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/raid1/www/Hosts/bankrupt/TCR_Public/051114.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, November 14, 2005, Vol. 9, No. 270 Headlines ACA ABS: Fitch Chips $18 Mil. Pref. Shares' Rating to B from BB ALESTRA S: Fitch Affirms B- Foreign & Local Currency Ratings ALLEGHENY ENERGY: S&P Puts BB Rating on $1 Bil. Sr. Secured Loan ALLIANCE GAMING: Reports Financial Results for FY 2005 4th Quarter AMERIPATH INC: S&P Puts BB- Rating on Proposed $298.5-Mil Sr. Loan ANCHOR GLASS: Court Okays Cohen & Grigsby as Special Counsel ANCHOR GLASS: Wants to Establish Interim Compensation Procedures ASARCO LLC: Encycle's Ch. 7 Trustee Taps Schmidt as Bankr. Counsel ASARCO LLC: Encycle's Ch. 7 Trustee Taps Avalos as Property Broker ATA AIRLINES: Inks Letter of Intent on Boeing Aircraft Lease ATA AIRLINES: Wants New John Denison Employment Pact Approved AUTOPISTA DEL MAYAB: Moody's Reviews Ba1 Currency Debt Rating BATTERY PARK: Moody's Puts $9 Mil. Notes' Caa2 Rating on Watchlist CACHET PRODUCTS: Case Summary & 111 Largest Unsecured Creditors CENTURY FUNDING: Moody's Puts $30 Mil. Notes' Rating on Watchlist CITIGROUP MORTGAGE: Fitch Junks Ratings on Two Certificate Classes COLLINS & AIKMAN: Gets Green Light to Amend $150MM DIP Agreement COLLINS & AIKMAN: Outlines Key Employee Retention Program COLLINS & AIKMAN: Reports Form 10-Q Filing Delay COMCAST HOLDINGS: Moody's Lifts $1.45 Billion Debts' Low-B Ratings CONGOLEUM CORP: Sept. 30 Balance Sheet Upside-Down by $35.6 Mil. CREDIT SUISSE: Fitch Lifts $27.1 Mil. Class H Cert. Rating to B DELTA AIR: Sept. 30 Balance Sheet Upside-Down by $8.463 Billion DENBURY RESOURCES: Files Third Quarter Financials Results DIDIER ROGEZ: Court Okays Charles Logan as Bankruptcy Counsel DIVERSIFIED ASSET: Fitch Holds Junk Rating on $36.9M Class B Notes DYER FABRICS: Bankruptcy Court Dismisses Chapter 11 Case ENRON CORP: Citrus Entities' Claims Bar Date is Jan. 17, 2007 FLYI INC: Nasdaq Says Common Stock Will be Delisted on Nov. 16 GMAC MORTGAGE: Fitch Affirms B Ratings on Three Cert. Classes GREEKTOWN HOLDINGS: Moody's Rates $185 Million Unsec. Notes at B3 ICG COMMS: Response to Southwestern Bell Can be Filed Under Seal IIB LUXEMBOURG: Moody's Rates New Loan Participation Notes at B1 JER CRE: Fitch Puts B Rating on $10 Million Class G Interest Notes JILLIAN'S ENT: Claims Objection Deadline is January 31 JOHNSONDIVERSEY INC: Fitch Affirms BB- Rating on Sr. Sec. Loans LA MUTUELLE: Chapter 15 Petition Summary LA QUINTA: Blackstone Transaction Prompts S&P to Watch Ratings LA QUINTA: Moody's Reviews B1 Pref. Stock Rating & May Downgrade LA RISA: Court Okays Hiring of Buddy Ford as Bankruptcy Counsel LA RISA: U.S. Trustee Meeting With Creditors on November 16 LEAP WIRELESS: Posts $7.6 Million Net Loss in Third Quarter LIBERTY MEDIA: Growth Strategies Spur S&P to Put Ratings on Watch MASSACHUSETTS HEALTH: Fitch Shaves $16.3-Mil Revenue Bonds to BB+ MCLEODUSA INC: Financing Commitment Under DIP Credit Facility MCLEODUSA INC: Court Okays Skadden Arps as Bankruptcy Counsel MCLEODUSA INC: Court Okays Logan & Company as Noticing Agent MERRIL LYNCH: Fitch Puts Low-B Ratings on $11.66-Mil Cert. Classes MICRO COMPONENT: Posts $992,000 Net Loss in Third Quarter MONTPELIER REINSURANCE: Moody's Cuts Pref. Shelf Rating to (P)Ba2 MORGAN STANLEY: S&P Assigns Low-B Ratings to $41.7MM Cert. Classes MORTGAGE CAPITAL: Fitch Lifts Low-B Ratings on $52.2M Class Certs. NETWORK COMMS: Moody's Rates $175 Million Sr. Sub. Notes at B3 NORTHLAKE CDO: Fitch Places BB Rating on $14-Mil Preference Shares NORTH STREET: Fitch Affirms BB+ Rating on $49-Million Income Notes NORTH STREET: Fitch Retains Junk Rating on $36.1-Mil Class E Notes NORTHWEST AIRLINES: Inks Agreement with ATSA to Cut Wages by 9.9% NVE INC: Wants Exclusive Plan Filing Period Extended to Feb. 16 NVE INC: Court Okays Marotta Gund as Panel's Financial Advisor NVE INC: Brown Rudnick Approved as Committee's Counsel ORMET CORP: Union Vows to Prevent Plant Closure O'SULLIVAN INDUSTRIES: Wants Confirmation Hearing Set for Jan. 30 O'SULLIVAN IND: Panel Balks at Adequate Protection for Noteholders O'SULLIVAN IND: Wants to Pay U.K. Creditors' GBP250,000 Claims PHOENIX COMPANIES: Moody's Assigns (P)Ba2 Preferred Stock Rating PINNACLE ENT: S&P Puts BB- Rating on Proposed $750MM Sr. Sec. Loan PIZZA INN: Posts $393,000 Net Loss for First Quarter 2006 REFCO INC: Amends RCM Stipulation with Creditors' Committee REFCO INC: 72 Parties Object to Use of Cash Management System REFCO INC: 72 Parties Oppose Continuing Intercompany Transactions REFCO INC: To Sell Retail FX Assets to Forex Capital Markets REGENCY GAS: Weak Profile Spurs S&P to Affirm B+ Rating RENT-A-CENTER: Weak Operating Trends Prompt S&P's Negative Outlook RIVIERA HOLDINGS: Strategic Plans Prompt S&P to Affirm B Ratings RUFUS INC: Wants Until February 24 to Remove Civil Actions SAINTS VINCENTS: Can Use CCC Cash Collateral Until November 18 SAINT VINCENTS: Has Exclusive Right to File Plan Until March 2 SAINT VINCENTS: Court Allows Creation of New Subsidiary SMURFIT-STONE: Business Plan Prompts S&P to Keep Ratings on Watch SPECTRUM BRANDS: Earnings Guidance Prompts S&P to Watch Ratings TELEPHONE & DATA: Restates Financials Due to Material Weakness TRANSPORTATION LOCATORS: Case Summary & 2 Unsecured Creditors TXU CORP: $2.05 Billion Sec. Notes Now Unsec. After Lien Release UAL CORP: Can Assume Modified PMCC Aircraft Financing Pact UAL CORP: Gets Court Nod to Reject One Boeing Aircraft Lease UNUMPROVIDENT FINANCE: Moody's Rates $400 Mil. Debentures at Ba1 U.S. CELLULAR: Financials Restatement May Cue Technical Default VALENTINE PAPER: Meriturn Partners to Acquire LaSalle Bank Loan VALLEY HEALTH: Improved Operating Income Cues S&P's Stable Outlook VALLEY MEDIA: Hit Entertainment Agrees to Reduce Claim VILLAS AT HACIENDA: Western Plains Wants Claims Bar Date Set WADENA HOUSING: Decline in Debt Coverage Cues S&P to Cut Rating WELLS FARGO: Fitch Junks Ratings on Class B-5 Certificates WESTON NURSERIES: Taps Riemer & Braunstein as Bankruptcy Counsel WESTON NURSERIES: U.S. Trustee Appoints 5-Member Creditors Panel WHEREHOUSE ENTERTAINMENT: Wants Until Nov. 30 to Object to Claims WINN-DIXIE: Delays Filing of FY 2006 First Quarter Financials WINN-DIXIE: Sets November 30 as Special Claims Bar Date WINN-DIXIE: November 23 is Florida Tax Collectors' New Bar Date * S&P Cuts Ratings on Gulf Coast Issuers to Low-B * BOND PRICING: For the week of Nov. 7 - Nov. 11, 2005 ********* ACA ABS: Fitch Chips $18 Mil. Pref. Shares' Rating to B from BB --------------------------------------------------------------- Fitch Ratings affirms three classes of notes issued by ACA ABS 2002-1 Ltd. and downgrades and withdraws the preference shares. These rating actions are effective immediately: -- $226,513,224 class A notes affirmed at 'AAA'; -- $64,000,000 class B notes affirmed at 'AA'; -- $15,920,337 class C notes affirmed at 'BBB'; -- $18,000,000 preferred shares downgraded to 'B' from 'BB'. In addition, Fitch withdraws the preferred shares. ACA 2002-1 is a collateralized debt obligation managed by ACA Management, LLC, which closed July 29, 2002. ACA 2002-1 is currently composed of 63.5% residential mortgage-backed securities, 7.7% consumer asset-backed securities, 11.2% commercial asset-backed securities, 6.2% CDOs, and 11.4 % commercial mortgage backed securities. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. The factors that have contributed to the current rating action on the preference shares are the increase in lower rated collateral and the decline in interest coverage. Since the last rating action in February 2004, the weighted average rating of the portfolio remained stable at 'BBB/BBB-'. However, the percentage of the total collateral that is rated below 'B-' increased to 2.6%, as of the Sept. 30, 2005 trustee report, from 0% at last review. In addition, the class A/B interest coverage test and class C IC test have declined to 127.3% and 118.4%, respectively, from 148.8% and 136.3% as of the last review date. They both remain above the trigger requirements. The weighted average coupon and weighted average spread are at their trigger levels of 7.1% and 1.95%, respectively. Also, there are three assets that Fitch deemed distressed and expects limited principal recoveries. The withdrawal of the rating on the preferred shares is at the request of the preferred shareholder. The ratings of the classes A and B notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class C notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the preference shares notes addresses the likelihood that investors will receive their stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings Web site at http://www.fitchratings.com/ For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004, also available at http://www.fitchratings.com/ ALESTRA S: Fitch Affirms B- Foreign & Local Currency Ratings ------------------------------------------------------------ Fitch Ratings has affirmed Alestra's, S. de R.L. de C.V. foreign and local currency ratings at 'B-' and has revised the Rating Outlook to Negative from Stable. The rating action applies to approximately $387 million of debt, including $304 million senior notes due 2010, $46 million senior notes due 2009, and $37 million senior notes due 2006. The revision of the Rating Outlook to Negative reflects several developing factors that may affect the business risk profile of Alestra over the next 12 to 24 months. These factors include: * increased competition in data, internet, and local services, which while expected to grow, may not fully compensate for eroding long-distance revenues and cash flows; and * the uncertainty of Alestra's long-term ownership structure and the future use of the AT&T brand name, given the potential change in ownership due to the SBC Communications' acquisition of AT&T Corp, which owns 49% of Alestra. Increased competition and/or the loss of the use of the AT&T brand name could weaken Alestra's expected financial performance. The ratings continue to reflect Alestra's business position as: * a niche provider of long-distance, data, and local service catering to the Mexican corporate sector; and * an improved financial profile following the recapitalization and debt restructuring completed during November 2003. The ratings also incorporate the challenges in the long-distance market, and Alestra's high leverage and medium to long-term refinancing concerns. These concerns are mitigated by an increased contribution of the DILS segment in the consolidated revenue mix that has helped stabilize EBITDA and credit protection measures since the restructuring. The company continues to face competitive challenges posed by the leading telecommunications operator, Telefonos de Mexico. Currently, Telmex controls over 90% of the local exchange sector, 70% of the long-distance sector, and has a substantial share of the data sector. Competition in the international and domestic business remains intense as prices continue to trend down. The elimination of the proportionate return rule in August 2004, significantly affected Alestra's incoming international long-distance tariffs and revenues, but this impact has been partially offset by higher long-distance gross margins. For the first six months of 2005, ILD revenues decline 63% vis-a-vis 2004. For this period, total long-distance revenues and EBITDA declined 49% and 19%, respectively, when compared with the same period of 2004, while gross margins have increased to 53% from 34% as the company has concentrated efforts to grow higher margin traffic. Competition is expected to pressure future long-distance margins. The company has achieved stability in consolidated EBITDA and cash flow over the past two years despite eroding long-distance revenues. For the first six months of 2005, total consolidated EBITDA has remained relatively unchanged when compared with the six months ended in 2004, despite the 30% decline in consolidated revenues as growth in DILS revenue has offset for declines experienced in the long-distance segment. Over the medium term, Alestra's main challenge will be to successfully grow its existing DILS operations at a pace that will offset continued pressure in the long-distance segment and maintain EBITDA levels. SBC's pending acquisition of AT&T, once completed, adds uncertainty to Alestra's long-term branding rights as well as ownership structure. Following the AT&T acquisition, SBC will own noncontrolling stakes both in Telmex and Alestra, 21% voting interest in Telmex and 49% voting interest in Alestra. Uncertainty of SBC's ultimate investment strategy in Mexico and the Mexican antitrust authority's view of SBC duel ownership interest in the telecommunications sector adds risk. The possible loss of a strategic minority investor, which provides technological and branding support through the usage of the AT&T brand, could pressure financial performance and credit quality. Alestra senior notes due 2010 are puttable at 101% of face value in an event of change of ownership; SBC's acquisition of AT&T is not expected to trigger this put. Alestra's credit protection measures have remained stable since late 2003. Leverage remains high, with total debt to EBITDA of 4 times while interest coverage ratio of EBITDA to gross interest expense at 2.4x. Total debt as of the second quarter of 2005 amounted to $394 million, composed of $304 million senior notes due 2010 with an amortization schedule with increased principal payments, $37.1 senior notes due 2006, $45.1 million senior notes due 2009, and $7.4 million capital leases; although the company liquidity position is strong and should be able to meet debt maturities over the next few years. The company will likely need to refinance some its maturities in 2009 and 2010. Alestra's business strategy is to focus increasingly on the DILS segments to offset a reduction in the long-distance business. The data services business offers significant long-term growth opportunities due to its low penetration in Mexico. This segment now accounts for around 50% of revenues compared with 14% in 2001 and is expected to continue increasing as a percentage of revenues. Alestra strategy over the past five years has resulted in shifting away its revenue mix from consumer business towards enterprise and international business segments. Alestra began offering local services in the three largest metropolitan areas during 2001 and has since increased coverage to smaller cities. Alestra provides long-distance services in Mexico since 1997. Long distance accounted for 52% of revenues during the first six months of 2005. Alestra also provides data, internet, and local services. Alestra is 49% owned by AT&T and 51% owned by Onexa. The company brands its services under the AT&T name. Alestra's securities are traded in the United States and are registered in the Securities and Exchange Commission. SEC filings on the company are available for free at http://ResearchArchives.com/t/s?2dd ALLEGHENY ENERGY: S&P Puts BB Rating on $1 Bil. Sr. Secured Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned an issue rating of 'BB' and a recovery rating of '1' to Allegheny Energy Supply Co. Inc.'s $1.069 billion senior secured bank loan, which has roughly $1 billion of debt as of Nov. 7, 2005. The '1' recovery rating indicates that holders of the bank loan can expect strong likelihood of full recovery of principal in a default or bankruptcy scenario. The 'BB' rating on the secured debt is currently one notch above AE Supply's 'BB-' issuer credit rating. The outlook is positive. AE Supply's recovery rating is based on a value to debt coverage of 1.3x. The issuer rating on AE Supply reflects the consolidated corporate credit rating of parent Allegheny Energy Inc., which is currently rated 'BB-' and has a positive outlook. "The rating reflects such weaknesses as a heavy debt burden and weak credit metrics, capped tariff rates in Pennsylvania, and the rising prices of coal and emission credits," said Standard & Poor's credit analyst Tobias Hsieh. "The weaknesses are partially mitigated by the fact that regulated subsidiaries generate stable cash flow, and through the company's valuable legacy coal-based generation assets," he continued. The positive outlook reflects the expectation that Allegheny will continue to improve its financial risk profile by paying down debt. ALLIANCE GAMING: Reports Financial Results for FY 2005 4th Quarter ------------------------------------------------------------------ Alliance Gaming Corporation (NYSE: AGI) reported unaudited results for the fourth quarter and fiscal year ended June 30, 2005, as well as unaudited restated results for the comparative prior year periods. The Company reported a fourth quarter loss from continuing operations of $1 million. For fiscal year 2005, the Company reported a loss from continuing operations of $20.3 million. For the comparable prior year quarter ended June 30, 2004, as restated, the Company reported income from continuing operations of $11.7 million. For the fiscal year ended June 30, 2004, as restated, the Company reported income from continuing operations of $39.7 million. "The past 12 months have been both challenging and productive," Chief Executive Officer Richard Haddrill, said. "We revamped our product lines, integrated acquisitions, reorganized management and we believe that we positioned ourselves well for future growth. We have much left to do but we appear to be on the right track as exemplified by our successful showing at the G2E gaming expo in September. We are in the process of finalizing orders with customers for more than 5,000 games related to our 2005 Expo promotions, which is well in excess of our normal level of show- related orders. We expect these orders to be delivered over the next twelve months. Further, despite overall slow market conditions, sales pipelines for both games and systems appear to be strong compared to recent quarters." Technical Default As of June 30, 2005, the Company was in compliance with the financial covenants contained in its bank credit agreement. However, the Company is and will be in technical default until the Company delivers to its lenders the audited financial statements for the fiscal year ended June 30, 2005, which it expects to complete in early December 2005. Restatement of Financial Accounts On Nov. 2, 2005 the Board of Directors of the Company concluded that the previously issued audited financial statements of the Company for the fiscal years ended June 30, 2003 and 2004 and the related auditors' report thereon, and the unaudited quarterly financial information previously reported for the year ended June 30, 2004 and for the quarters in the nine-month period ended March 31, 2005, should no longer be relied upon and will require restatement. The restatement required the Company to correct certain revenue recognition policies, which generally had the effect of deferring revenue and earnings to later periods than previously reported. The Company also restated its effective tax rate for 2005 to 24%, to reflect tax reserves applied to certain tax credits and to reflect a deferred tax liability related to the Company's consolidation of its European operations. Headquartered in Las Vegas, Nevada, Alliance Gaming Corporation -- http://www.alliancegaming.com/-- is engaged primarily in the design, manufacture and distribution of gaming devices and systems worldwide. The company also owns and operates Rainbow Casino in Vicksburg, Mississippi. * * * As reported in the Troubled Company Reporter on Nov. 8, 2005, Moody's Investors Service reported that these ratings remain on review for possible downgrade: -- $75 million senior secured revolving credit facility due 2008, to B1 from Ba3; -- $350 million senior secured term loan due 2009, to B1 from Ba3; and -- Corporate family rating, to B1 from Ba3 AMERIPATH INC: S&P Puts BB- Rating on Proposed $298.5-Mil Sr. Loan ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on AmeriPath Inc., including 'B+' corporate credit rating, and removed them from CreditWatch, where they were placed with negative implications on Sept. 30, 2005. The rating outlook is negative. The affirmation and removal from CreditWatch reflects Standard & Poor's belief that the company's well-entrenched anatomic pathology business will generate cash flows significant enough to meaningfully reduce debt -- incurred from the acquisition of esoteric laboratory services provider Specialty Laboratories Inc. -- over the next 12-24 months. However, the negative outlook reflects management's challenge in integrating a relatively large business that has been unprofitable in recent years. At the same time, AmeriPath's proposed $298.5 million senior secured credit facility was rated 'BB-' with a recovery rating of '1', indicating the high expectation for full recovery of principal in the event of a payment default. Proceeds will be used to partially fund the $326 million acquisition of Specialty and to refinance AmeriPath's existing facility. Standard & Poor's expects lease-adjusted debt to EBITDA to be approximately 7.5x at the close of the transaction. "The ratings reflect concerns over AmeriPath's aggressive growth through acquisitions in the U.S. market for anatomic pathology services," said Standard & Poor's credit analyst Jordan Grant. "This niche segment of the diagnostic services market is subject to Medicare reimbursement risks and competitive uncertainties. The ratings also reflect management's challenge to improve performance while being saddled with LBO- and acquisition-related debt." ANCHOR GLASS: Court Okays Cohen & Grigsby as Special Counsel ------------------------------------------------------------ The U.S. Bankruptcy Court for the Middle District of Florida allowed Anchor Glass Container Corporation to retain Cohen & Grigsby PC as its special counsel. Cohen & Grigsby will represent the Debtor in the litigation commenced by GGC, LLC -- also known as Glenshaw Glass Company -- in the United States Bankruptcy Court for the Western District of Pennsylvania. As reported in the Troubled Company Reporter on Oct. 17, 2005, the Debtor related that Cohen & Grigsby is particularly well suited for the type of representation required by the Debtor. Cohen & Grigsby will be paid in accordance with its ordinary and customary hourly rates for the legal services rendered. The firm will also be reimbursed for actual and necessary out-of-pocket expenses. Anchor did not disclose the firm's hourly billing rates. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Wants to Establish Interim Compensation Procedures ---------------------------------------------------------------- Anchor Glass Container Corporation asks the U.S. Bankruptcy Court for the Middle District of Florida to establish uniform procedures for interim compensation and reimbursement of professionals retained in its Chapter 11 case. Anchor Glass proposes to pay the Professionals monthly, upon submission of proper invoices for fees and costs, up to a maximum of 80% of the budgeted amount of fees billed for services rendered, and 100% of the budgeted costs for which reimbursement is sought by each Professional. The partial payments and any amounts held back by Anchor Glass will remain subject to the Court's review and approval upon submission of proper applications by the Professionals. The Professionals will be required to file applications for allowance of compensation and reimbursement of expenses pursuant to Sections 330 and 331, Rule 2016 of the Federal Rules of Bankruptcy Procedure, and Local Rule 2016-1 of the U.S. Bankruptcy Court for the Middle District of Florida. Robert A. Soriano, Esq., at Carlton Fields PA, in Tampa, Florida, contends that the suggested procedure will enable the Debtor, the Committee and the Note Purchasers to monitor the costs of administration, and allow the Debtor to maintain a level cash flow and implement efficient cash management procedures. The procedures will also allow the Court, the U.S. Trustee, and the key interested parties to ensure the reasonableness and necessity of the compensation and reimbursement sought pursuant to the procedures. Mr. Soriano also points out that the procedures will assist the Professionals in their work on the Debtor's Chapter 11 case without burdening them and their firms and without having the Professionals fund the reorganization proceeding. U.S. Trustee Objects Felicia S. Turner, United States Trustee for Region 21, asks the Court to deny the Debtor's Motion. The U.S. Trustee contends that the professional fees should not be paid before the application, notice and hearing as required by Sections 330(a)(1) and 331 of the Bankruptcy Code. Section 331 does not authorize payment of a professional's compensation without the Court's review. Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: Encycle's Ch. 7 Trustee Taps Schmidt as Bankr. Counsel ------------------------------------------------------------------ Michael Boudloche, the Chapter 7 Trustee for Encycle/Texas, Inc., asks permission from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to retain the Law Offices of Michael B. Schmidt as his counsel. Mr. Schmidt and his Firm will: a) assist the chapter 7 Trustee in negotiating and consummating non-routine sales of the assets of the estate, including sales free and clear of liens, claims and encumbrances and to institute any necessary related proceedings; b) institute non-routine objections to proofs of claim asserted against the Estate and prosecute all contested objections to proofs of claim asserted against the Estate. c) institute and prosecute proceedings for contempt and extraordinary relief; d) file pleadings with the Court and represent the Estate's interest with regard to any adversary or contested matters pending before the Court; e) act as attorney for the Estate in any litigation, as requested by the trustee; f) investigate executory contract relationships of the Debtor and to institute any necessary proceedings to obtain authority to assume or reject such executory contracts; g) analyze, institute and prosecute actions regarding insider transactions and third party dealings. h) analyze, institute and prosecute actions regarding avoidance of setoffs and avoidable transfers i) analyze, institute and prosecute actions regarding the piercing of the corporate veil. j) analyze business associations of the Debtors to determine the interest of the estate and to institute and prosecute actions to effect the recovery of notes receivable. l) analyze, institute and prosecute actions regarding denials of discharge; m) analyze, institute and prosecute actions regarding objections to exemptions; n) prepare for, institute and prosecute an examination under Bankruptcy Rule 2004 and to institute and prosecute Motions to Compel Attendance and Removal of Persons for Examination under Bankruptcy Rule 2005; and o) assist in the resolution of title problems associated with the Estate's property. The standard hourly rates of the Firm's professionals are: Professional Hourly Rate ----------- ----------- Michael B. Schmidt, Esq. $300 John Vardeman, Esq., $275 Legal Assistant $90 The Chapter 7 Trustee assures the Bankruptcy Court that the Firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation. ASARCO LLC: Encycle's Ch. 7 Trustee Taps Avalos as Property Broker ------------------------------------------------------------------ Michael Boudloche, the Chapter 7 Trustee for Encycle/Texas, Inc., asks permission from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to employ Armando Avalos Realty, Inc., as his real estate broker. Armando Avalos will assist the Chapter 7 Trustee in managing the Debtor's real property located in Corpus Christi, Texas. The chapter 7 Trustee also wants to employ the brokerage firm for any other real estate services not directly involving the real estate and not normally requested of a listing agent, including: a) reviewing documents pertaining to the property; b) collecting documents; and c) providing related testimony concerning valuations in court appearances. Mr. Avalos bills at $100 per hour. The Chapter 7 Trustee assures the Bankruptcy Court that Armando Avalos does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as that term is defined in section 101(14) of the Bankruptcy Code. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation. ATA AIRLINES: Inks Letter of Intent on Boeing Aircraft Lease ------------------------------------------------------------ Jeffrey C. Nelson, Esq., at Baker & Daniels, in Indianapolis, Indiana, tells the U.S. Bankruptcy Court for the Southern District of Indiana that ATA Airlines, Inc., and Automatic L.L.C. have entered into a Letter of Intent, dated Oct. 27, 2005, setting the material terms and conditions of the definitive agreement for the lease by ATA from Automatic of one Boeing B767-328ER aircraft, equipped with two General Electric CF6-80C2B6F engines. ATA Airlines has identified the Aircraft as being desirable to effect the proposed reconfiguration of its fleet. The Aircraft is necessary for the Debtor's future operations and will replace aircraft being removed from its fleet due to unfavorable leasing conditions and rates. ATA Airlines has served copies of the LOI to the Official Committee of Unsecured Creditors, Southwest Airlines Co., and the Air Transportation Stabilization Board for comment. The terms of the LOI and the contemplated transactions are similar to the Court-approved conditions for the entry of leases to Boeing 767-300 Aircraft. However, out of an abundance of caution, ATA Airlines asks the Court to approve the LOI pursuant to Section 363 of the Bankruptcy Code. ATA Airlines also seeks the Court's consent to file the LOI under seal. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Wants New John Denison Employment Pact Approved ------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Apr. 5, 2005, ATA Airlines, Inc., and John Denison executed an employment agreement on March 4, 2005. Pursuant to the Agreement, Mr. Denison will serve as ATA Airlines' Chief Executive Officer and continue to serve as the Co-Chief Restructuring Officer for ATA Airlines and ATA Holdings Corp. Mr. Denison has served as Co-Restructuring Officer since January 20, 2005. New Employment Agreement Signed ATA Airlines, Inc., and ATA Holdings Corp. ask the U.S. Bankruptcy Court for the Southern District of Indiana to: (i) determine that their execution of an Employment Agreement, dated as of Sept. 1, 2005, with John G. Denison is an ordinary course transaction; or, in the alternative (ii) approve the execution of the Employment Agreement, nunc pro tunc to Sept. 1, 2005. Since March 4, 2005, Mr. Denison has served as president and chief executive officer of ATA Airlines. Under the terms of the September 1 Agreement, Mr. Denison agrees to serve as president and chief executive officer to both ATA Airlines and ATA Holdings effective Sept. 1, 2005, until Dec. 31, 2007. Mr. Denison will receive compensation under these terms: (i) His base salary will be the nominal amount of $350,000 annually; provided however, consistent with salary reductions taken by its other executives, ATA will pay Mr. Denison a reduced base salary of $280,000 unless the parties agree to a different amount; (ii) He will be eligible to earn annual incentive bonus compensation, to be determined at the discretion of the Board of Directors of New ATA. The annual incentive compensation will target 50% to 125% of Mr. Denison's base salary; and (iii) He will be eligible to equity participation, the scope of which will be determined by mutual agreement at a future date closer to the actual date of the confirmation of a plan of reorganization and the emergence of ATA from bankruptcy. Terry E. Hall, Esq., at Baker & Daniels, in Indianapolis, Indiana, attests that Mr. Denison's employment satisfies the requirements of Section 327 of the Bankruptcy Code. Excluding Mr. Denison's recent engagement as the Debtors' co-chief restructuring officer, and the president and CEO of ATA, Mr. Denison is a "disinterested person." Mr. Denison also does not hold any interest adverse to the Debtors' estates. The Debtors believe Mr. Denison's leadership as president and CEO of ATA Holdings and ATA Airlines will be instrumental in their successful emergence from Chapter 11. Mr. Denison was employed by Southwest Airlines Co. from 1986 through 2001. During his time with Southwest, Mr. Denison served in several senior management positions, including serving as Southwest's chief financial officer. The Debtors are confident that Mr. Denison's past successes and experience in the airline industry are excellent indicators of the value Mr. Denison will add to the Debtors as president and CEO of ATA. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000) AUTOPISTA DEL MAYAB: Moody's Reviews Ba1 Currency Debt Rating ------------------------------------------------------------- Moody's Investors Service placed the Baa3 senior unsecured and Ba1 subordinated global local currency debt ratings of Autopista del Mayab under review for possible downgrade. Other ratings placed under review include ADM's Aa2.mx senior unsecured national scale rating and ADM's Aa3.mx subordinated national scale rating. The rating action reflects Moody's concern that the toll road may experience a significant and perhaps prolonged decrease in traffic due to the reduction of tourism-related traffic associated with Cancun and Cozumel. Additionally, Moody's notes that a section of the road experienced some flooding, which has impeded the flow of automobiles and will require certain repairs. Although the hotel industry in the region has endured a number of hurricanes in the past without prolonged negative effects, the damage caused by hurricane Wilma was particularly severe in the hotel and beach zone, causing a general shut down of the industry until the hotels and surrounding infrastructure are repaired. While government and industry officials have indicated that repairs to the hotel area and surrounding communities are expected to be completed by year-end and the federal government has pledged significant support to help restore the region, it is possible that the rebuilding effort could take considerably longer to complete or that tourism could take longer than expected to recover. Moody's review will consider the estimated cost of the closure and repair of ADM due to flooding as well as the toll road's ability to withstand a significant or prolonged reduction in traffic. Headquartered in Merida, Yucatan, Autopista del Mayab is a 245.5 km. toll road linking the cities of Canc�n and Kantunil. The road is owned by Consorcio del Mayab, S.A. de C.V., whose principal members include: * Canteras Peninsulares, S.A. de C.V.; * Constructora Mool, S.A. de C.V.; * Inmobiliaria Sucasa del Sureste, S.A. de C.V.; and * C.L. Construcciones, S. de R.L. de C.V. BATTERY PARK: Moody's Puts $9 Mil. Notes' Caa2 Rating on Watchlist ------------------------------------------------------------------ Moody's Investors Service upgraded its rating of these classes of Notes issued by Battery Park CDO Limited, a collateralized debt obligation issuance: 1) $161,000,000 Class I Senior Secured Floating Rate Notes from Aa2 on watch for possible upgrade to Aaa no longer on watch for possible upgrade. 2) $15,000,000 Class II-A Senior Secured Floating Rate Notes from Baa3 on watch for possible upgrade to A3 remaining on watch for possible upgrade. 