T R O U B L E D C O M P A N Y R E P O R T E R L A T I N A M E R I C A Friday, February 8, 2008, Vol. 9, Issue 28 Headlines A R G E N T I N A ALITALIA SPA: AirOne Readies Binding Offer for Italy's Stake ANGEL OSCAR: Trustee Verifies Proofs of Claim Until March 28 BUCKEYE TECH: Earns US$13.9 Million in 2nd Quarter Ended Dec. 31 DAWN FOODS: Seeks Bankruptcy Approval from Buenos Aires Court DELTA AIR: Merger Talks with Northwest Intensifies INSTITUTOS MEDICOS: Files for Reorganization in Court LANCI IMPRESORES: Files for Reorganization in Buenos Aires Court NESTOR ONOFRE: Seeks Bankruptcy Approval from Buenos Aires Court * ARGENTINA: IMF Asks Statistics Agency to Clarify Calculations B A H A M A S KNOLL INC: Reports US$20.7-Mln Net Income in Fourth Quarter 2007 B A R B A D O S B E R M U D A SEA CONTAINERS: Reaches Pact with Pension Schemes Trustees SECURITY CAPITAL: Moody's Cuts Insurance Strength Rating to 'A3' B R A Z I L BANCO ABC: Will Boost Lending by 65% in 2008 BANCO CRUZEIRO: 6.26& Non-Voting Capital in Bank Belongs to BBM CONTINENTAL AIR: WSJ Says United Merger Talks "Have Grown Serious" COREL CORP: Fourth Quarter 2007 GAAP Net Income is US$3.3 Million CROWN HOLDINGS: S&P Shifts to Pos. Outlook; Holds BB- Debt Rating JAPAN AIRLINES: To Begin 17% Hike on Int'l. Air Fare by April 1 QUAKER FABRIC: Can't File Plan Without Committee Consent QUAKER FABRIC: Gets Go Signal to Sell Brazilian Unit for US$100K SOLUTIA INC: Compels Banking Group to Honor $2 Bil. Exit Financing UAL CORP: Resells Previously Issued 4.50% Senior Notes Due 2021 UNITED AIR: WSJ Says Continental Merger Talks "Have Grown Serious" USINAS SIDERURGICAS: May Acquire More Iron Ore Assets in Brazil VALMONT INDUSTRIES: Buys 70% Stake in West Coast Engineering * BRAZIL: US Dollar Drop May Help in Debt Payment, Moody's Says C A Y M A N I S L A N D S COCO FUND: Sets Final Shareholders Meeting for February 21 INTERNATIONAL MERCANTILE: Shareholders Meeting Set for Feb. 22 JEFFERIES PARAGON: Proofs of Claim Filing Is Until February 21 JEFFERIES PARAGON MASTER: Proofs of Claim Filing Ends on Feb. 21 JOHCM TRIDENT: Proofs of Claim Filing Deadline Is February 21 LDA HOLDINGS: Proofs of Claim Filing Deadline Is February 21 MAPLETREE REAL: To Hold Final Shareholders Meeting on Feb. 21 ML PRINCIPAL: Proofs of Claim Filing Is Until February 21 NEW ORIENTAL: Proofs of Claim Filing Deadline is February 22 PARMALAT SPA: Sells Football Club and Brand for EUR17.1 Million PESCADORA LIMITED: Final Shareholders Meeting is on February 21 SCR MARKET: Proofs of Claim Filing Deadline Is February 21 SEAGATE TECH: Board of Directors Okays US$2.5BB Share Repurchase SEAGATE TECHNOLOGY: S&P's BB+ Rating Unmoved by Share Repurchase SOUTH SHORE: Proofs of Claim Filing Ends on February 21 TELEXPRESS INVESTMENTS: Proofs of Claim Filing Ends on Feb. 21 UBS PACTUAL: To Hold Final Shareholders Meeting on February 21 ZEBRA CAPITAL: Proofs of Claim Filing Deadline is February 21 C H I L E CODELCO: Power Shortages May Adversely Affect Copper Output SCIENTIFIC GAMES: Delivers Instant Ticket System to China Sports C O L O M B I A BANCO DE BOGOTA: Seeking Shareholders' Okay for Dividend GRAN TIERRA: Closes Colombian Block Stake Buyout Deal With Avalon POLYONE CORP: Reports US$7.1-Mln Net Income in Fourth Qtr. 2007 * COLOMBIA: Moody's Says US Dollar Drop May Help in Debt Payment * COLOMBIA: US Free Trade Pact Promotes Opportunities, Cato Says C O S T A R I C A DENNY'S CORP: To Report Fourth Quarter Financials on February 13 C U B A D O M I N I C A D O M I N I C A N R E P U B L I C BANCO INTERCONTINENTAL: Pedro Goico Denies Control of Pepe Card E C U A D O R * ECUADOR: Commission Lays Out Plan to Create Autonomous Regions E L S A L V A D O R ALCATEL-LUCENT: Works with Oki Electric to Market WiMAX Terminals F R E N C H G U I A N A G R E N A D A G U A T E M A L A G U Y A N A H A I T I H O N D U R A S J A M A I C A AIR JAMAICA: Starts Job Cutting Plan at Miami Marketing Dept. DYOLL GROUP: To Voluntarily Liquidate Assets NAT'L COMMERCIAL: Net Profit Increases to J$1.86B in 1st Quarter M E X I C O AMERICAN AXLE: Net Loss Drops to US$25MM in Qrtr. Ended Dec. 31 CALPINE CORP: CER's US$155 Million Bid for Hillabee Project Wins COMPLETE RETREATS: To Close 61 Chapter 11 Cases CROWN HOLDINGS: Earns $343 Million in 2007 Fourth Quarter ENERSYS INC: Earns US$16 Million in Third Fiscal Quarter 2008 INTERSTATE HOTELS: Closes Hotel Buyout Deal With Blackstone Group RESIDENTIAL CAPITAL: Moody's Downgrades Sr. Debt Rating to 'B2' N I C A R A G U A P A N A M A P A R A G U A Y P E R U CABLE & WIRELESS: Names Tony Bromfield as New Unit CEO QUEBECOR WORLD: BP Canada Wants to End Gas Supply to U.S. Plants QUEBECOR WORLD: Can File Schedules and Statements Until March 5 QUEBECOR WORLD: CEP Graphical Seeks Discussion of Financial Woes * PERU: US Drop Dollar May Help in Debt Payment, Moody's Says P U E R T O R I C O ELECTRONIC DATA: Earns US$189 Million in Fourth Quarter 2007 MACY'S: Division Consolidation Cues Elimination of 2,550 Jobs S U R I N A M E * SURINAME: Low-B Ratings Reflect High Debt Burden, Moody's Says T R I N I D A D & T O B A G O U R U G U A Y * URUGUAY: US Dollar Drop May Help in Debt Payment, Moody's Says V E N E Z U E L A EXIDE TECHNOLOGIES: Taps Phillip Damaska as Exec. Vice President GMAC LLC: Moody's Downgrades Senior Unsecured Rating to 'B1' NORTHWEST AIRLINES: Merger Talks with Delta Air Lines Intensifie - - - - - ================= A R G E N T I N A ================= ALITALIA SPA: AirOne Readies Binding Offer for Italy's Stake ------------------------------------------------------------ AirOne S.p.A. and a group of local investors are preparing a binding offer to acquire the Italian government's 49.9% stake in Alitalia S.p.A., Bloomberg News reports. AirOne told Bloomberg News that its offer will be financially backed by Intesa Sanpaolo S.p.A., Goldman Sachs Group Inc., Morgan Stanley and Nomura Holdings Plc. According to local daily MF, TPG Inc. and Pirelli & S.p.A. chairman Marco Tronchetti Provera may join AirOne in its Alitalia bid. AirOne said it would present an offer once it won its appeal at the Italian Regional Administration Court of Lazio. As reported in the TCR-Europe on Feb. 5, 2008, AP Holding S.p.A., investment arm of AirOne, has filed an appeal with the court to declare null and void a Dec. 28, 2007, decision of Italy's Ministry of Economy and Finance to commence exclusive talks to sell the Italy's stake to Air France. According to Bloomberg News, AirOne winning the suit would allow it to present its binding offer for the state-owned carrier. AirOne chairman Carlo Toto insisted in mid-January that it presented more economical offer for Alitalia, noting that its business plan for the national carrier is supported by "four among the world's most important banks that are ready to formalize their commitment immediately should a private negotiation be initiated." "We don't want to halt the talks," a source privy to AP Holding told Reuters. "We also want to be able to present a binding offer." "There are still many questions open so we don't think the game is over," Corrado Passera, who leads AirOne financial backer Intesa Sanpaolo S.p.A., told Corriere della Sera. "Everything still has to be sorted out." Alitalia and Italy have selected Air France-KLM's non-binding offer over AirOne's. As reported in the TCR-Europe on Jan. 17, 2008, Alitalia and Italy have commenced exclusive sale talks with Air France-KLM. The carriers have until mid-March to reach an agreement, which would be approved by the government. In its non-binding offer, Air France plans to: -- acquire 100% of the shares of Alitalia through an exchange offer; -- acquire 100% of Alitalia convertible bonds; and -- immediately inject at least EUR750 million into Alitalia through a capital increase, that will be open to all shareholders and be fully underwritten by Air France. About Alitalia Headquartered in Rome, Italy, Alitalia S.p.A. -- http://www.alitalia.it/-- provides air travel services for passengers and air transport of cargo on national, international and inter-continental routes. The Italian government owns 49.9% of Alitalia. The company has operations in Argentina. Despite a EUR1.4 billion state-backed restructuring in 1997, Alitalia posted net losses of EUR256 million and EUR907 million in 2000 and 2001 respectively. Alitalia posted EUR93 million in net profits in 2002 after a EUR1.4 billion capital injection. The carrier booked annual net losses of EUR520 million in 2003, EUR813 million in 2004, EUR168 million in 2005, and EUR625.6 million in 2006. Italian Transport Minister Alessandro Bianchi has warned that Alitalia may file for bankruptcy if the current attempt to sell the government's 49.9% stake fails. ANGEL OSCAR: Trustee Verifies Proofs of Claim Until March 28 ------------------------------------------------------------ Hector Rodolfo Arzu, the court-appointed trustee for Angel Oscar Martin y Silvia Liliana Diaz Sociedad de Hecho's reorganization proceeding, will be verifying creditors' proofs of claim until March 28, 2008. Mr. Arzu will present the validated claims in court as individual reports. The National Commercial Court of First Instance No. 5 in Buenos Aires, with the assistance of Clerk No. 10, will determine if the verified claims are admissible, taking into account the trustee's opinion, and the objections and challenges that will be raised by Angel Oscar and its creditors. Inadmissible claims may be subject for appeal in a separate proceeding known as an appeal for reversal. A general report that contains an audit of Angel Oscar's accounting and banking records will be submitted in court. La Nacion didn't state the reports submission deadlines. Creditors will vote to ratify the completed settlement plan during the assembly on Dec. 8, 2008. The debtor can be reached at: Angel Oscar Martin y Silvia Liliana Diaz Sociedad de Hecho Bolivia 41 Buenos Aires, Argentina BUCKEYE TECH: Earns US$13.9 Million in 2nd Quarter Ended Dec. 31 ---------------------------------------------------------------- Buckeye Technologies Inc. reported net income of US$13.9 million on net sales of US$211.0 million for the second quarter ended Dec. 31, 2007, compared with net income of US$3.8 million on net sales of US$185.0 million in the same period of 2006. Chairman and chief executive officer John B. Crowe said, "We had an exceptional quarter. Second quarter net sales were up 14.0% compared to the same period last year. Sales of US$211.0 million are our highest revenue quarter ever. The earnings improvement is a combination of higher pricing, higher specialty wood volume and cost control." Mr. Crowe went on to say, "We are pleased with the quarter and year-to-date revenue and income growth. Our markets remain solid and we will benefit from price increases that we implemented in January. In the current quarter, we anticipate lower nonwovens production and revenue due to our previously announced volume reduction from our Delta nonwovens facility. Additionally, we expect higher manufacturing costs at our Florida specialty wood facility due to planned maintenance inspections. While the just completed quarter's earnings performance will be difficult to repeat, we do anticipate strong performance in the January-March quarter 2008." Liquidity and Capital Resources At Dec. 31, 2007, the company had US$23.6 million of cash and cash equivalents and US$112.9 million borrowing capacity on its revolving credit facility. The portion of this capacity that the company may borrow, if any, will depend on our financial results and ability to comply with certain borrowing conditions under the revolving credit facility. As of Dec. 31, 2007, the company's liquidity, including available borrowings and cash and cash equivalents, was approximately