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/raid1/www/Hosts/bankrupt/TCR_Public/060206.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, February 6, 2006, Vol. 9, No. 31 Headlines ABITIBI-CONSOLIDATED: Posts CDN$355 Mil. Net Loss in 2005 4th Qtr. ACCLAIM ENT: Wants Until April 28, 2006, to Decide on Leases AEARO CORP: Planned Acquisition Cues S&P to Place Ratings Watch ALOHA AIRLINES: Gets Court Approval to Emerge from Bankruptcy AMERICAN HOME: Posts $87,137 Net Loss In Quarter Ended Nov. 30 AMERICAN PLAN: Trustee Says No More Assets Left to Distribute AMERISOURCEBERGEN CORP: Moody's Affirms Ba2 Unsec. Notes' Ratings AOL LATIN: Inks Severance Agreement with Pres. & CEO C. Harrington ASARCO LLC: Court OKs Stipulation for a 3-Member Independent Board ASARCO LLC: McAllister Appointed as Debtor's Interim CEO ASARCO LLC: First Union & BNY Wants Final DIP Order Modified ATA AIRLINES: Unveils 13 Statutory Requirements Under Amended Plan AUBURN FOUNDRY: Chapter 7 Trustee Taps Baker as Special Counsel AUBURN FOUNDRY: Chap. 7 Trustee Hires Dennis Maude as Consultant AUSTIN COMPANY: Committee Hires BBP Partners as Financial Advisor BCP CRYSTAL: S&P Raises Long-Term Corporate Credit Rating to BB- BERRY-HILL: Court Okays Continuation of All Insurance Policies BIRCH TELECOM: Hires Miller Buckfire as Financial Advisor BLUE BIRD: Fastest Chapter 11 Reorganization in U.S. History BOYDS COLLECTION: Panel Taps FTI Consulting as Financial Advisors BROOKLYN HOSPITAL: Meeting of Creditors Continued to Feb. 16 BURGER KING: Moody's Rates Proposed $350MM Add-On Facility at Ba2 BURGER KING: S&P Rates Proposed $350 Million Loan Add-On at B+ CABLEVISION SYSTEMS: S&P Holds Corporate Credit Rating on Watch CAREMORE HOLDINGS: Moody's Assigns B2 Corporate Family Rating CATHOLIC CHURCH: Tucson Parish Incorporation Nearly Completed CCH II: Fitch Assigns CCC+ Rating to $450 Million Senior Notes COATES INTERNATIONAL: Posts $202K Net Loss in Third Quarter CONSUMERS TRUST: Hires Katten Muchin as Bankruptcy Counsel COVALENCE SPECIALTY: S&P Rates Proposed $175 Million Loan at B- CSC HOLDINGS: Fitch Affirms Low-B Ratings With Negative Outlook DELTA AIR: Appoints Ernst & Young as Auditors for Fiscal 2006 DENNIS SPIELBAUER: Case Summary & 6 Largest Unsecured Creditors DOCTORS HOSPITAL: Files 2nd Amendment to DIP Financing Facility DOMTAR INC: Posts $298 Million Net Loss in 2005 Fourth Quarter DRS TECHS: S&P Affirms Corporate Credit Rating With Neg. Outlook ERA AVIATION: Court Okays Continued Use of Cash Collateral ESCHELON TELECOM: S&P Puts CCC+ Preliminary Rating on Securities EXIDE TECHS: S&P Lowers Corporate Credit Rating to CCC form CCC+ FLEET COMMERCIAL: Notes Payment Prompts S&P to Withdraw Ratings FOSS MANUFACTURING: Trustee Wants Jenifer Smyth's Contract Voided GARDEN STATE: Has Until April 6 to File Chapter 11 Plan GARDEN STATE: Has Until March 15 to Decide on New Jersey Lease GENERAL MOTORS: Incurs Total Loss Of $3.4 Billion For 2005 GEYSERS POWER: Voluntary Chapter 11 Case Summary GLAZED INVESTMENTS: Files Chapter 11 to Facilitate Purchase Pact GLAZED INVESTMENTS: Case Summary & 20 Largest Unsecured Creditors GLYCOGENESYS INC: Makes Management Changes and Cuts Work Force GOODING'S SUPERMARKETS: Court Issues Final Cash Collateral Order GRUMMAN OLSON: Wants Until June 1 to Object to Proofs of Claim HANOVER INSURANCE: Moody's Affirms Senior Debt Rating at Ba1 HEXCEL CORP: Improved Performance Cues Moody's to Upgrade Ratings HILTON HOTELS: Fitch to Lower Ratings Upon Hilton plc Acquisition HORSEHEAD INDUSTRIES: Taps Cole Schotz as Substitute Counsel INTEGRATED HEALTH: Abe Briarwood Wants IHS to Release $1.5 Million JOURNAL REGISTER: S&P Rates $1 Billion Sr. Credit Facilities at BB KAISER ALUMINUM: Wants to Pay PI Trust Trustees' Fees & Expenses KMART CORP: Court Lifts Stay for Six Personal Injury Claimants KNOBIAS INC: Files Amended 2004 Annual and 2005 Quarterly Reports KRISPY KREME: Sells 12 Stores to Westward Dough for $10 Million LA QUINTA: Moody's Downgrades Senior Unsecured Debt Rating to B2 LINENS 'N THINGS: Fitch Initiates Coverage With Low-B Ratings MAJESCO ENTERTAINMENT: Losses Trigger Going Concern Doubt MERISTAR HOSPITALITY: S&P Upgrades Corporate Credit Rating to B MESABA AIRLINES: Unions Balks at Court Filing to Reject Contracts MH/1993: Case Summary & 13 Largest Unsecured Creditors MUSICLAND HOLDING: Wants to Maintain Existing Insurance Policies MUSICLAND HOLDING: Walks Away from 68 Real Property Leases NEXICON INC: Earns $316,644 of Net Income in 3rd Quarter of 2005 NMHG HOLDING: S&P Revises Outlook to Stable from Negative NORTEL NETWORKS: S&P Rates Proposed US$1.3 Billion Facility at B- NORTEL NETWORKS: Unit Gets $1.3 Bil. Loan to Finance Bond Maturity NORTHWEST AIRLINES: Pilots Union Leaders Authorize Strike Ballot NOVELIS INC: Inks Multi-Year European Supply Agreement with Prefa PERFORMANCE TRANSPORTATION: Chapter 11 Cases Jointly Administered PERFORMANCE TRANSPORTATION: Creditors Meeting Set for March 6 PERFORMANCE TRANSPORTATION: Has Until March 3 to File Schedules POINT TO POINT: Court Confirms First Amended Chapter 11 Plan RESIDENTIAL REINSURANCE: Moody's Removes Notes' Rating From Watch RESORTS INT'L: Moody's Junks Ratings on $1.05 Billion Loans RGIS INVENTORY: S&P Assigns B+ to Planned $370 Million Bank Loan ROMAN CORPORATION: Seeks Protection Under CCAA RURAL CELLULAR: Fitch Rates $475 Million Sr. Sub. Notes at CC SECURUS TECHS: S&P Puts B+ Corporate Credit Rating on Neg. Watch SEDGWICK CMS: S&P Assigns B+ Bank Loan Rating to $340MM Facility SFK INTERNATIONAL: Case Summary & 20 Largest Unsecured Creditors STEELCASE INC: S&P Assigns Preliminary BB+ Sub. Debt Rating STELCO INC: Completes Sale of Subsidiaries' Shares to Mittal STEVE'S SHOES: U.S. Trustee Appoints 7-Member Creditors Committee STEVE'S SHOES: Committee Wants to Hire Kronish Lieb as Counsel TRU 2005: Fitch Rates $1.3 Billion Unsecured Credit Agreement at B TXU CORP: Earns $356 Million in Fourth Quarter Ended Dec. 31, 2005 UAL CORP: Reorganization Confirmation Cues S&P's Ratings Upgrade VERIFONE INC: S&P Raises Corporate Credit & Loan Ratings to BB- VILLAGES AT SARATOGA: Wants to Sell Property to Deer Canyon VINTAGE PETROLEUM: Occidental Merger Cues S&P's Ratings Withdrawal VISKASE COS: S&P Revises CreditWatch Implications to Negative WAVERIDER COMMS: Amends 2004 Annual Report WESTPOINT STEVENS: Steering Comm. Balks at Escrowed Funds Release WHITEHALL JEWELLERS: Agrees to Merge with Prentice and Holtzman WINDOW ROCK: U.S. Trustee Says Disclosures Statement is Inadequate XERIUM TECH: Subsidiary Acquires Coldwater Covers for $6.8 Million XEROX CAPITAL: S&P Puts $27 Mil. Certificates' B- Rating on Watch * Gardner Carton Names Irving Apar as Partner in New York Office * Osler's Robin Schwill Examines Canadian DIP Financing * BOND PRICING: For the week of Jan. 30 - Feb. 3, 2006 ********* ABITIBI-CONSOLIDATED: Posts CDN$355 Mil. Net Loss in 2005 4th Qtr. ------------------------------------------------------------------ Abitibi Consolidated Inc. reported a fourth quarter net loss of CDN$355 million ending Dec. 31, 2005, compared to a net loss of CDN$108 million in the same quarter of 2004. For the quarter ending Dec. 31, 2005, sales totaled CDN$1.31 billion, compared to CDN$1.34 billion sales for the same period in 2004. At Dec. 31, 2005, total assets were CDN$8 billion and total liabilities were CDN$5.6 billion, resulting in CDN$2.4 billion of positive shareholders' equity. "As promised, we have taken decisive actions which have delivered an important reduction in our debt and at the same time, sharpened our strategic focus on our North American portfolio of assets while still serving customers across the globe," said President and Chief Executive Officer John Weaver. "We have significantly improved our balance sheet and liquidity position and we are positioning ourselves for greater financial flexibility for the future." For all of 2005, net loss totaled CDN$350 million, compared to a CDN$36 million net loss for 2004. For all of 2005, sales totaled CDN$5.3 billion, compared to CDN$5.2 billion of sales in 2004. Headquartered in Montreal, Quebec, Abitibi-Consolidated Inc. -- http://www.abitibiconsolidated.com/-- is a leading producer of newsprint and commercial printing papers as well as a major supplier of wood products. Committed to the sustainable forest management of more than 40 million acres through third-party certification, the Company supplies customers in 70 countries from its 45 operating facilities. Abitibi-Consolidated is also the largest recycler of newspapers and magazines in North America. Company shares are traded on the Toronto Stock Exchange (TSX: A) and on the New York Stock Exchange (NYSE: ABY). * * * As reported in the Troubled Company Reporter on Dec. 14, 2005, Fitch Ratings has initiated coverage of Abitibi Consolidated Inc. and has rated Abitibi's senior unsecured bonds 'B+' and secured bank debt 'BB-'. The issuer default rating is also 'B+'. The Rating Outlook is Stable. Approximately $3.3 billion in public securities and CDN$700 million in bank debt is affected. The ratings are a function of a depressed North American demand for newsprint, a projected slow recovery in operating profits, and Abitibi's debt level. ACCLAIM ENT: Wants Until April 28, 2006, to Decide on Leases ------------------------------------------------------------ Allan B. Mendelsohn, Esq., the Chapter 7 Trustee overseeing the liquidation of Acclaim Entertainment Inc., asks the U.S. Bankruptcy Court for the Eastern District of New York to extend his time to assume, assume and assign, or reject executory contracts, licenses, license agreements, and unexpired leases to April 28, 2006. Many of the video games produced by the Debtor use the name, image and likeness of famous persons such as sports figures. The Debtor entered into license contracts for the use of those names and likenesses in connection with each video game produced. The Chapter 7 Trustee believes that there are several hundred Contracts to which the Debtor is a party and the Trustee doesn't want to lose his rights in those contracts. Mr. Mendelsohn tells the Bankruptcy Court that the extension to April 28 will provide him enough time to determine which of the executory contracts have value and should be assumed and which don't have value and should be rejected. The Bankruptcy Court will convene a hearing at 10:00 a.m., on Feb. 15, 2006, to consider the Trustee's extension request. Headquartered in Glen Cove, New York, Acclaim Entertainment was a worldwide developer, publisher and mass marketer of software for use with interactive entertainment game consoles including those manufactured by Nintendo, Sony Computer Entertainment and Microsoft Corporation as well as personal computer hardware systems. The Company filed a chapter 7 petition on Sept. 1, 2004 (Bankr. E.D.N.Y. Case No. 04-85595). Jeff J. Friedman, Esq., at Katten Muchin Zavis Rosenman represents the Debtor. Allan B. Mendelsohn, Esq., serves as the chapter 7 Trustee. Salvatore LaMonica, Esq., at La Monica Herbst & Maniscalo, LLP, represents the chapter 7 trustee. When Acclaim filed for bankruptcy, it listed $47,338,000 in total assets and $145,321,000 in total debts. In its bankruptcy petition, Acclaim listed GMAC Commercial Finance as its primary creditor, owed $18 million. AEARO CORP: Planned Acquisition Cues S&P to Place Ratings Watch --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on personal protection equipment manufacturer Aearo Corp. (a wholly-owned subsidiary of Aearo Technologies Inc.) on CreditWatch with negative implications, including the 'B+' corporate credit rating on the company. This action follows the announcement that the European private-equity firm Permira will acquire Aearo from Bear Stearns Merchant Banking for $765 million. "Based on this purchase price, there could be an increase in leverage beyond what is appropriate for the current rating," said Standard & Poor's analyst John R Sico. Total debt outstanding was $370 million as of Sept. 30, 2005. The purchase is expected to be funded with new debt and equity. The company had about $30 million of cash at Sept. 30, 2005. If the existing bank debt and subordinated debt are redeemed, the ratings on those issues will be withdrawn. The ratings on Aearo, including any new debt, will depend on the as-yet-unknown capital structure. For the current 'B+' rating, Standard & Poor's expectations are that total debt to EBITDA will fall in the 4x-5x range. The transaction is expected to close in 90 days. Indianapolis, Indiana-based Aearo Corp. is a leader in the: * hearing, * eye, * face, * head, and * respiratory segments of the personal protection equipment market and had sales of $420 million for the fiscal year ended September 2005. Standard & Poor's will review the financing of the transaction and the company's financial policies with Aearo's management before taking further rating action. ALOHA AIRLINES: Gets Court Approval to Emerge from Bankruptcy ------------------------------------------------------------- On Feb. 2, 2006, U.S. Bankruptcy Judge Robert Faris approved modifications to a Plan of Reorganization that clears the way for Aloha Airlines to exit bankruptcy protection by mid-February. "We've cleared all the hurdles and we are hopeful we will have our new funding in mid-February," said David A. Banmiller, Aloha's President and Chief Executive Officer. "We're excited that our lead investor The Yucaipa Cos will be coming aboard very soon and that we also will have participation by local investors to carry the Aloha Airlines tradition forward." Under the modified plan of reorganization, Aloha will emerge with $63 million in equity and very little debt, Mr. Banmiller said. "Thanks to the cooperative efforts of our 3,500 employees, our business partners, investors and advisers, the new Aloha Airlines will emerge with a balance sheet that's stronger than ever and exceedingly well positioned to compete in today's market. With the continued support of our loyal customers, Aloha Airlines is poised to become a leader in this part of the world." Headquartered in Honolulu, Hawaii, Aloha Airgroup, Inc. -- http://www.alohaairlines.com/-- provides air carrier service connecting the five major airports in the State of Hawaii. Aloha Airgroup and its subsidiary Aloha Airlines, Inc., filed for chapter 11 protection on Dec. 30, 2004 (Bankr. D. Hawaii Case No. 04-03063). Alika L. Piper, Esq., Don Jeffrey Gelber, Esq., and Simon Klevansky, Esq., at Gelber Gelber Ingersoll & Klevansky represent the Debtors in their restructuring efforts. As of Dec. 30, 2004, Aloha Airgroup reported $333,901 in assets and $24,124,069 in liabilities, while Aloha Airlines reported $9,134,873.23 in assets, and $543,709,698.75 in liabilities. AMERICAN HOME: Posts $87,137 Net Loss In Quarter Ended Nov. 30 -------------------------------------------------------------- American Home Food Products, Inc., delivered its quarterly report on Form 10-QSB for the quarter ending Nov. 30, 2005, to the Securities and Exchange Commission on Jan. 27, 2006. American Home reported a $87,137 net loss on $49,649 of revenue for the quarter ended Nov. 30, 2005. At Nov. 30, 2005, the Company's balance sheet showed $503,402 in total assets and liabilities of $3,466,745, resulting in a stockholders' deficit of $2,963,343. Going Concern Doubt Sherb & Co., LLP, expressed substantial doubt about American Home's ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended May 31, 2005. The auditing firm pointed to the Company's recurring losses from operations, working capital deficiency and default with certain of its debts. A full-text copy of the regulatory filing is available at no charge at http://researcharchives.com/t/s?4dd Based in New York City, American Home Food Products, Inc. engages in licensing its tradenames and marketing of construction materials. It licenses its Por-Rok, Dash Patch, and Sta-Dri trademarks. The Por-Rok and Dash Patch product lines include prepackaged concrete repair and floor resurfacing products; and Sta-Dri product line includes masonry waterproofing products. The company was formerly known as Novex Systems International, Inc. and changed its name to American Home Foods, Inc. in February 2005. AMERICAN PLAN: Trustee Says No More Assets Left to Distribute ------------------------------------------------------------- Lenard E. Schwartzer, the chapter 11 Trustee appointed in American Plan LLC's bankruptcy case, amended the report he presented during the Section 341(a) meeting concluded last February 2, 2005. The Trustee clarifies that no assets are available in the Debtor's estate for distribution to creditors. The Trustee says that based on his investigation, the Debtor's assets totaled $480 as of January 24, 2006. The Trustee reported at the Sec. 341 meeting that assets were available for distribution in the Debtor's estate. The Trustee also suggested a substantial likelihood that those assets would be recovered within a reasonable period of time. Headquartered in Henderson, Nevada, American Plan LLC, filed for chapter 11 protection on December 30, 2004 (Bankr. D. Nev. Case No. 04-22633). Sam Benevento, Esq., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $1 million and $10 million. AMERISOURCEBERGEN CORP: Moody's Affirms Ba2 Unsec. Notes' Ratings ----------------------------------------------------------------- Moody's Investors Service affirmed AmerisourceBergen Corporation's (ABC's) debt ratings (Ba2 corporate family rating) and changed the outlook to positive from stable. The change in outlook is based on Moody's belief that: 1) the transition to a fee-for-service business model is largely behind the company and core distribution margins are now stable to improving; 2) cash flow relative to current debt levels is expected to remain solid despite very low drug distribution margins and challenges faced in the PharMerica segment; 3) the company's strong liquidity position offers significant flexibility; and 4) ABC is not likely to need to raise leverage to pursue shareholder investments. Ratings affirmed: AmerisourceBergen Corporation: * Ba2 senior unsecured notes; * Ba2 corporate family rating; and * SGL-1 speculative grade liquidity rating. ABC's Ba2 rating primarily reflects a leading position but high reliance on drug distribution -- a sector that is beginning to see stabilization after having undergone a major transition over the past two years. ABC's core drug distribution margins are now stable to improving, having reached bottom during fiscal 2005. While the elimination of buy and hold opportunities has significantly reduced operating margins, the decline in ABC's net income has not been as dramatic due to reduced interest expense and income taxes. However, reported cash flow, during this transition period, has been very strong, benefiting by about $1.5 billion in one-time reductions in inventory as of Sept. 30, 2005. Moody's expects that a lower level of drug inventories will result in less volatile operating cash flows, but lower net margins. Moody's notes that cash flow for the first quarter of 2006 was affected by a one-time increase in accounts payable, but the rating agency anticipates cash flows for the balance of fiscal 2006 to be more representative of a sustainable level. As of Dec. 31, 2005, ABC's cash was about $1.5 billion, which is expected to provide sufficient flexibility so that ABC can engage in moderate shareholder initiatives without raising leverage. Moody's anticipates that ultimately, much of ABC's excess cash will be used to finance shareholder initiatives. During fiscal 2005, ABC repurchased approximately $786 million in shares and in August, the company announced board authorization of approximately $400 million in share repurchases, which raised total repurchase availability to $750 million. The company repurchased $89 million in shares in the first quarter of fiscal 2006 and Moody's anticipates the company will repurchase approximately $425 million in total under the program by the end of the fiscal year. In addition to share buybacks and dividends (increased to $20 million in November 2005) Moody's anticipates ABC will use excess cash for modest-sized acquisitions, in the $100-200 million range. Since the beginning of fiscal 2006, the company has announced acquisitions of two small companies for a total price of approximately $170 million. New regulations stemming from the Medicare Modernization Act of 2003, which became effective Jan. 1, 2006, are expected to result in reduced profitability over the near-term for PharMerica. This institutional pharmacy division comprises about 15% of the company's operating earnings. Moody's believes that reimbursement rates from Prescription Drug Plans will be insufficient to offset reduced rebates from manufacturers during 2006. This reduction in PharMerica's profitability is expected to be offset by improvements in the core drug distribution business. The positive outlook assumes ABC will generate sufficient operating cash flow to make moderate-sized acquisitions without significantly increasing financial leverage. The ratings could be upgraded if Moody's believes that ABC can sustain ratios of operating cash flow and free cash flow to adjusted debt at or above the 20% and 15% range, respectively. ABC's credit profile would also be enhanced if it can: * improve core distribution margins; * maintain revenue growth at market levels; and * prevent further deterioration of PharMerica's profitability. However, if ABC experiences further deterioration in margins or its ratios of operating and free cash flow to adjusted debt fall below 20% and 15%, respectively, the ratings or outlook could be lowered. AmerisourceBergen Corporation, headquartered in Valley Forge, Pennsylvania, is one of the nation's leading wholesale distributors of pharmaceutical products and related services. AOL LATIN: Inks Severance Agreement with Pres. & CEO C. Harrington ------------------------------------------------------------------ America Online Latin America Inc., aka AOL Latin America Inc., disclosed in a Form 8-K filing with the Securities and Exchange Commission that on Jan. 31, 2006, it entered into a Severance Agreement and Release of Claims agreement with Charles Herington, the company's president and chief executive officer. The company expects Mr. Herington's employment to end on March 2, 2006. Under the agreement (still subject to approval by the U.S. Bankruptcy Court for the District of Delaware), Mr. Herington will receive $538,067 in severance pay and a $461,200 ordinary course performance bonus for 2005. Additionally, Mr. Herrington will also receive either: (a) reimbursement for COBRA expenses for a 14-month period, or (b) payment of a lump sum equivalent to the cost of obtaining similar health insurance for a 14-month period. The company says that the bonus payment is expected to made upon approval by the bankruptcy court and severance payment is expected to be paid in September 2006. Headquartered in Fort Lauderdale, Florida, America Online Latin America, Inc. -- http://www.aola.com/-- offers AOL-branded Internet service in Argentina, Brazil, Mexico, and Puerto Rico, as well as localized content and online shopping over its proprietary network. Principal shareholders in AOLA are Cisneros Group, one of Latin America's largest media firms, Brazil's Banco Itau, and Time Warner, through America Online. The Company and its debtor-affiliates filed for Chapter 11 protection on June 24, 2005 (Bankr. D. Del. Case No. 05-11778). Pauline K. Morgan, Esq., and Edmon L. Morton, Esq., at Young Conaway Stargatt & Taylor, LLP and Douglas P. Bartner, Esq., at Shearman & Sterling LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $28,500,000 and total debts of $181,774,000. ASARCO LLC: Court OKs Stipulation for a 3-Member Independent Board ------------------------------------------------------------------ As previously reported in the Troubled Company Reporter on Nov. 25, 2005, the ASARCO Official Committee of Unsecured Creditors asks the Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to appoint Douglas McAllister as ASARCO's chief restructuring officer to assume the rights and responsibilities of the board of directors and CEO. TCEQ Supports the Committees' Request The Texas Commission on Environmental Quality believes that the day-to-day operations of the Debtors' operating facilities can run on "auto-pilot" until the Official Committee of Unsecured Creditors' request for the appointment of a chief restructuring officer is resolved. The Debtors' bankruptcy cases revolve around the environmental and asbestos liabilities and the litigation surrounding the transactions with Grupo Mexico, S.A. de C.V. Hal F. Morris, Esq., in Austin, Texas, contends that the Debtors' management has to be independent of Americas Mining Corporation or Grupo Mexico in order to make appropriate decisions, Mr. Morris points out. Mr. Morris asserts that an independent chief restructuring officer would be able to continue to use the skilled services of Baker Botts LLP and the Debtors' other skilled professionals, which would be most efficient in terms of cost and time and would provide continuity to the bankruptcy case. Accordingly, TCEQ asks the Court to maintain the status quo until the time the Committee's request is resolved. When the facts alleged by the Committee's request are proven true, TCEQ further asks the Court to order the parties to bring in an independent third-party chief restructuring officer. Committees Seek Evidentiary Hearing The Official Committee of Unsecured Creditors of Asarco, LLC, the Official Committee of the Subsidiary Debtors and Robert C. Pate, Future Claims Representative of the Subsidiary Debtors, tell the Court that they cannot support the appointment of any of the candidates identified by Carlos Ruiz Sacristan as there is no thorough, complete and detailed examination of their background, business dealings, financial holdings, and any other potential ties to Grupo Mexico, S.A. de C.V. or any of its affiliate. The Committees and the FCR adds that they are not willing to allow ASARCO's board to be comprised of persons not subject to the Court's jurisdiction and process. The Court has set a status conference for the Committees' request for the appointment of a chief restructuring officer. To fully allow the parties to fully prosecute the matter including the introduction of documentary evidence and the presentation of witness testimony, the Committees the FCR ask the Court to convert the status conference to an evidentiary hearing. Evidentiary Hearing Not Needed, Americas Mining Says Charles A. Beckham, Esq., at Haynes and Boone LLP, in Houston, Texas, contends that the Committees' request for an evidentiary hearing is yet another attempt to bypass the rules of procedure, all for non-existent emergency. ASARCO's status report makes plain that the issues around appointing new directors are evolving and that progress is being made, Mr. Beckham avers. If the Court is not satisfied with the results of the status conference, it can order an appropriate briefing and discovery schedule at that time, Mr. Beckham asserts. "What the Court should not do is summarily convert the scheduled status conference to an evidentiary hearing where the parties have not had a fair opportunity to prepare." Thus, Americas Mining Corporation asks the Court to deny the Committees' request for an evidentiary hearing. Parties Stipulate To resolve the issues relating to the independence of the ASARCO Board and the election of a chief executive officer, the ASARCO Committee, the Subsidiary Debtors Committee, and the FCR agree on these terms: 1. Appointment of Independent Directors Carlos Ruiz Sacristan will immediately appoint Malcolm Lovett and Edward R. Caine as additional directors of ASARCO. The additional Directors will serve through consummation of a plan of reorganization of ASARCO's Chapter 11 case, the conversion of ASARCO's Chapter 11 case to Chapter 7 or until their death, resignation or incapacity. 2. Replacement Directors Should any of the proposed Directors to be appointed resign or otherwise be unable to serve, the remaining members of the Board will select a replacement. The Committees will have an opportunity to interview the replacement Director before any hearing. 3. Modification of Operating Agreement The Limited Liability Company Agreement of ASARCO will be amended to assure the independence of its Board of Directors from interests of Americas Mining Corporation and its parent, Grupo. The Operation Amendments will provide that: a. During ASARCO's Chapter 11 case, the size of the Board will be three Directors; b. Mr. Ruiz will be Chairman of the Board and will remain Chairman of the Board so long as he is a Director; c. Two Directors will constitute a quorum of Directors; d. The Board may take any action provided for or permitted under the Operating Agreement or Delaware law, on the approval of two Directors; e. All meetings of the ASARCO Board will be held in the United States unless otherwise agreed by all Board members; f. Board meetings may be held by telephone; g. Board meetings will be called on not less than three days' written notice unless all Directors consent, or ASARCO's counsel advises that the matters to be addressed are urgent to require less than three days notice; and h. The Board will select a Chief Executive Officer who will be responsible for the day-to-day operations of ASARCO. 4. Compensation of Directors The Directors will be paid $100,000 annually for their service as Director, commencing as of their election or appointment, with $25,000 paid promptly after the Court approves the stipulation, and the balance paid at the end of each quarter served after. 5. Indemnity of Directors The Directors will be entitled to indemnification to the full extent provided under Delaware law. 6. Directors and Officers Insurance ASARCO will seek to secure appropriate insurance for the directors and officers. With the Committees' consent, ASARCO will set aside in a segregated account the amount is necessary to pay any self insured retention under the directors and officers insurance. 7. Interim Chief Executive Officer Douglas McAllister, Esq., will be appointed as interim chief executive officer of ASARCO. As interim CEO, Mr. McAllister's salary will be increased to the level of his predecessor so long as he serves as interim CEO. The Board, including the new Directors appointed, will meet as promptly as possible to determine whether Mr. McAllister will be elected as CEO. If the Board determines to replace Mr. McAllister with another CEO, Mr. McAllister will receive $50,000 on the election of his successor. Mr. McAllister will have indemnification to the full extent provided under the Delaware law. Judge Schmidt approves the parties' Stipulation. 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 proceeding. (ASARCO Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: McAllister Appointed as Debtor's Interim CEO -------------------------------------------------------- As previously reported in the Troubled Company Reporter on Dec. 26, 2005, three State Agencies ask Judge Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to appoint an examiner to check, inter alia, the background and alleged substantial conflicts of interest posed by ASARCO's present sole director, Carlos Ruiz Sacristan. The States Agencies were: * Texas Commission on Environmental Quality; * State of New Jersey Department of Environmental Protection; and * Missouri Department of Natural Resources. ASARCO LLC Responds A stipulation regarding corporate governance was presented and entered at the hearing for the request on the appointment of a chief restructuring officer. Under the Stipulation, Douglas E. McAllister was appointed interim chief executive officer, two qualified independent members were added to ASARCO's board of directors, and changes to the ASARCO's operating agreement were authorized. Because ASARCO LLC now has a functioning chief executive officer and an independent board of directors, the appointment of an examiner to act as a watchdog over the sole director and to serve as chief restructuring officer is unnecessary, Eric A. Soderlund, Esq., at Baker Botts LLP, in Dallas, Texas, asserts. Accordingly, ASARCO asks the Court to deny the request of the three State Agencies for the appointment of an examiner. * * * Judge Schmidt rules that the State Agencies' request is stricken for failure to attach a proposed order. 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 proceeding. (ASARCO Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: First Union & BNY Wants Final DIP Order Modified ------------------------------------------------------------ As previously reported in the Troubled Company Reporter on Dec. 22, 2005, Judge Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas authorized ASARCO LLC, on a final basis, to obtain up to $75,000,000 financing pursuant to a senior secured revolving line of credit facility with The CIT Group/Business Credit, Inc. The financing includes a $50,000,000 letter of credit subfacility. The loan amount may be increased to up to $150,000,000, at ASARCO's option, in accordance with the terms of the DIP Financing Agreement and subject to the DIP Agent receiving satisfactory collateral audits, appraisals, and title and lien reports with respect to a supplemental asset component. To secure the prompt payment and performance of any and all obligations, liabilities, and indebtedness of ASARCO under the DIP Facility, Judge Schmidt grants valid and automatically perfected security interests and liens to CIT Group in all of ASARCO's right, title, and interest in all of the real and personal properties and assets of ASARCO's estate. First Union & BNY Capital Seek Reconsideration First Union Corporation and Bank of New York Capital ask the Court to reconsider and modify the Final DIP Order to allow continued priority of perfection by allowing updated financing statements filings to be recognized as Permitted Encumbrances and Prior Liens within the context of the Final DIP Order. First Union and BNY Capital objected to the possible application of the Final DIP Order to updated financing statements needed because of ASARCO's change of state of organization and name. At DIP Financing hearing, ASARCO agreed to review and consider the objections. However, the Final DIP Order did not address First Union's and BNY Capital's objections, Michael M. Parker, Esq., at Fulbright & Jaworski LLP, in San Antonio, Texas, contends. CIT Group/Business Credit, Inc. offered to attach a footnote to its Financing Documents acknowledging a name change amendment to First Union's financing statement. After considering the offer, First Union and BNY do not believe the footnote will provide necessary protection. In CIT's Financing Documents and in the Final DIP Order, First Union's and BNY's prepetition financing statements were identified as Permitted Encumbrances, superior in priority to CIT's blanket lien. Mr. Parker notes that Permitted Encumbrances are only defined as those related to identified financing statements and not the collateral underlying those financing statements. The Final DIP Order does not explicitly recognize either First Union's amended financial statements or First Union's and BNY's right to update their financing statement to provide for ASARCO LLC's change in name and change in state of organizations to still maintain and continue their priority of perfection. CIT Group Responds Josiah M. Daniel III, Esq., at Vinson & Elkins LLP, in Dallas, Texas, asks the Court to deny First Union's and BNY's request to obtain postpetition enhancement of their prepetition liens. "The Reconsideration Motion failed to identify any procedural rule permitting their request." Section 552(a) of the Bankruptcy Code provides that any property acquired by a debtor postpetition is not subject to any lien from any prepetition security agreement, Mr. Daniel notes. Mr. Daniel states that First Union's and BNY's security interests became unperfected in February 2005, after failing to act promptly under the Uniform Commercial Code. Furthermore, First Union's and BNY's prepetition liens as of February 2005 are already well reflected in the Schedule of the DIP Financing Agreement. 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 proceeding. (ASARCO Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000). ATA AIRLINES: Unveils 13 Statutory Requirements Under Amended Plan ------------------------------------------------------------------ The Reorganizing ATA Holdings Corp., ATA Airlines, Inc., ATA Leisure Corp., and ATA Cargo, Inc., stepped Judge Basil H. Lorch through the 13 statutory requirements under Section 1129(a) of the Bankruptcy Code necessary to confirm their First Amended Plan of Reorganization: A. The Amended Plan complies with Section 1129(a)(1) because it provides for the classification of claims and interests, and complies with other requirements of Sections 1122 and 1123. In addition to Administrative Claims and Priority Tax Claims, which are not required to be classified, the Amended Plan designates seven Classes of Claims and two Classes of Interests. The Claims and Interests placed in each Class are substantially similar to other Claims or Interests in that Class. Valid business, factual and legal reasons exist for separately classifying the various Classes of Claims and Interests created under the Amended Plan, and the Classes do not unfairly discriminate between holders of Claims or Interests. The Amended Plan specifies the Classes of Claims and Interests that are impaired under the Plan and the treatment of impaired Claims and Interests in all Classes. The Plan also provides for the same treatment for each Claim or Interest in each Class unless the holder of a particular Claim has agreed to less favorable treatment with respect to the Claim or the law allows for a different treatment. Moreover, the Amended Plan provides adequate and proper means for its implementation, including: (a) the creation of a New Holding Company; (b) the continued organizational existence of the Reorganizing Debtors; (c) provision for debt and equity "exit" financing; and (d) the execution, delivery, filing or recording of all contracts, instruments, releases, indentures, and other agreements or related documents. The Articles of Incorporation and Bylaws will prohibit the issuance of nonvoting equity securities to the extent required by Section 1123(a)(6). The proposed appointment or employment of the individuals and the proposed compensation and indemnification arrangements for officers and directors are consistent with the interests of the holders of Claims and Interests and with public policy. The Amended Plan's provisions are appropriate and consistent with the applicable provisions of the Bankruptcy Code, including, provisions for: -- distributions to holders of Allowed Claims; -- the disposition of executory contracts and unexpired leases; -- the retention of, and right to enforce, sue on, settle or compromise with respect to claims or causes of action against third parties, to the extent not waived and released under the Amended Plan; -- resolution of Disputed Claims and Disputed Interests; -- allowance of Claims; -- indemnification obligations; -- releases by the Reorganizing Debtors; -- the restructuring of the Old ATSB Loan; -- substantive consolidation of the Reorganizing Debtors to the extent set forth in the Amended Plan; and -- releases by holders of Claims and Interests that voted to accept the Amended Plan. The Amended Plan is dated December 14, 2005, and identifies the entities submitting it. B. The Plan Proponents have complied with the applicable provisions of the Bankruptcy Code, thereby satisfying Section 1129(a)(2). Specifically, the Reorganizing Debtors are the proper debtors under Section 109 and the Plan Proponents are proper proponents of the Plan under Section 1121(a). The Plan Proponents have complied with the applicable provisions of the Bankruptcy Code, including as provided or permitted by orders of the Bankruptcy Court, the Bankruptcy Rules, and the Solicitation Procedures Order in transmitting the Plan, the Disclosure Statement, the Ballots and related documents and notices, and in soliciting and tabulating votes on the Plan. C. Following good faith negotiations among the Plan Proponents, the ATSB Lenders, the Official Committee of Unsecured Creditors and other parties-in-interest, the Plan Proponents have proposed the Plan in good faith and not by any means forbidden by law, thus satisfying Section 1129(a)(3) of the Bankruptcy Code. In determining that the Amended Plan has been proposed in good faith, the Bankruptcy Court has examined the totality of the circumstances surrounding the filing of the Chapter 11 cases and the formulation of the Amended Plan. The Chapter 11 cases were filed and the Amended Plan was proposed with the legitimate and honest purpose of reorganizing and maximizing the value of each of the Reorganizing Debtors and the recovery to the holders of Claims and Interests under the circumstances of the Chapter 11 cases. D. Any payment made or to be made by the Reorganizing Debtors for services or for costs and expenses in connection with the Chapter 11 cases, including all administrative expense and substantial contribution claims under Sections 503 and 507 of the Bankruptcy Code, or in connection with the Plan and incident to the Chapter 11 cases, has been approved by, or is subject to the approval of, the Court as reasonable. E. The Plan Proponents have disclosed the initial officers of the Reorganized Companies. Specifically, on the Reorganizing Debtors' behalf, James M. Carr, Esq., at Baker & Daniels, in Indianapolis, Indiana, notified the Court that the seven persons proposed to serve on the initial board of directors for the New Holding Company on the Effective Date, are: Proposed Director Background ----------------- ---------- Marc Chodock A management consultant at McKinsey & Company before joining MatlinPatterson Global Advisers LLC in February 2003 Peter Schoels Joined MatlinPatterson in July 2002 and serves on the board of Texon International on behalf of MatlinPatterson Lawrence M. Teitelbaum Joined MatlinPatterson as chief financial official in October 2002 Robert H. Weiss Joined MatlinPatterson as general counsel in October 2002 Michael J. Watzky Joined MatlinPatterson in 2002, and currently serves on the boards of directors of Opus LLC, Polymer Group and Kgen on behalf of various MatlinPatterson funds Harvey L. Tepner A partner at the International investment banking firm of Compass Advisers, LLP, and is in charge of its Restructuring Group. Mr. Tepner serves as a financial advisor to the Official Committee of Unsecured Creditors in the Reorganizing Debtors' Chapter 11 cases. He is also a member of the board of directors of Core-Mark Holding Company, Inc. John G. Denison Joined ATA Airlines, Inc., in January 2005 as co-chief restructuring officer and was appointed chief executive officer of the ATA Airlines in February 2005 and of ATA Holdings Corp., effective August 31, 2005 Mr. Carr further disclosed that Messrs. Schoels and Tepner are not U.S. citizens. The parties-in-interest are continuing to evaluate whether and to what extent their citizenship status may affect their service as directors. The senior officers of the New Holding Company and ATA, as of the Effective Date, will be those Persons currently serving as the senior officers of ATA Holdings and ATA. On the Effective Date, the term of the current members of the board of directors of each of the Reorganizing Debtors will expire. Subsequent boards of directors of New Holding Company will consist of the Chief Executive Officer of Reorganized ATA and six members appointed by the "New Investor" -- as referenced in