices, the majority of its merchant energy cash flows are sourced from the company's coal fired assets located in the New York Power Pool and in the Pennsylvania New Jersey Maryland Interconnect. These assets largely burn lower cost Western coal and the margins from these coal assets are expected to be more than 80% hedged for 2005 and 2006. Moreover, NRG's higher heat rate, less efficient natural gas and oil plants tend to be somewhat protected from the more efficient natural gas entrants in the near-term, as a number of these plants serve transmission constrained load pockets and are expected to continue to receive capacity payments for availability and regional reliability for the next several years.The $950 million in senior secured credit facilities, rated Ba3, will consist of a $150 million revolver/letter of credit facility and an $800 million seven year Term Loan B facility. A$350 million portion of the Term Loan B facility will be used to secure a cash collateralized letter of credit, which will be used to support NRG's working capital needs. The Ba3 rating incorporates the strong collateral package provided to these facilities. Both facilities are secured by a first-priority lien on all unencumbered NRG domestic subsidiary assets and on the stock of all encumbered international and domestic subsidiaries. The majority of the collateral value consists of the power plant assets of Northeast and South Central regions. These two regional subsidiaries, along with NRG Power Marketing, will provide joint and several upstream guarantees of both facilities. Together, the assets of Northeast, and South Central comfortably provide full collateral coverage of senior debt under a distress scenario. Based upon a recent study conducted by a independent third party, the value of these particular generating assets cover senior debt by nearly 3.0x. While the terms of the senior credit facilities will be relaxed from the existing facilities, the senior credit facilities will continue to have financial covenants requiring minimum coverage of both parent interest and consolidated interest expense, and limiting the incurrence of parent only and consolidated debt. Additionally, the credit facilities will have a cash sweep that requires excess cash to be used to retire debt. The amount of mandatory debt retirement will be on a sliding scale based upon the company's senior implied rating from Moody's and the corporate credit rating from Standard and Poor's.Moody's assignment of an SGL-1 rating for NRG's liquidity reflects our belief that NRG's liquidity is very good given the sizeable amount of cash liquidity on the balance and our belief that the company will continue to generate free cash flow. Moody's estimates NRG will have about $1.1 billion of unrestricted cash at year-end 2004 and total liquidity of around $1.4 billion. The company's cash flow is expected to cover all funding requirements, including required capital expenditures, for the foreseeable future. Aside from the 1% annual principal amortization on the Term Loan ($8 million), there is no large principal maturity due until 2014. In addition to the sizeable amount of cash on hand, working capital needs are expected to be satisfied by availability under the $150 million revolving credit facility and by the $350 million letter of credit facility. Working capital needs largely include the posting of collateral required to secure fuel for its power generation business as well as satisfying collateral requirements of various counterparties, which are either purchasing electric energy from NRG or selling electric energy to NRG.The B2 Issuer rating assigned to NRG reflects the unsecured nature of these claims relative to the company's first lien and second debt. All of NRG's debt has been issued on a secured basis, so creditors at this level are subordinate to approximately $2.7 billion of NRG debt and about $800 million of project level debt.The stable rating outlook reflects Moody's expectation that NRG will generate cash flow of around 10% of total consolidated debt for the foreseeable future and that leverage will modestly decline over that timeframe. The rating could be upgraded if NRG continues to execute on its business plan over a sustainable timeframe including financing any growth opportunities in a reasonably conservative fashion. The rating could be downgraded should sustainable cash flow to total debt decline to around 7 to 8% caused by NRG incurring higher debt or sustainable cash flow declining due to higher than anticipated operating expenses or lower than anticipated spark spreads.Ratings upgraded and removed from review for possible upgrade include: -- $1.725 billion 8.0% second lien secured notes due 2013, upgraded to B1 from B2; -- Senior implied rating, upgraded to B1 from B2.Ratings assigned include: -- Proposed $800 million secured Term Loan due 2011 and $150 million secured Revolving Credit due 2007 rated Ba3; -- Issuer Rating at B2 -- Speculative Grade Liquidity (SGL) Rating of SGL-1The B1 rating for the existing $250 million Revolving Credit Facility due 2006 and the B1 rating for the existing $700 million secured Term Loan due 2010 have been withdrawn as both facilities will be replaced by the new above referenced bank credit facilities.Headquartered in Princeton, New Jersey, NRG Energy, Inc., owns and operates a diverse portfolio of power-generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. The Company emerged from chapter 11 on December 5, 2003, under the terms of its confirmed Second Amended Plan. James H.M. Sprayregen, Esq., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq., at Kirkland & Ellis, represented NRG Energy in its $10 billion restructuring.OMEGA HEALTHCARE: Prices 3.5 Million Shares in Public Offering --------------------------------------------------------------Omega Healthcare Investors, Inc. (NYSE:OHI) declared the pricing of the public offering of 3.5 million shares of its common stock at a price of $11.96 per share for gross proceeds of $41.86 million. The offering is being made from its shelf registration statement that became effective on August 27, 2004. Also, the Company intends to grant the underwriters a 30-day option to purchase up to an additional 525,000 shares of common stock to cover over-allotments, if any. The common stock is being offered by the Company and represents a new financing. UBS Investment Bank is acting as sole book-running manager for the offering. Banc of America Securities LLC, Deutsche Bank Securities and Legg Mason Wood Walker, Incorporated are acting as co-managers for the offering. This press release shall not constitute an offer to sell nor a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. About the Company Omega is a Real Estate Investment Trust investing in and providing financing to the long-term care industry. At September 30, 2004, the Company owned or held mortgages on 205 skilled nursing and assisted living facilities with approximately 21,900 beds located in 29 states and operated by 39 third-party healthcare operating companies. * * *As reported in the Troubled Company Reporter on Nov. 02, 2004, Fitch Ratings has published a credit analysis report on OmegaHealthcare Investors, Inc. providing insight into Fitch'srationale for its ratings of: -- $300 million of outstanding senior unsecured notes 'BB'; -- $168 million of preferred stock 'B'.The Rating Outlook is Stable.PILLOWTEX CORP: Declares Castle & Cooke's $4.25-Mil. Bid Highest ----------------------------------------------------------------Castle & Cooke, Inc.'s Kannapolis-based subsidiary, Castle & Cooke North American Commercial, LLC, was declared the highest bidder at the conclusion of the auction held earlier Friday for Pillowtex Corporation's Plant 1 complex and waste water treatment facility located in Kannapolis. Plant 1, which consists of over five million square feet and approximately 135 acres, lies in the center of downtown Kannapolis. The final bid was for consideration of $4.25 million in cash plus a convertible promissory note in the principal amount of $2.125 million. Under the terms of the bid, a joint venture formed by Castle & Cooke North American Commercial, LLC or an affiliate will own Plant 1 and the treatment plant. The promissory note to Pillowtex Corporation will be converted for no cost into a one-third interest in the joint venture. Castle & Cooke's bid is subject to Bankruptcy Court approval. The hearing before the Court to consider such approval is scheduled for Tuesday, Dec. 14, 2004. David H. Murdock, Chairman and Chief Executive Officer of Castle & Cooke, Inc., stated, "We, in joint venture with Pillowtex Corporation, are very excited to be embarking upon the redevelopment of the Plant 1 complex and the creation of new employment opportunities for the citizens of Kannapolis and the surrounding communities. We believe the property offers a great diversity of development potential and we will be exploring these possibilities aggressively over the next several months. It is our goal to determine the best use for the property that would most benefit the City of Kannapolis and its residents." North Carolina Governor Mike Easley stated, "We look forward to working with David Murdock and Castle & Cooke to create jobs and investment in Cabarrus County and surrounding areas." In referring to David Murdock and Castle's final bid, Mayor Ray Moss, City of Kannapolis, stated, "We are dealing with someone who is known and has been involved in our City since 1982. I can't say anything about this that doesn't make the future for Kannapolis brighter than it is." Kannapolis City Manger Mike Legg added, "This is the best news. This is the best possible scenario for Kannapolis." Senator Fletcher Hartsell commented, "Over the years, David H. Murdock has shown a continued interest in North Carolina and we are very pleased to see that commitment extend to the redevelopment of Plant 1. With Castle & Cooke's reputation for quality development, the coming months will be exciting times for the entire community. We look forward to working with Mr. Murdock on these redevelopment plans." "[Friday's] announcement certainly reinforces David Murdock's continued commitment to downtown Kannapolis. I am certain the City of Kannapolis is happy to know that plans for the redevelopment and reenergizing of this important area of the City can now begin. Senator Dole's office looks forward to working with Mr. Murdock and the City of Kannapolis in any way appropriate," commented Margaret Kluttz, State Director of Senator Elizabeth Dole's office. Castle & Cooke North American Commercial, LLC and its affiliate company, also based in Kannapolis, Atlantic American Properties, own over 700,000 square feet of commercial and retail space in and around the Kannapolis area, including Cannon Village, the downtown Kannapolis shopping district, and over 800 acres of undeveloped land in Cabarrus and Rowan Counties in North Carolina. Atlantic American Properties, Inc. also owns and operates the Kannapolis Country Club and it recently purchased the sixteen-acre former Pillowtex Plant 4 facility in Kannapolis. Castle & Cooke, Inc. and its affiliated companies operate in over twenty-five states, with diversified businesses that include the ownership and development of real estate, manufacture of brick, and ownership of public warehouses, in addition to its chassis and generator set leasing services.Headquartered