US$136.5 million. Balance Sheet At Dec. 31, 2007, the company's consolidated balance sheet showed US$983 million in total assets, US$580.8 million in total liabilities, and US$402.2 million in total stockholders' equity. Full-text copies of the company's consolidated financial statements for the quarter ended Dec. 31, 2007, are available for free at http://researcharchives.com/t/s?27be About Buckeye Technologies Headquartered in Memphis, Tennessee, Buckeye Technologies Inc. (NYSE: BKI) -- http://www.bkitech.com/-- manufactures and markets specialty fibers and nonwoven materials. The company currently operates facilities in the United States, Germany, Canada, and Brazil. Its products are sold worldwide to makers of consumer and industrial goods. * * * To date, Buckeye Technologies Inc. carries Moody's Investors Service's B1 corporate family rating with a stable outlook. DAWN FOODS: Seeks Bankruptcy Approval from Buenos Aires Court ------------------------------------------------------------- The National Commercial Court of First Instance No. 19 in Buenos Aires is studying the merits of Dawn Foods International SRL's request to enter bankruptcy protection. Dawn Foods filed a "Quiebra Decretada" petition, after failing to pay its debts since Dec. 13, 2005. The petition, once approved by the court, will transfer control of the company's assets to a court-appointed trustee who will supervise the liquidation proceedings. Clerk No. 38 assists the court in this case. The debtor can be reached at: Dawn Foods International SRL Reconquista 458 Buenos Aires, Argentina DELTA AIR: Merger Talks with Northwest Intensifies -------------------------------------------------- Merger talks between Delta Air Lines Inc. and Northwest Airlines Corp. have intensified that could lead to an agreement being announced in the next two weeks, various reports say. Key details of the deal have yet to be hammered out and negotiations could still fall apart, according to The Wall Street Journal, citing people familiar with the talks. The reports note the potential dealbreaker was the structure of the combined Delta-Northwest management, specifically Northwest CEO Doug Steenland and his management team's role in the new company. The Journal's source says those issues were overcome earlier this week. When companies merge, it's not uncommon for the chief executives to divide the leadership roles, with one taking the CEO post and the other becoming chairman, according to TheStreet.com. In the case of Delta and Northwest, the situation is complicated by the role of Daniel Carp, who became chairman of Delta when the carrier emerged from bankruptcy in May 2007, TheStreet.com says. Since Mr. Carp was brought in to enhance Delta's position, there is a feeling that he should remain because of the progress the company has made, TheStreet.com says, citing a source. TheStreet.com's source says Mr. Steenland has apparently accepted the idea that Mr. Carp and Delta CEO Richard Anderson will retain their current posts in a new company. Mr. Anderson, a former Northwest Airlines chief executive, assumed the Delta CEO post from Gerald Grinstein in August. That decision to hire Mr. Anderson "raised new questions about Delta's future strategy", WSJ reported at that time. Mr. Anderson's appointment raises speculations that with an outsider at the helm, Delta may reverse its "go it alone" strategy and pursue a consolidation with Northwest, United Air Lines or Continental Airlines, Business Week had said. At the time of its bankruptcy, Delta and its unsecured creditors committee fended off a $8,000,000,000 to $10,000,000,000 hostile takeover bid from US Airways Group, Inc. Delta said it was better off as a stand-alone carrier. In January 2007, about two months since US Airways launched its hostile bid, Delta and NWA were reported to have held discussions about a potential merger. While both companies denied the reports, Mr. Grinstein subsequently admitted to sharing information with Northwest. "At the behest of our creditors' committee we recently retained an investment banker to obtain information from Northwest, a far cry from negotiating for a merger with them," Mr. Grinstein told members of the Delta Board Council, according to Reuters. Delta did not discount any possibility of a merger post- bankruptcy. According to a prior WSJ report, the Creditors Committee conditioned its support of Delta's stand-alone Chapter 11 plan of reorganization to a number of concessions, including the appointment of a new board that favors consolidation as a strategic opotion. In October, Mr. Anderson said he saw "obvious benefits" for Delta's employees and shareholders in Delta's merging with another carrier, Meg Marco at The Star Tribune reported. Although Mr. Anderson did not name a potential merger target for Delta at that time, analysts have argued that Northwest would make a good partner because the carriers' routes complement each other, Ms. Marco said. As proposed, the Delta-Northwest deal would be a stock-for-stock transaction, done "at market," meaning at roughly where the two stocks are trading, with little or no premium for either side, WSJ says. The Journal adds that the dynamic has made non-economic issues the center of the deal negotiations. United & Continental Talks Gain Steam There is also a possibility Delta could wind up with United. Both carriers have continued exploratory talks over the past month, WSJ says, citing people briefed on the matter. Pardus Capital Management, a New York-based hedge fund, and major stakeholder in both United and Delta, had urged both carriers to consolidate, to save money and counter escalating jet-fuel prices which rose by around 53% last year. As reported in the Troubled Company Reporter on Jan. 22, 2008, Mr. Anderson obtained approval from Delta's board of directors on Jan. 11, 2007, to engage in formal merger talks with both Northwest and United. Various reports, however, relate that a United-Continental merger is more likely. The reports state that exploratory merger talks between the two carriers have grown serious. Delta, the No. 3 U.S. carrier in terms of passenger traffic, has a market value of over $4,100,000,000 -- higher than UAL's $3,800,000,000, and Northwest's $3,700,000,000. United is the second-largest U.S. carrier, while Northwest takes the fifth spot. Continental, in Houston, Texas, is the No. 4 carrier. A Delta merger with either Northwest or United would create the largest passenger airline in the world. Some analysts worry a Delta merger would face antitrust hurdles, Bankruptcylaw360 says. The Journal says Delta's intent was to pursue tandem negotiations with Northwest and United on a compressed timeline, get a deal inked by mid-February and quickly begin the process for winning antitrust approval. Executives at the airlines believe any mergers are more likely to pass regulatory muster during the waning days of the Bush administration, the Journal relates. A United-Continental deal will have to be done very near a Northwest-Delta announcement, so the two potential combinations would undergo regulatory scrutiny at the same time, the Journal says citing a source familiar with the matter. A different source told the Journal United and Continental are poised to act quickly once another airline merger is announced. Northwest holds a "golden share" of preferred stock in Continental that allows Northwest to block a merger of Continental with another large carrier, WSJ notes. But if Northwest agrees to merge with Delta, Continental could redeem that stock for a total of $100, even if the deal is never consummated, freeing Continental to entertain other suitors, WSJ says. Continental executives have repeatedly said they prefer to remain independent, but would do what is best for the company if the competitive landscape changes, WSJ notes. Experts in the airline industry believe that a Northwest-Delta merger is more likely as Delta's Anderson was previously CEO at Northwest, and is already well acquainted with Northwest's operations. Bloomberg, citing an unnamed person familiar with Air France-KLM Group's plans, has reported that Air France is encouraging a merger between Delta and Northwest and may make a financial investment to foster a tie-up. A Delta-Northwest combination would preserve the SkyTeam Alliance, a marketing group that includes Delta, Northwest and United. Other Issues Other issues that will have to be taken up in a Delta-Northwest combination include both carrier's labor groups. The Air Line Pilots Association branches at Delta and Northwest have signaled that they could support a merger if they receive equity in the combined airline and achieve a labor contract with improved terms, WSJ says. Analysts also said mergers could lead to higher fares in some markets, at least in the long term, The New York Times state. Congress could also oppose a combination due to possible job loss and reduction in competition, Times relates. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * Moody's Investor Service placed Northwest Airlines Corp.'s long term corporate family and probability of default ratings at 'B1' in May 2007. The ratings still hold to date with a stable outlook. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 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, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * Moody's Investor Service placed UAL Corp.'s long term corporate family and probability ratings at 'B2' in January 2007. The ratings still hold to date with a stable outlook. About Continental Airlines Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/ -- is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 2,900 daily departures throughout the Americas, Europe and Asia, serving 144 domestic and 139 international destinations. More than 500 additional points are served via SkyTeam alliance airlines. With more than 45,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 69 million passengers per year. * * * As reported in the Troubled Company Reporter on Dec. 27, 2007, Fitch Ratings affirmed Continental Airlines 'B-' issuer default rating with a stable outlook. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. As of Sept. 30, 2007, the company's balance sheet showed total assets of $32.7 billion and total liabilities of $23 billion, resulting in a $9.7 billion stockholders' equity. At Dec. 31, 2006, deficit was $13.5 billion. (Delta Air Lines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. INSTITUTOS MEDICOS: Files for Reorganization in Court ----------------------------------------------------- Institutos Medicos S.A. has requested for reorganization approval after failing to pay its liabilities. The reorganization petition, once approved by the court, will allow Institutos Medicos to negotiate a settlement with its creditors in order to avoid a straight liquidation. The case is pending in the National Commercial Court of First Instance in Buenos Aires. The debtor can be reached at: Institutos Medicos S.A. Avenida Roque Saenz Pena 1219 Buenos Aires, Argentina LANCI IMPRESORES: Files for Reorganization in Buenos Aires Court ---------------------------------------------------------------- Lanci Impresores SA has requested for reorganization approval after failing to pay its liabilities. The reorganization petition, once approved by the court, will allow Lanci Impresores to negotiate a settlement with its creditors in order to avoid a straight liquidation. The case is pending in the National Commercial Court of First Instance No. 5 in Buenos Aires. Clerk No. 9 assists the court in this case. The debtor can be reached at: Lanci Impresores SA Mom 2862 Buenos Aires, Argentina NESTOR ONOFRE: Seeks Bankruptcy Approval from Buenos Aires Court ---------------------------------------------------------------- The National Commercial Court of First Instance No. 18 in Buenos Aires is studying the merits of Nestor Onofre Rinaldi, Susana Elsa Fabbro, Cynthia Lorena Rinaldi y Diego Rinaldi's request to enter bankruptcy protection. Nestor Onofre filed a "Quiebra Decretada" petition, after failing to pay its debts since May 7, 2007. The petition, once approved by the court, will transfer control of the company's assets to a court-appointed trustee who will supervise the liquidation proceedings. Clerk No. 39 assists the court in this case. The debtor can be reached at: Nestor Onofre Rinaldi, Susana Elsa Fabbro, Cynthia Lorena Rinaldi y Diego Rinaldi Gavilan 4212 Buenos Aires, Argentina * ARGENTINA: IMF Asks Statistics Agency to Clarify Calculations --------------------------------------------------------------- Argentina's statistics agency, INDEC, is under the International Monetary Fund's scrutiny, as the international organization seeks clarification of some methodology changes the agency introduced last year for calculating prices in sectors such as tourism, health, private schools and foods, Serena Saitto of Dow Jones Newswires reports. Reports of data manipulation are hounding the agency, however, the government has repeatedly denied doing so, Dow Jones relates. An INDEC spokesman told Dow Jones that the agency had received an e-mail from the Fund and that it is reviewing the questions laid out in that mail. An IMF spokesperson declined to comment on the matter, Dow Jones says. * * * As reported in the Troubled Company Reporter-Latin America on Dec. 26, 2007, Standard & Poor's Ratings Services assigned B+ long-term sovereign local and foreign currency ratings and B short-term sovereign local and foreign long-term ratings on Argentina. Standard & Poor's also placed 4 sovereign foreign currency recovery rating and a BB transfer and convertibility assessment rating. Standard & Poor's outlook for these ratings is stable. ============= B A H A M A S ============= KNOLL INC: Reports US$20.7-Mln Net Income in Fourth Quarter 2007 ---------------------------------------------------------------- Knoll Inc. announced results for its fourth quarter and year ended Dec. 31, 2007. Net sales were US$281.8 million for the quarter, an increase of 3.2% from fourth quarter 2006. Operating income was US$39.5 million, or 14.0% of net sales, an increase of 11% from the fourth quarter 2006, and net income was US$20.7 million, an increase of 15% over the fourth quarter 2006. For the full year, net sales were US$1.05 billion, an increase of 7.5% over full year 2006. Operating income was US$142.2 million, or 13.5% of net sales, an increase of 21.6% over full year 2006, net income was US$71.4 million, an increase of 21.8% over full year 2006. "For the 3rd year in a row now Knoll has continued to expand our industry leading operating margins, generate better than industry top-line growth and deliver more than 20% EPS growth for our shareholders," said Knoll Chief Executive Officer, Andrew Cogan. "While we are aware that our industry faces headwinds as we head into 2008, we are confident that the strength and diversity of our growth initiatives, the fullness of our new product pipeline and our cost discipline will allow us to continue to generate better than industry top-line performance as we work to achieve our mid- term 15% operating margin goals." Mr. Cogan added. "I want to congratulate and thank our Associates and Dealers on generating another year of industry leading performance. They have once again demonstrated that in the words of our founder Florence Knoll 'Good design is good business.'" Mr. Cogan stated. Mr. Cogan noted, "Net sales for the quarter were US$281.8 million, an increase of US$8.8 million, or 3.2%, over fourth quarter 2006, representing increased volume and price realization from previously implemented price increases. Our Specialty products experienced the strongest growth during the quarter as they also benefited from our fourth quarter acquisition of Edelman Leather." Backlog of unfilled orders at Dec. 31, 2007, was US$190.7 million, an increase of US$23million, or 13.7%, versus the prior year. Gross profit for the fourth quarter 2007 was US$99 million, an increase of US$9.9 million, or 11.1%, over the same period in 2006. Gross margin increased from 32.6% in the fourth quarter of 2006 to 35.1% in spite of the significant appreciation of the Canadian Dollar. The increase from the fourth quarter of 2006 largely resulted from additional volume, better pricing, and moderating inflation. Improved factory performance and global sourcing initiatives also contributed to the increase in gross margin. Operating expenses for the quarter were US$59.5 million, or 21.1% of sales, compared to US$53.5 million, or 19.6% of sales, for fourth quarter of 2006. The increase in operating expenses during the fourth quarter of 2007 was in large part due to the inclusion of Edelman Leather and increased investment spending in marketing and product development. Operating income increased, as a percentage of sales, to 14% from 13% in the same period in the prior year. Gross margin improvements from a year ago contributed to this increase. Net income for the fourth quarter 2007 was US$20.7 million as compared to US$18 million for the same quarter in 2006. Interest expense decreased US$0.9 million due to lower borrowing costs on the company's credit facility. For the year, net sales totaled US$1.05 billion an increase of US$73.6 million, or 7.5%, from 2006 net sales of US$982.2 million. The increase was attributable to additional revenues realized from price increases as well as higher volumes across all the company's product categories. The specialty businesses followed by International expansion and complimentary seating and storage products experienced the strongest growth in the year. Gross margins increased to 34.6% in 2007 compared to 32.5% in 2006. Additional volume, better pricing, and moderating inflation led to the increase. Improved factory performance and global sourcing initiatives also contributed to the increase. The increase in gross margin came in spite of the further appreciation in the Canadian Dollar. Operating expenses for 2007 were US$222.9 million, or 21.1% of sales, compared to US$202.1 million, or 20.6% of sales, for 2006. Increased investment spending on growth initiatives relating to new products and international expansion drove the increase along with increased incentive payments as a result of the higher sales and profits. The acquisition of Edelman Leather also impacted operating expense levels. The company generated 2007 net income of US$71.4 million compared to US$58.6 million in 2006. Net income in 2007 includes the write-off of deferred financing fees totaling US$0.7 million after tax as the company implemented the refinancing of its old credit facility with a new US$500 million revolving credit facility on June 29, 2007. Other income/expense in 2007 included an approximate US$4.2 million loss due to foreign currency translation and US$1.2 million loss related to the write off of deferred financing fees. Other income/expense in 2006 included an approximate US$563 thousand gain due to the foreign currency translation, a US$703 thousand loss on interest rate derivatives, and US$881 thousand gain in other miscellaneous income. Annual cash generated from operations in 2007 was US$102.2 million, compared to US$77.5 million the year before. Capital expenditures in 2007 totaled US$16.3 million compared to US$13.4 million for 2006. Investing activities in 2007 also included US$70.8 million for the acquisition of Edelman Leather. In addition, the Company repurchased approximately 2.3 million shares of its stock for US$48.1 million during the year. Also during the year the Company had net borrowings of US$18.2 million primarily to finance the purchase of Edelman Leather and repurchase shares. The company also paid dividends of US$21.7 million for the first three quarters of 2007, increasing to US$0.12 per share in the fourth quarter of 2007. Chief Financial Officer, Barry L. McCabe said, "During the quarter we were able to close the acquisition of Edelman Leather, increase our quarterly dividend and take advantage of our current stock price by repurchasing 1.1 million shares for a total repurchase of 2.261 million shares for the year. With our expanded bank facility, lowered leverage ratio and reduced borrowing costs, Knoll enters 2008 in the strongest financial position since our 2004 IPO and we are well positioned to take advantage of opportunities to continue to reduce our shares outstanding. Accordingly, we are pleased to announce the expansion of our share repurchase program by US$50 million." Expanded US$50 million Stock Repurchase Program On Feb. 4, 2008, the Knoll Board of Directors approved a US$50 million expansion of the company's previously announced stock repurchase program. The expanded repurchase program does not require the purchase of any minimum number of shares, but sets a limit on the total amount spent on repurchases. Before this expansion, the company had approximately US$17 million remaining under its US$50 million stock repurchase program announced in February 2006. Purchases under the repurchase program may be made from time to time in the open market, through privately negotiated transactions, or otherwise, and will depend on market conditions and applicable securities laws. First Quarter 2008 Outlook The company stated that it expects first quarter 2008 revenue to be in the US$258 - US$265 million range, an increase of 4.1%-6.9% from the first quarter of 2007. The company added that on Feb. 4, 2008, its Board of Directors declared a quarterly cash dividend of US$0.12 per share payable on March 31, 2008, to stockholders of record on March 14, 2008. About Knoll Inc. Headquartered in East Greenville, Pennsylvania, Knoll Inc. (NYSE: KNL) -- http://www.knoll.com/-- designs and manufactures branded office furniture products and textiles, serves clients worldwide. It distributes its products through a network of more than 300 dealerships and 100 showrooms and regional offices. The company has locations in Argentina, Australia, Bahamas, Cayman Islands, China, Colombia, Denmark, Finland, Greece, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines, Poland, Portugal and Singapore, among others. * * * Knoll Inc. carries Moody's Investors Service's B1 Corporate Family Rating and the company's US$200 million senior secured revolver and US$250 million senior secured term loan carry Moody's Ba2. Moody's assigned an LGD2 rating to both loans, suggesting note holders will experience a 27% loss in the event of a default. =============== B A R B A D O S =============== ============= B E R M U D A ============= SEA CONTAINERS: Reaches Pact with Pension Schemes Trustees ---------------------------------------------------------- Sea Containers Ltd. and its debtor-affiliates have reached an agreement in principle with the trustees of the two main Sea Containers Pension Schemes to agree on the amount of their claims against the Sea Containers estate. This is a critical and positive milestone in its efforts to emerge from Chapter 11, the Debtors said. Since the Chapter 11 negotiations first began in October 2006, the board of directors and the officers of Sea Containers have been focused on achieving a plan of reorganization that provides full and fair settlement for all creditors. The major creditors involved are the 1983 and the 1990 pension funds which have almost 1500 members between them and the holders -- thought to be a number of US hedge funds -- of the four outstanding bond issues. The agreement with the Trustees for the pension funds, which are estimated to