the Plan and the Disclosure Statement -- subject to the terms of the Minority Shareholder Protection Term Sheet. On the Effective Date, the articles of incorporation of ATA Holdings will be amended to reduce the size of its board of directors to one director. Brian Hunt, ATA Holdings' vice president, general counsel and secretary, is designated as the sole director of ATA Holdings from and after the Effective Date. The Reorganized Companies have not, and are not planning to, employ or retain an insider. The requirements of Section 1129(a)(5) have thus, been met. F. Section 1129(a)(6) is satisfied because the Plan does not provide for any change in rates over which a governmental regulatory commission has jurisdiction. G. The Plan satisfies Section 1129(a)(7). The liquidation analysis attached to the Disclosure Statement and evidence admitted at the Confirmation Hearing: (1) are persuasive, credible and accurate as of the dates the evidence was prepared, presented, or proffered; (2) either have not been controverted by other persuasive evidence or have not been challenged; (3) are based on reasonable and sound assumptions; (4) provide a reasonable estimate of the liquidation values of the Reorganizing Debtors upon conversion to a case under Chapter 7 of the Bankruptcy Code; and (5) establish that each holder of a Claim or Interest in an Impaired Class that has not accepted the Amended Plan will receive or retain under the Plan, on account of the Claim or Interest, property of a value, as of the Effective Date of the Plan, that is not less than the amount that it would receive if the Reorganizing Debtors were liquidated under Chapter 7 of the Bankruptcy Code. H. The Court finds that, other than Classes 2 and 3, all voting Impaired Classes as set forth on the ballot reports have voted to accept the Amended Plan. Although Fleet did not cast ballots with respect to the treatment of its Secured Claims in Classes 2 and 3, the treatment of the claims is consistent with the Fleet Stipulation. Counsel for the Reorganizing Debtors reported at the Confirmation Hearing that Fleet has acquiesced to the treatment provided for Fleet's Secured Claims in Classes 2 and 3 as meeting the requirements of Section 1129 of the Bankruptcy Code. Classes 8 and 9 are deemed to have rejected the Plan and, accordingly, confirmation as to those Classes only is sought pursuant to Section 1129(b). Class 5 and any Reinstated Class 4 Claims are deemed to have accepted the Amended Plan since they are Unimpaired. I. The treatment of Administrative Claims and Other Priority Claims under the Amended Plan satisfies the requirements of Section 1129(a)(9)(A) and (B) of the Bankruptcy Code, and the treatment of Priority Tax Claims under the Amended Plan satisfies the requirements of Section 1129(a)(9)(C). J. Each Impaired Class of Claims and Interests has voted to accept the Plan. Thus, Section 1129(a)(10) is satisfied. K. The financial projections in the Disclosure Statement and evidence admitted at the Confirmation Hearing: (i) are persuasive and credible; (ii) have not been controverted by other evidence or sufficiently challenged in any of the objections to the Amended Plan; and (iii) establish that the Amended Plan is feasible and that confirmation of the Amended Plan is not likely to be followed by the liquidation or the need for further financial reorganization of the Reorganizing Debtors or the Reorganized Companies. On the Effective Date, the Reorganizing Debtors and the Reorganized Companies will have sufficient operating cash and liquidity to meet their financial obligations under the Amended Plan, to fund ongoing business operations, and pay all anticipated Allowed Administrative Claims and Allowed priority Claims. Accordingly, the Amended Plan satisfies Section 1129(a)(11). L. The Reorganizing Debtors have paid or, pursuant to the Plan, will pay by the Effective Date, fees payable under 28 U.S.C. Section 1930, thereby satisfying Section 1129(a)(12). M. Section 1129(a)(13) requires that, following the Effective Date of the Plan, the payment of all retiree benefits, if any, will continue at the levels established pursuant to subsections (e)(1)(B) or (g) of Section 1114 of the Bankruptcy Code, at any time prior to the entry of the Confirmation Order, for the duration of the period the debtors have obligated themselves to provide the benefits. To the extent Reorganizing Debtors have any retiree benefits to pay, including certain travel benefits, they will do so and, therefore, Section 1129(a)(13) is satisfied. Finding that the Amended Plan satisfies the requirements, Judge Lorch confirmed the Reorganizing Debtors' Amended Plan on January 31, 2006. Under the confirmed Plan, unsecured creditors will receive upon emergence distributions of common stock representing 7% of the outstanding equity in the newly formed privately held holding company, which will become the ultimate parent company of ATA Airlines. Unsecured creditors will receive warrants to acquire 2% of the New Common Stock outstanding upon emergence. Ballots have revealed that a rights offering providing qualifying Class 6 unsecured creditors the opportunity to purchase $25,000,000 in value of New Common Stock has been fully subscribed. As a result, the qualifying unsecured creditors will also receive an additional 2% of the New Common Stock. In addition, the confirmed Plan includes an investment of $95,000,000 from ATA's new investor, MatlinPatterson, which consists of: (a) $30,000,000 in DIP financing, which will be converted into equity upon emergence; (b) $45,000,000 to New ATA Holdings Corp., in the form of an equity investment, reflecting the full subscription of New Common Stock in the rights offering; and (c) an additional $20,000,000 of exit debt financing upon emergence. Use of Cash Collateral As part of the last steps in achieving Plan confirmation, ATA recently finalized certain outstanding agreements relative to the Plan, including settlement terms on its loan from the Air Transportation Stabilization Board. Accordingly, all of the terms and provisions of the ATSB Cash Collateral Order will continue to apply and govern the Reorganizing Debtors' use of cash collateral, as well as all of the parties' rights and obligations, until the occurrence of the Effective Date. The Reorganized Debtors anticipate emerging from Chapter 11 by late February 2006. Objections are Resolved Three additional parties filed objections to confirmation of the Plan -- Key Equipment Finance, Inc., Stanfield Capital Partners LLC, and The Royal Bank of Canada. To address Key Equipment's objection, the Debtors promised to amend the cure amounts disclosed in the Plan. As previously reported, NatTel, LLC, asserted that the Plan is not confirmable. According to the Reorganizing Debtors, NatTel's objection is entirely without legal or factual merit because, among others, NatTel is not a creditor of the Reorganizing Debtors and, thus, has no standing to object to the Amended Plan. The Official Committee of Unsecured Creditors also points out that NatTel's Objection is replete with broad, sweeping and repetitive allegations, wholly lacking in support. Moreover, none of NatTel's allegations have any basis in either law or fact. However, Jack E. Robinson, president of NatTel, LLC, contended that the Reorganizing Debtors have waived any and all challenges to NatTel's standing to object to the Amended Plan because they failed to challenge NatTel's standing to object to the Disclosure Statement. The Court overruled the Objections that have not been withdrawn, waived, or settled. A full-text copy of the Confirmation Order and the Court's findings and conclusions of law is available at: http://bankrupt.com/misc/AtaReogrDebtorsPlanConfOrder.pdf ATA Looks Forward to Emergence "Throughout this process, I have never doubted that our employees were contributing everything they had to making our restructuring a success," said ATA Chairman, President and CEO John Denison in a ress release. "[The] ruling reflects their incredible accomplishments. Thanks to their hard work in developing an effective business plan, ATA has been able to transform itself into a more viable airline ready to emerge from Chapter 11. I believe the same efforts our employees applied during this challenging period will allow us to exceed the expectations of customers for many years to come." "Reaching this positive end to the restructuring process is even more rewarding because it is the result of consensual agreements reached between ATA, various stakeholders, interested parties and the Unsecured Creditors' Committee," explained ATA Interim Chief Financial Officer Frank Conway. "Reaching such agreements so quickly is an unusual achievement and has contributed greatly toward allowing ATA to regain a solid operational and financial footing in a remarkably short amount of time." Doug Yakola, who will assume the role of ATA's Chief Financial Officer upon emergence, agreed with Conway. "With a strengthened cash balance thanks to our new investment partner MatlinPatterson, a substantially lower CASM due to several cost-saving initiatives, and the right operational plan to leverage our strengths, all the pieces are in place to help secure the Company's future," said Yakola. "As we anticipate emergence, we look forward with a renewed sense of confidence in ATA's enduring success." Stronger Airline, Fresh Takeoff The Company notes that the Court's ruling came exactly one week following its announcement that it is expanding its codeshare agreement with Southwest Airlines to increase service between Hawaii and the West Coast and introduce new flights between Houston and New York. Earlier in the year, the U.S. Department of Transportation approved both carriers entering into the seven-year expanded codeshare agreement as a crucial part of ATA's restructuring efforts. "During the restructuring, we've made substantial strides in identifying broader and more robust sources of revenue through our enhanced codeshare agreement and strategic route realignment," emphasized ATA Executive Vice President and Chief Operating Officer Subodh Karnik. "Starting with our announcement of new service from Houston and increased flights between Hawaii and the mainland, we will be focusing on taking off in new directions as a Company that open up our unique brand of convenient business and leisure travel to thousands more customers across the country. By doing so, we will be reinforcing our position as a leading provider of affordable travel in markets that have been traditionally underserved by value-based carriers." The flight additions further detail a strategy previously outlined in ATA's Plan of Reorganization that accounts for scheduled service to remain a core element of its operations. To ensure profitability, the Company has worked to identify routes that not only further leverage the codeshare, but that also make efficient utilization of its aircraft and slot portfolios while enhancing markets that were historically robust for the carrier. As demonstration of its commitment to these priorities as well as its military charter operations, the Company also recently realigned its senior leadership team responsibilities to drive down accountability to every area of its operations. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) AUBURN FOUNDRY: Chapter 7 Trustee Taps Baker as Special Counsel --------------------------------------------------------------- Rebecca Hoyt Fischer, Esq., the chapter 7 Trustee overseeing the liquidation of Auburn Foundry, Inc., asks the U.S. Bankruptcy Court for the Northern District of Indiana for permission to employ Baker & Daniels LLP as her special counsel. Baker & Daniels will provide legal services to the chapter 7 Trustee with respect to certain matters involving the bankruptcy estate and represent the Trustee in all other matters requested by her in the Debtor's bankruptcy proceeding. John R. Burns, Esq., a partner at Baker & Daniels, is one of the lead attorneys from his Firm performing services to the chapter 7 Trustee. Mr. Burns charges $375 per hour for his services. Mr. Burns reports Baker & Daniels' professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Mark Werling Associate $240 Mark F. Juba Associate $160 Jacklyn L. Faulkner Paralegal $140 Baker & Daniels assures the Court that it does not represent any interest materially adverse to the Debtor or its estate and is a disinterested person as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Auburn, Indiana, Auburn Foundry, Inc. -- http://www.auburnfoundry.com/-- produces iron castings for the automotive industry and automotive aftermarket industry. The Company filed for chapter 11 protection on February 8, 2004 (Bankr. N.D. Ind. Case No. 04-10427). John R. Burns, Esq., and Mark A. Werling, Esq., at Baker & Daniels, represent the Debtor. When the Company filed for chapter 11 protection, it listed estimated assets and debts of $10 million to $50 milion. The Debtor's chapter 11 case was converted into a chapter 7 liquidation proceeding on Oct. 11, 2005. Rebecca Hoyt Fischer, Esq., is the chapter 7 Trustee for the Debtor's estate. Lewis C. Laderer, Esq., at Laderer & Fischer, PC represents the chapter 7 Trustee. AUBURN FOUNDRY: Chap. 7 Trustee Hires Dennis Maude as Consultant ---------------------------------------------------------------- Rebecca Hoyt Fischer, the chapter 7 Trustee overseeing Auburn Foundry, Inc.'s liquidation, sought and obtained permission from the U.S. Bankruptcy Court for the Northern District of Indiana to employ Dennis Maude as her consultant. Ms. Fischer informs the Court that as the Debtor's former Chief Financial Officer, Mr. Maude is familiar with the Debtor's books and records. His knowledge, Ms. Fischer says, is necessary for her to perform her duties. Mr. Maude is expected to: a) assist the Trustee with the assembly of documentation necessary for the preparation of W-2 forms, 1099 forms, tax returns and to address other tax issues; b) assist the Trustee's Special Counsel in responding to discovery requests in preference recovery actions; and c) provide any other documentation or information required by the Trustee or Trustee's Special Counsel or Accountant. Ms. Fischer discloses that Mr. Maude will bill $100 per hour for his services. Ms. Fischer assures the Court that Mr. Maude does not represent any interest adverse to the Trustee or the Debtor. Headquartered in Auburn, Indiana, Auburn Foundry, Inc. -- http://www.auburnfoundry.com/-- produces iron castings for the automotive industry and automotive aftermarket industry. The Company filed for chapter 11 protection on February 8, 2004 (Bankr. N.D. Ind. Case No. 04-10427). John R. Burns, Esq., and Mark A. Werling, Esq., at Baker & Daniels, represent the Debtor. When the Company filed for chapter 11 protection, it listed estimated assets and debts of $10 million to $50 milion. The Debtor's chapter 11 case was converted into a chapter 7 liquidation proceeding on Oct. 11, 2005. Rebecca Hoyt Fischer, Esq., is the chapter 7 Trustee for the Debtor's estate. Lewis C. Laderer, Esq., at Laderer & Fischer, PC represents the chapter 7 Trustee. AUSTIN COMPANY: Committee Hires BBP Partners as Financial Advisor ----------------------------------------------------------------- The Hon. Pat E. Morgenstern-Clarren of the U.S. Bankruptcy Court for the Northern District of Ohio authorized the Official Committee of Unsecured Creditors of The Austin Company and its debtor-affiliates to retain BBP Partners, LLC, as its financial advisor, nunc pro tunc to Nov. 21, 2005. The Committee tells the Bankruptcy Court that BBP is specifically qualified to provide the services it requires. BBP is a specialty accounting and consulting services firm that provides financial advisory and investigative accounting services to parties in litigation and bankruptcy. The Committee needs BBP to assist in evaluating whether the proposed sale of substantially all of the Debtors' assets is in the best interest of creditors. BBP will determine the economics of the sale, and the advantages and disadvantages of the Debtors' assumption and assignment of executory contracts, which is proposed as part of that sale. In addition, BBP will also: -- assist with the procurement and analysis of other potential offers for the assets of the Debtors; -- analyze other sources of recovery for the Committee; -- provide forensic accounting services and evaluations regarding pre-petition transactions entered into by the Debtors; and -- assist in the evaluation or preparation of a plan of reorganization for the Debtors. The lead professionals who will serve in this engagement and their hourly rates are: Professional Designation Hourly Rate ------------ ----------- ---------- Christopher R. Brauser Partner-in-Charge $245 Bankruptcy and Reorganization Practice Robert M. Brlas Partner and Managing $295 Member John Ellis Director of Valuation $225 Services The customary hourly rates for BBP's other professionals are: Designation Hourly Rate ----------- ----------- Partners $245 to $300 Managers and Directors $200 to $245 Senior Analysts $160 to $200 Analysts $95 to $155 Other Paraprofessionals $60 to $95 Christopher R. Brauser, a partner at BBP, assures the Bankruptcy Court that his firm does not hold any interest adverse to the Debtor's estate and is a "disinterested persons" as that term is defined in Section 101(14) of the Bankruptcy Code. A full-text copy of the Committee's eight-page engagement letter is available for a fee at: http://www.researcharchives.com/bin/download?id=060203032046 BBP Partners -- http://bbppartners.com/-- is a boutique accounting and consulting firm providing financial advisory and investigative accounting services to parties in litigation, bankruptcy and other situations. The firm can be reached at: BBP Partners Eaton Center 1111 Superior Avenue Suite 1025 Cleveland, Ohio 44114 Headquartered in Cleveland, Ohio, The Austin Company is an international firm offering a comprehensive portfolio of in-house architectural, engineering, design-build, construction management and consulting services. The Company also offers value-added strategic planning services including site location, transportation and distribution consulting, and facility and process audits. The Company and two affiliates filed for chapter 11 protection on Oct. 14, 2005 (Bankr. N.D. Ohio Lead Case No. 05-93363). Christine M. Pierpont, Esq., at Squire, Sanders & Dempsey, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. BCP CRYSTAL: S&P Raises Long-Term Corporate Credit Rating to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its long-term corporate credit rating on BCP Crystal US Holdings Corp., a subsidiary of Celanese Corp., to 'BB-' from 'B+'. The ratings of related entities were also raised. At the same time, Standard & Poor's raised its recovery ratings on the company's secured credit facilities to '2' from '3'. All ratings are removed from CreditWatch, where they were placed with positive implications on Dec. 14, 2005. The outlook is stable on this Dallas, Texas-based company. The upgrade of the long-term ratings reflects: * Standard & Poor's expectations for stronger earnings in 2006; * continued favorable supply and demand fundamentals during the next few years in the global market for Celanese's well- integrated and leading acetyls business; and * the company's plans to strengthen its competitive position in acetyls. "Moreover, improving discretionary cash flows enhance prospects for meaningful debt reduction, which would help sustain cash flow protection measures at levels appropriate for the revised ratings," said Standard & Poor's credit analyst Wesley E. Chinn. The revised recovery ratings indicate the likelihood of substantial recovery -- 80% to 100% --in a default scenario, compared with the prospect of meaningful recovery, or 50% to 80%, under a '3' rating. The improved recovery rating reflects the non-use (and subsequent expiration) of a delayed draw term loan and the elimination of virtually all of the minority shareholders of Celanese AG (now a subsidiary). The ratings on chemical producer BCP Crystal US Holdings Corp. reflect: * the still considerable debt load of Celanese; * the cyclicality of Celanese's businesses; and * exposure of operating margins to oil and natural gas-based raw materials. The high debt resulted primarily from borrowings in 2004 to fund the Blackstone Group's tender offer for the shares of Celanese AG, a transaction valued at about $3.4 billion. These weaknesses are only partially offset by the company's solid business profile as an integrated producer of diverse commodity and industrial chemicals, and improving internal funds generation which enhances the flexibility to reduce debt and make bolt-on acquisitions. With annual revenues of over $6.0 billion, Celanese ranks among the larger and more diversified global chemical businesses. BERRY-HILL: Court Okays Continuation of All Insurance Policies -------------------------------------------------------------- The Honorable Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York authorized Berry-Hill Galleries, Inc., and its affiliate, Coram Capital LLC, to: a) continue their workers' compensation insurance programs and policies; and b) pay all their obligations on all other related insurance policies and agreements. Judge Gerber also authorized the Debtors to make all required premium payments under the Insurance Policies, including, if necessary, payment of any outstanding prepetition amounts. The Insurance Policies, the Debtors told Judge Gerber, are necessary for the survival of their businesses and to avoid exposure to substantial liability for any damages. Specifically, the Debtors maintain these Insurance Policies: 1. a Workers' Compensation Policy; 2. Liability Insurance Policies; 3. Property Insurance Policies; and 4. Art Insurance Policies. A table listing Berry-Hill's insurance carriers and summarizing the company's aggregate annual premiums is available for free at http://ResearchArchives.com/t/s?4f4 Headquartered in New York, New York, Berry-Hill Galleries, Inc. -- http://www.berry-hill.com/-- buys paintings and sculpture through outright purchase or on a commission basis and also exhibits artworks. The Debtor and its affiliate, Coram Capital LLC, filed for chapter 11 protection on Dec. 8, 2005 (Bankr. S.D.N.Y. Case Nos. 05-60169 & 05-60170). Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $100 million and debts between $1 million and $50 million. BIRCH TELECOM: Hires Miller Buckfire as Financial Advisor --------------------------------------------------------- Birch Telecom, Inc. and its debtor-affiliates sought and obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Miller Buckfire & Co., LLC, as their financial advisor and investment banker, nunc pro tunc to Nov. 1, 2005. As previously reported in the Troubled Company Reporter on Dec. 16, 2005, Miller Buckfire will: (a) assist the Debtors in the analysis, design and formulation of its various options in connection with a restructuring, financing or sale; (b) advise and assist the Debtors in the structuring and effectuation of the financial aspects of a transaction; (c) provide financial advice and assistance to the Debtors in developing and seeking approval of a restructuring plan, including assisting the Debtors in negotiations with entities or groups affected by the plan and participate in hearings before the Bankruptcy Court; (d) if applicable, provide financial advice and assistance in identifying and negotiating with potential purchasers in connections with any sale, including preparation of a memorandum to be used for solicitation of any potential purchasers; and (e) if applicable, provide financial advice and assistance in identifying and negotiating with potential financing sources in connection with any financing, including the preparation of a memorandum to be used for solicitation of any potential financing sources. The Firm will receive: (a) a $150,000 monthly financial advisory fee commencing as of Nov. 1, 2005; (b) a restructuring transaction fee or financing fee upon consummation of any restructuring or financing, provided that 100% of any monthly advisory fee received after Oct. 1, 2004, will be credited against any restructuring transaction fee or financing fee payable; and (c) a sale transaction fee upon consummation of any sale, provided that 100% of the fee received after Nov. 1, 2005, will be credited against any payable. The Debtors paid Miller Buckfire $1.9 million for prepetition fees and expenses. Qazi M. Fazal, a Managing Director of Miller Buckfire, assures the Court that his Firm does not hold any interest adverse to the Debtors or their estates. Headquartered in Kansas City, Missouri, Birch Telecom, Inc., and its subsidiaries -- http://www.birch.com/-- own and operate an integrated voice and data network, and offer a broad portfolio of local, long distance and Internet services. The Debtors provide local telephone service, long-distance, DSL, T1, ISDN, dial-up Internet access, web hosting, VPN and phone system equipment for small- and mid-sized businesses. Birch Telecom and 28 affiliates filed for chapter 11 protection on Aug. 12, 2005 (Bankr. D. Del. Case Nos. 05-12237 through 05-12265). When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. BLUE BIRD: Fastest Chapter 11 Reorganization in U.S. History ------------------------------------------------------------ Blue Bird, which manufacturers of the iconic yellow school buses in the U.S., filed a pre-packaged Chapter 11 plan in the bankruptcy court in Nevada on Thursday, Jan. 26, 2006. On Friday, Jan. 27, 2006, the plan was confirmed, over the objection of one of the impaired creditors, restructuring approximately $215 million in debt. The company's stay in bankruptcy lasted about 32 hours, which is the shortest span between the filing of Chapter 11 petitions and confirmation of a reorganization plan of any Chapter 11 case in history. Lawyers at Allen & Overy represented The Royal Bank of Scotland plc (RBS) and Lloyds TSB Bank plc. "This is a ground-breaking example of our clients' willingness to use the entire range of restructuring tools in ever more novel ways. But it was not only the company's stay in Chapter 11 that was record-breaking. The Chapter 11 plan, senior and junior debt documentation and restructuring agreement were developed, documented, negotiated and closed in 10 days of round-the-clock activity with a diverse lender group located across several time zones. In an area of the law that can sometimes require months or even years of negotiation to arrive at a solution this result is all the more remarkable," said Peter Schulz, lead Allen & Overy partner on the deal. The case arose when Volvo pulled out of talks to acquire Blue Bird early in January. The company and its financial advisers informed the secured lender group that the company could not survive a traditional Chapter 11 case. Hence, the need for speed if the company was to be saved. RBS and Lloyds TSB, as joint co-ordinators for the secured lenders, led the negotiations with a diverse lender group, including UK, European and US institutions and par and distressed holders. The Chapter 11 plan involved a partial secured debt to equity conversion (including cram-down of dissenting lenders), elimination of the existing equity, no debtor-in-possession financing, an equity kicker for the exit facility lenders, amendment of the terms of the unconverted secured debt and a new priority revolving credit facility for working capital. About Allen & Overy LLP The Allen & Overy team was led in London by Peter Schulz and David Frauman, and in New York by Hugh McDonald and Ernie Chung, with key roles being played by Carolyn Conner, Kathleen Wong, Cara Hunt, Dorothee Fischer-Appelt, Jennifer Manning and Stephen Beattie in London, and Marc Bennett, William Westbrook and Kieran Brenner in New York. Stephen Fiamma, Joanna Norland, Derek Sloan, Henry Morgenbesser and Ken Rivlin provided advice on U.S. tax, UK and U.S. pensions and environmental issues. Allen & Overy LLP can be reached at: Allen & Overy LLP 1221 Avenue of the Americas New York, New York 10020 Tel: (212) 610-6300 Fax: (212) 610-6399 http://www.allenovery.com Allen & Overy LLP is a limited liability partnership registered in England and Wales with registered number OC306763. It is regulated by the Law Society of England and Wales. Allen & Overy LLP is a multi-jurisdictional legal practice with lawyers admitted to practice in a variety of jurisdictions. The term partner is used to refer to a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications. A list of the members of Allen & Overy LLP and of the non-members who are designated as partners is open to inspection at its registered office, One New Change London EC4M9QQ and at the New York address. * * * Blue Bird Body Company and five affiliates filed for chapter 11 protection on Jan. 26, 2006 (Bankr. D. Nev. Case No. 06-50026). Founded in 1927, Blue Bird -- http://www.blue-bird.com/-- has nearly 3,000 employees and three facilities in two countries. The Debtors also have an extensive network of distributors and service parts facilities throughout North America. Jay M. Goffman, Esq., Van C. Durrer II, Esq., and Mark A. McDermott, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, provided Blue Bird with legal advice and Kroll Zolfo Cooper provided the company with financial advisory services. BOYDS COLLECTION: Panel Taps FTI Consulting as Financial Advisors ----------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in The Boyds Collection and its debtor-affiliates' chapter 11 proceedings sought and obtained approval from the U.S. Bankruptcy Court for the District of Maryland to retain FTI Consulting, Inc., as its financial advisors, nunc pro tunc to Nov. 14, 2005. As previously reported in the Troubled Company Reporter on Dec. 28, 2005, FTI Consulting will: -- assist the Committee in the review of financial related disclosures required by the Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; -- assist with a review of the Debtors proposed key employee retention and other critical employee benefit programs; -- assist with a review of the Debtors' performance of cost/benefit evaluations with respect to the affirmation or rejection of various executory contracts and leases; -- assist regarding the valuation of the present level of operations and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; -- assist in the review of financial information distributed by the Debtors to creditors and others, including, but not limited to, cash flow projections and budgets, cash receipts and disbursement analysis, analysis of various asset and liability accounts, and analysis of proposed transactions for which Court approval is sought; -- attend meetings and assist in discussions with the Debtors, potential investors, banks, other secured lenders, the Committee and any other official committees organized in these chapter 11 proceedings, the U.S. Trustee, other parties in interest and professionals hired by the same, as requested; -- assist in the review or negotiation of any proposals for a plan of reorganization; -- assist in the review and/or preparation of information and analysis necessary for the confirmation of a plan in these chapter 11 proceedings; -- provide assistance in the evaluation and analysis of avoidance actions, including fraudulent conveyances and preferential transfers; -- assist in the review of potential tax attributes of the Debtor; and -- render other general business consulting services as the Committee or its counsel may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals in this proceeding. Steven Simms, Esq., disclosed that his Firm's professionals bill: Designation Hourly Rate ----------- ----------- Senior Managing Directors $560 - $625 Directors/Managing Directors $395 - $560 Associates/Consultants $195 - $385 Administration/Paraprofessionals $95 - $168 Mr. Simms assures the Court that FTI Consulting does not represent any interest adverse to the Committee. Headquartered in McSherrystown, Pennsylvania, The Boyds Collection, Ltd. -- http://www.boydsstuff.com/-- designs and manufactures unique, whimsical and "Folksy with Attitude(SM)" gifts and collectibles, known for their high quality and affordable pricing. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 16, 2005 (Bankr. Md. Lead Case No. 05-43793). Matthew A. Cantor, Esq., at Kirkland & Ellis LLP represents the Debtors in their restructuring efforts. As of June 30, 2005, Boyds reported $66.9 million in total assets and $101.7 million in total debts. BROOKLYN HOSPITAL: Meeting of Creditors Continued to Feb. 16 ------------------------------------------------------------ The U.S. Trustee for Region 7 rescheduled the meeting of The Brooklyn Hospital Center and its debtor-affiliate's creditors to 9:00 a.m., on Feb. 16, 2006. The meeting will be held at 515 Rusk Street, Suite 3401, in Houston, Texas. 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 Houston, Texas, Global Empire Investments & Holdings, LLC, filed for chapter 11 protection on Dec. 6, 2005 (Bankr. S.D. Tex. Case No. 05-95389). Richard L. Fuqua, II, Esq., at Fuqua & Keim, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. BURGER KING: Moody's Rates Proposed $350MM Add-On Facility at Ba2 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Burger King Corporation's (BKC) proposed $350 million senior secured term loan B add-on facility. Moody's also affirmed the company's Ba2 corporate family rating as well as the Ba2 rating assigned to BKC's: * $250 million senior secured term loan A; * $750 million senior secured term loan B; and * $150 million senior secured revolving credit facility. In addition, Moody's changed the outlook for BKC to negative from stable. Proceeds from the term loan B add-on, along with cash on hand, will be used to fund a $400 million dividend to private equity holders. In addition, Burger King Holdings, Inc. (BKH) recently announced its intentions to execute an initial public offering in the latter half of 2006 with the intentions to use the proceeds to the company from the transaction to reduce outstanding debt at BKC. The change in outlook to negative from stable reflects BKC's weaker credit metrics due in large part to higher debt levels associated with its proposed dividend initiatives. Pro forma for the incremental debt levels and adjusted for operating leases, leverage on an adjusted debt to EBITDA basis is expected to exceed 6.0x and is not anticipated to fall below 4.0x until fiscal year 2009 based on Moody's assumptions. The outlook could change back to stable if credit metrics improved to levels that were more reflective of the current rating level with: * leverage approaching 4.0x, * coverage improving towards 3.0x, and * retained cash flow less capex to adjusted debt of around 10% on a sustained basis. Although stronger credit metrics will largely be driven by a sustained improvement in operating performance, BKC could recognize a greater near term improvement if BKH successfully executes its proposed initial public offering and the proceeds are applied to debt reduction at BKC. Affirmation of the Ba2 corporate family rating and assignment of the Ba2 senior secured term loan B add-on reflect BKC's: * significant brand equity; * geographic diversity; * improving operating performance; and * good liquidity. However, the ratings also incorporate BKC's relatively weak credit profile, due in part to: * higher debt levels associated with funding its proposed dividend; * significant competitive pressures; * mature operating environment; and * relatively aggressive growth plans. Moody's believes upward ratings momentum from the current Ba2 corporate family rating is unlikely until the company exceeds the credits metrics referenced above on a sustained basis while maintaining adequate liquidity. However, the ratings would be lowered if a sustained deterioration in same store sales or average unit volumes lead to persistent weakness or deterioration in credit metrics or liquidity. It is Moody's understanding that the $350 million term loan B add- on will have the same terms and conditions as the existing credit facility that is currently rated. Moody's also anticipates that covenants will be adjusted for the proposed increase in the term loan B allowing for full access to the company's $150 million revolving credit. As of Sept. 30, 2005, there were no outstandings on the revolving credit facility and the company had full access to the revolver based on covenants. Burger King Corporation, with headquarters in Miami, Florida, operates 1,225 and franchises 9,915, (for an aggregate of 11,141 restuarants worldwide) Burger King hamburger quick service restaurants in the United States and 66 other countries. Corporate revenue for the 2005 fiscal year ending June 30, 2005 was about $1.9 billion and total sales across the Burger King system were about $12 billion. BURGER KING: S&P Rates Proposed $350 Million Loan Add-On at B+ -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to quick-service restaurant operator Burger King Corp.'s proposed $350 million add-on to its existing secured term loan B, which matures in 2012. The recovery rating on the company's $1.496 billion credit facility was lowered to '3' from '2'. The rating and recovery rating indicate the expectation for meaningful (50%- 80%) recovery of principal in the event of a payment default. At the same time, Standard & Poor's placed its ratings on Burger King, including the 'B+' corporate credit and bank loan ratings, on CreditWatch with positive implications. "The lower bank recovery rating is attributable to the increased debt the company will have to cover," said Standard & Poor's credit analyst Diane Shand. Total pro forma funded debt is approximately $1.4 billion. The ratings are based on preliminary terms and are subject to change after a review of final documents. The proceeds from the debt offering will be used to fund the majority of a $400 million special dividend to the company's private equity holders. The CreditWatch listing on Miami-based Burger King reflects its improving operating performance and the company's plans to offset the majority of the $400 million dividend with proceeds from an IPO. The company recently announced plans to file an S-1 with the SEC for an IPO of its common stock for at least $600 million. The proceeds from the IPO will be split between the company and its investor group (Texas Pacific Group, Bain Capital, and Goldman Sachs Capital Partners). Burger King will use the majority of its proceeds to repay the $350 million add-on to term loan B. If the transaction is successfully completed as proposed, and the company operating results improve such that leverage falls to less than 5x in fiscal 2006, all ratings would be raised to a 'BB-' and a stable outlook would be assigned. If the company is not successful with the IPO, ratings would most likely be affirmed at 'B+', with a stable outlook. CABLEVISION SYSTEMS: S&P Holds Corporate Credit Rating on Watch --------------------------------------------------------------- Standard & Poor's Ratings Services held its ratings for Bethpage, New York-based cable TV operator Cablevision Systems Corp. and its related entities on CreditWatch, with developing implications, including its 'BB-' corporate credit rating, where they originally were placed with negative implications on June 20, 2005. "This follows the company's Jan. 31, 2006, announcement in an 8K filing that it has completed the debt covenant compliance review, announced on Dec. 19, 2005; while the company has identified certain technical covenant compliance issues under its CSC Holdings Inc. and Rainbow National Services LLC credit agreements, it has obtained waivers from the lenders under these agreements and amendments have also been made to the Rainbow National Services loan agreement," said Standard & Poor's credit analyst Catherine Cosentino. Waivers also have been obtained for certain monetization transactions affected by the CSC Holdings covenant compliance issues. While the company is now in compliance with its various credit arrangements, at this point it has not yet addressed the upcoming refinancing of approximately $1.5 billion maturing in June 2006 under the CSC Holdings bank facility. In addition, Cablevision indicated in its 8K filing that the board of directors will reconsider initiation of a possible special dividend at its regularly scheduled March meeting. The ratings have been on CreditWatch since June 20, 2005, first with negative implications and subsequently developing implications. The latter revision occurred on Dec. 20, 2005, when the corporate credit rating was lowered to 'BB-' from 'BB' to reflect heightened concern for a potential near-term default under its bank agreements, and the implications changed to developing. At that time, the company had indicated in an 8K filing that it had committed certain technical covenant violations under its CSC Holdings bank credit agreement and may have breached certain covenants under other debt instruments. While Standard & Poor's does not know the size of any potential special dividend, the rating agency notes that on Dec. 2, 2005, it indicated that the company's 'BB' rating at the time could absorb a fully debt funded $3 billion special dividend, given the level of on-going operating cash flows generated predominately by its cable TV operations. However, failure to secure refinancing for the upcoming bank maturity in a timely manner could result in a downgrade. Conversely, if the company addresses the maturity overhang, given the strength of its cable TV business, ratings could be raised back to 'BB'. CAREMORE HOLDINGS: Moody's Assigns B2 Corporate Family Rating ------------------------------------------------------------- Moody's Investors Service assigned a B2 corporate family rating to CareMore Holdings, Inc. Previously, the rating agency had assigned a B2 senior debt rating to CareMore's proposed $150 million senior secured bank credit facility. The outlook on all the ratings is stable. Moody's says that the B2 corporate family rating reflects: * CareMore's dependence on the Medicare Advantage product; * the limited geographic area in which the company markets its products; * its limited track record; * the change occurring in the leadership at the company; and * the sustainability of the company's unique model to control healthcare costs for an extended period of time. However, the rating also recognizes the strong Medicare market that currently exists and the potential for strong returns should the provisions of the Medicare Modernization Act with respect to government reimbursement levels remain intact. The rating agency added that the rating also reflects the company's commitment for debt repayment of only 50% of excess cash flow, and an NAIC risk- based capital ratio below 100% of company action level. CareMore is a leading healthcare provider serving approximately 20,000 Medicare beneficiaries in Los Angeles and Orange counties in California. Coverage is provided under two Medicare plans: * Blue Shield Value Plan/65 Plus (through an agreement with Blue Shield of California); and * California Medicare Advantage (a CareMore product). CareMore's unique "controlled clinical approach", which is focused on the identification and management of frail patients, preventive care programs and prudent cost management, has led to an industry- leading medical loss ratio. The company also provides administrative services for affiliated physicians. CareMore Holdings, Inc. will be headquartered in Downey, California. As of Sept. 30, 2005, California Health Plan, CareMore's operating subsidiary, reported tangible net equity of approximately $8.3 million on a statutory basis. For the nine month period ending