3) $21,000,000 Class II-B Senior Secured Fixed Rate Notes from Baa3 on watch for possible upgrade to A3 remaining on watch for possible upgrade. Moody's noted that the transaction, which closed in December of 1999, has experienced improvement in overcollateralization due to amortization of the senior CDO liabilities. The rating of the Class I Notes, Class II-A Notes, and Class III-A Notes were placed on the Moody's watchlist for possible upgrade on Sept. 16, 2005. Moody's stated that the ratings assigned to the Class I Notes, Class II-A Notes and to the Class II-B Notes are no longer consistent with the credit risk posed to investors. Moody's also announced that as part of the rating monitoring process it has placed these Class of Notes issued by Battery Park on the Moody's watchlist for possible upgrade. * $9,000,000 Class III Mezzanine Secured Fixed Rate Notes currently rated Caa2. Rating Action: Upgrade Issuer: Battery Park CDO Limited CACHET PRODUCTS: Case Summary & 111 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Cachet Products, Inc. 30 Sherwood Lane P.O. Box 1048 Fairfield, New Jersey 07004 Bankruptcy Case No.: 05-60311 Type of Business: The Debtor manufactures and sells sketchbooks, portfolios, journals and scrapbooks. Chapter 11 Petition Date: November 11, 2005 Court: District of New Jersey (Newark) Judge: Novalyn L. Winfield Debtor's Counsel: Melinda D. Middlebrooks, Esq. Middlebrooks Shapiro Nachbar & Pflumm 140 Eagle Rock Avenue Roseland, New Jersey 07068-0609 Tel: (973) 228-1616 Total Assets: $1,732,029 Total Debts: $2,578,818 Debtor's 111 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Michael Kalman $1,056,664 30 Sherwood Lane Fairfield, NJ 07004 Linda Rosier $507,500 30 Sherwood Lane Fairfield, NJ 07004 Rose Printing Co., Inc. $192,833 D860394 Orlando, FL 32886 Main Choice International Development $69,944 Graphic Paper New York, Inc. $68,244 Millennium Graphic Partners $66,697 Sampro Inc. $47,663 Courier Companies, Inc. $42,431 Robert Rosier $34,000 Robert Wilson Paper Corp. $30,520 Zebra International Production $27,823 Reynolds Book Bindery $27,263 Anne McGilvray & Company $24,219 Hudson City Paper $22,388 Tulfra Fairfield 1 LLC $21,537 Lamitech - Daving, Inc. $17,699 Purchase Power $15,290 L.B. Bindery $13,471 United Healthcare $12,814 New England Motor Freight $12,751 Arrow Paper Co., Inc. $12,297 Metlife SBC $11,957 Grimstad Comerford Group $11,900 Spiral Binding Company, Inc. $10,980 James Burn International $10,527 Chickman Associates $10,024 Merrimac Paper Corporation $9,831 Atlantic Label & Printing $9,234 Climax Manufacturing Co. $8,972 Lake Book Manufacturing, Inc. $8,843 Rock-Tenn Company $7,450 Kappa Graphic Board USA $7,227 Gross Brothers Printing Co. $7,050 Kay Printing $6,887 Parson Weeks Publisher Services $6,771 Cohen Friedman Dorman Leen $6,721 Four Star Color $6,700 Hercules $6,147 Ward Trucking $5,627 Greenberg Traurig, LLP $5,495 Central Transportation International $5,190 Fairfield Graphics, Inc. $4,728 Delta Dental $4,680 Fedex $4,660 Falcon Supply Company $4,610 Phoenix Color Corp. $3,923 Lineco Inc. $3,887 Bacon & Graham, Inc. $3,558 Northern Adhesives $3,532 Allied Office Products $3,211 Home Depot Credit Services $2,996 Unishippers $2,596 Queen City Paper $2,540 Cover Material Sales, Inc. $2,476 Linda Rosier $2,121 B&C Industries $2,093 Sunoco $1,928 United Parcel Service $1,558 Pitney Bowes $1,520 Impact Images, Inc. $1,409 Lauren's Inc. $1,340 G.A.R. Inc. $1,335 The Barbara Golden Collection $1,325 The National Art Materials Trade $1,325 Association Staples Business Advantage $1,220 Public Service Electric Gas $1,014 Mc Garr & Associates $968 Andover Fabrics $960 Staples Credit Plan $903 Pitt Ohio Express $884 Con-Way Transportation Service $871 Accurate Office Supply $857 L.D. Davis Industries $829 Fred Hill Inc. $756 Reliable Office Supplies $754 Clipper Express Company $680 McShane Enterprises, Inc. $655 FLT Transportation Brokers $618 Leslie Waterworks $582 Waste Management $573 Malcolm Turk $555 BMW Financial Services $540 De Lage Landen Financial Service $538 Meyers Sales $502 Flemming Chalef $495 Saab Financial Services Corp. $484 R & L Carriers $473 Service Plus Inc. $400 Nacs-Camex $390 American Vending Co. $361 Kamp Fire Equipment $346 Rapidforms, Inc. $327 Friis & Company $318 New Jersey Business & Industry $300 Cintas Fire Protection $296 Uline $283 Ed Zacharski $276 Stacey & Associates $269 Ceridian $224 Pitney Bowes, Inc. $182 I. Sales Co. $116 Michael Miller Fabrics $97 Bill Books $91 Dell Financial Services $71 David Thompson $60 Crown Roll Leaf, Inc. $57 C2C Corp. $46 Poland Spring Water $39 Milberg Marketing Inc. $29 Booklink Inc. $24 Kleinberg, Kaplan, Wolff Unknown CENTURY FUNDING: Moody's Puts $30 Mil. Notes' Rating on Watchlist ----------------------------------------------------------------- Moody's Investors Service, as part of the rating monitoring process, placed these Class of Notes issued by Century Funding, Ltd., a collateralized debt obligation issuance, on the Moody's Watchlist for possible downgrade: * $30,500,000 Class B Floating Rate Notes due 2011 (the "Class B Notes") rated "Caa2". Moody's noted that the tranche has been deferring interest payments and the probability of expected loss has increased. Moody's stated that the placement on the Moody's watchlist reflects Moody's opinion that the credit quality of the Class B Notes may be decreasing. Rating Action: Placement on the Moody's Watchlist for possible downgrade Issuer: Century Funding, Ltd. CITIGROUP MORTGAGE: Fitch Junks Ratings on Two Certificate Classes ------------------------------------------------------------------ Fitch Ratings has taken rating actions on these Citigroup Mortgage Loan Trust Issues: Series 2003-1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'; -- Class WB-1 affirmed at 'AA'; -- Class WB-2 affirmed at 'A'; -- Class WB-3 downgraded to 'BB-'from 'BBB'; -- Class WB-4 downgraded to 'CCC' from 'BB-'; -- Class WB-5 downgraded to 'CC' from 'CCC'. The mortgage loans consist of fixed-rate mortgages extended to prime borrowers and are secured by first and second liens, primarily on one- to four-family residential properties. As of the October 2005 distribution date, the transaction is seasoned 23 months and the pool factor is approximately 62%. The affirmations reflect a stable relationship between credit enhancement and future loss expectations and affect approximately $136 million of outstanding certificates. The downgrades on the WB-3, WB-4, and WB-5 certificates reflect deterioration between credit enhancement and expected losses. Given the high outstanding delinquencies for Pool W, Fitch does not feel that the protection offered by the subordination of the WB-6 bond is adequate to prevent a principal write-down of the WB- 5 certificate from occurring. Additionally, losses could potentially exceed the protection offered by both the WB-5 and WB-4 bonds, eventually causing a principal write-down on the WB-3 bond. Fitch will continue to closely monitor these transactions. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings Website at http://www.fitchratings.com/ COLLINS & AIKMAN: Gets Green Light to Amend $150MM DIP Agreement ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Michigan authorized Collins & Aikman Corporation and its debtor-affiliates to enter into an amendment to their $150 million DIP credit agreement arranged by JPMorgan Chase & Co. The Debtors sought to modify the DIP agreement in order to make critical capital expenditures that would not be permitted under the current terms of the DIP Credit Agreement. As reported in the Troubled Company Reporter on Nov. 3, 20005, the Debtor told the Bankruptcy Court that certain aspects of the DIP Credit Agreement have to be modified to accommodate the provisions embodied in the certain of the Debtors' agreements with its major customers. In addition, the Debtors said that amendment is necessary to cure certain defaults and events of default, and modify certain comments to be consistent with the Debtors' ongoing business operations. The material terms of the Amendment include: A. Modifications to the Reporting Covenants The Amendment modifies several reporting requirements, including reporting of weekly cash receipts and cash disbursements and changing the due date for the Debtors to provide a detailed consolidated annual budget and other periodic reports. B. Modifications to the Negative Covenants (1) Carve-Out Account The Amendment modifies the DIP Credit Agreement to continue the requirement that the Debtors deposit into a "Carve-Out Account" amounts allocated in the Cash Budget for payment of professional fees. (2) Liens The Amendment modifies the negative covenant restricting the incurrence of liens to allow the Debtors to incur Liens in respect of certain insurance premium financing. (3) Indebtedness The Amendment modifies the negative covenant restricting the incurrence of indebtedness to allow for expanded flexibility in the incurrence of intercompany indebtedness and indebtedness from the financing of insurance premiums to accommodate the Debtors' operational needs. (4) Capital Expenditures The Amendment modifies the limitation on Capital Expenditures to accommodate the Customer Pricing Relief and allow for non-Customer funded capital expenditures. In addition, the Amendment includes a waiver by the Lenders of any Default or Event of Default arising out of non-Customer funded capital expenditures made prior to the Effective Date of the Amendment. (5) Guarantees The Amendment increases the applicable limitation on grants by the Debtors of guarantees and other liabilities to permit additional flexibility to accommodate the Debtors' operational requirements. (6) Cash Variance The Amendment modifies the negative covenant restricting changes in cash receipts and disbursements to address changed circumstances as a result of the expiration of the Customer Financing and the Debtors' ongoing operational requirements. C. Other Modifications (1) Borrowing Base To accommodate the Debtors' expected operational needs, the Amendment includes various limitations on the effectiveness of the Borrowing Base. (2) Issuance of Letters of Credit To facilitate the issuance of letters of credit, the Amendment provides that letters of credit may be issued in an amount equal to the amount that the Tranche A Loan is repaid without regard to whether the Total Commitment Usage exceeds the Borrowing Base. (3) Prepayment Provisions The Amendment modifies the mandatory prepayment provisions to permit, in certain circumstances, the cash collateralization of the Tranche B Loan rather than the mandatory prepayment of that Loan. (4) Update to Events of Default The Amendment includes a revision to the Events of Default to allow the Debtors a grace period in the event that the Customers do not timely make surcharge payments in accordance with the Customer Pricing Relief. (5) Customer Pricing Relief The Amendment includes certain modifications intended to update the DIP Credit Agreement to incorporate the Customer Pricing Relief approved by the Court on October 14, 2005. (6) Conditions to Effectiveness The Amendment includes certain conditions to effectiveness of the Amendment, including: (a) the affirmation approval of Required Lenders; and (b) payment: -- of an amendment fee to each Lender that executes the Amendment by October 28, 2005, a fee equal to 0.125% of the outstanding principal amount of the Lender's Tranche B Loans and Tranche A Commitment; and -- to the Agent of an arrangement fee, in the amount disclosed to the Official Committee of Unsecured Creditors, pursuant to a side letter agreement to be dated as of October 28, 2005. The Debtors asserted that failure to receive authority to enter into the Amendment and pay the Amendment Fee will preclude the Debtors from obtaining the substantial financial benefits, protections, consents and waivers provided in the Amendment. Accordingly, the Bankruptcy Court permits the Debtors to pay the Amendment Fee in connection with the implementation of the Amendment to the DIP Credit Agreement. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Outlines Key Employee Retention Program --------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Eastern District of Michigan to implement a Key Employee Retention Program. Marc J. Carmel, Esq., at Kirkland & Ellis LLP, in New York, tells Judge Rhodes that the Debtors' well-publicized economic problems and subsequent Chapter 11 filing have created a climate of instability for employees. A significant number of employees in positions critical to the Debtors' continuing businesses have been actively recruited by companies, some successfully. Because of these recruitment efforts and certain other factors, Mr. Carmel relates that the Debtors have had great difficulty retaining employees who occupy critical roles and whose skills and competencies are essential to a successful reorganization. According to Mr. Carmel, preserving and enhancing the value of the Debtors' estates depends on the retention of their Key Employees. In the two years prior to the Petition Date, the Debtors had been unable to provide the Key Employees with meaningful raises or bonuses. This, in combination with the financial uncertainty of the Debtors' businesses, created significant turnover and retention problems. Mr. Carmel relates that in 2005 alone, the Debtors have lost more than 62 employees from the Soft Trim business unit, 81 employees from the plastics business unit, 100 employees from the engineering and design function and an additional 55 employees from the balance of the corporate staff. The total reduction in annual salary resulting from unreplaced turnover is estimated at $26,000,000. KERP The Debtors have developed a key employee retention program to stem attrition and retain the valuable knowledge and experience of the remaining officers and key employees, and assist the Debtors with retaining certain employees during plant consolidations. The KERP contains provisions to authorize the Debtors to provide limited severance and retention bonuses to salaried and hourly employees in connection with plant closings. The Debtors believe that providing these benefits will induce employees to finish their work in connection with plant closings so that the value of the Debtors' estates may be maximized through an orderly transition of plant work. At the same time, the Debtors have kept in mind the financial constraints under which the Debtors operate. Therefore, Mr. Carmel assures that Court that the KERP has been carefully structured to avoid unnecessary or excessive incentives and has been tailored to provide bonuses only to those Key Employees whom senior management truly believes are critical to the success of the Debtors' Chapter 11 cases. In developing the KERP, the Debtors and Towers, Perrin, Foster & Crosby analyzed the need for and merits of the program. The Debtors and Towers Perrin believe that the KERP is comparable in design and scope to the programs implemented in those cases. The incentives provided by the KERP are comparable to those implemented in other large Chapter 11 cases and ultimately are less costly than the burdens that the loss of the Key Employees would entail, Mr. Carmel says. The KERP consists of the Retention Plan and the Success Sharing Plan. These plans are intended to operate in conjunction with each other. However, only the most senior Key Employees are eligible for the Success Sharing Plan, and a Success Sharing Plan participant cannot be a Retention Plan participant and vice versa. The Success Sharing Plan was developed in conjunction with the Official Committee of Unsecured Creditors and the Debtors' prepetition senior secured lenders. Retention Plan The Retention Plan provides cash bonus payments to encourage Key Employees to continue their employment with the Debtors following the filing of a Chapter 11 plan or sale transactions and through its effectuation. The Debtors have identified 220 Key Employees who would be eligible to participate in the Retention Plan. The Debtors estimate that the total Retention Plan cost will not exceed $9,500,000. The Retention Plan would establish a three-tier payment structure: Tier A -- Key senior staff and technical contributors who are entitled to a retention payment of 50% of base salary; Tier B -- Other Key Employees identified by senior management who receive a retention payment of 35% of base salary; and Tier C -- Critical engineering and design technical employees who are eligible for a retention payment of 25% of base salary. Retention payments will be paid in three separate installments: (a) 25% will be paid no later than December 15, 2005; (b) 25% will be paid on April 30, 2006; and (c) 50% will be paid on the effective date of an approved Chapter 11 plan or effectuation of a sale transactions involving substantially all of the Debtors' assets. If any participant is a member of an operating unit that is sold prior to confirmation of a plan of reorganization or sale of substantially all of the Debtors' assets, the remaining unpaid benefits due to the affected employee under the Retention Plan would be accelerated to be paid no later than the closing date of the sale of the operating unit. The Retention Plan would also establish a $250,000 discretionary pool for Key Employees not covered by the Retention Program. These bonuses generally would be less than those allocated to covered Key Employees -- about 10 to 20% of base salary. This discretionary pool is a necessary component of the KERP because it allows the Debtors to address retention needs that arise after implementation of the KERP. The Chief Executive Officer would determine participation in the discretionary pool, and no employee that receives funds from the discretionary pool could participate in other aspects of the Retention Plan. The Retention Plan also contains a separate allocation for employees who are affected by plant closings. Specifically, for any plant that is closed, the Debtors would be authorized to award any: (a) salaried employee employed at the closing plant a severance benefit of up to 12 weeks of base salary and continued medical benefits; and (b) hourly non-union employee employed at the closing plant up to two weeks of severance pay and up to 12 weeks of continued medical benefits. Participants in the plant-closing portion of the Retention Plan are not eligible for participation in the other provisions of the Retention Plan. Any Retention Plan participant who voluntarily leaves before a given payment is due would forfeit the remainder of the Retention Plan payments otherwise due. However, participants terminated without cause would be eligible for any remaining awards due to under the Retention Plan. All Retention Plan awards would be paid in cash. Retention Plan benefits would not be in lieu of other compensation or employee benefits otherwise due to the employee. Success Sharing Plan In addition to the Retention Plan, the Debtors have developed an incentive compensation pool program. At most 40 employees, excluding the Chief Executive Officer, will participate in the Success Sharing Plan. The Success Sharing Plan consists of three primary components: (a) an annual bonus program; (b) payment of up to 12 months of base severance pay; and (c) a Success Sharing pool bonus payable upon confirmation of a plan or sales of substantially all of the Debtors' assets. Incentives under the Success Sharing Plan pool would vary according to either post-reorganization enterprise value or aggregate transaction value in the event of the sale of substantially all of the Debtors' assets: -- Minimum funding for the Success Sharing Plan pool is $5,000,000, which increases based on the aggregate enterprise or transaction value of $1,200,000,000. This pool increases based on the aggregate enterprise or transaction value. -- Where this value is $1,200,000,000 to $1,500,000,000, there is a 1.5% increase for each $1,000,000 of enterprise value. From $1,500,000,000 to $2,000,000,000, a 3.1% incremental increase for each additional $1,000,000 in enterprise/ transaction value is funded. -- For values above $2,000,000,000, there is a 4% increase for each incremental $1,000,000 of enterprise/transaction value. -- The maximum possible funding is capped at $35,000,000. The Success Sharing Plan further provides that: a. Each Success Sharing Plan participant would be entitled to an annual bonus of up to 50% of his base salary, paid semi-annually, guaranteed for the first year following Court approval of the KERP and thereafter based on achievement of EBITDA levels as agreed by the Debtors, the Committee and the steering committee for the Debtors' senior, secured prepetition lenders. b. Each Success Sharing Plan participant would be entitled to severance compensation of twelve-months of his base salary. c. The Chief Executive Officer is entitled to 20% of the Success Sharing Plan pool. d. Other top executives are entitled to up to 50% of the Success Sharing Plan pool, subject to the approval of the Board of Directors with a cap per individual of 10% of the total Success Sharing Plan pool. e. Selected members of the senior management team, up to 30 individuals, are entitled to the remainder of the pool, subject to the approval of the Board of Directors and others, with a cap per individual of 2% of the total pool. Mr. Carmel explains that to be eligible for a payout under the Success Sharing Plan pool, employees would need to be employed by the Debtors 60 days after the effective date of the Chapter 11 plan or sale of substantially all of the Debtors' assets. However, in the event an employee was terminated without cause, he would still be entitled to his payment under the Success Sharing Plan pool, unless his particular employment agreement contains a different arrangement. Any Success Sharing Plan participant who voluntarily leaves before a given payment is due would forfeit the remainder of the Success Sharing Plan payments otherwise due. Payments under the Success Sharing Plan would not be in lieu of other compensation or benefits otherwise due to the employee. In the event of a sale, joint venture or merger of all or substantially all of the Debtors' assets, 100% of the bonus pool would be funded into a segregated trust account and would be payable in kind and in the same percentage of consideration as received by the Debtors in the transaction. The payout would be made after Court approval and on the earlier of the effective date of termination of the employee and 30 days after the effective date of the Chapter 11 plan. In the event of a reorganization of a substantial portion of the Debtors' businesses, 50% of the bonus pool would be payable in cash 60 days after the effective date of the Chapter 11 plan and 50% would be distributed in the form of common stock of the reorganized Debtors with a two-year vesting period. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) COLLINS & AIKMAN: Reports Form 10-Q Filing Delay ------------------------------------------------ Stacy Fox, executive vice president, chief administrative officer & general counsel of Collins & Aikman Corp., disclosed in a regulatory filing with the Securities and Exchange Commission that the Company is unable to file its Form 10-Q with financial statements for the fiscal quarter ended Sept. 30, 2005, on time. Ms. Fox explained that the Company's independent auditors, KPMG LLP, are unable to complete their audit of the 2004 financial statements and review of subsequent interim financial statements because: (i) of the ongoing independent investigation of controls over financial reporting and review of certain accounting issues that are expected to require a restatement of certain previously reported periods; and (ii) the Company filed for Chapter 11 bankruptcy. Collins & Aikman also has not filed its Form 10-Q for the fiscal quarters ended March 31, 2005, and June 30, 2005, and Form 10-K for the fiscal year ended Dec. 31, 2004. Collins & Aikman anticipates changes in its results of operations based on the impact of the accounting issues, Ms. Fox said. In addition, and in light of its bankruptcy filing, the Company also anticipates that there will be a significant change in the results of operations from the corresponding period for the prior year, but is unable to currently assess the amount of the change as a result of the ongoing restructuring process, according to Ms. Fox. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000). COMCAST HOLDINGS: Moody's Lifts $1.45 Billion Debts' Low-B Ratings ------------------------------------------------------------------ Moody's Investors Service upgraded to Baa3 from Ba1 two subordinated debt issue ratings of Comcast Holdings Corporation to reflect the recent guarantee from its parent holding company, Comcast Corporation (Baa2 senior unsecured), and has assigned a Baa2 rating to Comcast's new senior unsecured notes and bank facility: Ratings Upgraded: * $1,150 million 2% exchangeable subordinated debentures due October 2029 (ZONES) to Baa3 from Ba1 * $300 million 10.625% senior subordinated notes due 2012 to Baa3 from Ba1 Ratings Assigned: * $500 million 5.45% senior unsecured notes due 2010, Baa2 * $750 million 5.85% senior unsecured notes due 2015, Baa2 * $1.0 billion 6.5%senior unsecured notes due 2035, Baa2 * $5.0 billion senior unsecured revolving credit facility due 2010, Baa2 The two subordinated issues were upgraded reflecting a full and unconditional subordinated guarantee from Comcast, which eliminates the structural subordination that was previously in place. Previously, Comcast's Cross-Guarantee Structure with all of its subsidiaries excluded Comcast Holdings Corporation debt. Moody's notes that Comcast Holdings Corporation continues to maintain one debt instrument with no guarantee - $571 million of ZONES due November 2029 which remains rated Ba1 reflecting one notch each for structural and contractual subordination as compared to Comcast Corporation's senior unsecured debt. The new $2.25 billion senior unsecured notes and $5.0 billion five year revolving bank facility of Comcast Corporation were assigned a Baa2 rating and rank pari passu with Comcast's existing senior unsecured notes. The five year bank facility increased $500 million to $5.0 billion versus the prior agreement and includes slightly loosened covenants. Comcast Corporation, with its headquarters in Philadelphia, Pennsylvania, is the nation's largest cable television system operator with approximately 21.4 million subscribers and owns and operates: * cable television programming, * sports teams, and * arenas. CONGOLEUM CORP: Sept. 30 Balance Sheet Upside-Down by $35.6 Mil. ---------------------------------------------------------------- Congoleum Corporation (AMEX:CGM) reported its financial results for the third quarter ended Sept. 30, 2005. Net sales for the three months ended Sept. 30, 2005 were $60.5 million, compared with net sales of $58.9 million reported in the third quarter of 2004, an increase of 2.8%. Net income for the third quarter of 2005 was $300,000, compared with net income of $1.2 million in the third quarter of 2004. Net sales for the nine months ended Sept. 30, 2005 were $176.2 million, compared with net sales of $173.8 million reported in the first nine months of 2004, an increase of 1.3%. The net loss for the nine months ended September 30, 2005 (which includes a $15.5 million charge for asbestos liabilities) was $14.6 million. Excluding the asbestos-related charge, the Company would have had net income of $830,000 for the nine months ended September 30, 2005. Net income in the first nine months of 2004 was $2.1 million. Roger S. Marcus, Chairman of the Board, commented, "We faced some significant challenges in the third quarter which hurt our results. Costs for raw materials and energy, which had already increased significantly during the year, jumped again in the wake of hurricanes Katrina and Rita. In response, we instituted another price increase in October which should offset the latest cost increases at least partially in the fourth quarter and in full by next year. Unfortunately, this latest spike offset the third quarter margin recovery we had planned from price increases we initiated earlier in the year. In addition, our largest distributor reduced their inventory of our products by $1.8 million during the quarter as part of a broader inventory reduction program that we understand is now completed." "On a positive note, while the hurricanes hurt us on the cost side, they also created an influx of orders for manufactured housing and RV products beginning in September that we expect will benefit us in the fourth quarter and hopefully into 2006. We are also encouraged by the continued sales strength of our industry leading 'Dura' products and excited about other new innovations we are bringing to market in 2006. Our programs to reduce operating expenses also continue to have a positive effect, as evidenced by the fact that we spent $2.4 million less in the third quarter of 2005 than the same period last year despite higher sales. If material costs can hold steady as our price increases catch up, we can see our margins return to more normal levels, which we hope will be the case as we move into 2006." Mr. Marcus continued "On the reorganization front, we continue to negotiate settlements with insurers as we also press ahead to reach an agreement on a modified reorganization plan. With $164 million in court approved insurance settlements ready to fund our asbestos trust, we are making good progress toward getting a plan confirmed." Mr. Marcus concluded "Finally, I am sad to say that the Board of Directors regretfully accepted the resignation of Cy Baldwin at its meeting today due to personal health reasons. Cy has been a director of Congoleum since its inception as a public company a decade ago, and I join my fellow directors in thanking him for his years of dedicated service and sage guidance. We will miss him greatly." Congoleum Corporation is a leading manufacturer of resilient flooring, serving both residential and commercial markets. Its sheet, tile and plank products are available in a wide variety of designs and colors, and are used in remodeling, manufactured housing, new construction and commercial applications. The Congoleum brand name is recognized and trusted by consumers as representing a company that has been supplying attractive and durable flooring products for over a century. Congoleum is a 55% owned subsidiary of American Biltrite Inc. At. Sept. 30, 2005, Congoleum Corporation's balance sheet showed a $35,614,000 stockholders' deficit compared to a $20,989,000 deficit at Dec. 31, 2004. CREDIT SUISSE: Fitch Lifts $27.1 Mil. Class H Cert. Rating to B --------------------------------------------------------------- Credit Suisse First Boston Mortgage Securities Corporation's mortgage pass-through certificates, series 1997-C1 are upgraded by Fitch Ratings: -- $67.8 million class C to 'AAA' from 'AA+'; -- $61 million class D to 'AAA' from 'A-'; -- $64.4 million class F to 'BBB+' from 'BB'; -- $13.6 million class G to 'BBB-' from 'BB-'; -- $27.1 million class H to 'B' from 'B-'. In addition, Fitch affirms these certificates: -- $376.4 million class A-1C at 'AAA'; -- $43.5 million class A-2 at 'AAA'; -- Interest-only class A-X at 'AAA'; -- $94.9 million class B at 'AAA'. The $17 million class I and $8 million class J remain at 'CCC' and 'D', respectively. The unrated class K has been reduced to zero by realized losses. The $33.9 million class E is not rated by Fitch. Class A-1A and A-1B have both paid in full. The upgrades are primarily the result of increased subordination levels due to loan payoffs, scheduled amortization and defeasance. As of the October 2005 distribution date, the pool's aggregate certificate balance has decreased 40.5% to $807.7 million from $1.36 billion at issuance and 95 loans remain from 161 at issuance. Eleven loans have been defeased. To date, the transaction has realized losses in the amount of $19.1 million. Currently four loans are in special servicing. The largest specially serviced loan is a retail center in Wasilla, Alaska that lost its anchor tenant in 2004. The special servicer is currently assessing the leasing status of the property and allowing the borrower to explore leasing opportunities while the loan remains current. Losses are possible upon disposition. The second largest specially serviced loan is a retail center in West Covina, California. The loan was transferred in June 2005 due to significant modification of the collateral. The loan is current. The borrower is currently pursuing defeasance of the loan. Fitch projects no loss for this loan at this time. Fitch has identified six properties that are situated in counties that FEMA has designated disaster areas due to Hurricane Katrina. Five of the properties have not sustained any hurricane-related damage. However, one loan, a retail center in Waveland, Mississippi, was transferred to the special servicer after the reporting period due to significant damage suffered as a result of Hurricane Katrina. Damage estimates are unavailable as of yet. Fitch will continue to monitor this loan as more information becomes available. Fitch has also identified one loan that is located in area affected by Hurricane Wilma. The loan is a hotel property in Key West, Forida. The property sustained minimal damage from the hurricane and is current. This loan was briefly with the special servicer but now has returned to the master servicer. DELTA AIR: Sept. 30 Balance Sheet Upside-Down by $8.463 Billion --------------------------------------------------------------- Delta Air Lines (Pink Sheets:DALRQ) reported results for the quarter ended Sept. 30, 2005. Delta reported a net loss for the September 2005 quarter of $1.1 billion, compared to a net loss of $646 million in the prior year quarter. Excluding the reorganization and special items described below, the September 2005 quarter net loss was $438 million, compared to a net loss of $592 million in the prior year quarter. The reorganization items result from Delta's Chapter 11 filing on Sept. 14, 2005. Delta's operating loss for the September 2005 quarter was $240 million, including a $442 million year-over-year increase due to higher fuel prices. Average fuel price per gallon for the September 2005 quarter was $1.82, a 51.7 percent increase over the prior year period. "Our results for the third quarter show the challenges we continue to face," said Gerald Grinstein, Delta's chief executive officer. "We are committed to moving quickly and decisively to achieve our business plan that we announced in late September. We believe this plan will position Delta to become the lean, aggressive, profitable airline it must be to compete effectively over the long-term in the fast-changing airline industry environment." Business Plan On Sept. 22, 2005, Delta announced information about its business plan, which is intended to provide $3 billion in annual financial benefits by the end of 2007. This amount is in addition to the $5 billion in annual benefits that Delta expects to achieve by the end of 2006, as compared to 2002. The incremental targeted benefits include revenue and network productivity benefits of $1.1 billion, in-court restructuring opportunities of $970 million, and more competitive labor costs requiring $605 million in non-pilot cost reductions and $325 million in pilot cost reductions. Delta is moving aggressively in all of these areas -- as noted by schedule changes that will become effective in December, the continued streamlining of Delta's fleet, and the recently implemented pay reductions for all non- pilot employees, including management. "While we are pleased with the level of post-petition financing we were able to obtain, we must stop using borrowed money to fund our losses," said Edward H. Bastian, Delta's executive vice president and chief financial officer. "We have accomplished a great deal already this year, as evidenced by our 17.3% decline in mainline unit costs; however, unrelenting financial pressures, including high fuel prices and intense industry competition, require that we continue to move aggressively to achieve the additional targets we have defined in our business plan." Significant Transactions The following recent significant transactions have occurred: -- On Sept. 7, 2005, Delta completed the sale of ASA to SkyWest for a purchase price of $425 million plus $50 million in aircraft deposits. -- On Sept. 27, 2005, Delta entered into an amendment to its Visa/MasterCard credit card processing agreement to extend its term through October 27, 2007. The credit card processor has the right to maintain a reserve equal to its potential liability for Delta tickets purchased with Visa or MasterCard but not yet used for travel. -- On Oct. 6, 2005, the U.S. Bankruptcy Court for the Southern District of New York granted final approval for the $2.2 billion in debtor-in-possession financing that the company arranged to help support its business during its Chapter 11 reorganization. -- On Nov. 1, 2005, Delta filed a motion with the Bankruptcy Court to reject the company's collective bargaining agreement with the Air Line Pilots Association, International, the labor union that represents Delta pilots. Delta took this action because the company and ALPA had not been able to reach a consensual agreement to achieve the $325 million annual reduction in pilot labor costs required under Delta's business plan. Liquidity and Financial Analysis At Sept. 30, 2005, Delta had $2.6 billion in cash and cash equivalents and short-term investments, of which $1.4 billion was unrestricted. Restricted cash increased $891 million since December 31, 2004 due primarily to cash holdbacks required by the company's credit card processors. Capital expenditures for the quarter were approximately $102 million. Passenger revenues for the September 2005 quarter increased 9.2%, while passenger unit revenues increased 4.2% compared to the prior year quarter. The load factor for the September 2005 quarter was 79.2%, a 1.6 point increase compared to the prior year quarter. System capacity rose 4.8% and mainline capacity increased 4.7%. Due to sharply higher fuel costs, operating expenses for the September 2005 quarter increased 3.8% from the prior year quarter. As a result of Delta's cost controls, however, mainline operating expenses excluding fuel and special items declined 13.4%, in spite of a 4.7% increase in mainline capacity. Explanation of Reorganization and Special Items In the September 2005 quarter, Delta recorded reorganization and special items totaling a net $692 million charge. This net charge primarily reflects: -- a $607 million charge for reorganization items. This net charge primarily relates to the rejection of 40 leased aircraft in Delta's Chapter 11 proceedings and the write- off of debt issuance costs and discounts related to pre- petition debt obligations; and -- an $86 million settlement charge related to lump sum distributions under the company's defined benefit pension plan for pilots (Pilot Plan) to approximately 250 pilots who retired. As a result of these distributions, Delta must accelerate the recognition of actuarial losses in accordance with Statement of Financial Accounting Standards No. 88. In the September 2004 quarter, Delta recorded special items totaling a $54 million charge, consisting of: (1) a $40 million asset impairment charge associated with Delta's agreement to sell eight MD-11 aircraft; and (2) a $14 million settlement charge related to the Pilot Plan. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. At Sept. 30, 2005, Delta Air Lines, Inc.'s balance sheet showed an $8,463,000,000 stockholders' deficit compared to a $5,796,000,000 deficit at Dec. 31, 2004. DENBURY RESOURCES: Files Third Quarter Financials Results --------------------------------------------------------- Denbury Resources Inc. (NYSE symbol: DNR) disclosed its third quarter 2005 financial and operating results. Despite the negative impact of Hurricanes Katrina and Rita on production, earnings and cash flow were at near-record quarterly and nine month levels, primarily as a result of high commodity prices. The two hurricanes did not cause any significant property damage to the Company's properties. However, the Company estimates that it lost approximately 350,000 barrels of oil equivalent of production during the third quarter of 2005, as most of the Company's fields were shut-in for periods ranging from several days to a few weeks, principally because of lack of power or flooding. As a result, the Company's production in the third quarter of 2005 was lower than in the second quarter, averaging 27,345 BOE per day. Higher commodity prices more than offset the lower production levels, resulting in earnings for the quarter of $38.5 million as compared to earnings of $18.3 million, for the third quarter of 2004. Included in third quarter 2005 net income is approximately $8.1 million of pre-tax mark-to-market and other non-cash expense ($5.3 million after tax) related to the Company's decision to discontinue hedge accounting as of Jan. 1, 2005. Of this amount, $6.2 million was due to mark-to-market adjustments of the Company's oil and natural gas derivative contracts at Sept. 30, 2005, and $1.8 million was due to amortization of deferred hedge mark-to-market value losses that existed as of December 31, 2004, and which are being amortized as the contracts expire in 2005. Adjusted cash flow from operations (cash flow from operations before changes in assets and liabilities, a non-GAAP measure) for the third quarter of 2005 was $87.3 million, a 194% increase over third quarter 2004 adjusted cash flow from operations of $29.7 million. Net cash flow provided by operations, the GAAP measure, totaled $76.3 million during the third quarter of 2005, as compared to $44.8 million during the third quarter of 2004. The difference between the adjusted cash flow and cash flow from operations is due to the changes in receivables, accounts payables and accrued liabilities during the quarter. Oil and natural gas revenues, excluding hedges, were up 34% between the respective third quarters, as higher commodity prices more than offset lower production levels resulting from the hurricanes and the July 2004 sale of offshore properties. Cash payments on hedges were $3.8 million in the third quarter of 2005, a significant decrease from the $22.2 million paid in the third quarter of 2004, as most of the Company's out-of-the-money hedges expired as of Dec. 31, 2004. In addition to the cash payments, the Company recognized non-cash pre-tax expense of $8.1 million ($5.3 million after tax) of mark-to-market and other adjustments in the third quarter of 2005 relating to the Company's decision to discontinue hedge accounting as of Jan. 1, 2005. As a result of this accounting change, all future changes in the fair values of the Company's oil and natural gas derivative instruments will result in income or expense in the Company's statement of operations. Oil price differentials (Denbury's net oil price received as compared to NYMEX prices) deteriorated during 2004, particularly in the fourth quarter, as the price of heavy, sour crude produced primarily in the Company's East Mississippi properties dropped significantly relative to NYMEX prices. The Company's net oil price in the third quarter of 2005 averaged $6.34 below NYMEX prices, worse than the $5.19 differential during the comparable third quarter of 2004, but slightly better than the Company's fourth quarter of 2004 average differential of $6.48. The Company's natural gas differentials increased in the third quarter of 2005 to $0.97 per Mcf below NYMEX prices, while historically the Company's net natural gas price has generally been approximately the same as NYMEX prices. This higher variance is due, at least in part, to increasing natural gas prices during the quarter. Since most of the Company's natural gas is sold on an index price that is set near the first of each month and fixed for the entire month, variances increase if the NYMEX natural gas prices rise throughout the three-month period. Outlook Denbury's 2005 development and exploration budget (excluding acquisitions) is currently set at $365 million, including the estimated costs of the CO2 pipeline being constructed to East Mississippi. The Company has not yet set its 2006 capital budget, but it is likely to be significantly higher than the 2005 budget, and is preliminarily expected to be between $450 million and $500 million, a level that is reasonably close to its anticipated cash flow from operations using current prices. Preliminary estimates indicate that approximately 50% of the budget will relate to tertiary operations, approximately 25% will be spent in the Barnett Shale area, about 10% on exploration, and the balance on the Company's other assets in Mississippi and Louisiana. Any acquisitions made by the Company will increase these capital budget amounts. Denbury's total debt as of Oct. 31, 2005, was approximately $235 million, including $10 million borrowed on its bank credit line, with $190 million undrawn on its bank borrowing base. As a result of the two hurricanes, the Company anticipates that its production for 2005 will be between 29,500 and 30,000 BOE/d. The forecasted production from its tertiary oil projects is expected to be between 9,250 to 9,500 BOE/d for the year. Based on the preliminary estimates, pending finalization of its 2006 capital expenditure budget, the Company anticipates that its average daily production for 2006 will be around 35,000 BOE/d, an organic production growth rate of approximately 18% over 2005. The Company updated its progress on the CO2 source well currently drilling at Jackson Dome. The well has reached total depth and a preliminary review of the well logs and seismic data would indicate CO2 reserves in excess of 1 Tcf, subject to confirmation with production tests, gas composition, and delineation of the reservoir. Gareth Roberts, Chief Executive Officer, said: "While this quarter's results are somewhat skewed because of the effect of the hurricanes, our core operations, the CO2 tertiary floods, are continuing to perform as expected. Production from our tertiary floods is continuing to increase, the CO2 pipeline to East Mississippi, while delayed momentarily due to the storms, is still expected to be completed by the end of the first quarter of 2006, and the latest CO2 source well initially appears to have added in excess of 1 Tcf of CO2 reserves. Assuming the preliminary indications for this source well prove to be correct, the incremental CO2 reserves should be sufficient for another phase, or more, of tertiary operations. We have in inventory two oil fields, Cranfield and Lake St. John, that we purchased earlier this year that are likely to be part of a future tertiary phase, and we are actively seeking to acquire additional properties for other future tertiary phases. Our preliminary estimates indicate that there may be 25 to 35 million barrels of potential oil reserves from these two fields using recovery factors similar to those on our existing tertiary operations. "With our tertiary operations as our core growth engine, supplemented by our anticipated production growth from the Barnett Shale, we are preliminarily estimating total production growth next year of about 18%. It is significant to note that virtually all of this growth will be organic, from internally generated projects and inventory. We believe that we are one of a handful of companies that has a sufficient inventory of projects to deliver double digit production growth without purchasing incremental production. While we are experiencing significant cost inflation in our industry, at current commodity prices, we expect to continue to generate record or near-record cash flow and earnings and we plan to continue reinvesting all of these profits to further fuel our growth and build for the future. The outlook continues to be excellent for our business model." Denbury Resources, Inc. -- http://www.denbury.com/-- is a growing independent oil and gas company. The Company is the largest oil and natural gas operator in Mississippi, owns the largest reserves of CO2 used for tertiary oil recovery east of the Mississippi River, and holds key operating acreage in the onshore Louisiana and Texas Barnett Shale areas. The Company increases the value of acquired properties in its core areas through a combination of exploitation drilling and proven engineering extraction practices. * * * As reported in the Troubled Company Reporter on Nov. 8, 2005, Standard & Poor's Rating Services raised its corporate credit rating on independent oil and gas exploration and production company Denbury Resources Inc. to 'BB' from 'BB-'. The outlook is stable. Dallas, Texas-based Denbury has about $240 million of funded debt. DIDIER ROGEZ: Court Okays Charles Logan as Bankruptcy Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California, San Jose Division, gave Didier Jacques Rogez permission to employ the Law Offices of Charles E. Logan as his general bankruptcy counsel. The Debtor explains that he hired Charles E. Logan as his bankruptcy counsel because of the Firm's considerable experience in corporate bankruptcy matters. The Firm will provide legal services to the Debtor in connection with the administration of his bankruptcy estate and in other matters related to his chapter 11 case. Charles E. Logan, Esq., is the lead attorney for the Debtor. Mr. Logan says his Firm's professionals bill: Designation Hourly Rate ----------- ----------- Owner $350 Senior Associates $325 Associates: $300 Mr. Logan assures the Court that his Firm does not represent any interest materially adverse to the Debtor or his estate. Headquartered in Los Altos, California, Didier Jacques Rogez filed for chapter 11 protection on Oct. 14, 2005 (Bankr. N.D. Calif. Case No. 05-58399). When the Debtor filed for protection from his creditors, he listed total assets of $14,122,247 and total debts of $8,771,315. DIVERSIFIED ASSET: Fitch Holds Junk Rating on $36.9M Class B Notes ------------------------------------------------------------------ Fitch Ratings downgrades two classes of notes issued by Diversified Asset Securitization Holdings I, L.P. These rating actions are effective immediately: -- $123,362,244 class A-1 notes downgraded to 'BB' from 'A-'; -- $25,464,683 class A-2 notes downgraded to 'BB' from 'A-'; -- $36,896,563 class B notes remain at 'C'. DASH is a collateralized debt obligation managed by AAM Company, which closed Dec. 18, 1999. Currently, DASH is composed of 47.2% residential mortgage-backed securities, 13.2% asset-backed securities, 34.9% commercial mortgage-backed securities, and 4.7% CDOs. Due to the occurrence of an event of default under DASH's governing documents, the portfolio manager is prohibited from trading any securities. The rating actions are the result of continued deterioration in the credit quality of DASH's collateral portfolio. Since the last rating action on Dec. 17, 2004, DASH's overcollateralization coverage ratios have continued to erode. The class A and class B OC ratios have decreased to 99% and 84.1% as of Sept. 30, 2005 from 104.1% and 90.5% on Oct. 31, 2004, respectively. However, the calculation of DASH's OC ratios does not include principal proceeds, resulting in artificially low coverage levels. When the calculation is adjusted to include principal proceeds in the numerator, the OC ratios improve slightly to approximately 101.7% and 86.1%. Either way, the coverage ratios have eroded since last review. The declining coverage ratios have been compounded by the diversion of principal proceeds to pay class A interest. On the Oct. 3, 2005 payment date, $124,553 of principal proceeds was allocated to pay class A interest shortfalls, thus further eroding the collateral available to support the rated notes. The failure of the class A OC test has caused available proceeds to be applied towards the redemption of the class A notes. It is unlikely the class B noteholders will receive future cashflow. The portfolio contains three defaulted securities totaling $9.7 million, including one new default since the last rating action in the amount of $3.8 million. Additionally, the portfolio contains a number of distressed assets where further deterioration is expected. These assets have exposure to troubled sectors such as manufactured housing, aircraft leases, and mutual fund fees. The ratings of the class A-1 and A-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class B notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. DYER FABRICS: Bankruptcy Court Dismisses Chapter 11 Case -------------------------------------------------------- The Hon. William Houston Brown of the U.S. Bankruptcy Court for the Western District of Tennessee, Western Division, has dismissed Dyer Fabrics, Inc.'s chapter 11 case, forcing the company to halt its reorganization efforts and repay its creditors about 30 cents on the dollar, Shanon D. Murray of The Deal reports. The U.S. Trustee for Region 8 asked the Court to dismiss the chapter 11 case or convert it to a chapter 7 proceeding after the Debtor continued to incur losses and failed to propose any confirmable plan to the Court. The Debtor delivered its disclosure statement summarizing the provisions of its to-be-filed plan of reorganization to the Court on Aug. 31, 2005. Although the Debtor sought an extension to file a plan in mid-September, it still has not filed any amended plan. The Debtor previously filed a plan based upon a loan from CS Assets, but the loan, CS Assets says, has not been approved. Due to the Debtor's default under its leases with SR Processing, the Debtor has no equipment, no facility and no ability to reorganize. Headquartered in Dyersburg, Tennessee, Dyer Fabrics Inc., is a textile wholesaler and manufacturer. The Debtor filed for chapter 11 protection on July 9, 2004 (Bankr. W.D. Tenn. Case No. 04-30609). Steven N. Douglas, Esq., at Harris, Shelton, Dunlap represent the Debtor in its restructuring. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. ENRON CORP: Citrus Entities' Claims Bar Date is Jan. 17, 2007 ------------------------------------------------------------- In a Court-approved stipulation, Enron Corp., Enron North America Corp., Citrus Corp. and Citrus Trading Corp. agreed that: (a) The Citrus Entities' Administrative Bar Date is extended to Jan. 17, 2007; and (b) The Citrus Administrative Bar Date may be further extended, from time to time, in writing signed by the parties or their counsel. Headquartered in Houston, Texas, Enron Corporation -- http://www.enron.com/-- is in the midst of restructuring various businesses for distribution as ongoing companies to its creditors and liquidating its remaining operations. Before the company agreed to be acquired, controversy over accounting procedures had caused Enron's stock price and credit rating to drop sharply. Enron filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033). Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Confirmed Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 161; Bankruptcy Creditors' Service, Inc., 15/945-7000) FLYI INC: Nasdaq Says Common Stock Will be Delisted on Nov. 16 -------------------------------------------------------------- On Nov. 7, 2005, FLYi, Inc. (Nasdaq: FLYIQ) received a letter from The NASDAQ Stock Market, Inc., notifying the Company that, in light of the Company's announcement that it has filed for protection under Chapter 11 of the U.S. Bankruptcy Code and in accordance with NASDAQ Marketplace Rules 4300, 4450(f) and IM- 4300, the NASDAQ Staff has determined that the Company's common stock will be delisted from The NASDAQ Stock Market at the opening of business on Nov. 16, 2005. The Company does not intend to appeal the NASDAQ Staff determination to delist the Company's common stock from the NASDAQ Stock Market. In addition, the letter from NASDAQ stated that, as a result of the Filing, as of the opening of business last Nov. 9, 2005, the fifth character "Q" will be appended to the Company's trading symbol. The letter from NASDAQ further stated that if the Company does not appeal the Staff's determination to delist the Company's common stock from The NASDAQ Stock Market, the Company's common stock will not be immediately eligible to trade on the OTC Bulletin Board or in the "pink sheets," and that the common stock may become eligible to trade if a market maker makes application to register in and quote the security in accordance with Rule 15c2-11 under the Securities Exchange Act of 1934. Only a market maker, and not the Company, may make the application under Rule 15c2-11. The Company has advised the public, and reiterates, that the likely outcome of the company's Chapter 11 case is the cancellation of the company's existing common stock without consideration, in which case FLYi stock would have no value. Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. GMAC MORTGAGE: Fitch Affirms B Ratings on Three Cert. Classes ------------------------------------------------------------- Fitch Ratings has taken action on these GMAC Mortgage Corporation home equity issues: Series 2003-J2 -- Class A affirmed at 'AAA'; -- Class M-1 upgraded to 'AA+' from 'AA'; -- Class M-2 upgraded to 'A+' from 'A'; -- Class M-3 upgraded to 'BBB+' from 'BBB'; -- Class B-1 upgraded to 'BB+' from 'BB'; -- Class B-2 affirmed at 'B'. Series 2003-J4 -- Class A affirmed at 'AAA'. Series 2003-J5 -- Class A affirmed at 'AAA'. Series 2003-J6 -- Class A affirmed at 'AAA'. Series 2003-J7 -- Class A affirmed at 'AAA'. Series 2003-J8 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 affirmed at 'BB'; -- Class B-2 affirmed at 'B'. Series 2003-J9 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'BBB'; -- Class B-1 affirmed at 'BB'; -- Class B-2 affirmed at 'B'. Series 2003-J10 -- Class A affirmed at 'AAA'. All of the mortgage loans in the aforementioned transactions consist of 15- and 30-year fixed-rate mortgages extended to prime borrowers and are secured by first liens on one- to four-family residential properties. As of the October 2005 distribution date, these transactions are seasoned from a range of 22 to 31 months and the pool factors range from approximately 28% to 78% outstanding. The servicer for all the transactions is GMAC Mortgage Corporation, which is rated 'RPS1' by Fitch. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $1.92 billion in outstanding certificates as detailed above. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect approximately $13.02 million of outstanding certificates. The CE levels for all the classes affected by the upgrades have at least doubled their original enhancement levels since closing date. Fitch will continue to closely monitor these transactions. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings Web site at http://www.fitchratings.com/ GREEKTOWN HOLDINGS: Moody's Rates $185 Million Unsec. Notes at B3 ----------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Greektown Holdings, LLC and Greektown Holdings II, Inc.'s (as co-borrowers and co-issuers) $290 million senior secured credit facilities and a B3 rating to the company's $185 million in senior unsecured notes due 2013. The ratings on the credit facilities and the notes are contingent on the company receiving final approval from the Michigan Gaming Control Board. The ratings outlook is stable. Proceeds from the new facilities will be used to refinance approximately $171 million under the existing credit facility and fund the buyout of minority ownership interests in Greektown Casino, LLC, the primary operating subsidiary of Greektown Holdings, LLC not currently owned by the Sault Ste. Marie Tribe of Chippewa Indians. The senior secured credit facilities consist of a $100 million five year senior secured revolver and a $190 million seven year senior secured term loan B. The credit facilities contain a $200 million greenshoe that can be exercised either through additional term loan B borrowings or additional senior unsecured notes. The ratings consider Greektown's single asset nature and its considerable debt burden. Pro forma Debt/EBITDA at closing is about 5.5 times (x) while peak leverage during construction is expected to reach over 7.0x. Greektown's planned expansion, which will be entirely debt financed, will include: * additional gaming space, * an attached covered parking garage, * a new hotel tower, and * further enhancements to the entertainment and restaurant offerings. The planned expansion will take place in several phases with final completion by the beginning of 2008. Positive ratings consideration is given to the successful operating history of the casino and the considerable size and density of the Detroit gaming market. Detroit's win per unit statistics are among the best of all domestic gaming markets. Additionally, the market benefits from the passage of Proposal 1 by Michigan voters in November 2004 which requires a voter referendum for new forms of gaming in the state. Currently, Greektown is one of three commercial casinos that are permitted to operate in the city of Detroit. The rating also takes into account that the proposed expansion will fulfill Greektown's obligation under its development agreement with the city government of Detroit, and as a result, will make the company eligible for a reduced wagering tax from 24% to 19%. The two notch difference between the company's B1 senior secured credit facilities' rating and B3 senior unsecured notes rating considers the contractual subordination borne by the senior unsecured noteholders through the lack of a subsidiary guarantee from Greektown Casino, LLC. The stable rating outlook considers that once construction is completed, leverage is expected to decline rapidly as the company focuses on debt repayment. Debt/EBITDA is expected to decline to near 4.0x by the end of 2008. In addition to leverage limitations included in the senior note indenture and bank credit facilities, Greektown Holdings, LLC must comply with a leverage test pursuant to the company's agreement with the MGCB. If the company does not meet the leverage test, the MGCB has the right to force a sale of Greektown. However, non-compliance may be cured by equity contributions from the Tribe. The stable outlook also reflects the company's adequate liquidity through the construction period and that the capital spending requirement following the opening of the expansion will be minimal. Ratings upside is limited at this time given Greektown's significant development over the next two years and the expectation that the Detroit market will remain highly competitive as the other two casinos embark on their own expansion projects. Material construction delays and/or lower than expected ramp-up could have a negative impact on ratings. These new ratings were assigned: * $100 million senior secured guaranteed revolver due 2010 - B1; * $190 million senior secured guaranteed term loan B due 2012 - B1; * $185 million senior unsecured notes due 2013 - B3; and * Corporate family rating - B1. Greektown Holdings, LLC, through its primary operating subsidiary Greektown Casino, LLC, operates the Greektown Casino located in Detroit, Michigan. The company is owned 100% by Kewadin Greektown Casino LLC, an entity owned by the Sault Ste. Marie Tribe of Chippewa Indians. The Tribe owns 97% of Greektown Casino, LLC while the remaining 3% is owned by minority investors. Greektown Casino opened in November 2000 and generated revenues of $310.5 million during FY2004. ICG COMMS: Response to Southwestern Bell Can be Filed Under Seal ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware permitted ICG Communications, Inc., and its debtor-affiliates to file under seal their response to the motion filed by Southwestern Bell L.P. d/b/a Southwestern Bell Telephone Company, Ameritech and Pacific Bell Telephone for payment of Cure Amount or alternatively for payment of Administrative Expense under 11 U.S.C. Section 503(B). Southwestern Bell, Ameritech and Pacific Bell allege that they had provided the Reorganized Debtors with pre-petition and post- petition services for which they were entitled to priority payment under Sections 365 and 503(b) of the Bankruptcy Code. Southwestern Bell seeks payment of $1,159,237 as cure amount and $2,520,579 as an administrative expense. Ameritech seeks payment of $41,826 as cure amount and $1,295,627 as an administrative expense. Pacific Bell seeks payment of $300,651 as cure amount and $69,914 as an administrative expense. The parties eventually entered into two separate settlement agreements that resolve their dispute. The Reorganized Debtors told the Court that they needed to file their Response under seal because the Settlement Agreements are subject to a confidentiality clause that prevents the disclosure of terms necessary for the Response. Filing of the Response under seal is also necessary to adequately protect the interests of the three creditors who signed the Settlement Agreements. Headquartered in Englewood, Colorado, ICG Communications, Inc. -- http://www.icgcomm.com/-- is a business communications company that specializes in converged voice and data services. ICG has a national footprint and extensive metropolitan fiber serving 24 markets. ICG products and services include voice and Internet Protocol (IP) solutions including VoicePipeT, voice services, dedicated Internet access (DIA) and private line transport services. ICG provides corporate customers and other carriers with flexible and reliable solutions. The Company and its debtor- affiliates filed for chapter 11 protection on Nov. 14, 2000 (Bankr. D. Del. Case Nos. 00-04238 through 00-04263). David S. Kurtz, Esq., and Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom L.L.P., represents the Debtors. As of Sept. 30, 2000, the Debtors had total assets of $2,789,927,050 and total debts of $2,809,795,436. The Court confirmed the Debtors' Second Amended Joint Plan of Reorganization on Oct. 9, 2002, and that Plan took effect on Oct. 10, 2002. IIB LUXEMBOURG: Moody's Rates New Loan Participation Notes at B1 ---------------------------------------------------------------- Moody's Investors Service assigned a long-term rating of B1 to the upcoming issue of loan participation notes by IIB Luxembourg S.A., the proceeds of which will be used for the sole purpose of making a loan to International Industrial Bank (IIB) of Russia. The loan will represent a senior unsecured obligation for IIB. The exact amount and tenor of the issue are yet to be determined. The rating is subject to receiving final documentation on the issue. The outlook for the rating is stable. IIB's existing B1/NP long- and short-term foreign currency deposit ratings and E+ financial strength rating remain unaffected. The B1 rating for the Notes is based primarily on the fundamental ability of IIB, the ultimate obligor in respect of payments under the Notes, to make timely payments of interest and ultimate payment of principal on the Loan. The rating does not incorporate support from either IIB's shareholder or the regulator. According to Moody's, covenants embedded in the transaction state that the Notes may become payable in the event that the bank's rating were to be downgraded following a re-organisation (such as a merger, accession, division, separation or transformation). The rating agency notes that, while the likelihood of this covenant being triggered is relatively low, such an event could potentially have adverse liquidity implications for the bank and might exert additional downward pressure on its ratings. IIB is headquartered in Moscow, Russian Federation, and reported total assets of US$2 billion in accordance with IFRS as at 31 December 2004. JER CRE: Fitch Puts B Rating on $10 Million Class G Interest Notes ------------------------------------------------------------------ Fitch assigns these ratings to JER CRE CDO 2005-1, Ltd., and JER CRE CDO 2005-1 LLC: -- $81,725,000 class A floating-rate notes due Nov. 2043 'AAA'; -- $38,130,000 class B-1 fixed-rate notes due Nov. 2043 'AA'; -- $37,500,000 class B-2 floating-rate notes due Nov. 2043 'AA'; -- $48,400,000 class C fixed-rate deferrable interest notes due Nov. 2043 'A'; -- $46,500,000 class D fixed-rate deferrable interest notes due Nov. 2043 'BBB'; -- $23,320,000 class E fixed-rate deferrable interest notes due Nov. 2043 'BBB-'; -- $15,000,000 class F fixed-rate deferrable interest notes due Nov. 2043 'BB'; -- $10,000,000 class G fixed-rate deferrable interest notes due Nov. 2043 'B'. The ratings of the classes A, B-1, and B-2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the classes C, D, E, F, and G notes address the likelihood that investors will receive ultimate interest and deferred interest payments, as per the government documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings are based upon the credit quality and mixture of the underlying assets, credit enhancement provided by support from subordinated notes, excess spread, and protections incorporated in the structure. The net proceeds from the issuance of the notes will be used to purchase a static portfolio of approximately 97% commercial mortgage-backed securities and 3% real estate collateralized debt obligations. The underlying collateral will consist of 76 classes of subordinated certificates of CMBS in 14 issues with a target par amount of $415.7 million. The collateral supporting the structure will have a covenanted maximum Fitch weighted average rating factor of 19.68, weighted average coupon of 4.85%, and maximum weighted average life of 12 years. The collateral was selected and will be monitored by JER Investors Trust, Inc., a subsidiary of J.E. Robert Company, Inc. The notes have a stated maturity of 2043 and monthly payments on the notes will begin on Dec. 20, 2005. The collateral advisor will select all investments for the portfolio on behalf of the co-issuers, which are special purpose companies incorporated under the laws of the Cayman Islands and the State of Delaware. This is a static transaction; however, the collateral advisor will have the ability to sell impaired or credit-risk securities at any time. The portfolio will be approximately 89% ramped-up at closing; however, the remaining collateral has been identified and will be purchased prior to the March 2006 payment date. Structural protection is derived primarily from the subordination of junior classes and the related prioritization of cash flows. Coverage tests such as the three overcollateralization and three interest coverage tests embedded in the transaction are designed to maintain such protection. Interest and principal payments made to the classes B-1 and B-2 notes are applied pro rata and all other payments will be applied on a sequential basis starting with the class A notes and then to the B, C, D, E, F, and G notes. In addition, upon the failure of any coverage test mentioned previously, principal collections will be used to redeem the notes on a sequential basis. The placement agents for this transaction are Banc of America Securities LLC and Bear, Stearns & Co. Inc. For additional information on structural and other features of JER CDO 2005-1, please see the Fitch Presale report 'JER CRE CDO 2005-1, Ltd./LLC', dated Oct. 20, 2005, which is available on the Fitch Ratings subscription-based Web site, http://www.fitchresearch.com/ JILLIAN'S ENT: Claims Objection Deadline is January 31 ------------------------------------------------------ Steven L. Victor, the Plan Administrator appointed pursuant to the confirmed First Amended Joint Liquidation Plan of Jillian's Entertainment Holdings, Inc., and its debtor-affiliates, has until Jan. 31, 2006, to file avoidance actions and object to claims. In addition, Mr. Victor may file notices of removal through and including the latter of Jan. 31, 2006, or 30 days after the entry of an order terminating the stay with respect to the actions to be removed. The U.S. Bankruptcy Court for the Western District of Kentucky in Louisville extended the claims objection deadline to give Mr. Victor more time to reconcile and attempt to resolve certain disputed claims without the additional expense and risk of litigation. Mr. Victor also informed the Bankruptcy Court that as of October 2005, he has filed 47 complaints initiating adversary proceedings to recover preferences. Mr. Victor says that he will continue to investigate additional claims and may file more complaints within the extension period. Headquartered in Louisville, Kentucky, Jillian's Entertainment Holdings, Inc. -- http://www.jillians.com/-- operates more than 40 restaurant and entertainment complexes in about 20 states. The Company filed for chapter 11 protection on May 23, 2004 (Bankr. W.D. Ky. Case No. 04-33192). Edward M. King, Esq., at Frost Brown Todd LLC and James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets of more than $100 million and estimated debts of over $100 million. Judge David T. Stosberg confirmed the Debtors' Amended Joint Liquidating Plan on Dec. 12, 2004. JOHNSONDIVERSEY INC: Fitch Affirms BB- Rating on Sr. Sec. Loans --------------------------------------------------------------- Fitch Ratings has affirmed JohnsonDiversey, Inc.'s ratings: -- Senior secured bank credit facilities at 'BB-/R1'; -- Senior subordinated debt rating at 'B-/R4'; -- Issuer default rating at 'B-'. At the same time, Fitch affirms JohnsonDiversey Holdings Inc.'s senior discount notes rating of 'CCC/R6'. The Rating Outlook remains Negative. The rating affirmation reflects the increased liquidity and financial flexibility JohnsonDiversey is expected to realize with the new proposed amendment for its existing senior secured credit facilities. Furthermore, Fitch anticipates that JohnsonDiversey will benefit from an extended maturity schedule, relaxed financial covenants in the near-term, and have the option to access the delayed draw term loan under the amended credit facilities. The ratings are also supported by company's market positions worldwide, its diversified product portfolio serving the institutional and industrial cleaning and sanitation market, and manageable debt maturity schedule. The Negative Rating Outlook indicates elevated debt levels and a volatile cost environment for key raw materials that JohnsonDiversey uses for its polymer and professional products. Fitch expects raw material prices to be unstable, and there may be short periods of softening in prices during the second half of 2006. However, overall prices are likely to be maintained at recent levels as the chemical industry proceeds to its next cyclical peak between 2006 and 2007. Additionally, Fitch could revise the Rating Outlook to Stable if operating performance stabilizes over several quarters and cash flow continues to improve. The amended senior secured credit facilities are expected to include a five-year $150 million revolving credit facility, six-year $775 million term loan B, and a five-year $100 million delayed draw term loan -- the delayed draw term loan must be drawn within the first 12 months. Fitch anticipates JohnsonDiversey's actions to enhance liquidity and provide financial flexibility will allow them to execute its announced restructuring program during the next two to three years. Additional cash sources to fund the restructuring program are likely to include potential divestitures, availability under its existing accounts receivable securitization (A/R) program, and cash from operations. Operating results in the near term are expected to continue to be affected by volatile and high raw material costs, and margins are likely to be under pressure if price initiatives are unsuccessful. Year to date, JohnsonDiversey's price increases have been offset by rising costs. In the third quarter, the company's gross margin was relatively stable compared the second quarter; however, it was lower than the third quarter in the prior year. JohnsonDiversey had an EBITDA-to-gross interest expense of 2.8 times (x), debt-to-EBITDA of 3.1x, and total adjusted debt-to- EBITDAR, incorporating gross rent, of 5x for the 12-months ending Sept. 30, 2005. These credit metrics compare to EBITDA-to-gross interest expense of 3.1 x, debt-to-EBITDA of 3.4x, and total adjusted debt-to-EBITDAR, incorporating gross rent, of 5.2x at 2004 year end. Balance sheet debt was approximately $1.18 billion at the end of the third quarter. Additionally, the company has a $150 million A/R securitization program with approximately $140 million utilized as of Sept. 30, 2005. The total adjusted debt amount includes operating leases, A/R securitization program balance and JohnsonDiversey Holdings' senior discount note. At the end of the third quarter, JohnsonDiversey continues to have sufficient cash balances of $24 million including liquidity under unused and committed revolving credit facilities totaling $98 million. JohnsonDiversey, Inc., is a global player in the I&I cleaning market and sells its products into the following market segments: floor care, food service, restroom/housekeeping, laundry, and food processing. In