be in deficit by approximately US$200 million under the s75 'buy out' basis prescribed by UK law, will allow the Company and the trustees to avoid costly and protracted litigation in multiple and potentially competing jurisdictions. The agreement also creates an additional reserve of US$69 million for certain potential pension scheme liabilities in respect of age-related equalization changes. In connection with this important agreement, Sea Containers has withdrawn its appeal against the Financial Support Direction. The FSD, which sought to oblige Sea Containers Limited -- the ultimate parent company -- to put in place additional financial support for the pension funds, was handed down by the Determinations Panel of the UK Pensions Regulator on 3 July 2007. Sea Containers considers that the settlement will adequately address any FSD and that the current legal proceedings would be of no further benefit. Sea Containers is therefore pleased to have reached a timely and consensual settlement with the Trustees. Sea Containers, alongside the Trustees, will be seeking approval from the Regulator for the proposed settlement. Both sides are confident an approval will be granted in the near future. The proposed settlement is also subject to the Delaware Bankruptcy Court approval and may be objected to by other creditors of the estate. About Sea Containers Based in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Edmon L. Morton, Esq., Edwin J. Harron, Esq., Robert S. Brady, Esq., Sean Matthew Beach, Esq., and Sean T. Greecher, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors and the Financial Members Sub-Committee of the Official Committee of Unsecured Creditors of Sea Containers Ltd. is represented by William H. Sudell, Jr., Esq., and Thomas F. Driscoll, Esq., at Morris, Nichols, Arsht & Tunnell LLP. Sea Containers Services, Ltd.'s Official Committee of Unsecured Creditors is represented by attorneys at Willkie Farr & Gallagher LLP. In its schedules filed with the Court, Sea Containers disclosed total assets of $62,400,718 and total liabilities of $1,545,384,083. The Court gave the Debtors until Feb. 20, 2008 to file a plan of reorganization. SECURITY CAPITAL: Moody's Cuts Insurance Strength Rating to 'A3' ---------------------------------------------------------------- Moody's Investors Service has downgraded to A3, from Aaa, the insurance financial strength ratings of the operating subsidiaries of Security Capital Assurance Ltd, including XL Capital Assurance Inc., XL Capital Assurance Limited and XL Financial Assurance Ltd. Moody's has also downgraded the debt ratings of the holding company, Security Capital Assurance Ltd (senior debt to (P)Baa3 from (P)Aa3), and a related financing trust. These rating actions reflect Moody's assessment of SCA's weakened capitalization and business profile resulting, in part, from its exposures to the US residential mortgage market. The rating outlook is negative. The SCA units had already lost their key AAA grade at Fitch Ratings, The Wall Street Journal says. Standard & Poor's has warned it may cut the AAA ratings of SCA, the Journal relates. The Journal notes bond insurers play a key role in the financial system, guaranteeing some $2.4 trillion in debt, the bulk of it issued by municipalities that would otherwise have to pay higher rates. According to the Journal, the bond insurers, however, strayed from that core business into writing protection on collateralized debt obligations and other securities that have since plunged in value. Much of that protection was bought by banks seeking to hedge exposure that could produce further losses in the event of fresh downgrades, the Journal says. Impact on Ratings of Insured Obligations As a result of this downgrade, the Moody's-rated securities that are guaranteed or "wrapped" by XLCA, XLCA-UK and XLFA are also downgraded to A3, except those securities with higher public underlying ratings. Overview of Rating Approach As outlined in Moody's Rating Methodology for Financial Guarantors, Moody's has evaluated SCA along five key rating factors: 1) franchise value and strategy, 2) insurance portfolio characteristics, 3) capital adequacy, 4) profitability, and 5) financial flexibility. Of these factors, capital adequacy is given particular emphasis. To estimate capital adequacy, Moody's has applied its traditional portfolio risk model for determining stress losses on the non- mortgage related portion of SCA's insured portfolio, and alternative stress tests for the mortgage and mortgage-related CDO exposure. For mortgage-related exposures, stress losses were estimated using assumptions consistent with a scenario where 2006 subprime first-lien mortgages realize an average of 21% cumulative pool losses, with other vintages and products stressed accordingly. Stress-level losses for RMBS transactions were assessed on a transaction-by-transaction basis, while loss estimates for ABS CDOs were derived using a stochastic simulation model which applied stress to specific underlying collateral tranches within the CDOs. Estimated tranche-level losses were computed based on the structure of those tranches (e.g., attachment and detachment points) and estimates of their performance relative to the average. Losses estimated under the approach described above were present- valued to reflect estimates of the payout pattern that would emerge, based on the collateral type. For ABS CDOs, consideration was given to specific contractual features within associated CDS contracts. These factors resulted in aggregate present value discounts to principal loss estimates of approximately 11% for RMBS and 34% for ABS CDOs. Non-mortgage risks are discounted within the portfolio model based on estimates of payout patterns as well. In view of the expected correlation between the prospective experience of SCA and its reinsurers, and given the recent downgrade of affiliate XL Insurance Ltd (from Aa3 to A1) and reviews for possible downgrade of RAM Reinsurance Company Ltd. (Aa3) and BluePoint Re Limited (Aa3), Moody's has also, for purposes of estimating capital adequacy, reduced the estimated credit given for reinsurance in the stress case, to 50%, on average across the portfolio. In comparing estimated stress losses to claims paying resources and associated rating levels, Moody's combines an estimated loss distribution for mortgage risks with one for non-mortgage risks, assuming a correlation between the two that ranges from 90% (for Aaa) down to 30% (for Baa3). Claims paying resources are then compared to the indicated capital need, at the target benchmark (1.3x required capital). Key Rating Factors: Capital Adequacy Based on the risks in SCA's portfolio, as assessed by Moody's according to the approach outlined above, capitalization required to cover losses at the Aaa target level would exceed $6 billion. This compares to Moody's estimate of SCA's claims paying resources of $3.6 billion, which Moody's considers to be more consistent with capitalization at the single A rating level. Moody's further noted that it estimates SCA's insured portfolio will incur lifetime expected losses of approximately $1.2 billion in present value terms. SCA is currently pursuing several capital management initiatives that, according to Moody's, if successfully executed could reduce but would not likely eliminate the company's capital shortfall at the Aaa rating level. Moody's further commented that capitalization, and the prospect for improvements in capitalization, were considered in the context of the rating agency's opinion about the guarantor's ongoing business and financial profile, as summarized further below. Key Rating Factors: Business and Financial Profile In Moody's opinion, SCA's significant exposure to mortgage-related risk has had consequences for its business and financial profile beyond the associated impact on capitalization, and affects Moody's opinion about SCA's other key rating factors. Moody's believes that SCA is more weakly positioned than many of its peers with respect to business franchise, prospective profitability and financial flexibility. With respect to underwriting and risk management, Moody's believes that SCA's relatively significant exposure to the mortgage sector is indicative of a risk posture somewhat greater than the peer group overall. The company's participation in super-senior mezzanine tranches of ABS CDOs, in particular, contributed to this view. Going forward, Moody's believes SCA's strategic direction could change meaningfully, with implications for the business profile that are currently uncertain. SCA's profitability is likely to remain depressed in the near to intermediate term as losses on mortgage-related exposures are incurred. While Moody's expects the company will continue to earn premiums on its in-force book for many years, as well as investment income on its investment portfolio, Moody's believes premium volume on new business production will likely diminish significantly and operating expenses will become a greater drag on earnings over time. In terms of financial flexibility, SCA, like other financial guarantors, benefits from its ability to pay claims over an extended period of time, typically scheduled interest and principal at maturity. Moody's has also considered in its rating review the potential for calls on liquidity at SCA in the context of available resources, including the investment profile of the operating insurance entities. SCA's financial leverage profile is likely to increase as incurred losses erode shareholders' equity. Additional debt in the capital structure would further increase leverage and place additional demands on the operating companies to service fixed charges. Here, Moody's believes that holding company liquidity remains strong due to the firm's ability to upstream dividends from Bermuda-domiciled XLFA, which has substantial dividend capacity under Bermuda insurance regulations. In Moody's opinion, SCA's access to capital is weak currently, given the company's depressed equity valuation and wide CDS spreads. Consideration of Ongoing Capital Management Efforts Moody's is aware of a number of capital initiatives currently being pursued by SCA, including seeking to generate capital relief through reinsurance arrangements and restructuring certain mortgage-related exposures, although the company has announced that it will not raise new capital in the current market environment. Moody's stated that certain of these pending initiatives, if completed, would reduce the level of uncertainty surrounding portfolio loss estimates. However, Moody's believes that SCA's current business position and moderate franchise strength are consistent with operating company insurance financial strength ratings in the single-A range. Rating Outlook: Negative The negative outlook on SCA's ratings reflects continued uncertainty regarding both the ultimate performance of its mortgage and mortgage-related CDO exposures, as well as the future strategic direction of the firm and the potential for change in the competitive dynamics of the financial guaranty market. Moody's will continue to evaluate developments at the company and communicate any changes in its opinion as appropriate. List of Rating Actions These ratings have been downgraded: -- XL Capital Assurance Inc.: insurance financial strength to A3 from Aaa; -- XL Capital Assurance (U.K.) Limited: insurance financial strength to A3 from Aaa; -- XL Financial Assurance Ltd: insurance financial strength to A3 from Aaa; -- Security Capital Assurance Ltd: provisional rating on senior debt to (P)Baa3 from (P)Aa3, provisional rating on subordinated debt to (P)Ba1 from (P)A1 and preference shares to Ba2 from A2; and -- Twin Reefs Pass-Through Trust: contingent capital securities