Sept. 30, 2005, total revenue was $144 million. Information about Moody's and Standard & Poor's rating of CareMore's $150 million senior secured bank credit facility appeared in the Troubled Company Reporter on Jan. 24, 2006. CATHOLIC CHURCH: Tucson Parish Incorporation Nearly Completed ------------------------------------------------------------- Bob Scala of The New Vision, a monthly newspaper of the Diocese of Tucson, reports that the articles of incorporation for all 74 parishes in the Diocese were filed with the Secretary of State in November 2005. In December 2005, the articles of incorporation for each parish were published in a newspaper of record in the county where that parish is located. The formal incorporation process will be complete once the Arizona Corporation Commission has received copies of the actual publication copy of the articles. That process may already be completed. Mr. Scala says the next and last big step will be the deeding of the properties of each parish to that parish, which must be accomplished by April 15, 2006. The properties are presently held in trust by the Diocese for the parishes. The Roman Catholic Church of the Diocese of Tucson filed for chapter 11 protection (Bankr. D. Ariz. Case No. 04-04721) on September 20, 2004, and delivered a plan of reorganization to the Court on the same day. Susan G. Boswell, Esq., Kasey C. Nye, Esq., at Quarles & Brady Streich Lang LLP, represent the Tucson Diocese. (Catholic Church Bankruptcy News, Issue No. 51 Bankruptcy Creditors' Service, Inc., 215/945-7000) CCH II: Fitch Assigns CCC+ Rating to $450 Million Senior Notes -------------------------------------------------------------- Fitch Ratings assigned a 'CCC+' rating and 'RR3' Recovery Rating to the $450 million of 10.25% senior notes due 2010 issued by CCH II, LLC, in a private transaction. CCH II, LLC, is an indirect subsidiary of Charter Communications, Inc. The proceeds from the issuance are expected to be used to repay borrowings under the Charter Communications Operating, LLC, credit facility. In addition, Fitch has placed Charter's 'CCC' Issuer Default Rating and the individual issue ratings of Charter and its subsidiaries on Rating Watch Negative. Approximately $19.1 billion of debt is affected by Fitch's action. Fitch's rating action reflects Charter's precarious liquidity position beyond 2006, which increases the default risk associated with Charter's credit profile and downward pressure on recovery prospects. Fitch acknowledges that CCH II, LLC's issuance of $450 million in senior notes improves Charter's near-term liquidity profile by increasing the available borrowing capacity under Charter Communications Operating, LLC's revolver from $648 million (as of the end of third-quarter 2005) to approximately $1 billion (pro forma for the issuance as of the end of third-quarter 2005). Fitch believes that entering 2006, Charter will have approximately $1.4 billion (which aggregate availability is subject to maximum leverage covenants) of available liquidity between its revolver and the $435 million senior bridge loan at CCO Holdings, LLC, which should be sufficient to fund operational and debt service requirements during 2006. Given the company's increasingly untenable capital structure that will require additional cash to service a growing amount of cash interest expense and ongoing capital expenditures, Fitch expects Charter to generate negative free cash flow through 2007. From Fitch's perspective the company's financial flexibility is becoming more constrained and the company does not have sufficient liquidity resources in place to meet its business and debt service requirements beyond 2006. Given Charter's existing corporate structure, Charter's ability to raise financing at its various intermediate holding companies is becoming increasingly limited due to additional indebtedness covenants. Charter's liquidity position will be further pressured during 2007 by $385 million of scheduled maturities consisting of $280 million of bank debt and the maturity of Charter Communications Holdings, LLC, 8.25% notes due 2007. The Rating Watch Negative also incorporates the downward pressure on recovery prospects for bondholders, reflecting asset valuations and expected increases in outstanding debt, which could lead to a lowering of the Recovery Ratings assigned across Charter's capital structure. In resolving the Negative Rating Watch, the company will need to demonstrate sufficient financial flexibility and have liquidity resources in place that will satisfy the company's 2007 cash requirements. Overall, Fitch's current ratings for Charter reflect the company's highly levered balance sheet and the absence of any prospects to meaningfully de-lever its balance sheet over the near term. Additionally, the ratings incorporate Fitch's expectation that Charter will continue to generate negative free cash flow given: * the company's operating profile; * ongoing capital expenditures; and * the increasing cash interest requirements on debt that has converted or is scheduled to convert to cash interest payment. Moreover, Fitch's ratings continue to incorporate the competitive threat posed by the direct broadcast satellite operators, ILECs, and new industry participants. COATES INTERNATIONAL: Posts $202K Net Loss in Third Quarter ----------------------------------------------------------- Coates International, Ltd., delivered its financial results for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Jan. 27, 2006. Coates reported a $202,478 net loss for the three months ended Sept. 30, 2005, compared to $165,136 of net income for the corresponding three-month period in 2004. The net loss for the three-month period ended Sept. 30, 2005 included the Company's share of losses based on its equity ownership in Coates Motorcycle amounting to $54,059. No revenues were generated during the three-month periods ended Sept. 30, 2005 and 2004. The Company's balance sheet at Sept. 30, 2005, showed $2,335,473 in total assets and liabilities of $2,926,796, resulting in a $591,323 stockholders' deficit. Coates working capital deficit of $1,669,180 at Sept. 30, 2005, represents a $394,965 or 58% increase over the $676,949 working capital deficit position at Sept. 30, 2004. Going Concern Doubt Rosenberg Rich Baker Berman & Company expressed substantial doubt about Coates' ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2004 and 2003. The auditing firm pointed to the Company's lack of operating revenue, substantial losses and limited capital resources. Coates International, Ltd. -- http://www.coatesengine.com/-- has completed the development of a spherical rotary valve SRV Engine, the development of which was initiated by its founder, George J. An engine equipped with the CSRV can run on any number of fuels while reducing emissions and increasing efficiency. The Company plans to license its CSRV engine technology to makers of heavy- duty vehicles, automobiles, and industrial engines. CIL owns 30% of former subsidiary Coates Motorcycle Co., which plans to market a V-twin bike powered by CSRV technology. CONSUMERS TRUST: Hires Katten Muchin as Bankruptcy Counsel ---------------------------------------------------------- The Consumers Trust sought and obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Katten Muchin Rosenman LLP, as its bankruptcy counsel. As reported in the Troubled Company Reporter on Dec. 9, 2005, Katten Muchin will: a) advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued management of its business; b) work with the other professionals retained in this case to ensure an efficient chapter 11 process in the United States and Canada; c) attend meetings and negotiate with creditors and other parties-in-interest and advise and consult on the conduct of the case, including all of the legal and administrative requirements of operating in chapter 11; d) take all necessary actions to maximize the value of the Debtor's estate, including the prosecution of actions on the Debtor's behalf, the defense of any actions commenced against the estate, negotiations concerning litigation in which the Debtor may be involved, and objections to claims filed against the estate; e) prepare motions, applications, answers, orders, reports and papers necessary to the administration of the estate; f) negotiate and prepare the plan of reorganization, disclosure statement and related agreements and documents and taking any necessary actions on behalf of the Debtor to obtain confirmation of such plan; g) appear before this Court, any appellate courts, and the U.S. Trustee to protect the interests of the Debtor's estate; and h) perform other necessary legal services in connection with the prosecution of this chapter 11 case. Jeff J. Friedman, Esq., a Katten Muchin partner, discloses the Firm's professionals hourly rates: Professional Hourly Rate ------------ ----------- Partners $305 - $725 Counsel $345 - $625 Associates $170 - $435 Paraprofessionals $100 - $300 The Firm received a $250,000 retainer prior to the Debtor's chapter 11 filing. Mr. Friedman assures the Court that Katten Muchin is a "disinterested person" as that term is defined in sections 101(14) and 327 of the bankruptcy code. Headquartered in London, England, The Consumers Trust filed for chapter 11 protection on Dec. 5, 2005 (Bankr. S.D.N.Y. Case No. 05-60155). Jeff J. Friedman, Esq., at Katten Muchin Rosenman LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated between $1 million to $10 million in total assets and more than $100 million in total debts. COVALENCE SPECIALTY: S&P Rates Proposed $175 Million Loan at B- --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating and a recovery rating of '3' to Covalence Specialty Materials Corp.'s proposed $175 million second-priority senior loan due 2013, based on preliminary terms and conditions. These ratings denote the likelihood that lenders to the second-priority senior loan would experience meaningful recovery of principal (50%-80%) in a payment default scenario. At the same time, ratings on the company's proposed $200 million second-priority senior secured floating-rate notes due 2013 were withdrawn to recognize changes made to the company's pending financing plans. Additional changes include: * an increase to the company's proposed senior secured first- lien term loan to $350 million from $325 million; and * a reduction in the amount of the proposed senior subordinated notes to $265 million from $295 million. At the same time, Standard & Poor's affirmed all ratings, including its 'B' corporate credit rating, that were assigned on Jan. 26, 2006. The outlook remains positive. Transaction proceeds will be used to finance the equity sponsor-led acquisition and related fees and expenses. Pro forma for the transaction, Princeton, New Jersey-based Covalence had total debt outstanding of about $790 million at Dec. 31, 2005. In December 2005, Apollo Management L.P. entered into a definitive agreement to purchase the plastics and adhesives businesses of Tyco International Ltd. (BBB+/Watch Neg/A-2) for $945 million. If completed as proposed, the financing plan will include: * $700 million in senior secured credit facilities (including a $175 million revolving credit facility, a $350 million first- lien term loan B, and a $175 million second-priority senior loan due 2013); * $265 million senior subordinated notes due 2016; and * $205 million in equity and perpetual preferred stock contribution from Apollo and management. The transaction should close in the first calendar quarter of 2006, subject to customary closing conditions. "Ratings could be raised in the intermediate term if the company establishes a track record of earnings improvement and free cash flow generation, successfully establishes itself as a stand-alone entity, and demonstrates its commitment to maintain debt at manageable levels," said Standard & Poor's credit analyst Liley Mehta. The ratings reflect Covalence's vulnerable business risk profile incorporating its: * exposure to industrial and other end markets tied to general economic activity; * potential vulnerability to volatile raw-material costs if business conditions weaken; * challenges associated with operating as a stand-alone company, aggressive debt leverage; and * low operating margins that reflect a moderate dependence on commodity-like products. These negative factors outweigh the benefits of: * leading market positions in various plastic films market segments; * considerable scale; and * decent product and customer diversity. With pro forma revenues of about $1.7 billion, Covalence is among the largest producers of plastic film products in North America. CSC HOLDINGS: Fitch Affirms Low-B Ratings With Negative Outlook --------------------------------------------------------------- Fitch Ratings affirmed and removed from Rating Watch Negative the ratings for CSC Holdings, Inc. CSC: -- Issuer Default Rating (IDR) 'B+' -- Senior secured bank facility 'BB/RR1' -- Senior unsecured debt 'BB-/RR3' -- Senior subordinated debt 'B/RR5' CSC's Rating Outlook is Negative. Approximately $8.6 billion of CSC debt (as of Sept. 30, 2005) is affected by Fitch's action. Fitch's rating action follows CSC's announcement that it has concluded its debt covenant review, which was initiated on Dec. 19, 2005 and identified additional covenant compliance issued under the company's bank agreement related to monetization transactions and interest rate swaps. CSC indicates that it has received the necessary waivers from the lenders party to the bank agreement and that the company and its subsidiaries are in compliance with all of their debt agreements and instruments. CSC also announced that its board of directors will once again consider the payment of a special dividend at its regularly scheduled meeting in March. Fitch downgraded CSC's IDR on Dec. 15, 2005, reflecting the company's decision to materially increase its leverage to fund the special dividend to Cablevision System Corporation's common shareholders. Fitch believes that the board will reach a similar conclusion upon reconsideration of the special dividend in March. Fitch originally placed CSC on Rating Watch Negative on Dec. 19, 2006, following disclosure that the company had violated technical covenants contained in CSC's $2.4 billion bank facility and has potentially violated technical covenants contained in other debt instruments. DELTA AIR: Appoints Ernst & Young as Auditors for Fiscal 2006 ------------------------------------------------------------- Delta Air Lines (Other OTC:DALRQ) reported that the audit committee of its Board of Directors selected Ernst & Young LLP as the company's independent auditors for the fiscal year ending Dec. 31, 2006. The audit committee annually considers the selection of Delta's independent auditors. The selection followed a competitive bid process, which included proposals by large accounting firms. The audit committee selected Ernst & Young because of its experience both with airlines and companies involved in reorganization proceedings. Its current independent auditors, Deloitte & Touche LLP, are completing the audit of Delta's financial statements for the fiscal year ended Dec. 31, 2005. The change for fiscal 2006 was not the result of any disagreement between Delta and Deloitte & Touche on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure or any decision by Deloitte & Touche to resign or refuse to stand for re-election. "We believe that Ernst & Young, with its relevant experience, is the appropriate professional firm for Delta's current needs," Edward H. Bastian, Delta's Executive Vice President and Chief Financial Officer, said. "We appreciate the efforts of Deloitte & Touche over the last several years." Delta's engagement of Ernst & Young as the company's independent auditors for 2006 is subject to bankruptcy court approval. Accordingly, Delta will file a retention application on the appointment of Ernst & Young with the bankruptcy court. 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. DENNIS SPIELBAUER: Case Summary & 6 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Dennis S. Spielbauer P.O. Box 720835 San Jose, California 95172 Bankruptcy Case No.: 06-50153 Chapter 11 Petition Date: February 3, 2006 Court: Northern District of California Judge: Arthur S. Weissbrodt Debtor's Counsel: David A. Boone, Esq. LODAB PC 1611 The Alameda San Jose, California 95126 Tel: (408) 291-6000 Fax: (408) 291-6016 Estimated Assets: $10 Million to $50 Million Estimated Debts: $1 Million to $10 Million Debtor's 6 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Cal Coast Credit Services $2,739 2906 McBride Lane Santa Rosa, CA 95403 Washington Mutual $2,485 540 E. Main Street Stockton, CA 95020-3030 ER Solutions $739 800 SW 39th Street Renton, WA 98055 Bally Total Fitness $232 12440 E. Imperial, Suite 3 Norwalk, CA 90650 Professional Recovery $68 3005 Almaden Expressway San Jose, CA 95118-1202 U.S. Attorney General Unknown Civil Trial Sec. Western P.O. Box 683 Ben Franklin Washington, D.C. 20044 DOCTORS HOSPITAL: Files 2nd Amendment to DIP Financing Facility --------------------------------------------------------------- Doctors Hospital 1997, L.P., asks the U.S. Bankruptcy Court for the Southern District of Texas, to approve a second amendment to its DIP Financing Facility. The Second Amendment extends the term of the Debtor's loan agreements with GE HFS Holdings, Inc., and Bruckmann, Rosser, Sherrill & Co., L.P., through March 31, 2006. Additionally, the Debtor provided the DIP Lender with a [non- public] Cash Flow Budget for the 26-week period beginning Jan. 27, 2006. The Debtor reminds the Court that under to the terms of the GE DIP Loan Agreement, it was allowed to borrow an amount determined pursuant to a Borrowing Base, plus $4,000,000 of Overadvances. In December 2005, the Debtor experienced a liquidity crisis and was forced to ask for additional funds from GE HFS. The Debtor and GE HFS negotiated a first amendment to the DIP Agreement under which GE HFS allowed the Debtor to borrow an additional $625,000. That agreement, the Debtor says, along with a loan from Bruckmann Rosser, expired on Jan. 31, 2006. Joshua W. Wolfshohl, Esq., at Porter & Hedges, L.L.P., in Houston, Texas, tells the Court that the Debtor needs continued financing under the GE DIP Loan Agreement and the BRS DIP Note to allow it to continue to operate its hospitals. "Absent the proposed extension, the Debtor will be forced to curtail substantially all of its normal operations with concomitant harm to the value of its business, to say nothing of the immediate public health risk such a curtailment would engender when the Debtor lacks the funds necessary to provide for the care and comfort of the patients residing in its hospitals," Mr. Wolfshohl relates. The Second DIP Amendment also provides: -- with respect to leased property located at 510 West Tidwell in Houston, Texas, the Debtor stipulates to the arrearages under the Lease and promises to pay $100,000 per month to Healthcare Financial Services, L.L.C., GE HFS' affiliate who purchased the Tidwell Property and the current lessor of the property lease; -- for limitations disbursements by the Debtor during the extended term of the DIP Loan Agreement, in accordance with the Cash Flow Budget; and -- for the Debtor to pay a $16,500 extension fee as partial consideration for GE extending the DIP Loan Agreement and entering into the Second Amendment. A full-text copy of the Second Amendment to the Debtor's DIP Financing Facility is available at no charge at http://ResearchArchives.com/t/s?4f5 Headquartered in Houston, Texas, Doctors Hospital 1997 LP, dba Doctors Hospital Parkway-Tidwell, operates a 101-bed hospital located in Tidwell, Houston, and a 152-bed hospital located in West Parker Road, Houston. The Company filed for chapter 11 protection on April 6, 2005 (Bankr. S.D. Tex. Case No. 05-35291). James M. Vaughn, Esq., at Porter & Hedges, L.L.P., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $41,643,252 and total debts of $66,306,939. DOMTAR INC: Posts $298 Million Net Loss in 2005 Fourth Quarter -------------------------------------------------------------- Domtar Inc. reported a net loss of $298 million in the fourth quarter of 2005 compared to a net loss of $26 million in the fourth quarter of 2004 and a net loss of $52 million in the third quarter of 2005. The Company also recorded sales of $1.4 billion in the fourth quarter of 2005 compared to sales of $1.2 billion in the fourth quarter of 2004. At Dec. 31, 2005, assets totaled $4.4 billion and liabilities totaled $3.1 billion, resulting to a stockholders' equity of $1.3 billion. "In November 2005, faced with a number of economic conditions that adversely impacted our business, such as higher energy prices and the rapid rise of the Canadian dollar, we announced a plan aimed at returning the Company to profitability as quickly as possible," Raymond Royer, Domtar's President and Chief Executive Officer, said. "This plan included permanent closures of mills and paper machines, which will mean an 18% reduction in our work force. Although the plan is on schedule, our fourth quarter performance was hit with a restructuring charge of approximately $400 million. Additional restructuring costs of approximately $80 million will occur over the next few years." For the full year of 2005, Domtar recorded a net loss of $333 million compared to a net loss of $42 million in 2004. For the full year of 2005, the Company recorded sales of $4.6 billion compared to sales of $5 billion in 2004. Free cash flow declined by $116 million in 2005 compared to 2004. This deterioration mainly reflects a decline in profitability as well as increased requirements for working capital. Based in Montreal, Quebec, Domtar Inc. -- http://www.domtar.com/ -- is the third largest producer of uncoated freesheet paper in North America. It is also a leading manufacturer of business papers, commercial printing and publication papers, and technical and specialty papers. Domtar manages according to internationally recognized standards 18 million acres of forestland in Canada and the United States, and produces lumber and other wood products. Domtar has 10,000 employees across North America. The company also has a 50% investment interest in Norampac Inc., the largest Canadian producer of containerboard. * * * As reported in the Troubled Company Reporter on Dec. 14, 2005, Moody's Investors Service downgraded Domtar Inc.'s corporate family and senior unsecured debt ratings to B1 from Ba2. The outlook is negative. Ratings downgraded: Outlook: Negative * Corporate family rating: to B1 from Ba2 * Senior unsecured notes and debentures: to B1 from Ba2 * Senior Unsecured Shelf: to (P)B1 from (P)Ba2 DRS TECHS: S&P Affirms Corporate Credit Rating With Neg. Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on DRS Technologies Inc., including the 'BB-' corporate credit rating, and removed the ratings from CreditWatch, where they were placed with negative implications on Sept. 22, 2005. The affirmation, which was originally indicated on Nov. 7, 2005, reflects the acquisition of Engineered Support Systems Inc. (ESSI) on terms similar to those originally presented to Standard & Poor's. The ratings on the new $700 million credit facility and $900 million of new public debt securities were not on CreditWatch and are not affected. The outlook is negative. "The $2 billion, largely debt-financed acquisition is expected to result in improved customer and program diversity," said Standard & Poor's credit analyst Christopher DeNicolo. "However, the improved business risk profile is offset somewhat by the increase in leverage and deterioration in cash flow protection measures," the analyst continued. The rating assumes no significant debt-financed acquisitions for at least the next year. The $43 per share purchase consideration was paid 70% in cash and 30% in DRS stock. The $1.3 billion cash portion, including fees and expenses and repaying bank debt at DRS and ESSI, was financed with cash on hand and the proceeds from the new credit facility and new public debt securities. The ratings on Parsippany, New Jersey-based DRS reflect: * high debt leverage; * participation in the competitive defense electronics market; and * integration risks of an active acquisition program. These factors are partly offset by the generally favorable environment for defense spending and the company's leading positions in niche markets. DRS is a supplier of defense electronics products and systems, providing: * naval combat display workstations, * thermal imaging devices, * electronic sensor systems, * mission recorders, and * deployable flight incident recorders. The business environment for military contractors is generally favorable due to high levels of spending for both the military and homeland security, especially for defense electronics products. ESSI, which will comprise the new Services and Support Group, provides support and logistics services related to military sustainment and also designs and manufactures integrated military electronics and support equipment. Pro forma funded backlog for the combined company is around $2.5 billion. The acquisition of ESSI will result in weaker credit protection measures in the near term due to higher leverage. The failure to reduce leverage as expected or material integration problems could result in a downgrade. The current ratings also assume no significant debt-financed acquisitions for at least the next year. The outlook could be revised to stable if debt is reduced faster than current expectations. ERA AVIATION: Court Okays Continued Use of Cash Collateral ---------------------------------------------------------- The Hon. Donald MacDonald IV of the U.S. Bankruptcy Court for the District of Alaska authorized Era Aviation, Inc., to continue using cash collateral securing repayment of its prepetition obligations to CapitalSource Finance, LLC. The Debtor can use CapitalSource's cash collateral from Jan. 7, 2006, through Feb. 17, 2006, in accordance with a six-week budget. A copy of that budget is available for free at: http://researcharchives.com/t/s?4f8 As adequate protection for any diminution in the value of the CapitalSource's collateral, the Debtor grants CapitalSource a postpetition lien on the cash collateral, and on all of its postpetition assets, including all assets in which CapitalSource holds a valid and perfected prepetition lien. The lien will be retroactive to the time of commencement of the Debtor's Chapter 11 case, and will cover all property that exists as of the termination of the order. If the postpetition lien granted does not provide CapitalSource with collateral of a value equal to the value of any cash collateral consumed by the Debtor, Judge MacDonald rules that CapitalSource will have an administrative claim under Section 507(a)(1) of the Bankruptcy Code for that shortfall. Except for the postpetition lien provision, Judge MacDonald clarifies that no additional liens or payments by the Debtor are required for purposes of adequate protection at this time. Judge MacDonald also directs the Debtor to file weekly cash flow statements that accurately compare the weekly cash flow with the actual cash flow for each week. The weekly statements must be filed no later than February 8th, 15th and 22nd and e-mailed to CapitalSource's counsel. A final hearing to consider use of cash collateral beyond Feb. 17 will be held on Feb. 14, 2006 at 10:00 a.m. Headquartered in Anchorage, Alaska, Era Aviation, Inc. -- http://www.flyera.com/-- provides air cargo and package express services. The Debtor filed for chapter 11 protection on Dec. 28, 2005. Cabot C. Christianson, Esq., at Christianson & Spraker, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. ESCHELON TELECOM: S&P Puts CCC+ Preliminary Rating on Securities ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary rating of 'CCC+' to the debt securities under a $150 million universal shelf registration by Eschelon Telecom, Inc., filed on Feb. 1, 2006. "This rating is only for the senior second secured debt securities at the company's Eschelon Operating Co. intermediate holding company, and is based on the current capital structure and assumes no material priority obligations including first lien debt," said Standard & Poor's credit analyst Allyn Arden. At the same time, Standard & Poor's affirmed its 'CCC+' corporate credit rating on Eschelon. The outlook remains positive. The ratings on Minneapolis, Minnesota-based competitive local exchange carrier Eschelon Telecom Inc. reflect the company's vulnerable business position resulting from, among other factors, the highly competitive nature of the competitive local exchange carrier (CLEC) business, including substantial competition from the regional Bell operating companies. Additionally, the ratings incorporate Eschelon's limited liquidity and negative discretionary cash flow generation. Tempering factors include the company's low cost structure and flexibility with respect to capital spending. Total debt was approximately $97 million as of Sept. 30, 2005. EXIDE TECHS: S&P Lowers Corporate Credit Rating to CCC form CCC+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Exide Technologies to 'CCC' from 'CCC+' because of Exide's continued poor operating performance and rising debt leverage. Alpharetta, Georgia-based Exide, a manufacturer of automotive and industrial batteries, has total debt of about $837 million and underfunded postemployment benefit liabilities of about $400 million. The senior secured rating on Exide's recently enlarged first-lien credit facility was lowered to 'CCC' from 'B-', and the recovery rating was lowered to '2' from '1', because of the lower corporate credit rating and the weaker asset protection for the enlarged facility. The senior secured rating and the recovery rating reflect Standard & Poor's expectation that lenders will realize a substantial recovery of principal (80%-100%) in the event of default or bankruptcy. The senior secured rating on Exide's second-lien notes was lowered to 'CC' from 'CCC', reflecting the lower corporate credit rating and an increase in priority debt. "Exide expects to report lower earnings for its third quarter ended Dec. 31, 2005, than it did in the same quarter last year," said Standard & Poor's credit analyst Martin King. "The shortfall is a result of lower sales in the company's transportation segment, a sharp rise in lead prices to new historic highs, and unfavorable exchange rate movements. Although the company has undertaken initiatives to increase product prices, earnings will likely continue to be depressed in the fourth quarter and in fiscal 2007 (ending March 31, 2007)." Weak cash flow has forced the company to increase the size of its first-lien secured credit facility by $47.6 million to provide much-needed liquidity. Meanwhile, lenders have eliminated scheduled amortization requirements and relaxed financial covenant requirements. Still, debt leverage has increased because of the company's higher debt levels and weaker earnings. Debt to EBITDA is estimated at about 7x, and this will not meaningfully decline in the near term given the company's negative cash flow. Exide also has substantial underfunded postemployment benefit obligations that require about $35 million of funding each year. FLEET COMMERCIAL: Notes Payment Prompts S&P to Withdraw Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services withdrew its ratings on the class A-2, B-1, B-2, C-1, C-2, D-1, and D-2 notes issued by Fleet Commercial Loan Master LLC series 2000-1, a balance sheet corporate CLO transaction. The rating withdrawals follow the full redemption of these notes on the Nov. 16, 2005, payment date. Ratings withdrawn: Fleet Commercial Loan Master LLC series 2000-1 Rating Balance (mil. $) Class To From Previous Current ----- -- ---- -------- ------- A-2 NR AAA 830.100 0.000 B-1 NR A 39.900 0.000 B-2 NR A 32.600 0.000 C-1 NR BBB 45.600 0.000 C-2 NR BBB 37.300 0.000 D-1 NR BB 21.700 0.000 D-2 NR BB 17.700 0.000 FOSS MANUFACTURING: Trustee Wants Jenifer Smyth's Contract Voided ----------------------------------------------------------------- Patrick J. O'Malley, the chapter 11 Trustee for Foss Manufacturing Company, Inc., asks the Honorable Mark W. Vaughn of the U.S. Bankruptcy Court for the District of New Hampshire to release the Debtor from its five-year contract with Jenifer Smyth, daughter of the company's former CEO Stephen Foss, Patrick Cronin of the Hampton Union reports. Ms. Smyth signed on as the company's director of marketing in August 2005, receiving, Mr. Cronin relates: (a) an annual salary of $104,000 plus a guaranteed 3% increase per year; (b) participation in an incentive plan where she could earn up to 30% of her salary; and (c) 60% reimbursement of her health club membership dues. "In light of the fact that the debtor's bankruptcy estate does not require her services, rejection of the employment agreement is appropriate," Mr. O'Malley states in court documents Mr. Cronin reviewed. Headquartered in Hampton, New Hampshire, Foss Manufacturing Company, Inc. -- http://www.fossmfg.com/-- is a producer of engineered, non-woven fabrics and specialty synthetic fibers, for a variety of applications and markets. The Company filed for chapter 11 protection on Sept. 16, 2005 (Bankr. D.N.H. Case No. 05-13724). Andrew Z. Schwartz, Esq., at Foley Hoag LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $49,846,456 in assets and $53,419,673 in debts. GARDEN STATE: Has Until April 6 to File Chapter 11 Plan ------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey extended until April 5, 2006, the period within which Garden State MRI Corporation has the exclusive right to file a chapter 11 plan. The Court also gave the Debtor more time to solicit acceptances of that plan from their creditors, until June 5, 2006. The extension will give the Debtor more time to continue to stabilize its business and to continue to implement its long-term business plan in order to complete negotiations for a reorganization plan with its creditors. The extension will also allow the Debtor to pursue and formulate a feasible reorganization plan. Headquartered in Vineland, New Jersey, Garden State MRI Corporation, dba Eastlantic Diagnostic Institute -- http://www.eastlanticdiagnostic.com/-- operates an out-patient imaging and radiology facility. The Company filed for chapter 11 protection on June 9, 2005 (Bankr. D. N.J. Case No. 05-29214). Arthur Abramowitz, Esq. and Jerrold N. Poslusny, Jr., Esq., at Cozen O'Connor, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of less than $50,000 and estimated debts between $10 million to $50 million. GARDEN STATE: Has Until March 15 to Decide on New Jersey Lease -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey extended until Mar. 15, 2006, the time within which Garden State MRI Corporation can elect to assume, assume and assign, or reject its unexpired nonresidential real property lease. The Debtor leases office space located at 1170 East Landis Avenue in Vineland, New Jersey, from Daystar Concepts, Inc. The Debtor tells the Court that it needs more time to fully explore its options and complete negotiations. According to the Debtor: 1) a premature decision to reject the lease would have a detrimental affect on patients in the community who rely upon the services provided by Debtor; and 2) the requested extension will not prejudice the landlord of the lease because the Debtor is current on all post-petition obligations under the lease. Headquartered in Vineland, New Jersey, Garden State MRI Corporation, dba Eastlantic Diagnostic Institute -- http://www.eastlanticdiagnostic.com/-- operates an out-patient imaging and radiology facility. The Company filed for chapter 11 protection on June 9, 2005 (Bankr. D. N.J. Case No. 05-29214). Arthur Abramowitz, Esq. and Jerrold N. Poslusny, Jr., Esq., at Cozen O'Connor, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of less than $50,000 and estimated debts between $10 million to $50 million. GENERAL MOTORS: Incurs Total Loss Of $3.4 Billion For 2005 ---------------------------------------------------------- In its financial statements delivered to the Securities and Exchange Commission on Jan. 26, 2006, General Motors Corporation reported that it incurred a total loss of $3.4 billion for the fiscal year 2005 compared to a net income of $3.6 billion for fiscal year 2004. Including special items, GM reported a loss of $8.6 billion, compared to a net income of $2.8 billion. GM's revenues for 2005 were $192.6 billion, compared to $193.5 billion in 2004. Including special items, GM reported a loss of $4.8 billion in the fourth quarter of 2005, compared to a loss of $99 million in the fourth quarter of 2004. For the fourth quarter of 2005, revenues were $51.2 billion compared to $51.4 billion in 2004. General Motor's losses for the fourth quarter and the entire year of 2005 were far worse than the "more moderate losses" Wall Street analysts had predicted. GM's losses have been caused by loss of market share in North America due to competition from European and Japanese carmakers, high fuel costs and increased expenditures for employees' health care, raw materials and advertising costs. GM's financial results for 2005 were also adversely affected by charges for restructuring and matters associated with Delphi Corp.'s chapter 11 filing. Delphi Corp. is the now-bankrupt spin-off of General Motors' auto parts manufacturing operations. GM's Automotive Operations GM's automotive operations reported an adjusted loss of $5.3 billion in 2005, compared to adjusted earnings of $1.2 billion in 2004. The decline was principally driven by large losses in North America, partially offset by improved results in Europe and in the Latin America, Africa and Middle East region. GM North America (GMNA) reported an adjusted loss of $5.6 billion in 2005, compared to adjusted earnings of $1.1 billion in 2004 GM is also planning to close a dozen plants and lay off up to 30,000 workers in North America as part of its efforts to avert a bankruptcy filing. As of Dec. 31, 2005 GM reported total assets $475,284,000,000 and total liabilities of $457,511,000,000. As of Dec. 31, 2005, GM reported total stockholders' equity of $16,734,000,000, compared to stockholders' equity of $27,401,000,000 for Dec. 31, 2004. A full-text copy of GM's Form 8-K filed with the SEC and containing these financial disclosures is available for free at http://ResearchArchives.com/t/s?4f0 General Motors Corporation -- http://www.gm.com/-- headquartered in Detroit, Michigan, is the world's largest producer of cars and light trucks. Founded in 1908, GM today employs about 325,000 people around the world. It has manufacturing operations in 32 countries and its vehicles are sold in 200 countries. General Motors Acceptance Corporation, a wholly-owned subsidiary of GM, provides retail and wholesale financing in support of GM's automotive operations and is one of the world's largest non-bank financial institutions. Residential Capital Corporation, a real estate finance company based in Minneapolis, Minnesota, is a wholly owned subsidiary of GMAC. * * * As reported in the Troubled Company Reporter on Jan. 30, 2006, Moody's Investors Service placed the B1 long-term rating of General Motors Corporation on review for possible downgrade following the company's announcement of full-year 2005 results that include fourth quarter automotive operating cash generation that is materially below the rating agency's expectations. The ratings of General Motor's Acceptance Corporation (Ba1/review with direction uncertain and Not-Prime/review for possible upgrade) and of Residential Capital Corporation (Baa3 and Prime- 3/review direction uncertain) remain unchanged. As reported in the Troubled Company Reporter on Dec. 14, 2005, Standard & Poor's Ratings Services lowered its corporate credit rating on General Motors Corp. to 'B' from 'BB-' and its short- term rating to 'B-3' from 'B-2' and removed them from CreditWatch, where they were placed on Oct. 3, 2005, with negative implications. The outlook is negative. The 'BB/B-1' ratings on General Motors Acceptance Corp. and the 'BBB-/A-3' ratings on Residential Capital Corp. remain on CreditWatch with developing implications, reflecting the potential that GM could sell a controlling interest in GMAC to a highly rated financial institution. Consolidated debt outstanding totaled $285 billion at Sept. 30, 2005. GEYSERS POWER: Voluntary Chapter 11 Case Summary ------------------------------------------------ Lead Debtor: Geysers Power Company, LLC 50 West San Fernando Street San Jose, California 95113 Bankruptcy Case No.: 06-10197 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Silverado Geothermal Resources, Inc. 06-10198 Type of Business: The Debtors are affiliates of Calpine Corp. Chapter 11 Petition Date: February 3, 2006 Court: Southern District of New York (Manhattan) Debtors' Counsel: Matthew Allen Cantor, Esq. Kirkland & Ellis LLP Citigroup Center 153 East 53rd Street New York, New York 10022-4611 Tel: (212) 446-4800 Fax: (212) 449-4900 Debtors' Special Counsel: Covington & Burling LLP -- and -- Thelen Reid & Priest LLP Debtors' Crisis Managers: AP Services, LLC Debtors' Auditors: PricewaterhouseCoopers LLP Debtors' Financial Advisors: Miller Buckfire & Co., LLC Debtors' Tax Consultants: KPMG LLP Debtors' Energy Industry Consultants: PA Consulting Group, Inc. Debtors' Claims And Noticing Agent: Kurtzman Carson Consultants LLC Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million The Debtors did not file a list of their 20 Largest Unsecured Creditors. GLAZED INVESTMENTS: Files Chapter 11 to Facilitate Purchase Pact ---------------------------------------------------------------- Krispy Kreme Doughnuts, Inc. (NYSE: KKD) and Westward Dough, the Krispy Kreme area developer for Nevada, Utah, Idaho, Wyoming and Montana, reported on Feb. 3, 2006 that Westward Dough has reached an agreement to purchase certain of the assets of Glazed Investments, LLC. Glazed Investments is the Krispy Kreme area developer for Colorado, Minnesota and Wisconsin. The agreement calls for Westward Dough to purchase twelve Krispy Kreme stores, as well as the franchise development rights for Colorado, Minnesota and Wisconsin, for approximately $10 million. As a condition of the purchase agreement, and at the request of Westward Dough, Glazed Investments has agreed to conduct the sale under Chapter 11 Section 363 of the US Bankruptcy Code. The Chapter 11 filing made Friday, Feb. 3, 2006, by Glazed Investments will facilitate the sale by permitting the assets to be sold free and clear of all liens, claims and encumbrances. Other qualifying bidders will have an opportunity to submit bids for Glazed Investments through a court-supervised competitive bidding process. Krispy Kreme currently has a 97% ownership interest in Glazed Investments. Upon completion of Westward Dough's acquisition of Glazed Investments, Krispy Kreme will no longer retain an ownership position. "We are very excited to have reached an agreement to purchase the Krispy Kreme franchise in Colorado, Minnesota and Wisconsin," said Lincoln Spoor, Principal of Westward Dough. "We are pleased with the opportunity to combine Glazed Investment's strengths and best practices with our own, to create a truly great company. The Krispy Kreme brand deserves nothing less." "Completing this transaction represents another step forward in Krispy Kreme's restructuring," said Steve Panagos, President and Chief Operating Officer of Krispy Kreme. "Lincoln Spoor and his team at Westward Dough have a proven track record of successfully operating Krispy Kreme locations, and we are very pleased that they have decided to further expand their relationship with the Company." Westward Dough currently operates 