in Dallas, Texas, Pillowtex Corporation -- http://www.pillowtex.com/-- sold top-of-the-bed products to virtually every major retailer in the U.S. and Canada. TheCompany filed for Chapter 11 protection on November 14, 2000(Bankr. Del. Case No. 00-4211), emerged from bankruptcy under achapter 11 plan, and filed a second time on July 30, 2003 (Bankr.Del. Case No. 03-12339). The second chapter 11 filing triggeredsales of substantially all of the Company's assets. David G.Heiman, Esq., at Jones Day, and William H. Sudell, Jr., Esq., atMorris Nichols Arsht & Tunnel, represent the Debtors. OnJuly 30, 2003, the Company listed $548,003,000 in assets and$475,859,000 in debts. PREMIER CONCEPTS: Emerges From Chapter 11 Protection ----------------------------------------------------The U.S. Bankruptcy Court for the Central District of California approved Premier Concepts, Inc.'s (OTC Bulletin Board: FAUX) Chapter 11 Plan of Reorganization. Under the terms of the Plan, Premier's common stock will be subject to a 1 for 11 reverse stock split, and Premier's name will be changed to USN Corporation. Also, the Company's symbol has been changed to USNR.In accordance with the Bankruptcy Court's order, the effective date of the Plan of Reorganization, as well as the name change and reverse stock split, took effect yesterday, Dec. 13, 2004.Headquartered in Century City, California, Premier Concepts, Inc., sells costume fashion jewelry in retail outlets. The Company filed for chapter 11 protection on Oct. 10, 2003 (Bankr. C.D. Cal. Case No. 03-36445). Lawrence A. Diamant, Esq., at Robinson, Diamant, & Wolkowitz represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $2,378,629 in total assets and $2,148,897 in total debts.PURE MORTGAGES: Moody's Places Ba2 Rating on $23.5M Class F Notes-----------------------------------------------------------------Moody's Investors Service assigned these definitive ratings to the debt issued by PURE Mortgages 2004 plc, the first synthetic securitization of US commercial mortgages: -- Aaa to the $250,000 Class A+ Floating Rate Credit Linked Notes due 2034, -- Aaa to the $52,100,000 Class A Floating Rate Credit Linked Notes due 2034, -- Aa2 to the Euro 26,050,000 Class B Floating Rate Credit Linked Notes due 2034, -- A2 to the $28,650,000 Class C Floating Rate Credit Linked Notes due 2034, -- A3 to the $13,050,000 Class D Floating Rate Credit Linked Notes due 2034, -- Baa2 to the $29,950,000 Class E Floating Rate Credit Linked Notes due 2034, and -- Ba2 to the $23,500,000 Class F Floating Rate Credit Linked Notes due 2034.Moody's issued prospective ratings on the Notes on Nov. 5, 2004.The ratings on the Notes are based on: (1) the credit risk associated with the underlying collateral in conjunction with that of a reference pool of commercial mortgages originated by HSH Nordbank AG; (2) Moody's assessment of the characteristics of the reference pool of loans and the underlying real estate; (3) the subordinated position of the Class A Notes to the Class A+ Notes; (4) the level of subordination provided by the more junior ranking classes of notes; and (5) the legal and structural integrity of the issue.The ratings address the timely payment of interest and ultimate repayment of principal on or before the final maturity date. Moody's ratings address only the credit risks associated with the transaction. Other non-credit risks, such as those associated with the timing of principal prepayments and other market risks have not been addressed and may have a significant effect on yield to investors.The Notes are credit-linked to a pool of US commercial mortgages. The reference pool totals approximately $1.041 billion and contains 41 mortgages secured by 51 commercial real estate properties located throughout the United States. The states with the highest concentration of properties are: * California (32.6 per cent), * New York (27.5 per cent), * Massachusetts (7.4 per cent), * Florida (6.5 per cent), and * Texas (6.1 per cent). The quality of the security is good with approximately 98 per cent of all properties achieving an above average quality score. The net proceeds from the issuance of the Credit-Linked Notes will be used to fund either a cash collateral account with HSH Luxembourg (guaranteed by HSH), or certain eligible investments, which will have the benefit of a Put Option agreement with HSH.RAINIER CBO: Fitch Assigns Low-B Ratings on Classes B-1L & B-2 --------------------------------------------------------------Fitch Ratings has affirmed Rainier CBO I, Ltd. and Rainier CBO I (Delaware) Corp.: -- $88,549,059.25 class A-1L notes at 'AAA'; -- $137,000,000 class A-2L notes at 'AAA'; -- $62,000,000 class A-3L notes at 'A+'; -- $35,000,000 class A-4C notes at 'BB+'; -- $12,440,000 class B-1L notes at 'B+'; -- $6,960,000.02 class B-2 notes at 'B-'.Rainier CBO, a collateralized bond obligation -- CBO, is managed by Centre Pacific, LLC. The CBO was established in July of 2000 to issue debt and equity securities, and the issuance proceeds were used to purchase high yield bond collateral.Since the last rating action in January 2004, the collateral pool has seen improvement in its credit quality. According to the Oct. 17, 2004, trustee report, Rainier CBO's collateral currently includes a par amount of $13.444 million (3.71%) in defaulted assets as opposed to $14.367 million (4.04%) in January 2004. The percentage of 'CCC+' or below assets has gone down to 17.7% from 21.17% since January 2004. The senior class A overcollateralization -- OC -- test, with a trigger of 117%, has gone up to 128% from 124.7% since January 2004. The class A OC test, with a trigger of 106%, has gone up to 113.5% from 110.6% since January 2004. The class B OC test is currently passing at 105.5%, with the trigger set at 103%. This class B OC test was failing at 102.4% in January 2004. The revolving period of this transaction ended on July 17, 2004, and the notes are currently amortizing. Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates relative to the minimum cumulative default rates required for the rated liabilities. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings web site at http://www.fitchratings.com/ For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004, available on Fitch's web site.REAL MEX: S&P Places Single-B Ratings on CreditWatch Negative-------------------------------------------------------------Standard & Poor's Ratings Services placed its ratings for casual restaurant operator Real Mex Restaurant, Inc., on CreditWatch with negative implications. The CreditWatch placement follows the company's agreement to purchase Chevys, Inc., which operates 74 restaurants, the majority of which are located in California, for $77.9 million. Real Mex plans to fund the acquisition through one or a combination of debt, equity, cash on hand, or asset sales.As reported in the Troubled Company Reporter on Mar. 16, 2004, Standard & Poor's Ratings Services assigned its 'B-' rating to Real Mex Restaurant Inc.'s proposed $105 million senior secured note offering due 2010. The notes will be issued under Rule 144A with registration rights. The proceeds will be used to repay existing debt. Standard & Poor's also assigned its 'B' corporate credit rating to the company. The CreditWatch listing reflects the possibility that ratings could be lowered based on a potential deterioration of the company's financial profile. Upon completion of the transaction, Standard & Poor's will evaluate the merits of the acquisition and the impact on Real Mex's credit profile.REGAL ROW: Bankr. Ct. Will Hear Lawsuit Against Washington Mutual-----------------------------------------------------------------Chief Judge Fish of the U.S. District Court for the Northern District of Texas denied a motion by Regal Row Fina, Inc., Shiraz Poonawala and Yasmin Poonawala, to remand their lawsuit against Washington Mutual Bank F.A. to Texas state court. Judge Fish finds that the U.S. Bankruptcy Court is the best place to litigate the dispute. Regal Row Fina, Inc., borrowed money from Washington Mutual Bank before filing for chapter 11 protection. The loan is secured and Shiraz Poonawala and Yasmin Poonawala, Regal Row's owners, guarantee repayment of that bank debt. In 1999, the Debtor and its owners entered into negotiations with Atlantic Oil & Gas, Inc., p/k/a North Atlantic Oil & Gas, Ltd., to purchase real property, construct improvements, and to operate a Fina-branded gas station and convenience store and a Grandy's fast food restaurant. In July 1999, Yasmin Poonawala purchased the real property which is the subject of this dispute; Washington Mutual served as the lender for this purchase. Following this initial transaction, Washington Mutual provided $1.5 million of additional financing to Regal Row in October 1999, which was guaranteed by the Poonawalas. Pursuant to a Deed of Trust, the Security Agreement, and the Financing Statements, Washington Mutual holds a first priority security interest in and against substantially all of Regal Row's real property and personal property -- including, but not limited to, all of Regal Row's furniture, fixtures, equipment, and inventory. Washington Mutual has allowed the Debtor to use cash collateral to fund post-petition operations. On April 2, 2004, the Debtor and the Poonawalas sued the Bank (162d Judicial District Court in and for Dallas County, Texas, Cause No. 04-02755). The plaintiffs allege counts of fraud, constructive fraud, fraud in a real estate transaction, breach of contract, negligent misrepresentation, and breach of fiduciary duty. The plaintiffs seek money damages and an award of costs and attorney's fees against Washington Mutual. Specifically, the plaintiffs claim that prior to the July 1999 purchase and the October 1999 financing, there were several meetings and conversations between the parties during which time Washington Mutual made certain representations. As a result of these representations, the plaintiffs claimed that they believed they had acquired real estate, improvements, and personal property to operate the business at a cost they understood to be the cost of construction. However, the plaintiffs stated that the value of their acquisition was less than the amount the plaintiffs paid to Washington Mutual, thereby allowing Washington Mutual to receive a financial benefit by reason of the excess charges. After Regal Row tumbled into chatper 11, Washington Mutual removed the lawsuit from state court to the Bankruptcy Court. The Debtor and the Poonawalas want the lawsuit sent back to state court. Judge Fish says the Bankruptcy Court is the appropriate forum. Regal Row Fina, Inc., sought chapter 11 protection (Bankr. N.D. Tex. Case No. 04-33857-SAF-11), on April 5, 2004. Robert M. Nicoud, Jr., Esq., at Olson, Nicoud & Gueck, LLP, represents Regal Row. When the debtor filed for chapter 11 protection, it reported $596,000 in assets and $1,596,484 in liabilities. On May 5, 2004, Shiraz and Yasmin Poonawala, Regal Row's owners, commenced an individual chapter 11 proceeding (Bankr. N.D. Tex. Case 04-35147-BJH-11). RELIANCE GROUP: High River Objects to Disclosure Statement----------------------------------------------------------High River Limited Partnership notes that the Official Committee of Unsecured Creditors' Disclosure Statement fails to provide adequate information on the Litigation Claims and Proceeds and the ERISA Breach of Duty Claims. According