to Baa2 from Aa2. About Security Capital Assurance Security Capital Assurance Ltd is a Bermuda-domiciled holding company whose primary operating subsidiaries, XL Capital Assurance Inc. and XL Financial Assurance Ltd, provide credit enhancement and protection products to the public finance and structured finance markets throughout the United States and internationally. For the nine months ended Sept. 30, 2007, SCA reported a net loss available to common shareholders of $27 million. As of Sept. 30, 2007, SCA had shareholders' equity of approximately $1.6 billion. =========== B R A Z I L =========== BANCO ABC: Will Boost Lending by 65% in 2008 -------------------------------------------- Banco ABC Brasil's investor relations officer Sergio Lulia Jacob said in a conference call that it will increase lending by 65% in 2008, from 2007, Business News Americas reports. BNamericas relates that Banco ABC's lending rose 71.5% to BRL4.99 billion in 2007, compared to 2006. According to BNamericas, Banco ABC said in the conference call that middle market loans will grow 120%. Mr. Jacob told BNamericas that Banco ABC will launch offices in Rio de Janeiro and Curitiba in the first six months of 2008, half of the year and in Porte Alegre and a city in the northeast in the second half, boosting loans to middle market companies with revenues of up to BRL250 million per year. BNamericas says that Banco ABC has three offices in the greater Sao Paulo, one in Campinas, Sao Paulo, and one in Belo Horizonte, Minas Gerais. Banco ABC Brasil, controlled by Arab Banking Corporation and with a branch on the Cayman Islands, is a multiple bank endowed to operate with commercial, investment, financial, housing loan and exchange portfolios. Our supporting structure includes a securities dealer and an administration and services company. Due to their synergetic operations, these companies can cover a broad spectrum of financial intermediation activities focused on Brazilian interests, adding to the financial services offered worldwide by the controlling company. * * * As reported in the Troubled Company Reporter-Latin America on June 26, 2007, Fitch Ratings affirmed Banco ABC Brasil S.A.'s BB+ long-term local and foreign currency issuer default ratings, and B short-term rating. Fitch says the outlook is stable. BANCO CRUZEIRO: 6.26& Non-Voting Capital in Bank Belongs to BBM --------------------------------------------------------------- Brazilian investment bank BBM said in a filing with securities regulator Comissao de Valores Mobiliarios that it now holds 6.26% of non-voting capital in Banco Cruzeiro do Sul through the acquisition of 2.84 million preferred shares. Business News Americas relates that Banco Cruzeiro conducted an initial public offering on the Sao Paulo stock exchange Bovespa in June 2007. It sold about 36.1 million preferred shares for BRL560 million. Headquartered in Sao Paulo, Brazil, Banco Cruzeiro do Sul (Bovespa - CZRS4), a private-sector multiple bank with operations in the consumer segment, through paycheck-deductible loans to public employees and social security beneficiaries, and in the corporate segment, offering middle- market companies short-term loans usually backed by receivables. The bank's core business is lending to civil servants, with payments automatically deducted from payrolls. * * * On Sept. 10, 2007, Moody's assiged a Ba2 foreign currency deposit rating for Banco Cruzeiro do Sul. CONTINENTAL AIR: WSJ Says United Merger Talks "Have Grown Serious" ------------------------------------------------------------------ United Air Lines could likely end up marrying Continental Airlines in the event of a merger, instead of with Delta Air Lines, various report say. According to The Wall Street Journal, exploratory merger talks between United and Continental have grown serious. Moreover, the reports also note that merger talks between Delta Air and Northwest Airlines Corp. have intensified that could lead to an agreement being announced in the next two weeks. However, key details of the Delta-Northwest deal have yet to be hammered out and negotiations could still fall apart, according to the Wall Street Journal, citing people familiar with the talks. As reported in the Troubled Company Reporter on Jan. 22, 2008, Mr. Anderson obtained approval from Delta's board of directors on Jan. 11, 2007, to engage in formal merger talks with both Northwest and United. WSJ, citing people briefed on the matter, says Delta and United have continued exploratory talks over the past month. Pardus Capital Management, a New York-based hedge fund, and major stakeholder in both United and Delta, had urged both carriers to consolidate, to save money and counter escalating jet-fuel prices which rose by around 53% last year. Delta, the No. 3 U.S. carrier in terms of passenger traffic, has a market value of over $4,100,000,000 -- higher than UAL's $3,800,000,000, and Northwest's $3,700,000,000. United is the second-largest U.S. carrier, while Northwest takes the fifth spot. Continental, in Houston, Texas, is the No. 4 carrier. A Delta merger with either Northwest or United would create the largest passenger airline in the world. Delta-Northwest Merger Reports note the potential dealbreaker in a Delta-Northwest combination was the structure of the new company's management, specifically Northwest CEO Doug Steenland and his management team's role in the new company. The Journal's source says those issues were overcome earlier this week. When companies merge, it's not uncommon for the chief executives to divide the leadership roles, with one taking the CEO post and the other becoming chairman, according to TheStreet.com. In the case of Delta and Northwest, the situation is complicated by the role of Daniel Carp, who became chairman of Delta when the carrier emerged from bankruptcy in May 2007, TheStreet.com says. Since Mr. Carp was brought in to enhance Delta's position, there is a feeling that he should remain because of the progress the company has made, TheStreet.com says, citing a source. TheStreet.com's source says Mr. Steenland has apparently accepted the idea that Mr. Carp and Delta CEO Richard Anderson will retain their current posts in a new company. Mr. Anderson, a former Northwest Airlines chief executive, assumed the Delta CEO post from Gerald Grinstein in August. That decision to hire Mr. Anderson "raised new questions about Delta's future strategy", WSJ reported at that time. Mr. Anderson's appointment raises speculations that with an outsider at the helm, Delta may reverse its "go it alone" strategy and pursue a consolidation with Northwest, United Air Lines or Continental Airlines, Business Week had said. At the time of its bankruptcy, Delta and its unsecured creditors committee fended off a $8,000,000,000 to $10,000,000,000 hostile takeover bid from US Airways Group, Inc. Delta said it was better off as a stand-alone carrier. In January 2007, about two months since US Airways launched its hostile bid, Delta and NWA were reported to have held discussions about a potential merger. While both companies denied the reports, Mr. Grinstein subsequently admitted to sharing information with Northwest. "At the behest of our creditors' committee we recently retained an investment banker to obtain information from Northwest, a far cry from negotiating for a merger with them," Mr. Grinstein told members of the Delta Board Council, according to Reuters. Delta did not discount any possibility of a merger post- bankruptcy. According to a prior WSJ report, the Creditors Committee conditioned its support of Delta's stand-alone Chapter 11 plan of reorganization to a number of concessions, including the appointment of a new board that favors consolidation as a strategic opotion. In October, Mr. Anderson said he saw "obvious benefits" for Delta's employees and shareholders in Delta's merging with another carrier, Meg Marco at The Star Tribune reported. Although Mr. Anderson did not name a potential merger target for Delta at that time, analysts have argued that Northwest would make a good partner because the carriers' routes complement each other, Ms. Marco said. As proposed, the Delta-Northwest deal would be a stock-for-stock transaction, done "at market," meaning at roughly where the two stocks are trading, with little or no premium for either side, WSJ says. The Journal adds that the dynamic has made non-economic issues the center of the deal negotiations. Compressed Timeline The Journal says Delta's intent was to pursue tandem negotiations with Northwest and United on a compressed timeline, get a deal inked by mid-February and quickly begin the process for winning antitrust approval. Executives at the airlines believe any mergers are more likely to pass regulatory muster during the waning days of the Bush administration, the Journal relates. A United-Continental deal will have to be done very near a Northwest-Delta announcement, so the two potential combinations would undergo regulatory scrutiny at the same time, the Journal says citing a source familiar with the matter. A different source told the Journal United and Continental are poised to act quickly once another airline merger is announced. Northwest holds a "golden share" of preferred stock in Continental that allows Northwest to block a merger of Continental with another large carrier, WSJ notes. But if Northwest agrees to merge with Delta, Continental could redeem that stock for a total of $100, even if the deal is never consummated, freeing Continental to entertain other suitors, WSJ says. Continental executives have repeatedly said they prefer to remain independent, but would do what is best for the company if the competitive landscape changes, WSJ notes. Experts in the airline industry believe that a Northwest-Delta merger is more likely as Delta's Anderson was previously CEO at Northwest, and is already well acquainted with Northwest's operations. Bloomberg, citing an unnamed person familiar with Air France-KLM Group's plans, has reported that Air France is encouraging a merger between Delta and Northwest and may make a financial investment to foster a tie-up. A Delta-Northwest combination would preserve the SkyTeam Alliance, a marketing group that includes Delta, Northwest and United. Other Issues Other issues that will have to be taken up in a Delta-Northwest combination include both carriers' labor groups. The Air Line Pilots Association branches at Delta and Northwest have signaled that they could support a merger if they receive equity in the combined airline and achieve a labor contract with improved terms, WSJ says. Some analysts worry a Delta merger would face antitrust hurdles, Bankruptcylaw360 says. Analysts also said mergers could lead to higher fares in some markets, at least in the long term, The New York Times state. Congress could also oppose a combination due to possible job loss and reduction in competition, Times relates. About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 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, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News, Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). * * * Moody's Investor Service placed UAL Corp.'s long term corporate family and probability ratings at 'B2' in January 2007. The ratings still hold to date with a stable outlook. About Delta Air Based in Atlanta, Georgia, Delta Air Lines Inc. (NYSE:DAL) -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 328 destinations in 56 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. Delta flies to Argentina, Australia and the United Kingdom, among others. The company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. The Debtors filed a chapter 11 plan of reorganization and disclosure statement explaining that