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/raid1/www/Hosts/bankrupt/TCR_Public/051130.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, November 30, 2005, Vol. 9, No. 284 Headlines ACCUPOLL HOLDING: Sept. 30 Balance Sheet Upside-Down by $6.1 Mil. ACTIVECORE TECH: Posts $500,000 GAAP Net Loss in Third Quarter AERWAV INTEGRATION: Selling Assets to Shiver Lender for $3.3 Mil. AES DOMINICANA: Fitch Assigns B- Int'l. Foreign Currency Rating ALLIANCE ONE: Lenders Agree to Amend Senior Credit Facility ALLSERVE SYSTEMS: Section 341 Meeting Slated for Dec. 21 ARMSTRONG WORLD: Deloitte & Touche Continues Auditing Services ASARCO LLC: M.B. Schmidt Okayed as Encycle Ch. 7 Trustee's Counsel ASARCO LLC: Reed Smith Approved as Creditors Committee's Counsel ASARCO LLC: Creditors' Panel Wants F&J as Special Local Counsel B/E AEROSPACE: Expects 2005 Revenue to Top $800 Million BABSON CLO: Moody's Rates $12.5 Million Class E Notes at Ba2 BE AEROSPACE: Public Offering Plan Prompts S&P to Review Ratings BEAZER HOMES: Fitch Affirms BB+ Ratings on $2.03 Billion Debts BOYDS COLLECTION: S&P Withdraws Ratings Due to Inadequate Facts BROOKFIELD PROPERTIES: Gets O&Y Shareholders' Nod on Buy-Out Deal CALPINE CORP: Board Makes Changes in Executive Management CALPINE CORP: Management Changes Prompt S&P to Junk Credit Rating CALPINE CORP: Moody's Reviews Junk Ratings for Possible Downgrade CAPITAL AUTOMOTIVE: Merger Effectivity Date is December 15 CARROLS CORP: Late Financial Statement Filing May Prompt Default CATHOLIC CHURCH: Insurers Balk at Spokane's Disclosure Statement CATHOLIC CHURCH: Spokane Cash Mgt. Order Continued Until Feb. 27 CHASE MORTGAGE: Fitch Rates $10.45 Million Class Certs. at Low-B CITICORP MORTGAGE: Fitch Puts Low-B Ratings on $1.44M Class Certs. CURATIVE HEALTH: Sept. 30 Balance Sheet Upside-Down by $82 Million COLLINS & AIKMAN: International Auto to Buy C&A Europe CONGOLEUM CORP: Wants Until April 13 to Decide on Unexpired Leases DELPHI CORP: Tricon Wants Court to Lift Stay to Effectuate Set Off DELPHI CORP: Wants Okay on Supplier Contract Assumption Protocol DELPHI CORP: Wants Court Nod to Assume CEC Power Contracts DELTA AIR: Retiree Panel Wants Foley & Lardner as Local Counsel DELTA AIR: Wants to Set Off Obligations with Timco EAGLEPICHER HOLDINGS: Wants to Walk Away from 36 Computer Leases EAGLEPICHER INC: Inks Consensual Plan Term Sheet with Committee ELEPHANT TALK: Loss & Deficit Trigger Going Concern Doubt FASTENTECH INC: Sept. 30 Balance Sheet Upside-Down by $31 Million FIRST REPUBLIC: Fitch Affirms Low-B Ratings on Class B-5 Certs. FLYI INC: Court OKs Rejection of 30 Assigned 328 Jet Leases FLYI INC: Committee Can't Share Confidential Info to Creditors FOAMEX INT'L: Wants to Walk Away From 15 Executory Contracts FOAMEX INT'L: Wants to Reject Three New York Real Property Leases FOAMEX INT'L: Gets Court Okay to Hire Jefferson Wells as Auditors FOOTSTAR INC: Reaches Consensual Plan Terms with Committees GE BUSINESS: Fitch Places BB Rating on Class D Certificates GENERAL CABLE: Completes Senior Secured Debt Amendment & Extension GMAC MORTAGAGE: Fitch Affirms Low-B Ratings on Class B Certs. GTA-IB LLC: Sept. 30 Balance Sheet Upside-Down by $7 Million GTC TELECOM: Losses & Deficits Trigger Going Concern Doubt HEARTLAND INC: Deficits Trigger Management's Going Concern Doubt HULETT CORPORATION: Case Summary & 19 Largest Unsecured Creditors I2 TECH: Elects to Redeem $235 Million of 5.25% Subordinated Notes INFORMATION ARCHITECTS: Sept. 30 Balance Sheet Upside-Down by $3MM INTERFACE INC: Moody's Raises $135MM Sub. Notes' Rating to Caa1 INTREPID TECHNOLOGY: Loss & Deficit Trigger Going Concern Doubt INVESCO CBO: Fitch Affirms BB- Rating on $8 Mil. Class B-2 Notes K&S UTILITY: Case Summary & 61 Known Creditors KAISER ALUMINUM: Creditors Vote to Accept Amended Plan KAISER ALUMINUM: Asks Court to Approve Plan Modifications KAISER ALUMINUM: Wants CNA & National Union Agreement Approved KMART CORP: Pendleton Woolen Files Lawsuit Against Kmart KMART CORP: Wants Premier Retail Claim Reduced to $5.5 Million LEHMAN BROTHERS: Fitch Assigns Low-B Ratings to $12.4M Class Notes LOCATEPLUS HOLDINGS: Sept. 30 Balance Sheet Upside-Down by $4.3MM MEI LLC: Selling All Assets to MAK Energy via Private Sale MEI LLC: Creditors Must File Proofs of Claim by December 23 MEI LLC: Will Pay $110,000 to Settle Old National's Secured Claim MESABA AVIATION: Wants Sonnenschein Nath as Special Counsel MESABA AVIATION: Wants to Ink Sec. 1110 Pacts & Cure Defaults MIRANT CORP: Asks Court to OK 4-Yr. Revolver Settlement Term Sheet MIRANT CORP: Asks Court to Approve Consumers & METC Settlement MIRANT CORP: Court Enjoins Wilson Firm from Soliciting Plan Votes NATIONAL ENERGY: Wants Caledonia & NEG Settlement Deals Approved NATIONAL ENERGY: ET Debtors File First Quarterly Report NORTHWESTERN CORP: Black Hills Offer Cues Fitch's Evolving Outlook OMEGA HEALTHCARE: Offering Additional $50 Mil. of 7% Senior Notes OMNI MEDICAL: Loss & Deficit Trigger Going Concern Doubt OWENS CORNING: Has Until June 5 to Make Lease-Related Decisions PACIFIC BIOMETRICS: Equity Deficit Widens to $643,247 at Sept. 30 PACIFIC BIOMETRICS: Files Prospectus on $14.6 Mil. Common Shares PEP BOYS: Moody's Affirms Senior Subordinated Notes' Rating at B3 PINNACLE ENTERTAINMENT: Moody's Rates New $750MM Facility at B1 PLASTIPAK HOLDINGS: Offering $250MM Notes via Private Placement PORTAL SOFTWARE: Restating Financials to Accommodate Adjustments POWER EFFICIENCY: Posts $767,727 Net Loss in Third Quarter PRESCIENT APPLIED: Posts $388,493 of Net Loss in Third Quarter PROTOCOL SERVICES: Amended Plan Confirmation Hearing on Dec. 22 PROTOCOL SERVICES: Has Until Jan. 23 to Solicit Plan Acceptances PROXIM CORP: Court Extends Exclusive Plan Filing Period to Jan. 9 REMEDIATION FIN'L: Wants to Continue Lawrence Hilton Retention SOLUTIA INC: Acquires Vitro Plan's 51% Stake in Quimica SOUTHHAVEN POWER: Wants Exclusive Period Stretched to July 17 TARGUS GROUP: Moody's Rates Proposed $85 Million Term Loan at B3 TRM CORP: Lenders Waive Covenant Defaults Under Credit Agreement TRONOX INC: Raises $225.4 Million from Initial Public Offering VILLAGEEDOCS INC: Incurs $684,592 Net Loss in Third Quarter VIRTRA SYSTEMS: Releases Third Quarter 2005 Financial Results WACHOVIA BANK: S&P Raises Low-B Ratings on Six Class Certificates WM. BOLTHOUSE: Moody's Rates $135 Mil. Sr. Sec. Term Loan at B3 WORLDCOM INC: Court Lifts Stay for APG Inc. to Pursue Appeal Y-TEL INT'L: Files Third Quarter 2005 Financial Results Y-TEL INTERNATIONAL: Board Taps CFO John Conroy as Acting CEO ZIM CORPORATION: Posts $368,720 Net Loss in Second Fiscal Quarter * Proskauer Rose Names Six New Partners & Three Senior Counsel * Upcoming Meetings, Conferences and Seminars ********* ACCUPOLL HOLDING: Sept. 30 Balance Sheet Upside-Down by $6.1 Mil. ----------------------------------------------------------------- AccuPoll Holding Corp. delivered its financial results for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. For the three months ended Sept. 30, 2005, AccuPoll reported a $1,983,527 net loss, compared to a $2,784,826 net loss for the same period in 2004. The Company's balance sheet showed $1,113,598 in total assets at Sept. 30, 2005, and liabilities of $7,246,534, resulting in a stockholders' deficit of $6,132,936. As of Sept. 30, 2005, AccuPoll had a cash overdraft of $111,625 and approximately $5.5 million of working capital deficit. Accumulated deficit at Sept. 30, 2005, was approximately $36.7 million. Management estimates that the Company will require an additional $6.4 million in financing over the next twelve months to pay past due payables and continue operations. Going Concern Doubt Squar, Milner, Reehl & Williamson, LLP, expressed substantial doubt about AccuPoll's ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended June 30, 2005, and 2004. The auditing firm pointed to the Company's losses from operations, accumulated deficit, negative working capital and lack of operational history. About AccuPoll Headquartered in Tustin, California, AccuPoll (OCTBB: ACUP) - http://www.accupoll.com/-- is the developer of a federally qualified electronic voting system featuring an intuitive touch screen input and a voter verified paper audit trail that can be confirmed by the voter at the time the ballot is cast, creating a permanent paper audit trail as mandated in the "Help America Vote Act of 2002". The AccuPoll Voting System has been qualified under the 2002 Federal Election Commission Voting System Standards. ACTIVECORE TECH: Posts $500,000 GAAP Net Loss in Third Quarter -------------------------------------------------------------- ActiveCore Technologies, Inc. (OTCBB:ATVE) reported its financial results for the quarter ended Sept. 30, 2005. For the quarter ended Sept. 30, 2005, ActiveCore reported revenues of $2.7 million, which represents a 42% increase over the $1.9 million reported in the previous quarter of fiscal year 2005. Revenue increased despite the sale of the Company's U.K. subsidiary, Twincentric Limited, midway through the quarter. ActiveCore reported a $100,000 adjusted net loss for the period, and a net loss in accordance with GAAP of $500,000. These amounts compare with an adjusted net loss of $1 million and a net loss of $1.3 million incurred during the quarter ended June 30, 2005. "This quarter represents a major step forward towards financial stability for ActiveCore," said Efrem Ainsley, chief financial officer. "Not only did the Company reduce its adjusted net loss by 90%, but we've demonstrated that this new management team has clear visibility into the Company's financial performance, and this will continue to build shareholder confidence in future periods." Balance Sheet Restructuring Towards the end of the third quarter of fiscal year 2005, ActiveCore engaged in a balance sheet restructuring exercise in an attempt to alleviate some of its most pressing debt issues. Numerous creditors agreed to convert their indebtedness to equity and a total of 10.3 million common shares were issued in this regard. Additionally, the Company also issued 5 million common shares to certain parties pursuant to agreements that provide for them to continue to support the Company's financing requirements. The shares issued in the period are not currently freely trading, as they are required to be registered pursuant to an upcoming registration statement. As a result of the restructuring, as of September 30, 2005, the Company has improved its liquidity substantially as compared to June 30, 2005. Specifically, the Company's working capital deficit improved from $4.8 million to $2.2 million over the most recent quarter. At Sept. 30, 2005, the Company's balance sheet showed $10 million in total assets and $7.4 million in total liabilities. Going Concern Doubt BDO Dunwoody LLP expressed substantial doubt about ActiveCore's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm pointed to the Company's net losses, negative cash flow from operations and working capital deficiency at Dec. 31, 2004. ActiveCore Technologies, Inc. -- http://www.ActiveCore.com/-- operates a group of subsidiaries and divisions in the U.S. and Canada that offer a Smart Enterprise Suite of products and services. The Company integrates, enables, and extends functions performed by current and legacy IT systems. Its products encompass web portals, enterprise middleware, mobile data access, data management and system migration applications. AERWAV INTEGRATION: Selling Assets to Shiver Lender for $3.3 Mil. ----------------------------------------------------------------- Aerwav Integration Group, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersery for authority to sell certain tangible and intangible assets to Shiver Lender I, LLC, for $3.3 million, subject to higher and better offers. Additionally, Shiver Lender will also assume 50% of the Debtors' liability for unpaid sales and use taxes owed to the State of New Jersey. The Debtors also ask the Court to set a date for the auction of the assets. Competing bids must at least be more than $100,000 than Shiver's bid. Interested purchasers may contact the Debtors' accountant, James Horgan, CPA, at M.R. Weiser & Co., for more information. Heaquartered in Pine Brook, New Jersey, Aerwav Integration Group, Inc., fka ArmorGroup Integrated Systems dba Aerwav Integration Services -- http://www.aerwavintegration.com/-- creates, installs, monitors and customizes integrated electronic safety and security systems. The Debtor, along with its affiliates, filed for chapter 11 protection on July 22, 2005 (Bankr. D. N.J. Case Nos. 05-33791 through 05-33794). Gerald H. Gline, Esq., and Warren A. Usatine, Esq., at Cole, Schotz, Meisel, Forman & Leonard, P.A., represent Aerwav. When the Debtors filed for chapter 11 protection, they estimated below $50,000 in assets and $1 million to $10 million in debts. AES DOMINICANA: Fitch Assigns B- Int'l. Foreign Currency Rating --------------------------------------------------------------- Fitch Ratings has assigned a 'B-' international foreign currency rating to the proposed issuance of $160 million notes due 2015 to be issued by AES Dominicana Energia Finance, S.A. The Rating Outlook is Stable. The proposed bullet bond issuance will be used to: * refinance existing debt at two power generation operating companies: -- Andres B.V. -- Dominican Power Partners, and * provide new working capital. The rating assigned to this issuance is based on the combined credit quality of AES Dominicana's two main assets in the Dominican Republic, Andres and DPP. The issuance ultimately will be jointly and severally guaranteed by these operating companies to substantially mitigate structural subordination issues and allow the transaction to perform as direct obligations of these two entities. Initially, the transaction will only be guaranteed by Andres, with the DPP guarantee becoming effective following the filing by AES Corp. of its restated financial statements, expected within the coming weeks. The rating reflects: * the high quality of the company's assets, * its diversified portfolio of assets (power generating capacity, liquified natural gas/ LNG terminal, gas pipeline, and power purchase agreements), * the competitive advantage in terms of the LNG, * the company's experienced management team, * a $23.5 million guarantee from AES Corp., * the company's high dependency on the government for payments, * the systemic problems that have characterized the Dominican Republic energy sector, * low availability of the power plants due to lack of fuel, and * challenges of increasing the collections from end users to provide sufficient cash to the generation companies to meet working capital requirements. It is important to mention that the Dominican government, in place since August 2004, is working to reverse the decline of the power sector. The current administration has recognized the magnitude of the problems and, at the end of 2004, announced a strategy to reach the financial sustainability of the power sector, which was also included in the country's agreement with the IMF. Andres and DPP have been facing liquidity problems as they have not been receiving payments from their primary offtaker, the distribution company, EDE-Este; EDE-Este has not had sufficient cash flow due to the government's failure to meet its payment obligations because of the macroeconomic crisis of the country and the escalating price of fuel and power prices. Without payment from EDE-Este and DPP, with whom Andres contracts short-term PPAs, Andres has been limited in its ability to purchase LNG as it has to prepay for fuel. As a result, Andres has had lower than originally anticipated availability, forcing both Andres and DPP to buy energy in the spot market to meet their respective PPA obligations. Though Andres suspended principal payments, it has remained current on interest under the existing facility. The proposed bullet bond issuance will provide Andres and DPP with a more appropriate capital structure and should also result in lower total interest expense going forward. However, long-term refinancing risk remains a concern given the recent volatility of the Dominican economy and energy sector problems. The proposed transaction benefits from a six-month interest reserve account and a $23.5 million guarantee from AES Corp that should ensure that debt service is adequately covered until maturity. Projected EBITDA-to-interest ratios are acceptable for the rating category, increasing from the mid 2 times in 2006 to approximately 4x in 2009 range; similarly debt-to-EBITDA should improve as well from the mid 3x in 2006 to mid 2x in 2009 range, related to the forecasted growth in EBITDA. Projected cash flow from operations relies on maintaining collection of revenues from EDE-Este and is expected to include payment of accumulated unpaid taxes and increased working capital requirements. The ability of EDE-Este to generate positive operating cash and service all of its obligations is largely dependent on its ability to continue to improve collections from end users, primarily government and residential consumers, and diminish line losses. EDE-Este has increased collections and expects further improvements, assuming the government pays its bills on time and continues to support its strategy as reflected in the IMF agreement and as additional improvements are made in the residential sector. AES Dominicana is an energy group operating in the Dominican Republic, which manages two of AES Corp.'s wholly owned generation assets, Andres and DPP. AES Dominicana, through an AES Corp subsidiary, also has a management agreement to operate EDE-Este, one of the three distribution companies in the country. Andres is a power plant with a 304 MW combined cycle generation facility with duel fuel capability but with natural gas supplied through the LNG import facility serving as the primary fuel while DPP is a 236 MW power plant comprising two simple cycle combustion turbines that can burn both natural gas and fuel oil Number 2. Both plants together have PPA contracts with EDE-Este for 260 MW that increase over time, but Andres is currently servicing all contracts given its greater efficiency. Andres LNG terminal includes a large tanker berth and jetty, an LNG refueling pier, and a one million barrel LNG storage tank, as well as regasification and handling facilities for both LNG and diesel. ALLIANCE ONE: Lenders Agree to Amend Senior Credit Facility ----------------------------------------------------------- Alliance One International, Inc. (NYSE: AOI) obtained the requisite approvals from lenders for an amendment to its senior secured credit facility. The amendment relaxes certain financial covenants, changes certain negative covenants and increases the interest rate margins applicable to the periods for which covenant compliance has been relaxed. As previously reported, the Company sought these amendments in light of the current market conditions faced by the Company. The Company will file with the Securities and Exchange Commission a Form 8-K regarding this amendment, which will attach the full text of the amendment. Brian J. Harker, Chairman and Chief Executive Officer, stated "We are delighted by the level of support provided by our lenders and view this amendment as further validation of the strategic rationale for our merger. We are committed to working with our customers to further improve both profitability and liquidity going forward and delivering the full benefits of the merger to all our stakeholders." Alliance One International, Inc. -- http://www.aointl.com/-- is a leading independent leaf tobacco merchant. * * * As reported in the Troubled Company Reporter on Nov. 25, 2005, Moody's Investors Service lowered the ratings of Alliance One International, Inc., reflecting the company's shortfall from financial expectations primarily caused by the amalgamation of negative operating issues affecting the tobacco leaf industry. These include: * a poor quality crops in Brazil; * adverse foreign exchange movements; * stretching of purchases by customers; and * product pricing pressure. The cumulative effect of these issues on the company's financials include: * protracted working capital; * incremental bad debts; and * negative free cash flow (the company recently suspended the payment of dividends). Consolidated EBIT is insufficient to cover interest expense. Moody's lowered these ratings: * Approximately $650 million senior secured credit facility, maturing 2008, to B2 from B1, consisting of: -- a $300 million revolver available to Alliance One and Intabex Netherlands B.V., subsidiary; -- an approximately $150 million term A loan; and -- an approximately $200 million term B loan. * $315 million 11% guaranteed senior unsecured notes, due 2012, to B3 from B2 * $100 million 12.75% guaranteed senior subordinated note, due 2012, to Caa2 from B3 * Corporate family rating to B2 from B1 Moody's said the ratings outlook is negative. ALLSERVE SYSTEMS: Section 341 Meeting Slated for Dec. 21 -------------------------------------------------------- The U.S. Trustee for Region 3 will convene a meeting of Allserve Systems Corp.'s creditors at 9:00 a.m., on Dec. 21, 2005, at Suite 1401, One Newark Center, in Newark, New Jersey 07102. 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 North Brunswick, New Jersey, Allserve Systems Corp. is an outsourcing company for the IT industry. The Debtor filed for chapter 11 protection on November 18, 2005 (Bankr. D. N.J. Case No. 05-60401). Barry W. Frost, Esq., at Teich Groh represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets between 10 million to $50 million and debts between $50 million to $100 million. ARMSTRONG WORLD: Deloitte & Touche Continues Auditing Services -------------------------------------------------------------- Over the past four years, Deloitte & Touche LLP has provided Armstrong World Industries, Inc., with necessary internal audit services. However, Deloitte's engagement with AWI expired on August 30, 2005. To continue the necessary Internal Audit Services that are required for the effective and efficient operation of its business during the pendency of its Chapter 11 case, AWI sought and obtained the Court's authority to continue Deloitte's employment. Kenneth L. Jacobs, Esq., AWI's Deputy General Counsel in Litigation, relates that Deloitte is particularly well suited to continue to provide the Internal Audit Services to AWI in a cost-efficient and timely manner due to the firm's extensive experience in providing the services, and the firm's familiarity with AWI's business operations, personnel, financial reporting procedures, and accounting functions. Modified Employment Terms At AWI's request, Judge Fitzgerald also authorizes the company to modify the scope and terms of Deloitte's retention: (1) Deloitte will provide the Internal Audit Services to AWI from August 30, 2005, through December 31, 2005. (2) The firm's hourly rates will be revised: Partner $280 Director $260 Senior Manager $215 Manager $195 Senior Consultant $140 Consultant $110 (3) In the event that Deloitte subcontracts its affiliate, Deloitte Financial Advisory Services LLP, to assist in the performance of special investigations incidental to the Internal Audit Services as may be requested by AWI, Investigative Specialists will be paid $330 per hour. However, this includes China-based specialists. (4) The hourly rates for China-based professionals, in Hong Kong Dollars, are: Partners/Principal/Director HKD450 Senior Manager HKD360 Computer Forensic Manager HKD330 Manager HKD300 Computer Forensic Examiner HKD275 Assistant Manager HKD250 Senior HKD160 - HKD195 Accountant HKD65 - HKD130 A full-text copy of the modified Employment Terms is available for free at http://ResearchArchives.com/t/s?354 Joseph Murphy, a director at Deloitte & Touche, attests that the firm does not hold any interest adverse to the Debtors, and remains "disinterested," as the term is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b). Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. As of March 31, 2005, the Debtors' balance sheet reflected a $1.42 billion stockholders' deficit. (Armstrong Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) ASARCO LLC: M.B. Schmidt Okayed as Encycle Ch. 7 Trustee's Counsel ------------------------------------------------------------------ Michael Boudloche, the Chapter 7 trustee appointed to oversee the liquidation of Encycle/Texas, Inc.'s estate, sought and obtained authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to employ the Law Offices of Michael B. Schmidt as his attorney. M.B. Schmidt will: (a) assist the Trustee where necessary to negotiate and consummate non-routine sales of the estate's assets, including sales free and clear of liens, claims and encumbrances, and to institute any necessary proceedings; (b) institute non-routine objections to proofs of claim asserted against the estate, and to 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 in regard to any adversaries 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 institute any necessary proceedings to obtain authority to assume or reject executory contracts; (g) analyze, institute and prosecute actions regarding: * insider transactions and third -party dealings; * avoidance of set-offs and avoidable transfers; * piercing of the corporate veil; * denial of discharge; and * objections to exemptions; (h) analyze business associations of the Debtor to determine the estate's interest and institute and prosecute actions to effect the recovery of interest; (i) analyze the Debtor's interest and to institute and prosecute actions to effect the recovery of notes receivable; (j) prepare for and institute and prosecute an examination under Rule 2004 of the Federal Rules of Bankruptcy Procedure and to institute and prosecute Motions to Compel Attendance and Removal of Persons for Examination under Bankruptcy Rule 2005; and (k) assist in resolution of title problems associated with the estate's property. M.B. Schmidt's normal hourly billing rates are: Michael B. Schmidt $300 John Vardeman 275 Legal Assistant 90 John Vardeman, Esq., an attorney at M.B. Schmidt, assures the Court that M.B. Schmidt does not hold or represent any interest adverse to Encycle or its estate, and that the firm 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 Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Reed Smith Approved as Creditors Committee's Counsel ---------------------------------------------------------------- During a formational meeting conducted by the United States Trustee on Sept. 2, 2005, the Official Committee of Unsecured Creditors appointed in ASARCO LLC's case determined that it needed the assistance and advice of a counsel to perform its duties under Section 1103 (c) of the Bankruptcy Code. As a result, the ASARCO Committee selected Reed Smith LLP as its counsel because of the Reed Smith attorneys' extensive experience and knowledge in the field of debtors' and creditors' rights and business organizations under Chapter 11 of the Bankruptcy Code. On behalf of Committee member Wilmington Trust Company, as indenture trustee, Tina Moss, Esq., at Pryor Cashman Sherman & Flynn, LLP, in New York, tells the Court that ASARCO's bankruptcy cases have progressed very quickly. She reminds Judge Schmidt that the Debtors already conducted hearings on many motions and applications requiring immediate responses. Moreover, the ASARCO Committee and its professionals have been involved in numerous preliminary discussions with various parties-in-interest on labor issues and other operational matters necessary to enable the Committee to fully perform its statutory duties. Ms. Moss also notes that ASARCO's cases are likely to raise complex issues and the ASARCO Committee will require counsel with specialized and substantial expertise in commercial litigation and business law, including environmental, labor and tax law and extensive experience in commodity manufacturing insolvency cases. Accordingly, the Committee sought and obtained authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to retain Reed Smith as its counsel, nunc pro tunc to Sept. 2, 2005. Reed Smith's services include: (a) consulting with ASARCO concerning the administration of its bankruptcy case; (b) investigating the acts, conduct, assets, liabilities, and financial condition of ASARCO, the operation of ASARCO's businesses and the desirability or the continuance of businesses, and any other matter relevant to the case or to the formulation of one or more plans of reorganization; (c) evaluating with ASARCO any offers to purchase its assets or businesses and participating in the sales process; (d) participating in the formulation of one or more plans, advising those represented by the Committee of its determinations as to any plan formulated, and collecting and filing with the Court acceptances or rejections of any plan; (e) requesting, if appropriate, the appointment of one or more trustees or examiners; (f) asserting claims and causes of action on the Committee's and ASARCO's behalf; and (g) performing other services as are in the interest of ASARCO's creditors. The Reed Smith professionals that will primarily represent the ASARCO Committee and their regular hourly rates are: Professional Position Hourly Rate ------------ -------- ----------- Paul M. Singer Partner 585 James C. McCarroll Partner 530 Derek J. Baker Associates 365 Amanda Leonard Paralegal 180 Georgia Wicland Paralegal 100 The firm will be reimbursed for necessary expenses incurred. Paul M. Singer, Esq., a partner at Reed Smith, attests that the firm is an "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code and does not represent an interest materially adverse to ASARCO's estate. 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 Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Creditors' Panel Wants F&J as Special Local Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in ASARCO LLC's case seeks authority from the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to retain Fulbright & Jaworski L.L.P., as its special local counsel, nunc pro tunc to Sept. 12, 2005. The ASARCO Committee determined that Fulbright's engagement is necessary due to the complexity of issues the Committee will encounter in ASARCO's case. The Committee believes that Fulbright is well qualified to serve as special local counsel considering the firm's extensive experience in bankruptcy and reorganization matters. Evelyn H. Biery will primarily represent the Committee as its lead attorney. Ms. Biery will be assisted by other Fulbright attorneys Zack A. Clement, Jonathan Bolton, Sharon Beausoleil- Mayer, Jason Boland, Paul Botros and Mark Worden. As special local counsel, Fulbright will: (a) advise the Committee as to its powers and duties; (b) assist the Committee in its investigation of the ASARCO Debtors' affairs; (c) assist in analyzing applications, motions, responses, orders, statements, schedules, reports, and other pleadings and legal documents filed with the Court by the ASARCO Debtors or third parties; (d) appear and represent the Committee at hearings as appropriate; (e) assist and advise the Committee with regard to its communications to the general creditor body regarding the Committee's recommendations on any proposed plan of reorganization and other maters; and (f) perform other legal services as may be required and in the unsecured creditors' interest. Fulbright's hourly billing rates for domestic offices range from: Professional Hourly Rate ------------ ----------- Partners $350 to $680 Senior Associates $300 to $465 Senior Counsel $320 to $580 Counsel $165 to $485 Associates $165 to $385 Patent Agents $170 to $265 Counsel $325 to $690 Legal Assistants $70 to $215 Senior Legal Assistants $120 to $210 The hourly rates of the Fulbright professionals that will primarily represent the Committee are: Professional Hourly Rate ------------ ----------- Evelyn Biery $650 Zack Clement 650 Johnathan Bolton 300 Sharon Beausoleil-Mayer 285 Jason Boland 240 Paul Botros 240 Mark Worden 240 Other lawyers, legal assistants, and other personnel may be assigned as necessary to achieve proper staffing, in accordance with those consistent rates. Ms. Biery, a partner at Fulbright, attests that Fulbright does not represent or hold any interest adverse to the interests of the estate and is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code. Ms. Biery discloses that prior to its proposed engagement, Fulbright was retained by First Union Commercial Corporation and BNY Capital Resources Corporation to represent their interests as lessors in the reorganization cases. To zealously represent First Union's and BNY's interests, Fulbright's engagement as special local counsel will be limited to these conditions: (1) Fulbright will counsel or represent the Committee only on matters and legal issues that are not adverse to First Union or BNY, and Fulbright will be permitted to immediately recuse itself from continuing to represent or counsel the Committee in any issue or matter, which may foreseeably become adverse to First Union or BNY. (2) Fulbright, through Michael M. Parker, will be permitted to continue to counsel or represent First Union any BNY in any matters whatsoever pertaining to ASARCO's case, regardless of whether those matters are directly adverse to the Committee, the Debtors, other creditors, or the bankruptcy estates in general. (3) Fulbright will obtain the informed consent of First Union and BNY to Fulbright's representation of the Committee. (4) Individual Fulbright attorneys who are employed in counseling or representing the Committee will not participate in counseling or representing First Union or BNY, and vice versa. (5) Individual Fulbright attorneys who are employed in counseling or representing the Committee will not be permitted to access the files, documents and other confidential materials or information maintained by those Fulbright attorneys employed in representing or counseling First Union or BNY, and vice versa. 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 Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000). B/E AEROSPACE: Expects 2005 Revenue to Top $800 Million ------------------------------------------------------- B/E Aerospace, Inc. (Nasdaq:BEAV) confirmed its 2005 guidance that revenue will be in excess of $800 million and operating earnings growth will be approximately 45% over 2004 results. The Company also raised its 2006 earnings guidance and specified that underlying its existing 2006 guidance is operating earnings growth of approximately 40% over 2005 expected results. As a result of the Company's improving financial performance and outlook, as well as the reduction in interest expense of approximately $20 million associated with the planned redemption of the Company's outstanding 8% Senior Subordinated Notes due 2008 with the proceeds of its common stock offering, the Company expects to accelerate the recognition of its domestic deferred tax asset. The Company will recognize a domestic deferred tax asset in the fourth quarter of 2005, resulting in a tax benefit of approximately $0.85 per share. In addition, as a result of an expected increase in profitability in its international operations, the Company anticipates that it will recognize its foreign deferred tax asset in 2006, which would result in an additional tax benefit of approximately $0.30 per share in 2006. As a result of the recognition of these deferred tax assets, the Company's expected 2006 tax rate will increase from approximately 9% to approximately 30%, exclusive of the tax benefits. However, the Company anticipates that the increase in the accrual for taxes in 2006 will be offset by the foreign tax benefit. Cash taxes are expected to be approximately $4 million per year through 2007 as a result of the use of net operating loss carry-forwards for tax purposes. The Company increased its 2005 earnings per share guidance from $0.50 to $1.35 due to the one-time recognition of the domestic deferred tax asset. The Company increased its 2006 earnings per share guidance from $1.10 to $1.12 due to the common stock offering and associated debt redemption, its anticipated one-time recognition of its foreign deferred tax asset and an improving business outlook. The Company expects to use a 30% effective tax rate in 2006, offset by the tax benefits. If the Company were to report earnings per share at a 30% rate for both 2005 and 2006, exclusive of any tax benefits, its estimated 2005 and 2006 earnings per share would be approximately $0.39 and $0.81, respectively, based on an assumed weighted average of 61.4 million and 77.2 million shares of common stock outstanding, respectively. BE Aerospace, Inc., manufactures cabin interior products for commercial aircraft and for business jets and a leading aftermarket distributor of aerospace fasteners. * * * Moody's Rating Services assigned a B3 rating on the Company's corporate family rating and junked the ratings on its senior subordinate securities. BABSON CLO: Moody's Rates $12.5 Million Class E Notes at Ba2 ------------------------------------------------------------ Moody's Investors Service assigned ratings to six classes of notes issued by Babson CLO Ltd. 2005-III and by Babson CLO Inc. 2005-III. Moody's assigned these ratings: 1) Aaa to the U.S.$425,000,000 Class A Senior Notes due 2019 2) Aa2 to the U.S.$22,000,000 Class B Senior Notes due 2019 3) A2 to the U.S.$38,500,000 Class C Deferrable Mezzanine Notes due 2019 4) Baa2 to the U.S.$22,000,000 Class D Deferrable Mezzanine Notes due 2019 5) Ba2 to the U.S.$12,500,000 Class E Deferrable Mezzanine Notes due 2019 6) A3 to the U.S.$15,000,000 Class Q Combination Notes According to Moody's, the ratings are based primarily on the expected loss posed to noteholders relative to the promise of receiving the present value of such payments. Moody's also analyzed the risk of diminishment of cashflows from the underlying portfolio of corporate debt due to: * defaults, * the characteristics of these assets, and * the safety of the transaction's legal structure. Babson CLO Ltd. 2005-III, a collateralized debt obligation consisting primarily of U.S. senior secured loans, is managed by Babson Capital Management LLC, an indirect, wholly-owned subsidiary of MassMutual. BE AEROSPACE: Public Offering Plan Prompts S&P to Review Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including the 'B+' corporate credit rating, on BE Aerospace Inc. on CreditWatch with positive implications following the company's announcement that it plans to make a public offering of 13 million shares of its common stock. "This transaction should materially improve the firm's currently subpar financial profile," said Standard & Poor's credit analyst Roman Szuper. The net proceeds, estimated at $229 million or $263 million if the overallotment option is exercised in full, are intended to redeem $250 million 8% subordinated notes due 2008. About $680 million of debt is outstanding. The ratings on Wellington, Florida-based BE Aerospace reflect: * risks associated with difficult, albeit improving, conditions in the airline industry, the firm's primary customer base; * high debt; and * an overall subpar credit profile. These factors are partly offset by the company's position as the largest participant in the commercial aircraft cabin interior products market, a leading share of that business on corporate jets, and sufficient liquidity. Standard & Poor's will evaluate the impact of the equity offering and prospects for continued market recovery on the ratings and will make its determination in the near future. BEAZER HOMES: Fitch Affirms BB+ Ratings on $2.03 Billion Debts -------------------------------------------------------------- Fitch Ratings has affirmed the issuer default rating and senior unsecured debt, including revolving credit facility, rating of 'BB+' for Beazer Homes USA, Inc. (NYSE:BZH). The rating applies to: * $1.1 billion in outstanding senior notes, * $180 million of senior convertible notes, and * $750 million revolving credit agreement. The Rating Outlook is Stable. Ratings for Beazer are influenced by the company's operational record during the past decade and the financial progress that the company has achieved. Since the company went public in 1994, it has been an active consolidator in the homebuilding industry, which has contributed to its above-average growth. As a consequence, it has realized higher debt levels than its peers in recent years, especially following the Crossmann Communities acquisition. Management has generally exhibited an ability to quickly and successfully integrate its acquisitions, although Crossmann was an exception to the pattern. In any case, as the company has significant geographic breadth there should be less use of acquisitions going forward and acquisitions are likely to be moderate relative to Beazer's current size. The company's focus will be on organic growth in existing markets by increasing depth and breadth within those markets. The company is committed to maintaining a net debt to capitalization ratio of 45%-50%. Risk factors include: * the inherent cyclicality of the homebuilding industry, and * the company's historical aggressive growth strategy, moderate exposure to the sluggish Midwest, newly initiated share repurchase program, below-peer margins, and Beazer's size. During fiscal 2005 Beazer took a non-cash goodwill impairment charge of $130.2 million as the company and its board concluded that substantially all of the goodwill allocated to certain operations in Indiana, Ohio, Kentucky and Charlotte, North Carolina, which was recorded upon the acquisition of Crossmann Communities, was impaired. The company remains committed to those markets, but does expect to lessen incremental investment in the future. The charge does not affect Beazer's ability to generate cash flow in the future or its compliance with debt covenants. The company's EBITDA, EBIT, and FFO to interest ratios tend to be lower than the average public homebuilder, while its inventory turnover is similar to its peers. Beazer's leverage is higher and debt-to-EBITDA ratio is above peer averages. Although the company has certainly benefited from the generally strong housing market of recent years, a degree of profit enhancement is also attributed to purchasing design and engineering, access to capital, and other scale economies that have been captured by the large national and regional public homebuilders in relation to non-public builders. These economies, the company's presale operating strategy, and a return on equity and assets orientation provide the framework to soften the margin impact of declining market conditions in comparison to previous cycles. Beazer's ratio of sales value of backlog to debt as of calendar-year end during the past five years has ranged between 1.7 times to 2.1x and is currently 2.1x - a comfortable cushion. Beazer has grown rapidly since going public in 1994. The company has made eight acquisitions since its IPO. They have varied in size, but cumulatively have contributed meaningfully to Beazer's growth. The acquisitions have helped the company to build its position in certain markets, but primarily have enabled the company to enter new markets. The acquisitions typically were funded by cash on the balance sheet and debt and to a lesser degree by stock. Now that Beazer is in most of the markets it covets, it has adequate geographic diversity. As a corporate entity Beazer now has good scale. Future acquisitions are likely to be bolt-on purchases of smaller, private companies in existing Beazer markets as it looks to increase metropolitan market scale so that it leverages its fixed costs. As to whether an acquisition will be made or not, the key analysis is return on capital. Beazer believes that dominant size in major metropolitan markets offers key competitive advantage, especially in a consolidating industry. A number of Beazer's major markets rank in the top 20 markets in size in the U.S. and are among the faster growing markets in the country. In certain key markets, notably Las Vegas, metro Washington D.C., and California, in general land is in short supply, largely because of government constraints. However, Beazer is very well positioned in those markets as to current land reserves and access to new land. In most cases the company options or purchases land only after necessary entitlements have been obtained so that development or construction may begin as market conditions dictate. The use of non-specific performance rolling options gives the company the ability to renegotiate price/terms or void the option, which limits downside risk in market downturns and provides the opportunity to hold land with minimal investment. At the end of Beazer's 2005 fourth quarter, 45% of lots were owned, while 55% were controlled through options. Total lots controlled represented 5.9 years of land based on latest 12 months deliveries of 18,146. The company's closings, orders, and land position are reasonably well dispersed among its major markets/regions. Traditionally Beazer has emphasized true starter entry-level product, a position reinforced by the Crossmann acquisition, and to a lesser degree first and second move-up buyers. Since fiscal 2003 the company has scaled up its offerings at higher price points within entry level and above. In some markets value products have been introduced for the first time. Economy homes represented 18% of closings in fiscal 2005, while value accounted for 56% and style 26%. Profits should be enhanced in fiscal 2006 from the broadened product offering. Beazer's corporate margins trail many of its peers. Some of this is attributable to Crossmann Communities, which had lower margins than Beazer and then was affected by the soft Midwest housing market. The company's focus on entry-level customers tended to keep margins lower. Also, Beazer is not as active off balance sheet as certain of its peers. However, the company's ongoing efforts to broaden price points, especially in the Midwest, and a more aggressive corporate pricing stance where possible should benefit margins. The effort to boost volume out of existing markets should leverage costs. Beazer's shift to a unified consumer brand across all operations has the potential of aiding margins. The company's efforts to leverage its size should lead to further economies of scale in materials purchasing and construction. Beazer is also undertaking an aggressive effort to simplify and standardize best practices and product designs. As of Sept. 30, 2005 Beazer had $297.1 million in cash and equivalents and the company had no outstanding borrowings and available borrowings of approximately $670 million, less letters of credit, under the revolving credit facility at that date. The revolving credit facility matures on Aug. 21, 2009. The company has irregularly purchased modest amounts of its stock in the past and did not repurchase stock in fiscal 2005. On Nov. 18, 2005, the board expanded the outstanding stock repurchase authorization from 2 million shares as of Sept. 30, 2005 to 10 million shares. The company expects to execute the repurchase program within the next 36 months, with $200-$250 million allocated to repurchases in fiscal 2006. Beazer pays a modest dividend. BOYDS COLLECTION: S&P Withdraws Ratings Due to Inadequate Facts --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on The Boyds Collection Ltd. because of a lack of adequate financial information. The company's Form 10-Q for the quarter ended Sept. 30, 2005, has not been publicly issued following the company's Oct. 16, 2005, voluntary filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code. As reported in the Troubled Company Reporter on Oct. 21, 2005, Standard & Poor's Ratings Services lowered its ratings on The Boyds Collection Ltd. to 'D' following the company's recent voluntary filing for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Gettysburg, Pennsylvania-based Boyds, a distributor and retailer of collectible gifts, had total debt outstanding of $91 million as of June 30, 2005. BROOKFIELD PROPERTIES: Gets O&Y Shareholders' Nod on Buy-Out Deal ----------------------------------------------------------------- Brookfield Properties Corporation (BPO:NYSE,TSX) and its Canadian-based subsidiary, BPO Properties Ltd. (BPP:TSX), reported that the Brookfield Consortium, which consists of BPO Properties and its institutional partners, the CPP Investment Board and Arca Investments Inc., received approval from the unitholders of O&Y Real Estate Investment Trust for completion of the previously announced subsequent acquisition transaction of O&Y REIT. Under the transaction, all issued and outstanding voting units of O&Y REIT are being redeemed for C$16.25 in cash per unit. Unitholders voted 99.9% in favor of the subsequent acquisition transaction. Brookfield Properties Corporation -- http://www.brookfieldproperties.com/-- owns, develops and manages premier North American office properties. The Brookfield portfolio comprises 47 commercial properties and development sites totaling 46 million square feet, including landmark properties such as the World Financial Center in New York City and BCE Place in Toronto. Brookfield is inter-listed on the New York and Toronto Stock Exchanges under the symbol BPO. * * * As reported in the Troubled Company Reporter on Oct. 6, 2004, Standard & Poor's Ratings Services assigned its 'P-3(High)' Canadian national scale and 'BB+' global scale preferred share ratings to Brookfield Properties Corp.'s C$150 million -- with an underwriter's option of up to an additional C$50 million -- 5.20% cumulative class AAA redeemable preferred shares, series K. At the same time, Standard & Poor's affirmed its ratings outstanding on the company, including the 'BBB' long-term issuer credit rating. S&P said the outlook is stable. CALPINE CORP: Board Makes Changes in Executive Management --------------------------------------------------------- The Board of Directors for Calpine Corporation (NYSE: CPN) reported changes in Calpine's executive management with the departure of Peter Cartwright, Calpine Chairman, President and Chief Executive Officer, and Executive Vice President and Chief Financial Officer Robert D. Kelly. The Board believes that these management changes are essential to better address Calpine's financial challenges and to provide a new direction for the company. Calpine's Lead Director Kenneth T. Derr has been named Chairman of the Board and Acting Chief Executive Officer of Calpine. Mr. Derr retired from Chevron Corporation in 1999, having served 11 years as Chairman of the Board and Chief Executive Officer. The Board expects to announce a new Chief Executive Officer in the very near future. Eric N. Pryor, Executive Vice President and Deputy Chief Financial Officer, will serve as interim Chief Financial Officer. "Pete founded Calpine and has been the driving force behind the company's tremendous growth in the North American power industry," Mr. Derr said. "His 20 plus years of leadership have culminated in Calpine becoming one of North America's largest power producers." Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states, three Canadian provinces and the United Kingdom. Its customized products and services include wholesale and retail electricity, natural gas, gas turbine components and services, energy management, and a wide range of power plant engineering, construction and operations services. Calpine was founded in 1984. It is included in the S&P 500 Index and is publicly traded on the New York Stock Exchange under the symbol CPN. * * * As reported in today's Troubled Company Reporter, Standard & Poor's Ratings Services lowered its corporate credit rating on merchant generation company Calpine Corp. and its subsidiaries to 'CCC' from 'B-' and removed the ratings from CreditWatch with negative implications. The outlook is negative. The San Jose, California-based company has about $18 billion of total debt outstanding. "The downgrade is based on Calpine's board of directors' decision to remove the current CEO and CFO, which signals a change in management strategy and may lead to a financial restructuring," said Standard & Poor's credit analyst Jeffrey Wolinsky. CALPINE CORP: Management Changes Prompt S&P to Junk Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on merchant generation company Calpine Corp. and its subsidiaries to 'CCC' from 'B-' and removed the ratings from CreditWatch with negative implications. The outlook is negative. The San Jose, California-based company has about $18 billion of total debt outstanding. "The downgrade is based on Calpine's board of directors' decision to remove the current CEO and CFO, which signals a change in management strategy and may lead to a financial restructuring," said Standard & Poor's credit analyst Jeffrey Wolinsky. Moreover, last week's unfavorable court decision worsens Calpine's already vulnerable financial position. Under the court's order, Calpine may be required to return $313 million to the trustee account. "This development could materially harm the company's weak liquidity condition," said Mr. Wolinsky. "More importantly, the court decision heightens our concerns about Calpine's ability to sell or monetize assets so that management can execute on a deleveraging plan." The negative outlook on Calpine also reflects Standard & Poor's view that the company's board of directors may have a greater willingness to consider a financial restructuring as an option, evidenced by the removal of the CEO and CFO. CALPINE CORP: Moody's Reviews Junk Ratings for Possible Downgrade ----------------------------------------------------------------- Moody's Investors Service placed the debt ratings of Calpine Corporation (Calpine: Caa3 senior unsecured, B3 Corporate Family Rating) and several of its subsidiaries under review for possible downgrade. The rating action reflects: 1) Very weak operating cash flow relative to the company's substantial debt load; 2) Higher than expected natural gas prices, resulting in low generating margins and increased liquidity needs to meet collateral requirements; 3) An adverse court ruling last week on bondholder litigation, which affects the company's liquidity position; and 4) A continuing need to raise significant external funds to meet operating expenses and debt maturities. The rating action considers Calpine's very weak financial performance during the first month nine months of 2005, with funds from operations equaling negative $203 million and cash from operations equaling negative $407 million. Debt levels, while declining about $1 billion during 2005, remain quite high at about $17 billion. Calpine's very weak financial performance reflects the challenging environment for natural gas fueled electricity generators that results from very high natural gas prices and an excess of generating capacity in some markets. Following the sale of its natural gas producing assets in July 2005, Calpine ceased to benefit from the natural gas price hedge that was derived from these assets and spot market prices for natural gas have skyrocketed since July. The rating action also considers other near-term challenges facing the company, including litigation with bondholders, as the company attempts to de-leverage its balance sheet. Asset sales and asset monetization transactions have been a substantial source of cash. Accordingly, last week's decision by a Delaware court in regard to asset sales proceeds is of particular concern. The court decision could require Calpine to return $313 million plus interest to the second mortgage trustee and requires about $400 million of asset sales proceeds to remain with the trustee for the benefit of second mortgage bondholders. In addition to the impact that this decision might have on the company's near term liquidity, Moody's is concerned that the decision may impact Calpine's flexibility to continue to bolster its liquidity through on-going asset sales. Under its stated deleveraging plan, the company had hoped to reduce debt by $3 billion by year-end 2005, and the company was well short of this goal as of September 30. Calpine announced today that its CEO and CFO will leave the company and cited a need to address the company's financial challenges. Moody's review will assess the likely impact of possible changes in the strategic and financial direction of the company. The review will particularly focus on Calpine's ability to improve its operating margins and maintain adequate liquidity in the face of: * very high natural gas prices, * narrowing margins, and * on-going litigation. Ratings placed under review for possible downgrade include: -- Calpine's Corporate Family Rating at B3; -- Calpine's senior unsecured notes and senior unsecured convertible notes rated Caa3; -- Calpine Canada Energy Finance senior unsecured notes (guaranteed by Calpine) rated Caa3; -- Calpine Generating Company, LLC (CalGen) first priority senior secured revolving credit and term loan facilities rated B2; -- CalGen second priority term loans and floating rate notes rated B3; -- CalGen third priority notes rated Caa1; -- Riverside Energy Center and Rocky Mountain Energy Center secured term loans rated Ba3; -- South Point Energy Center, LLC, Broad River Energy LLC and RockGen Energy LLC Pass Through Certificates rated B3; -- Tiverton Power Associates Ltd. Partnership and Rumford Power Associates Ltd Partnership Pass Through Certificates rated Caa2; and -- Shelf registration for the issuance of various senior unsecured debt and trust preferred rated (P)Caa3 and (P)Ca, respectively. The ratings of Power Contract Financing, LLC and Gilroy Energy Center LLC are unaffected by this rating action for Calpine, their indirect parent. Both special purpose entities (SPEs) are designed to be bankruptcy remote, with features that include independent management and directors. Both SPEs rely upon contracted cash flows from entities unrelated to Calpine to service their debt and have separate contractual arrangements with credit worthy counterparties, the most important of which are power sales contracts to the California Department of Water Resources, which importantly appear to be highly favorable to the SPEs in comparison to current wholesale power market conditions. A bankruptcy filing by Calpine would not affect the CDWR contracts. However, an associated bankruptcy filing by PCF or Gilroy would provide an opportunity for CDWR to challenge the contracts, which is a key consideration in Moody's belief that these entities would not be drawn into a Calpine bankruptcy filing. Headquartered in San Jose, California, Calpine is an independent power producer that has a net operating portfolio of more than 90 natural gas fired plants capable of producing about 27,000 megawatts of generation in the US, Canada and Mexico, and leases and operates a significant fleet of geothermal plants at The Geysers in California. CAPITAL AUTOMOTIVE: Merger Effectivity Date is December 15 ---------------------------------------------------------- Capital Automotive REIT's (Nasdaq: CARS) Board of Trustees has determined that the anticipated effective date of the Company's previously announced merger with clients advised by DRA Advisors LLC is Dec. 15, 2005. Consummation of the Merger is subject to approval of the Company's shareholders and other conditions. Notes Conversion The Company also said that, beginning today, Nov. 30, 2005, and continuing until 15 days following the date on which the Merger closes, the Company's 6% Convertible Notes due May 15, 2024, will be convertible, prior to the effective time of the Merger, into common shares of beneficial interest of the Company and, after the effective time of the Merger, into the amount of cash consideration payable per common share in the Merger, in each case on the terms set forth in the indenture governing the Notes. Each holder of Notes may convert the entire principal amount of the holder's Notes, or any portion of the entire principal amount equal to $1,000 or any integral multiple of $1,000, by following the conversion procedures described in the Notes. To surrender a Note for conversion, a holder must: (i) complete and manually sign a conversion notice, (ii) provide any appropriate endorsements and transfer documents required by the Company or the Trustee, and (iii) pay any required transfer or similar tax. The form of conversion notice to be completed by holders will be available from the Trustee beginning on Nov. 30, 2005. Requests for the form of conversion notice and any questions or requests for assistance relating to the conversion procedures should be directed to the Trustee at (612) 667-6245 or (612) 667- 9764. Headquartered in McLean, Virginia, Capital Automotive -- http://www.capitalautomotive.com/-- is a self-administered, self- managed real estate investment trust. The Company's primary strategy is to acquire real property and improvements used by operators of multi-site, multi-franchised automotive dealerships and related businesses. * * * As reported in the Troubled Company Reporter on Sept. 9, 2005, Moody's Investors Service placed its ratings of Capital Automotive REIT on review for possible downgrade. This review was prompted by CARS' announcement that it has agreed to be acquired for cash by clients advised by DRA Advisors LLC. The total transaction value is approximately $3.4 billion, including the assumption of CARS indebtedness and preferred shares. CARS' Series A and Series B Cumulative Redeemable Preferred Shares will remain outstanding after the close of the acquisition as preferred shares of CARS. Ratings under review for possible downgrade are: Capital Automotive REIT: * Senior unsecured debt rated Baa3 * Preferred stock rated Ba1 CARROLS CORP: Late Financial Statement Filing May Prompt Default ---------------------------------------------------------------- On Oct. 19, 2005, Carrols Corporation appointed Deloitte & Touche LLP as its new independent registered public accounting firm. The company, with the involvement of Deloitte & Touche, is currently reviewing its accounting with respect to depreciation and interest expense associated with the sale/leaseback transactions that were recorded as lease financing obligations in the 2003 restatement of its financial statements. It is also reviewing the classification of the proceeds from qualifying sale/leaseback transactions in its statements of cash flows. As a result, the company has delayed the filing of its Quarterly Report on Form 10-Q for the fiscal quarter ended Oct. 2, 2005, with the Securities and Exchange Commission until it completes its review with the involvement of Deloitte & Touche and with consultation from its former independent registered public accounting firm, PricewaterhouseCoopers, LLP. Although the company has not yet concluded its review of either matter, it is possible that adjustments may be required to its historical financial statements for one or both of these items. If the company were to conclude that those adjustments are necessary, this could result in a restatement of its historical financial statements to: (1) decrease depreciation expense and increase the interest expense portion of the lease payment related to sale/leaseback transactions that occurred prior to 2001 that are being accounted for under the financing method; and (2) reclassify proceeds from qualifying sale/leaseback transactions from a financing activity to an investing activity in the statements of cash flows. The company does not believe that any of these adjustments, if required, would have any effect on the company's cash flows or its financial covenants under either the company's senior credit facility or its 9% Senior Subordinated Notes. In any event, the company does not anticipate that there will be any change in classification of these or any other leases for financial reporting purposes. The company has not finalized its financial results for the fiscal quarter and nine months ended Oct. 2, 2005, pending completion of this review and the filing of its Quarterly Report on Form 10-Q for the fiscal quarter ended October 2, 2005, with the SEC, however, it is providing certain estimates with respect to its operating results for the fiscal quarter and nine months ended Oct. 2, 2005. The results reported are estimated and remain subject to change pending the completion of the company's review, conclusions by its current and prior independent registered public accountants and the filing of its Quarterly Report on Form 10-Q with the SEC. Quarter Ended Oct. 2 Estimates The company indicated that total revenues for the third quarter of 2005 increased 1.8% to $181.3 million from $178.2 million in the third quarter of 2004. Revenues from its Hispanic restaurant brands, which include the Taco Cabana and Pollo Tropical restaurant chains, increased 7.9% in the third quarter to $88.6 million from $82.1 million in the prior year. Since the third quarter of the prior year, the company opened six new Pollo Tropical restaurants (three in the first nine months of 2005), four new Taco Cabana restaurants (three in the first nine months of 2005) and it acquired four Taco Cabana restaurants from a franchisee in Texas (during the third quarter of 2005). Comparable restaurant sales increased 6.4% for the third quarter of 2005 at Pollo Tropical and decreased 1.9% at Taco Cabana. The company reported that estimated segment EBITDA for its Hispanic Brands was $15.8 million in the third quarter of 2005 compared to $14.0 million in the third quarter of the prior year. Revenues from its Burger King restaurants decreased to $92.7 million in the third quarter of 2005 from $96.0 million in the third quarter of 2004. Revenues were lower mostly as a result of the company's closing of thirteen underperforming Burger King restaurants since the end of the third quarter in 2004, including ten Burger King restaurants closed in 2005. Comparable restaurant sales decreased 0.9% in the third quarter of 2005 compared to the third quarter of 2004. Segment EBITDA for the company's Burger King restaurants increased from $10.0 million in the third quarter of 2004 to $10.7 million in the third quarter of 2005. The company also indicated that total revenues for the nine month period ended Oct. 2, 2005 were $532.6 million and increased 3.8% over revenues of $513.0 million for the nine month period in 2004. Revenues for the company's Hispanic restaurant brands increased 8.4% for the nine month period in 2005; sales at its Burger King restaurants decreased 0.2%. Comparable unit sales for the nine month period in 2005 increased 7.5% at Pollo Tropical, 1.3% at Taco Cabana and 1.3% at the company's Burger King restaurants compared to the nine month period in 2004. The company indicated that during September and October 2005, its Pollo Tropical restaurants were negatively impacted by hurricanes Katrina and Wilma, and that its Taco Cabana restaurants in the Houston market were negatively impacted by hurricane Rita. While the restaurants collectively suffered only minimal property damage, the company estimated that lost revenues from restaurants temporarily closed were in the aggregate approximately $1.8 million. Full Year Guidance The company also provided guidance for the full year. It indicated that operating results for the fourth quarter would be lower than 2004 as a result of the hurricanes, higher utility costs and the inclusion of one additional week in 2004 compared to 2005. It indicated that EBITDA for all of 2005 (earnings before interest, income taxes, depreciation and amortization, impairment losses and stock-based compensation expense) is estimated to be in the same range as in 2004 after adjusting for the extra week in 2004 and for the non-recurring expenses in 2004 related to its refinancing activities (including among other things the special bonus). The company further indicated that segment EBITDA for its Hispanic Brands was anticipated to increase in 2005, and after adjusting for one less week, to increase approximately 5% for the year. Capital expenditures for the nine-month period totaled $28.9 million including $15.4 million for the construction of new restaurants, $4.1 million for the acquisition of four franchised Taco Cabana restaurants, $2.1 million for remodeling, and $7.3 million for maintenance and other capital expenditures. The company estimates that total capital expenditures for 2005 will range between $40 million to $45 million including approximately $25 million to $30 million for new restaurant development. For 2005, the company anticipates opening a total of five to six new Pollo Tropical restaurants (two to three to open in the fourth quarter) and six new Taco Cabana restaurants (three of which have opened in the fourth quarter). Debt Reduction The company further indicated that during 2005 it has lowered its outstanding senior secured debt. The total principal amount outstanding under the company's senior credit facility decreased from $220.0 million at Dec. 31, 2004, to $212.4 million at Oct. 2, 2005, including a voluntary prepayment of $6 million of principal amount of its term loan borrowings during the third quarter 2005. Likely Default As a result of the review of the accounting matters, the company does not believe that it will be able to file its quarterly financial statements prior to Dec. 6, 2005. Failure to provide financial statements to its senior lenders under its Senior Credit Facility by that date would constitute an event of default. The company is in discussions with its senior lenders to obtain a waiver and extension of time to furnish the required financial statements. Although it cannot predict the outcome of those discussions, the company believes that it will obtain a waiver and extension prior to Dec. 6, 2005. Carrols Corporation is one of the largest restaurant companies in the U.S. currently operating 537 restaurants in 17 states. Carrols is the largest franchisee of Burger King restaurants with 336 Burger Kings located in 13 Northeastern, Midwestern and Southeastern states. It also operates two regional Hispanic restaurant chains that operate or franchise more than 200 restaurants. Carrols owns and operates 135 Taco Cabana restaurants located in Texas, Oklahoma and New Mexico, and franchises three Taco Cabana restaurants. Carrols also owns and operates 66 Pollo Tropical restaurants in south and central Florida and franchises 25 Pollo Tropical restaurants in Puerto Rico (21 units), Ecuador (3 units) and South Florida. CATHOLIC CHURCH: Insurers Balk at Spokane's Disclosure Statement ---------------------------------------------------------------- General Insurance Company of America and ACE Property & Casualty Insurance Company, as successor-in-interest with regard to policies issued by Aetna Insurance Company, issued insurance policies to the Diocese of Spokane. The Insurers have defended suits tendered by the Diocese alleging injury within their policy periods under a reservation of rights. The Insurers inform the U.S. Bankruptcy Court for the Eastern District of Washington that Spokane's Disclosure Statement lacks adequate information required by Section 1125 of the Bankruptcy Code. The Disclosure Statement states that each Insurer will be given an opportunity to participate in the Plan of Reorganization and become a settling insurer. Settling Insurers, in exchange for their contributions, will receive an injunction against "prosecution of claims . . . by any Creditor or other party-in- interest, including a Tort Claimant." David E. Eash, Esq., at Huppin Ewing Anderson & Paul, P.S., in Spokane, Washington, notes that the Insurers are concerned that the Plan may alter their rights and obligations and improperly subject them to decisions of the so-called "Special Arbitrator" sought to be appointed in connection with Spokane's Plan. To what extent the Plan would affect Insurers' rights is unclear because the most critical Plan provisions are contained in documents, particularly the Settlement Trust Agreement and the Litigation Trust Agreement, that have not yet been provided. The failure to give parties-in-interest an opportunity to view the Trust Agreement should not be understated, Mr. Eash asserts. The Settlement Trust is the centerpiece of the Plan. It is the vehicle to which all sexual abuse claims will be channeled unless the claimant specifically opts out of the Settlement Trust in favor of litigating his or her claim in state court. The failure to provide parties an opportunity to review the Trust Agreements deprives parties of "adequate information." Mr. Eash explains that to the extent the Policies exist, they are contracts that do more than just obligate the Insurers to pay money on covered claims. Rather, they are a complex set of documents that set forth the contractual rights and obligations of the insurer and the insured. The mechanism by which the Diocese proposes to determine and allow sexual abuse claims -- the channeling of claims to a trust -- raises a host of potential issues regarding the rights of the Insurers under the Policies, Mr. Eash continues. To the extent the Diocese seeks to have claims paid by proceeds of the Policies, the Insurers' rights regarding assignment of the Policies, the right to participate in and consent to any settlement of claims, and other rights under the Policies may be violated. Mr. Eash argues that there is no basis in the Bankruptcy Code for the Plan to impair, alter, diminish, or affect the basic contractual and state law rights of the Insurers. Mr. Eash says that the Diocese cannot ask the Court to rewrite Policies to fit within its proposed Plan. Without the needed adequate information, the Insurers assert that approval of the Disclosure Statement must be denied. To the extent that the Diocese amends its Disclosure Statement, the Insurers reserve their rights to file subsequent objections. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Cash Mgt. Order Continued Until Feb. 27 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Washington rules that the Interim Cash Management Order is continued in full force with no alteration until February 27, 2006, unless sooner modified by Court order. Judge Williams will convene another hearing to consider any further extension and modification of the Interim Cash Management Order. As reported in the Troubled Company Reporter on March 23, 2005, Judge Williams authorized, on an interim basis, the Diocese of Spokane and the Parishes to maintain their existing bank accounts. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHASE MORTGAGE: Fitch Rates $10.45 Million Class Certs. at Low-B ---------------------------------------------------------------- Chase Mortgage Finance Trust Series 2005-A1 are rated: -- $1.8 billion classes 1-A1 through 1-A2, 2-A1 through 2-A5, 3-A1 through 3-A4, and A-R 'AAA'; -- $36.1 million class M 'AA'; -- $13.3 million class B-1 'A'; -- $6.65 million class B-2 'BBB'; -- $6.65 million class B-3 'BB'; -- $3.80 million class B-4 'B'. The 'AAA' rating on the senior certificates reflects the 3.75% subordination provided by the 1.9% class M, the 0.7% class B-1, the 0.35% class B-2, the 0.35% privately offered class B-3, the 0.20% privately offered class B-4, and the 0.25% privately offered class B-5, not rated by Fitch. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults, as well as bankruptcy, fraud, and special hazard losses in limited amounts. In addition, the ratings also reflect: * the quality of the underlying mortgage collateral, * the strength of the legal and financial structures, and * the primary servicing capabilities of Chase Home Finance LLP. As of the cut-off date, Nov. 1, 2005, the collateral consists of five, seven, and 10-year adjustable rate one- to four-family first lien mortgage loans with an aggregate scheduled balance of $1,900,007,729. The collateral consists of 3,068 loans. The average unpaid principal balance of the loans as of the cut-off date is $619,298. The weighted average original loan-to-value ratio (LTV) is 68.57%, and the weighted average FICO is 741. The weighted average mortgage rate of the pool is 5.59%. All of the loans were originated by Chase Home Finance, LLP. States with large concentrations of loans are California and New York. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release dated May 1, 2003 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available at http://www.fitchratings.com/ Wachovia Bank, National Association will serve as trustee. Chase Mortgage Finance Corporation I, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, the trustee will elect to treat all or portion of the assets of the trust funds as comprising multiple real estate mortgage investment conduits. CITICORP MORTGAGE: Fitch Puts Low-B Ratings on $1.44M Class Certs. ------------------------------------------------------------------ Citicorp Mortgage Securities, Inc.'s REMIC pass-through certificates, series 2005-8: -- $466,848,986 classes IA-1 through IA-8, IIA-1 through IIA-3, and A-PO senior certificates 'AAA'; -- $7,200,000 class B-1 'AA'; -- $2,400,000 class B-2 'A'; -- $1,440,000 class B-3 'BBB'; -- $720,000 class B-4 'BB'; -- $720,000 class B-5 'B'. The $721,387 class B-6 is not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 2.75% subordination provided by the 1.50% class B-1, the 0.50% class B-2, the 0.30% class B-3, the 0.15% privately offered class B-4, the 0.15% privately offered class B-5, and the 0.15% privately offered class B-6. In addition, the ratings reflect: * the quality of the mortgage collateral, * the strength of the legal and financial structures, and * CitiMortgage, Inc.'s servicing capabilities as primary servicer. As of the cut-off date, Nov. 1, 2005, the mortgage pool consists of 852 conventional, fully amortizing, 15-30 year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of approximately $480,050,373. The properties are located primarily in California, New York, and Florida. The weighted average current loan to value ratio of the mortgage loans is 64.75%. Approximately 22.13% of the loans were originated under a reduced documentation program. Condo properties account for 6.22% of the total pool and co-ops account for 6.61%. Cash-out refinance loans and investor properties represent 30.90% and 0.06% of the pool, respectively. The average balance of the mortgage loans in the pool is approximately $563,439. The weighted average coupon of the loans is 5.828% and the weighted average remaining term is 329 months. None of the mortgage loans are 'high cost' loans as defined under any local, state, or federal laws. For additional information on Fitch's rating criteria regarding predatory lending legislation, see the press release issued May 1, 2003 entitled 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation,' available at http://www.fitchratings.com/ The mortgage loans were originated or acquired by CMI and in turn sold to CMSI. A special purpose corporation, CMSI, deposited the loans into the trust, which then issued the certificates. U.S. Bank N.A. will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as one or more real estate mortgage investment conduits. CURATIVE HEALTH: Sept. 30 Balance Sheet Upside-Down by $82 Million ------------------------------------------------------------------ Curative Health Services, Inc., delivered its financial results for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. For the three months ended Sept. 30, 2005, Curative reported a $80.9 million net loss, compared to a $2.1 million net loss for the same period in 2004. For the first nine months of 2005, net loss was $89.1 million, compared to a net loss of $2.1 million for the same period in 2004. The net losses for the third quarter and first nine months of 2005 were attributed to the goodwill and intangible asset impairment charges, the increased interest expense related to the Company's senior notes, the decreased gross margins for Specialty Infusion and the charges taken primarily related to the Company's corporate office relocation. The Company's balance sheet showed $173.5 million in total assets at Sept. 30, 2005, and liabilities of $255.6 million, resulting in a stockholders' deficit of approximately $82 million. At Sept. 30, 2005, the Company had a $162.4 million working capital deficit, compared to a $50.8 million working capital deficit at Dec. 31, 2004. The increase in working capital deficit resulted from the reclassification of its debt and other obligation as current. Outstanding Debt Curative had approximately $213.6 million in outstanding debt as of Sept. 30, 2005, including: -- $185 million aggregate principal amount of 10.75% senior notes due 2011 and a $23.3 million revolving credit facility with General Electric Capital Corporation; -- $800,000 representing a Department of Justice obligation; -- $1.5 million representing the convertible note used in connection with the purchase of Apex in Feb. 2002; and -- $3 million in a convertible note related to the purchase of Home Care of New York, Inc., in Oct. 2002. Debt Restructuring Curative sought the help of a financial advisor in evaluating the financial alternatives available given its significant debt and continuing losses. In Oct. 2005, the Company commenced discussions with an ad hoc committee representing holders of approximately 80% of the aggregate principal amount of the senior notes regarding a possible restructuring of the notes. In connection with these discussions, the Company deferred the payment of interest due on the notes on Nov. 1, 2005, and instead elected to use the 30-day grace period under the Note Agreement. Waiver In addition, the Company executed a waiver agreement with GE Capital for failing to meet the financial covenants of total leverage ratio and senior secured leverage ratio related to its revolving credit facility for the quarter ended Sept. 30, 2005. Delisting Notice On Nov. 9, 2005, Curative received notification from The Nasdaq Stock Market indicating that for the past 30 consecutive business days, the bid price of the Company's common stock has closed below the minimum $1 per share requirement for continued inclusion under Marketplace Rule 4450(b)(4). Curative has until May 8, 2006, to regain compliance by having its shares close above $1 for a minimum of 10 consecutive trading days. If Curative has not regained compliance with the Bid Price Rule by May 8, 2006, Nasdaq will issue a letter notifying Curative that its common stock will be delisted. Nasdaq also informed the Company that it has failed to maintain the minimum aggregate market value of publicly held shares of $15 million required for continued inclusion under Marketplace Rule 4450(b)(3). Curative has until Feb. 8, 2006, to regain compliance with the MVPHS requirement. Compliance will be achieved if the MVPHS is $15 million or more for 10 consecutive trading days prior to Feb. 8, 2006. If the Company does not regain compliance with the Marketplace Rules by Feb. 8, 2006, Nasdaq will provide notice that Curative's common stock will be delisted from the Nasdaq Stock Market. Curative has determined that no specific action is warranted at this time in response to the Nasdaq notices. Going Concern Doubt Management says that in the absence of a significantly improved operating cash flow or the restructuring of the senior notes, Curative currently does not expect to be able to service its debt obligations coming due in fiscal 2006. For this reason, Management raised substantial doubt about the Company's ability to continue as a going concern. However, Ernst & Young LLP issued a clean and unqualified opinion after auditing Curative's financial statements for the year ended Dec. 31, 2004, and 2003. Curative Health Services, Inc. -- http://www.curative.com/-- is a leading provider of Specialty Infusion and Wound Care Management services. The Specialty Infusion business, through its national footprint of Critical Care Systems branch pharmacies, provides a cost-effective alternative to hospitalization, delivering pharmaceutical products and comprehensive infusion services to pediatric and adult patients in the comfort of their own home or alternate setting. Each JCAHO accredited branch pharmacy has a local multidisciplinary team of experienced professionals who clinically manage all aspects of a patient's infusion and support needs. * * * As reported in the Troubled Company Reporter on Nov. 9, 2005, Moody's Investors Service lowered the ratings of Curative Health Services Inc. (corporate family rating to Ca from Caa1 and senior notes to Ca from Caa2) following the announcement that the company has elected to use a 30-day grace period for payment of interest on its $185 million in senior notes. The company's speculative grade liquidity rating of SGL-4 was affirmed. Moody's said the rating outlook is negative. Ratings downgraded: Curative Health Services, Inc: * Corporate family rating to Ca from Caa1 * senior notes to Ca from Caa2 Rating affirmed: Curative Health Services, Inc.: * SGL-4 speculative grade liquidity rating. As reported in the Troubled Company Reporter on Aug. 12, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on Curative Health Services Inc to 'CCC+' from 'B-', and the senior unsecured debt rating to 'CCC' from 'CCC+'. S&P said the rating outlook is negative. COLLINS & AIKMAN: International Auto to Buy C&A Europe ------------------------------------------------------ International Auto Components Group, the joint venture company recently formed by WL Ross & Co. LLC, Franklin Mutual Advisers LLC, and Lear Corporation, reported a definitive agreement to acquire from Collins & Aikman Europe its $600 million operations in Austria, Belgium, Czech Republic, Germany, Netherlands, Slovakia, Spain, Sweden, and the United Kingdom serving Ford, General Motors, DaimlerChrysler, Porsche, Saab, Volkswagen, Volvo and other original equipment manufacturers. Exchange on the C&A business in Austria is subject to approval of the local insolvency authority and the Austrian Court. Wilbur L. Ross, Chairman of IAC said, "We are delighted to make IAC's first acquisition within a month of announcing the joint venture company. We also are appreciative that the automobile industry has decided to support our efforts. This is the start of a major global factor in the automotive interior plastics industry." The transaction is subject to certain conditions including approval by Monopoly Commissions, landlords, and customers, but is expected to close early in 2006. The purchase price is subject to certain final adjustments but in any event involves cash well in excess of $100 million and assumption by IAC of certain liabilities and commitments of C&A. 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. CONGOLEUM CORP: Wants Until April 13 to Decide on Unexpired Leases ------------------------------------------------------------------ Congoleum Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of New Jersey to extend, until April 13, 2006, the period within which they can elect to assume, assume and assign, or reject their unexpired nonresidential real property leases. The Debtors explain that they are parties to two unexpired nonresidential real property leases consisting of their corporate headquarters and warehouse facility. Their corporate headquarters is located in Hamilton, New Jersey, while their warehouse facility is located in Highland Park, New Jersey. The Debtors give the Court three reasons supporting the extension: 1) the two leases are significant assets of their estates, both locations are integral components of their business operations and an important part of their reorganization efforts under a proposed chapter 11 plan; 2) they are still continuing in their negotiations with respect to plan modifications for a proposed sixth modified chapter 11 plan, they are moving forward on all aspects of their bankruptcy cases and remain confident that a plan incorporating section 524(g) treatment of all asbestos claims can be confirmed in their chapter 11 cases; and 3) they are current on all of their post-petition rent obligations under the two leases and the requested extension will not prejudice the landlords of those leases. The Court will convene a hearing at 2:30 p.m., on Dec. 12, 2005, to consider the Debtors' request. Headquartered in Mercerville, New Jersey, Congoleum Corporation -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on December 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Domenic Pacitti, Esq., at Saul Ewing, LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. 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. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX:ABL). DELPHI CORP: Tricon Wants Court to Lift Stay to Effectuate Set Off ------------------------------------------------------------------ Prior to the Petition Date, Tricon Industries, Inc., and Delphi Corp. entered into a series of agreements whereby Tricon manufactures insert molded metal and plastic electrical components for four of the Debtors' North American business divisions. As of the Petition Date, Delphi owed $644,677 to Tricon. In addition, as a result of certain overpayments, credits and accounts payable due to Delphi, Tricon in turn owed Delphi $627,184. Since then, Tricon has continued to support Delphi Corporation and its debtor-affiliates by supplying goods on credit terms. By this motion, Tricon asks the Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York to lift or modify the automatic stay for the limited purpose of permitting Tricon to set off the prepetition balance owed to it by Delphi under the Contracts against the debts it owes to Delphi. "[G]iven the fact that an independent right of setoff exists outside of the Bankruptcy Code, and the exercise of this right meets all the conditions required for setoffs preserved under [Section 553 of the Bankruptcy Code], the right of Tricon to setoff the Debt against the Claim is established," Alex Pirogovsky, Esq., at Ungaretti & Harris LLP, in Chicago, Illinois, asserts. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Wants Okay on Supplier Contract Assumption Protocol ---------------------------------------------------------------- Delphi Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to approve uniform procedures to assume certain agreements with their suppliers, who are the sole source of goods that are critical to the Debtors' on-going manufacturing operations. John Wm. Butler, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, relates that the Debtors typically do not buy commodities from their suppliers, but rather buy sophisticated customized components, each of which require extensive and time- consuming testing and validation, including contractual approvals from the Debtors' customers. Therefore, with very few exceptions, re-sourcing the Goods in the short term is impossible. Moreover, the failure to timely receive even a very inexpensive part can quickly shut down the Debtors' assembly lines and expose their Chapter 11 estates to millions of dollars in potential damage claims. The Debtors have already established extensive programs to address issues arising under enforceable contracts with suppliers and to manage concerns related to special supplier groups, including financially distressed suppliers, foreign creditors, logistics providers and tooling manufacturers, among others. However, the Debtors need to amend, restate and extend expiring contracts that would otherwise jeopardize their supply chain or could potentially expose them to hostage bargaining situations with sole source suppliers that have no obligation to continue supplying them with necessary products. The Debtors' production of thousands of separate products requires the timely receipt of components and raw materials from thousands of dedicated suppliers. These components and raw materials are provided to the Debtors pursuant to tens of thousands of separate agreements with their suppliers, many of which have a yearly term. The Debtors preliminarily estimate that over 11,000 of supply agreements are due to expire on December 31, 2005, absent further extension. The Debtors further estimate that more than 3,000 of these agreements are either at the end of the product cycle or are otherwise not sufficiently critical to their on-going operations to necessitate extension. Accordingly, the Debtors have determined that a process should be established to facilitate the resolution of the expiring Assumable Agreements on a time frame and in a manner that ensures the continuity of supply of Goods to the Debtors and, thereby, the continuity of the Debtors' supply of products to their customers. The Debtors have further determined that the most efficient and cost effective manner in which to achieve these goals, enhance the likelihood of a successful restructuring, and preserve the going- concern value for all constituents is through assumption of the Assumable Agreements in exchange for a package of mandatory minimum provisions from the Covered Suppliers that provide the Debtors' continuity of supply at market terms. The salient terms of the proposed assumption procedures are: (a) The Debtors would be authorized, but not directed, to assume each Assumable Agreement pursuant to Section 365(a) of the Bankruptcy Code within a reasonable time prior to the date of expiration of the Assumable Agreement, without limitation to the Debtors' right to move separately to assume an agreement; (b) The relevant Covered Supplier's entry into an Assumption Agreement evidencing the Covered Supplier's agreement to comply with Required Minimum Provisions would be a condition precedent to the Debtors' exercise of the authority to assume an Assumable Agreement. Upon a Covered Supplier's entry into an Assumption Agreement, the Debtors would be authorized to assume the relevant Assumable Agreement or Agreements without further notice or Court order; (c) Should a Covered Supplier not consent to entry into an Assumption Agreement or refuse to consent to any Required Minimum Provision, the Debtors will not be authorized to assume that Supplier's Assumable Agreement or Agreements without prior approval of the Official Committee of Unsecured Creditors or, absent its approval, a Court order; (d) Upon the Debtors' election to assume one or more Assumable Agreements of a Non-Consenting Supplier, the Debtors would be required to provide written notice of the Non- Conforming Assumption to designated representatives of the Creditors Committee; and (e) The Creditors Committee will have three business days from the date of receipt of the notice of Non-Conforming Assumption to file any objection. If the Creditors Committee does not timely file its objection, it would be deemed not to object to the Non-Conforming Assumption and the assumption would become effective on the Assumption Date without further notice or Court order. If the Creditors Committee timely objects, the Court would then schedule a hearing to consider the Non-Conforming Assumption as soon as practicable. Each Covered Supplier who had already accepted a new agreement or an extension of the term of its Assumable Agreement after the Petition Date will be eligible to request that the Debtors assume its prepetition Previously Extended Agreement in accordance with the proposed Procedures. A Covered Supplier's failure to strictly comply with the proposed Procedures would constitute a full and final waiver of its right to seek assumption of the relevant Previously Extended Agreements. Required Minimum Provisions The Debtors further request that their authority to assume any Assumable Agreement be predicated on the relevant Covered Supplier's written agreement to each of these Required Minimum Provisions: (a) The term of the relevant Assumable Agreement would be extended for a period of two years from the date of expiration of the Assumable Agreement, unless the Debtors earlier reject or otherwise terminate the Assumable Agreement; (b) All costs payable under the terms of the proposed Procedures and Required Minimum Provisions related to cure of prepetition defaults under the assumed Assumable Agreements would be paid in cash in six equal installments at the end of each of the six calendar quarters ending on or after the Assumption Date. However, that Cure would not constitute an administrative expense pursuant to Section 503 of the Bankruptcy Code; (c) The relevant Assumable Agreement and Delphi's General Terms and Conditions, including, without limitation, the termination for convenience provisions, would be enforceable by the Debtors against the Covered Supplier; (d) The Covered Supplier would be required to supply the Debtors with the goods provided under the relevant Assumable Agreement during the term of the Extension on MNS-2 payment terms and those other terms and conditions as are embodied in the Assumable Agreement and other more favorable trade terms, practices, and programs in effect between the supplier and the Debtors in the twelve months prior to the Petition Date, or other favorable trade terms as are agreed to by the Debtors and the Covered Supplier; (e) The Covered Supplier would be adequately assured of future performance for the term of the Extension and waive any right to seek further adequate assurance of future performance, whether pursuant to Section 365(b)(1)(C) of the Bankruptcy Code or otherwise; (f) Cure, with respect to each assumed Assumable Agreement, in an amount up to 75% of the outstanding prepetition liabilities of the Debtors under the Assumable Agreement as of the Assumption Date reflected in the Debtors' books and records or as otherwise reconciled by the parties; provided, however, that the Covered Supplier will receive an allowed general unsecured claim against the relevant Debtor for the remaining balance of the amount of the Debtors' outstanding prepetition liabilities under the Assumable Agreement as of the Assumption Date; (g) In the event of any termination of any assumed Assumable Agreement, the Covered Supplier would not receive any payments of Cure that are to be paid on or after the effective date of the termination, provided that upon any termination or rejection of any assumed Assumable Agreement, the Covered Supplier would receive an allowed general unsecured claim against the relevant Debtor for the amount of the Remaining Cure. Upon any termination of any assumed Assumable Agreement, the amount of damages which the Covered Supplier could assert against the relevant Debtor on account of the termination or rejection could not exceed the amount of damages arising on a termination for convenience in accordance with Delphi's General Terms and Conditions; and (h) Upon a breach by the Covered Supplier of its obligations under the Assumption Agreement, the Covered Supplier would be liable to the Debtors for any and all consequential damages resulting from the breach. Furthermore, upon written notice of the breach from the Debtors, the Covered Supplier would not be entitled to further payments of Cure until further Court order. In the event that the Court determined that the Covered Supplier was in breach of the Assumption Agreement, the Covered Supplier would be required to immediately disgorge all payments of Cure received and the Debtors' avoidance rights under Chapter 5 of the Bankruptcy Code would immediately be reinstated without further Court order. The assumption of the Covered Supplier's Assumable Agreements will constitute irrevocable consent of the Covered Supplier to the Debtors' ability to sue for injunctive relief in the Court to compel specific performance under the Assumable Agreement upon a breach under any Assumable Agreement or Assumption Agreement. "MNS-2" refers to the payment terms under Delphi's General Terms and Conditions, whereby payment for goods supplied is generally due on the second business day of the second month following the receipt of the goods. Assumption Agreement Letter The Debtors propose to send a letter to Covered Suppliers to ensure that the Covered Suppliers that have their Assumable Agreements assumed will comply with the proposed Procedures and the Required Minimum Provisions. The Debtors believe that the cost of implementing their request will likely be offset by the positive cash flow that will be generated as a result of the Covered Suppliers' acceptance of the Required Minimum Provisions. The Debtors preliminarily estimate that, of the approximately $1,000,000,000 in prepetition payables outstanding as of the Petition Date, approximately $587,000,000 may be attributable to contracts expiring over the course of the next year and beyond that would be eligible for assumption under the Procedures. Approximately 52% of the Debtors' direct material annual purchase volume is associated with contracts that expire by December 31, 2005, with the balance expiring throughout 2006 or later. As a result, the expected average quarterly payment of prepetition payables during 2006, if approved, is estimated to be approximately $50,000,000, Mr. Butler reports. The Debtors assert that approval of their request will mitigate, to the greatest extent possible, the risk that the Covered Suppliers will refuse to perform beyond December 31, 2005, and will thereby avoid the shutdown of the Debtors' and their customers' operations that would result from the precipitous action. The Debtors believe that they will realize significant litigation cost savings from implementation of the Procedures, which will facilitate prompt consensual resolutions with the vast majority of their Covered Suppliers. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Wants Court Nod to Assume CEC Power Contracts ---------------------------------------------------------- Delphi Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's permission to assume a Special Manufacturing Contract dated October 13, 1995, as amended by a Partial Assignment Agreement dated December 22, 1998, with Consumers Energy Company. John Wm. Butler, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, relates that CEC is one of the Debtors' largest power suppliers, providing electric power to six of the Debtors' sites at reduced rates pursuant to Power Contracts, which are valuable, low-cost, below-market contracts that provide substantial savings to the Debtors that would be difficult to procure from other sources. The Power Contracts will expire on December 31, 2005. CEC, Mr. Butler informs the Court, has notified Delphi Automotive Systems LLC that it will not be eligible for preferential rates for the two to four-year period commencing in January 2006 unless it assumes the Power Contracts and pays the $3,600,000 cure amount, which are necessary conditions for the Debtors to enter into a New Power Contract in January 2006. Moreover, the Debtors stand to save more than $10,000,000 per year under the preferential rates -- an amount that far exceeds the Cure Amount that will be paid in connection with the assumption of the Power Contracts. The Debtors anticipate that the Michigan Public Service Commission will publish the preferential rates in late November. Eligible customers must elect the rates within 15 calendar days. CEC, Mr. Butler clarifies, is not obligated to provide preferential power rates to the Debtors, and will not do so if the Power Contracts are not assumed prior to their expiration. Thus, unless DAS LLC assumes the Power Contracts, it will not have the opportunity to elect to receive the preferential rates provided to "current customers" when negotiating a New Power Contract. Because MPSC will not publish its new rates until late November, the Debtors, Mr. Butler relates, cannot yet enter into a New Power Contract or simply assume the Power Contracts and pay the Cure Amount until they have received and analyzed the rates to be published by the MPSC and determined that it would be prudent to assume the contracts. Nevertheless, the Debtors have determined that preserving their eligibility for the CEC preferential rates by assuming the Power Contracts is in the best interests of their Chapter 11 estates, their creditors, and all parties-in-interest. The Debtors expect that the preferred Transitional Primary Rate published by the MPSC will result in an annual savings of approximately $5,000,000 compared to the standard bundled tariff rates. Moreover, participation in the Transitional Primary Rate will enable the Debtors to obtain additional power at a 60% discount, for an additional $5,000,000 in annual savings. "If the Debtors are not allowed to negotiate with CEC under the preferential rates published by MPSC, the power allotted to the Debtors at this discounted rate might be furnished to another large industrial power consumer," Mr. Butler notes. Therefore, the Debtors seek to assume the Power Contracts and pay the Cure Amount under these conditions: (i) DAS LLC will be allowed to fully participate in negotiations on the new Transitional Primary Rate and Interruptible Rate I, as published by the MPSC, with General Motors and CEC in connection with the procurement of electric power services for the period beginning January 1, 2006; (ii) DAS LLC will enter into a new contract for electric and power services with CEC at rates acceptable to DAS LLC; and (iii) Notice of DAS LLC's decision to enter into the New Power Contract and to pay the Cure Amount will be given to all interested parties. Upon satisfaction of the conditions and entry into the New Power Contract, DAS LLC will pay the Cure Amount, which constitutes the total amount due under the Power Contracts. However, in the event DAS LLC determines not to enter into a New Power Contract, or a New Power Contract is not entered into by January 31, 2006, the Cure Amount will not be paid and the assumption of the Power Contracts will be deemed null and void. The Debtors assert that their commitment to pay the Cure Amount upon execution of the New Power Contract, along with the ample liquidity available under their DIP financing facility, constitutes adequate assurance that they will cure any defaults under the Power Contracts. Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represents the Debtors in their restructuring efforts. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Retiree Panel Wants Foley & Lardner as Local Counsel --------------------------------------------------------------- The Delta Air Lines Retirement Committee seeks the U.S. Bankruptcy Court for the Southern District of New York's authority to retain Foley & Lardner LLP as local counsel for the Official Committee of Non-Pilot Retired Employees of Delta Air Lines, Inc. The Retiree Committee is composed of members of the DALRC Board. Foley & Lardner will assist Farella Braun & Martel LLP in the representation of the Retiree Committee. The firms will act as counsel for all matters relating to the Retiree Committee's review and evaluation of the Debtors' proposals to modify the benefits of their non-pilot Retirees. The firms have assured the DALRC that they will take care not to duplicate the efforts of each other and of other counsel or professionals of other committees retained in the Debtors' Chapter 11 cases. Foley & Lardner's current rates are: Professional Hourly Rate ------------ ----------- Partners $325 to $760 Associates $215 to $450 Paralegals $40 to $250 The professionals who will primarily provide services to the Retiree Committee are: Attorney Rates -------- ----- Peter N. Wang, Esq. $660 Mark L. Prager, Esq. $640 Jeremy L. Wallison, Esq. $350 Derek L. Wright, Esq. $325 Paralegal Rates --------- ----- Anna Sullivan $130 Ariel Fox $130 Lisa Ravener $130 Foley & Lardner will also charge for all disbursements and expenses incurred in the rendition of services. Peter N. Wang, a partner at Foley & Lardner, discloses that, due to its large and diversified practice, the Firm has represented and transacted with various parties-in-interest in matters unrelated to the Debtors' Chapter 11 cases. Foley & Lardner represents various airport authorities in connection with the Debtors' and other airports' bankruptcy cases with respect to gate and other leases, Passenger Facility Charges and other regulatory and related matters. The airport authorities have consented to Foley & Lardner's representation of the DALRC, and the DALRC has consented to Foley & Lardner's representation of the airport authorities. Foley & Lardner represented Delta in connection with a small tax-related matter that has been closed for over two years. One Foley & Lardner attorney has been identified as owning less than 500 shares of Delta stock as part of a 401(k) plan. Mr. Wang says that Foley & Lardner is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Wants to Set Off Obligations with Timco -------------------------------------------------- Triad International Maintenance Corporation and Delta Air Lines, Inc., are parties to an Engineering General Terms Agreement, dated July 3, 2002, and an Aircraft Maintenance Agreement dated Sept. 28, 2001. Neither agreement has been assumed or rejected by Delta in its Chapter 11 proceedings. Thomas P. Ogden, Esq., at Davis Polk & Wardwell, in New York, relates that under the Engineering Agreement, TIMCO provides Delta with a variety of engineering services and programs. These programs include in particular the production of reconfiguration kits that will allow certain aircraft to carry an additional crew, reconfigure certain aircraft from two-class configuration to single class configuration, and reconfigure certain aircraft from single class configuration to two-class configuration. Under the Maintenance Agreement, TIMCO provides Delta with certain aircraft maintenance and storage services. The aircraft maintenance services are typically billed at a fixed price, with 50% payable when the aircraft arrives at TIMCO's facilities, and the remaining 50% due at aircraft departure. TIMCO asserts that as of Sept. 14, 2005, Delta owed TIMCO $2,236,328, comprised of: (a) $1,570,797 in billed and $287,341 in unbilled accounts receivables for services and project costs under the Agreements; and (b) $378,190 in work in progress inventory under the Agreements. As of the Petition Date, Delta had made $3,195,740 in deposits with TIMCO against future project costs under the Engineering Agreement. Following arm's-length negotiations, the parties agree that: -- within five days after the approval of the parties' stipulation, TIMCO will set off the Deposits against the Accounts Receivables and WIP Inventory, provided, however, that the Accounts Receivables and WIP Inventory will be valued at $2,184,076; -- the set-off of the Deposits will extinguish any and all prepetition claims by TIMCO against the Debtors' estates; -- Within two business days after the TIMCO set-off, the Debtors will replenish the Deposits by advancing $2,184,076 to TIMCO; -- any and all future payments by Delta to TIMCO will be applied by TIMCO to the projects for which they are specifically intended; and -- all amounts owing by Delta on or after November 15, 2005 for goods or services provided to Delta postpetition will be and be deemed to be payable as administrative claims under Section 503(b)(1)(A) of the Bankruptcy Code. Delta Air Lines Inc. and its debtor-affiliates ask U.S. Bankruptcy Court for the Southern District of New York to approve the Stipulation. Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) EAGLEPICHER HOLDINGS: Wants to Walk Away from 36 Computer Leases ---------------------------------------------------------------- EaglePicher Automotive, Inc., asks the U.S. Bankruptcy Court for the Southern District of Ohio, Western Division, for authority to reject 36 unexpired computer leases with Micron Leasing and CIT Technology Financing Services, Inc. The Debtor decided to reject the leases in order to cut costs. Also, the Debtor determined that it doesn't need those 36 computers in order to reorganize. A list of the 36 rejected leases is available for free at http://ResearchArchives.com/t/s?35e Headquartered in Phoenix, Arizona, EaglePicher Incorporated -- http://www.eaglepicher.com/-- is a diversified manufacturer and marketer of innovative advanced technology and industrial products for space, defense, automotive, filtration, pharmaceutical, environmental and commercial applications worldwide. The company along with its affiliates and parent company, EaglePicher Holdings, Inc., filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Ohio Case No. 05-12601). Stephen D. Lerner, Esq., at Squire, Sanders & Dempsey L.L.P. represents the Debtors. When the Debtors filed for protection from their creditors, they listed $585 million in consolidated assets and $730 in consolidated debts. EAGLEPICHER INC: Inks Consensual Plan Term Sheet with Committee --------------------------------------------------------------- EaglePicher Incorporated and some of its debtor-affiliates agreed to a term sheet with their Official Committee of Unsecured Creditors for a consensual plan of reorganization in their Chapter 11 cases. The plan term sheet provides for the transfer of substantially all of the operating assets of the Debtors to newly formed companies. Under the plan, all of the common stock of the new holding company will be distributed to holders of the company's 9.75% Senior Notes and certain other unsecured non-trade creditors, with unsecured trade creditors receiving their pro rata share of the plan consideration, if any, in the form of cash payments over time or a single discounted cash payment. The Creditors Committee consists of: * Tennenbaum Capital Partners, LLC, * Angelo, Gordon & Company, L.P., * JP Morgan High Yield Partners, * Excel Polymers, Inc., and * The United Steelworkers of America. Funds managed by Tennenbaum and Angelo, Gordon together own a majority of the 9.75% Senior Notes. Implementation of the transactions contemplated by the plan term sheet is subject to Bankruptcy Court approval. New Financing EaglePicher obtained approval from the U.S. Bankruptcy Court for the Southern District of Ohio on a previously announced commitment from: * Goldman Sachs Credit Partners L.P. for $295 million of senior secured debtor-in-possession financing and * Tennenbaum and Angelo, Gordon for $50 million of junior secured debtor-in-possession financing, subject to normal closing conditions. This financing is convertible at the Debtors' option (subject to lender approval of the Debtors' plan of reorganization and other conditions) into post-reorganization financing for the new companies formed through the plan of reorganization and will provide sufficient funding to complete the reorganization. The parties are in the process of finalizing the terms and documentation of the financing. "In combination with the financing commitments we announced previously, we believe that reaching agreement with the Creditors Committee on the key elements of a plan of reorganization represents a significant milestone for EaglePicher to emerge from bankruptcy. The financing provides us the funding to repay all secured creditors in full, distribute fair value to our unsecured creditors and properly finance each of our businesses going forward," according to Stuart B. Gleichenhaus, interim CEO and Chief Restructuring Officer. Headquartered in Phoenix, Arizona, EaglePicher Incorporated -- http://www.eaglepicher.com/-- is a diversified manufacturer and marketer of innovative advanced technology and industrial products for space, defense, automotive, filtration, pharmaceutical, environmental and commercial applications worldwide. The company along with its affiliates and parent company, EaglePicher Holdings, Inc., filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Ohio Case No. 05-12601). Stephen D. Lerner, Esq., at Squire, Sanders & Dempsey L.L.P, represents the Debtors in their restructuring efforts. Houlihan Lokey Howard & Zukin is the Debtors financial advisor. When the Debtors filed for protection from their creditors, they listed $535 million in consolidated assets and $730 in consolidated debts. ELEPHANT TALK: Loss & Deficit Trigger Going Concern Doubt --------------------------------------------------------- Elephant Talk Communications Inc.'s management expressed substantial doubt about the Company's ability to continue as a going concern in the company's Form 10-QSB for the period ended Sept. 30, 2005, filed with the Securities and Exchange Commission on Nov. 14, 2005. The Company's management points to the company's $11,932,143 accumulated deficit as of Sept. 30, 2005, and its $1,013,901 net loss for the nine months ended Sept. 30, 2005. The Company reported a $224,474 net loss from operations on $42,780 of net revenues for the quarter ending September 30, 2005. At September 30, 2005, the Company's balance sheet showed $8,192,608 in total assets and $6,312,131 of positive stockholders' equity. Webb & Company, P.A., the Company's auditor, also expressed going concern doubt after it audited the Company's financials for the year ending December 31, 2004. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?359 Elephant Talk Communications Inc., through its wholly owned subsidiary, Elephant Talk Limited (OTC: ETLK), is a facility-based international long distance carrier with offices and hubs in Hong Kong, Los Angeles, Boston, New York, Singapore and Beijing. The Company has been listed at the OTC Bulletin Board, US, since January 2002 and is planning to apply for listings on the Frankfurt and Hong Kong markets to raise the necessary capital for future business expansion. FASTENTECH INC: Sept. 30 Balance Sheet Upside-Down by $31 Million ----------------------------------------------------------------- FastenTech, Inc., reported its results for the fiscal 2005 fourth quarter and the full year ended Sept. 30, 2005. The company also suspended plans to divest the remaining business unit in its application-specific components segment. Therefore, the company has included this business unit's results in its consolidated results from continuing operations. Fourth Quarter Results Net sales from continuing operations in the current quarter increased 31%, or $21.5 million, to $91.6 million from $70.1 million recorded in the same period last year. Current quarter net sales included $20.1 million from businesses acquired after Sept. 30, 2004. Operating income from continuing operations in the current quarter was $9.3 million compared to an operating loss from continuing operations of $5.8 million in the prior year quarter. The company reported net income from continuing operations of $4.7 million in the current quarter compared to a net loss from continuing operations of $5.8 million a year ago. The current quarter results reflect the $4 million gain on the repurchase of redeemable preferred stock and a $1.8 million increase in interest expense. "As expected, lower end market demand for new gas turbine units, particularly in North America, continued to moderate our organic top line growth in the quarter," Ron Kalich, President and Chief Executive Officer, said. "However, we remain optimistic about the recovery and future growth prospects for this market as we continue to see improving OEM demand on the MRO side of this business. We also continued our solid performance trend in the fourth quarter, with strong demand from our industrial and construction markets while our operating team continued to do an excellent job implementing cost savings and productivity initiatives." Full Year Results Net sales from continuing operations for fiscal 2005 increased 35%, or $85.1 million, to $327.5 million, compared to $242.4 million recorded in fiscal 2004. Current full year net sales results included $59.5 million from businesses acquired after Sept. 30, 2004. Operating income from continuing operations was $34.8 million in fiscal 2005 compared to $17.2 million in fiscal 2004. The increase reflects the incremental operating income from acquired businesses, which contributed approximately $5.6 million to the increase in operating income. The company reported net income from continuing operations of $6.4 million for fiscal 2005 compared to a net loss from continuing operations of $2.3 million for fiscal 2004. Fiscal 2005 results included a $6.3 million increase in interest expense. Acquisition Update The company also reported that in August 2005 it acquired Alabama-based General Products, a manufacturer of sheet metal assemblies and components serving the aerospace industry, including NASA. The company funded the $7 million purchase with cash on hand and borrowings under the company's senior credit agreement. FastenTech, Inc. -- http://www.fastentech.com/-- headquartered in Minneapolis, Minnesota, is a leading manufacturer and marketer of highly engineered specialty components that provide critical applications to a broad range of end-markets, including the power generation, industrial, military, construction, medium- heavy duty truck, recreational and automotive/ light truck markets. At Sept. 30, 2005, FastenTech Inc.'s balance sheet showed a $31,108,000 stockholders' deficit, compared to a $36,582,000 deficit at Sept. 30, 2004. * * * FastenTech, Inc.'s $145-million 11-1/2% Senior Subordinated Notes due 2011 carry Moody's Investors Service's and Standard & Poor's single-B ratings. FIRST REPUBLIC: Fitch Affirms Low-B Ratings on Class B-5 Certs. --------------------------------------------------------------- Fitch Ratings affirms these First Republic Mortgage Loan Trust Issues: Series 2000-FRB1 -- Class A at 'AAA'; -- Class B-1 at 'AAA'; -- Class B-2 at 'AAA'; -- Class B-3 at 'AA'; -- Class B-4 at 'A'; -- Class B-5 at 'BB+'. Series 2000-FRB2 -- Class A at 'AAA'; -- Class B-1 at 'AAA'; -- Class B-2 at 'AA+'; -- Class B-3 at 'AA'; -- Class B-4 at 'A'; -- Class B-5 at 'BB+'. At issuance, the collateral consisted of 28.5% negative amortization Cost of Funds Index adjustable-rate mortgages and fully amortizing COFI, LIBOR, Constant Maturity Treasury Rates, and Prime-based adjustable-rate first lien, residential mortgage loans on one- to four-family homes. As of the October 2005 distribution date, the transactions are seasoned 66 months and 60 months respectively and the pool factors are approximately 14% and 37%, respectively. At issuance, approximately 87% of the loans resided in California, and approximately 79% had unpaid principal balances greater than $600,000. All of the loans are serviced by First Republic Bank, which is currently not rated by Fitch. The affirmations: * reflect a stable relationship between credit enhancement and future loss expectations and * affect approximately $160 million of outstanding certificates. As of the October distribution date, all of the loans remaining in the pools are current, and the deals have not taken any principal losses to 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 Website at http://www.fitchratings.com/ FLYI INC: Court OKs Rejection of 30 Assigned 328 Jet Leases ----------------------------------------------------------- FLYi, Inc. and its debtor-affiliates own or lease more aircraft than currently are needed to operate their business. Brendan Linehan Shannon, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the Court that with their recent schedule reductions, the Debtors no longer need to operate all of the regional jets that they own or lease. The Debtors also own or lease, or may have contingent liabilities with respect to aircraft that they no longer operate. Bombardier Regional Jets The Debtors leased 50 CRJs from various parties, and debt financed the purchase of eight CRJs. As part of their restructuring efforts, the Debtors have determined to reduce their CRJ fleet to 30 aircraft. The Debtors do not believe there is any equity value for their estates in the CRJ Leases or the Owned CRJs. Hence, the Debtors have determined to reject 21 CRJ Leases and abandon one Owned CRJ, effective as of the Petition Date. Fairchild-Dormer 328 Jets As part of their former operation as a regional aircraft operator under Delta Air Lines' Delta Connection program, the Debtors operated 32 328 Jets. The Jets were financed under various leveraged leases entered into by the Debtors with Fairchild- Dormer GmbH, as owner participant, and a group of foreign banks, as lenders. As a result of the termination of the Delta Connection program in 2004, the Debtors ceased flying the 328 Jets. All of these aircraft were taken out of service. Pursuant to the Delta Connection program, the Debtors assigned 30 of the 328 Jets to Delta with the consent of the Lessor and the lenders. Under the terms of the financing arrangements for the Assigned 328 Jets, following the assignment, the Debtors would be relieved of any obligations under the leases only if Delta met certain defined financial tests at the time of assignment. However, Delta did not meet the prescribed tests. Nonetheless, in exchange for equity consideration, the Debtors obtained releases from all obligations to the relevant lenders under the leveraged leases governing the Assigned 328 Jets. However, the Lessor did not release the Debtors from all of their liability under the Assigned 328 Jet Leases and, as a result, the Debtors may have contingent liabilities under those leases. While the Assigned 328 Jet Leases may not be executory or unexpired, the Debtors also want, out of an abundance of caution, to reject the Assigned 328 Jet Leases to the extent that they are executory or unexpired. The Debtors still lease two of the 328 Jets. The Debtors do not fly the Remaining 328 Jets, and do not believe there is any value for their estates in those two leases. Thus, the Debtors want to reject the Remaining 328 Jet Leases, effective as of the Petition Date. British Aerospace J-41 Turboprop Aircraft As part of their former operation as a regional aircraft operator under United Airlines' United Express program, the Debtors operated 30 J-41s -- 25 leased J-41s and five debt-financed J- 41s. As a result of the termination of the United Express program, the Debtors grounded and ceased flying the J-41s in 2004. All of these aircraft were taken out of service. The Debtors have no intention of resuming flights with the J-41s. In September 2005, one of the debt-financed J-41s was sold and the debt was retired. In connection with the Debtors' late 2004 and early 2005 restructuring, 21 of the J-41 leases were terminated and those aircraft were returned to their owners and lenders. The Debtors currently own four J-41s and lease four J-41s. The Debtors do not believe there is any value for their estates in the Remaining J-41 Leases or the Remaining Owned J-41s, Mr. Shannon says. Accordingly, the Debtors have determined to reject the Remaining J-41 Leases and abandon the Remaining Owned J-41s, effective as of the Petition Date. By this motion, the Debtors seek the U.S. Bankruptcy Court for the District of Delaware's permission to: a. reject 27 leases consisting of: -- 21 CRJ Leases, -- two Remaining 328 Jet Leases, and -- four Remaining J-41 Leases. A full-text copy of the list of the 27 Leases is available at no cost at: http://bankrupt.com/misc/FLYi27rejectedaircraftleases.pdf b. reject 30 Assigned 328 Jet Leases, to the extent executory or unexpired. A full-text copy of the list of the Assigned Leases is available for free at: http://bankrupt.com/misc/FLYi_assignedaircraftleases.pdf c. abandon five owned aircraft -- one Owned CRJ and four Remaining Owned J-41s that are still in the Debtors' possession. A full-text copy of the list of the Abandoned Leases is available at: http://bankrupt.com/misc/FLYi_abandoneaircraftleases.pdf The Debtors also ask the Court to approve these proposed uniform procedures for certain parties to retake possession of the Leased Aircraft and the Owned Aircraft: 1. The Debtors will provide written notice to the relevant party identifying the location of the Leased Aircraft and the Owned Aircraft that are the subject of the rejection or abandonment, if those aircraft are in the Debtors' possession; 2. Each Controlling Party may object to the entry of the Lease Rejection and Aircraft Abandonment Order, within 10 days from the date of the Order. Timely objections will be heard at the next regularly scheduled omnibus hearing date; 3. Objection with respect to any aircraft will prevent the Lease Rejection and Aircraft Abandonment Order from becoming final only with respect to that aircraft, and the Lease Rejection and Aircraft Abandonment Order will be final with respect to all other aircraft; and 4. If the Debtors have deposited monies with a Controlling Party as a security deposit or for similar purposes, the Debtors request that the Controlling Party not be permitted to setoff or otherwise use that deposit without prior authority from the Court. Responses (a) Erste Bank Erste Bank der oesterreichischen Sparkassan AG has a perfected security interest in two aircraft and leases that the Debtors seek to reject. Erste Bank opposes the Debtors' request because it violates Section 1110 of the Bankruptcy Code. Brett D. Fallon, Esq., at Morris, James Hitchens & Williams, LLP, in Wilmington, Delaware, points out that the Debtors seek to merely abandon the aircraft without returning it to Wachovia Bank, N.A., as Lessor, in accordance with the terms of the Leases. The Debtors also fail to specify a date that the Records will be returned to Erste Bank or the Lessor. "The abandonment of the Aircraft and the failure to timely return the Records cannot satisfy the 'return and surrender' provisions of Section 1110(c)." Erste Bank asks the Court to deny the Rejection Motion unless the Order presented to the Court provides that: i. the Debtors return the Aircraft and the Records by a date certain in accordance with the terms of the Leases, which should be on a mutually convenient date within 15 days after the entry of an order authorizing rejection of the Aircraft; ii. Erste and Wachovia Bank are not required to pay for any costs associated with the maintenance, insurance or storage of the Aircraft or Records prior to their return by the Debtors pursuant to Section 1110(c) of the Bankruptcy Code; iii. all Erste Bank's or Wachovia Bank's Claims arising from the Debtors' obligations under the Leases, or Section 1110 or otherwise, are expressly preserved; iv. the Aircraft and Leases will be deemed rejected as of the date of actual return of the Aircraft and all of the Records to the Lessor in accordance with Section 1110(c); and v. the Debtors will insure, maintain and store the Aircraft and Records until it has satisfied its obligations to return the Aircraft and Records under Section 1110(c). (b) Barclays Bank Barclays Bank Plc is a "Loan Participant" under certain Operative Documents. At its core, the Operative Documents effectively provide for three essential transactions: (1) the grant of a first priority security interest in the Barclays' Aircraft to U.S. Bank National Association, in trust for Barclays, pursuant to a Mortgage Agreement; (2) the assignment to Barclays of the Lease and the rights under the Mortgage on the occurrence of certain events including, but not limited to the bankruptcy of Independence Air, Inc., as the Lessee; and (3) the lease of the Barclays' Aircraft from Wachovia Bank, National Association, as Owner Trustee, by the Debtors. Barclays complains that the Debtors propose to return and abandon the Barclays' Aircraft and the Original Engines on terms in complete violation of their statutory and contractual return obligations, Jennifer L. Scoliard, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers, LLP, in Wilmington, Delaware, informs the Court. Barclays also objects to: (a) the use of engines without accruing rent after the Petition Date; (b) the return of the Excess Aircraft without the installation of each Excess Aircraft's original engines; (c) the retroactive effectiveness of rejection; (d) the five business day deadline to retrieve the aircraft; (e) the five business day time period that the Debtors will continue storage and insurance; and (f) the failure to satisfactorily address the return of records and documents and original engines, to the extent not installed when "returned". (c) Mizuho Mizuho Corporate Bank, Ltd., is the owner of a British Aerospace J-41 turboprop aircraft bearing U.S. registration number N313UE, including all engines, propellers, appliances, and related parts and equipment and all related records, logs and documents relating. The Debtors lease the Mizuho Aircraft. Under the Lease, Mizuho holds a security deposit for $500,000. The lease term runs through August 13, 2008. Quarterly rent for $109,812 is due on February 13, May 13, August 13 and November 13 of each year through May 2008. According to William P. Bowden, Esq., at Ashby & Geddes, in Wilmington, Delaware, Mizuho does not object to the Debtors' determination to reject the lease. Mizuho, however, objects to the terms and conditions under which the Debtors are seeking to reject the lease for the Mizuho Aircraft pursuant to the Rejection Motion. The Debtors' proposed rejection procedures, Mr. Bowden says, fail to satisfy the requirements of Section 1110 and are objectionable for these reasons: (a) the Debtors' abandonment of the Mizuho Aircraft "as-is, where-is," with parts missing, at a location in Telford, Maine, unilaterally determined by the Debtors does not comply with the Debtors' obligation to "immediately surrender and return" all of the equipment to Mizuho under Section 1110(c)(1); (b) the Debtors' failure to provide insurance coverage on the Mizuho Aircraft and necessary storage maintenance pending the Debtors' full compliance with the "surrender and return to" requirements of Section 1110(c)(1) is unreasonable and improperly shifts risk to Mizuho before the Debtors satisfy their Section 1110(c)(1) obligation; (c) the Debtors proposal to "make available" the aircraft records and documents at a second location -- the Debtors' facility in Dulles, Virginia -- "as soon as practicable," again does not comply with the "immediately surrender and return to" obligation under Section 1110(c)(1); (d) the Debtors' request that the Court stay Mizuho from setting off its $500,000 security deposit violates Section 1110(a)(1); and (e) the Debtors improperly request retroactive effect of the rejection of the Mizuho Aircraft to the Petition Date, rather than the date on which the Debtors actually satisfy their "surrender and return to" obligation under Section 1110(c)(1). (d) Manufacturers and Traders Trust Stephanie Wickouski, Esq., at Gardner Carton & Douglas LLP, in Washington, D.C., asserts that the Debtors' request is improper because: 1. the Debtors' request violates the provisions of Section 1110 of the Bankruptcy Code, the relevant transaction documents, and industry standards by not resulting in the proper surrender and return of the subject aircraft; 2. the rejection and abandonment of the aircraft on a retroactive basis and prior to compliance with Section 1110 is inappropriate; 3. the Debtors' request does not provide that the Debtors are required to store, maintain and provide insurance for the aircraft until rejection or abandonment are effective; and 4. the Debtors' request fails to preserve all relevant rights of Manufacturers and Traders Trust Company related to the aircraft. Ms. Wickouski relates that the Debtors financed the acquisition or lease of airframes, aircraft engines, and related parts through a number of capital market and private transactions involving M&T. M&T serves various roles in these transactions including indenture trustee, pass-through trustee, subordination agent, loan trustee, or mortgagee under certain indentures, security agreements, trust agreements, and other loan and security documents in 20 publicly issued and privately-placed aircraft financing transactions, representing obligations of one or more of the Debtors aggregating in excess of $100,000,000. The Ad Hoc Committee of Holders of 7.20% 1997-IA Pass Through Certificates supports and joins in M&T's Objection. (d) Export Development Canada Export Development Canada is a loan participant to 23 leveraged lease transactions, each involving the lease to Independence Air, Inc., of one Bombardier CL-600-2B19 regional jet, together with certain related jet engines, equipment, appliances and documents. EDC is also a lender under a credit agreement secured by security interests in four Aircraft owned by Independence. Hence, EDC is the controlling party with respect to the Aircraft and is authorized to direct the exercise of remedies under certain Operative Documents. Johnny D. Demmy, Esq., at Stevens & Lee, P.C., in Wilmington, Delaware, tells the Court that EDC does not object generally to the Debtors' rejection of the leases pertaining to the Excess Aircraft. But EDC objects to the attempt by the Debtors to: (i) reject the leases retroactively in violation of Section 365 of the Bankruptcy Code; (ii) modify or avoid their return obligations under Section 1110 (c) of the Bankruptcy Code and the Operative Documents; and (iii) avoid the administrative costs arising from both their postpetition use of the Aircraft and their obligations to fully comply with the "surrender and return to" requirements of Section 1110(c). (e) GE Commercial GE Commercial Aviations Services LLC, as agent for certain affiliates that have an interest in five of the Debtors' aircraft, objects to the Debtors' proposed form of order, which contains several provisions that run afoul of the requirements of the Bankruptcy Code and applicable law. Among these provisions, the provision on the "surrender and return" of the aircraft, engines, appliances, spare parts, and all related records and documents contravenes Section 1110. Andrew C. Kassner, Esq., at Drinker Biddle & Reath LLP, in Wilmington, Delaware, asserts that until the Debtors have effectuated the "surrender and return" provisions in accordance with Section 1110, the Debtors should be obligated to pay their administrative expense rental obligations and other postpetition charges. Pending surrender and return of the GECAS Aircraft and Records in accordance with Section 1110(c), the Debtors should not be absolved of their obligations to insure, maintain and store the aircraft, Mr. Kassner adds. Any order entered by the Court authorizing rejection of the GECAS Leases should remedy these deficiencies found in the Debtors' Proposed Order, Mr. Kassner points out. The Court should also provide in its Order that: (i) the Debtors will cooperate with the aircraft creditors in the execution and delivery of lease termination statements and title transfer documents in a form adequate for filing with the Federal Aviation Administration; and (ii) the aircraft creditors have at least 10 business days after compliance with Section 1110(c) to take possession of the aircraft. (f) Canadian Regional Aircraft Finance Canadian Regional Aircraft Finance Transaction No. 1 Limited has an interest in four of the Excess Aircraft. Specifically, CRAFT (i) as loan participant, has an interest in three of the CRJ Leases; and (ii) as lender, has an interest in one of the Owned CRJs. CRAFT believes that the Rejection Motion should be denied to the extent that the Debtors seek to simply abandon the CRAFT Aircraft on an "as-is, where is" basis and impose improper obligations on CRAFT, in contravention of the clear, unequivocal, affirmative requirement under Section 1110. Accordingly, CRAFT asks the Court to enter an Order: a. requiring: * the Debtors to comply with the surrender and return provisions of Section 1110(c); * the Debtors to surrender and return actual physical possession of any CRAFT Equipment to CRAFT or its designee in accordance with the Aircraft Agreements or as otherwise agreed to by CRAFT; * the Debtors refrain during their possession of the CRAFT Equipment from replacing, removing, or substituting parts and engines except in strict compliance with the applicable provisions of the Aircraft Agreements; * the Debtors to maintain insurance and pay other costs under the Aircraft Agreements until the Debtors comply with the "surrender and return" provisions of Section 1110(c)(1); and * that the effective date of rejection or abandonment be the date on which the Debtors comply with their "surrender and return" obligations under Section 1110(c)(1); and b. containing a specific reservation of rights regarding potential administrative expense and other claims that may arise out of the Debtors' rejection or abandonment of the Aircraft Agreements on the CRAFT Equipment. * * * Judge Walrath grants the Debtors' request with respect to the 30 Assigned 328 Jets. The Court approves the rejection of the leases of aircraft, to the extent that the Leases are executory or unexpired, as of the Petition Date. If the Debtors have deposited monies with a Controlling Party as a security deposit or for similar purposes, the Controlling Party will not be permitted to setoff or otherwise use the deposit without Court approval. 