to Edward S. Weisfelner, Esq., at Brown Rudnick Berlack Israels, LLP, in New York City, the Disclosure Statement is "replete with glaring deficiencies that make it impossible for creditors to analyze the merits of the Creditors' Committee Plan." There is not enough information to evaluate: (a) the Litigation Claims; (b) how those Litigation Claims will be pursued by Reliance Group Holdings; and (c) the ERISA-based claims that are effectively abandoned by the Creditors' Committee Plan. "These deficiencies leave creditors with no guidance on possible recoveries, possible distributions, and the possible outcome of the Creditors' Committee Plan," Mr. Weisfelner says. A. Litigation Claims and Proceeds Mr. Weisfelner points out that the Disclosure Statement does not provide enough information on the nature and extent of Litigation Claims and Litigation Proceeds. Like the Bank Committee Plan, the Creditors' Committee Plan provides that Holders of Claims in Classes 2 and 4a, unless they "opt out," will assign their rights to Litigation Claims to RGH. RGH will then prosecute the Litigation Claims and distribute the Proceeds in accordance with the distribution scheme of the Creditors' Committee Plan. Mr. Weisfelner complains that the Disclosure Statement does not address the potential for the Litigation Claims. There is no description of the underlying factual basis of the Litigation Claims or of the likely outcome. High River wants to know how the Litigation Claims will be prosecuted. The Disclosure Statement does not explain what legal strategies will employed, the means in which the Litigation will be guided or what entity will be responsible for legal decisions. The Disclosure Statement only makes a bald reference that RGH will be responsible for the prosecution of the Litigation Claims. For example, Mr. Weisfelner says, there is no information as to how determinations whether to settle Litigation Claims will be made, or how "RGH" will determine which Litigation Claims to pursue. In short, there is no information with respect to the entities responsible for litigation strategy and the means for devising that strategy. B. ERISA Breach of Fiduciary Duty Claims The Disclosure Statement does not adequately describe the nature and extent of ERISA-based Breach of Fiduciary Duty Claims. These Claims are to be carved out of the Litigation Claims assigned to RGH for prosecution for the benefit of certain RFSC creditors. For example, if RFSC is deemed to be a fiduciary of the pension plans at issue, RFSC may have valuable claims for the benefit of its creditors -- claims that are not assigned to RGH for prosecution. Service providers may have committed fiduciary duty breaches, producing increased liabilities that were imposed on RFSC. If so, valuable claims against those service providers may exist. The Disclosure Statement fails to discuss these potential Claims, or any other potential estate claims that are being abandoned by the Creditors' Committee Plan. In light of the deficiencies, the Disclosure Statement does not have enough information to enable creditors to decide whether to accept the proposed treatment under the Creditors' Committee Plan. Without understanding the Litigation Claims, the ERISA- based Breach of Fiduciary Duty Claims or how they will be pursued, a creditor cannot determine whether the distribution scheme for the Litigation Proceeds is satisfactory. Given the information gaps, High River asserts, the Court should not approve the Disclosure Statement.Headquartered in New York, New York, Reliance Group Holdings, Inc.-- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, inturn, owns 100% of Reliance Insurance Company. The holding andintermediate finance companies filed for chapter 11 protection onJune 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403) listing$12,598,054,000 in assets and $12,877,472,000 in debts. Theinsurance unit is being liquidated by the Insurance Commissionerof the Commonwealth of Pennsylvania. (Reliance Bankruptcy News,Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000)ROLLIE R. FRENCH: Case Summary & 20 Largest Unsecured Creditors---------------------------------------------------------------Debtor: Rollie R. French, Inc. 1813 South 10th Street San Jose, California 95112 Tel: (408) 286-5300Bankruptcy Case No.: 04-57424Type of Business: The Company is a member of the South Bay Plastering Contractors Association. See http://www.plasterconnect.com/ Chapter 11 Petition Date: December 7, 2004Court: Northern District of California (San Jose)Judge: Arthur S. WeissbrodtDebtor's Counsel: Robert G. Harris, Esq. Heinz Binder, Esq. Binder & Malter, LLP 2775 Park Avenue Santa Clara, California 95050 Tel: (408) 295-1700Estimated Assets: $1 Million to $10 MillionEstimated Debts: $1 Million to $10 MillionDebtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------Scafco Steel Trade Debt $261,186PO Box 11215Spokane, Washington 99211-1215Carpenter Funds of North Union $231,850CaliforniaDepartment 01611PO Box 39000San Francisco, California 94139Acoustical Material Services Trade Debt $163,1761137 Olinder CourtPO Box 20492Phoenix, Arizona 95036Brand Scaffold Rent & Erect Trade Debt $113,562PO Box 91298Chicago, Illinois 60693ADR Consulting, Inc. Consulting Services $78,873Calply, Inc. Trade Debt $59,022Tomarco Trade Debt $54,958Plasterers Local #66 Union $50,593Isolatek International Trade Debt $46,003Bay Scaffolding, Inc. Trade Debt $40,895State Compensation Insurance Workers Compensation $25,839Bay Area Painters & Tapers Union $24,634San Francisco Gravel Company Trade Debt $19,836Plasterers Local #224 Union $18,556Ahern Rentals Trade Debt $18,537HOD Carriers #36 Trust Funds Union $17,696Denmar Steel Incorporated Trade Debt $11,833Railway Distributors Trade Debt $9,370Aqua Proof, Inc. Trade Debt $7,318North California Ind. Union $7,130Pension PlanSEQUILS-MINCS: Fitch Puts 'BB-' Rating on $58 Mil. MINCS Notes--------------------------------------------------------------Fitch Ratings affirms the ratings assigned to SEQUILS ING and MINCS ING effective immediately: -- $355,000,000 SEQUILS notes 'AA'; -- $58,653,000 MINCS notes 'BB-'.SEQUILS ING and MINCS ING are cash flow and synthetic CLOs, respectively, jointly obtaining exposures to a portfolio of high yield U.S. senior bank loans. SEQUILS obtains access to the economics of the loan portfolio via the purchase or the assignment of the loans using funds obtained from the SEQUILS note issuance. MINCS obtains access to the economics of the portfolio by synthetically referencing the portfolio via credit default swaps between SEQUILS, JPMorgan Chase Bank, and MINCS. The MINCS program is essentially a first-loss, credit enhancement to the SEQUILS program. ING Capital Advisors, Inc., is the asset manager.Positive performance since Fitch last rating action on the transactions confirms Fitch's opinion that the risk inherent in the various classes of securities are commensurate with the ratings assigned. Specifically, defaulted assets and assets rated 'CCC' or lower represent approximately 2.3% of the portfolio and the credit quality of the overall portfolio remains unchanged at 'BB-/B+'. The SEQUILS reserve account balance increased by $2 million to $6.6 million, the SEQUILS threshold utilization test has decreased nearly 20% to 0.0%, and the MINCS deficit ratio has also improved by nearly 5% to 49.3%.Fitch assigned a rating for the SEQUILS notes to the timely return of interest and ultimate return of principal. The MINCS notes are rated to the ultimate payment of basic interest and principal. Additionally, the ratings assigned to the SEQUILS and MINCS notes do not address the payment of any additional interest or distributions.SEQUOIA MORTGAGE: Fitch Puts Low-B Ratings on 4 Cert. Classes-------------------------------------------------------------Fitch Ratings has taken rating actions on Sequoia Mortgage Trust Home Equity Issues:Sequoia Mortgage Trust 11 (2002-11): -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'.Sequoia Mortgage Trust 12 (2002-12): -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'.The affirmations reflect credit enhancement consistent with future loss expectations and affect $1,373,733,464 of outstanding certificates.As of the November 2004 distribution, the pool factor (current mortgage loans outstanding as a percentage of the initial pool) for Trust 11 is 92%. In the 25 months since this transaction closed, credit enhancement (in the form of subordination) has increased by at least 40% for each class.As of the November 2004 distribution, the pool factor for Trust 12 is 76%. In the 23 months since this transaction closed, credit enhancement has increased by at least 30% for each class.SIMMONS BEDDING: S&P Rates Planned $165M Sr. Discount Notes at B------------------------------------------------------------------Standard & Poor's Ratings Services affirmed its ratings on Atlanta, Georgia-based mattress manufacturer Simmons Bedding Co., including its 'B+' corporate credit rating. At the same time, Standard & Poor's assigned its 'B+' corporate credit rating to Simmons Co., the holding company of the entity. Standard & Poor's also assigned its 'B-' rating to Simmons Co.'s proposed $165 million senior discount notes due 2014. For analytical purposes Standard & Poor's views the companies on a consolidated basis.At the same time, Standard & Poor's revised its outlook to negative from stable, reflecting the consolidated firm's increased debt leverage. The notes are rated two notches below the corporate credit rating, indicating its subordinated position in the consolidated capital structure. Proceeds from the proposed notes will be used to fund a dividend to the company's shareholders."The ratings on Simmons are based on its highly leveraged financial profile, a result of its debt-financed acquisition by an affiliate of Thomas H. Lee Partners L.P. in late 2003, and the proposed holding company notes," said Standard & Poor's credit analyst Martin S. Kounitz. At these debt levels, the ratings would be lower if not for firm's history of stable cash flows, successful new product innovations and its entrenched number-two position in the stable mattress industry, which is characterized by predictable demand characteristics.Following the company's recapitalization in December 2003, and pro forma for the proposed issuance of $165 million senior discount notes, Simmons is very highly leveraged.SIMMONS COMPANY: Moody's Junks $165 Million Senior Discount Notes-----------------------------------------------------------------Moody's Investors Service has assigned a Caa2 rating to Simmons Company's proposed $165 million senior discount notes due 2014. At the same time, the existing senior unsecured issuer rating of B3 assigned to Simmons Bedding Company has been withdrawn and a new senior unsecured issuer rating of Caa2 has been assigned to Simmons Company. All other ratings have been affirmed. Outlook remains stable.These ratings have been assigned: * $165 million secured discount notes due 2014 of Caa2; * Long-term senior unsecured issuer rating of Caa2;These ratings have been affirmed: * Senior implied rating of B2; * $75 million senior secured term loan B due 2011 of B2; * $405 million senior term loan B due 2011 of B2; * $140 million senior unsecured floating rate loan due 2012 of B3; * $200 million senior subordinated notes due 2013 of Caa1;This rating has been withdrawn: * Long-term