plan on Dec. 19, 2007. On Jan. 19, 2007, they filed revisions to the plan and disclosure statement, and submitted further revisions to the plan on Feb. 2, 2007. On Feb. 7, 2007, the Court approved the Debtors' disclosure statement. In April 25, 2007, the Court confirmed the Debtors' plan. That plan became effective on April 30, 2007. The Court entered a final decree closing 17 cases on Sept. 26, 2007. As of Sept. 30, 2007, the company's balance sheet showed total assets of $32.7 billion and total liabilities of $23 billion, resulting in a $9.7 billion stockholders' equity. At Dec. 31, 2006, deficit was $13.5 billion. (Delta Air Lines Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Jan. 17, 2008, Standard and Poor's said that media reports that Delta Air Lines Inc. (B/Positive/--) entered into merger talks with UAL Corp. (B/Stable/--) and Northwest Airlines Corp. (B+/Stable/--) will have no effect on the ratings or outlook on Delta, but that confirmed merger negotiations would result in S&P's placing ratings of Delta and other airlines involved on CreditWatch, most likely with developing or negative implications. About Northwest Airlines Northwest Airlines Corp. (NYSE: NWA) -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and about 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents. Northwest and its travel partners serve more than 1000 cities in excess of 160 countries on six continents, including Italy, Spain, Japan, China, Venezuela and Argentina. The company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for bankruptcy, they listed US$14.4 billion in total assets and $17.9 billion in total debts. On Jan. 12, 2007 the Debtors filed with the Court their Chapter 11 Plan. On Feb. 15, 2007, they Debtors filed an Amended Plan & Disclosure Statement. The Court approved the adequacy of the Debtors' Disclosure Statement on March 26, 2007. On May 21, 2007, the Court confirmed the Debtors' Plan. The Plan took effect May 31, 2007. (Northwest Bankruptcy News; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * Moody's Investor Service placed Northwest Airlines Corp.'s long term corporate family and probability of default ratings at 'B1' in May 2007. The ratings still hold to date with a stable outlook. About Continental Airlines Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/ -- is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 2,900 daily departures throughout the Americas, Europe and Asia, serving 144 domestic and 139 international destinations. More than 500 additional points are served via SkyTeam alliance airlines. With more than 45,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 69 million passengers per year. * * * As reported in the Troubled Company Reporter on Dec. 27, 2007, Fitch Ratings affirmed Continental Airlines 'B-' issuer default rating with a stable outlook. COREL CORP: Fourth Quarter 2007 GAAP Net Income is US$3.3 Million ----------------------------------------------------------------- Corel Corporation reported financial results for its fourth quarter and year ended Nov. 30, 2007. Revenues in the fourth quarter of fiscal 2007 were US$72.4 million, an increase of 53 percent over revenues of US$47.4 million in the fourth quarter fiscal 2006. Fourth quarter 2007 revenue includes organic revenue growth of 8 percent, which excludes revenue from products acquired from InterVideo and Ulead. GAAP net income in the fourth quarter of fiscal 2007 was US$3.3 million compared to GAAP net income of US$9.4 million in the fourth quarter of fiscal 2006. Non-GAAP adjusted net income for the fourth quarter fiscal 2007 was US$13.4 million compared to non-GAAP adjusted net income for the fourth quarter of fiscal 2006 of US$13.1 million. Non-GAAP adjusted EBITDA in the fourth quarter of 2007 was US$19.9 million, an increase of 35 percent over US$14.7 million in the fourth quarter of 2006. "Corel closed 2007 with a very strong fourth quarter driven by solid execution across our diverse mix of products, channels and geographies," said Corel Corporation Chief Executive Officer, David Dobson. "We continued to execute well on our key strategies in 2007 by delivering strong organic growth while successfully completing the integration of InterVideo and Ulead. The fundamental strength of the Corel business model is the ability to successfully integrate new products and teams while maintaining a sharp focus on profitably growing existing businesses." "Looking at the business over the past three years, I am very pleased with how we have re-positioned Corel into product and market segments that have better revenue growth and profit potential. As we enter 2008, we stand well-positioned to continue building on the foundation of our Graphics and Productivity products while leveraging our extensive Digital Media portfolio to pursue new growth opportunities." Mr. Dobson continued. Revenues for the year ended Nov. 30, 2007, were US$250.5 million, an increase of 41 percent over revenues of US$177.2 million for the year ended Nov. 30, 2006. GAAP net loss for the year ended Nov. 30, 2007, was US$13.1 million compared to a GAAP net income of US$9.3 million for the year ended Nov. 30, 2006. Non-GAAP adjusted net income for the year ended Nov. 30, 2007, was US$34.0 million compared to non-GAAP adjusted net income for the year ended Nov. 30, 2006, of US$37.6 million. Non-GAAP adjusted EBITDA for the year ended Nov. 30, 2007 was US$57.3 million, compared to US$55.2 million for the year ended Nov. 30, 2006. First Quarter Fiscal 2008 Guidance Corel provided guidance for the first quarter ending Feb. 29, 2008. The company currently expects: -- Revenue in the range of US$61 million to US$63 million. -- GAAP net loss in the range of US$(1.5) million to US$0.0 million and non-GAAP adjusted net income in the range of US$6.5 million to US$8.0 million. Resulting guidance for the year ending Nov. 30, 2008 is: -- Revenue in the range of US$258 million to US$273 million. -- GAAP net income of US$9.3 million to US$14.8 million and non-GAAP adjusted net income of US$40.5 million to US$46.0 million. About Corel Corp. Ottawa, Ontario-based Corel Corporation (NASDAQ: CREL) (TSX: CRE) -- http://www.corel.com/-- is a packaged software company with an estimated installed base of over 40 million users. The company provides productivity, graphics and digital imaging software. Its products are sold in over 75 countries through a scalable distribution platform comprised of original equipment manufacturers, Corel's international websites, and a global network of resellers and retailers. The company's product portfolio features CorelDRAW(R) Graphics Suite, Corel(R) WordPerfect(R) Office, WinZip(R), Corel(R) Paint Shop(R) Pro, and Corel Painter(TM). The company has operations in Germany, Italy, the United Kingdom, Australia, Japan, Korea, Brazil, and Mexico, among others. * * * As reported Troubled Company Reporter-Latin America on Nov. 15, 2007, Standard & Poor's Ratings Services revised its outlook on Corel Corp. to stable from positive. At the same time, S&P affirmed the ratings, including the 'B' long-term corporate credit rating, on the company. CROWN HOLDINGS: S&P Shifts to Pos. Outlook; Holds BB- Debt Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services has revised its outlook on Crown Holdings Inc. to positive from stable and affirmed the 'BB-' corporate credit and other existing ratings. The outlook revision reflects S&P's expectations that earnings growth and free cash generation could support strengthening of the company's financial profile to levels appropriate for a 'BB' rating in the next couple of years. The key ratio of funds from operations to total debt is expected to approach 20% by 2009 from the midteens percent area at Dec. 31, 2007. "We could raise the ratings if Crown continues to prioritize its free cash flows for debt reduction while maintaining a limited allocation for share repurchases, and asbestos-related liability trends remain reasonable," said S&P's credit analyst Liley Mehta. At Dec. 31, 2007, Crown Holdings had total adjusted debt outstanding of about US$4.3 billion. The ratings reflect the company's satisfactory business risk profile, characterized by market leadership, global operations, and relative earnings stability. Nevertheless, the financial profile remains aggressive, and the company continues to face risks associated with asbestos litigation. Based in Philadelphia, Pennsylvania, Crown Holdings Inc. (NYSE: CCK) -- http://www.crowncork.com/-- through its affiliated companies, supplies packaging products to consumer marketing companies around the world. In Latin America, the company has operations in Mexico and Brazil. The company also maintains operations in the United Kingdom , France, Canada, and the Middle East. In the Asia-Pacific region, the company has an office in Singapore. Crown Holdings, Inc., through its subsidiaries, is a leading supplier of packaging products to consumer marketing companies around the world. JAPAN AIRLINES: To Begin 17% Hike on Int'l. Air Fare by April 1 --------------------------------------------------------------- Japan Airlines Corp. disclosed Tuesday its plan to raise regular airfare for international flights by 17% effective Apri 1, Kyodo News says. The move is necessitated by higher fuel costs. The hike plan has been approved by the International Air Transport Association, of which Japan Airlines is a member. Tokyo-based Japan Airlines International Company, Limited -- http://www.jal.com/en/-- was created as a result of the merger of Japan Airlines and Japan Air Systems to boost domestic coverage. Japan Airlines flies to the United States, Brazil and France. * * * As reported on Feb. 9, 2007, that Standard & Poor's Ratings Services affirmed its 'B+' long-term corporate credit and issue ratings on Japan Airlines Corp. (B+/Negative/--) following the company's announcement of its new medium-term management plan. S&P said the outlook on the long-term corporate credit rating is negative. As reported on Oct. 10, 2006, that Moody's Investors Service affirmed its Ba3 long-term debt ratings and issuer ratings for both Japan Airlines International Co., Ltd and Japan Airlines Domestic Co., Ltd. The rating affirmation is in response to the planned restructuring of the Japan Airlines Corporation group on Oct. 1, 2006 with the completion of the merger of JAL's two operating subsidiaries, JAL International and Japan Airlines Domestic. JAL International will be the surviving company. Moody's said the rating outlook is stable. Fitch Ratings Tokyo analyst Satoru Aoyama said that the company's debt obligations and expenses for new aircraft have placed it in an unfavorable financial position. Fitch assigned a BB- rating on the company, which is three notches lower than investment grade. QUAKER FABRIC: Can't File Plan Without Committee Consent -------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware barred furniture upholstery manufacturer Quaker Fabric Corp. from filing a chapter 11 plan of liquidation absent consent from the official committee of unsecured creditors appointed in its case. Moreover, the Court rejected the Debtors' request for an April extension of their exclusive plan filing period. The Court settled for a 66-day extension, giving the Debtors until Feb. 18, 2008, to propose a bankruptcy plan. The Debtors were given until April 18 to solicit plan votes. As reported in the Troubled Company Reporter on Dec. 17, Quaker Fabric and its debtor-affiliates asked the Court to extend their exclusive periods to: a) file a chapter 11 plan until April 14, 2008; and b) solicit acceptances of that plan until June 11, 2008. The Debtors argued that they have been in chapter 11 for just over three months and have only recently obtained approval from the