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. (FLYi Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000). FLYI INC: Committee Can't Share Confidential Info to Creditors -------------------------------------------------------------- Typically, a debtor will share various confidential and other non-public proprietary information with a creditors' committee. Creditors' committees use the information to assess, among other things: * a debtor's capital structure; * opportunities for the restructuring of the debtor's business in Chapter 11; * the results of any revised operations of the debtor in the bankruptcy case; and * the debtor's overall prospects for reorganization under a Chapter 11 plan. Creditors' committees also typically execute confidentiality agreements or enter into other similar arrangements with debtors. Through these agreements and other arrangements, a debtor can ensure that the committees' members will keep the information confidential and will not use Confidential Information except in connection with the Chapter 11 case and on terms acceptable to the debtor. According to Brendan Linehan Shannon, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, the enactment of the new Section 1102(b)(3)(A) under the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005 raises the issues of whether a creditors' committee could be required to share: -- a debtor's Confidential Information with any creditor that the committee represents; and -- with any creditor that the committee represents information subject to the attorney-client or some other state, federal, or other jurisdictional law privilege, whether the privilege is: * solely controlled by the committee; or * is a joint privilege with the debtor or some other party. There is nothing in the statute that requires those results and nothing in the legislative history to Section 1102(b)(3)(A) that even implies that a creditors' committee has those obligations, Mr. Shannon tells the U.S. Bankruptcy Court for the District of Delaware. Mr. Shannon believes that the dissemination of the FLYi, Inc. and its debtor-affiliates' Confidential Information to parties who are not bound by any confidentiality agreement directly with the Debtors could be disastrous for them since many of the Debtors' competitors could be their creditors. Fair Disclosure Regulation The Debtors are subject to Regulation FD promulgated in 2000 under the Securities Exchange Act of 1934. Regulation FD requires that, whenever a public company discloses material nonpublic information to certain enumerated persons, the company must make public disclosure of that same information: (a) simultaneously for intentional disclosures; or (b) promptly for non-intentional disclosures. Regulation FD provides two options for disseminating information to the public: * By filing a Form 8-K with the Securities and Exchange Commission; or * By disclosing the information by any other method, or combination of methods, "that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public." There are certain exceptions to the requirements of Regulation FD for public companies. In particular, the disclosure requirements of Regulation FD do not apply if material nonpublic information is disclosed to a person or entity that expressly agrees to maintain the disclosed information in confidence. As a result, to the extent otherwise applicable, Regulation FD is not implicated when a debtor provides Confidential Information to a creditors' committee if the committee has executed a confidentiality agreement with the debtor or has entered into a similar arrangement that satisfies the exception to Regulation FD. Mr. Shannon explains that if the Creditors Committee were required to provide access to the Debtors' Confidential Information to the Debtors' general creditors, however, Regulation FD easily could be implicated, since those creditors would not have confidentiality agreements with the Debtors. As a result, the Debtors could be put in a position of having continually to make Form 8-K filings with the Securities and Exchange Commission or other public disclosure of the information as a result of disclosures made by the Creditors Committees or risk violating federal securities laws. In the alternative, if any confidentiality agreement with the Creditors Committee remained subject to the right of the committee to provide access to creditors, the confidentiality agreement might not be effective for the purposes of Regulation FD. Therefore, the provision by the Debtors to the Creditors Committee of Confidential Information could itself implicate Regulation FD. In either case, the Debtors would be required constantly to disclose publicly their Confidential Information, Mr. Shannon points out. That situation would be untenable, highly prejudicial to the Debtors and likely would cause serious harm to the Debtors' estates. Given the importance of the issues, the Debtors ask the Court to: a. confirm that Section 1102(b)(3)(A) does not authorize or require the Official Committee of Unsecured Creditors to provide access to the Debtors' Confidential Information to any creditor that the committee represents; and b. clarify that the Creditors Committee is not authorized or required to provide access to Privileged Information to any creditor that the committee represents. Mr. Shannon emphasizes that the Creditors Committee will be permitted, but not required, to provide access to Privileged Information to any party so long as: * the Privileged Information was not Confidential Information; and * the relevant privilege was held and controlled solely by the Creditors. * * * Judge Walrath grants the Debtors' request, as modified. "Confidential Information" will mean any nonpublic information of the Debtors, including, without limitation, information concerning the Debtors' assets, liabilities, business operations, projections, analyses, compilations, studies, and other documents prepared by the Debtors or their advisors or other agents, which is furnished, disclosed, or made known to the Creditors Committee, whether intentionally or unintentionally and in any manner, including in written form, orally, or through any electronic, facsimile or computer-related communication. "Privileged Information" will mean any information subject to the attorney-client or some other state, federal, or other jurisdictional law privilege, whether that privilege is solely controlled by the Creditors Committee or is a joint privilege with the Debtors or some other party. Judge Walrath rules that the Creditors Committee is not authorized or required pursuant to Section 1102(b)(3)(A) to provide access to any Confidential Information of the Debtors to any creditor it represents. The Court directs the Creditors Committee to respond to written and telephonic inquiries and comments received from the creditors that it represents. The Committee will be permitted, but not directed, to utilize a Web site for the purpose of providing access to documents, pleadings and other materials that the Creditors Committee believes, in its reasonable business judgment, are relevant and informative for creditors that it represents, including documents pertaining to any plan of reorganization in the Debtors' cases and pleadings filed by the Creditors Committee. The Creditors Committee is not authorized or required to provide to any creditor it represents, access to any Privileged Information. Nonetheless, the Creditors Committee will be permitted, but not required, to provide access to Privileged Information to any party so long as: (a) the Privileged Information is not Confidential Information; and (b) the relevant privilege is held and controlled solely by the Creditors Committee. 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. (FLYi Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000). FOAMEX INT'L: Wants to Walk Away From 15 Executory Contracts ------------------------------------------------------------ Foamex International Inc. and its debtor-affiliates seek the U.S. Bankruptcy Court for the District of Delaware's permission to reject 15 executory contracts: 1. Employment Agreement with Stephen P. Scibelli Jr.; 2. Security Services Agreement with ADT Security Services, Inc., dated February 14, 2002; 3. RMAP Lease Agreement with Ricoh Corporation; 4. Equipment Lease Agreement with Toshiba Financial Services; 5. Equipment Lease Agreement with Copi-Quick, Inc., and Citicorp Vendor Finance, Inc.; 6. Truck Lease and Service Agreement with Ryder Truck Rental, Inc.; 7. Temporary Labor Services Agreement with America's Skilled Personnel; 8. Temporary Labor Services Agreement with Aerotek, Inc., dated October 13, 2004; 9. Temporary Services Agreement with Aerotek dated November 22, 2004; 10. Temporary Labor Services Agreement with Aerotek dated October 12, 2004; 11. Temporary Labor Services Agreement with Aerotek dated October 19, 2004; 12. Temporary Labor Services Agreement with Adecco Employment Services dated October 1, 2004; 13. Temporary Labor Services Agreement with Adecco USA, Inc., dated November 30, 2004; 14. Temporary Labor Services Agreement with Adecco USA dated November 22, 2004, for the Debtors' Corry facility; and 15. Temporary Labor Services Agreement with Adecco USA dated November 22, 2004, for the Debtors' Arcade facility. According to Pauline K. Morgan, Esq., Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, the Debtors no longer utilize the Executory Contracts. The Debtors believe that the Executory Contracts are not essential to their operations and do not provide them with a fractional benefit based on the expenses they incurred. Ms. Morgan tells the Court that it is highly unlikely that the Debtors would ever be able to locate a third party willing to accept an assignment of the Contracts. To avoid further administrative expense to the estates, the Debtors concluded that it makes sound business sense to reject the Agreements. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945- 7000) FOAMEX INT'L: Wants to Reject Three New York Real Property Leases ----------------------------------------------------------------- Foamex International Inc. and its debtor-affiliates assert that three real property leases are no longer necessary for their operations: Leased Premises Lessor --------------- ------ Textile Building Manhattan Properties Company 295 Fifth Avenue New York, NY 595 Madison Avenue Fuller Madison LLC 34th Floor c/o Vornado Office Management New York, NY 595 Madison Avenue J.H. McCann & Company 34th Floor New York, NY The monthly obligations accruing under the Leases are either above ordinary regional market rates, create operating costs that are unnecessary to the Debtors' estates, or are otherwise unmarketable, Pauline K. Morgan, Esq., Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, says. Hence, the Debtors seek the U.S. Bankruptcy Court for the District of Delaware's permission to reject the Leases effective as of the later of November 30, 2005, or the date they surrender the property subject to the Lease Agreements. To the extent that the Debtors leave any property, including, but not limited to, personal property, furniture, fixtures and equipment, at the premises covered by Leases, the Debtors seek the Court's permission to abandon the Personal Property. Ms. Morgan tells the Court that the Debtors have reviewed each of the Agreements and determined that the Agreements hold no material economic value to them or their estates and are not essential to the conduct of their Chapter 11 cases. The decision to reject the Agreements will eliminate the Debtors' obligations to perform under the Agreements and the accrual of any further obligations, including administrative rent, Ms. Morgan adds. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945- 7000) FOAMEX INT'L: Gets Court Okay to Hire Jefferson Wells as Auditors ----------------------------------------------------------------- As previously reported in the Troubled Company Reporter on Nov. 24, 2005, Foamex International Inc. and its debtor-affiliates sought the U.S. Bankruptcy Court for the District of Delaware's permission to employ Jefferson Wells International, Inc., as their internal auditors, nunc pro tunc to the Petition Date, pursuant to engagement agreements between the parties dated September 19, 2005. The nature and extent of the services that the firm will render to the Debtors include: (a) teaming with the Debtors' management to more clearly define the scope, objectives and deliverables required for the successful completion of the project described in the Engagement Agreements; (b) working with the Debtors' Vice Presidents of Internal Audit and Manufacturing, the Debtors' Sarbanes-Oxley project team, and KPMG, to develop comprehensive documentation, controls and test scripts to successfully complete Sarbanes 404 work for 2005 on time and to the right quality standard; and (c) developing methods to ensure the sustainability of the internal control environment surrounding the ERP implementation described in the Engagement Agreements. The Debtors will pay Jefferson Wells based on these hourly rates: For the period from November 1, 2005, through November 1, 2006: Professional Hourly Rates ------------ ------------ Director $200 Engagement Manager $165 Technology Risk Management Professional $132 Financial Operations Professional $132 Internal Controls Professional $121 Additionally, the Debtors will reimburse the firm for necessary and reasonable out-of-pocket expenses incurred in providing the professional services. * * * The Court authorizes the Debtors to employ, compensate and reimburse Jefferson Wells, nunc pro tunc to the Petition Date. The Court rules that any prepetition amounts owed by the Debtors to Jefferson are deemed waived by the firm, with its consent. The Honorable Peter J. Walsh of the Bankruptcy Court for the District of Delaware makes it clear that Jefferson Wells is not entitled to charge the Debtors any rate other than the standard rate set in the Engagement Agreements, as modified from time-to- time. Under no circumstances may Jefferson Wells charge the Debtors for work not actually performed by the firm. The Court amends the Indemnification Provision stating that each party agrees to indemnify other party resulting from a breach of the party's representations, warranties or obligations or the negligent, intentional or willful acts of its employment in connection with the performance of services under the Agreement. The Indemnification Provision further provides that the Debtors are not obliged to indemnify Jefferson Wells for any claim that is judicially determined or settled prior to a judicial determination. The Court directs the Debtors to file an affidavit of disinterestedness for employing ordinary course professionals with respect to any outside agent or subcontractor utilized by Jefferson Wells. Any parties-in-interest will have until Dec. 7, 2005, to object to the affidavit of disinterestedness. If no timely objection to the affidavit of disinterestedness is filed, the Court will authorize Jefferson Wells' employment of the outside agent or subcontractor. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945- 7000) FOOTSTAR INC: Reaches Consensual Plan Terms with Committees ----------------------------------------------------------- Footstar, Inc., reached an agreement with the unsecured creditors' and equity committees in its chapter 11 cases with respect to all of the terms to be included in a consensual plan of reorganization. The plan is subject to confirmation by the U.S. Bankruptcy Court for the Southern District of New York in White Plains. Separately, the company also entered into an amended credit agreement with its lending group, led by Fleet National Bank, which revises the provisions for exit financing upon the company's consummation of a Plan of Reorganization. "With these two agreements, we are now positioned to implement our Plan of Reorganization and emerge from chapter 11," said Dale W. Hilpert, Chairman and Chief Executive Officer. "We believe that the agreement we have reached with our committees on a consensual plan fairly serves and balances the interests of all of Footstar's stakeholders. In addition, our amended credit facility will provide increased liquidity for Footstar upon emergence." Under the agreement with the committees, all unsecured creditors will be paid in full with postpetition interest at the rate of 4.25% per annum. In addition, Footstar will distribute the undisputed portions of unsecured creditors' disputed claims on the distribution date of the plan, with the balance to be distributed upon resolution of such disputes. Equityholders will retain their equity interests. Footstar will file an amended disclosure statement with respect to the plan and has scheduled a court hearing to review the adequacy of the disclosure statement. Upon approval of the disclosure statement, the Company will commence solicitation of the requisite stakeholder acceptances of the plan. Headquartered in West Nyack, New York, Footstar Inc., retails family and athletic footwear. As of August 28, 2004, the Company operated 2,373 Meldisco licensed footwear departments nationwide in Kmart, Rite Aid and Federated Department Stores. The Company also distributes its own Thom McAn brand of quality leather footwear through Kmart, Wal-Mart and Shoe Zone stores. The Company and its debtor-affiliates filed for chapter 11 protection on March 3, 2004 (Bankr. S.D.N.Y. Case No. 04-22350). Paul M. Basta, Esq., at Weil Gotshal & Manges represents the Debtors in their restructuring efforts. When the Debtor filed for chapter 11 protection, it listed $762,500,000 in total assets and $302,200,000 in total debts. GE BUSINESS: Fitch Places BB Rating on Class D Certificates ----------------------------------------------------------- Fitch Ratings has issued a presale report on GE Business Loan Trust, series 2005-2, discussing the rating analysis behind Fitch's expected ratings on these: -- Interest-only certificates 'AAA'; -- Class A certificates 'AAA'; -- Class B certificates 'A'; -- Class C certificates 'BBB'; -- Class D certificates 'BB'. The securities are backed by a pool of conventional small business loans and unguaranteed portion of Small Business Administration Section 504 Program loans. The loans are secured by first liens on owner-occupied or single tenant retail, office, industrial, or other commercial real estate. None of the underlying business loans are insured or guaranteed by any governmental agency. GENERAL CABLE: Completes Senior Secured Debt Amendment & Extension ------------------------------------------------------------------ General Cable Corporation (NYSE:BGC) had successfully completed an amendment and extension of its Senior Secured Revolving Credit Facility on Nov. 23, 2005. This amendment: * increases the size of the facility from $275 million to $300 million, * extends the maturity date by almost two years to August 2010, * lowers borrowing costs by approximately 75 basis points, and * reduces unused facility fees. In addition, several other provisions have been eliminated or relaxed, including: * the elimination of the annual limit on capital expenditures, * an expansion of permitted indebtedness to include acquired indebtedness of newly acquired foreign subsidiaries, and * a significant increase in the level of permitted loan funded acquisitions. Finally, this amendment satisfies the financing conditions to General Cable's offer to convert shares of its 5.75% Series A Redeemable Convertible Preferred Stock into its common stock, which was announced and commenced on Nov. 9, 2005. This amendment will permit General Cable to draw funds from its credit facility to pay approximately $16.3 million for the conversion offer premium, plus funds necessary to make a final dividend payment to holders of Preferred Stock who convert their shares of Preferred Stock in the conversion offer, as well as to pay all other costs and expenses related to the conversion offer. "Our operating results have steadily improved since our refinancing in November 2003 and at the end of the third quarter of 2005, General Cable had net debt of $301 million compared to net debt of $380 million just prior to the refinancing," Christopher Virgulak, Executive Vice President, Chief Financial Office and Treasurer of General Cable, said. "This operating improvement and de-leveraging has provided us the opportunity to amend and extend our credit facility and thereby improve our financial flexibility and lower our borrowing costs. These revised provisions not only provide long-term flexibility, but also allow us to complete the pending Silec acquisition as well as pay the conversion premium and other costs and expenses related to our Preferred Stock conversion offer. Our lenders continue to provide the support necessary to position General Cable for sustained long-term growth." General Cable has filed a registration statement with the Securities and Exchange Commission (File No. 333-129577) in connection with the Preferred Stock conversion offer. General Cable urges holders of Preferred Stock to read the documents that General Cable has filed or will file with the SEC because they contain important information. Holders of Preferred Stock may obtain these documents for free from the SEC's Web site -- http://www.sec.gov/-- or by contacting General Cable's Vice President of Finance and Investor Relations: 4 Tesseneer Drive Highland Heights Kentucky 41076 Telephone (859) 572-8000 Headquartered in Highland Heights, Kentucky, General Cable Corporation -- http://www.generalcable.com/-- makes aluminum, copper, and fiber-optic wire and cable products. It has three operating segments: industrial and specialty (wire and cable products conduct electrical current for industrial and commercial power and control applications); energy (cables used for low-, medium- and high-voltage power distribution and power transmission products); and communications (wire for low-voltage signals for voice, data, video, and control applications). Brand names include Carol and Brand Rex. It also produces power cables, automotive wire, mining cables, and custom-designed cables for medical equipment and other products. * * * As reported in the Troubled Company Reporter on Aug. 25, 2005, Standard & Poor's Ratings Services revised it outlook on Highland Heights, Kentucky-based General Cable Corp. to stable from negative, and affirmed the 'B+' corporate credit rating, 'BB' secured bank loan rating, and 'B' senior unsecured debt rating. The revised outlook reflects improved financial leverage metrics stemming from strengthened profitability. As a result, General Cable's financial leverage metrics, as measured on an adjusted total debt to EBITDA basis, are now more consistent with its overall rating, adding to the company's financial flexibility. GMAC MORTAGAGE: Fitch Affirms Low-B Ratings on Class B Certs. ------------------------------------------------------------- Fitch Ratings has affirmed these GMAC Mortgage Corporation home equity issues: GMAC Mortgage, Series 2003-J3: -- Class A at 'AAA'; -- Class M-1 at 'AA'; -- Class M-2 at 'A'; -- Class M-3 at 'BBB'; -- Class B-1 at 'BB'; -- Class B-2 at 'B'. The collateral in the aforementioned transaction consists of a 15-year fixed-rate mortgage extended to prime borrowers that is secured primarily by first liens on one- to four-family residential properties. The original loan-to-value for this mortgage pool is approximately 59.50%. As of the November 2005 distribution date, GMAC 2003-J3 has a pool factor of 37% and is seasoned for 31 months. The transaction is serviced by GMAC Mortgage Corporation, which is rated 'RPS1' by Fitch. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $110.3 million in outstanding certificates as detailed above. Fitch will continue to closely monitor this transaction. Further information regarding current delinquency, loss and credit enhancement statistics is available on the Fitch Ratings Web site at http://www.fitchratings.com/ GTA-IB LLC: Sept. 30 Balance Sheet Upside-Down by $7 Million ------------------------------------------------------------ GTA-IB, LLC, delivered its financial results for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. The Company incurred a $3.6 million net loss on $6 million of revenues for the three months ended Sept. 30, 2005, as compared to a $3.9 million net loss on $5.7 million of revenues for the same period in 2004. At Sept. 30, 2005, GTA-IB's balance sheet showed $53 million in total assets and $60.1 million in total liabilities, resulting in a stockholders' deficit of approximately $7 million. As of Sept. 30, 2005, the Company had a working capital deficit of approximately $3.5 million. Asset Sale Termination CMI Financial Network, LLC, withdrew its offer to acquire the business of Westin Innisbrook Golf Resort and GTA-IB's equity interest in Golf Host Securities, Inc., on Nov. 23, 2005. CMI had agreed to purchase the assets for $45 million in cash plus the assumption of certain liabilities. Under the terms of the agreement, CMI may terminate the agreement for any reason or for no reason at any time prior to Nov. 25, 2005. In order to complete its due diligence and to make certain additional changes to the terms of the agreement, CMI requested an extension of the November 25 deadline. GTA-IB and its affiliates did not agree to the extension. Houlihan Lokey Howard & Zukin Financial Advisors, Inc., will continue to market assets on behalf of GTA-IB and its affiliates. Going Concern Doubt BDO Seidman, LLP, expressed substantial doubt about GTA-IB's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm pointed to the Company's losses from operations since its inception and its deficiencies in working capital and equity at Dec. 31, 2004. Golf Trust of America, Inc. (AMEX:GTA) -- http://www.golftrust.com/-- was formerly a real estate investment trust, and is now engaged in the liquidation of its interests in golf courses in the United States pursuant to a plan of liquidation approved by its stockholders. In addition to the four 18-hole golf courses at the Westin Innisbrook Golf Resort, the Company currently owns an interest in four other properties (comprised of 5.0 eighteen-hole equivalent golf courses). GTC TELECOM: Losses & Deficits Trigger Going Concern Doubt ---------------------------------------------------------- GTC Telecom's management expressed substantial doubt about the Company's ability to continue as a going concern in the company's Form 10-QSB for the period ended Sept. 30, 2005, filed with the Securities and Exchange Commission on Nov. 14, 2005. The Company's management points to the company's working capital deficit, accumulated deficit, losses from operations and a lack of profitable operational history. The Company reported a $1,008,251 net loss from operations on $1,886,526 of net revenues for the quarter ending Sept. 30, 2005. At Sept. 30, 2005, the Company's balance sheet showed a $2,553,638 stockholders' deficit, a $1,536,368 working capital deficit, and $14,289,150 in accumulated deficit. Going Concern Doubt Squar, Milner, Reehl & Williamson, LLP, has expressed substantial doubt about GTC Telecom Corp.'s ability to continue as a going concern after it audited the Company's financial statements for the years ended June 30, 2005, and 2004. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?357 GTC Telecom (OTCBB: GTCC) -- http://www.gtctelecom.com/-- is a national communications provider offering telecommunication services such as local and long distance telephone services, Internet related services, and business process outsourcing services. The Company has focused on selling telecommunications products, including GTC Telecom Long Distance, GTC Internet, GTC Teleconferencing, Calling Planet and ecallingcards.com pre-paid calling cards. HEARTLAND INC: Deficits Trigger Management's Going Concern Doubt ---------------------------------------------------------------- Heartland, Inc.'s management expressed substantial doubt about the Company's ability to continue as a going concern in the company's Form 10-QSB for the period ended Sept. 30, 2005, filed with the Securities and Exchange Commission on Nov. 14, 2005. The Company's management points to Heartland's $3,062,947 working capital deficit and $7,756,921 accumulated deficit as of Sept. 30, 2005. The Company reported a $246,076 net income from operations on $14,265,935 of net revenues for the quarter ending September 30, 2005. At September 30, 2005, the Company's balance sheet showed $15,192,193 in total assets and $15,257,658 in total debts. As of September 30, 2005, equity deficit narrowed to $65,465 from a $333,400 deficit at December 31, 2004. Meyler & Company, LLC, the Company's auditor, also expressed going concern doubt after it audited the Company's financials for the year ending December 31, 2004. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?35b Heartland, Inc., does not have significant operations. It intends to acquire the properties utilized by Mound Technologies, Inc. The company has options to acquire four commercial parcels of real estate in Tennessee, Minnesota, and North Dakota. Heartland is based in Springboro, Ohio. HULETT CORPORATION: Case Summary & 19 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Hulett Corporation 11351 West 183rd Street Orland Park, Illinois 60467 Bankruptcy Case No.: 05-63640 Type of Business: The Debtor is a sewer and plumbing contractor. Chapter 11 Petition Date: November 28, 2005 Court: Northern District of Illinois (Chicago) Judge: Jack B. Schmetterer Debtor's Counsel: Timothy J. Mcgonegle, Esq. Schain Burney Ross & Citron Ltd. 222 North LaSalle Street, Suite 1910 Chicago, Illinois 60601 Tel: (312) 332-0200 Total Assets: $2,370,407 Total Debts: $4,878,474 Debtor's 19 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jane Mayer/CDM Trust $534,480 [Address not provided] First Midwest Bank 10751 $520,514 [Address not provided] United States Treasury $494,199 [Address not provided] Mayer, Jane E. $334,480 [Address not provided] Family Bank & Trust $300,000 [Address not provided] First Midwest Bank $200,000 Standard Bank & Trust Co. $200,000 Laborers Pension & Welfare Funds $183,087 Patten Equipment Rental $176,791 Joliet Sand & Gravel $170,096 C & M Pipe $131,332 US Pipe & Foundry $108,879 Wells Fargo BH 20 $84,677 Roland Machinery $80,855 Standard Bank $79,536 Komatsu BH 19 $66,493 Metropolitan Industries, Inc. $60,075 Wells Fargo BH 21 $59,184 Midwest Operating Engineers $57,964 I2 TECH: Elects to Redeem $235 Million of 5.25% Subordinated Notes ------------------------------------------------------------------ i2 Technologies, Inc. (Nasdaq:ITWO) has called $235 million of its $260 million of outstanding 5.25% convertible subordinated notes due December 2006 for redemption. The company expects that the redemption will be completed on Dec. 28, 2005. The announced redemption follows several transactions i2 has recently initiated to strengthen the company's balance sheet. On Nov. 21, 2005, i2 announced that it had signed a definitive agreement to sell its Content and Data Services business for approximately $30 million. If certain closing conditions are satisfied, that disposition is expected to be completed within the next few weeks. In addition, on Nov. 23, 2005 i2 completed a private placement of $75 million in aggregate principal amount of its 5% Senior Convertible Notes due in 2015. The company intends to use the proceeds from these transactions, together with its cash balances, to redeem substantially all of its outstanding convertible subordinated notes. "When I took over as CEO of i2, I committed to our customers, our shareholders and our employees that we would work to make i2 a more financially secure company," i2 Chief Executive Officer Michael McGrath said. "We have made significant progress in a number of areas, including the recent actions we have announced aimed at strengthening our company's balance sheet. Our current and prospective customers can be more confident that i2 has a stronger financial foundation allowing us to both support them in the future and focus on growth." i2 will pay a 75 basis point premium to redeem the convertible subordinated notes, and following the redemption $25 million of the notes will remain outstanding. After the completion of its fourth quarter, the company will evaluate remaining options to redeem the $25 million balance of the convertible subordinated notes left outstanding. i2 Technologies, Inc. -- http://www.i2.com/-- provides software designed to synchronize demand and supply across global business networks. i2's supply chain management tools and services are used by lots of industries; 19 of the AMR Research Top 25 Global Supply Chains belong to i2 customers. At Sept. 30, 2005, i2 Technologies, Inc.'s balance sheet showed a $143,787,000 stockholders' deficit compared to a $173,033,000 deficit at Dec. 31, 2004. INFORMATION ARCHITECTS: Sept. 30 Balance Sheet Upside-Down by $3MM ------------------------------------------------------------------ Information Architects Corporation delivered its quarterly report on Form 10-QSB for the period ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. The Company reports a $68,650 net loss for the quarter ended June 30, 2005, compared to a $831,882 net loss for the same period in 2004. Aggregate net losses since inception total $79.02 million. At Sept. 30, 2005, Information Architects' balance sheet showed a $3,300,414 stockholders' deficit, compared to a $3,713,097 deficit at Dec. 31, 2004. Going Concern Doubt In its quarterly report, the Company states that recurring losses raise doubt about its ability to continue as a going concern. Management says that the Company needs to generate profits from the acquisition of the assets from Perceptre LLC and its other subsidiaries in order to continue operating as a going concern. Jaspers + Hall, PC, expressed substantial doubt about the Company's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2003 and 2004. The auditing firm points to the Company's recurring losses from operations and stockholders deficit. Acquisitions The Company had ceased it operations in Dec. 2002. In Jan. 2003, the Company resumed its business in connection with the acquisition of the assets of Perceptre, LLC. Despite this acquisition, and that of its other subsidiaries, Information Processing Corporation, ICABS.com, Inc., and International Monetary Exchange Systems Corporation, losses have continued. During the nine months ended Sept. 30, 2004 the Company had acquired the three subsidiaries involved in credit card processing. These acquisitions were intended for the purpose of showing profitable returns for Information Architects Corporation. The companies own various software and proprietary rights to process credit instruments and at Sept. 30, 2004, were in the process of completing their development. Information Architects Corporation -- http://www.ia.com-- has three wholly owned subsidiaries whose prime focus is banking and financial products. Those companies are: Information Processing Corporation, ICABS.COM, Inc., and International Monetary Exchange Systems Corporation. Information Processing Corporation is an electronic transaction company and financial services provider, with a MasterCard and VISA certified US processing center located in Abilene, Texas. ICABS specializes in the management of relationships between banks, processors and other financial institutions and corporate clients for the issuance of Pre-Paid Debit and Credit Cards. IMES is also a leading provider of new universal "stored value" or "pre-paid" payment solutions. INTERFACE INC: Moody's Raises $135MM Sub. Notes' Rating to Caa1 --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of Interface, Inc. The upgrade acknowledges: * Interface's steady improvement in performance following a severe slowdown in the corporate interiors market in the period from 2001 through 2003; * substantial progress in exiting unprofitable businesses; * continued industry leadership in the corporate modular market; and * the company's recent record of successfully managing cost increases relating to petroleum-based raw materials. Moody's took these rating actions: * Upgraded to B2 from Caa1 $150 million 7.3% guaranteed senior unsecured notes due 2008 * Upgraded to B2 from Caa1 $175 million 10.375% guaranteed senior unsecured notes due 2010 * Upgraded to Caa1 from Caa3 $135 million 9.5% guaranteed senior subordinated notes due 2014 * Upgraded to B2 from B3 the Corporate Family Rating The ratings outlook is stable. The upgrade reflects: * the decrease in debt to EBITDA (adjusted for pensions and operating leases) to slightly less than 4.5 times at October 2, 2005 from 5.0 times at the end of fiscal 2004; * the improvement in EBIT to interest coverage to approximately 1.6 times from 1.2 times; and * increases in free cash flow (defined as cash from operations less capital expenditures) to debt ratios from -1.4% in fiscal 2004 to 4.2% for the twelve months ending October 2, 2005. The upgrade also takes into account the company's market position and brand recognition, exemplified by recent rankings in industry publications and leading market share positions. Specifically, the company commands: * a 35% market share in the global specified modular carpet segment (about 64% of 2004 revenues and most of the operating income); * a 60% market share in panel fabrics for use in open plan office furniture systems; and * a 30% US market share in contract upholstery fabrics sold to office furniture manufacturers (67% in the UK). Additionally, the upgrades recognize: * an improved business environment in the corporate interiors market (particularly in the US and Asia); * the completion of the divestiture of the unprofitable Re:Source dealer businesses that provided carpet installation and maintenance services in the United States; and * progress with efforts to diversify into the education, retail, government and residential market segments. The rating incorporates the expectation that with the improvements to its financial and business profile, the company should be able to weather unexpected softness in its markets, if necessary. The ratings also reflect: * the company's high financial leverage; * a constrained ability to make meaningful debt repayments given ongoing capital expenditure requirements; and * despite improvements, continued heavy exposure to the cyclical corporate interiors market. Continued exposure to petroleum-based raw materials also subjects the company to volatility with respect to its cost structure. Further improvements in diversification efforts, sustainable increases in free cash flow to debt ratios and successful debt reduction could lead to positive changes in the ratings outlook. A decline in free cash flow to debt or EBIT to interest coverage as well as the assumption of additional indebtedness could result in downward pressure on the ratings. The stable outlook is supported by the company's solid market position in key market segments and core competencies that are in line with current demand patterns in the specified modular market segment. The B2 ratings on the $150 million 7.3% guaranteed senior unsecured notes due 2008 and the $175 million 10.375% guaranteed senior unsecured notes due 2010, both upgraded from Caa1, reflect the expectation of full recovery in the event of default given the improvement in enterprise value. The B2 rating gives consideration to the effective subordination of the notes to the $100 million senior secured, borrowing base governed, credit facility, due on October 1, 2007 (not rated by Moody's) and to the structural subordination of the notes to the obligations at non- guarantor subsidiaries. The senior unsecured notes are guaranteed by certain of the company's domestic subsidiaries on a senior unsecured basis. All of the company's public debt is at the parent company -- Interface, Inc. About 23% of the consolidated assets consist of goodwill and other intangibles. Approximately 40% of the consolidated tangible assets are at the non-guarantor subsidiaries, which generate a majority of the company's operating income. The assumption of additional secured debt or pari passu senior unsecured indebtedness could place downward pressure on the B2 ratings for the senior unsecured notes. The Caa1 rating for the $135 million 9.5% guaranteed senior subordinated notes due 2014, upgraded from Caa3, continues to reflect the contractual subordination of the notes to a significant amount of senior debt and the potential impairment of the principal in a distressed situation. The notes are guaranteed by certain of the company's domestic subsidiaries on a senior subordinated basis. As with the senior unsecured notes above, the assumption of additional senior or pari passu indebtedness could place downward pressure on the rating of the senior subordinated notes. As of October 2, 2005, $16.1 million in borrowings and $16.6 million in letters of credit were outstanding under the revolving credit facility. As of October 2, 2005, Interface could have incurred $67.2 million of additional borrowings under its revolving credit facility and was in compliance with all of its financial covenants. Interface, Inc., based in Atlanta, Georgia, with 2004 revenues of $882 million, is a leader in the worldwide interiors market, offering floor coverings and fabrics. The company is: * the world's largest manufacturer of modular carpet under the: -- Interface, -- InterfaceFLOR, -- Heuga, -- Bentley, and -- Prince Street brands; and * through its: -- Bentley Mills, and -- Prince Street brands, enjoys a leading position in the high quality, designer-oriented segment of the broadloom carpet market. The company is a also a producer of interior fabrics and upholstery products, which it markets under the: -- Guilford of Maine, -- Chatham, and -- Camborne brands, and provides specialized fabric services through its TekSolutions business. INTREPID TECHNOLOGY: Loss & Deficit Trigger Going Concern Doubt --------------------------------------------------------------- Intrepid Technology and Resources, Inc.'s management expressed substantial doubt about the Company's ability to continue as a going concern in the company's Form 10-QSB for the period ended Sept. 30, 2005, filed with the Securities and Exchange Commission on Nov. 10, 2005. The Company's management points to Intrepid's stockholders' deficit, net loss and negative cash flows from operations. The Company reported a $433,138 net loss from operations on $140,989 of net revenues for the quarter ending September 30, 2005. At Sept. 30, 2005, the Company's balance sheet showed $1,284,726 in total assets and $1,457,319 in total debts. As of September 30, 2005, the Company's equity deficit narrowed to $172,593 from a $476,772 deficit at June 30, 2005. As reported in the Troubled Company Reporter on Oct. 12, 2005, Jones Simkins, PC, expressed substantial doubt about the Company's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2005. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?358 Based in Idaho, Intrepid Technology and Resources, Inc., (IESV:OB) -- http://www.intrepid21.com/-- specializes in renewable energy production projects. The Company's primary business is developing, constructing, and operating a portfolio of projects in the Renewable Energy sector, with a special emphasis on production of biofuels. Biofuels are combustible fuels such as biogas (methane), biodiesel, ethanol and hydrogen that are produced from biomass -- i.e. plant-derived organic matter. The Company provides the overall management and engineering for planning, building and operation - and owning or co-owing - biofuels production facilities. INVESCO CBO: Fitch Affirms BB- Rating on $8 Mil. Class B-2 Notes ---------------------------------------------------------------- Fitch Ratings affirms five classes of notes issued by Invesco CBO 2000-1 Ltd. These affirmations are the result of Fitch's review process and are effective immediately: -- $20,218,066 class A-1L notes at 'AAA'; -- $78,000,000 class A-2L notes at 'AAA'; -- $26,000,000 class A-3 notes at 'AAA'; -- $19,500,000 class B-1L notes at 'BBB-'; -- $8,000,000 class B-2 notes at 'BB-'. Invesco CBO 2000-1 is a collateralized bond obligation managed by Invesco, Inc., which closed on Oct. 26, 2000. Invesco CBO 2000-1 is composed of primarily corporate high-yield bonds and loans. As part of this review of Invesco CBO, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward The affirmations are the result of mild collateral deterioration, offset by the deleveraging of the class A-1L notes and the improved coverage on the senior notes. The class A-1L notes paid down approximately $21 million on the last payment date, according to the last trustee report dated Nov. 2, 2005, leaving $20.2 million, or 34.3%, of the original principal balance. As a result, the class A overcollateralization ratio increased to 126.8% from 125.7% since the last review on Sept. 24, 2004. However, Invesco continues to fail at its weighted average rating factor and below 'CCC+' tests. The percentage of the collateral below 'CCC+' increased to 10.8% from 10.2% with a trigger of 7.5%, and the WARF remained at 'B-'. In addition, the class B-1L and B-2 overcollateralization ratios declined to 111.4% and 106.0% from 112.0% and 107.1%, respectively. Invesco failed its additional coverage test, but it was cured by redeeming the class A-1L notes with approximately $2.1 million from interest proceeds. The rating of the class A 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 class B notes addresses the ultimate payments of the cumulative interest amount and 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 web site at http://www.fitchratings.com/ K&S UTILITY: Case Summary & 61 Known Creditors ---------------------------------------------- Debtor: K&S Utility Contractors, Inc. 1710 Ballard Road Seagoville, Texas 75159 Bankruptcy Case No.: 05-86893 Type of Business: The Debtor is a utility contractor. Chapter 11 Petition Date: November 29, 2005 Court: Northern District of Texas (Dallas) Debtor's Counsel: Thomas Craig Sheils, Esq. Sheils, Winnubst, Sanford & Bethune 1100 Atrium II 1701 North Collins Boulevard Richardson, Texas 75080-1339 Tel: (972) 644-8181 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 61 Known Creditors: Entity Claim Amount ------ ------------ Alliance Trucking Unknown P.O. Box 142587 Irving, TX 75014 Amtek Information Unknown P.O. Box 682303 Houston, TX 77269-2303 APAC Unknown 2121 Irving Boulevard Dallas, TX 75207 B & B Ready Mix Unknown 4240 South Beltline Road Seagoville, TX 75207 Barnsco Unknown P.O. Box 541087 Dallas, TX 75354-1087 Big City Crushed Concrete Unknown P.O. Box 29816 Dallas, TX 75229 Buy Lo Auto Supply Unknown 101 Hall Road Seagoville, TX 75159 Concrete Accessories Unknown 1359 Motor Street Dallas, TX 75207 Concrete Related Products Unknown P.O. Box 436 Cleburne, TX 76031 Contech Construction Products Unknown 1001 Grove Street Middleton, OH 45004 Continental Casualty Unknown Attn: John Vaughan 132 East Main Street, #200 Grand Prairie, TX 75050 Crescent Machinery Unknown P.O. Box 565548 Dallas, TX 75356 D & J Blueline Unknown 1000 East 7th Street Austin, TX 78702 Dallas County Tax Assessor Unknown Property Tax 500 Elm Street Dallas, TX 75202 Design & Construction Unknown P.O. Box 52470 Irvine, CA 97619-2407 Detroit Industrial Tools Unknown P.O. Box 7916 Van Neuys, CA 91409-1068 Direct Fuels Unknown P.O. Box 99008 Fort Worth, TX 76199 District Attorney Check Division Unknown 133 North Industrial LB19 Dallas, TX 75207-4399 Firemen's Fund Insurance Unknown 5455 La Sierra Drive, #100 Dallas, TX 75231 First State Bank Unknown 917 Military Parkway Mesquite, TX 75149 Fleet Management Unknown P.O. Box 9010 Des Moines, IA 50368-9010 Geo Shack Unknown 2307 Springlake Road, #514 Dallas, TX 75234 Glast, Phillips & Murray Unknown 13355 Noel, LB 48 Dallas, TX 75240-6657 Guarantee State Bank Unknown P.O. Box 6250 Lawton, OK 73506 Hilb, Rogal & Hamilton Unknown 5520 LBJ Freeway, #60 Dallas, TX 75367-9012 Holt Rentals Unknown P.O. Box 972006 Dallas, TX 75397 Hughes Supply Unknown P.O. Box 365 Alvarado, TX 76009-0365 Image Net Office Systems Unknown P.O. Box 26340 Oklahoma City, OK 73129 Improve Const. Methods Unknown P.O. Box 5798 Jacksonville, AR 72078-5798 Insurance Finance Corp. Unknown 8144 Walnut Hill Lane, #1300 Dallas, TX 75231 Internal Revenue Service Unknown P.O. Box 80110 Cincinnati, OH 45280-0010 IPC Unknown P.O. Box 9867 Fort Lauderdale, FL 33310-9867 Jerry Graves Unknown 8829 Hackney Dallas, TX 75238 Jessie Taylor Oil Unknown 3701 North Sylvania Fort Worth, TX 76137 Jones Contracting, L.P. Unknown c/o Mark Hawkins 100 Congress, #1300 Austin, TX 78701-2744 JRJ Paving Unknown 11359 Kline Drive Dallas, TX 75229 Kaufman Sand & Gravel Unknown 10900 South SH 34 Scurry, TX 75158 Lattimore Materials Unknown P.O. Box 556 McKinney, TX 75070-0056 Lone Star Machine Works Unknown P.O. Box 852334 Mesquite, TX 75185 Marlow's Check Cashing Unknown 11810 C.F. Hawn Freeway Dallas, TX 75227 Matbon, Inc. Unknown P.O. Box 154489 Irving, TX 75015 McHone Metal Fabricators Unknown 400 West Mallow Bridge Road Seagoville, TX 75159 Neff Rentals Unknown P.O. Box 99914 Chicago, IL 60696-7714 Nextel Unknown P.O. Box 54977 Los Angeles, CA 90054-0977 North Central Communications Unknown 14305 Inwood Road, #105 Dallas, TX 75244 Planetary Utilities Unknown 10650 Control Plaza Dallas, TX 75238 Quill Office Supply Unknown P.O. Box 94081 Palatine, CA 60094-4081 Recycled Materials, Inc. Unknown P.O. Box 154489 Irving, TX 75015-0000 Ron Massey Unknown 8340 Meadow Road, #130 Dallas, TX 75231 Rubachem Systems, Inc. Unknown P.O. Box 901 Northvale, NJ 07647 Southwest Surveying Unknown 2717 Motley, Suite B Mesquite, TX 75150 Synapse Solutions, Inc. Unknown P.O. Box 30474 Salt Lake City, UT 84130 Texas Mutual Insurance Unknown 6210 East Highway 290 Dallas, TX 75231 Tire Town Unknown 701 North Highway 175 Seagoville, TX 75159 Tools For The Trade Unknown P.O. Box 1559 Weaverville, NC 28787 Toothpro, Inc. Unknown P.O. Box 776 Mansfield, TX 76063 Underground Environmental Unknown 820 South Macarthur, #105366 Coppell, TX 75019 United Equipment Rental Unknown 503 East Border Street Arlington, TX 76010 Upshaw Insurance Unknown 1755 North Collins, Suite 310 Richardson, TX 75080 White's Florist Unknown 1816 North Highway 175 Seagoville, TX 75159 Xerox Corporation Unknown 350 South Northwest Highway Park Ridge, IL 60068 KAISER ALUMINUM: Creditors Vote to Accept Amended Plan ------------------------------------------------------ Kaiser Aluminum Corporation and its debtor-affiliates' Second Amended Plan of Reorganization has been accepted by all classes of creditors entitled to vote on the Plan. A voting report filed with the U.S. Bankruptcy Court for the District of Delaware by Logan & Company, the claims agent in Kaiser Aluminum's Chapter 11 case, indicates that on an aggregate basis more than 90% of Kaiser Aluminum's creditors who voted -- representing more than 90% of the claim amounts that voted -- accepted the Plan. Based on these voting results, Kaiser Aluminum is positioned to proceed with confirmation of the Plan. "The company's reorganization has addressed a significant number of very complex issues," said Jack A. Hockema, president and CEO of Kaiser Aluminum. "Many difficult decisions had to be weighed to achieve a fair and equitable outcome for all the creditors involved. That the plan was accepted by such an overwhelming majority of our creditors is a testament to the dedication and tireless efforts of all those involved in the process." Mr. Hockema added, "The company is now poised to emerge as a strong and viable leader in the fabricated aluminum products market. We could not have reached this point without the strong support provided by our customers, suppliers and the loyal Kaiser Aluminum employees who remained focused on running the business with excellence." The Court approved the Disclosure Statement related to the Plan on Sept. 7, 2005. The Disclosure Statement and Kaiser Aluminum's Form 10-Q for the period ended Sept. 30, 2005, provide additional detail on the Plan and the related proposed distributions. A black-lined copy of the Remaining Debtors' Second Amended Joint Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?362 A black-lined copy of the Remaining Debtors' Second Amended Disclosure Statement is available for free at http://ResearchArchives.com/t/s?363 Notwithstanding the broad creditor support for the Plan, certain objections to the Plan have been filed and some additional limited objections are expected. Kaiser Aluminum, through its advisors, will attempt to reach a consensual resolution of as many of these objections as possible over the coming weeks. The Court has scheduled hearings on Jan. 9, 2006 and Jan. 10, 2006 to consider confirmation of the Plan and hear any unresolved objections. In addition to the required entry of an order confirming the Plan by the Court, the U.S. District Court must affirm the confirmation order. No assurances can be provided as to whether or when the Bankruptcy Court will confirm the Plan, the District Court will affirm the confirmation order, or the Plan will be consummated, and, if consummated, as to the amount of distributions to be made to individual creditors. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. KAISER ALUMINUM: Asks Court to Approve Plan Modifications --------------------------------------------------------- Kaiser Alumina Australia Corporation, Kaiser Finance Corporation, Alpart Jamaica Inc. and Kaiser Jamaica Corporation seek the U.S. Bankruptcy Court for the District of Delaware's authority to make certain modifications to their Third Amended Joint Plans of Liquidation. The Plan Modifications will enable the Liquidating Debtors to: -- confirm the Liquidating Plans in 2005 even if the Court does not render a decision on the dispute relating to the relative priority of holders of Senior Note Claims and holders of Senior Subordinated Note Claims to payments by the Liquidating Debtors; and -- avail of significant potential tax savings. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, tells the Court that although there has yet been no decision on the Guaranty Subordination Dispute, the Debtors expect the amount of their alternative minimum tax liability for the 2005 taxable year to increase significantly if the Liquidating Plans do not become effective and distributions cannot be made to the Pension Benefit Guarantee Corporation in 2005. Specifically, the deductions the Debtors expect to generate in 2005 for payments to the PBGC pursuant to the Liquidating Plans would partially offset the Debtors' taxable gain on the sale of KAAC's interest in Queensland Alumina Limited in 2005. This partial offset would eliminate a portion of the AMT liability that otherwise could have been due for the 2005 taxable year because of the limitation imposed by the Internal Revenue Code that permits net operating loss carryforwards from prior years to offset only 90% of current-year AMT income rather than 100%. Based on the Debtors' current estimates, which are not yet finalized because the 2005 taxable year has not yet concluded, the combined federal and state AMT savings are projected to be approximately $4,000,000 if the Liquidating Plans become effective and payments are made to the PBGC in 2005 rather than in 2006. Plan Modifications Pursuant to the Plan modifications, the Confirmation Order will no longer include a determination of the entitlements of holders of Senior Note Claims and Senior Subordinated Note Claims to the Public Note Distributable Consideration. Instead, the Plan Modifications provide for an initial distribution to holders of Senior Note Claims on the Effective Date and the retention of the remainder of the Public Note Distributable Consideration by the Distribution Trustee pending the Court's decision on the Guaranty Subordination Dispute. The amount of the Public Note Distributable Consideration that will be retained by the Distribution Trustee, Mr. DeFranceschi says, will be sufficient to ensure that the Distribution Trustee will be able to implement any Court order adjudicating the Guaranty Subordination Dispute. The Plan Modifications further provide that the remainder of the Public Note Distributable Consideration will be distributed in accordance with a separate Court order determining the entitlements of the holders of Senior Note Claims and the holders of Senior Subordinated Note Claims to those distributions. The modification to the KAAC/KFC Liquidating Plan amends the definition of the PBGC Settlement Agreement to reflect the fact that the settlement has since been modified and to clarify that the PBGC's administrative claim is determined pursuant to the PBGC Settlement Agreement, as modified. A full-text copy of the proposed modifications to the AJI/KJC Plan is available at no charge at: http://bankrupt.com/misc/AJI_KJC_Planmodifications.pdf A full-text copy of the proposed modifications to the KAAC/KFC Plan is available at no charge at: http://bankrupt.com/misc/KAAC_KFC_Planmodifications.pdf Changes to Confirmation Order The Liquidating Debtors made conforming changes to the proposed confirmation order to reflect the Plan Modifications. The Liquidating Debtors also propose that the Confirmation Order will not be stayed but instead will be effective immediately, to provide additional time before year-end to effect the initial distributions to holders of Senior Note Claims and distributions to the PBGC. A blacklined copy of the proposed Confirmation Order is available at no charge at: http://bankrupt.com/misc/blacklined_draftconfirmationorder.pdf Plan Changes Won't Affect Recoveries Mr. DeFranceschi assures the Court that nothing in the Plan Modifications alters the Liquidating Plans' satisfaction of the requirements provided in Sections 1122 and 1123 of the Bankruptcy Code. Moreover, the modifications will not adversely change the treatment of the claim of any creditor. The modifications should be deemed accepted by the creditors that previously voted to accept the Liquidating Debtors' Plans, Mr. DeFranceschi asserts. The Court will convene a hearing on the Liquidating Debtors' request on December 19, 2005, at 1:30 p.m. Objections are due December 5, 2005. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 82; Bankruptcy Creditors' Service, Inc., 215/945-7000) KAISER ALUMINUM: Wants CNA & National Union Agreement Approved -------------------------------------------------------------- As previously reported, the explosion at Kaiser Aluminum Corporation and its debtor-affiliates' former alumina refinery in Gramercy, Louisiana, in 1999 resulted in numerous claims being brought against Kaiser Aluminum & Chemical Corporation and other parties potentially responsible for the explosion by individuals, including KACC employees, who claimed injuries while on the plant site or outside the site. During this time, KACC was an insured under certain third-party liability policies issued by Transcontinental Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA, and certain other insurance companies. CNA and National Union were obligated to fund settlements and pay defense costs as to claims for personal injury and property damage asserted by the Gramercy Explosion Claimants. Settlements with Gramercy Explosion Claimants KACC ultimately settled most, if not all, of the personal injury claims asserted against it in connection with the Gramercy Explosion using insurance proceeds provided by CNA and National Union. KACC negotiated individual settlements with Gary Guy, Terrence Hayes, and Todd Landry, the three most severely injured Inside-the-Gate Claimants, and their family members. KACC entered into a buy-out agreement with CNA and National Union for other Inside-the-Gate Claimants. Under the Buy-Out Agreement, National Union paid KACC $2,150,000, which KACC used to fund settlements with various Inside-the-Gate Claimants other than Messrs. Guy, Hayes and Landry. In return for providing the Buy-Out Funds, National Union was released from any further obligations to provide coverage for future claims asserted against KACC by additional Inside-the-Gate Claimants. In November 2000, KACC entered into a settlement with a class of plaintiffs comprised of Outside-the-Gate Claimants in which KACC agreed to pay $26,500,000 to resolve all of the class claims asserted against it. All of the settlements with both Inside-the-Gate and Outside-the- Gate Claimants released KACC and the Insurers from any further liabilities relating to the Gramercy Explosion. The settlements also contain a common provision that required the claimants to reimburse KACC and certain other parties, including the insurers, portions of the claimants' recoveries in litigation against third-party defendants. Because of the Reimbursement Provisions in each of the settlements, KACC received: (1) $5,682,500 from Outside-the-Gate Claimants; (2) $2,477,270 from Mr. Guy and certain of his family members; (3) $2,419,700 from Mr. Hayes and certain of his family members; and (4) More than $1,100,000 from Other Inside-the-Gate Claimants. In compliance with the Reimbursement Provisions, Mr. Landry and certain of his family members deposited $2,740,000 in the registry of the U.S. District Court for the Eastern District of Louisiana for the benefit of KACC and the Insurers. KACC's insurance counsel, Heller Ehrman LLP, maintains the Third- Party Recoveries KACC received, as well as the remaining portion of the Buy-Out Proceeds, in separate client trust accounts. Dispute Over Insurance Coverage & Ownership of Third-Party Recoveries A dispute arose between KACC and CNA regarding insurance coverage available under the CNA Policy regarding reimbursement of legal fees and expenses KACC incurred in connection with certain litigation related to the Gramercy Explosion and the Debtor's efforts to enforce its settlements with Gramercy Explosion Claimants. Because the disputed litigation costs were necessary to obtain the Third-Party Recoveries, KACC has maintained that CNA, which stood to benefit from the recoveries, was required to reimburse KACC for its fair share of the costs. CNA, on the other hand, argues that it is not required to do so under its policy. In light of the parties' inability to resolve this dispute, KACC has maintained the Third-Party Recoveries, which could be used to minimize its losses, with Heller Ehrman. The dispute eventually spilled over into a prepetition lawsuit KACC brought in the District Court for the Eastern District of Louisiana, where it sought to enforce the settlement entered into with the Landry Claimants. The Landry Claimants had earlier refused to turn over to KACC $2,740,000 in Third-Party Recoveries. The Landry Claimants eventually agreed to turn over the Landry Funds to KACC, as requested. However, KACC never received these funds, because the Insurers intervened in the lawsuit and requested that the District Court order the funds be paid over to them. The District Court ultimately directed the Landry Funds to be deposited in its registry -- where they currently remain -- pending a Court determination of whether the funds belong to KACC's estate. The Insurers also dispute that certain claims against KACC asserted by CII Carbon, LLC, are covered under the Insurers' policies. CII Carbon asserts $16,368,682 in damages as a result of the Gramercy Explosion. Adversary Proceeding vs. Insurers To resolve the disputes with the Insurers, KACC initiated an adversary proceeding on November 12, 2002, asserting seven claims against them. KACC asserts that all of the Third-Party Recoveries and the Buy-Out Funds are property of its estate. KACC also alleges that CNA breached the CNA Policy by failing to reimburse KACC the Disputed Litigation Costs. In their response, the Insurers asked the Court to find that all of the Third-Party Recoveries belong to CNA. According to the Insurers, pursuant to certain subrogation provisions in their policies, they were assigned the right to collect Third-Party Recoveries from the Gramercy Explosion Claimants. KACC disputed this contention, arguing that the subrogation provisions are inapplicable to the Third-Party Recoveries because KACC is not obtaining recoveries directly from third parties but is doing so pursuant to contractual arrangements in settlements reached with personal injury claimants. KACC maintained that any alleged breach of provisions in the CNA Policy or the National Union Policy only give rise to prepetition contractual claims against it. With respect to KACC's other claims, the Insurers disputed that the Buy-Out Agreement transferred all rights in the Buy-Out Proceeds to KACC. They maintained that KACC is not entitled to reimbursement of the Disputed Litigation Costs under the CNA Policy. On January 16, 2004, the Court issued a memorandum opinion and related interim order granting, in part, both KACC's request for summary judgment and CNA's cross-motion for summary judgment. The Order provided that the Buy-Out Funds belong to KACC and that the remaining Third-Party Recoveries would be paid to CNA. It specified that CNA cannot collect any Third-Party Recoveries until the parties agree on the "full amount of the Debtors' defense costs" which is to be subtracted from the Third-Party Recoveries that CNA is entitled to collect and set aside as a reserve fund. Parties Reach Settlement KACC and the Insurers met on several occasions and exchanged extensive information regarding the Disputed Litigation Costs that KACC might be entitled to collect. The parties subsequently reached a settlement that resolves all of the issues in the Adversary Proceeding and provides for an equitable distribution of the Third-Party Recoveries and the Buy-Out Proceeds. The salient terms of the parties' Settlement Agreement are: (a) KACC will be entitled to $7,300,000 of the Total Funds plus half of the Total Funds exceeding $16,100,000; (b) CNA will be entitled to $8,800,000 of the Total Funds plus half of the Total Funds exceeding $16,100,000; (c) KACC, CNA and National Union will immediately request the District Court to turn over the Landry Funds to Heller Ehrman, which will maintain the funds in a separate client trust account for the benefit of all of the parties to the Settlement Agreement and disburse the funds in accordance with the distribution procedures set forth in the Settlement Agreement; (d) National Union will not be entitled to any portion of the KACC Funds and will only be entitled to a portion of the CNA Funds to the extent the funds exceed the amounts necessary to fully replenish the limits of coverage under the CNA Policy. Any CNA Funds received by either CNA or National Union will replenish coverage under the CAN Policy or National Union Policy, as applicable; and (e) CNA will set aside $31,429 of the CNA Funds to reimburse KACC for CII Carbon's property damage claim, if the claim is allowed by the Court. The Insurers and certain other insurance companies of KACC, including Reliance Insurance Company, Chubb Insurance Company, Great American Insurance Company, Old Republic Insurance Company and TIG Insurance Company will be released from any obligations under their policies to pay for any of CII Carbon's claims against KACC related to the Gramercy Explosion. Mr. DeFranceschi tells Judge Fitzgerald that the Settlement Agreement allows KACC to recoup a substantial portion of the Disputed Litigation Costs, which have bee the subject of a factually intensive and costly dispute with the Insurers. KACC believes that that Settlement Agreement, including the recoveries it will receive, is fair and reasonable and will substantially benefit its estate. The Debtors ask the Court to approve the Settlement Agreement. A full-text copy of the Settlement Agreement is available at no charge at: http://bankrupt.com/misc/CNA_Settlement_Agreement.pdf Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 83; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Pendleton Woolen Files Lawsuit Against Kmart -------------------------------------------------------- Pendleton Woolen Mills, Inc., filed a complaint in the United States District Court for the District of Oregon accusing Kmart Corporation of selling flannel sheets that bear identical and confusingly similar imitations of Pendleton's federally registered "Pendleton," "Pendleton Home," and "Pendleton Home Collection" trademarks and service marks and common-law Tepee Logo trademark. Pendleton, a corporation organized and existing under the laws of the State of Oregon, manufactures men and women's apparel, blankets, home decor, bedding, and related accessories. It uses its own trademark in connection with the manufacture, distribution, and sale of these products in the United States. Michael Heilbronner, Esq., at IdeaLegal, P.C., in Portland, Oregon, notes that Pendleton does not manufacture Kmart's flannel sheets, nor is Kmart connected or affiliated with, or authorized by, Pendleton in any way. Pendleton used the Pendleton Marks and the Tepee Logo trademark extensively and continuously before Kmart began offering the Infringing Goods for sale and using confusingly similar imitations of the Pendleton trademark and the Tepee Logo trademark. Mr. Heilbronner says that Kmart uses the Pendleton trademark as the first word in the name of the Infringing Goods, and the Pendleton trademark appears clearly and conspicuously on the packaging for the Infringing Goods. The Infringing Goods sold by Kmart are similar to and compete with goods sold by Pendleton, and these goods are sold through overlapping channels of trade, including the Internet. Kmart's merchandise is likely to cause confusion and deceive consumers and the public regarding its source, Mr. Heilbronner contends. He says that Kmart's merchandise dilutes and tarnishes the distinctive quality of Pendleton's Pendleton Marks and Tepee Logo trademark. Accordingly, Pendleton asks the Oregon District Court to enjoin Kmart from: (a) using the Pendleton Marks or any other copy or imitation of the Pendleton Marks on, or in connection with, Kmart's goods and services; (b) using the Tepee Logo trademark or any other copy or imitation of Pendleton's Tepee Logo trademark on or in connection with Kmart's goods or services; (c) using any trademark, service mark, name, logo, design, or source designation of any kind on or in connection with Kmart's goods or service that: * is confusingly similar to Pendleton's; * likely causes confusion or public misunderstanding that the goods or services are produced, provided, or authorized by Pendleton; and * dilutes or tarnishes the distinctiveness of Pendleton's trademarks, service marks, names, or logos; and (d) passing off or palming off Kmart's goods or services as those of Pendleton, or otherwise continuing any and all acts of unfair competition alleged by Pendleton. In addition, Pendleton wants the Oregon District Court to direct Kmart to: (1) recall all products and packaging bearing the Pendleton Marks, the Tepee Logo trademark, or other confusingly similar marks, which have been shipped by or under Kmart authority to its customers and deliver to the concerned party a copy of a Court order as it relates to the injunctive relief against Kmart; (2) deliver up for impoundment and for destruction all materials or products in Kmart's possession that are found to adopt, infringe, or dilute any of Pendleton's trademarks or that otherwise unfairly compete with Pendleton and its products and services; and (3) cease all use of any kind of the Pendleton Marks and Tepee Logo trademark on the Internet. Pendleton further asks the Oregon District Court to compel Kmart to account to Pendleton any and all profits derived from the sale or distribution of the Infringing Goods. Mr. Heilbronner insists that Pendleton be awarded all available damages caused by Kmart's acts. Based on Kmart's willful and deliberate infringement and dilution of Pendleton's marks, and to deter the conduct in the future, Pendleton has the right for punitive damages. Pendleton demands a trial by jury on all claims and issues fit for trial. Pendleton's Statement Pendleton Woolen Mills, the apparel, blanket and home products company with roots dating back more than 140 years in Oregon, filed a trademark infringement lawsuit November 2, 2005 in federal court in Portland, Oregon, against discount retailer K Mart Corporation. Pendleton's suit claims that K Mart is capitalizing on the Pendleton brand and reputation by offering a flannel sheet set that uses the PENDLETON name and features an Indian Trade blanket pattern that closely copies distinctive elements of Pendleton's classic Tepee design. The packaging for K Mart's infringing merchandise designates the sheets as "pendleton . . . flannel sheet set." Pendleton Woolen Mills has not authorized or licensed K Mart to use the famous PENDLETON trademark. Likewise, the packaging and sheets prominently display Pendleton's Tepee Logo trademark without authorization of Pendleton. "Our reputation for quality is the hallmark of Pendleton products," says Mort Bishop III, President of Pendleton Woolen Mills. "K Mart is using our name and taking advantage of our famous brand symbols without our prior knowledge or permission. Pendleton believes that K Mart's actions will confuse and deceive consumers about the source and quality of the infringing merchandise." "We will take every appropriate step within our power to protect our brand," says Mr. Bishop. "We owe that to our consumers and retail customers, who have come to know and respect Pendleton's products. We cannot allow K Mart or any other company to unlawfully distort our valuable brand image and create confusion in the marketplace." Pendleton Woolen Mills is a privately held company that owns and operates two woolen mills in the Pacific Northwest, both of which manufacture Pendleton apparel and home products. Pendleton products are available at select department stores, specialty stores and more than 70 Pendleton retail stores nationwide. Pendleton's merchandise can also be ordered online at the company's Web site or in Pendleton's seasonal catalogs. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 104; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Wants Premier Retail Claim Reduced to $5.5 Million -------------------------------------------------------------- On July 22, 2002, Premier Retail Networks, Inc., filed an unsecured claim against Kmart Corporation for $140,013,530. On February 2, 2004, Kmart filed its 19th Omnibus Claims Objection disputing, among other claims, the PRN Claim. PRN responded to the Objection. Since then, the Parties have engaged in extensive negotiations concerning a consensual resolution of the PRN Claim. Subsequently, the parties have reached an agreement in principle to allow the PRN Claim in a reduced amount. Kmart, therefore, asks the U.S. Bankruptcy Court for the Northern District of Illinois to reduce and allow the PRN Claim as a Class 5 Claim for $5,500,000. Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- operates approximately 2,114 stores, primarily under the Big Kmart or Kmart Supercenter format, in all 50 United States, Puerto Rico, the U.S. Virgin Islands and Guam. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. Kmart bought Sears, Roebuck & Co., for $11 billion to create the third-largest U.S. retailer, behind Wal-Mart and Target, and generate $55 billion in annual revenues. The waiting period under the Hart-Scott-Rodino Antitrust Improvements Act expired on Jan. 27, without complaint by the Department of Justice. (Kmart Bankruptcy News, Issue No. 104; Bankruptcy Creditors' Service, Inc., 215/945-7000) LEHMAN BROTHERS: Fitch Assigns Low-B Ratings to $12.4M Class Notes ------------------------------------------------------------------ Fitch has assigned ratings to Lehman Brothers Small Balance Commercial's net interest margin securities, series 2005-2: -- $11,040,000 class N1 notes 'BBB'; -- $8,070,000 class N2 notes 'BB'; -- $4,355,000 class N3 notes 'B'. The notes are backed primarily by prepayment penalties and monthly excess spread not used to offset losses in the LBSBC, series 2005-2, transaction - see Fitch press release 'Fitch Rates Lehman Brothers Small Balance Commercial, Series 2005-2,' dated Oct. 28, 2005 and available on the Fitch Ratings Web site at http://www.fitchratings.com/ The collateral in this transaction consists of conventional business loans made to small businesses that are secured by first liens on commercial or mixed-use real estate. None of the underlying business loans are insured or guaranteed by any governmental agency. The loans were originated by Lehman Brothers Small Business Finance or its predecessors. The ratings on the net interest margin notes are based on: * Fitch's analysis of cash flows reflecting stressed default and stressed recovery rates and * timing lags under several default timing and prepayment speed scenarios. The ratings also take into consideration: * the origination, underwriting, and servicing experience of LBSBF; * the role of LBSBF as servicer; and * the sound legal and payment structure. The N1 notes benefit from a reserve fund that will be maintained at nine months of interest on the outstanding principal balance of the N1 notes. The N2 notes also benefit from a reserve fund that will initially be funded at three months of interest on the outstanding N2 principal balance and will then grow to and be maintained at six months of interest on the N2 balance. Interest is expected to be paid monthly and principal payments are expected to be allocated on a sequential basis. LOCATEPLUS HOLDINGS: Sept. 30 Balance Sheet Upside-Down by $4.3MM ----------------------------------------------------------------- LocatePLUS Holdings Corporation reported its financial results for the three months ended Sept. 30, 2005. The Company reported record revenues of $3,005,960 in the third quarter of 2005, an increase of 115% compared to revenues of $1,397,063 in the third quarter of 2004 and 9% greater than revenues of $2,761,103 reported in second quarter of 2005. For the nine months ended September 30, 2005, LocatePLUS reported revenues of $8,665,739, an increase of 118%, compared to revenues of $3,983,260 for the first nine months of 2004. "The third quarter continued our trend of triple-digit revenue growth, primarily as a result of increased usage of our Internet- based product and the addition of a significant channel partner," LocatePLUS CEO Jon Latorella said. "Cost as a percentage of revenue is not expected to increase over the next several months as we have acquired most the data planned for our online information systems. Currently gross margins are between 70 and 80%." LocatePLUS incurred a $3,277,758 net loss for the three months ended Sept. 30, 2005, compared to a $1,965,543 net loss for the same period in the prior year. The Company has incurred significant net losses in each of the last two years. Its accumulated deficit at Sept. 30, 2005, total approximately $34 million. The Company's balance sheet showed $8,066,434 in total assets at Sept. 30, 2005, and liabilities of $12,397,306, resulting in a stockholder's deficit of $4,330,872. Going Concern Doubt Livingston & Haynes, PC, expressed substantial doubt about LocatePLUS' ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004. The auditing firm pointed to the Company's substantial net losses and accumulated deficit at Dec. 31, 2004. About LocatePLUS LocatePLUS - http://www.locateplus.com/-- and its subsidiaries are industry-leading providers of public information and investigative solutions that are used in homeland security, anti- terrorism and crime fighting initiatives. The Company's proprietary, Internet-accessible database is marketed to business- to-business and business-to-government sectors worldwide. MEI LLC: Selling All Assets to MAK Energy via Private Sale ---------------------------------------------------------- MEI, LLC, has decided to sell the bulk of its assets to its secured creditor, MAK Energy, LLC, through a private sale. To consummate the sale, the Debtor asks the U.S. Bankruptcy Court for the Southern District of Indiana in Evansville to approve the purchase agreement with MAK. The Debtor sought bankruptcy protection in June 2005, after MAK initiated a foreclosure action against the Debtor's properties consisting mainly of 2,905 acres of land near Mt. Carmel, Illinois, and additional leases on approximately 900 acres of land. MAK holds a lien on substantially all of the Debtor's assets and asserts claims in excess of $4.7 million as of the petition date. After the Debtor refused to avail of the postpetition financing offered by Madison Capital Company, LLC, MAK offered to purchase certain of the Debtor's assets. Adria S. Price, Esq., at Price & Associates, LLC, tells the Bankruptcy Court that MAK's offer will allow the Debtor to: -- generate sufficient funds to pay all administrative, priority and unsecured claims in full; -- cure all monetary lease breaches; and -- pay secured claims in full. Salient terms of the proposed sale include: a) the sale of certain of the Debtor's assets, including without limitation, all of the real estate and mineral rights subject to MAK's mortgages; b) the Debtor's assumption and assignment of any unexpired leases and executory contracts as requested by MAK; c) MAK's payment of $$1.8 million in cash, less the $100,000 post-petition advances made to the Debtor, plus other ongoing consideration including additional cash and royalty consideration to be paid over time; d) MAK's relinquishment of its claims against the Debtor at the closing of the sale; e) MAK's payment of any outstanding real estate taxes on the real estate purchased; and f) MAK's payment of any cure amounts due under the leases it will be assuming. At the close of the sale, the Debtor will pay Region's Bank's $40,000 secured claim in full. Collateral securing the Debtor's debt to Old National Bank and Fifth Third Bank will not be included in the sale and the Debtor will retain the secured debts owed to these banks. The Debtor owes approximately $300,000 on account of administrative and unsecured claims as well as claims arising from rejected leases and executory contracts. The Debtor proposes to retain $600,000 of the purchase price in a segregated account to pay for these claims. The Debtor anticipates filing a plan of reorganization outlining the full payment of general unsecured claims within 15 to 45 days following the closing of the sale. Headquartered in Evansville, Indiana, MEI, LLC is a real estate developer. The Company filed for chapter 11 protection on June 17, 2005 (Bankr. S.D. Ind. Case No. 05-71351). Adria S. Price, Esq., at Price & Associates, LLC, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets of $10 million to $50 million and debts of $1 million to $10 million. MEI LLC: Creditors Must File Proofs of Claim by December 23 ----------------------------------------------------------- The U.S. Bankruptcy Court for Southern District of Indiana in Evansville established Dec. 23, 2005, as the last day for all creditors owed money by MEI, LLC, on account of claims arising prior to June 17, 2005, to file formal written proofs of claim. Creditors must deliver their claim forms to the: Clerk of Court U.S. Bankruptcy Court Southern District of Indiana 101 NW M L King Jr. Blvd, Rm. 352 Evansville, Indiana 47708 Headquartered in Evansville, Indiana, MEI, LLC is a real estate developer. The Company filed for chapter 11 protection on June 17, 2005 (Bankr. S.D. Ind. Case No. 05-71351). Adria S. Price, Esq., at Price & Associates, LLC, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets of $10 million to $50 million and debts of $1 million to $10 million. MEI LLC: Will Pay $110,000 to Settle Old National's Secured Claim ----------------------------------------------------------------- MEI, LLC, asks the U.S. Bankruptcy Court for the Southern District of Indiana in Evansville to approve a stipulation settling the secured claim of Old National Bank. The Debtor proposes to pay the bank $110,000 on or before Dec. 31, 2005. Old National asserts a $123,214 secured claim against the Debtor's estate on account of a Promissory Note executed by the Debtor on Dec. 4, 2000. The promissory note is secured by a lien on the Debtor's property located at 610 E. Fifth Street in Mt. Carmel, Illinois. The Debtor estimates the value of this property at $230,000. Old National is willing to accept $110,000 from the debtor in full and final satisfaction of its claim provided that the payment will be made by Dec. 31, 2005. Payment to Old National will come from the proceeds of the proposed sale of substantially all of the Debtor's assets to MAK Energy, LLC. Headquartered in Evansville, Indiana, MEI, LLC, is a real estate developer. The Company filed for chapter 11 protection on June 17, 2005 (Bankr. S.D. Ind. Case No. 05-71351). Adria S. Price, Esq., at Price & Associates, LLC, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets of $10 million to $50 million and debts of $1 million to $10 million. MESABA AVIATION: Wants Sonnenschein Nath as Special Counsel ----------------------------------------------------------- Mesaba Aviation, Inc., doing business as Mesaba Airlines, seeks the U.S. Bankruptcy Court for the District of Minnesota's permission to employ Sonnenschein Nath & Rosenthal, LLP, as its special counsel. Specifically, the Debtor wants to hire Sonnenschein Nath to: -- represent it in Northwest Airlines, Inc.'s Chapter 11 case pending before the U.S. Bankruptcy Court for the Southern District of New York; and -- provide consulting services regarding airline industry issues. Sonnenschein Nath's bankruptcy and restructuring group has been involved in a number of airline and aircraft industry restructurings, including Trans World Airlines, Frontier, Pan Am, Braniff, Eastern Express, and U.S. Africa Airways bankruptcies. The Debtor will pay Sonnenschein Nath on an hourly basis in accordance with its hourly rates: Position Hourly Rate -------- ----------- Partners and of Counsel $325 - $840 Associates $230 - $435 Paralegals $135 - $225 The Debtor believes that Sonnenschein Nath's employment will not duplicate the services offered by the Debtor's principal bankruptcy counsel, Ravich Meyer Kirkman McGrath & Nauman, P.A. Fruman Jacobson, Esq., a partner at Sonnenschein Nath, attests that the firm's partners, counsel and associates do not have any interest adverse to the Debtor or to the Debtor's estate in connection with the matters for which the firm is to be employed. Mr. Jacobson discloses that Andrew Weil, Esq., who has practiced law at Sonnenschein Nath since 1986, is the brother of Robert Weil, chief financial officer of MAIR Holdings, Inc., the parent of Mesaba. The firm has not represented MAIR Holdings in the past, and has represented Robert Weil in a personal, estate planning matter approximately 10 years ago, which representation is unrelated to Robert Weil's capacity as an officer or shareholder of MAIR. Mr. Jacobson assures the Court that Sonnenschein Nath will not represent either MAIR Holdings or Robert Weil in the future in connection with any matter related to the Debtor's Chapter 11 case, Mesaba, Northwest Airlines or any matter for which Sonnenschein Nath is to be engaged. Andrew Weil will not have any role or responsibility in the firm's representation of Mesaba and will be screened from any contact with documents and communications generated in the course of this representation of Mesaba, Mr. Jacobson adds. Carole Neville, Esq., a bankruptcy and restructuring partner in the firm's New York office, and Mr. Jacobson will be the attorneys sharing primary responsibility for the engagement. Mr. Jacobson and Ms. Neville also represent the Official Committee of Unsecured Creditors in the United Air Lines bankruptcy cases. Mesaba Aviation, Inc., d/b/a Mesaba Airlines,-- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). MESABA AVIATION: Wants to Ink Sec. 1110 Pacts & Cure Defaults ------------------------------------------------------------- Mesaba Aviation, Inc.'s fleet consists of approximately 100 aircraft. All of these aircraft, most engines and other equipment in the Debtor's fleet are subject to leases that may be subject to the provisions of Section 1110 of the Bankruptcy Code. The Debtor leases its aircraft pursuant to subleases with Northwest Airlines, Inc., and Pinnacle Airlines, Inc., and leases three aircraft from Fairbrook Leasing, Inc., and Lambert Leasing. Section 1110 requires the Debtor to choose one of two options to maintain the protections of the automatic stay with regard to the aircraft and other Equipment: 1. Pursuant to Section 1110(a)(2)(A), the Debtor may elect to agree to perform all obligations under the applicable agreements and to cure defaults under it prior to the 60th day after the Petition Date. 2. Alternatively, the Debtor may enter into agreements with its lessors under Section 1110(b) to extend the 60-day period. Either method of preserving the automatic stay under Section 1110 is subject to Court approval, Will R. Tansey, Esq., at Ravich Meyer Kirkman McGrath & Nauman, P.A., in Minneapolis, Minnesota, notes. The Debtor believes that the market values of many of its aircraft have substantially declined since the aircraft were originally leased. Consequently, it believes it is now paying premium prices for many of its aircraft. As part of its restructuring efforts, the Debtor wants to bring the cost of its aircraft and other leases on terms that are more closely aligned with current market conditions. However, the Debtor asserts that it will likely not be able to make many decisions and obtain Court approval immediately, given: -- the number of aircraft involved; -- the complexity of some of the transactions and relationships associated with those aircraft; -- Northwest's bankruptcy; and -- the press of other business. Mr. Tansey contends that it is imperative for the Debtor's business operations and successful reorganization that the Debtor be authorized to make agreements under Section 1110(a) and Section 1110(b), and, thus, maintain the automatic stay with respect to the Equipment prior to Court approval, provided that the agreements are subject to subsequent Court approval. Accordingly, the Debtor seeks the U.S. Bankruptcy Court for the District of Minnesota's authority to enter into agreements to perform obligations pursuant to Section 1110(a), and to enter into agreements pursuant to Section 1110(b) to extend the 60-day period. The Debtor proposes that all of those agreements be immediately effective, so that the automatic stay remains in place, but subject to final Court approval. The Debtor further asks Judge Kishel to hold that, upon execution and filing of a Section 1110(a) agreement on or before December 12, 2005, the Debtor will have complied with Section 1110(a)(2), and, provided that the Debtor performs the obligations required by Section 1110(a)(2) in a timely manner, the automatic stay under Section 362 will remain in effect with respect to the applicable Equipment, pending final approval of the Section 1110(a) agreement by the Court. Section 1110(a)(2)(B) requires the cure of certain defaults to maintain the protection of the automatic stay. The Debtor does not believe that Section 1110 requires the Court to approve the cure payments, once the agreement to perform under Section 11 10(a)(2)(A) is approved. However, out of an abundance of caution, the Debtor seeks permission to make those payments and to take actions as may be required under Section 1110(a)(2)(B) in connection with the Section 1110(a) agreements. Sec. 1110(a) Agreement Protocol The Debtor proposes these procedures for approval of the Section 1110(a) agreements: a. If the Debtor determines that it is in the best interests of its estate to perform under an agreement relating to certain Equipment, the Debtor will file with the Court a Notice of Election Pursuant to Section 1110(a). Each 1110(a) Notice will constitute the Debtor's agreement pursuant to Section 1110(a)(2)(A) to perform the required obligations. Each 1110(a) Notice will list: * each item of Equipment that is the subject of the 1110(a) Notice; * for leased Equipment, the lessor, and the beneficial owner of the Equipment; * for owned Equipment, any mortgagee or other party asserting a lien in the Equipment; and * the amount, if any that the Debtor believes it must pay to comply with Section 1110(a)(2)(B). b. The Debtor will serve the 1110(a) Notice by e-mail or overnight mail on the applicable Leased Equipment Parties or Owned Equipment Parties, as the case may be, and counsel to the Official Committee of Unsecured Creditors; and by e-mail or regular mail on the Service List. c. Any party-in-interest may object to an 1110(a) Notice or any specified Cure Amount in the Notice by filing a written objection with the Court and serving the objection so that it is actually received by each of the parties on or before the date that is five business days from the filing of the 1110(a) Notice: * Ravich Meyer Kirkman McGrath & Nauman, P.A. 4545 IDS Center 80 South Eighth Street Minneapolis, Minnesota 55402 Attention: Michael L. Meyer, counsel to the Debtor * Squire, Sanders & Dempsey 2 Renaissance Square 40 North Central Avenue Phoenix, Arizona 85004-4498 Attention: Craig D. Hansen, counsel to the Committee; and * The Office of the United States Trustee 1015 U.S. Courthouse 300 South Fourth Street Minneapolis, Minnesota 55415 Attention: Robert J. Raschke d. Any objection must specify: * the party's interest in the affected Equipment, if any; * the basis for the objection; and * the amount, if any, that the objecting party asserts as the Cure Amount, if different from that specified by the Debtor. e. If no objection is timely filed, the Debtor's agreement to perform under Section 1110(a)(2)(A) will be deemed approved, the Debtor's compliance with Section 1110(a)(2)(B) will be deemed authorized, and the automatic stay under Section 362 will remain in place as long as the Debtor complies with its Section 1110(a) obligations. f. If an objection is timely filed with respect to a Section 1110(a) Notice, and is not resolved consensually among the parties within 10 days of the date of the objection, the Debtor will schedule a hearing on the objection. g. If an 1110(a) Notice applies to multiple pieces of Equipment, and a timely objection relates to less than all of the Equipment, the 1110(a) Notice will be deemed approved as to all Equipment as to which the objection does not apply. Sec. 1110(b) Agreement Protocol The Debtor also proposes procedures for approval of Section 1110(b) agreements to extend the 60-day period specified in Section 1110(a): a. After entry into an agreement under Section 1110(b), the Debtor will file the agreement with the Court and serve notice of its filing by e-mail or overnight mail on the applicable Leased Equipment Parties or Owned Equipment Parties, as the case may be, and counsel to the Committee; and by e-mail or regular mail on parties listed on the Service List. b. Any party-in-interest may object to an agreement under Section 1110(b) by filing a written objection with the Court and serving the objection so that it is actually received by each of the Objection Notice Parties on or before the date that is five business days from the filing of the applicable 1110(b) Agreement. Any objection must set forth with specificity the basis for the objection. c. If no objection is timely filed, the Section 1110(b) agreement will be deemed authorized and the automatic stay will remain in effect in accordance with the terms of the agreement. If an objection is timely filed and is not resolved consensually among the parties within 10 days, the Debtor will schedule a hearing on the objection; and the Debtor's time to perform obligations under Section 1110(a)(2) will be automatically extended through three business days after the Court's ruling on the objection. 