senior unsecured issuer rating of B3The discount notes will be issued by Simmons Company, the ultimate holding company of Simmons Bedding Company, without upstream support from any of the operating subsidiaries. Proceeds from the senior discount notes are expected to be dividended to all shareholders, including, Thomas H. Lee Partners, the financial sponsor of Simmons Company, and to pay transaction costs.The new ratings and affirmation reflect Simmons increased leverage as a result of the transaction mitigated by improved operating performance. Moody's expects December 2004 leverage, proforma for the sale of Mattress Gallery, acquisition of Juvenile Products and the proposed note offering, to be approximately 6.7x, an increase from 5.5x at September 25, 2004. The higher debt burden will place additional pressure on Simmons Bedding Company to generate adequate profits for dividends to be upstreamed to Simmons Company and could limit the company's overall financial flexibility. Mitigating this increased leverage is the company's success in enhancing its operations.Over the past few years, Simmons has registered improvements in its operating margins, which is reflective of its strong product innovation and cost control discipline. Management's focus on product innovation and cost control (eg. shift to one-sided mattress and zero-waste programs) has enabled the company to achieve this growth while increasing its EBITDA margins and free cash flow after capital expenditures. Moreover, Simmons has been disciplined in its application of cash flow to debt reduction over the past couple of years.The Caa2 rating on Simmons Company senior discount notes reflects their structural subordination to a material amount of indebtedness at Simmons Bedding Company. These notes will not be guaranteed by any operating subsidiary and will not pay cash interest for the first five years. Provisions in the indenture are expected to restrict additional indebtedness, dividends, investments, liens, asset sales, affiliate transactions, and mergers and acquisitions. Further, restricted payments will be limited to 50% of consolidated net income.Simmons' credit profile remains supported by its leading brand and competitive position (second largest market share behind Sealy) in the relatively stable and brand sensitive mattress industry, by its product innovation (HealthSmart removable mattress tops introduced in October 2004), and by the proven operating abilities of Simmons senior management who are expected to continue in their current roles. While consumers can defer mattress purchases in the short term, replacement bedding accounts for about 70% of industry sales and the average replacement cycle has been relatively steady at 8 to 10 years. The mattress industry's stability also stems from favorable demographics including growth in home sales, number of rooms per home, disposable income, and population (approximately 2/3 of Simmons sales come from replacement sales). The industry has experienced only one year-over-year dollar sales decline over the past twenty years (2001), and average selling prices have steadily risen. Finally, Moody's believes that it is unlikely that Simmons will move any of its business overseas given quick turnarounds (3 days from order to delivery).The stable ratings outlook reflects Moody's expectation that Simmons will maintain its credit protection measures, which should allow for moderate deleveraging over time. Moody's expects management to sustain its strategic direction, which is centered on premium pricing (price points of $799 or higher), new products and distribution channels, cost and asset efficiency measures, and debt reduction.Moody's will consider positive rating actions if Simmons sustains its currently strong operating momentum with well-received new product launches and smooth operational transitions, and applies its cash generation to debt reductions. Negative ratings actions could be considered through a sustained reversal in profitability measures or a change in strategic direction, which materially impedes debt reduction, compromises the company's liquidity position, or upsets recent market share gains.Headquartered in Atlanta, Georgia, Simmons Company is one of the largest manufacturers of premium mattresses, foundations and related accessories. The company has the second largest market share, behind Sealy, in the U.S. mattress industry. Net sales for the twelve months ended September 2004 approximated $876 million.SINGH BROTHERS LLC: Case Summary & 4 Largest Unsecured Creditors----------------------------------------------------------------Debtor: Singh Brothers LLC c/o Sukhdev Hothi 27902 36th Avenue South Auburn, Washington 98001Bankruptcy Case No.: 04-25645Chapter 11 Petition Date: December 9, 2004Court: Western District of Washington (Seattle)Judge: Thomas T. GloverDebtor's Counsel: Richard G. Birinyi, Esq. Bullivant Houser Bailey PC 1601 5th Avenue #2300 Seattle, WA 98101 Tel: 206-292-8930Total Assets: $2,327,500Total Debts: $1,008,740Debtor's 4 Largest Unsecured Creditors:Entity Nature Of Claim Claim Amount------ --------------- ------------Sukhdev Hothi $7,50027902 36th Ave. S.Auburn, WA 98001Gurmail Kang $7,5005612 185 St.Surrey, BC V3S 8J3Farmers Insurance Services $1,340P.O. Box 25368Santa Ana, CA 92799Puget Sound Energy Services $400STANDARD PARKING: Moody's Withdraws Junk Ratings After Redemption-----------------------------------------------------------------Moody's Investors Service has withdrawn the ratings of Standard Parking Corporation following the redemption of the company's rated debt securities.These ratings have been withdrawn: * Senior Implied, rated Caa1; * Issuer Rating, rated Caa1.The withdrawal reflects the company's redemption of its rated debt with the proceeds of an equity issuance and a new senior credit facility, which is not rated by Moody's.Standard Parking Corporation and its subsidiaries and affiliates manage, operate and develop parking properties throughout the United States and Canada. Revenues for the year ended December 31, 2003 were about $546 million.STELCO INC: Utilizes $257.6 Million of Credit Facility------------------------------------------------------Stelco Inc.'s (TSX:STE) credit facility utilization pursuant to an existing Stelco financing agreement was $257.6 million as of November 12, 2004. Stelco forecasts that the total facility utilization of the Existing Stelco Financing Agreement will decrease by $25.7 million to $231.9 million as at Feb. 11, 2005.There has been interest shown in the sale process of the non-core subsidiaries. A total of 53 parties have signed confidentiality agreements with respect to the six non-core subsidiaries: * AltaSteel, * Norambar, * Stelcam, * Stelwire, * Stelfil, and * Stelpipe.Stelco, Inc. -- http://www.stelco.ca/-- which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in2003 were $2.7 billion.STRUCTURED ASSET: Fitch Assigns Low-B Ratings on Four Certificates------------------------------------------------------------------Fitch Ratings has affirmed 29 classes of Structured Asset Securities Corp. residential mortgage-backed certificates: Series 1996-2: -- Class A affirmed at 'AAA'. Series 1996-A: -- Class A affirmed at 'AAA'. Series 2001-11: -- Class A affirmed at 'AAA'. Series 2001-15A: -- Class A affirmed at 'AAA'. Series 2001-17: -- Class A affirmed at 'AAA'. Series 2002-15: -- Class A affirmed at 'AAA'. Series 2002-19: -- Class A affirmed at 'AAA'. Series 2002-27A: -- Class A affirmed at 'AAA'. Series 2003-4: -- Class A affirmed at 'AAA'. Series 2003-16: -- Class A affirmed at 'AAA'. Series 2003-21: -- Class A affirmed at 'AAA'. Series 2003-23H: -- Class A affirmed at 'AAA'; -- Classes 1B1, 2B1 affirmed at 'AA'; -- Classes 1B2, 2B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Series 2003-29: -- Class A affirmed at 'AAA'. Series 2003-30: -- Class A affirmed at 'AAA'. Series 2003-33H: -- Class A affirmed at 'AAA'; -- Classes 1B1, 2B1 affirmed at 'AA'; -- Classes 1B2, 2B2 affirmed at 'A'; -- Class B3 affirmed at 'BBB'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. These affirmations reflect credit enhancement consistent with future loss expectations, and affect $2,777,652,377 of outstanding certificates. The pools are seasoned from a range of 103 to only 13 months. The pool factors (current principal balance as a percentage of original) range from approximately 4% to 87% outstanding.TENET HEALTHCARE: Subsidiary to Sell St. Charles General Hospital -----------------------------------------------------------------Tenet Healthcare Corporation (NYSE:THC) reported that a company subsidiary has entered into a definitive agreement to sell St. Charles General Hospital, a 168-bed hospital in New Orleans, to Preferred Continuum Care. Net after-tax proceeds, including a note from Preferred Continuum Care for a portion of the sales proceeds and the liquidation of working capital, are estimated to be approximately $11 million. The company expects to use the proceeds of the sale for general corporate purposes. Preferred Continuum Care, based in Birmingham, Ala., was formed in January 2004 to create centers of excellence for treating long-term acute care patients. The company, which is developing facilities in four states, was founded by two health care executives -- Thomas D. Scott and Eugene E. Smith -- with combined industry experience totaling more than 50 years. Smith is an original founder of HEALTHSOUTH Corporation. The transaction is expected to be complete by Dec. 31, subject to customary approvals. "We are pleased to be transferring ownership of St. Charles General Hospital to a well-qualified buyer with significant experience in hospital operations, who will continue to provide health care services to the community," said W. Randolph Smith, president of Tenet's former Western Division, who is overseeing the company's previously announced divestiture program. "New Orleans remains an important market for Tenet and we are committed to continue serving the community through the network of acute care hospitals and health care facilities that we are retaining in the area." St. Charles General Hospital is one of 27 facilities Tenet reported it was divesting on Jan. 28, 2004. Tenet has completed the divestiture of 11 of the 27 facilities and, with this announcement, has entered into definitive agreements to divest another 11. Discussions and negotiations with potential buyers for the remaining five hospitals slated for divestiture are ongoing. Previously reported completed divestitures are: -- In November, a Tenet subsidiary completed the sale of Midway Hospital Medical Center in Los Angeles to Physicians of Midway, Inc. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $12 million. -- Also in November, several Tenet subsidiaries completed the transfer of assets of three acute care hospitals in West Los Angeles to Centinela Freeman HealthSystem. Net after-tax proceeds are estimated to be approximately $47 million, including the liquidation of working capital and tax benefits. -- In October, several Tenet subsidiaries completed the sale of four hospitals in the Los Angeles area to AHMC, Inc. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $95 million. Under the sales agreement, the company received $50 million of cash proceeds upon closing and entered into a $50 million senior secured loan agreement with the buyer. The $50 million loan due from the buyer matures on Dec. 16, 2004, and is collateralized by all the properties of the sold hospitals. -- In August, a Tenet subsidiary completed the sale of Doctors Hospital of Jefferson in Metairie, La., to East Jefferson General Hospital. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $33 million. -- In July, a Tenet subsidiary returned Doctors Medical Center - San Pablo in San Pablo, Calif., to the West Contra Costa Health Care District, the entity from which the company had been leasing the facility. -- In June, a Tenet subsidiary completed the sale of Brownsville Medical Center in Brownsville, Texas, to Valley Baptist Health System. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $68 million. Previously announced definitive agreements are: -- In November, a Tenet subsidiary entered into a definitive agreement to sell Hollywood Presbyterian Medical Center in Los Angeles, Calif., to the CHA Medical Group. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $69 million. The transaction is expected to be complete by Dec. 31, subject to regulatory approvals. -- In October, several Tenet subsidiaries entered into a definitive agreement to sell two acute care hospitals in St. Louis to Argilla Healthcare, Inc. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $42 million. The sale is expected to be complete by Dec. 15, subject to regulatory approvals. -- Also in October, several Tenet subsidiaries entered into a definitive agreement to sell three acute care hospitals in Massachusetts to a subsidiary of Vanguard Health Systems, Inc. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $167 million. The sale is expected to be completed by Dec. 31, subject to regulatory approvals and certain other closing conditions. -- In September, several Tenet subsidiaries entered into a definitive agreement to sell four acute care hospitals in Orange County, Calif., to Costa Mesa-based Integrated Healthcare Holdings, Inc. Net after-tax proceeds, including the liquidation of working capital, are estimated to be approximately $72 million. The transaction is expected to be complete in December, subject to customary regulatory approvals. About the Company Tenet Healthcare Corporation, through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. Tenet can be found on the World Wide Web at http://www.tenethealth.com/ * * *As reported in the Troubled Company Reporter on Dec. 09, 2004, Moody's Investors Service assigned an SGL-4 speculative gradeliquidity rating to Tenet Healthcare Corporation. At the sametime, Moody's affirmed Tenet's existing long-term debt ratings(senior implied at B2) and assigned a B3 rating to TenetHealthcare's $1 billion 9.875% senior unsecured note offering,which was issued in June of this year. The rating outlook isnegative.Ratings assigned: * Tenet Healthcare Corporation: -- SGL-4 speculative grade liquidity rating; -- B3, 9.875% senior unsecured notes.Ratings affirmed: * Tenet Healthcare Corporation: -- B2 senior implied; -- B3 issuer rating; -- B3 senior unsecured note ratings.TENGTU INTL: Working Capital Deficiency Spurs Going Concern Doubt-----------------------------------------------------------------Tengtu International Corp., reported that for the fiscal year ended June 30, 2004, it made a one time adjustment of $18,700,000 due from a related party. Tengtu believed that its approximately $19.5 million receivable due from Tengtu China was materially impaired and that Tengtu was continuing an assessment of the impairment. Upon further assessment, Tengtu believes that approximately $800,000 of this amount will be collected from schools resulting in a write-down $18,700,000 due from Tengtu China in the quarter ended June 30, 2004. However, the Company is continuing aggressive efforts to collect all receivables.In addition to, the Tengtu China Group companies have incurred approximately $8.37 million in bank debts and loans.The Company's net loss for the year ended June 30, 2004, was $73,015,718. Other cash changes from operating activities include non-cash changes for depreciation of $108,288, $47,209,330 of Goodwill write off after re-evaluation of issuing 30 million shares for a 43% of interest in Tengtu United and consolidation of other Tengtu Group companies from the restructuring, loss on eqity investments of $1,183,804 primarily due to the high start-up expenses in CBERC, bad debt expenses of $18,700,000 for the one-time write off of amounts due from related party, minority interest of $13,101, net advances to related party of $680,185, and non-cash interest expense of $272,013 related to the Top Eagle Holdings, Ltd. convertible debenture.Tengtu's cash on hand is not sufficient to meet its capital investment plans and operating requirements for the next 12 months. The Company is planning to raise additional funds to meet the cash requirements for its operations, including NEP and CBERC. There can be no assurance that the financing will be available, or if available, that it will be on acceptable terms. Going Concern DoubtMoore Stephens, P.C., Certified Public Accountants of New York, New York, has stated, in part, in their September 26, 2004, Auditors Report to the Board of Tengtu International Corporation:"The accompanying statements have been prepared assuming that the Company will continue as a going concern. . . . [T]he Company incurred a net loss of $73,015,718 for the year ended June 30, 2004, used cash in operations of $3,690,102 and, as of that date, had a working capital deficiency of $3,822,607. These conditions raise substantial doubt about the Company's ability to continue as a going concern."Tengtu International Corp., through its wholly owned subsidiary, Beijing Tengtu United Electronics Development Co., Ltd., is engaged in the sale of software and educational materials to schools in the People's Republic of China. TOWER PARK: Unsatisfactory Cash Flows Trigger Going Concern Doubt-----------------------------------------------------------------Tower Park Marina Investors LP's marina is not generating satisfactory levels of cash flows and cash flow projections do not indicate significant improvement in the near term. These matters raise substantial doubt about the Partnership's ability to recover the carrying value of its assets, (not withstanding the write-down of the marina facility to its net realizable value) and to continue as a going concern. The Partnership's ability to continue to operate through 2004 and beyond is contingent on, among other factors, the improvement in Tower Park Marina operations and continued advances from the General Partners. Management's plans include the expenditure of approximately $125,000 (unaudited) in additional repairs and capital improvements during 2004, which management believes will continue to improve the operations of the property.For the nine months ended September 30, 2004, revenues for Tower Park declined by $141,000 to $2,107,000. The decrease was the net result of declines in RV parking ($86,000) retail sales ($68,000) and other ($63,000), offset by increases in slip rentals of $51,000, and fuel service of $20,000. For the three months ended September 30, 2004, the Partnership's net loss of $35,000 was $34,000 better than the $69,000 net loss incurred for the same period last year. However, last year's net loss included an $81,000 prepayment penalty assessed by the prior lender and $24,000 related to the write-off of unamortized loan costs. Adjusting for these two items, the Partnership's performance was $71,000 worse than that of the prior year. This decline was primarily the result of an $80,000 decline in RV parking revenues, as a result of transient workers occupying a large portion of the RV park in 2003. The Partnership's net loss of $261,000 for the nine months ended September 30, 2004, is $6,000 more than the loss incurred in the same period a year ago. The increased loss reflects a decline in activity at the property from the previous year, when occupancies, primarily in RV parking, were elevated by transient workers who resided at the property during road construction for most of 2003. In addition, lease income declined due to a decrease in percentage rent payments from the restaurant tenant, and a reduction in square footage leased to another tenant. The 2004 loss was partially offset by a significant decline in interest expense, due primarily to the 2003 interest amounts including an $81,000 prepayment penalty assessed by the prior lender. Included in the Partnership's net loss of $261,000 is $199,000 of depreciation and amortization. Excluding these non-cash items, the Partnership incurred a cash flow deficit of $62,000. This deficit was covered by additional advances from the General Partner and by the deferral of interest and management fee payments due to the General Partner and its affiliates. Tower Park Marina Investors, L.P. (f/k/a PS Marina Investors I), is a publicly held limited partnership organized on Jan. 6, 1988 under the California Revised Limited Partnership Act.The Company was formed to acquire and improve existing marinas and related facilities and, to a lesser extent, to develop marina facilities. Marina facilities typically contain wet and dry boat storage facilities, gasoline sales facilities and may contain one or more related facilities such as a recreational vehicle or campground facilities, boat trailer storage facilities, boat rental and sales facilities, restaurants or similar facilities, and boat supply and sundries stores. Substantially all of the Company's income is derived from the rental of wet and dry boat storage facilities and related facilities such as R.V. facilities and boat trailer storage facilities, and from the receipt of rental payments under leases or subleases.TRAPEZA CDO: Fitch Affirms $6.9 Mil. Class E Debt Rating at 'BB'----------------------------------------------------------------Fitch Ratings affirms seven classes of notes issued by Trapeza CDO III, LLC. These affirmations are the result of Fitch's review process. These rating actions are effective immediately: -- $108,497,331 class A1A notes at 'AAA'; -- $71,500,000 class A1B notes at 'AAA'; -- $25,000,000 class B notes at 'AA+'; -- $31,250,000 class C-1 notes at 'A'; -- $31,250,000 class C-2 notes at 'A'; -- $13,715,288 class D notes at 'BBB'; -- $6,857,142 class E notes at 'BB'.Trapeza III is a collateralized debt obligation -- CDO -- managed by Trapeza Capital Management, LLC which closed June 25, 2003. Trapeza III is composed of bank and thrift trust preferred securities. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. Since closing the collateral has continued to perform, with slight improvement in the weighted average bank score of the portfolio as determined by the Fitch Bank Scoring Model. The class A/B and class C/D overcollateralization -- OC -- ratios remain relatively unchanged, and continue to pass their performance test triggers of 141.25% and 103.5% with ratios of 146.3% and 106.7%, respectively. There are currently no deferring or defaulted securities in the portfolio. Three institutions with securities totaling 5.1% of the initial portfolio have been acquired by separate institutions not previously included in the portfolio, allowing obligor concentration to remain unchanged. The ratings on the class A1A, A1B, and B notes address the likelihood that investors will receive timely payment of interest and ultimate payment of principal by the stated maturity date. The ratings on the class C-1, C-2, D, and E notes address the likelihood that investors will receive ultimate payment of interest and ultimate payment of principal by the stated maturity date.TRUSSWAY LTD.: Involuntary Chapter 11 Case Summary-------------------------------------------------- Alleged Debtors: Trussway, Ltd. Trussway Holdings, Inc. Trussway Partners, Inc. Trussway, Inc. Central Trussway, Inc. East Trussway, Inc. West T-Way L.P., Inc. c/o 9411 Alcord Houston, Texas 77093Involuntary Petition Date: December 9, 2004Case Numbers: 04-21687 to 04-21689 and 04-21691 to 04-21694Chapter: 11Court: Southern District of Texas (Corpus Christi)Judge: Richard S. SchmidtPetitioners' Counsel: Trey A. Monsour, Esq. Haynes & Boone LLP 901 Main Street, Suite 3100 Dallas, TX 75202 Tel: 214-651-5137 Fax: 214-200-0532 Petitioner Claim Amount ---------- ------------Pam Capital Funding LP $11,111,252 13455 Noel Road Suite 1300 Dallas, TX 75240Pamco Cayman Ltd. $10,740,877 13455 Noel Road Suite 1300 Dallas, TX 75240Highland Legacy Limited $7,407,502 c/o Highland Capital Management, L.P. Two Galleria Tower 13455 Noel Road, Ste 1300 Dallas, TX 75240California Public Employees' Retirement System $5,555,626c/o Highland Capital Management, L.P. Two Galleria Tower 13455 Noel Road, Ste. 1300 Dallas, TX 75240UAL CORP: Permanent Salary Reductions to Save $112 Mil. Annually----------------------------------------------------------------UAL Corporation (OTC Bulletin Board: UALAQ), the holding company whose primary subsidiary is United Airlines, disclosed changes to salaried and management (SAM) employees' compensation and benefits that will achieve annual average savings of $112 million through permanent salary reductions, benefit changes, and productivity enhancements.The permanent SAM salary reductions will increase with an employee's responsibilities: -- Salaried employees will take a 4% reduction. -- Management employees will take a 6% reduction. -- Officers will take an 8% reduction. -- Members of the Executive Council (Glenn Tilton and his seven direct reports) have already said they will take an 11% reduction.In addition to the permanent salary reductions, and consistent with United's proposals to its unions, there will be a 4% temporary reduction in salaries. As a result, total reductions in salaries for the SAM group will range from 8% to 15%. These salary reductions take effect January 1; the temporary reductions will be restored upon United's exit from bankruptcy."This is very difficult for all our employees," said Sara Fields, senior vice president-People. "But it is absolutely essential if we are to build a strong and healthy company providing good, secure jobs, competitive compensation and benefits, and the opportunity to participate in the company's success in the future."The company also will adopt a revised benefit plan for salaried and management employees and is assessing the impact of changes to medical and dental programs, vacation and holiday schedules, and sick leave. These plans have not been finalized. The final component of the salaried and management savings is expected to be achieved through productivity enhancements. The company has already identified $30 million in annual productivity savings.These changes affect U.S.-based salaried and management employees and expatriates only.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.UAL CORP: IFS Wants Pension Payments Under Administrative Claim---------------------------------------------------------------Independent Fiduciary Services, Inc., is the independent fiduciary appointed to protect the interests of the participants and beneficiaries of the defined benefit pension plans of the Debtors. Filiberto Agusti, Esq., at Steptoe & Johnson, in Washington, D.C., says that UAL Corporation and its debtor-affiliates have failed to make contributions required by the Internal Revenue Code. The Debtors have also failed to make contributions directly attributable to the postpetition service of employees. IFS asks the Court to allow the claims for unpaid contributions as administrative priority expenses under Section 503(b) of the Bankruptcy Code. For 2003 and 2004, the Debtors are obligated to make $949,223,621 in minimum funding contributions to the Plans. Approximately $406,424,919 of this shortfall represents benefits earned by employees through labor provided to the Debtors' estate. Yet the Debtors have contributed only $145,782,418 to the Plans postpetition and assert that there will be no more contributions for the duration of their reorganization. Therefore, the Debtors are leaving $803,441,203 in contributions unpaid, of which $260,642,501 is meant to cover the benefits earned by employees through postpetition work. Mr. Agusti tells the Court that these figures are conservative. They are based on the Debtors' calculations, which use optimistic assumptions like a 9.25% annual return on pension assets. If a more realistic 7.25% total return rate assumption were used instead, Mr. Agusti says, the Debtors would owe $1,137,000,000 in postpetition minimum funding contributions, of which $432,030,000 would be attributable to postpetition labor. By deducting the postpetition contributions, the more realistic calculations indicate that the Debtors owe $993,970,000 for unpaid contributions. Mr. Agusti asserts that administrative priority should to $803,440,000 to $993,970,000 of unpaid contributions. IRC Section 412 requires a company with a defined benefit plan to make minimum funding contributions. Therefore, federal law imposes a statutory obligation on the Debtors to make these payments. As with any postpetition government license, fee or tax, the portion representing the cost of benefits earned for postpetition work is entitled to administrative priority. The Debtors may intend to reject their collective bargaining agreements, but the estates have benefited from nearly two years worth of employee labor. Even if the Debtors reject the CBAs now, they are still responsible for honoring the collectively bargained-for commitments through the rejection date. The $260,640,000 to $288,920,000 in unpaid accrued benefits qualify for administrative expense priority as actual, necessary costs of preserving the estate. Mr. Agusti emphasizes that IFS is not seeking immediate payment of these contributions. This separate issue can be addressed in the future. U.S. Labor Secretary Responds Elaine L. Chao, Secretary of the United States Department of Labor, submits an Amicus Brief in support of IFS. The Secretary of Labor is responsible for the interpretation and enforcement of Title I of the Employee Retirement Income Security Act of 1974. This embodies the Secretary with a strong interest in ensuring that courts correctly interpret ERISA. Ms. Chao asserts that the minimum funding contributions are administrative expenses of the Debtor's estate and entitled to administrative priority. The Bankruptcy Code promulgates that a debtor must manage its business in compliance with state and federal law. The minimum funding contributions constitute statutory obligations for employers that maintain ERISA-covered pension plans. To permit otherwise would give the Debtors an unfair advantage over other employers. The Bankruptcy Code addresses CBAs and the means for assumption, rejection or modification. The Debtors agreed to make minimum funding contributions to the Flight Attendants Plan and agreed not to maintain their retirement benefits. Therefore, the Debtors must make the minimum contributions to the Plans. If the Debtors want to avoid these payments, they must reject the CBAs. Since this has not happened, the contributions must be treated as administrative expenses and given administrative priority. The minimum funding obligation constitutes a postpetition debt, which arose out of a transaction that benefited the estate. Upon filing the Petition, the Debtors did not immediately move to reject the CBAs. Instead, they obtained a first-day order authorizing maintenance of the Plans. The Debtors' employees continued to work with confidence that their pensions were preserved intact. In April 2003, the unions agreed to modify the CBAs, through wage concessions that were designed to protect their retirement benefits. The entire time, the Debtors continued to operate, benefiting from the labor of its Plan participants. After more than $800,000,000 has accrued in delinquent contributions to the Plans, the Debtors decided to file a Section 1113 Motion to reject the CBAs in disregard of provisions requiring maintenance of the Plans. Ms. Chao says the Debtors may seek to modify or reject the CBAs prospectively; they may not do so retroactively. Permitting the Debtors to treat the minimum funding contributions as general unsecured claims would be a retroactive rejection of the CBAs.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. (United AirlinesBankruptcy News, Issue No. 69; Bankruptcy Creditors' Service,Inc., 215/945-7000)US AIRWAYS: Flight Attendants Authorize Strike ----------------------------------------------Flight attendants at US Airways overwhelmingly authorized their union to engage in CHAOS(TM) strike-related activities should a federal bankruptcy court permit management to abrogate its collective bargaining agreement with its employees."Our sisters and brothers have given voice to a clear and unmistakable message: 'Enough is enough,'" said Pat Friend, international president of the Association of Flight Attendants-CWA. "We will not stand by while our employers destroy our careers in a desperate attempt to cover for their own mistakes."Ms. Friend noted that by seeking to scrap its legally binding contract, terminate its pension plan, cut retiree health benefits and impose intolerable wage cuts and work rule changes, US Airways is forcing its employees to mobilize for CHAOS (Create Havoc Around Our System), AFA's trademarked tactic of surprise, intermittent strikes on flights, dates and locations chosen solely at the union's discretion.Today, flight attendants will join with hundreds of fellow workers and supporters from throughout the labor movement for an AFA-sponsored rally in Washington's Lafayette Park, in front of the White House, to protest corporate America's assault on their livelihoods, and to promote an economic agenda to save America's middle class. Similar rallies will be held at locations across the country. More than 46,000 flight attendants, including 5,200 at US Airways, join together to form AFA, the world's largest flight attendant union. AFA is part of the 700,000 member strong Communications Workers of America, AFL-CIO. Visit us at http://www.afanet.org/ 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: Passenger Load Hits Record 73.1% in November 2004------------------------------------------------------------- US Airways reported its November 2004 passenger traffic. Mainline revenue passenger miles for November 2004 increased 2.0 percent on a 1.3 percent increase in available seat miles compared to November 2003. The passenger load factor was 73.1 percent (a record for any November in the company's history), which is a 0.5 percentage point increase compared to November 2003.Revenue passenger miles for US Airways mainline during the first 11 months of 2004 increased 6.7 percent on a 3.6 percent increase in available seat miles compared to the same period in 2003. The passenger load factor for January through November 2004 was 75.5 percent, a 2.1 percentage point increase compared to the same period in 2003.The two wholly owned subsidiaries of US Airways Group, Inc., Piedmont Airlines, Inc. and PSA, Inc., -- and MidAtlantic Airways, reported a 117.0 percent increase in revenue passenger miles for November 2004, on 98.4 percent more capacity, compared to November 2003. The passenger load factor was 62.5 percent, a 5.4 percentage point increase compared to November 2003. The triple digit increase in revenue passenger miles is attributed to the company's rapid expansion of regional jet flying over the past 12 months.Revenue passenger miles for the two wholly owned subsidiaries of US Airways Group, Inc., and MidAtlantic Airways for the first 11 months of 2004 increased 56.7 percent on a 35.7 percent increase in available seat miles compared to January through November 2003. The passenger load factor for the first 11 months of 2004 was 61.4 percent, an 8.2 percentage point increase compared to the same period in 2003.Mainline system passenger unit revenue for November 2004 is expected to decrease between 6.5 percent and 7.5 percent compared to November 2003.The mainline load factor in November markets where US Airways offers GoFares was 76.6 percent, compared to a 71.4 percent load factor in non- GoFares markets. GoFares now are offered on 29 percent of US Airways' flights.US Airways ended the month of November by completing 99.3 percent of its scheduled departures.