Court to secure DIP financing from their prepetition secured lenders. In addition, the Debtors pointed out they have devoted substantial time and resources in effectuating the sale of their assets which resulted in the sale of the their Bleachery Pond and the Tupelo Lee Industrial Park properties to separate buyers in September 2007. The Debtors said their cases are large and complex and they need more time to focus on the formulation, filing and solicitation of a plan of liquidation that will be accepted by their creditors and approved by the Court. The Debtors also pointed to the progress they have made in the collection of their receivables and are not seeking an extension to pressure creditors. About Quaker Fabric Based in Fall River, Mass., Quaker Fabric Corp. (NASDAQ: QFAB) -- http://www.quakerfabric.com/-- designs, manufactures, and markets woven upholstery fabrics primarily for residential furniture manufacturers and jobbers. It also develops and manufactures specialty yarns, including chenille, taslan, and spun products for use in the production of its fabrics, as well as for sale to distributors of craft yarns, and manufacturers of home furnishings and other products. The company is one of the largest producers of Jacquard upholstery fabrics. Quaker Fabric sells its products through sales representatives andindependent commissioned sales agents in the United States, Canada, Mexico, and internationally. The company and its affiliate, Quaker Fabric Corporation of Fall River, filed for chapter 11 protection on Aug. 16, 2007 (Bankr. D. Del. Case No. 07-11146). John D. Sigel, Esq. at Wilmer Cutler Pickering Hale and Dorr LLP and Joel A. Waite, Esq. at Young Conaway Stargatt & Taylor LLP are co-counsels to the Debtors. Epiq Bankruptcy Solutions is the Debtors' claims agent. The Official Committee of Unsecured Creditors has selected Shumaker, Loop & Kendrick, LLP, as its bankruptcy counsel and Benesch, Friedlander, Coplan & Aronoff, LLP, as co-counsel. The Debtors' schedules reflect total assets of US$41,375,191 and total liabilities of US$54,435,354. QUAKER FABRIC: Gets Go Signal to Sell Brazilian Unit for US$100K ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware permitted Quaker Fabric Corp. to sell its Brazilian warehouse subsidiary Quaker Textil do Brasil Ltda to American Decorative Fabric, LLC for US$100,000. The subsidiary had been a warehouse and sales office. The Debtors said operations at Quaker Brazil stopped after the Debtors consummated a sale of substantially all of their assets in September 2007. The Debtors initially opted to wind up Quaker Brazil's operations, however, Brazilian requirements for winding up a company are expensive. The Debtors said the costs of "dormancy" under Brazilian law will likely consume the remaining funds of Quaker Brazil. As part of the sale, the buyer required Quaker Fabric Corporation of Fall River to waive a US$797,267 intercompany receivable owing to it from Quaker Brazil. The Debtors said they do not believe they would have recovered the receivable under any realistic circumstances. The unit is sold on an "as is, where is" basis. About Quaker Fabric Based in Fall River, Mass., Quaker Fabric Corp. (NASDAQ: QFAB) -- http://www.quakerfabric.com/-- designs, manufactures, and markets woven upholstery fabrics primarily for residential furniture manufacturers and jobbers. It also develops and manufactures specialty yarns, including chenille, taslan, and spun products for use in the production of its fabrics, as well as for sale to distributors of craft yarns, and manufacturers of home furnishings and other products. The company is one of the largest producers of Jacquard upholstery fabrics. Quaker Fabric sells its products through sales representatives and independent commissioned sales agents in the United States, Canada, Mexico, and internationally. The company and its affiliate, Quaker Fabric Corporation of Fall River, filed for chapter 11 protection on Aug. 16, 2007 (Bankr. D. Del. Case No. 07-11146). John D. Sigel, Esq. at Wilmer Cutler Pickering Hale and Dorr LLP and Joel A. Waite, Esq. at Young Conaway Stargatt & Taylor LLP are co-counsels to the Debtors. Epiq Bankruptcy Solutions is the Debtors' claims agent. The Official Committee of Unsecured Creditors has selected Shumaker, Loop & Kendrick, LLP, as its bankruptcy counsel and Benesch, Friedlander, Coplan & Aronoff, LLP, as co-counsel. The Debtors' schedules reflect total assets of US$41,375,191 and total liabilities of US$54,435,354. SOLUTIA INC: Compels Banking Group to Honor $2 Bil. Exit Financing ------------------------------------------------------------------ Solutia Inc. and its debtor-affiliates filed a complaint before the U.S. Bankruptcy Court for the Southern District of New York against the three banks that had executed a firm commitment to fund a $2 billion exit financing package for Solutia, but to date have refused to meet this commitment. The banks are Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. Solutia is seeking a court order requiring the banks to meet their commitment and fund Solutia's exit from bankruptcy. The complaint also asserts that the banks should be stopped from invoking the clause they claim relieves them of their obligation due to their improper conduct and misrepresentations to the company, and further claims that the banks fraudulently induced Solutia to enter into the initial engagement by promising that the financing was firmly committed. Solutia and the banks have agreed that Solutia's claim to require immediate funding of the $2 billion package should be heard by the Court on an expedited basis, with the trial to conclude by the end of February -- prior to the expiration of the banks' commitment. "This is not a 'best efforts' agreement," said Jeffry N. Quinn, chairman, president and CEO of Solutia Inc. "Solutia agreed to pay the banks an enhanced fee in exchange for their firm commitment to fund the full $2 billion exit financing facility -- regardless of the results of the syndication process. We are extremely disappointed by their refusal to meet this commitment and have no choice but to pursue all of our legal remedies." On Oct. 25, 2007 , the banks executed a firm commitment to fund a $2 billion exit financing package for Solutia. These substantial, custom credit facilities and arrangements were specifically tailored to facilitate Solutia's prompt emergence from Chapter 11. On November 20, 2007 , the bankruptcy court approved the exit financing package. Nine days later, in reliance on the banks' firm lending commitment, the court found the plan of reorganization to be feasible and confirmed the plan. However, in late January -- shortly before the anticipated closing of the exit facility and Solutia's long-awaited emergence from Chapter 11 -- the banks notified Solutia that they were refusing to provide the funding, citing a so-called "market MAC" provision in their commitment letter and asserting that there has been a change in the markets since entering into the commitment. "It is a well-documented fact that the ongoing conditions in the credit markets began in the summer of 2007," said Quinn. "Well before the banks committed to Solutia's exit financing, they stated in public filings and through professional advice to Solutia that the credit markets were in disarray, and that the credit crisis would continue for months to come. Despite their concerns and negative outlook, the banks entered into a firm commitment to provide Solutia with this exit financing. The willingness of these banks to offer committed financing that was not subject to a successful syndication was a major factor in deciding to award them this business." Quinn added, "Solutia is ready to emerge from Chapter 11. We have successfully repositioned our company, we have confirmed a plan of reorganization that brings significant value to our constituents, and our businesses are performing well. We now look to the banks to meet their commitment." The Adversary Proceeding Solutia filed Adversary Proceeding No. 08-01057 against the Lenders, seeking: * a final judgment ordering the Commitment Parties to close on the Exit Financing in accordance with the terms of the Commitment Letter; * in the alternative, a judgment directing the Commitment Parties to pay compensatory and punitive damages in an amount to be determined at trial, but in no event less than $2,250,000; and * payment and compensation of Solutia costs and attorney's fees. Richard I. Werder, Jr., Esq., at Quinn Emanuel Urquhart Oliver & Hedges, LLP, in New York, as the Debtors' proposed special counsel, reiterates that Solutia specifically bargained for a "firm commitment" from the Commitment Parties whereby the three lenders expressly agreed to fund the Exit Financing "even if they could not syndicate the loans." "The credit markets were in such a state of disarray since the summer, as everybody knows, and that's specifically why Solutia required a firm commitment," Susheel Kirpalani, a member of Quinn Emanuel, said in an interview, according to The Associated Press. "If for some reason they would seek to wiggle out of their commitment, the damages would be very, very large," Mr. Kirpalani said. "We never expected to be litigating with our exit lenders," he added. According to the Complaint, the Lenders' reliance on the Market MAC provision in the Commitment Letter, which they downplayed from the outset, is "utterly without basis in the midst of a tumultuous market that was not only foreseeable, but had long existed when they signed on to the firm commitment." The Lenders should be held accountable for their fraudulent conduct -- which impacts Solutia, its employees, its 20,000 retirees, its creditors and other parties-in-interest -- by paying compensatory and punitive damages to Solutia, Mr. Werder asserts. Mr. Werder relates that the Commitment Parties attended Court hearings to approve both the Commitment Letter and the Plan, but never once suggested that the financing might not close. He relates that shortly after Plan confirmation, the banks told Solutia that syndicating in January would be better for the company than syndicating the financing earlier -- that it could provide "only upside." However, the Commitment Parties have changed their approach, acting as if they never said or did those things, he tells the Court. As previously disclosed in its Feb. 1, 2008 filing with the U.S. Securities and Exchange Commission, Solutia gave the Lenders a formal demand on January 29 to fund the new loan on February 6. The next day, the Lenders gave notice they wouldn't, Solutia said in the SEC filing. The Lenders' refusal to proceed to closing is a direct and willful breach of their obligations under the Commitment Letter, Mr. Werder maintains. Without the Exit Financing, Solutia's confirmed Plan and its global settlement with Monsanto Company may not be consummated, and all of the key stakeholders in Solutia's bankruptcy case, including noteholders, trade creditors, shareholders, and 20,000 retirees will have contemplated distributions delayed further and threatened altogether, Mr. Werder states. Mr. Werder adds that the commitment made by certain creditors to backstop Solutia's $250,000,000 new equity rights offering expires on February 28, 2008, if Solutia has not emerged from bankruptcy by that deadline. "Solutia not only stands to lose this valuable commitment, but would be forced to return to creditors funds deposited pursuant to the equity rights offering," Mr. Werder tells the Court. Moreover, Solutia's DIP Financing matures on March 31, 2008, and must be repaid in full by that time, Mr. Werder notes. "Simply put, without the exit financing, the Debtors potentially will be left to start from scratch on a bankruptcy plan