1110(b) Agreements Are Confidential Additionally, the Debtor seeks permission to file the Section 1110(b) agreements under seal. Mr. Tansey asserts that the Debtor's competitors and aircraft lessors may utilize the Section 1110(b) agreements to the detriment of the Debtor. By filing the agreements under seal, Mr. Tansey explains, the Debtor will be able to preserve the confidentiality of the terms of the deals and maintain a level playing field among the Debtor's competitors and lessors. The Debtor will provide copies of all agreements filed under seal to the Committee and the U.S. Trustee. Mesaba Aviation, Inc., d/b/a Mesaba Airlines,-- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000). MIRANT CORP: Asks Court to OK 4-Yr. Revolver Settlement Term Sheet ------------------------------------------------------------------ Mirant Corporation is a borrower under a Four-Year Credit Agreement with Credit Suisse First Boston, as Administrative Agent, and certain banks and other financial institutions, as Lenders. Pursuant to the Four-Year Revolver: -- the Lenders agreed to make available to Mirant a working capital and letter of credit facility of up to $1,125,000,000 in aggregate principal amount, subject to and in accordance with certain terms and conditions; and -- Mirant entered into a Letter of Credit Agreement, dated September 4, 2001, with Wachovia Bank, N.A., as Issuing Bank, under which Wachovia agreed to issue letters of credit to beneficiaries designated by Mirant. From time to time prior to the Debtors' bankruptcy date, at Mirant's request, Wachovia issued letters of credit pursuant to the Four-Year Revolver and the Letter of Credit Agreement to support the obligations of Mirant and its various subsidiaries. The beneficiaries of the Letters of Credit include: * trading counterparties under "safe harbor" contracts; * counterparties under power purchase agreements and transportation agreements; * lenders under project financing debt; * Independent System Operators; and * other vendors and suppliers. On the Petition Date, a large number of Letters of Credit -- aggregating approximately $773,000,000 -- remained outstanding and undrawn. The Lenders requested a negotiation of the treatment of all outstanding Letters of Credit to avoid the same being drawn on their own terms. Specifically, the Lenders proposed that the expiration dates of some of these outstanding Letters of Credit be extended for an additional period of time to avoid them from being drawn by their Beneficiaries. The Debtors and the Lenders twice sought and obtained Court approval to amend the Four-Year Revolver. The second amended agreement provided that any existing Letter of Credit could be further extended, from time to time, subject to the provisions of the Four-Year Revolver. As of November 23, 2005, all of the remaining outstanding Letters of Credit either were drawn or expired under their own terms, except for the Letter of Credit issued for the benefit of the New York Independent Systems Operator Inc. The Letter of Credit Litigation After the First Amendment Order, CSFB, on behalf of the Lenders, filed a single proof of claim against Mirant with respect to claims arising from the Debtors' obligations under the Letter of Credit Agreement. CSFB and Wachovia amended the proof of claim reflecting newly asserted claims and other causes of action against Mirant and certain of the Debtors. Among other things, the Amended Claims asserted: -- subrogation against the Subsidiary Debtors; -- entitlements to administrative priority claims; and -- entitlements to the return of excess proceeds from certain Beneficiaries of drawn Letters of Credit. The Debtors objected to the Amended Claims. As a consequence, the Debtors also filed five separate motions for partial summary judgment against the Lenders asserting, among other things, that, as a matter of law, no rights of subrogation, entitlement to administrative priority claims or to the return of excess Letter of Credit proceeds existed. The Debtors further assert that even if these rights had existed, these rights were waived, both by Court Orders and by the parties' conduct, in connection with the Letter of Credit extensions approved by the Bankruptcy Court. On February 17, 2005, CSFB withdrew its request for administrative claim treatment. In July 2005, the U.S. Bankruptcy Court for the Northern District of Texas issued an order in respect of the Debtors' summary judgment motions. The Court ruled that: * CSFB and Wachovia were not entitled to any of the proceeds from drawn Letters of Credit that had been returned to the Debtors; * its Order entered in connection with the extensions of the Letters of Credit did not bar CSFB and Wachovia's subrogation claims; and * with respect to subrogation, waiver by conduct and certain other matters, a trial on the merits is necessary. Michelle C. Campbell, Esq., at White & Case LLP, in Miami, Florida, notes that the Court has not yet addressed certain other issues raised in the Summary Judgment Motions. On October 26, 2005, CSFB and Wachovia filed a motion seeking estimation and allowance of certain of their claims, including their alleged subrogation claims, against the Subsidiary Debtors for voting purposes. After almost a month of extensive negotiations, the Debtors and CSFB along with the Official Committee of Unsecured Creditors of Mirant Corporation agreed to end their disputes. Mirant and its debtor-affiliates ask the Court to approve a Term Sheet that will settle the disputes arising from the Four-Year Revolver. The relevant provisions of the Term Sheet are: A. Settlement If the Court enters an order approving the Term Sheet before Tuesday, November 29, 2005 at 4:00 p.m., Eastern Time, CSFB agrees; (a) not to file, or directly or indirectly cause any other person to file, any objections to the confirmation of the Plan; and (b) to withdraw its motion to estimate claims for voting purposes. B. Termination of the Four-Year Revolver Upon the occurrence of the effective date of the Debtors' Plan, the Four-Year Revolver will be terminated. Prior to the Effective Date, the Debtors agree to endeavor to cause the draw of remaining Letter of Credit, which was issued for the benefit of the New York Independent Systems Operator Inc., for the face amount of $7,007,793. If the Outstanding L/C is not drawn prior to the Effective Date, each Lender must irrevocably deposit with Issuing Bank its pro rata share of the face amount of the Outstanding L/C to receive a distribution under the Plan, and, in the event the Outstanding L/C is drawn post-Effective Date, the Outstanding L/C Collateral Pool will be used to reimburse the Issuing Bank. To the extent proceeds of the Outstanding L/C are not drawn by its beneficiary, the balance of the undrawn portion of the Outstanding L/C Collateral Pool will be promptly paid to Mirant. C. Treatment of Claims under Letters of Credit The Lenders will receive one Allowed Mirant Debtor Class 3 - Unsecured Claim against Mirant in an amount equal to: (a) the sum of the face amount of the Letters of Credit drawn prior to the Effective Date -- assuming the Outstanding L/C is drawn prior to the Effective Date, that amount totals $650,533,875; and (b) $25,942,677 -- constituting the $25,000,000 revolving loan, prepetition accrued interest and prepetition fees and expenses. Additionally, the Lenders will receive an Allowed Administrative Claim, payable on the Effective Date, equal to $4,000,000 for postpetition fees and expenses, which amount the Debtors may allocate among them in their discretion, subject to review and approval of the Court. D. Postpetition Interest CSFB, on behalf of the Lenders, will receive interest on the Revolver Claim and the Pre-Confirmation Draw Claim at the non- default contract rate as calculated under the Plan. Fees with respect to each particular Letter of Credit will accrue at a rate of 1.95% per annum from July 15, 2005, until the earlier of occurrence of: i. a draw on a particular Letter of Credit; and ii. surrender or expiration of a particular Letter of Credit, which fees will total $17,500,000 through December 31, 2005, assuming the Outstanding L/C is drawn on that date. Fees with respect to each drawn Letter of Credit and the Pre- Confirmation Draw Claim will accrue at the non-default rate as calculated under the Plan, which interest will total $67,100,000 through December 31, 2005. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 84 Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Asks Court to Approve Consumers & METC Settlement -------------------------------------------------------------- Mirant Corporation and its debtor-affiliates ask Judge D. Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas to approve the Settlement Agreement and Release, dated November 1, 2005, by and between Mirant Zeeland, LLC, Mirant Americas Energy Marketing, LP, Consumers Energy Company and Michigan Electric Transmission Company, LLC, resolving disputes concerning station service at the Zeeland power facility, located in Zeeland, Michigan, and setting forth their business relationship going forward. Zeeland and Consumers were parties to a Contract For Standby Electric Service dated March 1, 2001. Under the Phase I Contract, Zeeland purchased station power from Consumers to service Phase I of the Zeeland Power Facility. Under the Phase I Contract, Zeeland paid Consumers the charges specified in Consumers' tariff that is on file with the Michigan Public Service Commission, consisting of (i) a fixed monthly customer charge and (ii) other charges based on the Phase I of the Zeeland Power Facility's actual usage, assessed on a per kWh basis. The Phase I Contract automatically renewed unless terminated pursuant to written notice provided at least 30 days prior to March 1 of any given year. Zeeland and Consumers were also parties to a Contract For Standby Electric Service dated November 15, 2001, whereby Zeeland purchased station power from Consumers to serve Phase II of the Zeeland Power Facility. Under the Phase II Contract, Zeeland purchased station power from Consumers to serve Phase II of the Zeeland Power Facility. Similar to the Phase I Contract, Zeeland paid Consumers the charges specified in Consumers' tariff on file with the MPSC, consisting of (i) a fixed monthly customer charge and (ii) other charges based on Phase II of the Zeeland Power Facility's actual usage, assessed on a per kWh basis. The tariff specifies that the minimum charge under the Phase II Contract is the customer charge. The Phase II Contract automatically renewed unless terminated pursuant to written notice provided at least 30 days prior to November 15 of any given year. The Debtors subsequently rejected and terminated the Phase I and II Contracts. The Debtors wanted to begin self-supplying station power at the Zeeland Power Facility pursuant to the provisions of the Midwest Independent Transmission System Operator, Inc.'s Day 1 Open Access Transmission Tariff. As a result, Consumers filed two proofs of claim: -- Claim No. 3554 against Debtor Mirant Corp. for $146,401 for unpaid station service bills for the Zeeland Power Facility; and -- Claim No. 5250 for $1,014 against MAEM for unpaid title transfer tracking bills related to the non-physical transfer of ownership of gas from MAEM to various gas marketers during February, March and April of 2003. According to the Debtors, Consumers is indebted to Zeeland for $242,001 for sales tax overcharges, of which $128,855 is attributable to the prepetition period and $113,146 is attributable to the postpetition period. Consumers asserts that Zeeland owes Consumers several hundred thousand dollars for postpetition energy, metering and other charges associated with the delivery of station power by Consumers to the Zeeland Power Facility after November 15, 2004. The Debtors dispute Consumers' assertion and deny any liability on account of the Postpetition Station Power Claim. The parties have successfully reached a compromise. The salient terms of the Settlement Agreement are: 1. Consumers will be allowed a right of recoupment or setoff pursuant to Section 553 of the Bankruptcy Code and other applicable law so that the Prepetition Overcharge Amount owed by Consumers to Zeeland -- $128,855 -- will be credited to Consumers' Prepetition Claim owed by Zeeland to Consumers -- $147,415 -- leaving Consumers with an allowed, prepetition, general unsecured claim against Zeeland for $18,560. 2. Within 30 days after entry of an order by the Bankruptcy Court approving the Agreement, Consumers will file an amended claim with the Debtors' claims agent for $18,560, which will replace and supersede in its entirety Proofs of Claim Nos. 3554 and 5250. 3. All prepetition claims of Consumers against any of the Debtors, except for the Allowed Claim, will be disallowed in their entirety, will not be asserted in any forum, and those disallowed claims are not subject to reconsideration. 4. Consumers will credit to Zeeland's account $113,146 in full and final satisfaction of the Postpetition Station Power Claim. 5. For the Day 2 Period -- April 1, 2005, and beyond -- the Parties agree that Zeeland has the ability to self-supply station power for the Zeeland Power Facility, as long as Zeeland meets the standards and requirements for self- supply of station power set forth in the MISO tariff and business practices. 6. In the Day 2 Period, during the time that Zeeland elects to name Consumers as Zeeland's Load Serving Entity, Zeeland will maintain an agreement with Consumers for a qualifying Michigan Public Service Commission regulated retail service rate for back-up retail station power service for each point of service. 7. The Parties release each other from all claims and liability, if any, to the other parties relating to (i) sales tax amounts; (ii) title transfer tracking bills; or (iii) energy imbalances and Zeeland Power Facility service during the period of November 16, 2004, through March 31, 2005. 8. Zeeland, MAEM and Consumers release each other from liability or responsibility for any matters related to Zeeland's station power service or self-supply from April 1, 2005, through November 1, 2005. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 83 Bankruptcy Creditors' Service, Inc., 215/945-7000) MIRANT CORP: Court Enjoins Wilson Firm from Soliciting Plan Votes ----------------------------------------------------------------- Mirant Corporation and William K. Snyder, the Chapter 11 Examiner, ask the U.S. Bankruptcy Court for the Northern District of Texas for a declaratory judgment and an injunction against: a. The Wilson Law Firm, P.C., b. L. Matt Wilson, Esq., individually and in his capacity as counsel for the Mirant Ad Hoc Shareholders Committee; and c. the Ad Hoc Shareholders, namely: 1. Frank Smith, 2. R. Weldon Tigner, 3. Dave Lucas, 4. Nancy Sterk, 5. David Matter, 6. Clark Lewis, 7. Harris Rush, 8. Jim Kellogg, Jr., 9. Kent Koerper, 10. Peter DePavloff, 11. Bart Ingram, and 12. Mary Leight. According to the Web site maintained by the Wilson Firm -- http://www.willaw.com/-- Mr. Wilson and the Wilson Firm purport to represent a number of Mirant stockholders including a subset of those stockholders who function as an ad hoc committee. The Web site invites stockholders to be represented by the Wilson Firm and to become participants on the Ad Hoc Committee by filling out a brief online form. Thomas E. Lauria, Esq., at White & Case, LLP, in Miami, Florida, tells Judge Lynn that on October 12, 2005, at 11:45 a.m. EDT, a message entitled "Smart Shareholders Will Vote 'NO'" was posted by an individual using the Yahoo! ID (or screen name) of "lmattlaw," on a Yahoo! Message Board at: http://search.messages.yahoo.com/search/messages?tag_M=lmattlaw&fname_M=txt_main Three new links were added to the Wilson Web site with these titles: 1. "Why Smart Mirant Shareholders Will Vote No"; 2. "What Do Shareholders Really Know About Mirant"; and 3. "The Law Favors Shareholders Who Vote No." A copy of the posted solicitation materials is available for free at http://ResearchArchives.com/t/s?350 Mr. Lauria informs the Court that the Solicitation Materials reflect the position of Mr. Wilson, the Wilson Firm and the Ad Hoc Shareholders with respect to the Debtors' Plan, and presumably were approved for dissemination by one or more of the Ad Hoc Shareholders. The Solicitation Materials recommend that Mirant stockholders vote to reject the Plan. The Solicitation Materials also contain a number of statements that are materially misleading or factually inaccurate, Mr. Lauria says. Mirant and the Examiner believe that the Solicitation Materials may have also been distributed to individual stockholders, including the Ad Hoc Shareholders. Mirant creditors and stockholders who read the Solicitation Materials may be left with the impression that rejection of the Plan allows them to pursue a number of alternatives without disclosing the possibility that those alternatives may not materialize, and offers no downside to creditors and stockholders, Mr. Lauria says. "This is patently contrary to the statements contained in the Disclosure Statement, the present posture of the Mirant case and the express provisions of the Bankruptcy Code and the Federal Rules of Civil Procedure." For these reasons, Mirant and the Examiner ask the Court to: (a) declare that the Solicitation Materials contain material misrepresentations and factual inaccuracies and that the use of the Solicitation Materials to solicit votes on the Debtors' Plan violates Section 1125 of the Bankruptcy Code; (b) issue a temporary restraining order, without notice: (1) enjoining Wilson, et al., from distributing, publishing or otherwise soliciting votes to accept or reject the Plan based on the Solicitation Materials or any of the related statements made; (2) directing the Wilson Firm to remove the Solicitation Materials from the Wilson Web site; and (3) causing the publication of a retraction of the Solicitation Materials on the Wilson Web site and the Yahoo! Message Boards frequented by Mirant stockholders advising the Ad Hoc Shareholders and other Mirant creditors and stockholders that the Solicitation Materials contain material misrepresentations and factual inaccuracies that should not be relied on in determining how to vote on the Plan; and (c) enter a preliminary injunction extending the relief granted in the temporary restraining order, if any. In the absence of immediate injunctive relief, the Debtors -- and the voting creditors and stockholders who vote in reliance on the statements contained in the Solicitation Materials -- will suffer irreparable injury, Mr. Lauria contends. If the Solicitation Materials cause any class of creditors or stockholders to vote to reject the Plan, that rejection could jeopardize the Debtors' ability to confirm the Plan. In that event, the Debtors, creditors and stockholders face the possibility that other, less favorable plans of reorganization may be proposed, and the further delay will only add to the tremendous administrative expenses already incurred by the Debtors. Court Injunction The Court, after examining the pleadings, and concluding a telephone hearing, finds that the Solicitation Materials contained statements which may be material misrepresentations and factual inaccuracies, and that the use of the Solicitation Materials to solicit votes to reject the Debtors' Chapter 11 Plan may violate Section 1125 of the Bankruptcy Code. The Court further finds that, if a temporary restraining order is not entered immediately, the continued publication of the Solicitation Materials could taint the voting process. The Court therefore finds that: (i) the Debtors and the Examiner have demonstrated a reasonable likelihood of succeeding on the merits of their complaint, (ii) the continued publication of the Solicitation Materials could irreparably harm the Debtors, including Mirant Corporation, and could harm the bankruptcy process, (iii) the harm is imminent in light of the fact that the process of soliciting the tabulating votes on the Plan has commenced, (iv) the harm to the Debtors and voting creditors and stockholders outweighs any potential harm to Defendants that may arise from an injunction, and (v) the balance of equities favors issuance of an injunction. Thus, Judge Lynn temporarily enjoins the Wilson Firm, et al., from distributing, publishing or otherwise soliciting votes to accept or reject the Plan based on the Solicitation Materials. Judge Lynn directs the Wilson Firm to immediately cease making accessible the Solicitation Materials on the Wilson Web site. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590). Thomas E. Lauria, Esq., at White & Case LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 81 Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL ENERGY: Wants Caledonia & NEG Settlement Deals Approved ---------------------------------------------------------------- Before filing for bankruptcy, NEGT Energy Trading - Power, L.P., entered into various tolling contracts, pursuant to which it had the right to provide fuel to a generating facility and then to take the electricity generated. In exchange, ET Power paid the facility owner, among other fees, a predetermined tolling fee on a periodic basis. Dennis J. Shaffer, Esq., at Whiteford, Taylor & Preston L.L.P., in Baltimore, Maryland, relates that pursuant to the Tolling Contracts, ET Power was able to: (i) operate the facility using its own fuel; and (ii) control the related electricity generation output without incurring the capital expense of owning the generating facility. The Tolling Agreements were long-term contracts, with terms varying from 15 to 25 years. The tolling fee paid by ET Power to each plant owner was fixed and specified by contract, subject to an escalation clause tied in part to inflation and other economic factors, Mr. Shaffer explains. "Given the expected growth in demand for electricity in the long term, the Tolling Agreements were projected to be profitable for ET Power over the life of the contract with much of the benefit to be realized in later years," Mr. Shaffer says. "In the short term, however, a decline in electricity demand and prices, coupled with an increase in fuel prices, made the Tolling Agreements unprofitable or otherwise not useful to ET Power." Caledonia Tolling Agreement On September 20, 2000, ET Power entered into a Dependable Capacity and Conversion Services Agreement with Caledonia Generating, LLC. Due to certain uncured defaults, ET Power notified Caledonia in February 2003 of its termination of the Caledonia Tolling Agreement. Caledonia filed an emergency petition against ET Power in the Circuit Court for Montgomery County in Maryland to compel arbitration or for a temporary restraining order. On March 3, 2003, Caledonia obtained an order requiring ET Power to continue to perform its obligations under the Caledonia Tolling Agreement. ET Power filed an appeal and, on March 24, 2003, it commenced arbitration proceedings against Caledonia. The arbitration and the State Court Action were stayed as of the Petition Date. The ET Debtors have previously sought and obtained the Court's authority to reject the Tolling Agreements, including the Caledonia Tolling Agreement. Caledonia Claims & Arbitration The Caledonia Tolling Agreement provides for damages in the event of material breach, subject to a $500,000,000 cap. National Energy & Gas Transmission, Inc., guaranteed ET Power's obligations under the Caledonia Tolling Agreement, subject to a $250,000,000 cap. General Electric Capital Corporation also established an irrevocable letter of credit with JPMorgan Chase Bank for the benefit of ET Power. Caledonia timely filed an unliquidated proof of claim against ET Power alleging damages arising from the Tolling Agreement. Caledonia also timely filed a proof of claim against NEG aggregating $250,000,000 for amounts allegedly due under the NEG Guarantee. In addition, GECC filed a proof of claim for $10,000,000 relating to the Letter of Credit. With the Court's consent, the ET Debtors and Caledonia agreed to proceed to arbitration to resolve the Claims and all related disputes. On July 6, 2005, ET Power filed a complaint against Caledonia, seeking to avoid preferential and fraudulent transfers and to recover property. The Avoidance Action has been stayed pending the outcome of the Arbitration. Caledonia Settlement Subsequently, ET Power, NEG, Caledonia and GECC entered into a Settlement Agreement to resolve the Arbitration, the Claims, the Avoidance Action and all matters relating to the Caledonia Tolling Agreement. Pursuant to the Settlement Agreement, Caledonia will have a $375,000,000 allowed general unsecured claim against ET Power and a $250,000,000 allowed general unsecured claim against NEG. However, the aggregate cash distributions to Caledonia cannot exceed $275,000,000. In addition, the Letter of Credit will be deemed terminated and the GECC Claim will be disallowed in full. The parties also exchanged mutual releases. Intercompany Settlement In connection with the Settlement Agreement, ET Power and NEG agreed to resolve all intercompany claims, including any subrogation claims with respect to the Caledonia Tolling Agreement. ET Power will pay NEG $17,500,000 for agreeing to enter into the Settlement Agreement. In addition, on account of the ET Power Claim, ET Power will pay no less than one full distribution on a $275,000,000, based on ET Power's final recovery rate. Similarly, on account of the NEG Claim, NEG will pay no more than one full distribution on a $250,000,000 claim based on NEG's final recovery rate, but, depending on ET Power's final recovery rate, could pay less than that amount. Mr. Shaffer clarifies that the Intercompany Agreement relates solely to claims between NEG and ET Power and has no impact on Caledonia's recovery under the Settlement Agreement. The Settlements Are Appropriate By this motion, the ET Debtors ask the Court to approve the Settlement Agreement and the Intercompany Agreement. Mr. Shaffer tells the Court that while the ET Debtors might well prevail in the Arbitration if it went forward, the Settlement Agreement makes sense in light of the expense and uncertainty that would be involved. "The Settlement Agreement, which resolves two of the largest claims against the [ET] Debtors, significantly advances [their] claims resolution process and, ultimately, will facilitate and maximize distributions to creditors," Mr. Shaffer explains. In addition, Mr. Shaffer notes, the Intercompany Agreement equitably resolves any subrogation claims that NEG has against ET Power without the need for further dispute or litigation. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. The Hon. Paul Mannes confirmed NEGT Energy Trading Holdings Corporation, NEGT Energy Trading - Gas Corporation, NEGT ET Investments Corporation, NEGT Energy Trading - Power, L.P., Energy Services Ventures, Inc., and Quantum Ventures' First Amended Plan of Liquidation on Apr. 19, 2005. The Plan took effect on May 2, 2005. (PG&E National Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL ENERGY: ET Debtors File First Quarterly Report ------------------------------------------------------- Pursuant to their First Amended Plan of Liquidation, NEGT Energy Trading Holdings Corporation and its debtor-affiliates delivered their first quarterly report for the period from May 2, 2005, through August 31, 2005, to the U.S. Bankruptcy Court for the District of Maryland. The ET Debtors disclose that PENTA Advisory Services, LLC, their Plan Administrator, has made substantial progress toward liquidating their remaining non-cash assets and winding down their affairs pursuant to the ET Plan. Moreover, the statutory deadlines for the commencement of most Chapter 5 avoidance actions were reached during the Reporting Period, the ET Debtors say. Prior to those deadlines, the ET Debtors filed over 30 adversary proceedings seeking to recover amounts on behalf of their estates. In addition, while the large majority of claims filed against the ET Debtors were resolved prior to the Effective Date, several dozen more claims were settled, withdrawn, disallowed, or otherwise resolved during the Reporting Period. The Plan Administrator also continued to work with the ET Debtors to resolve outstanding intercompany claims, to reduce outstanding reserve amounts and realize recoveries on intercompany receivables. The ET Debtors attest that as a result of the Plan Administrator's efforts, they were able to make initial distribution during the Reporting Period based on their then- current claims reserve estimates. For NEGT Energy Trading Holdings Corporation, 15% was distributed on Allowed Claims. Allowed Claims against NEGT Energy Trading - Power, L.P., were subject to a 20% distribution. Furthermore, holders of Allowed Claims against NEGT Energy Trading - Gas Corporation received a first and final distribution consisting of payment in full plus Postpetition Date interest at the Federal Judgment Rate. As of the conclusion of the Reporting Period, several substantial claims and litigation matters remained open and unresolved, and the timing of any additional interim distributions to holders of General Unsecured Claims will, in large measure, depend on the speed at which those matters are resolved. These matters include most aspects of the refund proceedings before the Federal Energy Regulatory Commission, actions pending before state and federal courts in California relating to the Debtors' sale of electricity in the California market, actions commenced by certain employees for bonus payments, and disputes regarding their tolling agreement with certain parties. The ET Debtors paid a total of $674,171 to the Plan Administrator for its services during the Reporting Period: Debtor Amount Paid --------- ----------- ET Gas $303,377 ET Holdings 37,079 ET Power 333,715 The Plan Administrator maintains a $3,184,084,356 reserve amount on account of Administrative, Priority, Secured and Unsecured Claims as of the conclusion of the Reporting Period, including reserves for Disputed Claims. In addition, the ET Debtors paid $3,444,776 in fees to these professionals during the Reporting Period: Professional Fees ------------ ---- Adams & Holt, Inc. $1,124 Akin Gump Strauss Hauer & Feld, LLP 778 Bishop, Daneman & Simpson, LLC 1,828 Bob Barron 3,706 C. Kevin Renner 43,741 CRA International, Inc. 100,260 Econ One Research, Inc. 445,758 Ernst & Young 12,178 Gibbs & Bruns, L.L.P. 480,594 Hosie Frost Large & McArthur 8,789 Hughes & Luce, LLP 3,716 Kevin Chandler 345 Latham & Watkins, LLP 2,870 Morrison & Foerster, LLP 278,334 National Energy & Gas Trans., Inc. 626,056 Niskayuna Power Consultants, LLC 33,657 Pinnacle Law Group, LLC 116 PowerGEM, LLC 20,257 Pterra, LLC 22,270 Rayburn Cooper & Durham, P.A. 510 Resolutions, LLC 5,143 Richard Bethman 19,200 Roy J. Shanker, Ph.D. 52,537 Sarah M. Kabia 595 Sidley Austin Brown & Wood, LLP 58,331 Sutherland, Asbill & Brennan, LLP 550,599 Teltech Research & Analysis Services 1,650 Whiteford, Taylor & Preston 175,319 Willkie Farr & Gallagher, LLP 490,450 Winston & Strawn, LLP 837 Zaid Ibrahim & Co. 3,230 The professional fees were paid by each ET Debtor at these amounts: Debtor Amount Paid --------- ----------- Energy Services Ventures $1,943 ET Gas 856,744 ET Holdings 104,217 ET International 15,408 ET Power 2,466,464 Furthermore, the ET Debtors paid $2,995,359 for other post- Effective Date expenses: Debtor Amount Paid --------- ----------- Energy Services Ventures $25 ET Gas 1,156,127 ET Holdings 133,503 ET International 7,724 ET Investments 250 ET Power 1,697,730 The ET Debtors report that they made distributions to holders of General Unsecured Claims: Claim Amount Allowed Amount Paid Amount ------------ -------------- ----------- ET Gas Claims $25,116,404 $19,619,350 $20,250,893 ET Holdings Claims 28,408,908 21,319,786 3,197,967 ET Power Claims 77,496,597 53,272,634 10,654,527 The ET Debtors also report that they paid $52,112,436 to holders of Administrative Claims, Priority Claims, Priority Tax Claims, and Secured Claims. During the Reporting Period, the Liquidating Debtors resolved 68 Disputed Claims aggregating $10,160,490. There remains 56 unresolved Disputed Claims aggregating $842,944,952. Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and its debtor-affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher, and Paul M. Nussbaum, Esq., and Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, L.L.P., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and that plan took effect on Oct. 29, 2004. The Hon. Paul Mannes confirmed NEGT Energy Trading Holdings Corporation, NEGT Energy Trading - Gas Corporation, NEGT ET Investments Corporation, NEGT Energy Trading - Power, L.P., Energy Services Ventures, Inc., and Quantum Ventures' First Amended Plan of Liquidation on Apr. 19, 2005. The Plan took effect on May 2, 2005. (PG&E National Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 215/945-7000) NORTHWESTERN CORP: Black Hills Offer Cues Fitch's Evolving Outlook ------------------------------------------------------------------ Fitch Ratings has affirmed NorthWestern Corp.'s outstanding senior secured debt obligations at 'BBB-' and the senior unsecured revolving credit facility at 'BB+'. The Rating Outlook has been revised to Evolving from Positive. The rating action follows the disclosure by NOR on Nov. 23, 2005 that it is evaluating a merger proposal received from Black Hills Corporation, Inc. The Evolving Rating Outlook for NOR's debt obligations reflects some uncertainty as to the direction of NOR's underlying credit quality should a merger with BKH ultimately be consummated. BKH has proposed a stock-for-stock merger valuing NOR at a range of $1.9 billion to $2 billion, including the assumption of outstanding NOR debt. In addition, BKH has stated a willingness to pay a portion of the consideration in cash. Accordingly, a potential merger with BKH could have a degree of leveraging impact on NOR's credit profile either directly or indirectly through BKH. Fitch will continue to monitor the situation and will consider future rating action in the event a definitive agreement is ultimately reached between NOR and BKH or an alternative third-party. OMEGA HEALTHCARE: Offering Additional $50 Mil. of 7% Senior Notes ----------------------------------------------------------------- Omega Healthcare Investors, Inc. (NYSE:OHI) is offering an additional $50 million aggregate principal amount of 7% senior notes due 2014 at an issue price of 100.25% of the principal amount of the notes, resulting in gross proceeds to the company of $50.125 million. The terms of the notes offered will be substantially identical to Omega's existing $260 million aggregate principal amount of 7% senior notes due 2014. The notes will be offered only to qualified institutional buyers under Rule 144A under the Securities Act of 1933 and to non-U.S. persons outside the United States under Regulation S under the Securities Act. The company will use the net proceeds of the offering to repay indebtedness under its revolving senior credit facility and for working capital and general corporate purposes. The notes issued in this offering have not been registered under the Securities Act of 1933, as amended, or any applicable state laws, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This notice does not constitute an offer of any securities for sale. Omega has agreed to file a registration statement with the Securities and Exchange Commission, pursuant to which it would exchange the privately placed notes for notes that are registered. After the exchange, these notes will be identical to, and will trade as a single series with, the existing 7% senior notes due 2014. Omega HealthCare Investors, Inc. -- http://www.omegahealthcare.com/-- is a real estate investment trust investing in and providing financing to the long-term care industry. At September 30, 2005, the Company owned or held mortgages on 216 skilled nursing and assisted living facilities with approximately 22,407 beds located in 28 states and operated by 38 third-party healthcare operating companies. * * * Omega Healthcare's 6.95% notes due 2007 and 7% notes due 2014 carry Moody's Investors Service's B1 rating, Standard & Poor's BB- rating and Fitch's BB- rating. OMNI MEDICAL: Loss & Deficit Trigger Going Concern Doubt -------------------------------------------------------- Omni Medical Holdings, Inc.'s management expressed substantial doubt about the Company's ability to continue as a going concern in the company's Form 10-QSB for the three-month period ended Sept. 30, 2005, filed with the Securities and Exchange Commission on Nov. 10, 2005. The Company's management points to these factors: * $945,183 net loss for the nine months ended Sept. 30, 2005; and * $4,201,085 working capital deficit as of Sept. 30, 2005. The Company reported a $328,414 net loss from operations on $1,634,639 of net revenues for the quarter ending Sept. 30, 2005. At Sept. 30, 2005, the Company's balance sheet showed $9,281,455 in total assets and $1,937,991 in positive stockholders' equity. Mantyla McReynolds, the Company's auditor, also expressed going concern doubt after it audited the Company's financials for the year ending Dec. 31, 2004. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?35d Omni Medical Holdings, Inc., a Utah corporation, provides medical billing and transcription services, and electronic medical record solutions to medical practitioners. OWENS CORNING: Has Until June 5 to Make Lease-Related Decisions --------------------------------------------------------------- The Honorable Judith Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware extends the deadline by which Owens Corning and its debtor-affiliates may assume or reject their unexpired non-residential real property leases to June 5, 2006. As reported in the Troubled Company Reporter on Oct. 21, 2005, the Debtors are currently focused on litigation of key issues in their cases: 1. The reversal by the U.S. Court of Appeals for the Third Circuit of Judge Fullam's order approving the substantive consolidation of the Debtors' cases; and 2. An appeal on Judge Fullam's $7,000,000,000 estimation of present and future asbestos liability of Owens Corning. The Debtors are currently parties to 150 prepetition leases for space used for conducting the production, warehousing, distribution, sales, sourcing, accounting and general administrative functions that comprise their businesses. Since they filed for bankruptcy, the Debtors have remained, and will continue to remain, current on their postpetition rent obligations, the Debtors informed the Court. Headquartered in Toledo, Ohio, Owens Corning -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. The Company filed for chapter 11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837). Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom, represents the Debtors in their restructuring efforts. At Sept. 30, 2004, the Company's balance sheet shows $7.5 billion in assets and a $4.2 billion stockholders' deficit. The company reported $132 million of net income in the nine-month period ending Sept. 30, 2004. (Owens Corning Bankruptcy News, Issue No. 120; Bankruptcy Creditors' Service, Inc., 215/945-7000) PACIFIC BIOMETRICS: Equity Deficit Widens to $643,247 at Sept. 30 ----------------------------------------------------------------- Pacific Biometrics Inc. delivered its financial statements for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. The company posted a $281,560 net loss on $1,834,442 of revenues for the quarter ended Sept. 30, 2005. At Sept. 30, 2005, the company's balance sheet showed $3,281,825 in total assets and $3,925,071 in total liabilities, resulting in a $643,247 stockholders' deficit. Pacific Biometrics' Sept. 30 balance sheet shows strained liquidity with $2,380,505 in current assets available to satisfy $2,709,559 of current liabilities coming due within the next 12 months. A full-text copy of Pacific Biometrics' financial statements for the quarter ended Sept. 30, 2005, is available at no charge at http://ResearchArchives.com/t/s?351 Going Concern Doubt Williams & Webster, PS, of Spokane, Washington, expressed substantial doubt about Pacific Biometrics Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2005. The auditing firm points to the Company's recurring net losses and cash flow shortages. Established in 1989, Pacific Biometrics Inc. -- http://www.pacbio.com/-- provides specialized central laboratory and contract research services to support pharmaceutical and diagnostic manufacturers conducting human clinical trial research. The company provides expert services in the areas of cardiovascular disease, diabetes, osteoporosis, arthritis, and nutrition. The PBI laboratory is accredited by the College of American Pathologists and through its non-profit affiliate Pacific Biometrics Research Foundation is one of only three U.S.-based laboratories approved and accredited by the Center for Disease Control as a Cholesterol Reference Laboratory. PACIFIC BIOMETRICS: Files Prospectus on $14.6 Mil. Common Shares ---------------------------------------------------------------- Pacific Biometrics Inc. filed a Prospectus Summary with the Securities and Exchange Commission relating to the sale of 14,653,314 shares of its common stock. The shares include: -- 6,949,815 shares that are currently issued and outstanding, held by the selling security holders; -- 5,278,248 shares issuable upon conversion of outstanding secured convertible notes held by Laurus Master Fund Ltd.; -- 1,908,586 shares issuable upon exercise of warrants held by the selling security holders; and -- 516,665 shares issuable upon conversion of shares of Series A preferred stock owned by the selling security holders. The Company's shares of common stock are quoted on the OTC Bulletin Board under the symbol "PBME." The Company's common shares traded between $0.92 and $1.20 within the month. A full-text copy of Pacific Biometrics' Prospectus Summary is available at no charge at http://ResearchArchives.com/t/s?353 Established in 1989, Pacific Biometrics Inc. -- http://www.pacbio.com/-- provides specialized central laboratory and contract research services to support pharmaceutical and diagnostic manufacturers conducting human clinical trial research. The company provides expert services in the areas of cardiovascular disease, diabetes, osteoporosis, arthritis, and nutrition. The PBI laboratory is accredited by the College of American Pathologists and through its non-profit affiliate Pacific Biometrics Research Foundation is one of only three U.S.