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.USGEN: HSBC Bank Issues Notice to Bear Swamp Certificateholders---------------------------------------------------------------HSBC Bank USA, in its capacity as the Successor Pass Though Trustee in connection with those Pass Through Trust Agreements A and B dated as of November 23, 1998, between USGen New England, Inc., and JPMorgan Chase Bank, issued a notice to holders of: * 7.459% Pass Through Certificates, Series 1998-A; and * 8.270% Pass Through Certificates, Series 1998-B, and as the Successor Lease Indenture Trustee under those Indentures of Trust, Mortgage and Security Agreement dated as of November 23, 1998, between Bear Swamp Generating Trust No. 1 and No. 2, and JPMorgan, regarding: a) the status of certain litigation affecting the certificateholders; b) the status of USGen New England, Inc.'s bankruptcy proceeding; and c) the proposed refinancing of the credit facility between HSBC and certain certificateholders. A full-text copy of the Trustee Notice is available for free at: http://bankrupt.com/misc/Trustee_Notice_to_Bear_Swamp_Certificateholders.pdf For further information concerning the Trustee Notice, Certificateholders may contact: * Stephanie Wickouski, Esq. Gardner, Carton & Douglas, LLP Counsel to the Trustee Phone: (202) 230-5161 - or - * Robert J. Gibbons, Esq. Debevoise & Plimpton, LLP Counsel to the Certificateholders Committee and co-counsel to the Trustee Phone: (212) 909-6303 Headquartered in Bethesda, Maryland, USGen New England, Inc., an affiliate of PG&E Generating Energy Group, LLC, owns and operates several electric generating facilities in New England and purchases and sells electricity and other energy-related products at wholesale. The Debtor filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30465). John E. Lucian, Esq., Marc E. Richards, Esq., Edward J. LoBello, Esq., and Craig A. Damast, Esq., at Blank Rome, LLP, represent the Debtor in their restructuring efforts. When it sought chapter 11 protection, the Debtor reported assets amounting to $2,337,446,332 and debts amounting to $1,249,960,731.WEIRTON STEEL: Court Approves HSBC Bank Settlement Agreement ------------------------------------------------------------As reported in the Troubled Company Reporter on Nov. 11, 2004, after Weirton Steel Corporation and its debtor-affiliates filed for chapter 11 protection, HSBC Bank USA was appointed as successor indenture trustee to J.P. Morgan Trust Company, N.A., to the 8-5/8% 1989 City of Weirton, West Virginia Pollution Control Revenue Funding Bonds. HSBC provided a variety of services relating to the Bonds throughout the course of Weirton's bankruptcy case. Subsequently, HSBC filed Claim No. 20439, asserting administrative priority status, for $229,507 plus additional fees and expenses it incurred through the Effective Date of Weirton's Confirmed Plan. Weirton Steel Corporation's First Amended Plan of Liquidation became effective on September 8, 2004. Mark E. Freedlander, Esq., at McGuireWoods, LLP, in Pittsburgh, Pennsylvania, relates that as an active participant on the Official Committee of Unsecured Creditors appointed by the Office of the U.S. Trustee in Weirton's case, HSBC substantially contributed to Weirton's bankruptcy case, and is thus entitled to payment for trustee fees and the fees and expenses of outside counsel. The Weirton Steel Corporation Liquidating Trustee disputes the validity and amount of the HSBC Administrative Claim, and question the extent to which HSBC is entitled to an administrative claim for the services it has provided.To resolve their dispute, the United States Bankruptcy Court for the Northern District of West Virginia, approved the settlement entered between the Liquidating Trustee and HSBC stipulating that: (a) the HSBC Administrative Claim will be fixed and allowed against Weirton for $164,195, and will be given administrative priority status in accordance with the Confirmed Plan; (b) HSBC will forever release and discharge Weirton and the Trustee from any and all claims, past, present or future, for fees and expenses of HSBC on an administrative priority basis. However, this will not release: -- any claims filed by HSBC, as an indenture trustee, in respect of the bond claims under the applicable indenture for which HSBC serves as indenture trustee; and -- the charging lien HSBC has vis-a-vis the distributions to bondholders for the unpaid amount, if any, of fees and expenses; and (c) Weirton and the Trustee will forever release and discharge HSBC from any and all claims, past, or future, related in any manner to Weirton's bankruptcy filing or to HSBC's role as indenture trustee under the applicable indenture.Headquartered in Weirton, West Virginia, Weirton Steel Corporationwas a major integrated producer of flat rolled carbon steel withprincipal product lines consisting of tin mill products and sheetproducts. The company was the second largest domestic producer oftin mill products with approximately 25% of the domestic marketshare. The Company filed for chapter 11 protection on May 19,2003 (Bankr. N.D. W. Va. Case No. 03-01802). Judge L. EdwardFriend, II administers the Debtors cases. Robert G. Sable, Esq.,Mark E. Freedlander, Esq., David I. Swan, Esq., James H. Joseph,Esq., at McGuireWoods LLP represent the Debtors in theirliquidation. Weirton sold substantially all of its assets toWilbur Ross' International Steel Group. Weirton's confirmed Planof Liquidation became effective on Sept. 8, 2004. (WeirtonBankruptcy News, Issue No. 38; Bankruptcy Creditors' Service,Inc., 215/945-7000)WILLIAMS CO: Fitch Upgrades Senior Secured Debt Rating to 'BB'--------------------------------------------------------------The Williams Companies, Inc.'s -- WMB -- senior unsecured debt rating has been upgraded to 'BB' from 'B+' by Fitch Ratings. In addition, the senior unsecured debt ratings of WMB's two pipeline issuing subsidiaries, Transcontinental Gas Pipe Line Corp. -- TGPL -- and Northwest Pipeline Corp. -- NWP, have been upgraded to 'BB+' from 'BB'. Williams Production RMT Co.'s -- RMT -- outstanding secured term loan B is affirmed at 'BB+'. The Rating Outlook for each entity has been revised to Stable from Positive. The rating action reflects WMB's significantly deleveraged balance sheet, the company's stable liquidity position and limited debt refinancing risk through 2010, the continued solid financial performance of WMB's core natural gas businesses, and good prospects for continued deleveraging and strengthening of consolidated credit measures through 2006. In addition, the revised ratings reflect Fitch's expectation that WMB's Power segment, notwithstanding the longer term risks associated with its contractual portfolio, will not adversely affect near-term consolidated cash flows.WMB's corporate restructuring has narrowed the scale and scope of the company. With WMB's asset sale program now complete, the company has emerged as a more focused integrated natural gas company with core operations encompassing FERC-regulated interstate pipelines (TGPL and NWP), exploration and production -- E&P, and midstream gas and liquids services. These businesses should continue to generate a relatively predictable earnings and cash flow stream with potential commodity price volatility in the E&P segment offset by the cash flow stability of TGPL and NWP and WMB's growing portfolio of fee-based midstream gas gathering assets. Commodity price risk at E&P is further mitigated by WMB's hedging strategy and focus on developing lower risk Rocky Mountain-based tight sands and coalbed methane gas reserves. Although WMB has been successful in winding down speculative trading positions, there is longer term uncertainty associated with Power's sizable tolling contract portfolio. WMB currently has long-term tolling agreements for approximately 7,700 megawatts of generating capacity, under which it is obligated to make fixed payments averaging $400 million over the next several years, with a total remaining net present value of about $2.5 billion. Importantly, WMB has sold forward a significant portion of its tolling exposure at above-market spark spreads thus minimizing the near-term cash flow strain at Power. Fitch estimates that existing physical power sales contracts, combined with financial hedges and projected merchant sales will cover a significant portion of Power's fixed cost structure, including overhead, through 2010.Since announcing its restructuring plan in 2002, WMB has decreased consolidated debt by $6.0 billion, primarily utilizing cash generated from asset sales and the early conversion of Feline PACs. At the same time, WMB has expanded the cash flow generating capabilities of its core natural gas businesses, effectively offsetting a good portion of income lost due to asset sales. As a result, near-term consolidated credit protection measures should continue to trend toward levels solidly within Fitch's 'BB' targets for diversified energy merchants. Specifically, Fitch expects consolidated cash interest coverage to exceed 3.5 times with total debt to EBITDA dropping below 4.0x by year-end 2005. While the current commodity price outlook for natural gas prices could lead to further strengthening of credit ratios, the future direction of WMB's ratings will largely be determined by the company's ability to further mitigate the unhedged exposure of Power beyond 2010. The Williams Companies, Inc.: -- Senior unsecured notes and debentures upgraded to 'BB' from 'B+'; -- Senior secured to 'BB+' from 'BB'; -- Junior subordinated convertible debentures to 'B+' from 'B-'. Williams Production RMT Co.: -- Senior secured term loan B affirmed at 'BB+'.Northwest Pipeline Corp.: -- Senior unsecured notes and debentures to 'BB+' from 'BB'. Transcontinental Gas Pipe Line Corp.: -- Senior unsecured notes and debentures to 'BB+' from 'BB'.WINN-DIXIE: Grants Restricted Stock Award to New President & CEO----------------------------------------------------------------Winn-Dixie Stores, Inc. (NYSE: WIN) has hired Peter L. Lynch to serve as its president and chief executive officer.In connection with hiring Mr. Lynch, the Company made an inducement grant of 3,000,000 restricted stock units, payable only in shares of the Company's common stock. The RSUs were granted with the approval of the compensation committee of the Company's Board of Directors. As long as Mr. Lynch remains an employee through the applicable vesting date: (1) 2,000,000 of the RSUs will vest five years from the date of grant; and (2) 1,000,000 of the RSUs will vest in equal installments on the first five anniversaries of the grant date. About Winn-Dixie Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. Founded in 1925, the Company is headquartered in Jacksonville, Florida. * * *As reported in the Troubled Company Reporter on Nov. 01, 2004, Standard & Poor's Ratings Services lowered its ratings on Winn-Dixie Stores Inc. The corporate credit rating was lowered to 'B-'from 'B'. The outlook is negative."