that took four years and myriad integrated compromises to achieve," Mr. Werder avers. Citigroup Reacts Citigroup spokeswoman Danielle Romero-Apsilos said in a statement that the bank thinks the lawsuit is "baseless," AP relates. "We believe the suit is without merit and have complied with all of our contractual obligations," Ms. Romero-Apsilos said in an e- mail. Officials at Goldman Sachs and Deutsche Bank declined to comment, according to eFinancial News Ltd. Moreover, several bankruptcy lawyers said they believe the lawsuit marks the first time a company on its way out of bankruptcy has sued to challenge a "market MAC" clause, AP says. According to AP, at the time Solutia was negotiating the deal in September 2007, a Citi director told Solutia's chief financial officer that the market MAC clause was created in 1998 during a time of turmoil in world financial markets, according to the suit. The clause went unused for years once the turmoil subsided. However, after the credit crunch last summer, Citi revived it and inserted it into the Solutia loan contract. Citi told Solutia, however, that the clause had never been invoked. As a result, the company, said, the bank left Solutia with "the impression that the provision was nothing more than Citi's recycled boilerplate," AP further relates. Bloomberg News says that the Lenders evidently continue working on a loan syndication with respect to the implementation of Solutia's Plan of Reorganization, which was confirmed by the Court on November 29, 2007. KDP Investment Advisors Inc. reported that the $400,000,000 in senior unsecured notes pursuant to the Plan are being offered with a 12% interest rate and a 7% discount to yield 14%, Bloomberg relates. KDP also said that the $1,200,000,000 senior secured term loan is being shopped with a 9% discount and a 3.5% interest rate above the London interbank offered rate, according to Bloomberg. In its operating report for the month ended Dec. 31, 2007, Solutia disclosed a $21,000,000 operating loss and a $144,000,000 net loss. For calendar year 2007, the company's net loss was $209,000,000 while the operating profit totaled $189,000,000. About Solutia Inc. Based in St. Louis, Missouri, Solutia Inc. (OTCBB:SOLUQ) -- http://www.solutia.com/-- and its subsidiaries, engage in the manufacture and sale of chemical-based materials, which are used in consumer and industrial applications worldwide. The company and 15 debtor-affiliates filed for chapter 11 protection on Dec. 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., Jonathan S. Henes, Esq., and Michael A. Cohen, Esq., at Kirkland & Ellis LLP, in New York, as lead bankruptcy counsel, and David A. Warfield, Esq., and Laura Toledo, Esq., at Blackwell Sanders LLP, in St. Louis Missouri, as special counsel. Trumbull Group LLC is the Debtor's claims and noticing agent. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. The Official Committee of Retirees of Solutia, Inc., et al., is represented by Daniel D. Doyle, Esq., Nicholas A. Franke, Esq., and David M. Brown, Esq., at Spencer Fane Britt & Browne, LLP, in St. Louis, Missouri, and Frank M. Young, Esq., Thomas E. Reynolds, Esq., R. Scott Williams, Esq., at Haskell Slaughter Young & Rediker, LLC, in Birmingham, Alabama. On Feb. 14, 2006, the Debtors filed their Reorganization Plan & Disclosure Statement. On May 15, 2007, they filed an Amended Reorganization Plan and on July 9, 2007, filed a 2nd Amended Reorganization Plan. The Bankruptcy Court approved the Debtors' amended Disclosure Statement on Oct. 19, 2007. On Oct. 22, 2007, the Debtor re-filed a Consensual Plan & Disclosure Statement and on Nov. 29, 2007, the Court confirmed the Debtors' Consensual Plan. (Solutia Bankruptcy News, Issue No. 117; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * * * As reported in the Troubled Company Reporter on Dec. 10, 2007, Standard & Poor's Ratings Services assigned its 'B+' loan rating to Solutia Inc.'s (D/--/--) proposed $1.2 billion senior secured term loan and a '3' recovery rating, indicating the likelihood of a meaningful (50%-70%) recovery of principal in the event of a payment default. The ratings are based on preliminary terms and conditions. S&P also assigned its 'B-' rating to the company's proposed $400 million unsecured notes. Standard & Poor's expects to assign its 'B+' corporate credit rating to Solutia if the company and its subsidiaries emerge from Chapter 11 bankruptcy proceedings in early 2008 as planned. S&P expect the outlook to be stable. UAL CORP: Resells Previously Issued 4.50% Senior Notes Due 2021 --------------------------------------------------------------- UAL Corp. supplemented the prospectus dated April 23, 2007, relating to the resale by selling security holders of up to US$726,000,000 aggregate principal amount of 4.50% Senior Limited- Subordination Convertible Notes due 2021 and shares of UAL's common stock issuable upon conversion of the notes or in payment of accrued interest on the notes. The Sixth Supplement to the Prospectus provides an updated list of the Selling Securityholders and the total number of UAL shares they beneficially own after the offering: Selling Principal Amount of UAL Shares Shares Owned Securityholder Notes Owned/Offered Offered After Offering -------------- ------------------- ---------- -------------- Argent Classic US$820,000 25,126 - Convertible Arbitrage Fund Ltd. Argentum Multi- 40,000 1,225 - Strategy Fund Ltd - Classic Citigroup Global 5,000,000 153,209 - Markets Inc. Lehman Brothers, Inc. 2,000,000 61,283 - The Drake Offshore 1,000,000 30,641 - Master Fund, Ltd. Xavex Convertible 140,000 4,289 - Arbitrage 10 Fund Total US$9,000,000 275,773 - A full-text copy of the Sixth Supplement to the Prospectus is available for free at http://ResearchArchives.com/t/s?27bc About UAL Corp. Based in Chicago, Illinois, UAL Corporation (NASDAQ: UAUA) -- http://www.united.com/-- is the holding company for United Airlines, Inc. United Airlines is the world's second largest air carrier. The airline flies to Brazil, Korea and Germany. The company filed for chapter 11 protection on Dec. 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, represented the Debtors in their restructuring efforts. Fruman Jacobson, Esq., at Sonnenschein Nath & Rosenthal LLP represented the Official Committee of Unsecured Creditors before the Committee was dissolved when the Debtors emerged from bankruptcy. Judge Wedoff confirmed the Debtors' Second Amended Plan on Jan. 20, 2006. The company emerged from bankruptcy protection on Feb. 1, 2006. (United Airlines Bankruptcy News, Issue No. 152 Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/ or 215/945-7000). * * * Fitch Ratings, on May 2007, affirmed the Issuer Default Ratings of UAL Corp. and its principal operating subsidiary United Airlines Inc. at B-. UNITED AIR: WSJ Says Continental Merger Talks "Have Grown Serious" ------------------------------------------------------------------ United Air Lines could likely end up marrying Continental Airlines in the event of a merger, instead of with Delta Air Lines, various report say. According to The Wall Street Journal, xploratory merger talks between United and Continental have grown serious. Moreover, the reports also note that merger talks between Delta Air and Northwest Airlines Corp. have intensified that could lead to an agreement being announced in the next two weeks. However, key details of the Delta-Northwest deal have yet to be hammered out and negotiations could still fall apart, according to the Wall Street Journal, citing people familiar with the talks. As reported in the Troubled Company Reporter on Jan. 22, 2008, Mr. Anderson obtained approval from Delta's board of directors on Jan. 11, 2007, to engage in formal merger talks with both Northwest and United. WSJ, citing people briefed on the matter, says Delta and United have continued exploratory talks over the past month. Pardus Capital Management, a New York-based hedge fund, and major stakeholder in both United and Delta, had urged both carriers to consolidate, to save money and counter escalating jet-fuel prices which rose by around 53% last year. Delta, the No. 3 U.S. carrier in terms of passenger traffic, has a market value of over $4,100,000,000 -- higher than UAL's $3,800,000,000, and Northwest's $3,700,000,000. United is the second-largest U.S. carrier, while Northwest takes the fifth spot. Continental, in Houston, Texas, is the No. 4 carrier. A Delta merger with either Northwest or United would create the largest passenger airline in the world. Delta-Northwest Merger Reports note the potential dealbreaker in a Delta-Northwest combination was the structure of the new company's management, specifically Northwest CEO Doug Steenland and his management team's role in the new company. The Journal's source says those issues were overcome earlier this week. When companies merge, it's not uncommon for the chief executives to divide the leadership roles, with one taking the CEO post and the other becoming chairman, according to TheStreet.com. In the case of Delta and Northwest, the situation is complicated by the role of Daniel Carp, who became chairman of Delta when the carrier emerged from bankruptcy in May 2007, TheStreet.com says. Since Mr. Carp was brought in to enhance Delta's position, there is a feeling that he should remain because of the progress the company has made, TheStreet.com says, citing a source. TheStreet.com's source says Mr. Steenland has apparently accepted the idea that Mr. Carp and Delta CEO Richard Anderson will retain their current posts in a new company. Mr. Anderson, a former Northwest Airlines chief executive, assumed the Delta CEO post from Gerald Grinstein in August. That decision to hire Mr. Anderson "raised new questions about Delta's future strategy", WSJ reported at that time. Mr. Anderson's appointment raises speculations that with an outsider at the helm, Delta may reverse its "go it alone" strategy and pursue a consolidation with Northwest, United Air Lines or Continental Airlines, Business Week had said. At the time of its bankruptcy, Delta and its unsecured creditors committee fended off a $8,000,000,000 to $10,000,000,000 hostile takeover bid from US Airways Group, Inc. Delta said it was better off as a stand-alone carrier. In January 2007, about two months since US Airways launched its hostile bid, Delta and NWA were reported to have held discussions about a potential merger. While both companies denied the reports, Mr. Grinstein subsequently admitted to sharing information with Northwest. "At the behest of our creditors' committee we recently retained an investment banker to obtain information from Northwest, a far cry from negotiating for a merger with them," Mr. Grinstein told members of the Delta Board Council, according to Reuters. Delta did not discount any possibility of a merger post- bankruptcy. According to a prior WSJ report, the Creditors Committee conditioned its support of Delta's stand-alone Chapter 11 plan of reorganization to a number of concessions, including the appointment of a new board that favors consolidation as a strategic opotion. In October, Mr. Anderson said he saw "obvious benefits" for Delta's employees and shareholders in Delta's merging with another carrier, Meg Marco at The Star Tribune reported. Although Mr. Anderson did not name a potential merger target for Delta at that time, analysts have argued that Northwest would make a good partner because the carriers' routes complement each other, Ms. Marco said. As proposed, the Delta-Northwest deal would be a stock-for-stock transaction, done "at market," meaning at roughly where the two stocks are trading, with little or no premium for either side, WSJ says. The Journal adds that the dynamic has made non-econom