-based laboratories approved and accredited by the Center for Disease Control as a Cholesterol Reference Laboratory. At Sept. 30, 2005, the company's balance sheet showed a $643,247 stockholders' deficit compared to a $362,083 stockholders' deficit at Dec. 31, 2004. * * * Going Concern Doubt Williams & Webster, PS, of Spokane, Washington, expressed substantial doubt about Pacific Biometrics Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2005. The auditing firm points to the Company's recurring net losses and cash flow shortages. PEP BOYS: Moody's Affirms Senior Subordinated Notes' Rating at B3 ----------------------------------------------------------------- Moody's Investors Service affirmed the B1 corporate family and B3 senior subordinated debt ratings of The Pep Boys - Manny, Moe and Jack and changed the outlook to negative. These ratings were affirmed: * Corporate family rating at B1; * Senior guaranteed unsecured convertible notes due 2007 at B1; and * Senior subordinated notes due 2014 at B3. The outlook is changed to negative. The outlook change to negative reflects the poor operating performance achieved thus far in 2005 which is primarily attributed to the disruptions associated with the aggressive store remodeling program and secondarily to the lack luster results generated by the company's tire business, both private label and branded. While the store repositioning strategy process remains very much a work in progress, the disruptions are expected to abate shortly under a more disciplined approach resulting in an earnings improvement in Q42005 with continuation into 2006. Moody's anticipates the company returning to 2004 performance levels by the end of FY 2006. While operating performance for 2005 has been well below plan, it is important to note that Pep Boys has not increased its debt levels as funding for its aggressive capital expenditure program has been supplemented out of pre-existing excess cash due to its lower operating cash flow. The B1 rating affirmation takes into consideration that debt protection measures have become weaker for the category due to the soft 2005 operating performance; however, the ratings also reflects Pep Boys' strong brand recognition, the favorable industry fundamentals that are evident, with the average age of vehicles increasing, as is the proportion of higher repair costs for sport utility vehicles balanced by the challenges remaining for the company as it attempts to rebalance its operating model away from more complicated service and repairs to a higher velocity, more retail- based platform. The ratings also reflect some benefit derived from Pep Boy's ownership of a significant number of its stores, which reduces rents relative to sales and provides some underlying support for the credit, however, the potential for the monetization of some portion of its owned real estate portfolio concurrent with upcoming debt maturities would reduce financial flexibility and further reduce the amount of cushion currently available at this rating level. Pep Boys has been working to improve its operating performance over the last few years which has lead to some past asset write- downs, as well as uneven operating performance during fiscal 2005. The company continues to invest in its store base and infrastructure to improve its service capabilities and overall operating performance. Moody's expects that Pep Boys will continue to have to invest in its store base to keep pace with its competition and bring its operating performance in line with its peers. While these investments will have longer term benefits for Pep Boys, it will likely be a few more quarters before these benefits are reflected in the company's operating results. Downward rating pressure will continue if operating performance does not begin to improve by the end of the second quarter of fiscal 2006 sufficient to reduce debt/EBITDA below 6x. Considering the negative outlook, upward rating momentum is minimal; however, a stable outlook could result if debt/EBITDA reduces below 5.5x, which would indicate operational improvement. Headquartered in Philadelphia, Pennsylvania, The Pep Boys - Manny, Moe and Jack operate about 593 stores in 36 states and Puerto Rico with annual revenues of approximately $2.3 billion. PINNACLE ENTERTAINMENT: Moody's Rates New $750MM Facility at B1 --------------------------------------------------------------- Moody's Investors Service assigned a B1 rating to Pinnacle Entertainment, Inc.'s proposed $750 million senior secured bank credit facility and affirmed the company's B2 corporate family rating and Caa1 senior subordinated debt ratings. The new bank credit facility consists of a: * $450 million senior secured revolver due 2010; * $200 million senior secured funded term loan due 2011; and * $100 million senior secured delayed draw term loan due 2011. The new facility will replace Pinnacle's existing B1 rated $380 million senior secured bank credit facility and provide additional overall liquidity as well as funding for the company's St. Louis construction projects. The rating outlook is stable. Pinnacle's B2 corporate family rating reflects the risks associated with its high leverage and significant upcoming development activity related to two casino projects in St. Louis, Missouri. Additionally, the rating takes into account the continuing uncertainty regarding the amount and timing of any insurance coverage related to Hurricane Katrina. The one-notch rating differential between the company's B1 senior secured bank loan rating and its B2 corporate family rating reflects the superior recovery profile of the credit facility relative to other debt obligations in Pinnacle's capital structure. Moody's decision to assign a higher rating to the senior secured credit facilities was based on an analysis of distressed asset and enterprise values and the determination that senior secured lenders would be adequately protected under distressed circumstances. The stable ratings outlook considers that the uncertainty regarding the amount and timing of any insurance coverage makes it less likely there will be ratings improvement in the near-term. To the extent that: 1) insurance matters are resolved in a manner that does not have a material negative impact on the company's overall financial profile; 2) L'Auberge du Lac casino in Lake Charles, Louisiana continues to perform at or above initial expectations; and 3) Pinnacle's other casino properties continue to improve, a higher rating would be considered. The stable ratings outlook also takes into account that Pinnacle is currently in compliance with the Missouri Gaming Commission's requirement that the company have an interest coverage ratio of at least 2.0 times before it can proceed with development in St. Louis, Missouri. The St. Louis development opportunities are viewed as positive credit considerations in that they would provide Pinnacle with an increased level of diversification, a key factor with respect to longer-term ratings improvement. These new ratings were assigned: * $450 million senior secured revolving credit facility due 2010 -- B1; * $200 million senior secured funded term loan due 2011 -- B1; and * $100 million senior secured delayed draw term loan due 2011 -- B1. Pinnacle's new bank facility will be secured by substantially all of the company's tangible and intangible assets and will include maintenance-type covenants related to leverage and interest coverage, as well as a 50% excess cash flow sweep which applies after 2006. There will be a greenshoe option that can increase the facility by an additional $250 million as long as no event of default is in place, and can be applied to any bank facility tranche. The B1 rating on the company's existing $380 million bank facility will be withdrawn once the new bank facility is in effect. Pinnacle Entertainment: * owns casinos in: -- Nevada, -- Mississippi (currently closed), -- Louisiana, -- Indiana, and -- Argentina; * owns a hotel in Missouri; and * receives lease income from two card club casinos in the Los Angeles metropolitan area. PLASTIPAK HOLDINGS: Offering $250MM Notes via Private Placement --------------------------------------------------------------- Plastipak Holdings, Inc., intends to offer, subject to market and other conditions, $250 million principal amount of its senior notes due 2015 in a private offering. The proceeds from the offering, together with the proceeds of borrowings under its senior secured credit facility and cash on hand, will be used to finance its previously announced cash tender offer and consent solicitation for its outstanding 10.75% Senior Notes due 2011. The notes will be offered in the United States only to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended, and in offshore transactions pursuant to Regulation S under the Act. The notes have not been registered under the Act and, unless so registered, the notes may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Act and applicable state securities laws. Plastipak Holdings, Inc. -- http://www.plastipak.com/-- is a leading manufacturer of plastic packaging containers for many of the world's largest consumer products companies. For the fiscal year ended Oct. 30, 2004, Plastipak manufactured and distributed approximately 8.5 billion containers worldwide for over 450 customers. To meet the demand of its diverse customer base, Plastipak operates 16 plants in the United States, Brazil and Europe. Plastipak also provides integrated transportation and logistics services, which the company's management believes makes it uniquely, vertically integrated in the plastic packaging industry. Plastipak has obtained 153 U.S. patents for its state- of-the-art packages and package-manufacturing processes. * * * As reported in the Troubled Company Reporter on Oct. 14, 2005, Plastipak Holdings, Inc., commenced a cash tender offer and consent solicitation for its $325 million of outstanding 10.75% Senior Notes due 2011. The terms and conditions of the tender offer and consent solicitation are set forth in Plastipak's offer to purchase and consent solicitation statement, dated Oct. 12, 2005, and the related letter of transmittal and consent. Consent Solicitation In connection with the tender offer, Plastipak is soliciting consents to proposed amendments to the indenture governing the Notes, which would eliminate substantially all of the restrictive covenants and certain events of default in the indenture. Plastipak is offering to make a consent payment (which is included in the total consideration) of $30.00 per $1,000 principal amount of Notes to holders who validly tender their Notes and deliver their consents on or prior to the consent payment deadline. Holders may not tender their Notes without delivering consents and may not deliver consents without tendering their Notes. PORTAL SOFTWARE: Restating Financials to Accommodate Adjustments ---------------------------------------------------------------- Portal Software, Inc. (Pink Sheets:PRSF) will restate its financial results for its first, second and third quarters for fiscal 2005. The company reports that significant progress has been made in the year-end audit of Portal's fiscal 2005 financial results. In connection with the work completed to date on the company's fiscal year-end 2005 audit, management has identified adjustments that will be made to previously disclosed financial results. These adjustments will result in the restatement of previously filed results for the first, second and third quarters of fiscal year 2005. The company will also revise the preliminary results reported for its fourth quarter of fiscal year 2005 through the second quarter of fiscal 2006. The adjustments that give rise to the restatements and adjustments to the previously reported preliminary unaudited financials fall into four categories: 1. The accounting for revenue on certain complex multi-element contracts. The largest of the changes results from the company's application of certain paragraphs of SOP 97-2 on one large multi-element contract where Vendor Specific Objective Evidence of fair value for consulting services was not present; 2. The accounting for deferred costs on certain long term projects. The company had incorrectly deferred costs on certain large fixed price services contracts; 3. The accounting for certain international withholding and payroll taxes. The company had over accrued for certain international withholding taxes and had not accrued properly for international payroll taxes in international countries where the company had small operations. This adjustment relates to a material weakness previously disclosed in the company's press release dated June 30, 2005; and 4. The impact of a number of individually insignificant adjustments. Based on the expected adjustments, revenue for the first through third quarters of fiscal 2005 will be decreased by approximately $100,000 in the aggregate compared with the amounts reported on the company's Form 10Qs for the respective quarters. These adjustments relate to material weaknesses previously disclosed. Based in part on interpretations of recent relevant accounting pronouncements, the company has revised its application of revenue accounting on certain multiple element contracts which principally impacted the third and fourth quarter of fiscal 2005 and subsequent quarters. Compared with previously disclosed preliminary unaudited financial results, revenue for the fourth quarter of fiscal 2005 is expected to be reduced by $6.2 million. Approximately 90 percent of the $6.2 million revenue adjustment relates to changes in the application of certain paragraphs of SOP 97-2 on one large customer contract where VSOE for consulting services was not present. The net loss for the first through third quarters of fiscal 2005 will be increased by an aggregate of $1.5 million compared with the amounts reported on the company's Form 10Qs for the respective quarters. These adjustments include the impact of the foreign tax withholding and foreign payroll tax accruals of $500,000. Also included is the impact of the change in accounting for deferred costs on certain long-term contracts. Compared with previously disclosed preliminary unaudited financial results for the fourth quarter of fiscal 2005, the net loss is expected to be increased by $5 million. "Portal is continuing to make significant progress in this complex and ongoing audit and, as a result, the company has decided to restate certain portions of our previously released financial information," Dave Labuda, Portal's chief executive officer, said. "Portal remains committed to concluding this process as quickly as possible in order to file our Form 10-K for fiscal 2005." Material Weaknesses As previously reported, the company has identified multiple, unremediated material weaknesses in its internal controls over financial reporting. Subsequent to the press release dated June 30, 2005, which provided preliminary, unaudited financial information for the company's fourth quarter fiscal 2005 and in conjunction with the ongoing Section 404 Internal Control testing, management identified additional material weaknesses in its internal controls over financial reporting. Specifically, management identified material weaknesses related to the management of payroll related taxes in foreign countries and related to its overall entity level controls. The material weaknesses in our entity level controls relate to establishing an effective control environment, assessing risk, performing control activities, and monitoring controls. These material weaknesses are in addition to the material weaknesses that were previously disclosed and that continue to exist, including, without limitation, those in revenue recognition processing, financial close processing, and a shortage of qualified finance staff (all of which also existed at the end of fiscal year 2005). These material weaknesses have contributed to the delays in the company's filing of its periodic reports with the SEC and increase the risk that there may be material inaccuracies in our filed reports or in the preliminary results reported herein. Portal has been and continues to work diligently to remediate these material weaknesses. The company believes it has made progress on several fronts in remediating the control deficiencies that have caused the material weaknesses, and it is committed to fixing these control deficiencies and remediating the material weaknesses in the company's internal controls. Portal Software is the premier provider of billing and Revenue Management solutions for the global communications and media markets. The company delivers the only platform for the end-to-end management of customer revenue across offerings, channels, and geographies. Portal's solutions enable companies to dramatically accelerate the launch of innovative, profit-rich services while significantly reducing the costs associated with legacy billing systems. Portal is the Revenue Management partner of choice to the world's leading service providers including: Vodafone, AOL Time Warner, Deutsche Telekom, TELUS, NTT, China Telecom, Reuters, Telstra, China Mobile, Telenor Mobil, and France Telecom. POWER EFFICIENCY: Posts $767,727 Net Loss in Third Quarter ---------------------------------------------------------- Power Efficiency Corp. delivered its financial statements for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. The company reported a $767,727 net loss on $75,952 of total revenues for the quarter ended Sept. 30, 2005. At Sept. 30, 2005, the company's balance sheet showed $4,033,153 in total assets, $1,948,500 in total liabilities, and $2,084,653 in stockholders' equity. Going Concern Doubt Sobel & Co., LLC, in Livingston, New Jersey, the company's external auditor, raised substantial doubt about the Company's ability to continue as a going concern after it audited Power Efficiency Corp.'s financial statements for the year ended Dec. 31, 2004. Power Efficiency Corp. -- http://www.powerefficiencycorp.com/-- designs, develops, markets and sells proprietary solid state electrical components to reduce energy consumption in alternating current induction motors. PRESCIENT APPLIED: Posts $388,493 of Net Loss in Third Quarter -------------------------------------------------------------- Prescient Applied Intelligence, Inc., delivered its financial statements for the quarterly period ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. For the three months ended Sept. 30, 2005, the company reported a $388,493 net loss on $2,348,870 of revenues, compared to a $1,064,497 net loss on $1,311,541 in revenues for the same period in 2004. At Sept. 30, 2005, the company's balance sheet showed $23,257,808 in total assets and $2,299,937 in total liabilities. Prescient Applied Intelligence, Inc., fka The viaLink Company, provides electronic commerce services particularly to in the consumer packaged goods, retail and automotive industries. * * * Going Concern Doubt KPMG LLP expressed substantial doubt about Prescient's ability to continue as a going concern after it audited the company's financial statements for the fiscal year ended Dec. 31, 2004. The auditing firm pointed to the company's recurring losses from operations and resulting dependence upon access to additional external financing. PROTOCOL SERVICES: Amended Plan Confirmation Hearing on Dec. 22 --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California will convene a hearing to consider confirmation of the Fourth Amended Joint Plan of Reorganization filed by Protocol Services, Inc., and its debtor-affiliates. The Debtors filed their Fourth Amended Joint Plan and an accompanying Fourth Amended Disclosure Statement on Nov. 23, 2005. Summary of Fourth Amended Plan 1) Holders of allowed administrative claims, allowed priority tax claims and allowed other priority claims will be paid in full as required by the Bankruptcy Code, unless otherwise agreed by the holders of those claims. 2) Holders of allowed senior secured claims, totaling approximately $120.5 million, will: a) share in the New Senior Tranch A Notes and the New Subordinated Tranche B Notes, 60% of the New Protocol Common Stock and subject to dilution for the New Management Incentive Plan and the turnover of the Redistributed Stock to the Mezzanine B Lenders, and b) receive restructuring fees in cash totaling $850,000 and payment of professional expenses and fees incurred by the Senior Lenders and not previously reimbursed by the Debtors. 3) Holders of allowed Mezzanine A claims, totaling approximately $61.7 million, will share in 40% of the New Protocol Common Stock together with holders of allowed Mezzanine B claims and subject to dilution for the New Management Incentive Plan, receive cash totaling $260,000 and payment of the professional expenses and fees incurred by those Mezzanine A Lenders and not previously reimbursed by the Debtors. 4) Holders of allowed Mezzanine B claims, totaling approximately $34.6 million, will share in 40% of the New Protocol Common Stock together with holders of allowed Mezzanine B claims and subject to dilution for the New Management Incentive Plan, receive the Redistributed Stock and restructuring fees totaling $140,000 and payment of the professional expenses and fees incurred by those Mezzanine B Lenders and not previously reimbursed by the Debtors. 5) Holders of allowed general unsecured claims, totaling approximately $14.5 million, will receive, pro rata beneficial interests in the Unsecured Creditors' Trust, which will be the recipient of the New Unsecured Note amounting to $1.2 million. 6) Holders of allowed convenience class claims will receive the lesser of 25% of the allowed amount of those claims and their pro rata share of $800,000. 7) Old protocol common stock and old other interests will be cancelled on the effective date of the Amended Plan and will not receive or retain any property under the Plan. A full-text copy of the redlined version of the Fourth Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=051129005830 All ballots must be returned by Dec. 16, 2005, to the Debtors' noticing agent: Protocol Communications, Inc. Ballot Processing C/o Kurtzman Carson Consultants LLC 12910 Culver Blvd., Suite 1 Los Angeles, California 90066 Objections to the Fourth Amended Plan, if any, must be filed and served by Dec. 19, 2005. Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. PROTOCOL SERVICES: Has Until Jan. 23 to Solicit Plan Acceptances ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of California extended until Jan. 23, 2006, the period within which Protocol Services, Inc., and its debtor-affiliates have the exclusive right to solicit acceptances of their proposed Fourth Amended Joint Plan of Reorganization. The Debtors explain that although the Fourth Amended Joint Plan is scheduled for a confirmation hearing on Dec. 22, 2005, they sought the extension out of an abundance of caution on their part and barring any unforeseen events that may occur that could delay the confirmation process. In case the Plan will not be confirmed on the Dec. 22 hearing, the Debtors will have until the plan solicitation period to file a plan. Additionally, the Debtors relate that the extension is in the best interest of their estates, their creditors and other parties-in- interest and it will not prejudice those creditors and parties-in- interest. Headquartered in Deerfield, Illinois, Protocol Services, Inc., and its subsidiaries offers agency services, database development and management, data analysis, direct mail printing and lettershops, e-marketing, media replication, and inbound and outbound teleservices. Protocol has offices and operations in California, Colorado, Illinois, Louisiana, Florida, Michigan, North Carolina, New York, Massachusetts, Connecticut and Canada and employs over 4,000 individuals. The Company and its affiliates -- Protocol Communications, Inc., Canicom, Inc., Media Express, Inc., and 3588238 Canada, Inc. -- filed for chapter 11 protection on July 26, 2005 (Bankr. S.D. Calif. Case Nos. 05-06782 through 05-06786). Bernard D. Bollinger, Jr., Esq., and Jeffrey K. Garfinkle, Esq., at Buchalter, Nemer, Fields & Younger, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. PROXIM CORP: Court Extends Exclusive Plan Filing Period to Jan. 9 ----------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware extended until Jan. 9, 2006, the time within which Proxim Corp. and its debtor-affiliates have the exclusive right to file a chapter 11 plan. Judge Walsh also extended the Debtors' exclusive right to solicit acceptances of that plan to March 8, 2006. As reported in the Troubled Company Reporter on Oct. 19, 2005, the Debtors asked the Court for the extension disclosing that after the sale closing of substantially all of the their assets on July 27, 2005, Proxim, the Official Committee of Unsecured Creditors, and the Warburg Group engaged in settlement negotiations regarding the lenders allowed secured claim. The Debtors told the Court that they'll be in a position to propose a disclosure statement and plan as soon as a settlement is reached. While waiting for the outcome of the settlement talks, the Debtors want to make sure that the status quo won't be disrupted by other parties filing their own chapter 11 plans. Headquartered in San Jose, California, Proxim Corporation -- http://www.proxim.com/-- designs and sells wireless networking equipment for Wi-Fi and broadband wireless networks. The Debtors provide wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. The Debtor along with its affiliates filed for chapter 11 protection on June 11, 2005 (Bankr. D. Del. Case No. 05-11639). When the Debtor filed for protection from its creditors, it listed $55,361,000 in assets and $101,807,000 in debts. REMEDIATION FIN'L: Wants to Continue Lawrence Hilton Retention -------------------------------------------------------------- Remediation Financial, Inc., and Santa Clarita, LLC, two of the Debtors in the jointly administered chapter 11 proceedings of RFI Realty, Inc., and its debtor-affiliates, ask the U.S. Bankruptcy Court for the District of Arizona for permission to retain Lawrence Hilton and Hewitt & O'Neil LLP as their special counsel. Lawrence Hilton will represent the Debtor in the lawsuit entitled Castaic Lake Water Agency, et al., v. Whittaker Corporation, et al., pending before the United States District Court for the Central District of California. The firm will provide legal services, including representation of the Debtors, in all aspects of the CLWA Litigation. While the CLWA Litigation has been stayed after the Debtors sought bankruptcy protection, Lawrence Hilton has assisted the Debtors with respect to certain legal matters associated with the case. The firm has incurred fees of $126,824 and expenses of $4,650 since the petition date. The Debtors' insurer, Steadfast Insurance Co., is providing the Debtors with defense in the CLWA Litigation pursuant to an insurance policy. Any amount paid by Steadfast to defend the CLWA Litigation is deducted from the amount of coverage available under the applicable policy. Since the petition date, Steadfast has paid Lawrence Hilton approximately $132,344 on account of fees and $9,928 on account of expenses. As of Nov. 2, 2005, the Debtors owe the firm $30,027. The terms of Lawrence Hilton's representation remain the same postpetition as they were prepetition. The hourly rates for the firm's professionals are: Designation Hourly Rate ----------- ----------- Partners $260 Associates $190 Paralegals $90 To the best of the Debtors' knowledge, Lawrence Hilton does not hold any interest adverse to their estates. Headquartered in Phoenix, Arizona, Remediation Financial, Inc. is a real estate developer. Remediation Financial, Inc., and Santa Clarita, L.L.C. filed for chapter 11 protection on July 7, 2004 (Bankr. D. Ariz. Case No. 04-11910). RFI Realty, Inc., filed on June 15, 2004 (Bankr. D. Ariz. Case No. 04-10486) and Bermite Recovery, L.L.C., filed on September 30, 2004 (Bankr. D. Ariz. Case No. 04-17294). Alisa C. Lacey, Esq., at Stinson Morrison Hecker LLP, represents 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 $10 million to $50 million. SOLUTIA INC: Acquires Vitro Plan's 51% Stake in Quimica ------------------------------------------------------- Solutia Inc. (OTC Bulletin Board: SOLUQ) reached a definitive agreement with Vitro Plan, S.A. de C.V. (NYSE: VTO; BMV: VITROA), to purchase Vitro Plan's 51% stake in its joint venture with Solutia, known as Quimica M, S.A. de C.V. As a result, Solutia will become the sole owner of Quimica M. Additionally, Solutia and certain affiliates of Vitro Plan will be entering into agreements under which Solutia will supply those Vitro affiliates with 100% of their requirements for Saflex(R) and Vanceva(R) PVB interlayer products. This purchase and the related transactions are subject to approval of the U.S. Bankruptcy Court for the Southern District of New York, the approval of the parties' respective boards of directors, and the Mexican Competition Commission. The Quimica M joint venture produces PVB interlayers at a plant in Puebla, Mexico. These interlayers are used by major glass producers such as Vitro to make laminated glass for use in automobiles and buildings. "This acquisition is another important step forward in our reorganization," said Jeffry N. Quinn, president and CEO, Solutia Inc. "One of the basic tenets of our reorganization strategy is to improve our asset portfolio. This acquisition, in addition to the recently announced construction of our Laminated Glazing Interlayers plant in Suzhou, China, significantly enhances the strategic position of our LGI business." Mitch Pulwer, general manager of Solutia's LGI business, said, "Solutia has a long history working with Vitro Plan and affiliates to grow its glass business. We look forward to continuing and strengthening this important relationship." Mr. Pulwer added, "This transaction is an important component of the strategy to optimize our worldwide production of PVB interlayer for the benefit of our customers. The Puebla plant offers a proven supply of the world's premier PVB interlayers. As a result, we will have greater flexibility in meeting the needs of customers and in scheduling our worldwide manufacturing operations as efficiently as possible. And, we will continue to invest throughout the world as both technology and capacity needs arise." Commissioned in 1995, the Puebla plant operates state-of-the-art PVB interlayer manufacturing lines using the same Solutia technology used at other Solutia production sites. The plant is ideally situated to allow Solutia to directly supply PVB interlayers to the growing Mexican market, as well as to customers in other world areas. "The LGI business plays a critical role in our growth strategy for the Performance Products Division," said Luc De Temmerman, president of Solutia's Performance Products Division. "As a global division, we are continuously evaluating opportunities to further develop our presence in areas with significant growth potential, such as Mexico and China." This agreement comes less than three months after Solutia announced that it is beginning construction of a new Saflex and Vanceva PVB interlayer plant in Suzhou, China. Solutia's LGI business presently manufactures PVB interlayers at Ghent, Belgium; Sao Jose Dos Campos, Brazil; Springfield, Mass., USA; and Trenton, Mich., USA. It also has a PVB finishing center, distribution center and regional customer service center in Singapore. In addition to being the world's largest producer and seller of PVB interlayers, Solutia is the global leader in PVB innovation, quality and reliability. When laminated between layers of glass, PVB interlayers greatly enhance the performance characteristics of glass, providing benefits such as security, solar protection, sound attenuation, safety and style. Laminated glass made with Saflex PVB is used in applications for automobiles and buildings. In addition to Saflex, Solutia manufactures Vanceva high- performance interlayers, providing customers the world's most innovative portfolio of laminated glass interlayers. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. SOUTHHAVEN POWER: Wants Exclusive Period Stretched to July 17 ------------------------------------------------------------- Southaven Power, LLC, asks the U.S. Bankruptcy Court for the Western District of North Carolina for an extension of its time to file and solicit acceptances of a chapter 11 plan. The Debtor wants until July 17, 2006, to file a plan and until Sept. 11, 2006, to solicit acceptances of that plan. The Debtor explains that the estate's most important asset is the ongoing arbitration against PG&E Energy Trading-Power, L.P., nka NEGT Energy Trading - Power, L.P. The arbitration relates to a Dependable Capacity and Conversion Services Agreement dated June 1, 2000, with ET Power. ET Power's obligations under the Agreement were partially guaranteed by its parent, PG&E National Energy Group, nka National Energy & Gas Transmission, Inc. ET Power filed a lawsuit asserting an $8 million breach of contract claim against the Debtor. In turn, the Debtor asserts a $500 million rejection damage claim against ET Power and a $176.2 million claim against NEGT, as guarantor. The litigation was subject to an arbitration proceeding scheduled for Oct. 17 to Oct. 28, 2005. The Debtor tells the Court that although the arbitration proceeding took place on schedule, it was not concluded. The Debtor says that the hearings have been scheduled to resume on Feb. 6 to Feb. 24, 2006. The Debtor tells the Court that it believes even if the hearing was to proceed on the February schedule, the arbitration may not be concluded until the end of May 2006. The Debtor discloses that until the arbitration proceeding is resolved, it has no way to determine the value of its assets and thus cannot determine which creditors are entitled to share. To put it bluntly, the Debtor says, it is impossible to file a plan of reorganization until the arbitration proceeding is resolved. The Debtor tells the Court that the extension will give it an opportunity to craft and prosecute a plan of reorganization that reflects the result of the arbitration proceeding. Headquartered in Charlotte, North Carolina, Southaven Power, LLC, operates an 810-megawatt, natural gas-fired electric power plant located in Southaven, Mississippi. The Company filed for chapter 11 protection on May 20, 2005 (Bankr. W.D.N.C. Case No. 05-32141). Hillary B. Crabtree, Esq., at Moore & Van Allen, PLLC, and Mark A. Broude, Esq., at Latham & Watkins LLP represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts of more than $100 million. TARGUS GROUP: Moody's Rates Proposed $85 Million Term Loan at B3 ---------------------------------------------------------------- Moody's Investors Service affirmed the corporate family rating of Targus Group International, Inc. at B1, affirmed the proposed $230 million secured bank loan at B1, and assigned a B3 rating to the proposed $85 million second-lien term loan. Moody's also withdrew the ratings for the speculative grade liquidity rating of SGL-2 and the proposed $150 million senior subordinated note issue that were assigned on October 25, 2005. There are several meaningful changes relative to the prior capital structure that include: * upsizing the bank loan to $230 million from $205 million; * withdrawing from sale the originally contemplated senior subordinated notes; and * arranging the $85 million second-lien secured loan. Together with about $120 million of new equity and $25 million of unrated Holding Company notes, cash proceeds from the new debt will finance the leveraged buyout of the company for total consideration of about $420 million. Relative to the capital structure contemplated in the October 25 rating action, leverage is modestly improved. The rating outlook is stable. Rating assigned: * $85 million second-lien secured term loan at B3 Ratings affirmed (subject to review of final documentation): * $230 million secured bank loan (upsized from $205 million) at B1 * Corporate family rating (previously called the senior implied rating) at B1 Ratings withdrawn: * $150 million senior subordinated note rating of B3 * Speculative grade liquidity rating of SGL-2 The long-term ratings reflect: * Moody's belief that financial leverage and interest coverage are weak for the rating category among consumer products companies; * the high degree of competition from other computer notebook case and accessory suppliers; and * the need for continuous product innovation given the short life cycle of many computer-related products. Also constrain the ratings are: * the vulnerability to continued downward pricing pressure on the company's products from original equipment manufacturers; * the substantial weight of the non-guarantor foreign subsidiaries (in terms of revenue, operating costs, and assets); and * the challenges in achieving all of the identified cost saving initiatives. However, mitigating the weaknesses are: * the favorable growth trends for notebook cases and computer accessories as global notebook computer unit sales continue to rapidly increase; * the revenue diversity from a worldwide geographic footprint, three separate distribution channels, and two major product categories (notebook cases and computer accessories); and * Moody's opinion that a portion of planned cost savings are realizable within a reasonable timeframe. The strength of the Targus brand, particularly in notebook computer cases, and the limited incremental capital investment required for the company's business plan, given that all manufacturing is outsourced, also support the ratings. The stable rating outlook reflects Moody's expectations that the company's financial profile will modestly improve as it: 1) increases revenue in line with increased unit sales of notebook computers; 2) reduces leverage through growing free cash flow; and 3) amortizes the term loan with a portion of free cash flow. Ratings could be negatively impacted if: * sales growth across geography, distribution channels, and product categories is not balanced; * leverage and interest coverage do not approach 5.5 times and 2 times, respectively, within two years; or * the company is unable to offset downward pricing pressure with at least a portion of the anticipated post-LBO cost savings. Over the longer term, ratings could move upward as: * financial flexibility strengthens (such as leverage falling below 5 times and interest coverage comfortably exceeding 2 times); * operating measures (such as market share, revenue, and operating profit) steadily improve from current levels; and * the company achieves satisfactory progress with the anticipated savings in coordinating procurement, freight, and product offering. However, Moody's does not necessarily expect that the company will achieve all of the promised savings within the timeline currently projected by management. The B1 rating of the proposed senior secured credit facility (to be comprised of a $40 million revolving credit facility and a $190 million Term Loan B) recognizes the senior position of this debt class in the company's capital structure and considers that this debt has a first-lien on substantially all of the company's domestic assets. In a hypothetical default scenario, Moody's believes that the orderly liquidation value of easily monetizable assets such as accounts receivable and inventory would fall below the total bank loan commitment. Complete recovery would rely on the less easily predicted valuation for property, plant, and equipment and intangible assets. Moody's expects that the Revolving Credit Facility will largely be used to bridge temporary cash flow timing differences. As of July 2, 2005, all of the revolving credit facility would have been available on a pro-forma basis. The B3 rating on the proposed 7.5-year second-lien term loan considers that this facility has a subordinate claim on collateral relative to the first-lien loan. The notching relative to the senior implied rating reflects: 1) that the majority of debt in the company's capital structure has a first-lien on collateral; and 2) Moody's belief that recovery in a hypothetical default scenario would completely depend upon residual enterprise value given likely asset liquidation value. This facility first becomes callable at the beginning of Year 2 at 102% of par. Pro-forma for this financing transaction, debt equals about 6.2 times reported EBITDA (Moody's calculation of EBITDA treats management fees as an administrative expense and excludes pro- forma savings), total interest coverage is about 1.7 times, and free cash flow is approximately 5% of debt. Over the past several years, revenue has grown at a healthy pace as global notebook unit sales have annually increased by more than 20%. The ratings are based on the expectation that healthy worldwide notebook unit growth will continue. The company anticipates that substantial cost savings are obtainable through consolidating and coordinating product offerings on a global basis. Progress at these cost improvements are key to offsetting downward pricing pressure, particularly given the relatively small size of Targus relative to most original equipment manufacturers, computer distributors, and important consumer electronics retailers. Targus Group International, Inc, headquartered in Anaheim, California, designs, develops, and distributes notebook computer cases and computer accessories. The company sells its products to: * original equipment manufacturers, * third-party distributors, and * retailers worldwide. Targus generated revenue of $387 million for the twelve months ending July 2, 2005. TRM CORP: Lenders Waive Covenant Defaults Under Credit Agreement ---------------------------------------------------------------- TRM Corporation delivered its financial statements for the quarter ending Sept. 30, 2005, to the Securities and Exchange Commission. For the three months ended Sept. 30, 2005, the company reported $318,000 of net income on $31.4 million of net sales, compared to $2.2 million of net income on $22.4 million of net sales for the same period in 2004. At Sept. 30, 2005, TRM's balance sheet showed $364.6 million in total assets and $247.9 million in total liabilities. Credit Facility As of Sept. 30, 2005, the company owed: -- $125.7 million pursuant to its $150 million syndicated loan facility ($120 million of which was used to fund the acquisition of eFunds Corporation's ATM business); -- $112.5 million under a term loan agreement; and -- $13.2 million under a $30 million lines of credit. Bank of America had issued letters of credit in the amounts of $4.4 million to guarantee the company's performance under its agreements relating to TRM Inventory Funding Trust and EUR1.5 million ($2.6 million based on exchange rate as of Sept. 30, 2005), in connection with the proposed acquisition of Travelex UK Limited, leaving a balance available under its lines of credit of $9.8 million as of Sept. 30, 2005. Credit Waiver The company failed to meet three financial covenants of its syndicated loan facility as of Sept. 30, 2005. These covenants include: -- consolidated leverage ratio; -- consolidated fixed charge coverage ratio; and -- capital expenditures limit. "We have subsequently been granted a waiver as of Sept. 30, 2005, of the lenders' rights and remedies with respect to those covenant violations and an amendment to the credit agreement," Jon S. Pitcher, the company's principal accounting officer said. "Violation of the capital expenditures limits was caused by the mandatory upgrading of our ATM estate in the UK which required us to be compliant with triple DES and EMV standards by July 1, 2005. Costs related to these upgrades were higher than expected, which resulted in additional capital expenditures on hardware and installations." Mr. Pitcher added that the company violated the covenants as a result of additional capital expenditures relating to the mandatory upgrading of its ATM estate in the United Kingdom. In addition to the waiver as of Sept. 30, 2005, the lenders have agreed to amend covenants in the facility, including: -- the minimum consolidated fixed charge coverage ratio as of the end of December 2005 has been decreased from 1.1:1.0 to 1.0:1.0; -- the capital expenditures limit has been increased from $12.5 million per year to $17 million for 2005 and $15 million per year thereafter. TRM Corporation and TRM (ATM) Limited are borrowers under a credit agreement dated Nov. 19, 2004, as amended, with Bank of America, N.A., as lender and administrative agent. A full-text copy of the waiver and amended credit agreement is available at no charge at http://ResearchArchives.com/t/s?355 TRM Corporation is a consumer services company that provides convenience ATM and photocopying services in high-traffic consumer environments. TRM's ATM and copier customer base has grown to over 35,000 retailers throughout the United States and over 47,000 locations worldwide, including 6,500 locations across the United Kingdom and over 5,500 locations in Canada. TRM operates one of the largest multi-national ATM networks in the world, with over 22,000 locations deployed throughout the United States, Canada, Great Britain, including Northern Ireland, and Germany. * * * As reported in the Troubled Company Reporter on Nov. 21, 2005, Standard & Poor's Ratings Services reported that 'B+' corporate credit and senior secured debt ratings on Portland, Oregon-based TRM Corporation remain on CreditWatch with negative implications, where they were placed on Sept. 6, 2005, reflecting uncertainties with respect to financing arrangements of the $78 million Travelex acquisition. "The CreditWatch review has been expanded to include the impact of recent earnings declines on expectations for future leverage and cash flow," said Standard & Poor's credit analyst Lucy Patricola. TRONOX INC: Raises $225.4 Million from Initial Public Offering -------------------------------------------------------------- Tronox Incorporated (NYSE: TRX) completed its initial public offering of 17,480,000 shares of its Class A common stock, with net proceeds totaling approximately $225.4 million. Tronox has granted the underwriters a 30-day option to purchase up to an additional 2,622,000 shares of Class A common stock to cover over- allotments, if any. "As a new publicly traded company with nearly 40 years of success in the chemical industry, we are focused on adding value for our stockholders and continuing to provide high-performance products and world-class service to our customers," said Tom Adams, Tronox chief executive officer. "We have an estimated 13% share of the worldwide market for titanium dioxide pigment in a marketplace where the top five producers represent in excess of 70% of the global TiO2 capacity. "We are well positioned to execute our strategy, with assets strategically located to serve global markets. Our proprietary chloride technology and specialized sulfate process plant provide products to a diverse customer base," said Mr. Adams. "Most importantly, we have talented, innovative and customer-focused employees, who are excited about the opportunities for Tronox to increase profitability, free cash flow and returns as we move forward as a publicly traded company. Our value strategies include optimizing supply-chain opportunities, enhancing margins, reducing costs and improving uptime through manufacturing excellence." Tronox also reported the three financing transactions: * The conversion of Tronox common stock held by Kerr-McGee Corp. (NYSE: KMG) into approximately 22.9 million shares of Tronox Incorporated Class B common stock * The issuance by Tronox subsidiaries, Tronox Worldwide LLC and Tronox Finance Corp., of $350 million of unsecured notes at a fixed rate of 9.50% per annum and due 2012 in a concurrent private offering * Tronox Worldwide's entry into a senior secured credit facility consisting of a $200 million term loan facility and a $250 million revolving credit facility Headquartered in Oklahoma City, Tronox Inc. -- http://www.tronox.com/-- is the world's third-largest producer and marketer of titanium dioxide pigment, with an annual production capacity of 624,000 tonnes. Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products. The chemical business' five pigment plants, which are located in the United States, Australia, Germany and the Netherlands, supply high-performance products to more than 1,100 customers in approximately 100 countries. In addition, the chemical business produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride and elemental boron. * * * As reported in the Troubled Company Reporter on Nov. 4, 2005, Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Oklahoma City, Oklahoma-based Tronox Inc. The outlook is positive. At the same time, Standard & Poor's assigned its 'BB-' rating and its recovery rating of '3' to Tronox's proposed $450 million senior secured credit facilities, based on preliminary terms and conditions. The rating on the senior secured credit facilities is the same as the corporate credit rating; this and the recovery rating of '3' indicate that bank lenders can expect a meaningful recovery of principal in the event of a payment default. In addition, Standard & Poor's assigned its 'B+' rating to the company's $350 million senior unsecured notes due 2012 to be issued under Rule 144a with registration rights. The rating on the unsecured notes is one notch below the corporate credit rating based on Standard & Poor's expectation that the level of Tronox's priority obligations will place holders of the unsecured notes at a material disadvantage in terms of recovery prospects in a bankruptcy scenario. VILLAGEEDOCS INC: Incurs $684,592 Net Loss in Third Quarter ----------------------------------------------------------- VillageEDOCS Inc. delivered its financial results for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission. The company reported $183,242 of net income from operations on $2,620,854 of revenues for the third quarter. VillageEDOCS President and CEO Mason Conner said, "While we are pleased that our operating companies have reported net sales of $6,308,354 for the first nine months of the year and continue to achieve growth, we are also very happy to report that the holders of almost $1.02 million in notes payable exercised their right to convert their debt to common and preferred stock during the quarter, bringing the total conversion of debt to stock for the first nine months of 2005 to approximately $6 million. This represents the conversion of almost 100% of the promissory notes outstanding as of the beginning of the year, and 100% of the promissory notes issued during the year, excluding promissory notes related to acquisition agreements." The Company's remaining promissory note debt consists of $580,000 in acquisition-related notes with either multi-year or performance-based contractual repayment schedules, as well as approximately $157,000 in convertible notes and accrued interest held by Alan and Joan Williams. The Company aims to convert the remaining Williams debt before year-end. While the $1.02 million in conversions during the third resulted in a substantial reduction of debt, it contributed to the non-cash interest charges of $811,679 during the third quarter. During the third quarter, Barron Partners LP converted its $800,000 promissory note into 16,000,000 shares of preferred stock. Subsequently, it converted 2,500,000 shares of preferred stock into an equal number of shares of common stock. In addition, Barron holds warrants that, if exercised, could potentially fund future acquisitions. MessageVision contributed $777,684 in revenue and $252,871 in operating income for the quarter. The electronic document delivery service operated by MVI has achieved an operating income for seven consecutive quarters. For the third quarter of 2005, Tailored Business Systems contributed $1,220,271 in revenue and reported an operating income of $116,428. Historically, TBS reports the strongest revenues during the third and fourth quarters due to seasonal property tax bill printing services. In 2004, TBS printed over 2 million bills that represented over $2 billion in revenue to its governmental entity clients. In its second quarter as a subsidiary of VillageEDOCS, e-forms and imaging and archiving provider Resolutions contributed $622,899 in revenue and reported an operating income of $49,330. Net sales for the three months ended September 30, 2005, were $2,620,854, a 56% increase over net sales for the prior year quarter of $1,682,917. The increase of $937,937 in the 2005 quarter resulted from an increase of $69,657 (10%) in revenue from MVI as well as an increase of $245,381 (25%) in revenue of TBS and the addition of $622,899 in sales from Resolutions. Gross profit for the three months ended September 30, 2005, increased 69% to $1,496,604 as compared to $883,180 for the prior year quarter. The increase in the 2005 quarter of $613,424 resulted from an increase of $100,841 from MVI, an increase of $173,859 from TBS, and the addition of $338,742 from Resolutions. Gross profit margin for the 2005 quarter was 57% as compared to 52% for the 2004 quarter. Operating expenses for the three months ended September 30, 2005, increased by 78% to $1,313,362 from the $737,127 reported in the three months ended September 30, 2004. Of the total increase of $576,235, $105,548 and $216,261 are attributable to increases in operating expenses of corporate and TBS, respectively. These increases were offset by a decrease of $34,968 from MVI. In addition, Resolutions incurred $289,394 of operating expenses during the quarter. Net loss for the three months ended September 30, 2005, was $684,592, compared to a net loss of $27,737 for the three months ended September 30, 2004. The overall net loss in the 2005 quarter was comprised of net income of $252,160, $76,574 and $44,197 from MVI, TBS, and Resolutions, respectively, as offset by a net loss from corporate of $1,057,523. The overall net loss in the 2004 quarter was comprised of a net loss of $233,762 from corporate, offset by net income from TBS and MVI of $156,350 and $49,675, respectively. Going Concern Doubt The Report of Independent Registered Public Accounting Firms on the Company's Dec. 31, 2004, consolidated financial statements stated that because of recurring losses, and a working capital deficit of $528,587 at December 31, 2004, there is a substantial doubt about the Company's ability to continue as a going concern. About VillageEDOCS VillageEDOCS -- http:\\www.villageedocs.com -- through its MessageVision subsidiary, provides comprehensive business-to- business business information delivery services and products for organizations with mission-critical needs, including major corporations, government agencies and non-profit organizations. The Company's Tailored Business Systems subsidiary provides accounting and billing solutions for county and local governments. Through its Resolutions subsidiary, it provides products for document management, archiving, document imaging, imaging software, document scanning, e-mail archiving, document imaging software, electronic forms, and document archiving. VIRTRA SYSTEMS: Releases Third Quarter 2005 Financial Results ------------------------------------------------------------- VirTra Systems, Inc., delivered its financial statements for the quarterly period ended Sept. 30, 2005, to the Securities and Exchange Commission on Nov. 14, 2005. The Company reported a $29,547 net loss from operations on $279,619 of net revenues for the quarter ending September 30, 2005. For the nine months ended Sept. 30, 2005, the company reported a $1,115,287 net loss and $1,286,076 negative cash flows from operations. Going Concern Doubt As reported in the Troubled Company Reporter on May 30, 2005, the Company's auditors raised substantial doubt about the Company's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec. 31, 2004. At Sept. 30, 2005, the Company's balance sheet showed a $4,527,986 working capital deficit and a $3,415,009 stockholders' deficit. The Company also disclosed that it had defaulted on its notes and obligations under product financing arrangements. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?35c VirTra Systems, Inc. (OTCBB:VTSI), applies patented technology to produce the world's most advanced virtual reality systems and 3-D experiences. With proprietary 360-degree, interactive photorealistic technology, VirTra Systems constructs marksmanship, judgmental use-of-force, and situational awareness firearms training simulators for military branches such as the U.S. Army and U.S. Air Force, and for domestic and international law enforcement agencies. VirTra Systems also produces custom advertising and promotional mobile marketing and experiential marketing systems utilizing the sensations of motion, touch, sound, and smell for clients such as General Motors, Pennzoil, Red Baron Pizza, and the U.S. Army. WACHOVIA BANK: S&P Raises Low-B Ratings on Six Class Certificates ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 12 classes of Wachovia Bank Commercial Mortgage Trust's commercial mortgage pass-through certificates from series 2002-C1. Concurrently, ratings on the remaining four classes from the same transaction are affirmed. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios, the stable performance of the pool, and the defeasance of 5% of the collateral. As of the remittance report dated Nov. 15, 2005, the collateral pool consisted of 153 loans with an aggregate principal balance of $911.5 million, compared with 156 loans totaling $950 million at issuance. The master servicer, Wachovia Bank N.A., provided interim and year-end 2004 net cash flow debt service coverage (DSC) for 96.5% of the pool, which excludes the aforementioned defeased loans. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.40x, up from 1.33x at issuance. The trust has not experienced any losses to date. All of the loans in the pool are current, but one loan is with the special servicer. The top 10 loan exposures have an aggregate outstanding balance of $203.7 million. As of fiscal year 2004, the weighted average DSC for the top 10 loan exposures was 1.38x, up from 1.29x at issuance. The loans are performing well, with the exception of the Oak Brook Apartments loan, which is on the watchlist. Standard & Poor's reviewed property inspections provided by Wachovia for the collateral securing the top 10 loan exposures and all were characterized as "good" or "excellent." The CityPlace II loan, which secures the fourth-largest loan, is also a concern, as it has experienced a significant decline in occupancy. Occupancy for the 292,039-sq.-ft. office property in Hartford, Connecticut, fell to 69% as of May 6, 2005, after its largest tenant vacated in the first quarter of 2005. The loan matures in December 2006, and it is not yet on Wachovia's watchlist. Wachovia's watchlist includes 28 loans with an aggregate outstanding balance of $144.3 million. The watchlist reflects the concentration of the pool's collateral in multifamily properties. The only loan exposure from the top 10 loans included on Wachovia's watchlist is secured by a multifamily property. The loan, Oak Brook Apartments, is secured by a multifamily property in Rancho Cordova, California, which is in Sacramento's metropolitan statistical area. The property consists of 304 units. The loan was assumed in October 2005 by an affiliate of Prometheus Real Estate Group, which is the largest private owner of multifamily properties in the San Francisco Bay area. For the year ending Dec. 31, 2004, the Oak Brook Apartments reported a DSC of 0.94x and occupancy of 91%. The Park Apartments in Deerfield Beach, Florida, secures the only loan with the special servicer, LNR Partners Inc. The 168-unit property was built in 1985. The loan was transferred to LNR Partners Inc. in November 2005 after the borrower requested to defer principal and interest and reserve payments for the next three to four months. Hurricane Wilma severely damaged the property, causing approximately 50% of the units to be uninhabitable. Standard & Poor's has reviewed the insurance certificate for the property provided by Wachovia, and has stressed the loan appropriately. For the year ending Dec. 31, 2004, the Park Apartments reported a DSC of 1.36x and occupancy of 93%. Standard & Poor's stressed the loans on the watchlist, along with other loans with credit issues, as part of its pool analysis. No property securing loans in the pool have been identified as being damaged by hurricanes Katrina or Rita, and the Park Apartments secure the only loan affected by Hurricane Wilma. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Wachovia Bank Commercial Mortgage Trust Commercial Mortgage Pass-Through Certs Series 2002-C1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ B AAA AA 19.80% C AAA A 15.11% D AA+ A- 14.07% E AA BBB+ 12.64% F A+ BBB 10.81% G A- BBB- 9.38% H BBB+ BB+ 7.69% J BBB BB 5.73% K BBB- BB- 5.21% L BB B+ 4.12% M B+ B 3.34% N B B- 2.83% Ratings Affirmed Wachovia Bank Commercial Mortgage Trust Commercial Mortgage Pass-Through Certs Series 2002-C1 Class Rating Credit enhancement ----- ------ ------------------ A-1 AAA 23.71% A-2 AAA 23.71% A-3 AAA 23.71% A-4 AAA 23.71% IO-I AAA N/A IO-II AAA N/A N/A - Not applicable. WM. BOLTHOUSE: Moody's Rates $135 Mil. Sr. Sec. Term Loan at B3 --------------------------------------------------------------- Moody's Investors Service assigned B2 ratings to Wm. Bolthouse Farms, Inc. and Bolthouse Juice Holdings LLC's (as joint and several obligors) new $75 million senior secured revolving credit facility and $500 million first lien term loan; a B3 rating to its new $135 million senior secured second lien term loan; and a B2 corporate family rating. The outlook on all ratings is stable. The rated debt will help fund the leveraged acquisition of a 72% stake in Bolthouse by Madison Dearborn Partners (MDP). The $1.1 billion cost of the transaction (9.8X LTM pro forma adjusted EBITDA) will be funded by: * $635 million in senior secured debt provided by the bank term loans; * $260 million in cash by MDP; and * the rollover of a $200 million equity stake (in the form of $100 million each of common and preferred stock) by Bolthouse's senior management. Following the transaction, Bolthouse will be owned 72% by MDP and 28% by management. This represents a first time rating for these issuers. Ratings for Wm. Bolthouse Farms, Inc. and Bolthouse Juice Holdings LLC are assigned: * $75 million senior secured six year revolving credit facility at B2 * $500 million senior secured seven year first lien term loan at B2 * $135 million senior secured eight year second lien term loan at B3 * Corporate family rating at B2 The outlook is stable. Bolthouse's ratings reflect the company's significant amount of enterprise debt, resulting in high leverage relative to cash flow and modest interest coverage along with the company's relatively narrow product focus, as well as its small size relative to much larger and diverse fruit, vegetable, and packaged food companies. The ratings also reflect greater-than-average event risk as Bolthouse completes a major expansion of its existing fruit and vegetable juice productive capacity in an effort to greatly expand sales of this product segment where the company has had good success to date in establishing a solid market share in the premium healthy beverage category. The ratings gain support from the relatively stable nature of the company's earnings, cash flow, and market position within its core carrot business -- in large part due to the attractive duopoly nature of the U.S. carrot industry. Over 80% of the company's revenues and gross profits are derived from the production, processing, and sale of carrots and carrot-derived products both for retail consumption and by other food manufacturers. Carrots are sold under the "Bolthouse" and "Green Giant" brands, as well as under numerous private labels. This narrow product focus which has commodity oriented characteristics, and can be impacted by factors such as weather, plant disease, and the cost volatility of inputs such as energy. The company is also exposed to the risk that changing consumer tastes or diets could negatively impact its performance. These risks are partially moderated by the benefits derived from the highly concentrated nature of the US carrot industry in which two processors -- Bolthouse and Grimmway Farms -- control nearly 90% of the market for US cut and peeled carrots. This duopoly nature of the US carrot industry has created relatively stable revenues and earnings, with the industry not suffering the same degree of earnings volatility as some other more competitive fruit and vegetable segments such as bananas. Bolthouse also benefits from its favorable growing conditions in California which helps mitigate weather-related threats. Additionally, the high cost of the special purpose carrot processing equipment, along with the contracting arrangements Bolthouse has created with farmers in U.S. regions favorable to carrot production, has created formidable barriers to entry in this industry. The ratings also reflect the success the company has had to date in establishing a solid market share in the premium healthy juice category which is a relatively new business that was started in 2003. Since then, the business has recently become profitable in achieving a number 2 market position in this growing product category. Presently, Bolthouse is completing the construction of a new $71 million juice production facility, which will triple current capacity. Aside from potential start-up problems at the new plant, the company may also not be able to increase sales volumes sufficiently to obtain an adequate return on its new plant investment. The stable outlook on Bolthouse's ratings reflects Moody's anticipation that the company's core carrot business will continue its solid performance while the company undertakes the expansion of its beverage juice business, and that the company will actively move to reduce leverage in the years following the transaction. At closing, Bolthouse will have approximately $750 million in enterprise debt, incorporating Moody's standard analytic adjustments. This includes: * $635 million in senior secured 1st and 2nd lien debt; * $100 million in preferred stock (basket "A" treatment under Moody's methodology for handling securities of this type); and * $14 million in capitalized operating leases. This results in pro-forma LTM debt/EBITDA of approximately 6.7X. Moody's expects EBITDA-CAPX/interest to be modest during the first year at 1.3X (1.6X if PIK dividends on preferred are excluded). The 12.5% preferred stock will pay PIK interest for the first two years, then at the company's option may become cash pay subject to the company achieving certain performance standards. FCF/Debt will be under 5% once the juice plant expansion is completed, indicating modest ability to reduce debt over time. Bolthouse's balance sheet is weak, with over 62% of its assets comprised of goodwill. The senior secured revolver and first lien term loan are rated at the corporate family rating as this debt represents the majority of the enterprise's debt. The facilities are secured by substantially all assets of the borrowers, as well as a pledge of stock, plus both upstream and downstream guarantees. The $135 million second lien term loan is notched down from the corporate family rating reflecting its secured but junior position behind the substantial $575 million in first lien revolver and term loan indebtedness. The second lien term loan is secured by the same assets and benefits from same guarantees as the first lien facilities, although its claim is junior to that of the first lien facilities. Asset coverage appears weak, with full coverage of debt requiring the company to realize significant value of goodwill in liquidation. A relatively high multiple of the company's EBITDA -- especially in a distressed scenario -- would be required to fully repay all the facilities. Over time, Bolthouse's ratings could be upgraded if the company is able to successfully ramp up manufacturing operations in its newly-expanded juice operations without significant operating difficulties, and effectively utilize the added capacity and expected higher margin operating cash flows to reduce leverage. Upward rating pressure would result if Debt/EBITDA (including Moody's standard analytic adjustments) could be maintained below 4.5X, with free cash flow to debt registering over 8%. Downward rating pressure could occur if the company's operating performance deteriorates -- perhaps due to start-up issues at its expanded juice operations -- or if the company is unable to reduce leverage from its initial high levels such that Debt/EBITDA remains above 6.0X by FYE'07. Wm. Bolthouse Farms, Inc., headquartered in Bakersfield California, is a processor and distributor of peeled and cut carrots and carrot products, and a producer of fruit and vegetable based beverages. Bolthouse had FY'2005 revenues of $391 million. WORLDCOM INC: Court Lifts Stay for APG Inc. to Pursue Appeal ------------------------------------------------------------ Before the Petition Date, A.P.G., Inc., commenced an action against MCI Telecommunications Corp. and others in the United States District Court for the District of Rhode Island. In November 2000, the District Court approved a stipulation dismissing MCI Communications Corporation. In January 2001, the District Court granted MCI's motion for summary judgment, dismissing all of APG's claims except its breach of contract claim. In November 2001, during the trial on APG's contract claim, the District Court granted MCI's motion for judgment as a matter of law. APG then appealed the District Court's Judgment in January 2002. However, the Appeal was stayed due to WorldCom, Inc., and its debtor-affiliates' bankruptcy petition. After the Petition Date, APG filed Claim No. 11605, asserting the same claims it asserted in the Appeal. The Debtors have objected to the Claim. In August 2002, APG sought relief from the automatic stay to allow it to litigate in the First Circuit the issues asserted in the Case and in the Appeal. The Debtors objected to APG's request. In October 2002, the Bankruptcy Court denied APG's stay relief motion, without prejudice. In a Court-approved stipulation, MCI and APG now agree that APG will be granted relief from the automatic stay to the extent applicable, and further relief from the Section 524(a) Discharge Injunction for the limited purpose of prosecuting the Appeal to conclusion in the First Circuit. If the Judgment is affirmed, the effect of the Judgment will be decided in the Debtors' bankruptcy cases as a part of the Objection. If the Judgment is reversed and remanded for further proceedings, the automatic stay and the Discharge Injunction will remain in full force and effect and are specifically not modified to permit further proceedings in the District Court. Instead, all issues with respect to the Claim will be resolved in the Bankruptcy Court in the context of the Objection. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI -- http://www.worldcom.com/-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. The Bankruptcy Court confirmed WorldCom's Plan on October 31, 2003, and on April 20, 2004, the company formally emerged from U.S. Chapter 11 protection as MCI, Inc. (WorldCom Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) Y-TEL INT'L: Files Third Quarter 2005 Financial Results ------------------------------------------------------- Y-Tel International Inc. delivered its financial results for the quarter ended Sept. 30, 2005. During the third quarter, the Company was in the final stages of finishing its contractual obligations to Digicel and completing the convergence from the DMS platform to the new Voip environment. This new infrastructure will become the backbone for Y-Tel's new wholesale and retail products and services while significantly reducing its operating costs. The Company was also finalizing its plans to relocate the base of operations from Miami, Florida, to Dallas, Texas. During the third quarter, the Company completed the installation of the Nextone equipment and added thirteen new carriers related to expansion of its wholesale product. Additionally, the Company continued development of its retail infrastructure in preparation for product launch targeted for the first quarter of 2006. The Company also completed its trademark application for CellNet. This new product will provide cellphone customers 60% to 70% savings when making international long distance calls. Currently, a new Web site and distribution channels for CellNet, which is part of the retail launch scheduled for the first quarter 2006, are being developed. The Company completed installation of its first wifi mesh network in Nacogdoches, Texas. The first network is a joint venture with Dotcom, a local Internet provider in Nacogdoches. The two companies will be testing various wifi phones and ATA devices over the next few months to identify areas of opportunity for expansion into other markets. Results from Operations Net sales were $737,503 and $886,351 for the nine months ended Sept. 30, 2005, and 2004, respectively, resulting in a 16.8% decrease in revenue when compared to the same period of time for the previous year. Net sales were $249,738 and $364,914 for the quarters ended September 30, 2005, and 2004, respectively, resulting in a 31.5% decrease in revenue when compared to the same period of time for the previous year. Operating expenses were $4,799,126 and $1,368,161 for the nine months ended September 30, 2005, and 2004, respectively, resulting in a 250% increase when compared to the same period of time for the previous year. Operating expenses were $837,773 and $438,702 for the quarters ended September 30, 2005, and 2004, respectively, resulting in a 91% increase when compared to the same period of time for the previous year. Going Concern Doubt Corbin & Company, LLP, raised substantial doubt about the Company's ability to continue as a going concern after it audited the company's financial statements for the fiscal year ended Dec. 31, 2004. The auditing firm points to the company's operating losses and negative cash flows from operations. Y-Tel International Inc., fka Consolidated Pictures Corp., is a wholesale and retail provider of telecommunication, VoIP, and Wifi services and devices. As of Sept. 30, 2005, Y-Tel incurred an equity deficit of $60,134. The Company has a net working capital deficit of $776,629 as of Sept. 30, 2005. Y-TEL INTERNATIONAL: Board Taps CFO John Conroy as Acting CEO ------------------------------------------------------------- The Board of Directors for Y-Tel International, Inc., voted to remove Steven Lipman as the Company's Chairman, President and Chief Executive Officer on Nov. 18, 2005. The Board also voted to remove Mr. Lipman as a director and to terminate his employment with the Company. John Conroy, the Company's Chief Financial Officer, was appointed by the Board to serve as the Acting Chief Executive Officer and Chairman following Mr. Lipman's removal. The Board established an Executive Committee to perform all actions of the Board until the next annual stockholders' meeting. The committee will consist of directors John Conroy, Todd Wallace and Alan Tracey. Y-Tel International Inc., fka Consolidated Pictures Corp., is a wholesale and retail provider of telecommunication, VoIP, and Wifi services and devices. As of Sept. 30, 2005, Y-Tel incurred an equity deficit of $60,134. The Company has a net working capital deficit of $776,629 as of Sept. 30, 2005. ZIM CORPORATION: Posts $368,720 Net Loss in Second Fiscal Quarter ----------------------------------------------------------------- ZIM Corporation reported its results for the three and six months ended Sept. 30, 2005. Revenue for the second quarter was $2,172,864, a decrease compared with revenue of $3,227,000 in the second quarter of last fiscal year. SMS revenue was $1,863,744, a decrease from $2,913,871 for the same period last year. SMS revenues in the last fiscal year were due to higher levels of messaging traffic from a significant customer. Net loss in the quarter was $368,720, as compared with $535,014 in the second quarter of last fiscal year. The improved net loss is a result of significant improvements in cost management and the elimination of the amortization of the intangible assets acquired in the EPL acquisition. Revenue for the first six months of fiscal year 2006, ended September 30, 2005, was $4,746,173, a slight increase compared with revenue of $4,705,716 for the first six months of the last fiscal year. Net loss for the first six months of this fiscal year was $565,601 as compared to a net loss of $1,527,219 in the first six months of last fiscal year. "Although ZIM's revenue for the second quarter is down from the prior year, we continued our move towards profitability," ZIM's president and chief executive officer Mike Cowpland. "We added to our customer base during the quarter and we are now focused on continued improvements in scalability, reliability and performance of our platform and geographical expansion." ZIM had cash of $511,311 at September 30, 2005, as compared to $737,888 at March 31, 2005. Cash used in operations for the six months ended September 30, 2005, was $234,973. Cash provided from operations for the three months ended September 30, 2005, was $273,599. During the quarter, ZIM arranged for Dr. Cowpland, to provide an unsecured revolving line of credit to ZIM of up to C$500,000 and bearing interest at the same rate as charged by the Company's principal banker from time to time. There is currently no balance owing on this line of credit. Going Concern Doubt Raymond Chabot Grant Thornton LLP, the Company's independent auditors, indicated on the annual report ended March 31, 2005, that there was substantial doubt regarding Zim Corp.'s ability to continue as a going concern. Future liquidity and cash requirements will depend on a wide range of factors including the level of business in existing operations and ZIM's ability to raise additional financing. There can be no assurance that ZIM will be able to meet its working capital needs for any future period. Material Weakness The independent auditors reported to the Board of Directors that there is a material weakness in the Company's internal controls over financial reporting. The auditors' primary concern was the adequacy of review of supporting schedules that resulted in adjusting journal entries being entered into the accounting systems that were inaccurate or disclosures in the notes to the financial statements that were incorrect. These inaccuracies were not detected by the control procedures of management reviewing the schedules and supporting documentation, resulting in errors appearing on the financial statements and subsequent detection in the audit. ZIM Corp. -- http://www.zim.biz-- is a mobile service provider, aggregator and application developer for the global SMS market. ZIM's products include mobile e-mail and office tools, such as ZIM SMS Chat, and its message delivery services include Bulk SMS, Premium SMS and Location Based Services. ZIM is also a provider of enterprise-class software and tools for designing, developing and manipulating database systems and applications. Through its two-way SMS expertise and mobile-enabling technologies, ZIM bridges the gap between data and mobility. * Proskauer Rose Names Six New Partners & Three Senior Counsel -------------------------------------------------------------- Proskauer Rose LLP, an international law firm with over 700 lawyers in the U.S. and Europe, has promoted six attorneys to partner and three to senior counsel. In the firm's Corporate Department, Yuval Tal and Janice Smith were named partner in the New York office and Monica Shilling in the Los Angeles office. In the Litigation & Dispute Resolution Department, Anthony Pacheco was named partner in Proskauer's Los Angeles office and Lionel Pashkoff was named partner in the Washington, D.C. office. In the Labor & Employment Department, Robert Projansky was named partner in New York. Michael Lebowich and Marc Mandelman were named senior counsel in the Labor & Employment Department in New York and Stuart Kapp, who focuses his practice on commercial real estate and corporate transactions, was named senior counsel in the Boca Raton office. "This is a highly accomplished and diverse group and we look forward to their continued contributions to the firm," said Allen I. Fagin, Chairman of Proskauer Rose. Mr. Tal is a graduate of the University of Chicago Law School. Ms. Smith is a graduate of the Fordham University School of Law, and received her B.A. from Iona College. Ms. Shilling is a graduate of the Georgetown University Law Canter, and received her B.A. from the University of Redlands. Mr. Pacheco is a graduate of the University of Michigan Law School, and received his B.A. from Princeton University. Mr. Pashkoff is a graduate of the George Washington University National Law Center, and received his B.A. from the University of Maryland. Mr. Projansky is a graduate of New York University School of Law, and received his B.A. from the State University of New York at Binghamton. Mr. Lebowich is a graduate of Harvard Law School, and received his B.S. from the Cornell University School of Industrial & Labor Relations. Mr. Mandelman is a graduate of the Hofstra University School of Law, and received his B.S. from Hobart and William Smith Colleges. Mr. Kapp is a graduate of Cornell Law School, and received his M.G.A. from the University of Pennsylvania. About Proskauer Rose LLP Proskauer Rose LLP, -- http://www.proskauer.com/-- founded in 1875, is one of the nation's largest law firms, providing a wide variety of legal services to clients throughout the United States and around the world from offices in New York, Los Angeles, Washington, D.C., Boston, Boca Raton, Newark, New Orleans and Paris. The firm has wide experience in all areas of practice important to businesses and individuals, including corporate finance, mergers and acquisitions, general commercial litigation, private equity and fund formation, patent and intellectual property litigation and prosecution, labor and employment law, real estate transactions, bankruptcy and reorganizations, trusts and estates, and taxation. Its clients span industries including chemicals, entertainment, financial services, health care, hospitality, information technology, insurance, internet, manufacturing, media and communications, pharmaceuticals, real estate investment, sports, and transportation. * Upcoming Meetings, Conferences and Seminars --------------------------------------------- December 1, 2005 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Fundamentals: Nuts & Bolts for Young Practitioners Hyatt Grand Champions Resort, Indian Wells, California Contact: 1-703-739-0800; http://www.abiworld.org/ December 1-3, 2005 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Grand Champions Resort, Indian Wells, California Contact: 1-703-739-0800; http://www.abiworld.org/ December 2, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Open House Merchandise Mart, Chicago, Illinois Contact: 815-469-2935 or http://www.turnaround.org/ December 5-6, 2005 MEALEYS PUBLICATIONS Asbestos Bankruptcy Conference Ritz-Carlton, Battery Park, New York, New York Contact: http://www.mealeys.com/ December 5, 2005 TURNAROUND MANAGEMENT ASSOCIATION Carolinas Holiday Reception The Park Hotel, Charlotte, North Carolina Contact: 704-926-0359 or http://www.turnaround.org/ December 6, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA/UVANY Holiday Party Shanghai Reds, Buffalo, New York Contact: 716-440-6615 or http://www.turnaround.org/ December 6, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Networking with CFA Pyramid Club, Philadelphia, Pennslyvania Contact: 215-657-5551 or http://www.turnaround.org/ December 7, 2005 TURNAROUND MANAGEMENT ASSOCIATION Evening Drinks GE Commercial Finance, Sydney, Australia Contact: 9299-8477 or http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION NJTMA Networking Breakfast Woodbridge Hilton, Iselin, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION TMA/CFA Holiday Party J.W. Marriott, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Holiday Gathering & Help for the Needy *FREE to Members* Mack Hall at Hofstra University, Hempstead, New York Contact: 516-465-2356; http://www.turnaround.org/ December 8, 2005 TURNAROUND MANAGEMENT ASSOCIATION Annual Board of Directors Meeting Rochester, New York Contact: 716-440-6615; http://www.turnaround.org/ December 12-13, 2005 PRACTISING LAW INSTITUTE Understanding the Basics of Bankruptcy & Reorganization New York, New York Contact: http://www.pli.edu/ December 14, 2005 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Hotel, Tyson's Corner, Virginia Contact: 703-912-3309; http://www.turnaround.org/ January 5, 2006 TURNAROUND MANAGEMENT ASSOCIATION NJTMA Holiday Party Iberia Tavern & Restaurant, Newark, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ January 14, 2005 CEB Drafting & Negotiating Office Leases San Francisco, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 14, 2005 CEB Real Property Financing Los Angeles, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 21, 2005 CEB Drafting & Negotiating Office Leases Sacramento, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 21, 2005 CEB Drafting & Negotiating Office Leases San Diego, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 21, 2005 CEB Real Property Financing Sacramento, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 21, 2005 CEB Real Property Financing San Diego, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION PowerPlay - TMA Night at the Thrashers Philips Arena, Atlanta, Georgia Contact: 678-795-8103 or http://www.turnaround.org/ January 28, 2005 CEB Drafting & Negotiating Office Leases Anaheim, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 28, 2005 CEB Drafting & Negotiating Office Leases Santa Clara, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 28, 2005 CEB Real Property Financing Anaheim, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 28, 2005 CEB Real Property Financing Santa Clara, California Contact: customer_service@ceb.ucop.edu or 1-800-232-3444 January 26-28, 2006 AMERICAN BANKRUPTCY INSTITUTE Rocky Mountain Bankruptcy Conference Westin Tabor Center, Denver, Colorado Contact: 1-703-739-0800; http://www.abiworld.org/ February 9-10, 2006 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium Eden Roc, Miami, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ February 27-28, 2006 PRACTISING LAW INSTITUTE 8th Annual Real Estate Tax Forum New York, New York Contact: http://www.pli.edu/ March 2-3, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS Legal and Financial Perspectives on Business Valuations & Restructuring (VALCON) Four Seasons Hotel, Las Vegas, Nevada Contact: http://www.airacira.org/ March 2-5, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES 2006 NABT Spring Seminar Sheraton Crescent Hotel, Phoenix, Arizona Contact: http://www.pli.edu/ March 4-6, 2006 NORTON INSTITUTES ON BANKRUPTCY LAW Bankruptcy Law Institute Marriott, Park City, Utah Contact: 770-535-7722 or http://www2.nortoninstitutes.org/ March 9, 2006 AMERICAN BANKRUPTCY INSTITUTE Nuts & Bolts for Young Practitioners Century Plaza, Los Angeles, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 10, 2006 AMERICAN BANKRUPTCY INSTITUTE Bankruptcy Battleground West Century Plaza, Los Angeles, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 22-25, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference JW Marriott Desert Ridge, Phoenix, Arizona Contact: http://www.turnaround.org/ March 30-31, 2006 PRACTISING LAW INSTITUTE Commercial Real Estate Financing: What Borrowers & Lenders Need to Know Now Chicago, Illinois Contact: http://www.pli.edu/ March 30 - April 1, 2006 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ April 1-4, 2006 NORTON INSTITUTES ON BANKRUPTCY LAW Bankruptcy Law Institute The Flamingo, Las Vegas, Nevada Contact: 770-535-7722 or http://www2.nortoninstitutes.org/ April 5-8, 2006 MEALEYS PUBLICATIONS Insurance Insolvency and Reinsurance Roundtable Fairmont Scottsdale Princess, Scottsdale, Arizona Contact: http://www.mealeys.com/ April 6-7, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES The Seventh Annual Conference on Healthcare Transactions Successful Strategies for Mergers, Acquisitions, Divestitures, and Restructurings The Millennium Knickerbocker Hotel, Chicago, Illinois Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ April 18-22, 2006 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting JW Marriott, Washington, D.C. Contact: 1-703-739-0800; http://www.abiworld.org/ April 19, 2006 PRACTISING LAW INSTITUTE Residential Real Estate Contracts & Closings New York, New York Contact: http://www.pli.edu/ May 4-6, 2006 AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION Fundamentals of Bankruptcy Law Chicago, Illinois Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ May 8, 2006 AMERICAN BANKRUPTCY INSTITUTE NYC Bankruptcy Conference Millennium Broadway, New York, New York Contact: 1-703-739-0800; http://www.abiworld.org/ May 18-19, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Third Annual Conference on Distressed Investing Europe Maximizing Profits in the European Distressed Debt Market Le Meridien Piccadilly Hotel, London, UK Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ May 22, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI TMA Annual Golf Outing Indian Hills Golf Club, Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ June 7-10, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 22nd Annual Bankruptcy & Restructuring Conference Grand Hyatt, Seattle, Washington Contact: http://www.airacira.org/ June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ June 21-23, 2006 TURNAROUND MANAGEMENT ASSOCIATION Global Educational Symposium Hyatt Regency, Chicago, Illinois Contact: http://www.turnaround.org/ June 22-23, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Ninth Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel, Chicago, Illinois Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ June 29 - July 2, 2006 NORTON INSTITUTES ON BANKRUPTCY LAW Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 770-535-7722 or http://www2.nortoninstitutes.org/ July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott, Newport, Rhode Island Contact: 1-703-739-0800; http://www.abiworld.org/ July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island, Amelia Island, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ September 7-9, 2006 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Wynn Las Vegas, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ September 17-24, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Optional Alaska Cruise Seattle, Washington Contact: 800-929-3598 or http://www.nabt.com/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage, Long Island, New York Contact: 312-578-6900; http://www.turnaround.org/ October 25-28, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ February 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium San Juan, Puerto Rico Contact: 1-703-739-0800; http://www.abiworld.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ March 29-31, 2007 ALI-ABA Chapter 11 Business Reorganizations Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, Illinois Contact: http://www.airacira.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, Florida Contact: http://www.ncbj.org/ October 22-25, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott, New Orleans, Louisiana Contact: 312-578-6900; http://www.turnaround.org/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 25-29, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Ritz Carlton Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ October 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ October 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, Nevada Contact: http://www.ncbj.org/ October 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* 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 C. 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 ***