addition, JohnsonDiversey is a global supplier of water-based acrylic polymer resins for printing, packaging, coatings, and plastics markets. The company is owned by JohnsonDiversey Holdings, Inc., which is owned by Commercial Markets Holdco (67%) and Unilever (33%). For the 12-months ending Sept. 30, 2005, JohnsonDiversey had $3.3 billion in net sales and $379 million in EBITDA. LA MUTUELLE: Chapter 15 Petition Summary ---------------------------------------- Petitioner: Jeffrey John Lloyd Foreign Representative Debtor: La Mutuelle du Mans Assurances IARD United Kindom Branch MMA Account Norman Insurance House Kings Road Reading, RG1 4LL United Kingdom Case No.: 05-60100 Type of Business: The Debtor is an insurance company. Chapter 15 Petition Date: November 11, 2005 Court: Southern District of New York (Manhattan) Petitioner's Counsel: Selinda A. Melnik, Esq. Edwards Angell Palmer & Dodge LLP 919 North Market Street, Suite 1500 Wilmington, Delaware 19801 Tel: (302) 425 7103 Fax: (302) 777 7263 Estimated Assets: $10 Million to $100 Million Estimated Debts: $1 Million to $10 Million A full-text copy of the List of Identifiable Potential U.S. and Non-U.S. Creditors and other Notice Parties are available for a fee at: http://www.researcharchives.com/bin/download?id=051113210453 LA QUINTA: Blackstone Transaction Prompts S&P to Watch Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on La Quinta Corp., including its 'BB' corporate credit ratings, on CreditWatch with developing implications. Irving, Texas-based La Quinta owns, operates, and franchises 604 hotels as of Sept. 30, 2005. The CreditWatch listing follows the announcement that La Quinta has entered into a definite agreement to be acquired by The Blackstone Group for $11.25 per paired share in cash. The total value of the transaction, including the assumption of La Quinta's debt, is about $3.4 billion. This acquisition is subject to shareholder approval and other customary conditions, and is expected to be completed in the first quarter of 2006. The closing of the merger is not subject to the receipt of financing by Blackstone. In resolving the CreditWatch listing, Standard & Poor's will monitor the situation as it develops. "Should the unsecured notes and preferred stock be fully redeemed, we would withdraw our ratings on La Quinta and remove them from CreditWatch. However, should some, or all of, the debt remain outstanding under a more highly leveraged capital structure, ratings could be lowered," said Standard & Poor's credit analyst Sherry Cai. LA QUINTA: Moody's Reviews B1 Pref. Stock Rating & May Downgrade ---------------------------------------------------------------- Moody's Investors Service placed the Ba2 senior unsecured debt and B1 preferred stock ratings of La Quinta under review for possible downgrade. This rating action follows the announcement on Nov. 9, 2005 that La Quinta is being acquired by an affiliate of the Blackstone Group in an all cash transaction valued at $3.4 billion. The terms and composition of the financing for this transaction have not been disclosed. The acquisition is expected to close in the first quarter of 2006. According to Moody's, this rating review reflects the rating agency's concern that La Quinta's capital structure would be more highly levered and contain significant amount of secured debt following the acquisition of the REIT by an affiliate of the Blackstone Group. Moody's review will focus on utilization of debt -- especially secured debt -- to fund this transaction, and the ultimate capitalization of La Quinta. Depending on the final capital structure and strategy of La Quinta, the ratings could be downgraded by more than one notch. However, should the debt and preferred securities be retired in their entirety prior to the closing of the merger, Moody's could affirm the current ratings and simultaneously withdraw the ratings. These ratings were placed under review for downgrade: La Quinta Properties, Inc.: * Senior unsecured debt at Ba2 * senior unsecured debt shelf at (P)Ba2 * preferred stock at B1 * subordinated debt shelf at (P)Ba3 * preferred stock shelf at (P)B1 La Quinta Corporation: * Senior unsecured debt shelf at (P)B1 * subordinated debt shelf at (P)B2 * preferred stock shelf at (P)B3 La Quinta (NYSE: LQI) is a paired-share hospitality firm consisting of a REIT -- La Quinta Properties, Inc. -- and La Quinta Corporation. La Quinta owns, operates or franchises more than 600 hotels in 39 states under the: * La Quinta Inns, * La Quinta Inns & Suites, * Baymont Inn & Suites, * Woodfield Suites, and * Budgetel brands. The firm is based in Irving, Texas, USA. LA RISA: Court Okays Hiring of Buddy Ford as Bankruptcy Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida gave La Risa Development Co., L.L.C., permission to employ Buddy D. Ford, P.A., as its general bankruptcy counsel. Mr. Ford will: 1) assist and advise the Debtor with regard to its powers and duties as a Debtor and debtor-in-possession in the continued operation and management of its business and property; 2) prepare and file the Debtor's Schedules Assets and Liabilities, Statement of Financial Affairs and other documents required by the Court; 3) prepare on behalf of the Debtor any necessary applications, answers, orders, reports, complaints, plans of reorganization and disclosure statements, and other legal papers; 4) represent the Debtor at the meeting of creditors and appear at Bankruptcy Court hearings; and 5) perform all other legal services to the Debtor that are necessary in its chapter 11 case. Buddy D. Ford, Esq., is the lead attorney for the Debtor. Mr. Ford discloses that his Firm negotiated a $15,000 retainer. Mr. Ford says the Firm's professionals bill: Designation Hourly Rate ----------- ----------- Counsel $250 Paralegals $50 Mr. Ford assures the Court that his Firm does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Palm Harbor, Florida, La Risa Development Co., L.L.C. purchased six lots near the Bay Esplandade on Clearwater Beach and has developed the property to construct condominiums. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. M.D. Fla. Case No. 05-25090). When the Debtor filed for protection from its creditors, it listed total assets of $12,443,000 and total debts of $6,167,286. LA RISA: U.S. Trustee Meeting With Creditors on November 16 ----------------------------------------------------------- The U.S. Trustee for Region 21 will convene a meeting of La Risa Development Co., L.L.C.'s creditors at 3:00 p.m., on Nov. 16, 2005, at the Office of the U.S. Trustee, Timberlake Annex, Suite 1200, located at 501 East Polk Street, in Tampa, Florida. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Palm Harbor, Florida, La Risa Development Co., L.L.C. purchased six lots near the Bay Esplandade on Clearwater Beach and has developed the property to construct condominiums. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. M.D. Fla. Case No. 05-25090). Buddy D. Ford, Esq., at Buddy D. Ford, P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $12,443,000 and total debts of $6,167,286. LEAP WIRELESS: Posts $7.6 Million Net Loss in Third Quarter ----------------------------------------------------------- Leap Wireless International, Inc. (NASDAQ:LEAP) reported strong financial results for the third quarter of 2005. These results reflect continued strong year-over-year growth in total revenues and adjusted consolidated earnings before interest, taxes, depreciation and amortization. Total consolidated revenues for the third quarter were $230.5 million, an increase of $23.6 million over the total consolidated revenues of $206.9 million for the third quarter of 2004. Consolidated operating income for the third quarter was $28.6 million, an increase of $26.4 million over consolidated operating income of $2.2 million for the third quarter of 2004. Consolidated net loss for the third quarter totaled $7.6 million. This compares to consolidated net income in the third quarter of 2004 of $957.3 million, which included $963.2 million of reorganization items, net, reflecting the net impact of fresh- start reporting and other bankruptcy related items. "Our performance during the third quarter reflects an overall strengthening of our business as our product development activities, distribution improvements and marketing strategies have taken effect," said Doug Hutcheson, president and chief executive officer of Leap. "Once again, we have demonstrated an ability to generate solid operational performance, even while supporting the costs associated with our new market launch activities and systems upgrades to meet regulatory requirements and to support future improvements in efficiency. We are on track to meet our goals for 2005 while implementing our strategic plans, and we are looking toward the coming year with great anticipation." "As 2006 approaches, well-managed growth becomes a priority and it is our goal to continue the strong performance shown in our operational markets throughout 2005 as we launch new markets in key clusters across the country," continued Mr. Hutcheson. "To provide insight into our expectations for the coming year, we are providing an outlook for adjusted consolidated EBITDA and capital spending for 2006. We intend to capitalize on the momentum of each new market launch and our new services and products throughout the year while maintaining a well-balanced approach to managing our cost performance." "The strength of our business is evidenced by our financial performance, confirming the value of pursuing growth in targeted markets and focusing on developing products for an underserved customer segment," said Dean Luvisa, Leap's acting chief financial officer. "With nearly $400 million in cash at the close of the third quarter, we believe that our current cash position, combined with our expected cash flow from operations, adequately positions us for the significant capital investments ahead of us as we build-out the planned new markets. Looking forward, we expect to maintain good liquidity and relatively low leverage positions, while opportunistically drawing on the capital markets to position ourselves to capture future opportunities that enhance the value of the company." Leap Wireless International, Inc. -- http://www.leapwireless.com/ -- headquartered in San Diego, Calif., is a customer-focused company providing innovative mobile wireless services targeted to meet the needs of customers under-served by traditional communications companies. With the value of unlimited wireless services as the foundation of its business, Leap pioneered both the Cricket(R) and Jump(TM) Mobile services. Through a variety of low, flat rate, service plans, Cricket service offers customers a choice of unlimited anytime local voice minutes, unlimited anytime domestic long distance voice minutes, unlimited text, instant and picture messaging and additional value-added services over a high- quality, all-digital CDMA network. Designed for the urban youth market, Jump Mobile is a unique prepaid wireless service that offers customers free unlimited incoming calls from anywhere with outgoing calls at an affordable 10 cents per minute and free incoming and outgoing text messaging. Both Cricket and Jump Mobile services are offered without long-term commitments or credit checks. * * * As reported in the Troubled Company Reporter on July 28, 2005, Moody's Investors Service affirmed the B1 corporate family rating (formerly known as the senior implied rating) of Leap Wireless International, Inc., and the B1 ratings on the senior secured credit facilities of its principal subsidiary Cricket Communications, Inc. The outlook for these ratings remains stable. However, Moody's lowered Leap's speculative grade liquidity rating to SGL-2 from SGL-1. The affected ratings are: Leap Wireless International, Inc.: * Corporate family affirmed at B1 * Speculative Grade Liquidity downgraded to SGL-2 from SGL-1 Rating outlook stable Cricket Communications, Inc.: * $110 million senior secured revolving credit affirmed at B1 * $600 million (increased from $500 million) senior secured term loan affirmed at B1 Rating outlook stable LIBERTY MEDIA: Growth Strategies Spur S&P to Put Ratings on Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Liberty Media Corp., including the 'BB+' corporate credit rating, on CreditWatch with negative implications. The CreditWatch placement follows the company's announcement that it will issue a tracking stock that will track the performance of QVC Inc. together with Liberty's minority stakes in IAC/InterActiveCorp and Expedia Inc. A tracking company will be established to mirror the performance of these assets. "The CreditWatch listing reflects uncertainty surrounding the resulting capital structure at the tracking company and at Liberty, and the process through which the transaction is completed," said Standard & Poor's credit analyst Andy Liu. In resolving the CreditWatch listing, Standard & Poor's will meet with management to discuss these issues and the company's future growth strategies. A portion of Liberty's debt will be allocated to the tracking company such that the relationship of debt to EBITDA is in the 3x-5x area. It is expected that the tracking company will ultimately be spun off to shareholders. The remaining debt at Liberty will be supported by Starz Entertainment Group, some developing businesses, and Liberty's equity security portfolio. MASSACHUSETTS HEALTH: Fitch Shaves $16.3-Mil Revenue Bonds to BB+ ----------------------------------------------------------------- Fitch Ratings downgrades to 'BB+' from 'BBB+' the rating on the Massachusetts Health and Educational Facilities Authority's approximately $16.3 million revenue bonds (Milton Hospital Issue), series C, which were issued in 2001. The 'BB+' rating reflects Milton's upcoming issuance of $32.4 million of parity debt, historical operating losses, and significant deterioration of its balance sheet. Fitch simultaneously withdraws the rating and will no longer provide ratings or analytical coverage of securities related to Milton Hospital. MCLEODUSA INC: Financing Commitment Under DIP Credit Facility ------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Nov. 7, 2005, McLeodUSA Incorporated and some of its subsidiaries entered into a Revolving Credit and Guaranty Agreement with JPMorgan Chase Bank, N.A., as agent. The lenders' commitments under the DIP Credit Agreement are: Commitment Lenders Amount Percentage ------- -------------------- JPMorgan Chase Bank, N.A. $23,500,000 47.0000% Fidelity Management & Research Co. $15,000,000 30.0000% Jefferies & Co. Inc. $4,140,000 8.2800% Jefferies Partners Opportunity Fund, LLC $3,795,000 7.5900% Jefferies Partners Opportunity Fund II, LLC $2,760,000 5.5200% Jefferies Employees Opportunity Fund, LLC $805,000 1.6100% Total $50,000,000 100.0000% =========== A full-text copy of the November 1, 2005, DIP Credit Agreement is available for free at http://ResearchArchives.com/t/s?2c7 Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05-63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represent the Debtors in their restructuring efforts. As of June 30, 2005, McLeodUSA Incorporated reported $674,000,000 in total assets and $1,011,000,000 in total debts. McLeodUSA Inc. previously filed for chapter 11 protection on January 30, 2002 (Bankr. D. Del. Case No. 02-10288). The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and that Plan took effect on April 16, 2002. The Court formally closed the case on May 20, 2005. (McLeodUSA Bankruptcy News, Issue No. 3 Bankruptcy Creditors' Service, Inc., 215/945-7000). MCLEODUSA INC: Court Okays Skadden Arps as Bankruptcy Counsel ------------------------------------------------------------- The Honorable John H. Squires of the U.S. Bankruptcy Court for the Northern District of Illinois, Chicago Division, gave McLeodUSA Incorporated and its debtor-affiliates authority to employ Skadden, Arps, Slate, Meagher and Flom LLP, as their bankruptcy counsel, nunc pro tunc to Oct. 28, 2005. Skadden will continue representing the Debtors in their current restructuring efforts. As previously reported in the Troubled Company Reporter on Nov. 7, 2005, pursuant to an Engagement Agreement dated March 1, 2005, Skadden will be paid a $250,000 retainer for professional services and expenses. Because Skadden has been representing the Debtors for years on multiple matters, Skadden was already holding retainers aggregating $415,000, which was simply maintained as the retainer under the Engagement Agreement with the Debtors' consent. In the 90 days prior to the Petition Date, in the ordinary course of business, the Debtors paid Skadden $2,418,652 for services rendered and as reimbursement for charges and disbursements incurred, $2,338,806 of which was attributable to legal services performed and charges and disbursements incurred in contemplation of or in connection with their Chapter 11 cases. Skadden will be providing professional services to the Debtors under its bundled rate schedules and, therefore, Skadden will not be seeking to be separately compensated for certain staff and clerical personnel who also record time spent working on matters. As of Sept. 1, 2005, the hourly rates under the bundled rate structure range: Designation Hourly Rate ----------- ----------- Partners & Of Counsel $585 to $835 Counsel & Special Counsel $560 to $640 Associates $295 to $540 Legal Assistants & support staff $90 to $230 Consistent with the Firm's policy with respect to its other clients, Skadden will continue to charge the Debtors for all other services provided and for other charges and disbursements incurred in the rendition of services. Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05-63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represent the Debtors in their restructuring efforts. As of June 30, 2005, McLeodUSA Incorporated reported $674,000,000 in total assets and $1,011,000,000 in total debts. McLeodUSA Inc. previously filed for chapter 11 protection on January 30, 2002 (Bankr. D. Del. Case No. 02-10288). The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and that Plan took effect on April 16, 2002. The Court formally closed the case on May 20, 2005. (McLeodUSA Bankruptcy News, Issue No. 3 Bankruptcy Creditors' Service, Inc., 215/945-7000). MCLEODUSA INC: Court Okays Logan & Company as Noticing Agent ------------------------------------------------------------ Pursuant to Rule 1007(a)(1) of the Federal Rules of Bankruptcy Procedure and Local Rule 1007-1, a Chapter 11 petition is to be accompanied by a list of parties-in-interest in a computer readable format designed and published from time to time by the clerk of the Court. Pursuant to Bankruptcy Rule 2002, the Clerk, or some other person as the Court may direct, is required to provide various notices to creditors, equity security holders, the United States and the U.S. Trustee. Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Chicago, Illinois, relates that there are approximately 10,000 creditors and parties-in-interest in McLeodUSA Incorporated and its debtor-affiliates' cases to whom certain notices, including notice of the chapter 11 cases, may be sent. The size and magnitude of the noticing process to parties-in-interest makes it impracticable for the Clerk to undertake that task. Accordingly, the Debtors sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of Illinois, Chicago Division to: (a) make available the Mailing Matrix to any party-in-interest who requests, at that party's sole cost and expense, in addition to filing the Mailing Matrix, which will be provided to the Clerk in an ASCII or text format; (b) mail directly to the parties on the Mailing Matrix initial notices; and (c) employ Logan & Company, Inc., as the authorized noticing agent of the Bankruptcy Court to undertake mailings as directed by the Debtors, the Court or the U.S. Trustee. Logan's Services As Noticing Agent, Logan will: (a) relieve the Clerk of the Bankruptcy Court of all noticing under any applicable rule or bankruptcy procedure and processing of claims, including: -- initial notice of filing; -- notice of hearing on disclosure statement and plan confirmation; -- other miscellaneous notices to any entities, not necessarily creditors, that the Debtors or the Court deem necessary for an orderly administration of the Chapter 11 cases. (b) file with the Clerk's Office a certificate of service, within 10 days after each service, which includes a copy of the notice, a list of persons to whom it was mailed and the date mailed; (c) make all original documents available to the Clerk's Office on an expedited immediate basis; (d) comply with applicable state, municipal and local laws and rules, orders, regulations and requirements of Federal Government Departments and Bureaus; and (e) promptly comply with further conditions and requirements as the Clerk's Office may prescribe. The Debtors agree to pay Logan's customary rates and any necessary out-of-pocket expenses incurred for transportation, lodging, meals and related items. Kathleen M. Logan, president of Logan & Company, maintains that the firm: (1) will not consider itself employed by the United States government and will not seek any compensation from the government in its capacity as the Noticing Agent in the Debtors' Chapter 11 cases; (2) waives any rights to receive compensation from the U.S. government; (3) will not be an agent of the United States and will not act on behalf of the United States; and (4) will not employ any past or present employees of the Debtors in connection with its work as the Noticing Agent. Ms. Logan assures the Court that the firm and its employees have no connection with the Debtors, their creditors or any other party-in-interest. Neither Logan nor any of its employees represent any interest adverse to the Debtors' estates with respect to the matters on which Logan is to be engaged. Headquartered in Cedar Rapids, Iowa, McLeodUSA Incorporated -- http://www.mcleodusa.com/-- provides integrated communications services, including local services in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Debtor and its affiliates filed for chapter 11 protection on Oct. 28, 2005 (Bankr. N.D. Ill. Case Nos. 05-53229 through 05-63234). Peter Krebs, Esq., and Timothy R. Pohl, Esq., at Skadden, Arps, Slate, Meagher and Flom, represent the Debtors in their restructuring efforts. As of June 30, 2005, McLeodUSA Incorporated reported $674,000,000 in total assets and $1,011,000,000 in total debts. McLeodUSA Inc. previously filed for chapter 11 protection on January 30, 2002 (Bankr. D. Del. Case No. 02-10288). The Court confirmed the Debtor's chapter 11 plan on April 5, 2003, and that Plan took effect on April 16, 2002. The Court formally closed the case on May 20, 2005. (McLeodUSA Bankruptcy News, Issue No. 4 Bankruptcy Creditors' Service, Inc., 215/945-7000). MERRIL LYNCH: Fitch Puts Low-B Ratings on $11.66-Mil Cert. Classes ------------------------------------------------------------------ Fitch rates Merrill Lynch Mortgage Investors Trust, mortgage loan asset-backed certificates, series 2005-SL3, which closed on Nov. 10, 2005: -- $262.25 million, classes A-1, A-2A and A-2B 'AAA'; -- $31.77 million class M-1 'AA'; -- $25.94 million class M-2 'A'; -- $15.23 million class B-1 'BBB+'; -- $6.39 million class B-2 'BBB'; -- $6.20 million class B-3 'BBB-'; -- $6.02 million class B-4 'BB+'; -- $5.64 million class B-5 'BB'. The 'AAA' rating on the senior certificates reflects the 33.95% initial credit enhancement provided by 8.45% class M-1, the 6.90% class M-2, the 4.05% class B-1, the 1.70% class B-2, the 1.65% class B-3, the privately offered 1.60% class B-4, the privately offered 1.50% class B-5, along with overcollateralization. The initial OC is 4.40% with a target OC of 8.10%. All certificates have the benefit of excess interest. In addition, the ratings reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of Wilshire Credit Corporation as servicer. LaSalle Bank National Association will act as trustee. The collateral pool consists of fixed second lien mortgage loans and totals $375,991,445 as of the cut-off date. The weighted average original loan-to-value ratio is 97.23%. The average outstanding principal balance is $46,270, the weighted average coupon is 9.848% and the weighted average remaining term to maturity is 226 months. 30.03% of the loans have prepayment penalties. The loans are geographically concentrated in California, Florida, and New York. All of the mortgage loans were originated or acquired by one of the originators and subsequently purchased by Merrill Lynch Mortgage Capital, Inc. Approximately 28.28%, 18.20% and 16.33% of the mortgage loans were underwritten in accordance with the underwriting guidelines of Option One Mortgage Corporation, Accredited Home Lenders and Acoustic Home Loans LLC, respectively. The remaining Mortgage Loans were originated by various originators, none of which originated mortgage loans representing more than approximately 10% of the mortgage loans. MICRO COMPONENT: Posts $992,000 Net Loss in Third Quarter --------------------------------------------------------- Micro Component Technology, Inc. (OTCBB:MCTI) delivered its financial results for the quarter ended Sept. 24, 2005, to the Securities and Exchange Commission on Nov. 7, 2005. Micro Component reported a $992,000 net loss for the three months ended Sept. 24, 2005, as compared to a $476,00 net loss for the same period in 2004. Net sales for the third quarter were $1.8 million, an increase of 33.0% above net sales of the prior quarter and a decrease of 54.4% from the quarter ended September 25, 2004. Gross profit for the third quarter of 2005 decreased by $1.2 million to $0.8 million, or 44.0% of net sales, from $2 million, or 50.7% of net sales, for the comparable period in the prior year. The Company's balance sheet showed $5,105,000 of assets at Sept. 24, 2005, and liabilities totaling $10,728,000, resulting in a $5,623,000 stockholders' deficit. Micro Component's President, Chairman and Chief Executive Officer, Roger E. Gower, commented, "It appears that the Test and Assembly portion of the Semiconductor Capital Equipment Market as reported by the Semiconductor Equipment and Materials Institute has experienced a steady upturn in bookings for the past six months and this has been reflected in our improving results. "It is still early to project a firm upturn in bookings for 2006 but the direction is gratifying. As previously announced, our customers continue to see the significant benefits afforded to them through the utilization of our strip technology. In one large device manufacturer situation, over 50% of its worldwide production today is tested utilizing our Tapestry equipment. "At the same time, we will continue to remain diligent to reduce costs where we can and were pleased to see our operating costs down approximately 36% and 21% for the three and nine month periods ended September 24, 2005, respectively, from the prior year period," concluded Mr. Gower. Capital Resources Capital expenditures were $12,000 for the first nine months of 2005 compared to $131,000 in the comparable prior year period. The capital spending in the current year period was primarily in the area of information technology equipment. The prior year spending was primarily in the area of technology equipment and facility costs related to Micro Component's Malaysian operations. On Jan. 28, 2005, the Company completed an amendment to its $5 million secured financing with an institutional lender whereby payments due under the long-term convertible notes have been deferred for one year, resulting in $800,000 of principal payments being rescheduled to begin on February 1, 2006. The maturity date of the long-term convertible note has also been extended for one year from March 2007 to March 2008. On April 29, 2005, the Company borrowed an additional $2.5 million for the institutional lender. The new loan provides for monthly interest payments at a rate equal to prime plus 1.75%. Beginning six months after the closing, The Company is required to make monthly payments equal to 1/30th of the principal amount until three years after the closing, at which time the entire remaining principal and accrued interest is due and payable in full. The Company received net proceeds of approximately $2.4 million at the closing. In connection with this transaction, The Company issued the lender an option to purchase 2,556,651 shares at $0.01 per share. On Feb. 25, 2005, Micro Component completed a new restructuring agreement with its 10% Senior Convertible Noteholders. Under the agreement, the Noteholders representing $2.9 million in debt, or 80% of the debt existing as of December 31, 2004, have agreed to continue to accept stock in lieu of cash for their interest payments for the remaining term of the notes through December 2006. During the first quarter of 2004, $3.7 million of the Notes were converted to equity under the agreement resulting in the issuance of 3,710,000 shares of common stock to the noteholders. Going Concern Doubt Virchow, Krause & Company, LLP, expressed substantial doubt about Micro Component's ability to continue as a going concern after it audited the Company's financials statements for the years ended Dec. 31, 2004 and 2003. The auditing firm pointed to the Company's recurring losses from operations and stockholders' deficit at Dec. 31, 2004. About Micro Component Micro Component -- at http://www.mct.com-- supplies integrated automation solutions for the global semiconductor test and assembly industry. MCT offers complete and comprehensive equipment automation solutions for the test, laser mark handling equipment, mark inspect, singulation, sort, and packaging for shipment portions of the back-end of the semiconductor manufacturing process that significantly improve our customers' productivity, yield and throughput. MONTPELIER REINSURANCE: Moody's Cuts Pref. Shelf Rating to (P)Ba2 ----------------------------------------------------------------- Moody's Investors Service lowered the credit ratings of Montpelier Reinsurance Holdings Ltd. (NYSE: MRH) (senior debt to Baa3 from Baa2), and the insurance financial strength rating of Montpelier Reinsurance Ltd. to Baa1 from A3. These rating actions conclude a review initiated on Sept. 12, 2005 and reiterated on Sept. 23, 2005. The outlook is stable. According to Moody's, the downgrade of MRH reflects its substantial losses recorded from recent hurricanes, which represent 66% of shareholders' equity as of June 30, 2005 and over two years worth of net income. These losses were outside of Moody's rating expectations and raise concerns about the company's risk management. This is especially true given Moody's expectations that the company's first quarter extraordinary dividend of $390 million was predicated in large part on a reduced underwriting risk profile. Although the company raised $600 million in equity capital shortly after announcing its initial loss estimate for Hurricane Katrina, the loss estimates have increased significantly and the company has incurred additional losses from Hurricanes Rita and Wilma. The stable outlook of MHR reflects Moody's view that the company will re-evaluate its risk tolerance and reduce its underwriting exposures commensurate with its reduced capital levels. In addition, the current rating incorporates the likelihood that MHR will undertake other initiatives to strengthen its balance sheet and financial flexibility. Going forward, Moody's expects that the company's financial leverage will remain below 20% and that the company will take appropriate capital management actions should estimated losses from the hurricanes be revised upward or losses from additional storms be incurred. These ratings have been lowered and the rating outlook is stable: Montpelier Re Holdings Ltd.: * senior unsecured debt to Baa3 from Baa2 * subordinate debt shelf to (P)Ba1 from (P)Baa3 * preferred shelf to (P)Ba2 from (P)Ba1 MRH Capital Trust I: * capital securities to (P)Ba1 from (P)Baa3 MRH Capital Trust II: * capital securities to (P)Ba1 from (P)Baa3 Montpelier Reinsurance Ltd.: * insurance financial strength to Baa1 from A3 Montpelier Re Holdings Ltd. (NYSE: MRH) is a Bermuda-based, publicly-traded holding company, that provides global specialty reinsurance products through its Bermuda-domiciled, wholly-owned reinsurance operating subsidiary, Montpelier Reinsurance Ltd. For the quarter ended September 30, 2005, MRH reported gross written premiums of $290 million and net loss of $875 million. As of September 30, 2005, shareholders' equity was $1.13 billion. MORGAN STANLEY: S&P Assigns Low-B Ratings to $41.7MM Cert. Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Morgan Stanley Capital I Trust 2005-HQ7's $1.96 billion commercial mortgage pass-through certificates series 2005-HQ7. The preliminary ratings are based on information as of Nov. 10, 2005. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the fiscal agent, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-1A, A-2, A-AB A-3, A-M, A-J, B, C, D, E, and F are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.41x, a beginning LTV of 104.2%, and an ending LTV of 90.4%. A copy of Standard & Poor's complete presale report for this transaction can be found on RatingsDirect, Standard & Poor's Web- based credit analysis system, at http://www.ratingsdirect.com/ The presale can also be found on the Standard & Poor's Web site at http://www.standardandpoors.com/ Select Credit Ratings, and then find the article under Presale Credit Reports. Preliminary Ratings Assigned Morgan Stanley Capital I Trust 2005-HQ7 Class Rating Amount ($) Recommended credit support (%) ----- ------ ---------- ------------------ A-1 AAA 125,000,000 30.000 A-1A AAA 217,220,000 30.000 A-2 AAA 205,100,000 30.000 A-AB AAA 100,000,000 30.000 A-3 AAA 725,941,000 30.000 A-M AAA 196,180,000 20.000 A-J AAA 139,779,000 12.875 B AA+ 14,713,000 12.125 C AA 26,975,000 10.750 D AA- 17,166,000 9.875 E A+ 17,166,000 9.000 F A 19,618,000 8.000 G A- 19,618,000 7.000 H BBB+ 26,974,000 5.625 J BBB 19,618,000 4.625 K BBB- 19,618,000 3.625 L BB+ 7,357,000 3.250 M BB 9,809,000 2.750 N BB- 4,905,000 2.500 O B+ 4,904,000 2.250 P B 4,905,000 2.000 Q B- 9,809,000 1.500 S NR 29,427,251 N/A X* AAA 1,961,802,251 N/A *Interest-only class with a notional dollar amount. NR--Not rated. N/A--Not applicable. MORTGAGE CAPITAL: Fitch Lifts Low-B Ratings on $52.2M Class Certs. ------------------------------------------------------------------ Fitch Ratings upgrades Mortgage Capital Funding, Inc.'s, multifamily/commercial mortgage pass-through certificates, series 1997-MC2: -- $43.5 million class F to 'BBB-' from 'BB+'; -- $8.7 million class G to 'BB+' from 'BB'. In addition, Fitch affirms these certificates: -- $181.3 million class A-2 at 'AAA'; -- Interest-only class X at 'AAA'; -- $52.2 million class B at 'AAA'; -- $43.5 million class C at 'AAA'; -- $39.2 million class D at 'AAA'; -- $19.6 million class H at 'B'; -- $10.9 million class J at 'B-'. Fitch does not rate the $26.1 million class E and the $8 million class K certificates. Class A-1 has been paid in full. The upgrades are the result of increased subordination levels due to loan payoffs and amortization. As of the October 2005 distribution date, the pool's aggregate principal balance has been reduced 50.3%, to $433.1 million from $870.6 million at issuance. The pool has realized $9.4 million in losses to date. The pool contains five loans that are currently in special servicing. The largest specially serviced loan is secured by a multifamily property in Indianapolis, IN and is 30 days delinquent. The loan was transferred to the special servicer in June 2005 due to imminent default. The special servicer is evaluating workout strategies for this property. The second largest specially serviced loan is a retail outlet center in Burlington, NC, and is 90+ days delinquent. Foreclosure has been initiated on this property. While Fitch expects losses on the specially serviced assets, they are anticipated to be absorbed by the nonrated class K. Fitch has identified 17 loans of concern, which include the specially serviced loans and loans that have experienced declines in cash flow and occupancy. Fitch continues to monitor the performance of these loans. NETWORK COMMS: Moody's Rates $175 Million Sr. Sub. Notes at B3 -------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Network Communications, Inc.'s (NCI) proposed $100 million senior secured credit facilities; a B1 Corporate Family rating; and a B3 rating to its proposed $175 million senior subordinated notes. The outlook is stable. Details of the rating action are: Network Communications, Inc.: * $25 million senior secured revolving credit facility due July 2010 -- Ba3 * $75 million senior secured Term loan B -- Ba3 * $175 million senior subordinated notes, due 2013 -- B3 * Corporate Family rating -- B1 The rating outlook is stable. The ratings reflect: * NCI's high leverage; * its vulnerability to activity in the real estate market and real-estate advertising spending; * strong competition from a number of better capitalized rivals; * reliance upon two titles for around 75% of its sales; and * a dependence upon acquisitions and new market launches for a significant contribution towards its recent growth. The ratings are supported by: * the market share and reputation of its flagship publication; * The Real Estate Book; * the local nature of its business; * the wide geographic range of its markets; * the diversification of its real estate advertiser base; and * its low- cost distribution model. In addition, the ratings are supported by the expected continuation of growth in real estate advertising spending. The proposed financing will increase NCI's debt by $18 million to $250 million, or approximately 8.3 times EBITDA for its most recent fiscal year ending March 30 2005. Adjusting for the benefit of a strong first quarter (ending June 30, 2005) and the acquisition of Weisner Publishing and Lone Wolf Publishing in the first half of 2005, the proposed debt leverage would have declined to approximately 6.7 times adjusted LTM EBITDA at the end of June 2005. NCI's business, which is directly dependent upon the underlying activity taking place in various real-estate markets around the country, has enjoyed relatively strong top line growth. Much of this growth has resulted from the entry into new geographical markets, reflected by 36 new market launches during fiscal 2005 and 13 for YTD fiscal 2006. Moody's expects to see a slow-down in the pace of new market launches with a commensurate moderation in the growth of the company's profitability. In addition, a significant portion of the company's recent growth has been achieved from acquisitions, and is not reflective of expected future organic growth. Local real estate advertising is an intensely competitive business, and NCI competes against strong rivals including Primedia and Trader Publishing. In addition, NCI competes against local newspapers and other forms of local real estate advertising. NCI's low cost distribution strategy and its extensive use of independent distribution channels, enables a broader, though arguably lower-end, market coverage compared to the supermarket focus and direct distribution approach of its competitors. NCI has completed a number of acquisitions, including two significant purchases during the first half of 2005, totaling $33 million. Moody's expects that management will continue to use its excess free cash flow to make further acquisitions as well as to fund a planned $5 million investment in a new printing press during FY 2006. For fiscal 2005, NCI recorded an EBITDA margin of 22%, which reflected the contribution of higher-margined restricted group subsidiaries, partially offset by EBITDA losses from its unrestricted group of subsidiaries, the latter largely representing developmental properties. Proceeds of the proposed financing will be used to repay: 1) $176 million in existing bank debt; 2) $30 million in senior subordinated notes; and 3) $25 million in holding company debt. At closing, NCI expects to record $13.7 million in cash and $25 million in undrawn availability under its revolving credit facility, representing an adequate liquidity profile. The Ba3 senior secured credit revolver and term loans are rated one notch above the B1 Corporate Family rating, reflecting their senior-most position in the capital structure and the relatively low multiple required to cover this portion of debt under a distressed scenario. Senior secured lenders will benefit from a pledge of the stock of the operating subsidiaries plus a lien on all assets and upstream guarantees from subsidiaries. Covenants under the proposed bank credit facility are governed by the performance of NCI's restricted group of subsidiaries, rather than the lower EBITDA results of the company's consolidated operations. According to this definition, initial leverage will stand at approximately 6.3 times debt to EBITDA. The revolving credit, which is not expected to be utilized, will have covenants customary for senior secured credit facilities of this type; however, the term loan's covenants will be those more customary for publicly traded high yield securities. The B3 rating on the senior subordinated notes reflects their contractual subordination to the senior secured credit facilities, and the rating is notched two levels below the B1 Corporate Family rating. These securities will also benefit from upstream subsidiary guarantees and will have incurrence covenants covering: * indebtedness, * restricted payments, * mergers and consolidatons, * asset sales, * payment restrictions affecting subsidiaries, and * transaction with affiliates. Since the company at close will be positioned at the low end of the B1 Corporate Family rating band, an upgrade is highly unlikely in the near term. However, ratings could be downgraded or the rating outlook changed to negative: * if the costs of further new market development or operating losses at the unrestricted subsidiary level increase marginally and place downward pressure on free cash flow, delaying the expected rate of deleveraging; * if the company is unable to maintain its current market shares; or * if NCI makes further sponsor distributions prior to achieving a significant reduction in leverge. Moody's has based its ratings upon a review of the audited financials of GMH Holding Corproration and its subsidiaries (GMH) for the period ending March 27, 2005, with the understanding that the financial results of GMH differ in no significant manner from those of NCI. Headquartered in Lawrenceville, Georgia, Network Communications, Inc. is a publishing and printing company with sales of $137 million in fiscal 2005. NORTHLAKE CDO: Fitch Places BB Rating on $14-Mil Preference Shares ------------------------------------------------------------------ Fitch Ratings affirms five classes of rated notes issued by Northlake CDO I, Limited. These affirmations are the result of Fitch's review process. These rating actions are effective immediately: -- $174,000,000 class I-MM floating-rate notes at 'AAA/F1'; -- $56,000,000 class I-A floating rate notes at 'AAA'; -- $45,000,000 class II floating rate notes at 'AA'. -- $14,500,000 class III floating rate notes at 'BBB'; -- $14,000,000 preference shares at 'BB'. Northlake is a collateralized debt obligation, which closed in February 2003 and is managed by Deerfield Capital Management. Northlake is composed of 45.6% residential mortgage-backed securities, 28.2% asset-backed securities, 19.8% commercial mortgage-backed securities, and 6.3% collateralized debt obligations. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and its portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing and interest- rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. Since the last review, the collateral has continued to perform. The weighted average credit quality has remained 'BBB+/BBB', based on the trustee report as of Sept. 30, 2005. The transaction is in compliance with all collateral quality tests and satisfies all of the coverage tests. As of the most recent trustee report available, collateral assets with the credit quality below 'BBB-' represented 4.9% of the $289 million of total collateral and eligible investments. This compares with 2.8% of the collateral and eligible investments as of Oct. 29, 2004. The ratings of the class I-MM, I-A, and II notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the class III notes addresses the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the preference shares addresses the ultimate payment of a 2% internal rate of return. Additionally, the 'F1' rating on the class I-MM notes is based on the support provided to the notes by the put agreement provided by AIG Financial Products Corp. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings Web site at http://www.fitchratings.com/ For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004, available on Fitch's Web site at http://www.fitchratings.com/ NORTH STREET: Fitch Affirms BB+ Rating on $49-Million Income Notes ------------------------------------------------------------------ Fitch Ratings has affirmed six classes of notes of North Street Referenced Linked Notes 2002-4, Ltd. These rating actions are effective immediately: -- $353,000,000 class A notes affirmed at 'AAA'; -- $40,000,000 class B notes affirmed at 'AA'; -- $46,000,000 class C notes affirmed at 'A'; -- $61,000,000 class D notes affirmed at 'BBB+'; -- $25,000,000 class E notes affirmed at 'BBB'; -- $49,000,000 income notes affirmed at 'BB+'. North Street 2002-4, which closed on March 15, 2002, is a partially funded synthetic collateralized debt obligation created to enter into a credit default swap with UBS Investment Bank. The reference portfolio on North Street 2002-4 consists primarily of corporate bonds, asset-backed securities, commercial mortgage backed securities, and real estate investment trust securities. As part of this review, Fitch discussed the current state of the portfolio with the asset manager and its portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing scenarios to measure the breakeven default rates relative to the minimum cumulative default rates required for the rated liabilities. The affirmation of the ratings is a result of the stable credit quality of the reference portfolio, with the weighted average rating of 'BBB+' both as of the most recent trustee report dated October 31, 2005 and at the time of last review. Assets rated at or below 'BBB' represented 35% as of the most recent trustee report available and 39.6% at the time of last review, below the allowed maximum of 50%. The referenced portfolio has experienced no credit events to date. The ratings of the class A, B, C, and D notes addresses the credit quality of the reference pool and the likelihood of the applicable class of notes having to make credit protection payments under the credit default swap. The rating of the class E notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the income notes addresses the likelihood that investors will receive ultimate payments of interest, at the rated coupon of 7.5%, as well as the stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings Web site at http://www.fitchratings.com/ For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004, available on Fitch's Web site at http://www.fitchratings.com/ NORTH STREET: Fitch Retains Junk Rating on $36.1-Mil Class E Notes ------------------------------------------------------------------ Fitch Ratings has affirmed six classes of notes of North Street Referenced Linked Notes 2000-2, Ltd. These rating actions are effective immediately: North Street 2000-2 -- $60,800,000 class A notes affirmed at 'AA-'; -- $32,600,000 class B notes affirmed at 'BBB+'; -- $29,000,000 class C notes affirmed at 'BBB-'; -- $7,500,000 class D notes affirmed at 'BB+'; -- $36,100,000 class E notes remain at 'CCC'; -- $19,716,100 income notes remain at 'C'. North Street 2000-2 is a partially funded synthetic collateralized debt obligation created to enter into a credit default swap with UBS Investment Bank. North Street 2000-2 closed on Oct. 27, 2000. The reference portfolio consists primarily of corporate bonds, asset-backed securities, commercial mortgage-backed securities, and real estate investment trust securities. As part of this review, Fitch discussed the current state of the portfolio with the asset manager and its portfolio management strategy going forward. In addition, Fitch conducted cash flow modeling utilizing various default timing scenarios to measure the breakeven default rates relative to the minimum cumulative default rates required for the rated liabilities. The affirmation of the ratings is a result of stabilization in the credit quality of the referenced portfolio. As of the most recent trustee report dated Oct. 31, 2005, Fitch Rating Factor of the referenced portfolio was 21.6, as compared with 22.4 at the time of last review on Oct. 29, 2004, but still above the allowed maximum of 17. Referenced securities below 'BBB-' represented 25.4% of the $1,176.7 million reference portfolio on Oct. 31, 2005, as compared with 24.6% at the time of the last review, above the allowed maximum of 3%. The referenced portfolio has experienced five credit events to date requiring protection payments over $39 million but no additional credit events since last review. The ratings of all classes of notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. The rating of the income notes addresses the likelihood that investors will receive full and timely payments of interest, at the rated coupon of 9.5%, as well as the stated balance of principal by the legal final maturity date. Fitch will continue to monitor and review this transaction for future rating adjustments. Additional deal information and historical data are available on the Fitch Ratings Web site at http://www.fitchratings.com/ For more information on the Fitch VECTOR Model, see 'Global Rating Criteria for Collateralised Debt Obligations,' dated Sept. 13, 2004, available on Fitch's Web site at http://www.fitchratings.com/ NORTHWEST AIRLINES: Inks Agreement with ATSA to Cut Wages by 9.9% ----------------------------------------------------------------- Northwest Airlines (OTC: NWACQ) reported on Nov. 11, 2005, that the membership of the Aircraft Technical Support Association has ratified a long-term labor cost restructuring agreement with the company. The contract is the first long-term labor cost restructuring agreement ratified by one of its seven unions that provides the total contribution from a work group toward the $1.4 billion in annual labor cost reductions the airline is seeking as part of its re-organization. "The membership of ATSA made an important investment in building a more competitive Northwest Airlines," said Julie Showers, vice president of labor relations. "We appreciate the hard work and commitment that ATSA leadership showed during the negotiating process and are pleased to have reached a consensual agreement that moves us closer toward achieving our labor cost savings goal." ATSA represents approximately 200 technical writers, trainers and maintenance planners at Northwest. The agreement represents $2.25 million in annual labor cost savings for the airline and will be in effect until the conclusion of the fourth full calendar year after the airline emerges from its Chapter 11 re-organization. The agreement includes a 9.9% wage reduction, profit sharing and benefit changes that will allow Northwest to be more cost competitive with both low-cost carriers and airlines that have restructured their costs through the bankruptcy process. Earlier this week, Northwest reached a tentative long-term agreement with The Transport Workers Union of America. As reported in the Troubled Company Reporter on Nov. 9, 2005, Northwest reported that it reached interim labor cost savings agreements with the Air Lines Pilots Association and the Professional Flight Attendants Association. The ALPA Master Executive Council agreed to temporary pay and other reductions of $215 million on an annualized basis and PFAA leaders agreed to cuts of $117 million. The ALPA agreement is subject to membership ratification. Northwest also reported earlier last week that it reached a tentative agreement on permanent wage and benefit reductions with employees represented by the Northwest Airlines Meteorology Association. The airline and the IAM are continuing to negotiate a permanent cost reduction agreement. The new contracts, along with salaried and management pay cuts implemented last December and also planned for next month, as well as labor cost savings achieved through its new aircraft maintenance program, are all part of Northwest's efforts to achieve a competitive labor cost structure. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05- 17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. NVE INC: Wants Exclusive Plan Filing Period Extended to Feb. 16 --------------------------------------------------------------- NVE Inc. asks the U.S. Bankruptcy Court for the District of Delaware to extend until Feb. 16, 2006, the period within which it has the exclusive right to file a chapter 11 plan. The Debtor also wants its plan confirmation period extended through April 15, 2006. The Debtor tells the Court that the formulation of a plan, which will be supported by the Official Committee of Unsecured Creditors, the plaintiff bar, and the retailers, will be an extraordinary and difficult task. The current plan filing period expires on Dec. 8, 2005. The Debtor believes unexpected delays will require a request for further extension. Thus, the extension period will allow the Debtor to move forward with its negotiations with the Creditors' Committee and other creditors. Headquartered in Andover, New Jersey, NVE Inc., dba NVE Pharmaceuticals, Inc., manufactures dietary supplements. The Debtor is facing lawsuits about its weight-loss products which contain the now-banned herbal stimulant, Ephedra. The Company filed for chapter 11 protection on August 10, 2005 (Bankr. D. N.J. Case No. 05-35692). When the Debtor filed for protection from its creditors, it listed $10,966,522 in total assets and $14,745,605 in total debts. NVE INC: Court Okays Marotta Gund as Panel's Financial Advisor -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave the Official Committee of Unsecured Creditors of NVE Inc., permission to retain Marotta Gund, Budd & Dzera, LLC, as its financial advisors and accountants. Marotta Gund will: a) assist the Committee in analyzing the Debtor's actual cash flow results and short-term cash flow forecast, understanding the nature and purpose of intercompany transactions, monitoring trade credit levels and assessing the Debtor's cash availability; b) conduct due diligence of NVE's annual operating plan and long-term business plan, including management strategies, initiatives, key assumptions, financial projections, risks and opportunities; c) identify opportunities for the Debtor to increase revenues, reduce costs, enhance profitability, improve liquidity and strengthen the management process; d) assist the Committee in preparing for Bankruptcy Court hearings, including providing testimony as required by the Court; e) advise the Committee with respect to the development, negotiation and approval of a Plan of Reorganization and Disclosure Statement; and f) perform other professional services as the Committee may request. Paul Dzera, Marotta Gund's principal partner, discloses that the Firm will bill the Debtor based on its professionals' hourly rates: Designation Hourly Rate ----------- ----------- Partners $525 Professional Staff $200 - $450 Mr. Dzera assures the Court that the firm does not hold or represent an adverse interest to the Debtor's estate. Headquartered in Andover, New Jersey, NVE Inc., dba NVE Pharmaceuticals, Inc., manufactures dietary supplements. The Debtor is facing lawsuits about its weight-loss products which contain the now-banned herbal stimulant, Ephedra. The Company filed for chapter 11 protection on August 10, 2005 (Bankr. D. N.J. Case No. 05-35692). When the Debtor filed for protection from its creditors, it listed $10,966,522 in total assets and $14,745,605 in total debts. NVE INC: Brown Rudnick Approved as Committee's Counsel ------------------------------------------------------ The U.S. Bankruptcy Court for the District of New Jersey gave the Official Committee of Unsecured Creditors appointed in NVE Inc.'s chapter 11 proceedings permission to employ Brown Rudnick Berlack Israels LLP as its counsel, nunc pro tunc to Sept. 20, 2005. As previously reported in the Troubled Company Reporter, Brown Rudnick will: 1) develop and negotiate the procedures to govern the allowance of claims of ephedra claimants and the distribution of proceeds to ephedra claimants in accordance with provisions of any plans of reorganization that may be submitted in the Debtors' bankruptcy proceedings; 2) develop and negotiate the procedural structure of an appropriate trial on causation, if necessary, and participate that trial solely to insure that the approved procedures are followed and not modified without the participation of the Committee; 3) protect the Committee's interest with respect to confirmation and consummation of any plans of reorganization that may be submitted in the Debtors' chapter 11 case; 4) appear in Court and at various meetings to represent the interests of the Committee and attend meetings and negotiate with the representatives of the Debtors, the Creditors' Committee and other parties-in-interst; 5) advise the Committee with respect to its rights, duties and powers in the Debtor's chapter 11 case and prepare for the Committee all necessary applications, motions, answers, memoranda, orders, reports and other legal papers in support of positions take by the Committee; 6) investigate transactions and claims and causes of action against the Debtor's shareholder and CEO and commence and prosecute those actions, if necessary; and 7) perform all other legal services for the Committee in connection with the Debtor's chapter 11 case in accordance with the scope of the Committee's duties and as required under the Bankruptcy Code and the Bankruptcy Rules. B. David J. Molton, Esq., a member of Brown Rudnick, is one of the lead attorneys for the Committee. Mr. Molton charges $600 per hour for his services. Mr. Molton reports Brown Rudnick's professionals bill: Professional Hourly Rate ------------ ----------- William R. Baldiga $685 Steven B. Smith $445 Designation Hourly Rate ----------- ----------- Partners $400 - $790 Associates $200 - $480 Paralegals $175 - $240 Mr. Molton assures the Court that the Firm does not represent any interest materially adverse to the Committee, the Debtor or its estate. Headquartered in Andover, New Jersey, NVE Inc., dba NVE Pharmaceuticals, Inc., manufactures dietary supplements. The Debtor is facing lawsuits about its weight-loss products which contain the now-banned herbal stimulant, Ephedra. The Company filed for chapter 11 protection on August 10, 2005 (Bankr. D. N.J. Case No. 05-35692). When the Debtor filed for protection from its creditors, it listed $10,966,522 in total assets and $14,745,605 in total debts. ORMET CORP: Union Vows to Prevent Plant Closure ----------------------------------------------- The United Steelworkers of America pledged that the Union will fight to save the jobs of about 500 hourly employees at Ormet's Rolling Mill, in spite of an announcement that the facility will be closed by the end of the year. Aleris Buy-Out Aleris International, Inc., said in a news release that the company has agreed to purchase "selected assets" within the Rolling Mill and plans to move the equipment to other Aleris plants. "I encourage Aleris to bargain with our Union and negotiate an agreement that will keep the Hannibal plants operating," USW District 1 Director David McCall, said. "A well-trained, experienced workforce could be a valuable asset that was overlooked in the early stages of this deal." USWA Challenges Mr. McCall said that the USWA faced similar challenges during the recent crisis in the steel industry that sent over 50 steel manufacturers into bankruptcy. He also pointed out that Aleris' headquarters in Beachwood, Ohio is less than ten miles from Mittal Steel's Cleveland facilities, which LTV Steel tried to shut down before the USWA sought out an investment firm that committed to operate the facility. "Our Union's experience dealing with distressed employers gives us an advantage as we move forward with working to save our plants," Mr. McCall said. "We will all do our parts to work with Aleris management and explore ways we can prevent the closure and get our members back on the job." MatlinPatterson McCall said that MatlinPatterson, the investment firm that now holds a majority stake in Ormet, never had a sincere interest in making and selling aluminum for profit and that the company's failure to negotiate a fair contract with the USWA since Ormet emerged from Chapter 11 Bankruptcy should have served as a warning. Headquartered in Wheeling, West Virginia, Ormet Corporation -- http://www.ormet.com/-- is a fully integrated aluminum manufacturer, providing primary metal, extrusion and thixotropic billet, foil and flat rolled sheet and other products. The Company and its debtor-affiliates filed for chapter 11 protection on January 30, 2004 (Bankr. S.D. Ohio Case No. 04-51255). Adam C. Harris, Esq., in New York, represents the Debtors in their restructuring efforts. When the Company filed for bankruptcy protection, it listed $50 million to $100 million in estimated assets and more than $100 million in total debts. The Company's chapter 11 plan was confirmed by the Court in April 2005. Under the confirmed Plan, Ormet was authorized to break labor contracts, which resulted in conflicts with the United Steelworkers of America. O'SULLIVAN INDUSTRIES: Wants Confirmation Hearing Set for Jan. 30 ----------------------------------------------------------------- Rule 3017(c) of the Federal Rules of Bankruptcy Procedure provides that on or before approval of a disclosure statement, the Court will fix a time within which the holders of claims and interests may accept or reject the plan of reorganization and may fix a date for the hearing on confirmation. In this regard, O'Sullivan Industries Holdings, Inc., and its debtor-affiliates ask Judge Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia to convene a hearing to consider confirmation of their Chapter 11 Plan on Jan. 30, 2006. In addition, the Debtors ask the Court to fix Jan. 16, 2006, as the last date by which objections to confirmation of the Plan must be filed. The Debtors propose that any Plan Objections will: (i) be in writing and state the name of the objector, its interest in their Chapter 11 cases, and, if applicable, the amount and nature of its claim or interest, as well as state with particularity the nature of the objection and its legal basis; (ii) include suggested language to amend the Plan in a manner that would resolve the objection; and (iii) be filed with the Court no later than the Plan Objection Deadline and served to these parties: (a) counsel to the Debtors; (b) the Office of the United States Trustee; (c) counsel to CIT Group/Business Credit, Inc.; (d) counsel to the trustee for the 10.63% senior secured notes due 2008; (e) counsel to the largest holders of the Senior Secured Notes; (f) counsel to the trustee for the 13.375% senior subordinated notes due 2009; and (g) counsel to the Official Committee of Unsecured Creditors. Furthermore, the Debtors anticipate that it might become necessary for them, as their Chapter 11 cases progress, to file and serve a supplement to the Plan. Thus, the Debtors ask the Court to allow them to file the Plan Supplement up to one week before the Plan Objection Deadline and that the deadline to object to the Plan Supplement be the Plan Objection Deadline. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) O'SULLIVAN IND: Panel Balks at Adequate Protection for Noteholders ------------------------------------------------------------------ The Official Committee of Unsecured Creditors tells Judge Mullins that without foundation in applicable law, O'Sullivan Industries Holdings, Inc., and its debtor-affiliates seek to provide excessive consideration to Senior Secured Noteholders in the guise of "adequate protection." The Committee believes that the Senior Secured Noteholders are more than adequately protected by the Debtors' maintaining the going-concern value of their business. Thus, the Committee asks the U.S. Bankruptcy Court for the Northern District of Georgia to substantially modify the adequate protection stipulation to ensure that the Debtors' Chapter 11 cases proceed on a level playing field, with a full and complete opportunity for the Committee to fulfill its statutory obligations. The Committee also asks the Court to consider its proposed alternative Adequate Protection Stipulation, which provides the Senior Secured Notes with "adequate protection" that the law compels, without sacrificing the rights of general unsecured creditors. James R. Sacca, Esq., at Greenberg Traurig, LLP, in Atlanta, Georgia, relates that on Nov. 3, 2005, the Committee received a revised version of the Adequate Protection Stipulation. Less than 24 hours later, the Committee received a further revised Adequate Protection Stipulation, which made additional substantive changes to the Initial Revised Adequate Protection Stipulation. "Once again, the Debtors' unsecured creditors are not only forced to play 'catch up,' but are forced to play 'catch up' with substantively moving parts," Mr. Sacca argues. "While some changes have been made from the Initial Adequate Protection Stipulation, the Revised Adequate Protection Stipulation still grossly overreaches and provides more than the law permits to the Senior Secured Noteholders under the pretext of 'adequate protection.'" According to Mr. Sacca, the extent of the Senior Secured Noteholders' Adequate Protection is limited and their replacement liens should be subject to avoidance as their prepetition liens are subject to avoidance. In addition, while the Senior Secured Noteholders' entitlement to a superpriority claim is now subject to some additional limitations, Mr. Sacca asserts that the revised adequate protection stipulation still impermissibly overly compensates the Senior Secured Noteholders. Moreover, Mr. Sacca notes that the Senior Secured Noteholders are not entitled to the current payment of their professionals' fees and expenses. "[I]t makes no economic sense to strain the Debtors' limited liquidity to pay the Senior Secured Noteholders' professionals on a current basis," Mr. Sacca asserts. Under the Debtors' proposed plan of reorganization, the Debtors' general unsecured creditors are being completely wiped out, Mr. Sacca points out. Mr. Sacca says it makes no sense for the Debtors' estates to pay the Senior Secured Noteholders' financial advisor for a so-called "success fee" when the Debtors' unsecured creditors are getting nothing. Mr. Sacca also contends that the terms of the proposed carve out discriminate against the Committee. In addition, Mr. Sacca contends that the Committee should be given more time to investigate the prepetition senior secured notes liens and Bank of New York's claim. The Committee asks the Court to extend the deadline for it to bring any action to challenge the Prepetition Senior Secured Notes Liens and the BNY Claim to January 24, 2006. Furthermore, Mr. Sacca argues that: * The Senior Secured Noteholders impermissibly seek to limit the rights of discovery and the rights of third parties-in-interest to commence an adversary proceeding; * Without due notice, the Debtors and the Senior Secured Noteholders seek to cap the amount that the Committee can spend on its Investigation; and * The Senior Secured Noteholders have added a new limitation that essentially waives the rights of all third parties to have their administrative claims paid from either the Prepetition Senior Secured Notes Collateral, the Postpetition Senior Secured Notes Collateral, or the unencumbered assets of the Debtors' estates, if the cases are not successful. "To allow the Senior Secured Noteholders to reap the benefits of chapter 11 and a windfall if the reorganization process does not prove to be successful is fundamentally unfair," Mr. Sacca tells Judge Mullins. "Post-petition creditors should not be asked to support the Debtors and then be put at risk to hold the proverbial 'bag'." Noteholders Want Objection Overruled GoldenTree Asset Management L.P., Mast Credit Opportunities I, (Master) Ltd., and BreakWater Fund Management, LLC, as the Ad Hoc Senior Secured Noteholders Committee, tell the Court that the Committee represents a constituency mostly comprised of deeply subordinated unsecured creditors that are "out of the money" by a substantial margin. Hence, the Ad Hoc Committee believes that the Committee's constituency has no economic interest in the Debtors' assets. "[N]otwithstanding substantial economic and other concessions made by the Ad Hoc Senior Secured Noteholders Committee to adequate protection objections raised by the Committee, the Committee persists in subjecting the Debtors' estates to a time- consuming, expensive fight over adequate protection," Richard F. Casher, Esq., at Kasowitz, Benson, Torres & Friedman, LLP, in New York, argues. The Debtors can ill afford lengthy, expensive litigation, he adds. Their cash resources are very limited, and anything but a short stay in Chapter 11 well may cause their largest customers to re-think their relationship with them. Thus, Mr. Casher asserts that the Debtors, mindful of their fiduciary duties to their in-the-money creditors, prudently have sought to place their Chapter 11 cases on a fast track. The Committee's lead objection stating that the Debtors' efforts to maintain going concern value is sufficient to provide the Senior Secured Notes with adequate protection under the law, has no foundation in bankruptcy jurisprudence, Mr. Casher contends. Moreover, Mr. Casher continues, the objection illogically presumes that one mystically can predict today that, despite the myriad business and economic risks that affect and challenge the Debtors' operations on a daily basis, their mere "efforts to maintain going concern value" will result in the successful management of the risks and preserve intact, over the course of indeterminate future months, their going concern value. Mr. Casher points out that other objections raised by the Committee concern the text of the Interim Adequate Protection Stipulation. "Those objections either are resolved by drafting changes reflected in the Final Adequate Protection Stipulation or economic concessions made by the Ad Hoc Senior Secured Noteholders Committee that are reflected in the Final Adequate Protection Stipulation, or are at odds with the economic realities affecting the Debtors' chapter 11 estates," Mr. Casher says. Mr. Casher contemplates that the Final Adequate Protection Stipulation, more than fairly and generously, takes into account the interests of the Committee's out-of-the-money constituency. It also balances them against the competing interests of the Senior Secured Noteholders, the only major constituency that has an economic interest in the Debtors' assets, and the one constituency whose collateral is funding the costs and expenses of the Chapter 11 Cases, including the fees and expenses of the Committee's Professionals, Mr. Casher adds. Accordingly, the Ad Hoc Committee asks the Court to overrule the Committee's Objection and approve the Final Adequate Protection Stipulation. Debtors Respond James C. Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout, P.A., in Atlanta, Georgia, tells the Court that all material objections have been resolved by major concessions from the Ad Hoc Committee. Hence, the Committee's remaining issues are not constructive and are largely trivial in the context of the Debtors' Chapter 11 cases. One of the Committee's primary complaints was the limitation on its professional fees included in the Carve-Out. Notwithstanding the economic realities of the Debtors' cases, Mr. Cifelli asserts that the Ad Hoc Committee has graciously agreed to remove the aggregate $200,000 limitation on professional fees and expenses of the Committee. Now, the fees and expenses are only subject to the overall limitation following a Commitment Termination Date. There is also a generous $50,000 limit for fees and expenses incurred in investigating claims against the secured noteholders represented by the Ad Hoc Committee, Mr. Cifelli adds. Furthermore, Mr. Cifelli refutes the Committee's contention that the Senior Secured Noteholders should receive only replacement liens because they are adequately protected by the fact that the Debtors' going concern value is greater than their liquidation value. "If that were the correct analysis, the result would be to deprive almost all secured creditors in Chapter 11 cases of any meaningful protection against a decrease in the value of their collateral and to discourage them from supporting debtors' reorganization efforts," Mr. Cifelli argues. Moreover, contrary to the Committee's 90-day period request to investigate and challenge the Prepetition Senior Secured Notes Liens and the Bank of New York's Claim, the Debtors believe that 75 days is more than sufficient time given that: (i) the professionals retained by the Committee received copies of the results of the Debtors' lien searches, along with a summary of those results, on or about August 30, 2005, and therefore have already had substantial time to undertake an investigation; (ii) the Ad Hoc Committee has stated that it will cooperate with the Committee in providing information and documentation promptly; and (iii) with the consent of the Ad Hoc Committee, the Committee will now have up to $50,000 available to conduct the investigation. "[A] shorter investigation period is consistent with the Debtors' strong desire to make their Chapter 11 cases proceed as rapidly as possible, both because it is important for their business not to languish in bankruptcy and because additional time will cause the incurrence of additional, unnecessary administrative costs," Mr. Cifelli avers. In any case, Mr. Cifelli notes that the Final Adequate Protection Stipulation provides that the Committee may ask the Court for additional time to conduct an investigation or discovery for cause shown. Moreover, Mr. Cifelli points out that the waivers in Section 506(c) of the Bankruptcy Code are customarily approved in connection with similar financing arrangements and are not unfair to third parties as the Committee contends because the Court has made it clear that employees and vendors who render services and provide goods to the Debtors during their Chapter 11 cases will not be left unpaid. Accordingly, the Debtors ask the Court to deny the Committee's Objection in its entirety. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) O'SULLIVAN IND: Wants to Pay U.K. Creditors' GBP250,000 Claims -------------------------------------------------------------- O'Sullivan Industries Holdings, Inc., and its debtor-affiliates sell products manufactured in the United States to large retailers in Europe through branch operations in the United Kingdom. The U.K. Branch leases office and warehouse space and has 14 employees. James C. Cifelli, Esq., at Lamberth, Cifelli, Stokes & Stout, P.A., in Atlanta, Georgia, tells the U.S. Bankruptcy Court for the Northern District of Georgia that the U.K. Branch is an expanding and important component of the Debtors' overall business, generating between $5,000,000 and $6,000,000 in revenues in fiscal year 2005. The Debtors believe that there is significant opportunity for growth in the U.K. and European markets and that the U.K. Branch will become even more important to the Debtors as they pursue foreign sourcing opportunities. In connection with their operation of the U.K. Branch, the Debtors have ongoing business relationships with various creditors in the United Kingdom that provide freight, carriage, temporary staffing, utility, and other services to the Debtors. Mr. Cifelli relates that the U.K. Creditors have certain prepetition claims against the Debtors totaling no more than GBP250,000. According to Mr. Cifelli, the U.K. Creditors have threatened to take, or have already taken, actions that could cripple the U.K. Branch operations. Certain U.K. Creditors have told the Debtors that they will not provide, or have already ceased providing, essential services to the U.K. Branch until their claims are paid. Other U.K. Creditors have refused to release freight that the U.K. Branch needs to satisfy customer orders until their claims are paid. Still other U.K. Creditors have indicated that, unless their claims are paid, they will bring U.K. insolvency proceedings against the U.K. Branch, which could result in the liquidation of the U.K. Branch's assets. In addition, Mr. Cifelli continues, management of the U.K. Branch is concerned that they may be subject to wrongful trading claims under U.K. law. Accordingly, the Debtors seek the Court's authority to pay, in their absolute discretion, the U.K. Claims. The Debtors also seek the Court's authority to condition payment of the U.K. Claims on the continued services to them during the course of their Chapter 11 case. In certain circumstances, the Debtors would include letters with checks paying outstanding U.K. Claims that would condition the cashing of those checks on an agreement by the particular U.K. Creditor to provide services in accordance with the usual and customary terms and conditions of the industry or on other terms acceptable to the Debtors. The Debtors also reserve the right to require written confirmation of that agreement from any U.K. Creditor before paying any U.K. Claim, to demand a return of any funds paid if appropriate postpetition services are not provided to them, and to contest any invoice of any U.K. Creditor. Mr. Cifelli says that the Debtors have considered various alternatives to paying the U.K. Claims. They have informed many of the U.K. Creditors that the Bankruptcy Code prevents them from paying the U.K. Claims and that the U.K. Creditors' actions or threatened actions would violate the automatic stay of the Bankruptcy Code. However, many of the U.K. Creditors were undeterred. Mr. Cifelli asserts that even assuming that the automatic stay or other provisions of the Bankruptcy Code apply, it would be extremely difficult, if not impossible, not to mention costly, for the Debtors to enforce those provisions against the U.K. Creditors. The Debtors have provided a confidential break-down of the U.K. Creditors and the U.K. Claims to the U.S. Trustee, counsel to the largest holders of the senior secured notes due 2008, counsel to The CIT Group/Business Credit, Inc., and counsel to the Official Committee of Unsecured Creditors. Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on October 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). On September 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) PHOENIX COMPANIES: Moody's Assigns (P)Ba2 Preferred Stock Rating ---------------------------------------------------------------- Moody's Investors Service assigned a provisional (P)Baa3 debt rating to The Phoenix Companies, Inc.'s (Phoenix; NYSE: PNX) senior unsecured notes due Feb. 16, 2008 that will be remarketed on Nov. 10, 2005, and issued on Nov. 16, 2005. Moody's has also assigned provisional ratings to Phoenix's $750 million shelf registration. The outlook on Phoenix and its subsidiaries is stable. The rating agency noted that Phoenix has made improvements in its risk profile in recent years. According to Moody's, management at Phoenix has done this through the disposition of numerous non-core assets, including minority interests in third-party companies and venture capital partnership investments. Adding to the company's improved credit profile are three other factors: 1) the aggressive management of expense levels by reducing or eliminating the focus on business lines not fitting into the companies' risk/return profile; 2) the rationalization of the asset management business; and 3) an improved capital position at Phoenix Life Insurance Company. Despite these improvements, Moody's noted that Phoenix has exhibited weak profitability on both statutory and GAAP reporting bases compared with its industry peers. In turn, weak and inconsistent statutory profitability at Phoenix Life Insurance Company has constrained the holding company's financial flexibility in terms of the cash dividend capacity to service the holding company's interest expense and other corporate obligations. In addition, Moody's cited other credit challenges at Phoenix including a meaningful outstanding unfunded pension obligation, which raises Phoenix's adjusted financial leverage, and the company's exposure to potential future write-offs of intangible assets associated with the prior acquisition of its asset management subsidiaries. The rating agency also pointed out that Phoenix maintains a modest market position in a consolidating industry. Moody's said factors that could lead to a ratings upgrade include: 1) GAAP return on equity (ROE) above 6%; 2) Earnings Interest Coverage above 4 times; 3) Cash Flow Interest Coverage above 2.5 times; 4) NAIC Risk-Based Capital consistently above 325%; 5) consistent consolidated statutory net income above $50 million; and 6) financial leverage (including pension obligations) of less than 25%. The rating agency also noted that negative rating pressure could develop if these occurs: 1) financial leverage (including pension obligations) exceeding 30%; 2) NAIC Risk-Based Capital Ratio dropping below 275%; 3) intangibles as a percentage of shareholders' equity (excluding accumulated other comprehensive income) exceeding 130%; or 4) Cash Flow Interest Coverage falling below 1.5 times. These ratings were assigned with a stable outlook: Phoenix Companies, Inc.: * (P)Baa3 senior unsecured debt rating; * (P)Ba1 subordinate debt rating; * (P)Ba2 preferred stock rating; and * a (P)Baa3 debt rating for senior unsecured notes, maturing February 16, 2008. Phoenix is an insurance and asset management organization headquartered in Hartford, Connecticut. As of September 30, 2005, Phoenix reported: * total assets of about $27.7 billion; * third-party assets under management of $38.8 billion; and * shareholders' equity of approximately $2 billion. PINNACLE ENT: S&P Puts BB- Rating on Proposed $750MM Sr. Sec. Loan ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating and a recovery rating of '1' to Pinnacle Entertainment Inc.'s proposed $750 million senior secured bank facility, indicating Standard & Poor's expectation that the lenders would realize full recovery of principal in the event of a payment default. Proceeds from the proposed bank facility will be used to refinance the company's existing credit facilities, to help provide funding for several of the company's planned capital investments, including its St. Louis developments, and for general corporate purposes. At the same time, Standard & Poor's affirmed its 'B+' corporate credit and 'B-' subordinated debt ratings on the Las Vegas, Nevada-based casino owner and operator. The rating on the company's existing senior secured bank facility will be withdrawn once the new facility is funded. Total debt outstanding at Sept. 30, 2005, was about $703 million. PIZZA INN: Posts $393,000 Net Loss for First Quarter 2006 --------------------------------------------------------- Pizza Inn, Inc. (Nasdaq: PZZI) reported a $393,000 net loss on $12.9 million in revenues for the first quarter ended Sept. 25, 2005, compared to a $285,000 net income on $14.4 million of revenues for the same period last year. "Despite the temporary negative impact of Hurricane Katrina on our financial results, our primary concern is with the people of the Gulf Region and our operators there," President and Chief Executive Officer Tim Taft, said. "We must, however, remain focused on the fundamentals of our business, from concept development to unit-level profitability. In the coming weeks we will introduce our new buffet concept in the Dallas and Houston markets, featuring a more progressive approach to our brand and its profitability. In addition, a new franchisee selection program will roll out in November of this year, targeting strategic markets throughout the chain. Also, as our Product and Purchasing Committee reduces costs in the operating system, our marketing efforts have been refocused to illuminate the brand's core competency -- a tradition of serving quality food and hospitality." Covenant Breaches The Company believes it has failed to comply with certain financial ratio covenants contained in its credit agreement with Wells Fargo Bank, N.A., as of the close of the company's fiscal quarter on Sept. 25, 2005. Upon the occurrence of an event of default, Wells Fargo may elect to: -- terminate the revolving credit commitment under the loan agreement; or -- declare all outstanding principal of and accrued and unpaid interest on the Company's obligations under the loan agreement immediately due and payable. The Company has requested that Wells Fargo agree to waive the event of default, though Wells is not obligated to grant the waiver. As of Oct. 24, 2005, Wells Fargo has not exercised any of the rights or remedies available to it under the Loan Agreement in these circumstances. The Company entered into a $6 million revolving credit agreement with Wells Fargo on Aug. 29, which allows the Company to obtain more favorable interest rates as financial results improve. Headquartered in The Colony, Texas, Pizza Inn, Inc. -- http://www.pizzainn.com/-- franchises approximately 400 restaurants with annual chain wide sales of over $160 million. REFCO INC: Amends RCM Stipulation with Creditors' Committee ----------------------------------------------------------- In a Court-approved stipulation, Refco Inc., and its debtor- affiliates and the Official Committee of Unsecured Creditors previously agreed that from Nov. 3 up to Nov. 9, 2005, Refco Capital Markets, Ltd., and any person or entity acting on its behalf, will not use, transfer convert, dissipate, hypothecate, liquidate, or otherwise dispose of any "security," as that term is defined in Section 101(49) of the Bankruptcy Code, or any "customer property" as defined in Sections 741(4) and 761(10), or other similar instruments, futures, and options. Parties Amend Stipulation The Debtors and the Committee amend and restate their stipulation limiting the activities of Refco Capital Markets for an additional period of five business days. The parties continue to seek to resolve consensually any outstanding issues regarding the alleged liquidation, sale, or transfer of securities of, or in the custody of, RCM, and, consequently, wish to maintain the status quo for seven more business days. In a Court-approved Amended Stipulation, the parties agree that: (1) Effective Nov. 9, 2005, and continuing to and including Nov. 18, 2005, RCM or any person or entity acting on its behalf, will not use, transfer, convert, dissipate, hypothecate, liquidate, or otherwise dispose of any "security" or of any "customer property" as defined in Sections 101(49) and 741(4) and 761(10) of the Bankruptcy Code, or other similar instruments, futures, and options. (2) With respect to Securities, Customer Property, or other Instruments, if any, that non-debtor Refco Securities received from RCM, Refco Securities will be bound by the Amended Stipulation as if it were one of the RCM Parties. (3) Effective Nov. 9, 2005, and continuing to and including Nov. 18, 2005, Refco Securities, and any of its representative will not use or transfer or otherwise dispose of any Securities, Customer Property, or other Instruments, without the express written consent of Robert N. Dangremond, of Alix Partners, LLC, as the Debtors' financial advisor, after consultation with Houlihan Lokey Howard & Zukin, as the Committee's financial advisor. However, that restriction will not apply to the transfer, conversion, dissipation, hypothecation, liquidation, or other disposition by any Refco Securities Party of Securities, Customer Property, or other Instruments that: (i) were not received directly or indirectly from, or held on RCM's behalf, by Refco Securities; and (ii) are held in retail accounts by natural persons who have fully satisfied any liabilities owed to Refco Securities. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) REFCO INC: 72 Parties Object to Use of Cash Management System ------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Nov. 2, 2005, Refco Inc., and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's authority to continue to use their existing cash management systems in the ordinary course of their businesses, to use the property of their estates, and to ensure an orderly transition into Chapter 11 proceedings. The Debtors use a centralized cash management system to fund their operational needs. Richard B. Levin, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, relates that Debtor Refco Capital LLC holds at least five bank accounts, including a concentration account at Harris Bank. Funds were transferred into the Concentration Account, on an as needed basis, from a number of sources, including from accounts held by Debtor Refco Capital Markets, Ltd. Mr. Levin tells Judge Robert D. Drain that the Debtors' integrated cash management system is complex, highly automated, and computerized. Nonetheless, the cash management procedures employed by the Debtors constitute essential business practices. Mr. Levin explains that the integrated cash management system provides significant benefits to all of the Debtors, including the ability to: (a) control corporate funds centrally; (b) invest idle cash; (c) ensure availability of funds when necessary; and (d) reduce administrative expenses by facilitating the movement of funds. The Debtors' business operation requires that the cash management systems continue during the pendency of their Chapter 11 cases. "Requiring the Debtors to adopt new, segmented cash management systems at this early and critical stage of these cases would be expensive, would create unnecessary administrative problems, and would be much more disruptive than productive," Mr. Levin asserts. "Any disruption could have a severe and adverse impact [on] the Debtors' ability to reorganize." Objections At least 72 parties-in-interest, mostly customers and creditors, ask the Court to deny the Debtors' request to continue using their existing cash management system: * Stilton International Holdings Limited * Rogers Raw Materials Fund, L.P. * Rogers International Raw Materials Fund, L.P. * Turisol Casa de Cambio, C.A. * AQR Absolute Return Master Account L.P. * AQR Global Asset Allocation Master Account L.P. * Premier Bank International N.V. * Rietumu Bank and RB Securities Limited * JWH Global Trust, IDS Managed Futures, L.P. * IDS Managed Futures II, L.P. * IDS Managed Fund LLC * Refco Advantage Multi-Manager Fund Futures Series I * Refco Winton Diversified Futures Fund * Interacciones Casa de Bolsa C.A. * Winchester Preservation LLC * Reserve Invest (Cyprus) Ltd. * Global Management Worldwide Limited and affiliates * VR Global Partners, L.P. * Paton Holdings Ltd. * VR Capital Group Ltd. * VR Argentina Recovery Fund Ltd. * Russia Growth Fund Ltd. * Aldesa Valores Puesto de Bolsa, Sa * Popular Valores Puesto de Bolsa, S.A. * Bank of America, N.A., as Administrative Agent * Banesco International de Puerto Rico * Banesco Banco Universal C.A. * Panama Branch; Banesco Holding C.A. * Banesco Banco Universal C.A. * Banesco, Banco International (Panama) S.A. * Miura Financial Services * Multiplicas Casa de Bolsa * Bencorp Casa de Bolsa C.A. * Clau Corporation Overseas LTD. * NBK Investments LTD * Almiron Finance Corp. * AFC Almiron * Dufil Investments S.A. * Bencorp Custody I * Total Bank Curacao N.V. * Total Bank N.V. * Fondo Comun Casa de Bolsa C.A. * La Primera Casa de Bolsa * La Primera C.B. * SBP Alternative Investments Fund * SBP Investments/Trading * SBP - Custody I * SBP Investments/Alternative * Markwood Investments * Union Holding Company * Gorey Finance, Inc. * Dover Commodities Corp. * Global Partners Emerging Markets S.A. * Acurob Investments AG * Capital Investment Services, Inc. * Enrico Priotti * Luca Desidero * Icis Trading Inc. * Carlos Alberto Nagel Markovic * Mistyrise International Ltd. * Inverunion S.A. Casa de Bolsa * Carlos Sevilleja * Cosmorex Ltd. * Creative Finance Limited * Invesdex Ltd (ICL) * Renaissance Advisory Services Limited * Banvalor Banco de Inversion * Capital Management Select Fund Ltd. * Acies Asset Management * KPC Corporation * the Official Committee of Unsecured Creditors * BAWAG P.S.K. Bank fur Arbeit und Wirschaft und Osterreichische Postsparkasse Aktiengesellschaft In separate pleadings, Stilton, et al., point out that the Debtors fail to articulate any legitimate business rationale, other than boilerplate assertions, supporting the need for continuing their cash management system, and how it is beneficial to the Debtor whose property is being swept. Stilton, et al., want the Court ensure that their assets and property that are held by the Debtors: (i) are not used as part of the cash management system, (ii) are not are not used to fund the operations of other entities, or (iii) are not otherwise used, transferred, disposed or dissipated by any of the Debtor entities. Stilton, et al., assert that the Debtors' ability to transfer funds to non-Debtor entities beyond the Court's control could injure all creditors. "The Debtors' cash management plan has no safeguards for ensuring that funds will not be spent outside of the ordinary course of business, and it does not prevent the Debtors from investing funds in Non-Debtor affiliates in a manner that violates Section 345 of the Bankruptcy Code." If the Court approves the Debtors' request, Bank of America says, the Order should provide for: -- appropriate limitations on amounts that will be advanced to entities where assurance of repayment may be questionable; -- appropriate notice and an opportunity for significant creditor representatives to object before the limitations on advances to any entity may be exceeded. Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) REFCO INC: 72 Parties Oppose Continuing Intercompany Transactions ----------------------------------------------------------------- Before the Petition Date, Refco Inc., and its debtor-affiliates and certain non-Debtor affiliates engaged in intercompany financial transactions with each other in the ordinary course of their businesses. Richard B. Levin, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, relates that those transactions are recorded by each entity as an intercompany obligation. Accordingly, the Debtors ask the Honorable Robert D. Drain of U.S. Bankruptcy Court for the Southern District of New York for permission to continue the Intercompany Transactions postpetition. The Debtors believe that the continuation of intercompany services is beneficial to their estates and creditors and that corresponding transfers among the appropriate intercompany accounts should be permitted. The Debtors also intend to preserve and exercise intercompany setoff rights pursuant to Section 553(a) of the Bankruptcy Code. Due to the nature of the Intercompany Transactions, balances due and owing may exist from one Debtor to another at any given time. Those balances represent extensions of intercompany credit, Mr. Levin explains. Mr. Levin notes that to ensure that each individual Debtor will not, at its creditors' expense, fund the operations of another entity, the Debtors will continue to maintain records of those transfers, including records of all current intercompany accounts receivable and payable. The Debtors further ask Judge Drain to accord all postpetition Intercompany Transactions superpriority status, with priority over any and all administrative expenses of the kind specified in Sections 503(b) and 507(b) of the Bankruptcy Code, subject and subordinate only to the priorities, liens, claims, and security interests, if any, granted under any debtor-in-possession financing facility to which the Debtors may become party and other valid liens. Moreover, Refco Capital LLC has entered into separate Paying Agent Agreements with certain Debtor and non-Debtor affiliates. Under the Agent Agreement, Refco Capital will have the ability, but not the obligation, to continue to pay the obligations of the Debtor and non-Debtor Affiliates, for which Refco Capital will receive cash, or other assurance of payment on review, on account of the entity for whom payment is being made. Refco Capital will act as agent and will hold its affiliates' money in trust. The Debtors ask Judge Drain to approve the Agent Agreement. A full-text copy of the Agent Agreement is available for free at: http://bankrupt.com/misc/refcopayingagentagreement.pdf Objections of 72 Parties-In-Interest In separate pleadings, at least 72 parties-in-interest, mostly customers and creditors of the Debtors, complain that: -- the Debtors fail to provide sufficient disclosure regarding Intercompany Transfers; -- the Debtors fail to disclose necessary information regarding proposed Intercompany Setoffs; -- the Debtors have not given a sufficient justification to allow the intercompany transactions; -- the Debtors fail to provide sufficient disclosure or support for the granting of superpriority status; and -- the Debtors fail to provide sufficient information regarding the proposed paying agent agreements. The Objecting Parties also assert that the Paying Agent Agreement should not be approved because it authorizes Refco Capital LLC to make payments on behalf of its affiliates even when the affiliates have not deposited the necessary amounts into Refco Capital's account. The Objecting Parties contend that Intercompany Transfers between and among Debtor and non-debtor affiliates should be prohibited until allegations that the Debtors may be liquidating and transferring among debtor and non-debtor affiliates assets which may constitute "customer property" are resolved. Moreover, Lending Debtors should be granted liens in the assets of Borrowing Debtor and non-debtor affiliates, the Objecting Parties state. The Objecting Parties are: * Stilton International Holdings Limited * Rogers Raw Materials Fund, L.P. * Rogers International Raw Materials Fund, L.P. * Turisol Casa de Cambio, C.A. * AQR Absolute Return Master Account L.P. * AQR Global Asset Allocation Master Account L.P. * Premier Bank International N.V. * Rietumu Bank and RB Securities Limited * JWH Global Trust, IDS Managed Futures, L.P. * IDS Managed Futures II, L.P. * IDS Managed Fund LLC * Refco Advantage Multi-Manager Fund Futures Series I * Refco Winton Diversified Futures Fund * Interacciones Casa de Bolsa C.A. * Winchester Preservation LLC * Reserve Invest (Cyprus) Ltd. * Global Management Worldwide Limited and affiliates * VR Global Partners, L.P. * Paton Holdings Ltd. * VR Capital Group Ltd. * VR Argentina Recovery Fund Ltd. * Russia Growth Fund Ltd. * Aldesa Valores Puesto de Bolsa, Sa * Popular Valores Puesto de Bolsa, S.A. * Bank of America, N.A., as Administrative Agent * Banesco International de Puerto Rico * Banesco Banco Universal C.A. * Panama Branch; Banesco Holding C.A. * Banesco Banco Universal C.A. * Banesco, Banco International (Panama) S.A. * Miura Financial Services * Multiplicas Casa de Bolsa * Bencorp Casa de Bolsa C.A. * Clau Corporation Overseas LTD. * NBK Investments LTD * Almiron Finance Corp. * AFC Almiron * Dufil Investments S.A. * Bencorp Custody I * Total Bank Curacao N.V. * Total Bank N.V. * Fondo Comun Casa de Bolsa C.A. * La Primera Casa de Bolsa * La Primera C.B. * SBP Alternative Investments Fund * SBP Investments/Trading * SBP - Custody I * SBP Investments/Alternative * Markwood Investments * Union Holding Company * Gorey Finance, Inc. * Dover Commodities Corp. * Global Partners Emerging Markets S.A. * Acurob Investments AG * Capital Investment Services, Inc. * Enrico Priotti * Luca Desidero * Icis Trading Inc. * Carlos Alberto Nagel Markovic * Mistyrise International Ltd. * Inverunion S.A. Casa de Bolsa * Carlos Sevilleja * Cosmorex Ltd. * Creative Finance Limited * Invesdex Ltd (ICL) * Renaissance Advisory Services Limited * Banvalor Banco de Inversion * Capital Management Select Fund Ltd. * Acies Asset Management * KPC Corporation * the Official Committee of Unsecured Creditors * BAWAG P.S.K. Bank fur Arbeit und Wirschaft und Osterreichische Postsparkasse Aktiengesellschaft Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. (Refco Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) REFCO INC: To Sell Retail FX Assets to Forex Capital Markets ------------------------------------------------------------ Refco, Inc. (OTC: RFXCQ) reported, on Nov. 11, 2005, that it has signed a Memorandum of Understanding with Forex Capital Markets LLC, a Futures Commission Merchant registered with the Commodity Futures Trading Commission and a member of the National Futures Association, to sell certain of its retail FX assets. The MOU provides for: * The sale of more than 15,000 retail client accounts of Refco FX Associates LLC (RefcoFX.com); and * The 35% share of Forex Capital Markets LLC currently owned by Refco. The transaction, which is valued at more than $110 million, includes cash, the assumption of certain customer account liabilities and forgiveness of certain debt. Under the terms of the MOU, RefcoFX.com clients may continue trading in their accounts without disruption, and - upon the consummation of a transaction -- all retail customer positions and orders traded on RefcoFX.com will be transferred intact. The MOU is subject to definitive documentation and approval by the U. S. Bankruptcy Court after an auction under which competing bids can be considered. Bids must provide for all retail customer positions and orders traded on RefcoFX.com to be transferred intact. As part of the MOU, FXCM has agreed to provide confidential materials, including all documents, agreements and financials relating to its relationship with Refco to qualified interested parties who sign a Non-Disclosure Agreement. FXCM Comments In a separate news release, Forex Capital Markets LLC also reported about the signing of the Memorandum of Understanding with units of Refco, Inc. The announcement was made on Nov. 11, 2005, by Drew Niv, CEO of Forex Capital Markets. "Both purchases are subject to the approval of the U.S Bankruptcy Court, which is currently overseeing Refco's chapter 11 cases," said Mr. Niv. At the moment, the RefcoFX clients are not permitted to withdraw funds in their trading accounts. "A purchase will liberate their customers from the bankruptcy proceedings, and give them full access to their funds," said Mr. Niv. "Upon completion of this purchase, RefcoFX account holders will be able to withdraw their funds, deposit them, trade with them - in short, carry out all normal account procedures." "FXCM is protecting the reputation of the online foreign exchange industry by demonstrating that there are strong, responsible forex firms able to stabilize the industry in difficult times. We believe that our efforts to make these customers whole underlines that commitment," said Mr. Niv. "This transaction is subject to the approval of the bankruptcy court, after an open bidding process whereby other potential buyers may also compete with FXCM for these assets but will also be required to protect retail customer accounts. The MOU contains a schedule that could result in a closing of a transaction within thirty days. Then all of RefcoFX retail clients' funds currently tied up in the bankruptcy proceedings would be available to them," said Mr. Niv. About Forex Capital Markets LLC Forex Capital Markets LLC provides currency trading services to retail traders under the name FXCM -- http://www.fxcm.com/-- and to institutional clients under name FXCM Pro -- http://www.fxcmpro.com/ The firm has serviced over 50,000 accounts and is registered with the CFTC as a Futures Commission Merchant. FXCM has received numerous awards from the investment community, including Best Currency Broker from Shares, Best Retail Foreign Exchange Platform from FX Week and Best Foreign Exchange Specialist from Technical Analysis of Stocks & Commodities. In addition to currency trading, FXCM offers educational courses on forex trading, and provides research through DailyFX.com. FXCM will soon provide managed account programs for clients seeking investment diversification. About Refco Inc Headquartered in New York, New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. REGENCY GAS: Weak Profile Spurs S&P to Affirm B+ Rating ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Regency Gas Services LLC. At the same time, Standard & Poor's affirmed its 'B+' secured bank loan rating and '3' recovery rating on the company's $170 million first lien revolving credit facility and $310 million first lien term loan. The 'B+' rating and '3' recovery score indicate the expectation for meaningful recovery of principal in the event of payment default. The outlook is stable. "Regency's weak business risk profile reflects its brief operating history, small asset base, exposure to commodity price risk, and competitive position," said Standard & Poor's credit analyst Plana Lee. Formed in 2003, the company's operating history is brief. Its asset base is small, currently consisting of five gas-gathering systems, one major transmission system, and five cryogenic processing plants, which were acquired from El Paso Field Services in 2003 and Duke Energy Field Services in 2004. A portion of Regency's contract mix includes keep-whole contracts, which expose the company to commodity price risk. Although these contracts are modified to contain conditioning floors and fee provisions, they remain more vulnerable to the spread between natural gas and natural gas liquids prices than fee-based cash flows. Regency's competitive position also lags behind those of its larger, better-capitalized midstream peers. These risks are somewhat mitigated by: * long-lived, predictable reserves and increased drilling activity in Regency's operating regions, supported by the currently favorable pricing environment, * geographic diversity, and management is working to improve its contract mix, and * a hedging program designed to hedge 85% of expected exposure to NGL prices in 2006 and 75% in 2007. The hedges consist of ethane, propane, butane, and natural gasoline swaps. The company's North Louisiana expansion, where one-half of the capacity is currently contracted, should increase fee-based margins to 46% from 18%, which Standard & Poor's views as positive for credit quality. The expansion is expected to be in service by year-end 2005. Furthermore, recent hurricanes have not caused delays in the company's construction schedule. RENT-A-CENTER: Weak Operating Trends Prompt S&P's Negative Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Plano, Texas-based Rent-A-Center Inc. to negative from stable. Ratings on the company, including the 'BB+' corporate credit rating, were affirmed. Total debt outstanding as of Sept. 30, 2005 was $707 million. The outlook revision is based on weak operating trends over the past 18 months, as EBITDA declined to $341 million from $425 million and leverage increased, with lease-adjusted total debt to EBITDA at 3.0x, versus 2.2x. "The company's customer continues to be negatively affected by higher energy prices, resulting in declining same-store sales," said Standard & Poor's credit analyst Robert Lichtenstein. "Although Rent-A-Center's credit measures are still adequate for the rating category, they are well below previous strong levels." The ratings reflect: * the challenges of improving operations of a mature store base, and * the vulnerability of its customer to changes in disposable income. These factors, however, are partially mitigated by the company's leading market position in the industry and moderate leverage. RIVIERA HOLDINGS: Strategic Plans Prompt S&P to Affirm B Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' ratings on Riviera Holdings Corp. At the same time, ratings were removed from CreditWatch with developing implications where they were initially placed on Feb. 16, 2005. The outlook is stable. Total debt outstanding at Sept. 30, 2005, was about $215 million. The CreditWatch resolution and affirmation follow the company's announcement that it concluded the process to explore strategic alternatives to maximize shareholder value. The alternatives that were explored included: * development of the Las Vegas property, refinancing, joint ventures, mergers, and * realizing the value of Riviera's stock through other means. Las Vegas, Nevada-headquartered company owns and operates the Riviera Hotel and Casino in Las Vegas and the Riviera Casino in Black Hawk, Colorado. Factors such as positive momentum in Las Vegas and a recently completed neighboring expansion project in Black Hawk are expected to continue to benefit Riviera's properties over the near term. "Over the intermediate term, we expect competitive pressures to increase in Black Hawk, which likely will affect the company's property in this market," said Standard & Poor's credit analyst Peggy Hwan. RUFUS INC: Wants Until February 24 to Remove Civil Actions ---------------------------------------------------------- Rufus, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to extend until Feb. 24, 2006, the period within which it can remove prepetition civil actions. The extension period will give the Debtor more time to make fully informed decisions concerning removal of each pending civil action. Furthermore, it will assure that the Debtor does not forfeit valuable rights under Section 1452 of Bankruptcy Code. Headquartered in Meriden, Connecticut, Rufus, Inc., sells dogs, dog food, supplies and accessories. The Debtor also operates a chain of six retail stores in the Northeastern United States. The Company filed for chapter 11 protection on Aug. 10, 2005 (Bankr. D. Del. Case No. 05-12218). Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its bankruptcy proceeding. When the Debtor filed for protection from its creditors, it listed $1.8 million in total assets and $12.7 million in total debts. SAINTS VINCENTS: Can Use CCC Cash Collateral Until November 18 -------------------------------------------------------------- The Hon. Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York extended Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' authority to use the Comprehensive Cancer Corporation's Cash Collateral through and including Nov. 18, 2005. The Court previously approved a stipulation allowing the Debtors to use Comprehensive Cancer Corporation of New York's cash collateral through Oct. 18, 2005. The Stipulation is modified to reflect that the superpriority administrative claim, granted to CCC as additional adequate protection under Section 507(b) of the Bankruptcy Code, will not attach to or be payable from any proceeds from causes of action arising under Sections 544, 545, 547, 548, 549, 550 and 724 of the Bankruptcy Code. In addition, the Administrative Claim will be: -- junior to any claim allowed in favor of HFG Healthco-4 LLC under the DIP Loan; -- pari passu with any other super-priority administrative claim arising under Section 507(b); and -- subject to the Carve-out. Judge Beatty clarifies that all other terms and conditions of the Stipulation and Order remain in full force and effect. Debtors Request for Further Extension On Nov. 3, 2005, the Debtors asked the Court for permission to further use the CCC Cash Collateral until Jan. 20, 2006. According to Frank A. Oswald, Esq., at Togut, Segal & Segal LLP, in New York, the Debtors and the CCC are currently negotiating the terms of the extension. Cash Collateral Dispute As reported in the Troubled Company Reporter on Sept. 22, 2005, the CCC filed a preliminary objection to the $100 million postpetition financing from HFG Healthco-4 LLC, arguing that the Replacement Lien did not adequately protect them as a secured creditor. SVCMC and the CCC entered into negotiations, which culminated in a short-term agreement providing that: -- CCC is granted the Replacement Lien for the period from July 5, 2005, to September 7, 2005; -- Pending a further hearing on the CCC Objection, SVCMC will pay $1.3 million as adequate protection to the CCC for the period from July 5, 2005, to July 31, 2005, retroactively, plus $650,000 on Aug. 15, 2005; and -- The adequate protection payments will be credited against the CCC's prepetition claim. In a Court-approved stipulation, the Debtors agree to grant the CCC: (a) Replacement Lien on all postpetition proceeds of the CCC Receivables, which is enforceable to the extent of any diminution in value of the CCC's interest in the CCC Receivables since the Petition Date; (b) a superpriority claim under Section 507(b) of the Bankruptcy Code to the extent that the Replacement Lien is inadequate; (c) an administrative claim pursuant to Section 503(b) for all services rendered by the CCC postpetition to SVCMC under the terms and conditions of the Services Agreement, which will not affect the non-recourse nature of the Services Agreement; and (d) a payment of $1 million to be credited as an advance against SVCMC's postpetition payment obligations to the CCC with respect to the Services Agreement. The CCC will also receive $1.95 million as partial adequate protection payment. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Has Exclusive Right to File Plan Until March 2 -------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended, until March 2, 2006, the period within which Saint Vincents Catholic Medical Centers of New York and its debtor- affiliates have the exclusive right to file a plan of reorganization. The Debtors also have until May 1, 2006, to solicit acceptances of that Plan. As reported in the Troubled Company Reporter on Oct. 19, 2005, the Debtors told the Bankruptcy Court that the extension will permit management to develop and implement a viable long-term business plan and allow the Creditors' Committee and other parties-in- interest to evaluate that plan. John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP, in New York, informed the Bankruptcy Court that the Official Committee of Unsecured Creditors supports the extension of the Exclusive Periods. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Court Allows Creation of New Subsidiary ------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' request for authority to incorporate a wholly controlled, not-for-profit corporation that will accept funds from the New York State Office of Mental Health pursuant to Section 363(b) of the Bankruptcy Code. As reported in the Troubled Company Reporter on Oct. 19, 2005, the Debtors will use the funds from the OMH to fully finance the purchase and renovation of a property located at 78 Fort Place, in Staten Island, New York. The property will be used as a community residence facility. The OMH provided the funds to acquire the five Community Residence Facilities that SVCMC owns. SVCMC provides the staff and support services to each of the Community Residence Facilities under a contract with the OMH, pursuant to which the OMH reimburses SVCMC for all costs and expenses associated with operating the Community Residence Facilities. SVCMC has been operating Community Residence Facilities under these arrangements with the OMH since 1978. The Fort Place Property The Fort Place Property has 42,211 square feet of space and is currently occupied by a religious order. SVCMC proposes to develop 59 units, including several shared apartments, in the Community Residence Facility at the Fort Place Property. The units will be efficiency-type apartments with separate kitchens and baths. The OMH approved $11.1 million for the purchase and renovation of the Fort Place Property and all other costs relating to the property until it is ready for operations in two years. The funding is sufficient to cover the entire cost of purchasing and renovating the Fort Place Property, but is conditioned on SVCMC finalizing the purchase of that property, Mr. Troop notes. SVCMC intends to use the Affiliate to conclude the transactions. Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, represent the Debtors in their restructuring efforts. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) SMURFIT-STONE: Business Plan Prompts S&P to Keep Ratings on Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services said that its ratings, including its 'B+' long-term corporate credit rating on containerboard manufacturer, Smurfit-Stone Container Corp. remain on CreditWatch with negative implications following the company's announcement of strategic initiatives. The ratings were placed on CreditWatch on Aug. 16, 2005. Debt, including off-balance-sheet lease and accounts receivable financing and debt-like pension and other postretirement obligations, was $6 billion at Sept. 30, 2005. Smurfit-Stone announced these strategic initiatives: -- Reduce annual costs by $600 million; -- Close up to 20% of its corrugated container facilities and transfer production to larger plants; -- Generate annual incremental revenue of $650 million; -- Realign the organizational structure; -- Invest about $400 million in capital to implement the strategies; and -- Potentially sell all or part of its consumer packaging segment. "We plan a full review of Smurfit-Stone within the next few weeks to assess the likely impact of these sweeping initiatives on the company's business and financial profiles," said Standard & Poor's credit analyst Pamela Rice, "given our concerns about the industry as a whole, the meaningful spending that will be necessary to carry out the initiatives, the potential for debt reduction from asset sales, and the risks of operational inefficiencies and customer turnover that could result from executing such a broad agenda of change." The company has also indicated that it will incur $130 million of cash costs to carry out these initiatives. SPECTRUM BRANDS: Earnings Guidance Prompts S&P to Watch Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on battery manufacturer Spectrum Brands Inc., including its 'B+' corporate credit rating, on CreditWatch with negative implications. About $2.3 billion of debt is affected by this action. The CreditWatch listing follows the company's announcement that it has further revised its earnings guidance downward for fiscal 2006. The Atlanta, Georgia-based company had previously lowered earnings guidance for fiscal 2006 on Sept. 7, 2005. "Factors that continue to affect the company's operations include a weak battery category segment in Europe and North America, and increasing commodity and transportation costs," said Standard & Poor's credit analyst Patrick Jeffrey. Standard & Poor's will meet with management to assess the company's operating trends to determine their effect on the existing ratings. Areas of focus will include: * future trends in the company's battery business segment, * the continuing impact of higher commodity and transportation costs, * Spectrum's ability to continue to generate significant free cash flow to help reduce leverage, and * liquidity given tight financial covenants under the bank agreement. It is unlikely that the ratings would be lowered more than one notch from this review. TELEPHONE & DATA: Restates Financials Due to Material Weakness -------------------------------------------------------------- Telephone and Data Systems, Inc. (Amex: TDS; TDS.S) reported that it will restate its financial results for: * the first quarter of 2005; * the second quarter of 2005; * the year ended Dec. 31, 2004; * the year ended Dec. 31, 2003; * the year ended Dec. 31, 2002; * the year ended Dec. 31, 2001; * the year ended Dec. 31, 2000; and * each of the quarters of 2004 and 2003. As a result, previously issued financial statements for these periods should not be relied on. The restatement is related to the company's review of its accounting treatment for: (1) Universal Service Fund expense; (2) leases; (3) contract termination fees; (4) income tax accounting; and (5) other adjustments and accruals, including the recognition of income from certain investments accounted for under the equity method of accounting. The company will file amended Forms 10-K and 10-Q as promptly as possible, but those filings are not expected to be made until mid-December 2005. Material Weakness The guidance set forth in Auditing Standard No. 2 of the Public Company Accounting Oversight Board states that the restatement of previously issued financial statements to reflect the correction of a misstatement should be regarded as at least a significant deficiency in, and is a strong indicator of a material weakness in internal control over financial reporting. In connection with the expected filing of the amended 2004 Form 10-K, TDS has concluded that a material weakness existed as of Dec. 31, 2004, which precludes TDS from concluding that its internal control over financial reporting was effective as of Dec. 31, 2004. A material weakness is a control deficiency, or combination of control deficiencies, that results in a more than remote likelihood that a material misstatement of the interim or annual financial statements will not be detected. Therefore, TDS's Management Report on Internal Control Over Financial Reporting, which was contained in Item 9A of the Form 10-K as of and for the year ended Dec. 31, 2004, and which stated that the TDS's internal control over financial reporting was effective as of Dec. 31, 2004, can no longer be relied on and will be restated in connection with the filing of the amended Form 10K. In the amended Form 10-K: (i) TDS management will conclude that as of Dec. 31, 2004, TDS did not maintain effective controls over the financial reporting process due to an insufficient number of qualified personnel with the required proficiency to apply the company's accounting policies in accordance with U.S. GAAP and (ii) TDS expects that PricewaterhouseCoopers LLP, TDS's independent public accounting firm, will reissue its report stating that TDS did not maintain effective internal control over financial reporting as of Dec. 31, 2004. TDS is reviewing the impact of these items as part of an overall assessment. As a result, the company believes it is possible that additional material weaknesses in its internal control over financial reporting may be identified and reported. Since Dec. 31, 2004, the company has made several additions to technical accounting and financial reporting personnel at TDS and U.S. Cellular to increase expertise in these areas. Further actions are in process, including the recruiting of additional personnel, providing additional training for the current accounting staff, incorporating more detailed analytical review processes and other actions. While management believes it has made substantial progress on this remediation, additional efforts will be required to fully remediate the material weakness. Management is continuing to develop and implement its plan to remediate this issue. It is necessary for TDS to finalize and complete the restatements before TDS can file its Form 10-Q for the quarter ended Sept. 30, 2005, because financial information to be included in such Form 10-Q depends on the results of such restatements of prior periods. Such Form 10-Q is due on Nov. 9, 2005, but can be extended to Nov. 14, 2005. It is not expected that the restatements will be completed by the extended deadline of Nov. 14, 2005. Accordingly, TDS expects that its Form 10-Q for the quarter ended Sept. 30, 2005, will not be filed on a timely basis. TDS expects to file the restatements and the Form 10-Q as soon as possible, but such filing is not expected to be made until mid-December 2005. TDS's subsidiary, U.S. Cellular, will also restate financial statements for the same periods as TDS and will not be able to file the Form 10-Q for the period ended Sept. 30, 2005 by the extended deadline of Nov. 14, 2005. U.S. Cellular has issued a separate press release relating to its restatement. Technical Defaults The restatements and the late filing of the Form 10-Q for the quarter ended Sept. 30, 2005, will result in technical defaults under the revolving credit agreement between TDS and certain lenders, under a revolving credit agreement between U.S. Cellular and certain lenders and under certain forward contracts between subsidiaries of TDS and a counterparty. Neither TDS nor U.S. Cellular has failed to make or expects to fail to make any scheduled payment of principal or interest under such revolving credit agreements or forward contracts. TDS and U.S. Cellular have communicated with the agents for the lenders and the counterparty to obtain waivers from the lenders and the counterparty under such agreements. TDS and U.S. Cellular believe that the lenders and the counterparty will agree to waive any defaults that may occur as a result of the restatements and the late filing of the Form 10-Q. However, those actions cannot be assured. In addition, the late filing of the Form 10-Q results in non- compliance under certain debt indentures. However, this non- compliance will not result in events of default unless and until written notice thereof is delivered by the trustee or sufficient holders of debt and, in any event, those events of default would be cured if TDS and U.S. Cellular file their Forms 10-Q for the quarter ended Sept. 30, 2005, within 90 days of any such notice. As a result, TDS and U.S. Cellular believe that they will be able to file the Forms 10-Q in sufficient time to avoid any event of default maturing into a default under any indenture. Neither TDS nor U.S. Cellular has failed to make or expects to fail to make any scheduled payment of principal or interest under those indentures. AMEX Notification TDS has notified the American Stock Exchange of the restatements and the expected delay in its filing of the Form 10-Q for the quarter ended Sept. 30, 2005. TDS expects to receive a notice of failure to satisfy listing requirements from the American Stock Exchange following the delay in filing. TDS will disclose any such notice and the contents of such notice promptly. In that event, TDS expects to restore compliance with those listing requirements when it files the restated financial statements and the Form 10-Q for the quarter ended Sept. 30, 2005. Telephone and Data Systems, Inc., a FORTUNE 500 company, is a diversified telecommunications corporation founded in 1969. Through its strategic business units, U.S. Cellular and TDS Telecom, TDS operates primarily by providing wireless, local telephone and broadband services. TDS builds value for its shareholders by providing excellent communications services in growing, closely related segments of the telecommunications industry. As of Sept. 30, 2005, the company employed 11,700 people and served 6.5 million customers/units in 36 states. TRANSPORTATION LOCATORS: Case Summary & 2 Unsecured Creditors ------------------------------------------------------------- Debtor: Transportation Locators, LLC 8513 South Airport Way Hangar A18 Tulsa, Oklahoma 74132 Bankruptcy Case No.: 05-30001 Type of Business: The Debtor is an aircraft broker. Chapter 11 Petition Date: October 25, 2005 Court: Northern District of Oklahoma (Tulsa) Judge: Terrence L. Michael Debtor's Counsel: Lawrence Johnson, Esq. Law Office of Lawrence Johnson 2535 East 21st Street Tulsa, Oklahoma 74114-1705 Tel: (918) 743-0459 Fax: (918) 744-6686 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Premium Financing Specialists, Inc. $5,135 Box 35408 Tulsa, OK 74153 Rich & Cartmill $1,038 2738 East 51st, Suite 400 Tulsa, OK 74105 TXU CORP: $2.05 Billion Sec. Notes Now Unsec. After Lien Release ---------------------------------------------------------------- TXU Corp. subsidiary, TXU Electric Delivery Company, got back its first mortgage bonds from The Bank of New York after it invoked the fall-away provision under the 2002 Senior Secured Notes Indenture. Under the Indenture, The Bank of New York, as the Indenture Trustee, may terminate the lien on the Notes if the outstanding debt owed under the Notes is below 5% of the Company's assets or capitalization at Oct. 25, 2005. The Company currently has outstanding $2.05 billion in aggregate principal amount of its notes under the Indenture. In effect, all of the outstanding series of Senior Secured Notes became unsecured obligations of the Company ranking equally with all of the Company's other unsecured obligations. TXU Corp. -- http://www.txucorp.com/-- a Dallas-based energy company, manages a portfolio of competitive and regulated energy businesses in North America, primarily in Texas. In TXU Corp.'s unregulated business, TXU Energy provides electricity and related services to 2.5 million competitive electricity customers in Texas, more customers than any other retail electric provider in the state. TXU Power has over 18,300 megawatts of generation in Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal- fired generation capacity. The company is also one of the largest purchasers of wind-generated electricity in Texas and North America. TXU Corp.'s regulated electric distribution and transmission business, TXU Electric Delivery, complements the competitive operations, using asset management skills developed over more than one hundred years, to provide reliable electricity delivery to consumers. TXU Electric Delivery operates the largest distribution and transmission system in Texas, providing power to more than 2.9 million electric delivery points over more than 99,000 miles of distribution and 14,000 miles of transmission lines. * * * As reported in the Troubled Company Reporter on Feb. 1, 2005, TXU Corp. securities rated by Fitch Ratings remain unchanged following the announcement that TXU reached a comprehensive settlement agreement resolving potential claims relating to TXU Europe. The ratings are: -- Senior unsecured 'BBB-'; -- Preferred stock 'BB+'; -- Commercial paper 'F3'. UAL CORP: Can Assume Modified PMCC Aircraft Financing Pact ---------------------------------------------------------- On Jan. 30, 2003, UAL Corporation and its debtor-affiliates asked the U.S. Bankruptcy Court for the Northern District of Illinois for permission to modify several aircraft financings. The Court granted the request on Feb. 7, 2003. The modified aircraft financings included agreements between United Air Lines, Inc., UAL Corporation, General Foods Credit Corporation, Philip Morris Capital Corporation and State Street Bank and Trust Company. The Agents for the modified aircraft financings were U.S. Bank, Wilmington Trust Company and General Foods Credit Investors No. 3 Corp. The modified aircraft financings relate to 18 Boeing 757-222 aircraft bearing Tail Nos.: -- N551UA -- N552UA -- N553UA -- N554UA -- N555UA -- N556UA -- N557UA -- N558UA -- N559UA -- N560UA -- N561UA -- N562UA -- N563UA -- N564UA -- N565UA -- N566UA -- N513UA -- N523UA The Debtors seek the Court's authority to assume the modified aircraft financing with the PMCC Holders. Micah E. Marcus, Esq., at Kirkland & Ellis, in Chicago, Illinois, relates that the modified aircraft financings: (1) allow the Debtors to retain the 18 PMCC Aircraft at attractive rates with the potential for rejection; and (2) reduce the Debtors' financing costs for the PMCC Aircraft by around $3,000,000 a year per aircraft. In exchange, the Debtors must assume the modified aircraft financings by October 31, 2005. Mr. Marcus notes that if the modified aircraft financings are not assumed by that date, the amended terms will terminate and will revert to the terms in effect prior to modification. This would prevent the Debtors from realizing substantially improved terms and possibly losing control of the PMCC Aircraft altogether. Mr. Marcus asserts that the Court should allow the Debtors to assume the modified aircraft financings. The Debtors have delayed making a decision on the PMCC Aircraft for some time. The PMCC Aircraft are critical to the Debtors' business and ability to meet the projections of the exit business plan. PMCC Holders Object David S. Curry, Esq., at Mayer, Brown, Rowe & Maw, in Chicago, Illinois, notes that the Debtors imply that no defaults exist under the modified aircraft financings. The Debtors intend to inappropriately cut off the PMCC Holders' rights to any unknown defaults that may exist. The 18 aircraft lease financings are "extraordinarily complex transactions each comprising numerous agreements," says Mr. Curry. The PMCC Holders acknowledge they have been paid basic rent. However, the PMCC Holders cannot be certain that no defaults exist. Mr. Curry contends that any order approving assumption should preserve the PMCC Holders' contractual rights with respect to subsequently discovered defaults. Wilmington Trust Company, as the Owner Trustee of four of the 18 PMCC Aircraft, and U.S. Bank, as Indenture Trustee and Owner Trustee of 16 of the 18 PMCC Aircraft, support the objection filed by the PMCC Holders. Debtors Respond Micah E. Marcus, Esq., at Kirkland & Ellis, points out that the PMCC Holders do not object to the assumption of the modified aircraft financings. Furthermore, the additional language requested by the PMCC Holders is neither appropriate nor necessary. Mr. Marcus asserts that the Court should grant the Debtors' request without the reservation of rights requested by the PMCC Holders because the Debtors are current on rent. The PMCC Holders do not allege any defaults that would require cure by the Debtors. Therefore, the PMCC Holders failed to meet their burden to support their request for reservation of rights. The PMCC Holders must assert any defaults now. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) UAL CORP: Gets Court Nod to Reject One Boeing Aircraft Lease ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of Illinois gave UAL Corporation and its debtor-affiliates permission to reject the lease for a Boeing 737-322 aircraft -- Tail No. N343UA -- and engines, as of Oct. 21, 2005. Upon written request of the Controlling Party, the Debtors will provide a bill of sale or lease termination statement to file with the Federal Aviation Administration, at the expense of the Controlling Party. The Debtors entered into the Lease as part of a leveraged lease, whereby an Owner Trust holds title to, and leases the aircraft and engines to, the Debtors for Equity Participants. An Indenture Trustee holds a security interest in the Lease, the aircraft, and the engines for various lending parties to secure their debt. David A. Agay, Esq., at Kirkland & Ellis, in Chicago, llinois, explains that the rejection of the aircraft lease is a component of the settlement with Vx Capital Partners LLC. The Debtors are restructuring and marking to market its aircraft financings to reflect current market rates. The Debtors are shrinking the fleet to match capacity with demand and are pursuing a strategy to focus on international routes. In light of the settlement with Vx Capital, rejection of the aircraft lease is in the Debtors' best interests, Mr. Agay tells the Court. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 105; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNUMPROVIDENT FINANCE: Moody's Rates $400 Mil. Debentures at Ba1 ---------------------------------------------------------------- Moody's Investors Service assigned a Ba1 senior unsecured debt rating, with negative outlook, to UnumProvident Finance Company PLC's US$400 million issue of ten year 6.85% senior debentures. The issuer is a wholly-owned U.K. subsidiary of UnumProvident Corporation (NYSE: UNM) and the senior debentures carry full and unconditional guarantees by UNM and Unum European Holding Company Limited (UNM European HC), the holding company for UnumProvident's U.K. life insurance operations. The rating agency also affirmed UNM's credit ratings, including its senior debt at Ba1 and insurance financial strength ratings at Baa1 for its U. S. life insurance affiliates. The outlook on UNM and its affiliates is negative. Moody's said that its Ba1 rating for the UNM Finance debt issuance represents credit transference by UNM's full and unconditional guarantee for principal and interest, which ranks pari passu with UNM's other senior unsecured debt obligations. The rating agency noted that it expects that interest payments would be serviced by UNM Finance and that UNM would hedge the dollar-denominated interest payments against future foreign exchange movements between the dollar and the British pound. According to the rating agency, UNM Finance's issuance is part of UNM's plan to repatriate up to US$450 million from its UK operations in accordance with the terms of the Homeland Investment Act (HIA.) The repatriation plan benefits UNM, as the HIA provides that 85% of qualifying cash dividends distributed by foreign subsidiaries are excluded from US federal taxes. Moody's said that proceeds from the repatriation will be used to pay domestic, non-executive compensation, consistent with the intent of the legislation. Moody's noted that amounts that the company would have otherwise used for compensation expense will be applied to debt repayment in the US through UNM's participation in the February 2006 remarketing of its $575 million of hybrid securities-related debt in an amount equal to the UNM Finance issuance. Because of the time lag between the UK debt issuance and the hybrid securities remarketing, UNM's reported financial leverage will rise over year-end. However, Moody's said that it views the UK debt issuance as a credit neutral event. Because the proceeds will be invested in highly liquid, high-grade, short-term securities between the time of issuance and remarketing of the hybrid securities, the rating agency said that it will analytically adjust year-end 2005 financial leverage for the UK debt issuance. Moody's said that UNM's ratings are based on the company's leading market share in the group long-term and individual disability markets and that the ratings also reflect: * the company's access to a huge claims data-base; * focus on claims management and return-to-work programs; * its position in the group life market; and * a solid presence in the growing worksite marketing area. However, the rating agency noted that these strengths are tempered by: * UNM's concentration of earnings in the group and individual disability businesses; * strong competition in the group disability and group life markets; and * the group's relatively high financial leverage and constrained fixed charge coverage. Despite the positive impact of capital raising initiatives, which resulted in a reduction in inter-company loans and improved risk- adjusted capitalization at its life subsidiaries, the rating agency remains concerned about the financial flexibility of the company. Moody's continues to believe that there is substantial execution risk associated with the company's strategic plan to restore profitability to its core U.S. group long-term disability business. The rating agency is concerned that if UNM experiences difficulties in retaining distribution and maintaining persistency within targeted levels, the company could experience pressure on its expense structure. Claim trends have resulted in weak statutory operating earnings in recent years (although improved in 2004 and 2005), and volatile earnings present challenges to longer-term statutory planning and the ability of the operating companies' to send dividends to the holding company to service interest and common stock dividend payments, according to the rating agency. UnumProvident Corporation is headquartered in Chattanooga, Tennessee. At September 30, 2005, UnumProvident had total assets of $51.1 billion and total shareholders' equity of $7.2 billion. U.S. CELLULAR: Financials Restatement May Cue Technical Default --------------------------------------------------------------- United States Cellular Corporation (Amex: USM) reported that it will restate its financial results for the: * first quarter of 2005; * second quarter of 2005; * year ended Dec. 2004; * year ended Dec. 2003; * year ended Dec. 2002; * year ended Dec. 2001; and * year ended Dec. 2000; As a result, previously issued financial statements for these periods should not be relied on. The restatement is related to the company's review of its accounting treatment for: (1) Universal Service Fund expense; (2) leases; (3) contract termination fees; (4) income tax accounting; and (5) other adjustments and accruals, including the recognition of income from certain investments accounted for under the equity method of accounting. The company will file amended Forms 10-K and 10-Q as promptly as possible, but such filings are not expected to be made until mid- December 2005. Material Weakness The guidance set forth in Auditing Standard No. 2 of the Public Company Accounting Oversight Board states that the restatement of previously issued financial statements to reflect the correction of a misstatement should be regarded as at least a significant deficiency in, and is a strong indicator of a material weakness in internal control over financial reporting. In connection with the expected filing of the amended 2004 Form 10-K, U.S. Cellular has concluded that a material weakness existed as of Dec. 31, 2004, which precludes U.S. Cellular from concluding that its internal control over financial reporting was effective as of Dec. 31, 2004. A material weakness is a control deficiency, or combination of control deficiencies, that results in a more than remote likelihood that a material misstatement of the interim or annual financial statements will not be detected. Therefore, U.S. Cellular's Management Report on Internal Control Over Financial Reporting, which was contained in Item 9A of the Form 10-K as of and for the year ended Dec. 31, 2004 and which stated that U.S. Cellular's internal control over financial reporting was effective as of Dec. 31, 2004, can no longer be relied on and will be restated in connection with the filing of the amended Form 10-K. In such amended Form 10-K: (i) U.S. Cellular management will conclude that as of Dec. 31, 2004 U.S. Cellular did not maintain effective controls over the financial reporting process due to an insufficient number of qualified personnel with the required proficiency to apply the company's accounting policies in accordance with U.S. GAAP and (ii) U.S. Cellular expects that PricewaterhouseCoopers LLP, U.S. Cellular's independent public accounting firm, will reissue its report stating that U.S. Cellular did not maintain effective internal control over financial reporting as of Dec. 31, 2004. U.S. Cellular is reviewing the impact of these items as part of an overall assessment. As a result, the company believes it is possible that additional material weaknesses in its internal control over financial reporting may be identified and reported. Since Dec. 31, 2004, the company has made several additions to technical accounting and financial reporting personnel to increase its expertise in these areas. Further actions are in process, including the recruiting of additional personnel, providing additional training for the current accounting staff, incorporating more detailed analytical review processes and other actions. While management believes it has made substantial progress on this remediation, additional efforts will be required to fully remediate the material weakness. Management is continuing to develop and implement its plan to remediate this issue. It is necessary for U.S. Cellular to finalize and complete the restatements before U.S. Cellular can file its Form 10-Q for the quarter ended Sept. 30, 2005 because financial information to be included in such Form 10-Q depends on the results of such restatements of prior periods. Such Form 10-Q is due on Nov. 9, 2005, but can be extended to Nov. 14, 2005. It is not expected that the restatements will be completed by the extended deadline of Nov. 14, 2005. Accordingly, U.S. Cellular expects that its Form 10-Q for the quarter ended Sept. 30, 2005 will not be filed on a timely basis. U.S. Cellular expects to file the restatements and the Form 10-Q as soon as possible, but such filing is not expected to be made until mid-December 2005. Technical Default The restatements and the late filing of the Form 10-Q for the quarter ended Sept. 30, 2005 will result in technical defaults under the revolving credit agreement between U.S. Cellular and certain lenders and under certain forward contracts between subsidiaries of U.S. Cellular and a counterparty. U.S. Cellular has not failed to make nor does it expect to fail to make any scheduled payment of principal or interest under such revolving credit agreements or forward contracts. U.S. Cellular has communicated with the agents for the lenders and the counterparty to obtain waivers from the lenders and the counterparty under such agreements. U.S. Cellular believes that the lenders and the counterparty will agree to waive any defaults that may occur as a result of the restatements and the late filing of the Form 10-Q. However, such actions cannot be assured. In addition, the late filing of the Form 10-Q results in non- compliance under certain debt indentures. However, this non- compliance will not result in events of default unless and until written notice thereof is delivered by the trustee or sufficient holders of debt and, in any event, such events of default would be cured if U.S. Cellular files its Form 10-Q for the quarter ended Sept. 30, 2005 within 90 days of any such notice. As a result, U.S. Cellular believes that it will be able to file the Form 10-Q in sufficient time to avoid any event of default maturing into a default under any indenture. U.S. Cellular has not failed to make nor does it expect to fail to make any scheduled payment of principal or interest under such indentures. AMEX Notification U.S. Cellular has notified the American Stock Exchange of the restatements and the expected delay in its filing of the Form 10-Q for the quarter ended Sept. 30, 2005. U.S. Cellular expects to receive a notice of failure to satisfy listing requirements from the American Stock Exchange following such delay in filing. U.S. Cellular will disclose any such notice and the contents of such notice promptly. In such event, U.S. Cellular expects to restore compliance with such listing requirements when it files the restated financial statements for the periods noted herein and the Form 10-Q for the quarter ended Sept. 30, 2005. As of Sept. 30, U.S. Cellular Corporation -- http://www.uscellular.com/-- the nation's sixth largest wireless service carrier, provided wireless service to 5.3 million customers in 25 states. The Chicago-based company operates on a customer satisfaction strategy, meeting customer needs by providing a comprehensive range of wireless products and services, superior customer support and a high-quality network. VALENTINE PAPER: Meriturn Partners to Acquire LaSalle Bank Loan --------------------------------------------------------------- Meriturn Partners, LLC, through an affiliate, reported an agreement on Nov. 10, 2005, to acquire LaSalle Bank's Loan to Valentine Paper, Inc. Valentine is operating as a debtor-in- possession since it filed for bankruptcy on June 6, 2005. Meriturn intends to increase the amount of the DIP facility so the company can operate and provide its customers with the service they are entitled to expect. Concurrent to Meriturn's note purchase, Dunn Paper, Inc., a portfolio company of Meriturn, signed an asset purchase agreement to buy substantially all of the assets of Valentine and has been named as the 'Stalking Horse' acquirer under the Section 363 bankruptcy sales process. Meriturn's Partner, Lee Hansen, commented: "Valentine's management team has done an excellent job maintaining the business under difficult conditions. However, it has become clear the company needs increased funding to meet its customers' expectations. By acquiring LaSalle's note, Meriturn can make sure Valentine has sufficient funding to complete its sale process as a going concern." Brent Earnshaw, President & CEO of Dunn Paper, said: "Dunn's pending purchase of Valentine represents a unique strategic opportunity to continue to build a unique and diversified portfolio of specialty paper products. The management team at Valentine brings extraordinary paper-making experience and we are excited to work with them to restore the trust of Valentine's existing customers and to grow their business by leveraging Dunn's customer relationships. We will capitalize the acquisition through increased investment by Meriturn in order to remain a well capitalized company." About Dunn Paper Inc. Dunn Paper, Inc. -- http://www.dunnpaper.com/-- is a premier manufacturer of specialty papers serving flexible packaging companies, labelers, foodservice companies, and bag manufacturers. The company is a leading North American producer of specialty C1S (coated-one- side) and uncoated MG (machine-glazed) papers. Founded in 1924, the company was subsequently purchased by Dunn's management and Meriturn in 2003. The company is headquartered at 218 Riverview Street, Port Huron, Michigan. About Meriturn Partners LLC Meriturn Partners, LLC -- http://www.meriturn.com/-- invests in corporate restructurings and turnarounds where our capital and financial restructuring and operational initiatives can improve the balance of revenue growth and profitability. We target control investments in companies operating in basic industries (manufacturing, services, and distribution) with revenue of $20- 250 million and based in the U.S. and Canada. Meriturn currently owns 4 companies with annual revenue of over $230 million and 750 employees. Founded in 2001, Meriturn has offices in San