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 liquidity tofund its near-term operating and capital needs, improved operatingresults or additional funding will be needed to execute longer-term strategic initiatives."* Jonathan Halpern Joins Winston & Strawn as Partner in NY Office-----------------------------------------------------------------Winston & Strawn LLP reported that Jonathan N. Halpern joined the firm as a partner in the New York office. Mr. Halpern joins the firm from the United States Attorney's Office for the Southern District of New York, where he was an Assistant U.S. Attorney in its Criminal Division and Chief of the Major Crimes Unit. As Chief of the Major Crimes Unit, Mr. Halpern supervised approximately 25 prosecutors specializing in large-scale and complex white collar criminal matters, including: -- money laundering; -- tax crimes; -- financial institution, investment and insurance fraud; -- illegal banking practices; foreign corrupt practices; -- false claims; and -- intellectual property and computer crimes. In that role, he also worked regularly with law enforcement officials to review suspicious activities reported by the banking community; routinely conferred with regulators of financial institutions; and chaired a bankruptcy fraud task force in the SDNY. In addition, while serving in the Public Corruption Unit, Mr. Halpern was responsible for investigating and prosecuting racketeering, bribery, extortion, campaign finance and civil rights offenses. A 15-year veteran of the U.S. Attorney's Office, he was recipient of the Department of Justice Director's Award for Superior Performance. "We are very pleased to welcome Jonathan to Winston," said James M. Neis, managing partner of the firm. "He has had great New York-focused expertise in the U.S. Attorney's office and will be an excellent addition to that office." At Winston & Strawn, Mr. Halpern will focus his practice on complex commercial litigation, appellate matters, white collar crime and internal corporate investigations. "Jonathan's strong track record at the U.S. Attorney's Office and his breadth of knowledge and experience in white-collar criminal investigations and prosecutions is a natural fit with our current white collar group in New York and nationally," said Dan K. Webb, head of Winston & Strawn's litigation practice. Prior to joining the U.S. Attorney's Office, Mr. Halpern practiced with Patton, Boggs & Blow in Washington, D.C. He received his J.D. from Boston University School of Law, where he was editor-in-chief of the Boston University International Law Journal, and his A.B. degree, cum laude, from Cornell University. "We are pleased to welcome Jonathan to Winston & Strawn," said Jonathan Goldstein, head of the firm's New York office. "He joins a great group of litigators -- many of whom are also former federal and state prosecutors -- in representing Winston & Strawn's clients in federal and state court litigation and before grand juries and appellate courts. His prosecutorial experience will be a real asset in our work for our clients." Winston & Strawn LLP is a commercial law firm that celebrated its 150th anniversary in 2003. It has more than 850 attorneys in eight offices including Chicago, New York, Washington, D.C., Los Angeles, San Francisco, London, Paris and Geneva. Additional information about the firm is available on the firm's website: http://www.winston.com/ * Davis Polk Elects Five New Counsel------------------------------------Davis Polk & Wardwell elected Susan Betteridge Baker, Jeannette Boot, James Murray, Diem-Suong Thi Nguyen and D. Scott Tucker Counsel to the firm as of December 1, 2004. Ms. Baker is Counsel in the Investment Management/Private Funds Group. She advises on the Investment Company Act, Investment Adviser Act and related federal laws. Her clients include investment management companies, advisers, financial institutions and mutual fund directors. Recently, Ms. Baker has been counseling advisers, mutual funds, funds of hedge funds, Chief Compliance Officers and fund directors on the development, implementation, review and approval of written policies and procedures that are reasonably designed to prevent violation of federal securities laws. In addition, she has counseled advisers on regulatory filings, fee or service agreement matters and offering document disclosure. Ms. Baker has also worked on acquisitions and reorganizations of investment advisers. Ms. Boot is Counsel in the Equity Derivatives Group and the Financial Institutions Group. Her work is principally focused on representation of hedge fund, broker-dealer and bank clients with respect to the development and negotiation of specialized financing arrangements, derivatives and other financial products, including prime brokerage and securities lending agreements, various option, swap, repurchase and forward arrangements, and a wide variety of equity, credit and hedge fund-linked structures. Mr. Murray is Counsel in the Litigation Department. He has represented a wide range of institutional clients in a variety of civil and regulatory matters, including most recently a pharmaceutical company in connection with consumer protection and False Claims Act litigation and a broker-dealer and a mutual fund complex in connection with matters involving mutual fund trading. He has also worked on a number of complex commercial, antitrust, and white collar criminal matters, including several internal investigations, and has represented numerous financial institutions and other clients facing potential actions by the SEC, state attorneys general and other regulators. Ms. Nguyen is Counsel in the Litigation Department. She has represented individual and corporate clients in a variety of civil and regulatory matters, with an emphasis on complex, multi-district cases involving patent-related antitrust issues, securities litigation and commercial disputes. Her recent representations include an accounting firm in numerous lawsuits alleging violation of securities laws in connection with the bankruptcy of a Belgian software firm; pharmaceuticals companies in connection with governmental investigations and antitrust litigation involving patent disputes; a storage software company in a securities enforcement and internal investigation matter; an electric company in connection with a state administrative matter; an oil company in a trial in the Federal Court of Canada seeking to set aside a judgment in a patent infringement case on the basis of the fraud; a non-profit sailing organization in a cancellation proceeding involving several trademark registrations; various investment banking and accounting firms in securities class action lawsuits and securities enforcement matters; a cable provider in connection with disputes involving a Malaysian joint venture; and a distillery in a contract dispute. Mr. Tucker is Counsel in the Litigation Department. He has extensive experience in complex commercial litigation, regulatory investigations, and securities and consumer class action litigation. He has also represented clients in connection with a variety of criminal matters, confidential internal investigations and arbitrations. His recent matters include several significant professional liability cases, SEC investigations related to auditor independence and insider trading, antitrust litigation, several cases related to financial institutions, civil litigation related to the insurance industry, and a criminal matter related to a former senior executive of a major software company. * Large Companies with Insolvent Balance Sheets----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Airgate PCS Inc. CSA (89) 270 9Akamai Tech. AKAM (144) 189 63Alaska Comm. Syst. ALSK (12) 650 85Alliance Imaging AIQ (41) 654 36Amazon.com AMZN (721) 2,109 642AMR Corp. AMR (314) 29,261 (1,824)Amylin Pharm. Inc. AMLN (42) 402 325Atherogenics Inc. AGIX (19) 93 77Blount International BLT (283) 423 103CableVision System CVC (1,669) 11,795 223CCC Information CCCG (131) 80 8Cell Therapeutic CTIC (52) 174 87Centennial Comm CYCL (538) 1,532 152 Choice Hotels CHH (175) 271 (16)Cincinnati Bell CBB (600) 1,987 (20)Clean Harbors CLHB (3) 471 31Compass Minerals CMP (109) 642 99Conjuchem Inc. CJC (16) 24 19Cotherix Inc. CTRX (44) 25 20Cubist Pharmacy CBST (75) 155 (6)Delta Air Lines DAL (3,297) 23,526 (2,614)Deluxe Corp. DLX (214) 1,561 (344)Denny's Corporation DNYY (246) 730 (80)Domino Pizza DPZ (575) 421 (16)Eagle Hospitality EHP (26) 177 N.A.Echostar Comm DISH (1,711) 6,170 (503) Empire Resorts NYNY (13) 61 7Foxhollow Tech. FOXH (60) 28 16Graftech International GTI (44) 1,036 284 Hawaiian Holding HA (160) 236 (60)Hercules Inc. HPC (40) 2,658 362IMAX Corp. IMAX (49) 222 9Indevus Pharm. IDEV (34) 205 164Isis Pharm. ISIS (18) 255 116Kinetic Concepts KCI (29) 638 214 Level 3 Comm Inc. LVLT (159) 7,395 157Lodgenet Entertainment LNET (68) 301 20Lucent Tech. Inc. LU (1,379) 16,963 3,765Maxxam Inc. MXM (649) 1,017 72McDermott Int'l MDR (338) 1,245 (33)McMoran Exploration MMR (85) 156 29 Northwest Airline NWAC (2,166) 14,450 (431)Northwestern Corp. NWEC (603) 2,445 (692)ON Semiconductor ONNN (298) 1,221 270Owens Corning OWENQ (4,259) 7,373 1,114Per-se Tech. Inc. PSTI (25) 169 31Phosphate Res. PLP (439) 316 5Pinnacle Airline PNCL (18) 147 26Primedia Inc. PRM (1,163) 1,577 (203)Primus Telecomm PRTL (113) 735 (23)Qwest Communication Q (2,477) 24,926 (509)SBA Comm. Corp. SBAC (27) 915 11Sepracor Inc. SEPR (380) 974 600St. John Knits Int'l SJKI (57) 206 77 Syntroleum Corp. SYNM (8) 48 11US Unwired Inc. UNWR (234) 709 (280)Valence Tech. VLNC (48) 16 2Vector Group Ltd. VGR (48) 528 110Vertrue Inc. VTRU (44) 445 0WR Grace & Co. GRA (118) 3,087 774Young Broadcasting YBTVA (12) 798 85 *********Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities.Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report.Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test.A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to email@example.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. *********S U B S C R I P T I O N I N F O R M A T I O NTroubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo and Peter A. Chapman, Editors.Copyright 2004. All rights reserved. ISSN: 1520-9474.This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed.The TCR subscription rate is $675 for 6 months delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***