15 Krispy Kreme stores located in Nevada, Utah, Idaho, Wyoming and Montana. About Krispy Kreme Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme -- http://www.krispykreme.com/-- is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. There are currently approximately 320 Krispy Kreme stores and 80 satellites operating systemwide in 43 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. Headquartered in Winston-Salem, North Carolina, Freedom Rings LLC is a majority-owned subsidiary and franchisee partner of Krispy Kreme Doughnuts, Inc., in the Philadelphia region. The Debtor operates six out of the approximately 360 Krispy Kreme stores and 50 satellites located worldwide. The Company filed for chapter 11 protection on Oct. 16, 2005 (Bankr. D. Del. Case No. 05-14268). M. Blake Cleary, Esq., Margaret B. Whiteman, Esq., and Matthew Barry Lunn, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. KremeKo, Inc., Krispy Kreme's Canadian franchisee, is currently restructuring under the Companies' Creditors Arrangement Act. Pursuant to the Court's Initial Order, Ernst & Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings. The Monitor is attempting to sell the KremeKo business. GLAZED INVESTMENTS: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Glazed Investments, LLC 1211 West 22nd Street, Suite 700 Oak Brook, Illinois 60523 Bankruptcy Case No.: 06-00932 Type of Business: The Debtor makes and sells doughnuts. The Debtor is a majority-owned unit of Krispy Kreme. Chapter 11 Petition Date: February 3, 2006 Court: Northern District of Illinois Judge: Pamela S. Hollis Debtor's Counsel: Daniel A. Zazove, Esq. Perkins Coie LLP 131 S. Dearborn, Suite 1700 Chicago, Illinois 60603-5559 Tel: (312) 324-8605 Fax: (312) 324-9400 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Moac Mall Holdings, LLC Trade Debt $203,626 National City Center 115 W. Washington Indianapolis, IN 46204 Penske Truck Leasing Co., LP Trade Debt $162,696 Route 10 Greenshill Reading, PA 19603 Ryder Transportation Services Trade Debt $99,607 55 Shuman Boulevard, Suite 350 Naperville, IL 60565 Xcel Energy Trade Debt $76,441 414 Nicollet Mall Minneapolis, MN 55484-9477 American Express Trade Debt $51,000 200 Vesey Street New York, NY 10285 Fleetcor Corp. Trade Debt $34,914 Aspen Waste Systems Inc. Trade Debt $24,976 Wisconsin Public Service Corp. Trade Debt $22,670 Perlgrant, LLC Trade Debt $21,667 KEMPS, LLC Trade Debt $18,086 CON0CO Trade Debt $17,738 CenterPoint Energy Trade Debt $16,445 We Energies Trade Debt $14,361 Roto Rooter Trade Debt $13,577 Robinson Dairy Inc. Trade Debt $13,087 Aramark Uniform Services, Inc. Trade Debt $12,987 Macerich Citadel, LP Trade Debt $9,403 Shaker Advertising Agency Trade Debt $9,399 Industrial Towel & Uniform, Inc. Trade Debt $9,106 General Information Trade Debt $8,959 Services, Inc. GLYCOGENESYS INC: Makes Management Changes and Cuts Work Force -------------------------------------------------------------- GlycoGenesys, Inc. (Nasdaq: GLGS) and its subsidiaries have filed voluntary petitions to restructure under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the District of Massachusetts. In addition, the Company laid off over half of its work force and effected senior management changes to allow it time to pursue strategic alternatives including a sale of the Company. As a part of this effort, the Board of Directors appointed John W. Burns, the Company's Senior Vice President and Chief Financial Officer, to the additional positions of Interim Chairman of the Board of Directors and Treasurer and Frederick E. Pierce, II, the Company's VP Business Development, to the additional positions of Interim Chief Executive Officer and President. Bradley J. Carver has stepped down as the Chief Executive Officer, a position he held since June 2000. Mr. Carver will continue to provide services to the Company as a consultant and remain a member of the Board of Directors. Dr. Burns and Mr. Pierce, together with other retained employees, will utilize their extensive backgrounds in healthcare and finance to pursue strategic alternatives for the Company while in Chapter 11. Through work force reductions the Company has recognized an immediate reduction of over 40% of its payroll beginning Feb. 1, 2006. "We are concentrating the Company's efforts on significantly reducing and containing monthly expenses in Chapter 11, maintaining our multiple myeloma clinical trial, and securing a strategic alliance or other alternative to enable the Company to emerge stronger from Chapter 11," said Mr. Pierce. Dr. Burns has been the Company's Chief Financial Officer since January 2000, a Senior Vice President since March 2001 and a Director since June 2002. Prior thereto, Dr. Burns was the CFO/Senior Vice President, Finance & Business Operations for South Shore Hospital, a regional healthcare services provider based in South Weymouth, MA, from February 1993 to February 1999. From January 1989 to December 1992, Dr. Burns was the Vice President/Treasurer and a subsidiary CFO/Vice President, Finance for Eastern Enterprises, a NYSE company. Dr. Burns has also held corporate finance and treasury positions with Allied-Signal, Citicorp Investment Bank and International Paper. He began his career with Ciba Giegy (now Novartis) as a biostatistician. Dr. Burns holds a Master of Business Administration in Finance from New York University and holds a Doctor of Philosophy in Mathematics from Stevens Institute of Technology. Mr. Pierce has been Vice President of Business Development for the Company since August 2002 and Vice President of Finance and Investor Relations since June 1998. Prior to joining GlycoGenesys, Mr. Pierce was at Lehman Brothers, where he was the New England private client services liaison to healthcare investment banking. In addition, Mr. Pierce had over seven additional years experience at Kidder Peabody and Merrill Lynch. Mr. Pierce received a B.S. in chemistry from Hampshire College. About GlycoGenesys, Inc. Headquartered in Boston, Massachusetts, GlycoGenesys, Inc. -- http://www.glycogenesys.com/-- is a biotechnology company focused on carbohydrate drug development. The Company's drug candidate GCS-100, a unique compound to treat cancer, has been evaluated in previous clinical trials at low dose levels in patients with colorectal, pancreatic and other solid tumors with stable disease and partial response documented. The Company currently is completing a Phase I dose escalation trial to evaluate higher dose levels of GCS-100LE, a low ethanol formulation of GCS-100, at Sharp Memorial Hospital, Clinical Oncology Research in San Diego, California and the Arizona Cancer Center in both Tucson and Scottsdale, Arizona. In addition, GCS-100LE is being evaluated in a Phase I/II trial for multiple myeloma at the Dana-Farber Cancer Institute in Boston, Massachusetts, Roswell Park Cancer Institute in Buffalo, New York and Emory's Winship Cancer Institute, Atlanta, Georgia. The Company filed for chapter 11 protection on Feb. 2, 2006, (Bankr. D. Mass. Case No. 06-10214). Andrew G. Lizotte, Esq., at Hanify & King, P.C., represents the Debtors in their restructuring efforts. When the Debtor filed for protection from their creditors, their total assets and total debts ranged from $1 million to 10 million. GOODING'S SUPERMARKETS: Court Issues Final Cash Collateral Order ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida approved, on a final basis, Gooding's Supermarkets, Inc.'s authority to use cash collateral securing repayment of prepetition debts to National Commerce Bank, FSB, and Associated Grocers of Florida, Inc. As previously reported in the Troubled Company Reporter on Jan. 5, 2006, the cash collateral, in which National Commerce and Associated Grocers asserted an interest, was comprised of funds on hand and funds to be received from the Debtor's collection of accounts receivable. The Debtor owes $235,076 to the Associated Grocers and $2.7 million to National Commerce. To provide the lenders with adequate protection against any diminution in the value of their collateral, the Debtor will grant them replacement liens having the same validity, extent and priority as the lenders' prepetition liens. Headquartered in Orlando, Florida, Gooding's Supermarkets, Inc., dba Gooding's, offers catering services and operates a chain of supermarkets in Central Florida. The Company filed for chapter 11 protection on Dec. 30, 2005 (Bankr. M.D. Fla. Case No. 05-17769). When the Debtor filed for protection from its creditors, it listed estimated assets of $1 million to $10 million and estimated debts of $10 million to $50 million. GRUMMAN OLSON: Wants Until June 1 to Object to Proofs of Claim -------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Grumman Olson Industries, Inc.'s chapter 11 case, asks the U.S. Bankruptcy Court for the Southern District of New York to extend until June 1, 2006, the deadline within which it can raise objections to proofs of claim filed against the Debtor's estate. On October 19, 2004, the Court confirmed the first amended joint liquidating plan proposed by the Debtor and the Committee. The plan became effective on November 10, 2005. Pursuant to the plan, any objections to claims filed against the Debtor will be filed and served upon the applicable claimants within 90 days after the Effective Date. The Committee, with the assistance of Paul Gunther, the Debtor's president and sole director, has worked diligently to reconcile claims filed against the company. The Committee believes that the extension is necessary to complete its review to objected claims and will able the Debtor to make final distribution to creditors and close this case. Grumman Olson Industries, Inc., which derives its operating revenues primarily from the sale of truck bodies, filed for chapter 11 protection on December 9, 2002 (Bankr. S.D.N.Y. Case No. 02-16131). Sanford Philip Rosen, Esq., at Sanford P. Rosen & Associates, P.C., and James M. Matthews, Esq., at Carl A. Greci, Esq., represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $30,022,000 in total assets and $38,920,000 in total debts. HANOVER INSURANCE: Moody's Affirms Senior Debt Rating at Ba1 ------------------------------------------------------------ Moody's Investors Service affirmed the ratings of The Hanover Insurance Group, Inc. (THG; senior debt at Ba1) and of Hanover Insurance Company (insurance financial strength at Baa1). The rating outlook has been changed to stable from negative. The Ba1 insurance financial strength rating and the stable outlook on First Allmerica Financial Life Insurance Co. (FAFLIC) remain unaffected. According to Moody's, the change to a stable outlook reflects a greater certainty regarding the ultimate size of the company's hurricane losses incurred in the last half of 2005. As of Dec. 31, 2005, after-tax hurricane losses represent approximately 10% of shareholders' equity. The company is in the process of reducing its gross catastrophe exposure in: * Florida, * Louisiana, and * Massachusetts. Moody's expects that the company will continue to evaluate its risk management practices in relation to catastrophe "tail risk". Further, the losses from the hurricanes do not appear to have had a negative impact on the company's franchise nor caused a significant disruption to its agency distribution network. Moody's Baa1 insurance financial strength ratings of Hanover Insurance Company reflect: * good underwriting experience (excluding catastrophes); * adequate statutory capitalization; * significant investments in technology; and * a risk profile that is weighted towards personal lines. In addition, the company's new business production and retention rates in both personal lines and commercial lines have improved. Offsetting these strengths are: * challenges the company faces in growing its existing portfolio of businesses; * reducing its high underwriting expense ratio; and * competing against companies with more significant financial and technological resources. On Sept. 19, 2005, Moody's changed the ratings' outlook to negative from stable based on uncertainty related to Hurricane Katrina and the potential disruption to its independent agency network. These ratings were affirmed with a stable outlook: The Hanover Insurance Group, Inc.: -- senior unsecured debt rating at Ba1 AFC Capital Trust 1: -- preferred stock rating at Ba2 Hanover Insurance Company: -- insurance financial strength at Baa1 THG writes predominantly personal and commercial lines insurance on a regional basis, including in: * Michigan, * Massachusetts, * New York, * New Jersey, and * Louisiana. For the quarter ended Dec. 31, 2005, THG reported net income of $114.5 million versus $63.1 million during the prior year quarter. As of Dec. 31, 2005, shareholders' equity was $1.95 billion. HEXCEL CORP: Improved Performance Cues Moody's to Upgrade Ratings ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of Hexcel Corporation (Corporate Family Rating to B1 from B2) in response to continued strengthening in the company's credit profile owing to: * improved recent operating results; and * the expectation of continued strong financial performance for the intermediate term. The ratings outlook is stable. The ratings upgrades reflect the company's improved financial performance in FY 2005 and expectations for further improvement in 2006 due to strengthening demand in key market sectors in which the company operates, particularly in commercial aerospace. However, ratings also consider thin projected levels of free cash flow due to continued investments the company is expected to undertake to support the expansion of its business during the on- going recovery in the commercial aircraft OEM supply sector. The stable outlook reflects Moody's expectations that Hexcel will modestly grow its revenue base and operating profits over the near term, owing primarily to anticipated strong demand in the commercial aerospace sector and augmented by improving prospects in the company's industrial and wind energy segments. Ratings or their outlook may improve if, as a result of continued improvement in key business segments, free cash flow were to exceed 15% of debt over a sustained period, while leverage (Debt/EBITDA as defined per Moody's standard methodology) were to remain below 3 times, and EBIT coverage of interest were to remain in excess of 3 times. Conversely, ratings or their outlook could be subject to downward revision if the company suffers deteriorating operating performance in key business segments, possibly: * due to an unexpected drop in OEM commercial or military aircraft production; * if the company were to increase debt levels for any reason, such that free cash flow were to be remain persistently below 5% of debt over a prolonged period; * if leverage were to exceed 4 times; or * if EBIT/interest were to fall below 2 times. On Jan. 25 2006, Hexcel reported FY 2005 (ending December) financial results that show a continued trend towards revenue growth and margin and cash flow improvement that has resulted from robust economic conditions in the company's key markets despite temporary set-backs in the OEM supplier sector in the third quarter. Although the company repaid only modest amounts of debt over 2005 ($11 million, or 3%), most credit metrics have exceeded targets for upward rating movement as suggested by Moody's press release of Jan. 26 2005. At that time ratings were upgraded in conjunction with a refinancing. With total debt of $513 million (using Moody's standard adjustments) as of December 2005, Hexcel's leverage has improved to 2.9 times, versus about 3.8 times as of March 2005 (after the re-financing). EBIT/interest coverage similarly improved to 3.1 times (versus 1.6 times as of year-end 2004). These metrics are both quite strong relative to the B1 rating. However, ratings remain somewhat constrained by relatively thin free cash flows and the long term volatility of the commercial OEM aerospace sector. In 2005, Hexcel generated only $13 million of free cash flow, or about 2.5% of total debt, owing largely to an increase in capital expenditures ($63 million) and use of cash for working capital purposes ($46 million) as well as certain non-recurring litigation and re-financing costs. Going forward, the company anticipates increased spending on CAPEX in FY 2006 (approximately $100 million) primarily related to expanding its carbon fiber capacity, while continued growth in business levels should result in continued increases in working capital. The company expects that further revenue growth and margin expansion will cover such cash requirements, but Moody's believes that free cash flows will remain modest through 2006, reflecting the cash requirements to support growth. Furthermore, if the company were to falter in meeting targeted revenue growth, or if margins were to tighten, the company would find the need to draw on its cash or its $125 million liquidity facility to fund planned 2006 capital spending. With about $10 million drawn and about $9 million used for letters-of-credit purposes as of September 2005, the company had total availability under the existing facility of about $106 million (including foreign facilities), in addition to a cash balance of about $20 million at year-end. The Ba3 rating on Hexcel's $350 million senior secured credit facilities, one notch above the Corporate Family Rating, reflects the seniority in claim provided to these facilities over the Company's senior subordinated notes, which are essentially all of the remaining debt. The senior secured facilities are secured by a lien on all of the company's U.S. assets plus 65% of the shares of the first tier foreign subsidiaries. As of December 2005, the company had total asset of about $879 million, and about $804 million of tangible assets after goodwill and other intangibles. Of this amount, approximately $285 million represented fixed assets, while a large majority of the remaining balance comprised accounts receivable ($156 million) and inventories ($150 million). With approximately $100 million of planned investment in production capacity in 2006, Hexcel will have added a substantial amount of fixed assets to the collateral pool securing the senior secured facilities, further improving asset coverage. Moody's believes this suggests good asset coverage to the $315 million of total committed senior secured debt, warranting the one notch differential with the Corporate Family Rating. The B3 rating assigned to Hexcel's senior subordinated notes, two notches below the Corporate Family Rating, reflects the structural subordination of these notes to all existing and future senior indebtedness of the company. These ratings have been upgraded: * Senior secured revolving credit facility due 2010, to Ba3 from B2; * Senior secured term loan due 2012, to Ba3 from B2; * Senior subordinated notes due 2015, to B3 from Caa1; and * Corporate Family Rating, to B1 from B2. This rating has been withdrawn, as the issue had been redeemed: * Senior secured notes due 2008, rated B3. Hexcel Corporation, headquartered in Stamford, Connecticut, is a leading advanced structural materials company. It develops, manufactures and markets: * lightweight, high-performance reinforcement products; * composite materials; and * composite structures for use in: * commercial aerospace, * space and defense, * electronics, and * industrial applications. The company had FY 2005 revenues of $1.16 billion. HILTON HOTELS: Fitch to Lower Ratings Upon Hilton plc Acquisition ----------------------------------------------------------------- Fitch Ratings expects to downgrade these ratings for Hilton Hotels Corporation (Hilton) upon completion of its acquisition of Hilton plc: -- Issuer Default Rating (IDR) to 'BB' from 'BBB-'; -- Senior unsecured to 'BB' from 'BBB-'; and -- Proposed $5.75 billion senior secured credit facility at 'BB'. Fitch will also remove Hilton from Rating Watch Negative, where it was originally placed on Dec. 29 2005. The Rating Outlook will be Stable. These actions reflect Hilton's significantly levered balance sheet subsequent to the completion of its $6 billion acquisition of Hilton PLC, which is expected to close some time in first-quarter 2006 (1Q'06). Hilton intends to fund the $6 billion transaction with: * $1.2 billion of cash, * $4.6 billion of bank debt, and * $130 million of assumed Hilton PLC debt. The new debt will consist of: * a $3.25 billion revolver ($1.86 billion outstanding), * a $2 billion equivalent term loan A, and * a $500 million term loan B. The proposed revolving credit facility, term loans and all senior debt will be secured by 100% of the capital stock of Hilton's U.S. domestic subsidiaries and 100% of the capital stock in the U.K. acquisition entity. Additionally, Fitch believes pro forma lease payments could approach $500 million, up from $57 million in 2004, due to the significant number of leased rooms (43,000) being acquired from Hilton PLC. Fitch includes in its calculation of off balance sheet items annual lease expense. As a result of the debt funded transaction and the assumed increase in annual lease expense, Fitch anticipates Hilton's pro forma adjusted debt number will exceed $12 billion. The rating also takes into consideration Hilton's superior and diversified asset base, its improved cash flow generating capabilities and the favorable lodging industry outlook. Hilton is a leading hotel engaged in the ownership and management of lodging facilities. Brands within Hilton cover the value chain and include: * Hilton, * Hilton Garden Inn, * Doubletree, * Embassy Suites, * Hampton, * Homewood Suites by Hilton, and * Conrad. Hilton PLC owns the rights to the Hilton brand name outside of the U.S. as well as the Scandic and Conrad brands. The transaction with Hilton International will increase the number of rooms in the Hilton system by more than 25% to over 475,000 (80% managed or franchised, 17% owned/leased). Pro forma 