Francisco, California and Raleigh, North Carolina. About Valentine Paper Inc. Headquartered in Lockport, Louisiana, Valentine Paper, Inc. -- http://www.valentinepaper.com/-- produces technical and specialty papers. The Company filed for chapter 11 protection on June 6, 2005 (Bankr. E.D. La. Case No. 05-14659). David F. Waguespack, Esq., at Lemle & Kelleher, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed assets from $1 million to $10 million and debts from $10 million to $50 million. VALLEY HEALTH: Improved Operating Income Cues S&P's Stable Outlook ------------------------------------------------------------------ Standard & Poor's Ratings Services revised its rating outlook to stable from negative on Valley Health System, California's debt, reflecting improved operating income and increasing liquidity. Additionally, Standard & Poor's affirmed its 'B+' standard long-term rating on Valley's $41.8 million 1996 series A hospital revenue bonds. "Valley has struggled to return to operating profitability and has experienced operating losses over the past eight years. However, Valley has shown improved liquidity and a reduction of operating losses over the past two years," Standard & Poor's credit analyst James Cortez said. "In order to maintain the stable outlook, Valley will need to continue to experience improved operating income, which will allow the organization to begin addressing deferred capital needs and maintain adequate levels of liquidity reserves." "While no definitive plans have been made in relation to Valley's seismic spending needs, it appears unlikely that Valley will be able to address the seismic compliance legislation currently mandated by 2013 without outside support," he added. "Valley's future strategy regarding the seismic needs will be monitored over the next one to two years and could have future ratings implications." Other factors affecting the rating include: * Valley's strained balance sheet, * its increasing utilization trends tempered by a payor mix dominated by government payors, and * a sizable amount of self-pay patients that has resulted in an increasing annual bad debt expense. Valley Health System operates three acute care hospitals located about 100 miles southeast of Los Angeles: the flagship, Hemet Valley, with 252 available beds; Menifee Valley, with 84 beds; and Moreno Valley, with 101 beds. VALLEY MEDIA: Hit Entertainment Agrees to Reduce Claim ------------------------------------------------------ Hit Entertainment (USA), Inc., aka Lyrick Studios, Inc., has agreed to a substantial reduction of its prepetition claim in settlement of the avoidance action suit commenced by Valley Media, Inc. Accordingly, Al Krichhein, the Liquidating Trustee appointed pursuant to Valley Media's confirmed Liquidating Plan, asks the U.S. Bankruptcy Court for the District of Delaware to approve the settlement. Avoidance Action On Aug. 6, 2002, Valley Media filed a complaint to avoid preferential transfers and to recover property against Hit Entertainment. The Debtor sought to recover approximately $1,106,580 in transfers made to Hit Entertainment within 90 days prior to the Debtor's bankruptcy filing on Nov. 20, 2001. Hit Media had asserted various defenses in response to the complaint. Settlement After extensive negotiations, the parties agreed that Hit Entertainment's $2,164,844 prepetition claim against the Estate will be reduced to $1,092,422 effective upon the Liquidating Trustee's receipt of a $10,000 settlement amount. Upon payment of the settlement amount, the avoidance action suit will be dismissed with prejudice. A copy of the settlement agreement is available for a fee at: http://www.researcharchives.com/bin/download?id=051111022907 Headquartered in Woodland, California, Valley Media, Inc. -- http://www.valleymedia.com/-- was a full-line distributor of music and video entertainment products. The Company filed for chapter 11 protection on November 20, 2001 (Bankr. D. Del. Case No. 01-11353). Robert J. Dehney, Esq., and Michael G. Busenkell, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtor. When the Debtor sought protection from its creditors, it listed $241,547,000 in total assets and $259,206,000 in total debts. Judge Walsh entered an order confirming Valley Media's Liquidating Plan on May 6, 2005. A summary of that plan appeared in the Troubled Company Reporter on Mar. 29, 2005, and Feb. 22, 2005. VILLAS AT HACIENDA: Western Plains Wants Claims Bar Date Set ------------------------------------------------------------ Western Plains Development Corp., a creditor of Villas at Hacienda del Sol, Inc., asks the U.S. Bankruptcy Court for the District of Arizona to establish a deadline for creditors to file proofs of claim against the Debtor. Western Plains assert that a claims bar date would be helpful in the administration of the Debtor's chapter 11 case, including consideration of a plan of reorganization. No party-in-interest has filed a disclosure statement to date. The Debtor tells the Court that it intends to file a plan of reorganization sometime after the Court resolves its objection to a request for payment filed by Lenox Mortgage VI LLC. The Court will convene a hearing at 9:00 a.m. on Nov. 17, 2005, to consider Western Plains' request. Headquartered in Tucson, Arizona, Villas At Hacienda Del Sol, Inc. -- http://www.thevillasathaciendadelsol.com/-- filed for chapter 11 protection on March 28, 2005. (Bankr. D. Ariz. Case No. 05-01482). Matthew R.K. Waterman, Esq., at Waterman & Waterman, PC, represents the Debtor. When the Company filed for protection from its creditors, it estimated assets and liabilities ranging from $10 million to $50 million. WADENA HOUSING: Decline in Debt Coverage Cues S&P to Cut Rating --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Wadena Housing and Redevelopment Authority, Minnesota's $2 million multifamily housing revenue bonds series 1993 to 'BB' from 'A-'. The outlook is stable. The downgrade reflects a decline in debt service coverage over the past several years, debt service reserve fund funded at six months' maximum annual debt service, rents currently at 136% of fair market rents limiting the ability of the project to receive rental increases, and the deterioration of the loan-to-value ratio to 85.77%. The bonds are secured by a Section 8 subsidized mortgage loan, which is coterminous with bond maturity in 2019. The latest audited financial statements for the fiscal year ended June 2004 indicate that the performance of the project declined slightly from the prior year, with debt service coverage of 1.12x MADS. As per unaudited financial statements for fiscal 2005, it is expected that debt service coverage will decline to 1.01x MADS. Average rental income for the project for fiscal 2003-2004 remained stable at $549 per unit per month. The project has not received rental increases since 1995. The rents at the property are currently 136% above fair market rents. Projects with rents above HUD's fair market rents are highly susceptible to rent freeze. The expense ratio for fiscal 2003-2004 is at 43.2%, slightly higher than 40.9% for fiscal 2002-2003. As per the year-to-date financial statements the expense ratio is at 47.3%. Annual expenses per unit for fiscal 2003-2004 are at $3,068, slightly higher than $2,882 for fiscal 2002-2003 while the year-to-date financial statements put annual expense per unit at $3,258. The slight increase in expenses in 2003-2004 was primarily due to a 37% increase in administration expenses, which is approximately 45% of total expenses, and a 6% increase in utility expenses, which is approximately 22% of total expenses. Debt per unit was $34,661 as of June 30, 2004, and $33,136 as of Oct. 7, 2005. Average physical occupancy continues to remain strong at the property with a rate of 100% for fiscal 2003-2004. As per the project manager report, occupancy at the property in August 2005 was also at 100%. WELLS FARGO: Fitch Junks Ratings on Class B-5 Certificates ---------------------------------------------------------- Fitch Ratings has taken rating actions on these Wells Fargo Alternative Loan Trust Issues: Series 2002-1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 affirmed at 'AA'; -- Class B-3 affirmed at 'A'; -- Class B-4 downgraded to 'BB-' from 'BB'; -- Class B-5 downgraded to 'CCC' from 'B'. Series 2003-1 -- Class A affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 downgraded to 'BB-' from 'BB'; -- Class B-5 downgraded to 'CCC' from 'B'. The mortgage loans consist of 15- and 30-year fixed-rate mortgages and are secured by first liens, primarily on one- to four-family residential properties. As of the October 2005 distribution date, the transactions are seasoned 38 months and 26 months, respectively, and the pool factors are approximately 12% and 54%, respectively. The affirmations reflect a stable relationship between credit enhancement and future loss expectations and affect approximately $149.5 million of outstanding certificates. The downgrades on the B-4 and B-5 certificates of the 2002-1 transaction reflect deterioration between credit enhancement and expected losses and affect approximately $1.7 million in outstanding certificates. Given approximately $3.4 million in nonperforming loans, Fitch does not feel that the protection offered by the subordination of the nonrated B-6 bond is adequate to prevent a writedown of the B-5 certificate from occurring. Fitch also believes that future losses may exceed the amount of protection offered by the subordination of the B-5 bond, putting the B-4 in danger of principal losses. The downgrades on the B-4 and B-5 certificates of the 2003-1 transaction reflect deterioration between credit enhancement and expected losses and affect approximately $2 million in outstanding certificates. Given approximately $3.8 million in outstanding delinquencies, Fitch does not feel that the protection offered by the subordination of the nonrated B-6 bond is adequate to prevent a writedown of the B-5 certificate from occurring. Fitch also believes that future losses may exceed the amount of protection offered by the subordination of the B-5 bond, putting the B-4 in danger of principal losses. Fitch will continue to closely monitor these transactions. Further information regarding current delinquency, loss, and credit enhancement statistics is available on the Fitch Ratings Web site at http://www.fitchratings.com/ WESTON NURSERIES: Taps Riemer & Braunstein as Bankruptcy Counsel ---------------------------------------------------------------- Weston Nurseries, Inc., asks the U.S. Bankruptcy Court for the District of Massachusetts for permission to employ Riemer & Braunstein LLP as its general bankruptcy counsel. The Debtor explains that it hired Riemer & Braunstein as its bankruptcy counsel because of the Firm's extensive experience and expertise in bankruptcy law. Riemer & Braunstein will advise and represent the Debtor in all aspects of its bankruptcy proceeding and provide all other legal services that are necessary and appropriate in its chapter 11 case. Alan L. Braunstein, Esq., a member of Riemer & Braunstein, reports that his Firm received a $70,000 retainer. The Debtor has agreed to pay Riemer & Braunstein the usual hourly rates for its professionals that will render services to the Debtor. Riemer & Braunstein had not yet submitted the hourly rates of its professionals performing services to the Debtor when the Debtor filed its request with the Court to employ the Firm as its bankruptcy counsel. Riemer & Braunstein assures the Court that it does not represent any interest materially adverse to the Debtor or its estate. Headquartered in Hopkinton, Massachusetts, Weston Nurseries, Inc., -- http://www.westonnurseries.com/-- is central New England's premier resource in designing, creating, and enjoying outdoor living areas. Weston Nurseries grows and sells quality plants, trees, shrubs, and perennials. The Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr. D. Mass. Case No. 05-49884). When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. WESTON NURSERIES: U.S. Trustee Appoints 5-Member Creditors Panel ---------------------------------------------------------------- The United States Trustee for Region 1 appointed five creditors to serve on the Official Committee of Unsecured Creditors in Weston Nurseries, Inc.'s chapter 11 case: 1. Chesapeake Nurseries, Inc. Attn: Christopher Rogers 7 Populatic Street Medway, Massachusetts 02053 Tel: 508-254-8428, Fax: 508-533-2422 2. Birnbaum & Godkin, LLP Attn: Scott Birnbaum, Esq. 280 Summer Street Boston, Massachusetts 02210 Tel: 617-307-6100, Fax: 617-307-6101 3. Quansett Nurseries, Inc. Attn: Fred Dabney 794 Horseneck Road South Dartmouth, Massachusetts 02740 Tel: 508-636-6931, Fax: 508-636-8752 4. Hopewell Nursery Attn: Richard Miller 100 William Street Uxbridge, Massachusetts 1569 Tel: 856-297-3407, Fax: 508-266-2045 5. Commerce Corporation Attn: Julie Teal 7603 Energy Parkway Balto, Maryland 21226 Tel: 410-360-6613, Fax: 410-360-6002 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Hopkinton, Massachusetts, Weston Nurseries, Inc., -- http://www.westonnurseries.com/-- is central New England's premier resource in designing, creating, and enjoying outdoor living areas. Weston Nurseries grows and sells quality plants, trees, shrubs, and perennials. The Company filed for chapter 11 protection on Oct. 14, 2005 (Bankr. D. Mass. Case No. 05-49884). Alan L. Braunstein, Esq., at Riemer & Braunstein, LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. WHEREHOUSE ENTERTAINMENT: Wants Until Nov. 30 to Object to Claims ----------------------------------------------------------------- Wherehouse Entertainment, Inc., and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend, until Nov. 30, 2005, the period within which they can object to claims filed against their estates. The Debtors tell the Bankruptcy Court that an extension will give them sufficient time to complete the evaluation of all outstanding claims. The Debtors report that they have filed nine omnibus claims objections seeking to reduce and allow or expunge administrative, secured and priority claims. In addition, the Debtors say they have reached a consensual resolution regarding the amount and priority of numerous claims to which they had objected. Headquartered in Torrance, California, Wherehouse Entertainment, Inc., sells prerecorded music, videocassettes, DVDs, video games, personal electronics, blank audio cassettes and videocassettes, and accessories. The Company and its debtor-affiliates filed for chapter 11 protection on January 20, 2003, (Bankr. Del. Case No. 03-10224). Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards Layton & Finger represent the Debtors in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $227,957,000 in total assets and $222,530,000 in total debts. WINN-DIXIE: Delays Filing of FY 2006 First Quarter Financials ------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Bennett L. Nussbaum, senior vice president and chief financial officer of Winn-Dixie Stores, Inc., disclosed that the Company had been unable to complete all work necessary to timely file its first quarterly report on Form 10-Q for the fiscal year 2006, without unreasonable effort or expense. Mr. Nussbaum relates that the delay is due to: -- the Chapter 11 filing and the additional and critical demands that the filing has placed on the time and attention of Winn-Dixie's senior management; -- the significant time and attention devoted to the Restructuring Plan; -- the delay in completion of the internal control assessment for fiscal year 2005; -- the delay in completion of the Company's annual financial statements for fiscal year 2005; and -- additional effort involved in the large number of store sales and closures. The Company anticipates significant changes in the results of operations for the first quarter of fiscal 2006 from the corresponding period of fiscal year 2005. According to Mr. Nussbaum, Winn-Dixie expects the results to be impacted by four items: -- Lease termination and severance charges related to store, warehouse and manufacturing plant closures. -- Reclassification of previous year results of operations to Discontinued Operations for stores closed as part of the Restructure Plan. -- Gain/loss on disposition of property and equipment, including pharmacy prescription files. -- Reversal of LIFO reserves due to significant inventory liquidations. "Because we have been unable to complete all work necessary with respect to the Form 10-Q, we are not able to reasonably estimate these items at this time," Mr. Nussbaum says. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Sets November 30 as Special Claims Bar Date ------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates advise the U.S. Bankruptcy Court for the Middle District of Florida that Nov. 30, 2005, 5:00 p.m. EST, has been established as a special bar date within which these parties are required to file proofs of claim: (a) parties who were listed in the Second Amended Schedules of Assets and Liabilities and Schedule of Executory Contracts and Unexpired Leases, filed by Winn-Dixie Stores, Inc., on November 3, 2005; (b) parties who were mailed the initial bar date notice but as to which a re-mailing is necessary; and (c) certain subsequently identified potential claimants who were not identified in time to receive notice of the original bar date established in these cases. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: November 23 is Florida Tax Collectors' New Bar Date --------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Sept. 19, 2005, the U.S. Bankruptcy Court for the Middle District of Florida extended the Florida Tax Collectors' deadline for filing ad valorem real property and tangible personal property tax claims against Winn-Dixie Stores, Inc., and its debtor-affiliates to Nov. 7, 2005. At the Florida Tax Collectors' request, the Court further extends the Bar Date to Nov. 23, 2005, solely as to the Florida Tax Collectors' claims on account of the 2005 ad valorem taxes. Brian T. Fitzgerald, Esq., relates that the offices of several Florida Tax Collectors in South Florida have been seriously affected by Hurricane Wilma. As a result, various Florida Tax Collectors having a significant number of ad valorem tax claims are unable to generate and finalize their 2005 ad valorem tax bills on time. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063). The Honorable Judge Robert D. Drain ordered the transfer of Winn-Dixie's chapter 11 cases from Manhattan to Jacksonville. On April 14, 2005, Winn- Dixie and its debtor-affiliates filed for chapter 11 protection in M.D. Florida (Case No. 05-03817 to 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000). * S&P Cuts Ratings on Gulf Coast Issuers to Low-B ------------------------------------------------- Standard & Poor's Ratings Services has lowered the ratings on a number of Gulf Coast issuers that were placed on CreditWatch with negative implications following Hurricane Katrina. Most of the downgrades are into the 'B' category, which reflects speculative credit characteristics. When Hurricane Katrina struck the Gulf Coast, Standard & Poor's placed several state and local government ratings on CreditWatch with negative implications. The basis for the action at that time was: * the event itself, and * the lack of critical information necessary to assess how the storm would affect credit. With this article's rating actions, these ratings are being removed from CreditWatch. It is now apparent that the rated credits in the New Orleans area will have to cope with not only the immediate property damage but also a significant displacement of residents in the region, causing a far-reaching, but still unknown, effect on the regional economy and local government revenue bases. While people are returning and limited governmental services are being provided, S&P recognizes that full economic recovery, however that might be defined, will take years. To provide a more accurate assessment of current credit quality, and recognizing that redevelopment will occur at various speeds, S&P has taken a number of actions to bring ratings to the appropriate categories. In most cases, the rating outlook has been determined to be "developing," which indicates the rating might be raised or lowered within six months to two years. The pace of redevelopment, as seen in economic activity and the rate of repopulation, will be critical to the revenue stream pledged to the bonds, which could provide upward or downward pressure on the rating. The level of state and federal support for operations and capital infrastructure could also have a substantial effect on credit quality in upcoming years. Once pledged revenues are measurable, the potential to better match that with annual debt service through a restructuring could also stabilize or improve credit quality. A rating in the 'B' category means an obligation is vulnerable to nonpayment but that the obligor currently has the capacity to meet its financial commitment on its obligations. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on its obligation. Given the severe economic dislocation and the uncertainty over restoration of viable, sustainable economic and revenue performance, there is no question that long-term credit fundamentals are now lacking in these issues. To 'B' from 'BBB+', outlook now developing: -- New Orleans, Louisiana's general obligation debt. To 'B-' from 'BBB', outlook now developing: -- New Orleans' limited-tax debt, and -- New Orleans' pension debt. To 'B' from 'A', outlook now developing: -- New Orleans Sewerage & Water Board's water debt and sewer debt, -- New Orleans Exhibition Hall Authority's debt, -- Louisiana Stadium & Exposition District's debt, and -- St. Bernard Parish's debt. To 'B' from 'A-', outlook now developing: -- Plaquemines Parish's sales tax debt. To 'SP-3' from 'SP-1+': -- New Orleans Sewerage & Water Board's sewer bond anticipation notes. To 'B' from 'BBB+', outlook now developing: -- Orleans Parish Law Enforcement District's debt. To 'B-' from 'BBB-', outlook now developing: -- Plaquemines Parish Law Enforcement District's debt. To 'BB' from 'BBB+', outlook now developing: -- St. Bernard Parish School Board's debt, reflecting the board's property tax pledge and its ability to collect taxes from the functioning refineries and industrial payors. Some Credits Remain Investment-Grade Mississippi Gulf Coast communities have also been severely affected. The rating on Biloxi, Mississippi's general obligation debt outstanding has been lowered to 'BBB' from 'A', which means it remains investment-grade. The outlook is developing. By permitting land-based casinos, the special state legislative session in October has encouraged aggressive rebuilding in Biloxi; one casino hopes to reopen before the end of the year and the rest plan to reopen during 2006. Significant operating challenges, however, exist with management expecting to collect just 60% of budgeted property tax collections for fiscal 2006; there is also widespread damage to structures throughout the city. The rating on Biloxi's limited-tax debt outstanding has been lowered to 'BBB-' from 'A-'. The outlook is developing. The rating on Jefferson Parish, Louisiana's East Bank Hotel revenue bonds outstanding has been lowered to 'BBB-' from 'BBB'. The outlook is stable. The hotels in the defined area are essentially undamaged; given the demand for rooms in the area, these hotels will be fully occupied during the recovery. With the recent decision to require Federal Emergency Management Agency workers to pay hotel taxes, it is likely that revenues will flow but that coverage will likely be lower. The ratings on Louisiana and Mississippi remain on CreditWatch with negative implications where they were placed on Aug. 29. The information provided at the state level has been adequate to maintain the states' ratings, but economic performance and revenue trends will remain difficult to track for the balance of 2005. In addition, the Louisiana Legislature is in the middle of a special session that will last until Nov. 22, 2005. S&P will formally review both states before the end of November. * BOND PRICING: For the week of Nov. 7 - Nov. 11, 2005 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- Abc Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 3 Adelphia Comm. 6.000% 02/15/06 4 Adelphia Comm. 7.500% 01/15/04 64 Adelphia Comm. 7.875% 05/01/09 62 Adelphia Comm. 8.125% 07/15/03 66 Adelphia Comm. 8.375% 02/01/08 63 Adelphia Comm. 9.250% 10/01/02 62 Adelphia Comm. 9.500% 02/15/04 66 Adelphia Comm. 9.875% 03/01/05 63 Adelphia Comm. 9.875% 03/01/07 61 Adelphia Comm. 10.250% 11/01/06 60 Adelphia Comm. 10.250% 06/15/11 67 Adelphia Comm. 10.500% 10/01/10 63 Adelphia Comm. 10.875% 10/01/10 63 AHI-DFLT 07/05 8.625% 10/01/07 56 Aladdin Gaming 13.500% 03/01/10 0 Albertson's Inc. 7.000% 07/21/17 74 Allegiance Tel. 11.750% 02/15/08 23 Allegiance Tel. 12.875% 05/15/08 25 Amer & Forgn PWR 5.000% 03/01/30 69 Amer Plumbing 11.625% 10/15/08 15 American Airline 7.377% 05/23/19 67 American Airline 7.379% 05/23/16 67 American Airline 8.390% 01/02/17 74 American Airline 8.800% 09/16/15 65 American Airline 9.980% 01/02/15 67 American Airline 9.980% 01/02/15 67 American Airline 10.180% 01/02/13 67 American Airline 10.190% 05/26/16 73 American Airline 10.850% 03/15/09 65 Ames True Temper 10.000% 07/15/12 73 AMR Corp. 9.000% 09/15/16 71 AMR Corp. 9.200% 01/30/12 71 AMR Corp. 9.750% 08/15/21 60 AMR Corp. 9.800% 10/01/21 63 AMR Corp. 9.880% 06/15/20 55 AMR Corp. 10.125% 06/01/21 63 AMR Corp. 10.130% 06/15/11 67 AMR Corp. 10.150% 05/15/20 56 AMR Corp. 10.200% 03/15/20 62 AMR Corp. 10.400% 03/10/11 67 AMR Corp. 10.450% 03/10/11 68 AMR Corp. 10.550% 03/12/21 63 Anchor Glass 11.000% 02/15/13 62 Antigenics 5.250% 02/01/25 45 Anvil Knitwear 10.875% 03/15/07 55 Apple South Inc. 9.750% 06/01/06 5 Armstrong World 6.350% 08/15/03 72 Armstrong World 6.500% 08/15/05 72 Armstrong World 7.450% 05/15/29 72 Armstrong World 9.000% 06/15/04 73 Amtran Inc. 9.625% 12/15/05 4 Asarco Inc. 7.875% 04/15/13 59 Asarco Inc. 8.500% 05/01/25 51 ATA Holdings 12.125% 06/15/10 2 ATA Holdings 13.000% 02/01/09 5 At Home Corp. 4.750% 12/15/06 0 Atlantic Coast 6.000% 02/15/34 4 Autocam Corp. 10.875% 06/15/14 63 Bank New England 8.750% 04/01/99 7 Big V Supermkts 11.000% 02/15/04 0 Budget Group Inc. 9.125% 04/01/06 0 Burlington North 3.200% 01/01/45 57 Burlington Inds 7.250% 09/15/05 2 Burlington Inds 7.250% 08/01/25 2 Calpine Corp. 4.000% 12/26/03 61 Calpine Corp. 4.750% 11/15/23 42 Calpine Corp. 7.750% 04/15/09 44 Calpine Corp. 7.875% 04/01/08 50 Calpine Corp. 8.500% 07/15/10 69 Calpine Corp. 8.500% 02/15/11 43 Calpine Corp. 8.625% 08/15/10 45 Calpine Corp. 8.750% 07/15/07 58 Calpine Corp. 8.750% 07/15/13 69 Calpine Corp. 9.875% 12/01/11 70 CD Radio Inc. 8.750% 09/29/09 0 Cell Therapeutic 5.750% 06/15/08 68 Cell Therapeutic 5.750% 06/15/08 51 Cellstar Corp. 12.000% 01/15/07 0 Cendant Corp 4.890% 08/17/06 50 Charter Comm Hld 10.000% 05/15/11 63 Charter Comm Hld 11.125% 01/15/11 66 CIH 10.000% 05/15/14 65 Ciphergen 4.500% 09/01/08 75 Clark Material 10.750% 11/15/06 0 Collins & Aikman 10.750% 12/31/11 49 Comcast Corp. 2.000% 10/15/29 38 Constar Intl 11.000% 12/01/12 67 Cons Container 10.125% 07/15/09 66 Cooper Standard 8.375% 12/15/14 71 Covad Communication 3.000% 03/15/24 57 Cray Inc. 3.000% 12/01/24 55 Cray Research 6.125% 02/01/11 25 Curagen Corp. 4.000% 02/15/11 69 Curagen Corp. 4.000% 02/15/11 73 Curative Health 10.750% 05/01/11 71 DAL-DFLT09/05 9.000% 05/15/16 20 Dana Corp 5.850% 01/15/15 72 Dana Corp 7.000% 03/15/28 72 Dana Corp 7.000% 03/01/29 72 Dayton Superior 13.000% 06/15/09 67 Decrane Aircraft 12.000% 09/30/08 50 Delco Remy Intl 9.375% 04/15/12 38 Delco Remy Intl 11.000% 05/01/09 46 Delta Air Lines 2.875% 02/18/24 17 Delta Air Lines 7.299% 09/18/06 62 Delta Air Lines 7.541% 10/11/11 61 Delta Air Lines 7.700% 12/15/05 17 Delta Air Lines 7.779% 01/02/12 70 Delta Air Lines 7.900% 12/15/09 20 Delta Air Lines 8.000% 06/03/23 18 Delta Air Lines 8.187% 10/11/17 60 Delta Air Lines 8.270% 09/23/07 45 Delta Air Lines 8.300% 12/15/29 17 Delta Air Lines 8.540% 01/02/07 22 Delta Air Lines 8.540% 01/02/07 26 Delta Air Lines 8.540% 01/02/07 28 Delta Air Lines 8.540% 01/02/07 28 Delta Air Lines 8.950% 01/12/12 43 Delta Air Lines 9.250% 12/27/07 19 Delta Air Lines 9.250% 03/15/22 18 Delta Air Lines 9.375% 09/11/07 61 Delta Air Lines 9.590% 01/12/17 40 Delta Air Lines 9.750% 05/15/21 17 Delta Air Lines 9.875% 04/30/08 63 Delta Air Lines 10.000% 08/15/08 19 Delta Air Lines 10.000% 05/17/08 42 Delta Air Lines 10.000% 05/17/09 39 Delta Air Lines 10.000% 05/17/09 39 Delta Air Lines 10.000% 05/17/09 25 Delta Air Lines 10.000% 06/01/10 44 Delta Air Lines 10.000% 06/01/10 61 Delta Air Lines 10.000% 06/01/10 50 Delta Air Lines 10.000% 12/05/14 19 Delta Air Lines 10.060% 01/02/16 53 Delta Air Lines 10.125% 05/15/10 19 Delta Air Lines 10.140% 08/14/11 59 Delta Air Lines 10.330% 03/26/06 27 Delta Air Lines 10.375% 02/01/11 18 Delta Air Lines 10.375% 12/15/22 18 Delta Air Lines 10.430% 01/02/11 41 Delta Air Lines 10.430% 01/02/11 41 Delta Air Lines 10.500% 04/30/16 58 Delta Air Lines 10.790% 09/26/13 41 Delta Air Lines 10.790% 03/26/14 20 Delta Air Lines 10.790% 03/26/14 41 Delta Air Lines 10.790% 03/26/14 31 Delphi Auto Syst 6.500% 05/01/09 62 Delphi Auto Syst 7.125% 05/01/29 62 Delphi Corp 6.500% 08/15/13 62 Delphi Trust II 6.197% 11/15/33 28 Diamond Brands 12.875% 04/15/09 0 Duane Reade Inc 9.750% 08/01/11 70 Dura Operating 9.000% 05/01/09 54 DVI Inc. 9.875% 02/01/04 10 Edison Brothers 11.000% 09/26/07 0 Empire Gas Corp. 9.000% 12/31/07 0 Epix Medical Inc. 3.000% 06/15/24 64 E. Spire Comm Inc. 13.000% 11/01/05 0 Exodus Comm. Inc. 10.750% 12/15/09 0 Falcon Products 11.375% 06/15/09 2 Fedders North AM 9.875% 03/01/14 72 Federal-Mogul Co. 7.375% 01/15/06 35 Federal-Mogul Co. 7.500% 01/15/09 34 Federal-Mogul Co. 8.160% 03/03/03 32 Federal-Mogul Co. 8.250% 03/03/05 33 Federal-Mogul Co. 8.370% 11/15/01 32 Federal-Mogul Co. 8.800% 04/15/07 34 Finova Group 7.500% 11/15/09 37 FMXIQ-DFLT09/05 13.500% 08/15/05 3 Foamex L.P.-DFLT 9.875% 06/15/07 7 Foamex L.P./C-DFT 10.750% 04/01/09 73 Ford Motor Co. 6.500% 08/01/18 70 Ford Motor Co. 7.400% 11/01/46 66 Ford Motor Co. 7.500% 08/01/26 69 Ford Motor Co. 7.700% 05/15/97 67 Ford Motor Co. 7.750% 06/15/43 61 Ford Motor Cred 5.600% 09/20/11 74 Ford Motor Cred 5.650% 01/21/14 73 Ford Motor Cred 5.750% 01/20/14 75 Ford Motor Cred 5.750% 02/20/14 73 Ford Motor Cred 5.900% 02/20/14 74 Ford Motor Cred 6.000% 03/20/14 71 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 11/20/14 73 Ford Motor Cred 6.000% 11/20/14 73 Ford Motor Cred 6.000% 01/20/15 73 Ford Motor Cred 6.000% 02/20/15 73 Ford Motor Cred 6.050% 12/22/14 74 Ford Motor Cred 6.050% 12/22/14 71 Ford Motor Cred 6.150% 12/22/14 70 Ford Motor Cred 6.150% 01/20/15 70 Ford Motor Cred 6.200% 03/20/15 73 Ford Motor Cred 7.500% 08/20/32 67 Gateway Inc. 1.500% 12/31/09 74 Gateway Inc. 2.000% 12/31/11 72 General Motors 7.400% 09/01/25 63 General Motors 7.700% 04/15/16 70 General Motors 8.100% 06/15/24 68 General Motors 8.250% 07/15/23 71 General Motors 8.375% 07/15/33 71 General Motors 8.800% 03/01/21 72 General Motors 9.400% 07/15/21 74 Gfsi Inc. 9.625% 03/01/07 37 GMAC 5.250% 01/15/14 74 GMAC 5.350% 01/15/14 74 GMAC 5.900% 01/15/19 74 GMAC 5.900% 02/15/19 72 GMAC 6.000% 02/15/19 73 GMAC 6.000% 02/15/19 70 GMAC 6.000% 03/15/19 72 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 75 GMAC 6.050% 08/15/19 73 GMAC 6.050% 08/15/19 73 GMAC 6.050% 10/15/19 74 GMAC 6.125% 10/15/19 74 GMAC 6.150% 09/15/19 73 GMAC 6.150% 10/15/19 71 GMAC 6.200% 04/15/19 74 GMAC 6.250% 12/15/18 75 GMAC 6.250% 01/15/19 73 GMAC 6.250% 04/15/19 74 GMAC 6.250% 05/15/19 74 GMAC 6.300% 08/15/19 72 GMAC 6.300% 08/15/19 73 GMAC 6.400% 11/15/19 74 GMAC 6.400% 11/15/19 74 GMAC 6.750% 03/15/20 74 Golden Northwest 12.000% 12/15/06 3 Graftech Int'l 1.625% 01/15/24 71 Graftech Int'l 1.625% 01/15/24 71 Gulf States STL 13.500% 04/15/03 0 Home Interiors 10.125% 06/01/08 61 Home Prod Intl 9.625% 05/15/08 74 Human Genome 2.250% 08/15/12 73 Human Genome 2.250% 08/15/12 74 Huntsman Packag 13.000% 06/01/10 11 Imperial Credit 9.875% 01/15/07 0 Impsat Fiber 6.000% 11/01/24 71 Inland Fiber 9.625% 11/15/07 56 Integrat Elec SV 9.375% 02/01/09 53 Integrat Elec SV 9.375% 02/01/09 49 Intermet Corp. 9.750% 06/15/09 38 Iridium LLC/CAP 10.875% 07/15/05 23 Iridium LLC/CAP 11.250% 07/15/05 21 Iridium LLC/CAP 13.000% 07/15/05 23 Iridium LLC/CAP 14.000% 07/15/05 23 Isolagen Inc. 3.500% 11/01/24 43 Jacobson's 6.750% 12/15/11 3 Kaiser Aluminum & Chem. 12.750% 02/01/03 8 Kellstrom Inds 5.500% 06/15/03 0 Kellstrom Inds 5.750% 10/15/02 0 Kmart Corp. 8.990% 07/05/10 51 Kmart Funding 8.880% 07/01/10 50 Kulicke & Soffa 0.500% 11/30/08 72 Kulicke & Soffa 1.000% 06/30/10 72 Lehman Bros Hldg 0.750% 06/21/10 52 Level 3 Comm. Inc. 2.875% 07/15/10 61 Level 3 Comm. Inc. 6.000% 09/15/09 60 Level 3 Comm. Inc. 6.000% 03/15/10 58 Liberty Media 3.750% 02/15/30 55 Liberty Media 4.000% 11/15/29 59 Macsaver Financl 7.400% 02/15/02 0 Macsaver Financl 7.875% 08/01/03 0 Mcms Inc. 9.750 03/01/08 0 Merisant Co 9.500% 07/15/13 68 Metricom Inc. 13.000% 02/15/10 0 Motels of Amer 12.000% 04/15/04 66 MSX Int'l Inc. 11.375% 01/15/08 62 Muzak LLC 9.875% 03/15/09 50 New Orl Grt N RR 5.000% 07/01/32 72 New World Pasta 9.250% 02/15/09 5 North Atl Trading 9.250% 03/01/12 73 Northern Pacific RY 3.000% 01/01/47 55 Northern Pacific RY 3.000% 01/01/47 55 Northwest Airlines 6.625% 05/15/23 33 Northwest Airlines 7.068% 01/02/16 69 Northwest Airlines 7.248% 01/02/12 18 Northwest Airlines 7.360% 02/01/20 64 Northwest Airlines 7.625% 11/15/23 32 Northwest Airlines 7.875% 03/15/08 32 Northwest Airlines 8.070% 01/02/15 20 Northwest Airlines 8.130% 02/01/14 23 Northwest Airlines 8.304% 09/01/10 73 Northwest Airlines 8.700% 03/15/07 34 Northwest Airlines 8.875% 06/01/06 34 Northwest Airlines 8.970% 01/02/15 16 Northwest Airlines 9.179% 04/01/10 43 Northwest Airlines 9.875% 03/15/07 33 Northwest Airlines 10.000% 02/01/09 32 Northwest Stl & Wir 9.500% 06/15/01 0 NTK Holdings Inc. 10.750% 03/01/14 60 NWA Trust 9.360% 03/10/06 64 NWA Trust 11.300% 12/21/12 45 Oakwood Homes 7.875% 03/01/04 10 Oakwood Homes 8.125% 03/01/09 5 O'Sullivan Ind. 10.630% 10/01/08 62 Oscient Pharm 3.500% 04/15/11 73 Osu-Dflt10/05 13.375% 10/15/09 5 Owens-Crng Fiber 8.875% 06/01/02 69 Overstock.com 3.750% 12/01/11 70 PCA LLC/PCA Fin 11.875 08/01/09 23 Pegasus Satellite 9.625% 10/15/05 32 Pegasus Satellite 9.750% 12/01/06 25 Pegasus Satellite 12.375% 08/01/06 23 Pegasus Satellite 12.500% 08/01/07 25 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings Inc. 9.875% 06/15/08 65 Piedmont Aviat 9.900% 11/08/06 0 Piedmont Aviat 10.000% 11/08/12 11 Pixelworks Inc. 1.750% 05/15/24 68 Pliant Corp. 13.000% 06/01/10 22 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 0 Polaroid Corp. 11.500% 02/15/06 0 Portola Packagin 8.250% 02/01/12 71 Primedex Health 11.500% 06/30/08 55 Primus Telecom 3.750% 09/15/10 28 Primus Telecom 5.750% 02/15/07 62 Primus Telecom 8.000% 01/15/14 58 Primus Telecom 12.750% 10/15/09 52 Psinet Inc. 11.500% 11/01/08 0 Radnor Holdings 11.000% 03/15/10 75 RDM Sports Group 8.000% 08/15/03 0 Read-Rite Corp. 6.500% 09/01/04 20 Reliance Group Holdings 9.000% 11/15/00 20 Reliance Group Holdings 9.750% 11/15/03 0 Safety-Kleen Corp. 9.250% 06/01/08 0 Salton Inc. 12.250% 04/15/08 57 Silicon Graphics 6.500% 06/01/09 68 Solectron Corp. 0.500% 02/15/34 72 Solutia Inc. 6.720% 10/15/37 70 Solutia Inc. 7.375% 10/15/27 71 Tekni-Plex Inc. 12.750% 06/15/10 54 Teligent Inc. 11.500% 03/01/08 0 Toys R Us 7.375% 10/15/18 68 Trans Mfg Oper 11.250% 05/01/09 63 Transtexas Gas 15.000% 03/15/05 1 Trism Inc. 12.000% 02/15/08 0 Triton Pcs Inc. 8.750% 11/15/11 73 Triton Pcs Inc. 9.375% 02/01/11 73 Tropical Sportsw 11.000% 06/15/08 0 United Air Lines 6.831% 09/01/08 71 United Air Lines 7.270% 01/30/13 46 United Air Lines 7.371% 09/01/06 35 United Air Lines 7.762% 10/01/05 44 United Air Lines 8.030% 07/01/11 67 United Air Lines 9.000% 12/15/03 13 United Air Lines 9.020% 04/19/12 41 United Air Lines 9.125% 01/15/12 16 United Air Lines 9.200% 03/22/08 45 United Air Lines 9.300% 03/22/08 27 United Air Lines 9.350% 04/07/16 62 United Air Lines 9.750% 08/15/21 14 United Air Lines 10.020% 03/22/14 60 United Air Lines 10.110% 01/05/06 51 United Air Lines 10.125% 03/22/15 58 United Air Lines 10.250% 07/15/21 14 United Air Lines 10.670% 05/01/04 16 United Air Lines 11.210% 05/01/14 14 Univ. Health Services 0.426% 06/23/20 57 US Air Inc. 10.250% 01/15/49 4 US Air Inc. 10.250% 01/15/49 4 US Air Inc. 10.250% 01/15/49 1 US Air Inc. 10.300% 07/15/49 8 US Air Inc. 10.550% 01/15/49 28 US Air Inc. 10.680% 06/27/08 2 US Air Inc. 10.700% 01/15/49 28 US Air Inc. 10.700% 01/15/49 27 US Air Inc. 10.750% 01/15/49 6 US Air Inc. 10.800% 01/01/49 6 Venture Hldgs 9.500% 07/01/05 0 Vesta Insur Grp 8.750% 07/15/27 51 Vitesse Semicond 1.500% 10/01/24 73 WCI Steel Inc. 10.000% 12/01/04 49 Werner Holdings 10.000% 11/15/07 42 Westpoint Steven 7.875% 06/15/08 0 Westpoint Steven 7.875% 06/15/05 0 Wheeling-Pitt St 5.000% 08/01/11 75 Wheeling-Pitt St 6.000% 08/01/10 70 Winn-Dixie Store 8.875% 04/01/08 69 Winstar Comm 10.000% 03/15/08 0 Winstar Comm 12.750% 04/15/10 0 World Access Inc. 4.500% 10/01/02 4 Xerox Corp 0.570% 04/21/18 41 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P. Laureno, Cherry A. Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, Tara Marie A. Martin and Peter A. Chapman, Editors. Copyright 2005. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***