2005 EBITDA allocation is: * 43% owned; * 33% managed/franchised; * 16% leased; and * 8% timeshare. Approximately: * 71% of pro forma EBITDA will be generated in the Americas; * 26% in Europe/Africa; and * 3% in the Middle East/Asia Pacific. Subsequent to the transaction, Fitch expects Hilton to generate a significant amount of free cash flow despite a large capital program and healthy dividend payments. Assuming that in 2006 Hilton can generate revenue per available room (RevPAR) gains in the upper single digits, slightly improve margins, keep its capital spending near $635 million and maintain dividend payments of $67 million, Fitch believes free cash flow could approach $200 million. Additionally, management has suggested it will continue to divest some owned assets, although no target has been revealed. The credit facility includes a mandatory prepayment of the Term Loan A with proceeds from asset sales outside of the U.S. Furthermore, Hilton management reiterated in its recent quarterly conference call that its strategy is to sell 'many of the HI (Hilton International) assets and use the proceeds to pay down debt.' Fitch believes that the robust lodging environment should also allow Hilton to make progress at reducing debt in the near to intermediate term. Fitch expects the industry's fundamentals to remain strong in 2006, as solid demand growth should again outstrip very modest expansion in the supply of available rooms. Improvements in pricing will be supported by robust demand in all segments of the industry (luxury, upscale, and limited service). Lodging demand from business, group and leisure segments should increase modestly in 2006 based on GDP growth of 2%-3%. Complementing the increased demand will be reduced supply growth, particularly in the U.S. Two factors expected to contribute to the limited supply growth are: * rising construction costs, and * increasing interest rates. As a result of stronger lodging demand and limited additional room supply, Fitch expects average RevPAR to increase for the third consecutive year. Reasonable margin improvements are anticipated for most lodging companies as RevPAR growth will likely exceed growth in labor, utility, and insurance costs. The Stable Outlook is based on Fitch's expectations for the lodging industry along with Hilton successfully integrating the acquired assets. Also incorporated in the Stable Outlook are meaningful asset sales in the intermediate term and strong cash flow with the proceeds directed toward debt reduction. HORSEHEAD INDUSTRIES: Taps Cole Schotz as Substitute Counsel ------------------------------------------------------------ Horsehead Industries, Inc., n/k/a HH Liquidating Corp., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to employ Cole, Schotz, Meisel, Forman & Leonard, P.A. as substitute counsel to replace Angel & Frankel, P.C. As previously reported in the Troubled Company Reporter, the Bankruptcy Court approved Angel & Frankel's retention as counsel to the Debtors. Effective Jan. 1, 2006, each of the attorneys of Angel & Frankel joined Cole Schotz. For purposes of efficiency and continuity, the same attorneys from Angel & Frankel should continue their representation of the Debtors as attorneys of Cole Schotz. Cole Schotz will: (a) provide legal advice to the Debtors with respect to their powers and duties in the continued operation of their businesses as debtors-in-possession; (b) prepare, on the Debtor's behalf, all necessary applications, answers, orders and other legal papers required in connection with the administration of the Chapter 11 estate; (c) appear before the Bankruptcy Court (and any other court) to represent and protect the Debtors' interests and estate, except as to matters assigned to other retained counsel; (d) represent the Debtors in any adversary proceeding, either commenced by or against the Debtors; (e) assist the Debtors in the formulation and implementation of a Chapter 11 plan; and (f) perform all other legal services for the Debtors, as debtors-in-possession, that may be necessary. Joshua J. Angel, Esq., a member at Cole Schotz, discloses his Firm's professionals bill: Professional Hourly Rate ------------ ----------- Members $375 - $750 Counsel $280 - $370 Associates $360 - $165 Legal Assistants $115 - $150 To the best of the Committee's knowledge, the Firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Horsehead Industries, Inc., d/b/a Zinc Corporation of America, the largest zinc producer, filed for chapter 11 protection on August 19, 2002 in the U.S. Bankruptcy Court for the Southern District of New York. When the Company filed for protection from its creditors, it listed $215,579,000 in assets and $231,152,000 in debts. INTEGRATED HEALTH: Abe Briarwood Wants IHS to Release $1.5 Million ------------------------------------------------------------------ Integrated Health Services, Inc., and Abe Briarwood Corp. entered into a Stock Purchase Agreement under which Briarwood was to effectively acquire all of Briarwood's assets. Laurie S. Polleck, Esq., at Jaspan Schlesinger Hoffman LLP, in New York, relates that one of the major assets acquired by Briarwood under the SPA and the IHS Debtors' Plan of Reorganization were IHS' account receivables. According to Ms. Polleck, IHS' account receivables include receivables owed from the United States Centers for Medicare and Medicaid Services -- a portion of which had been subjected to an administrative freeze pending resolution of certain CMS claims subject to an appeals process. The appeals process resulted in a deduction of the CMS claim from the amount administratively frozen with the excess amount allocated to IHS for $1,554,815. Ms. Polleck asserts that the $1,554,815 Medicare receivable was an asset purchased by Briarwood and, therefore, belongs to Briarwood. However, through inadvertence or otherwise, CMS recently paid the $1,554,815 Medicare receivable to IHS Liquidating LLC. Briarwood demanded IHS Liquidating to turnover the $1,554,815 Medicare receivable. IHS agreed but stated that the receivable will be held in escrow by Briarwood's counsel, pending an appropriate Court order permitting its release. Ms. Polleck informs the Court that IHS Liquidating has failed to provide any real explanation as to why IHS Liquidating is entitled to receive the $1,554,815 Medicare receivable. IHS Liquidating also failed to advise Briarwood of any request for preliminary or pre-judgment relief, which would restrain the turnover of the Medicare receivable to Briarwood. Against this backdrop, Briarwood asks the U.S. Bankruptcy Court for the District of Delaware to permit the release of the $1,554,815 Medicare receivable, currently held in escrow. Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- operated local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company and its 437 debtor-affiliates filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Rotech Medical Corporation and its direct and indirect debtor-subsidiaries broke away from IHS and emerged under their own plan of reorganization on March 26, 2002. Abe Briarwood Corp. bought substantially all of IHS' assets in 2003. The Court confirmed IHS' Chapter 11 Plan on May 12, 2003, and that plan took effect September 9, 2003. Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the IHS Debtors. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) JOURNAL REGISTER: S&P Rates $1 Billion Sr. Credit Facilities at BB ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'BB' ratings and recovery ratings of '2' to Journal Register Co.'s $1.0 billion senior secured credit facilities, indicating a substantial recovery (80%-100%) of principal in the event of a payment default. These facilities consist of $375 million revolving credit and $625 million tranche A term loan facilities due August 2012. The new facilities were used to refinance the former $1.05 billion in credit facilities. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on the Trenton, New Jersey-headquartered newspaper publisher. The outlook is stable. Journal Register had about $755 million borrowed under the new facilities. The company's financial profile is currently weak for the ratings. However, ratings stability assumes that Journal Register will focus on debt reduction in coming periods and make progress in reducing its debt to EBITDA measure to the 5.0x and under area that Standard & Poor's deems appropriate for the company at the 'BB' corporate credit rating. An outlook revision to negative or possibly a downgrade would be considered if Journal Register's financial position deteriorates as a result of: * acquisitions; * additional share repurchases beyond the current authorization; and/or * meaningfully weaker operating performance. KAISER ALUMINUM: Wants to Pay PI Trust Trustees' Fees & Expenses ---------------------------------------------------------------- A key feature in Kaiser Aluminum Corporation and its debtor- affiliates' Plan of Reorganization is the establishment of four personal injury trusts, to which, all present and future asbestos, silica, coal tar pitch volatile and noise-induced hearing loss claims will be accordingly channeled: (1) the Asbestos PI Trust (2) the Silica PI Trust (3) the CTPV PI Trust (4) the NIHL PI Trust Kimberly Newmarch, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that more than $27,000,000 in cash and rights to proceeds under various insurance policies will be transferred to a funding vehicle trust once the Debtors' Plan is confirmed and becomes effective. Additionally, 100% of the outstanding shares of reorganized KAE Trading, Inc., and approximately 6.5% of the outstanding shares of reorganized Kaiser Aluminum Corporation will be transferred to the Asbestos PI Trust and the Silica PI Trust. The Funding Vehicle Trust will distribute cash, less certain expenses and other amounts, to the four Trusts, pursuant to the terms of a Funding Vehicle Trust Agreement. Thus, each of the PI Trusts needs to be prepared to administer the assets they receive as soon as possible. The proposed trustees to the Trusts are: * Mark M. Gleanon, Ken M. Kawaichi, and Robert A. Marcis for the Asbestos PI Trust; * Anne M. Ferazzi for the Silica & CTPV PI Trusts; and * Jack T. Marionneaux for the NIHL PI Trust. Ms. Newmarch tells the U.S. Bankruptcy Court for the District of Delaware that if the Proposed PI Trustees cannot commence work on the PI Trusts in advance of the Effective Date, an unacceptable and potentially detrimental delay may occur while they prepare to responsibly manage the assets of the Trusts. "This could expose the PI Trusts' beneficiaries to risks they would not otherwise face if the Proposed PI Trustees were able to prepare for PI Trust administration before the Effective Date," Ms. Newmarch explains. As it currently stands under the Plan, the Proposed PI Trustees and their professionals cannot be compensated until after the Effective Date, when each of the PI Trusts is formed. Hence, counsel for the PI Trusts asked the Debtors to provide funding, in advance of the Effective Date, to enable the proposed PI Trustees to commence certain preparatory work for the Trusts, which work includes: -- setting up the PI Trusts so that they are in a position to begin processing tort claims for payment as soon as practical after the Effective Date; and -- ensuring that the rights, obligations and authority granted under the documents pertaining to the PI Trusts are sufficient to permit the Proposed PI Trustees to adequately fulfill their duties. Notwithstanding these duties, the proposed PI Trustees will not have the right to re-negotiate the terms of the documents pertaining to the Funding Vehicle Trust or the PI Trusts and will not have standing to appear or be heard in connection with the Debtors' Chapter 11 cases, Ms. Newmarch adds. The funding to be advanced by the Debtors prior to the Effective Date will be limited pursuant to these terms: (a) Compensation of: * the Proposed Asbestos PI Trustees will not exceed $5,000 each, per month, plus a per diem allowance of $1,500, and reimbursement of reasonable out-of-pocket expenses; * the Proposed Silica PI Trustee will not exceed $5,000, per month, plus hourly allowance of $400, and reimbursement reasonable of out-of-pocket expenses; * the Proposed CTPV PI Trustee will not exceed $400 per hour plus reimbursement of reasonable out-of-pocket expenses; and * the Proposed NIHL PI Trustee will not exceed a monthly amount to be agreed upon, plus reimbursement of reasonable out-of-pocket expenses. (b) To the extent the Proposed PI Trustees will retain experts and consultants to assist in conceptualizing and instituting their PI Trust's administrative procedures to process claims and make payments to claimants, the fees and expenses of the experts and consultants will not exceed: PI Trust Monthly Fee -------- ----------- Asbestos $50,000 Silica & CTPV $25,000 NIHL To be agreed (c) The aggregate amount for fees and expenses of each PI Trust's counsel must not exceed: PI Trust Monthly Fee -------- ----------- Asbestos $75,000 Silica & CTPV $35,000 NIHL To be agreed (d) To the extent the Proposed PI Trustees engage investment advisors to advise them on an investment strategy to maximize the overall value of the PI Trusts, the fees for the investment advisors must not exceed: PI Trust Monthly Fee -------- ----------- Asbestos $100,000 Silica & CTPV $35,000 NIHL To be agreed In addition to the monthly limits, Ms. Newmarch says the aggregate amount reimbursable with respect to each set of professionals will be limited to three times the stated monthly limit. All advance funding will reduce, and will be deducted from, the funding obligations owed to the Funding Vehicle Trust on the Effective Date pursuant to the Plan. The Funding Vehicle Trust will, in turn, allocate the deducted amounts among the PI Trusts based on the fees and expenses advanced for the benefit of each PI Trust. Any fees reimbursed to the PI Trusts for work performed by attorneys or other professionals retained by any of the Proposed PI Trustees will not be treated as compensation for work performed in connection with the Chapter 11 cases. Accordingly, no fee applications would be filed. Against this backdrop, the Debtors seek the Court's authority to pay the proposed PI Trustees and their professionals for fees and expenses incurred in connection with preparatory work for the PI Trusts. Ms. Newmarch maintains that allowing the Debtors to compensate the proposed PI Trustees will not harm the Chapter 11 estates in any way because all amounts advanced by the Debtors will reduce, dollar-for-dollar, the Debtors' cash funding obligations under the Plan. The limits placed in the advances will also provide certainty that the advances will not exceed a specified, agreed amount absent Court approval. 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. 89; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Court Lifts Stay for Six Personal Injury Claimants -------------------------------------------------------------- Judge Susan Pierson Sonderby of U.S. Bankruptcy Court for the Northern District of Illinois signs separate Agreed Orders between Kmart Corporation and six personal injury claimants, lifting the automatic stay and injunction provision under Kmart's Plan of Reorganization to permit the litigation the claimants initiated to proceed and continue to a final judgment or settlement: Claimant Date of Injury Location -------- -------------- -------- Deborah & Lowell January 7, 2003 Kmart Store No. 3043 Earnest 1500 C. Colfax Ave., Aurora, Colorado Lynette Cowser March 24, 2002 Kmart Store No. 4486 2701 S. Chase Ave., Milwaukee, Wisconsin Mei-Yan Chiu June 23, 2002 Kmart Store No. 7359 9903 Military Trail, Boynton Beach, Florida Semaj Matthews December 8, 2002 Kmart Store No. 7169 400 South Broadway, Salina, Kansas Teresa Vale July 8, 1997 Kmart Store No. 4732 Road 2KM 126.5 Aguadilla, Puerto Rico The Estate of December 24, 2002 Kmart Store No. 4912 Patricia Wood 4075 West Ina Road, Tucson, Arizona The automatic stay and the Plan Injunction will remain in effect with respect to any and all actions by the Claimants to execute on any final judgment or settlement against Kmart or any of its property. 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. 106; Bankruptcy Creditors' Service, Inc., 215/945-7000) KNOBIAS INC: Files Amended 2004 Annual and 2005 Quarterly Reports ----------------------------------------------------------------- Knobias, Inc., delivered amended financial statements for the year ended Dec. 31, 2004, the quarter ended March 31, 2005, and the quarter ended June 30, 2005, to the Securities and Exchange Commission on Jan. 30, 2006. As reported in the Troubled Company Reporter on Dec. 15, 2005, Knobias amended its financial statements to correct errors in its treatment of the beneficial conversion feature of its convertible debt, issued in December 2004. The Company's revised balance sheet for the year ended Dec. 31, 2004, reflect a decrease in total debt and an increase in its paid-in capital totaling $190,300. Going Concern Doubt Russell Bedford Stefanou Mirchandani LLP expressed substantial doubt about Knobias' 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 significant operating losses. A copy of the Company's amended annual report for the year ended Dec. 31, 2004, is available for free at: http://researcharchives.com/t/s?4f1 A copy of the Company's amended quarterly report for the quarter ended March 31, 2005, is available for free at: http://researcharchives.com/t/s?4f2 A copy of the Company's amended quarterly report for quarter ended June 30, 2005, is available for free at: http://researcharchives.com/t/s?4f3 About Knobias Knobias, Inc. - http://www.knobias.com/-- provides complete financial information solutions for institutional market participants, corporations and industry professionals. Actionable data is delivered via high-quality applications consisting of proprietary products; analytics; streaming information; financial data; fundamental research; and third-party research. Primarily through its wholly owned subsidiary, Knobias.com, LLC, it markets its products to individual investors, day-traders, financial oriented websites, public issuers, brokers, professional traders and institutional investors. At Sept. 30, 2005, Knobias' liabilities exceeded its assets by $2,059,985. KRISPY KREME: Sells 12 Stores to Westward Dough for $10 Million --------------------------------------------------------------- Krispy Kreme Doughnuts, Inc. (NYSE: KKD) and Westward Dough, the Krispy Kreme area developer for Nevada, Utah, Idaho, Wyoming and Montana, reported on Feb. 3, 2006 that Westward Dough has reached an agreement to purchase certain of the assets of Glazed Investments, LLC. Glazed Investments is the Krispy Kreme area developer for Colorado, Minnesota and Wisconsin. The agreement calls for Westward Dough to purchase twelve Krispy Kreme stores, as well as the franchise development rights for Colorado, Minnesota and Wisconsin, for approximately $10 million. As a condition of the purchase agreement, and at the request of Westward Dough, Glazed Investments has agreed to conduct the sale under Chapter 11 Section 363 of the US Bankruptcy Code. The Chapter 11 filing made Friday, Feb. 3, 2006, by Glazed Investments will facilitate the sale by permitting the assets to be sold free and clear of all liens, claims and encumbrances. Other qualifying bidders will have an opportunity to submit bids for Glazed Investments through a court-supervised competitive bidding process. Krispy Kreme currently has a 97% ownership interest in Glazed Investments. Upon completion of Westward Dough's acquisition of Glazed Investments, Krispy Kreme will no longer retain an ownership position. "We are very excited to have reached an agreement to purchase the Krispy Kreme franchise in Colorado, Minnesota and Wisconsin," said Lincoln Spoor, Principal of Westward Dough. "We are pleased with the opportunity to combine Glazed Investment's strengths and best practices with our own, to create a truly great company. The Krispy Kreme brand deserves nothing less." "Completing this transaction represents another step forward in Krispy Kreme's restructuring," said Steve Panagos, President and Chief Operating Officer of Krispy Kreme. "Lincoln Spoor and his team at Westward Dough have a proven track record of successfully operating Krispy Kreme locations, and we are very pleased that they have decided to further expand their relationship with the Company." Westward Dough currently operates 15 Krispy Kreme stores located in Nevada, Utah, Idaho, Wyoming and Montana. About Krispy Kreme Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme -- http://www.krispykreme.com/-- is a leading branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. There are currently approximately 320 Krispy Kreme stores and 80 satellites operating system-wide in 43 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. KremeKo, Inc., Krispy Kreme's Canadian franchisee, is currently restructuring under the Companies' Creditors Arrangement Act. Pursuant to the Court's Initial Order, Ernst & Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings. The Monitor is attempting to sell the KremeKo business. LA QUINTA: Moody's Downgrades Senior Unsecured Debt Rating to B2 ---------------------------------------------------------------- Moody's Investors Service downgraded the ratings on the senior unsecured debt of La Quinta to B2, from Ba2, and upgraded the B1 preferred stock ratings of the company to Ba3; Moody's will withdraw all ratings assigned to La Quinta. According to Moody's, these rating actions follow the announcement on Jan. 25, 2006 that an affiliate of the Blackstone Group has completed its acquisition of La Quinta in an all cash transaction valued at $3.4 billion. In December 2005, La Quinta commenced a tender offer and consent solicitation for all of its outstanding unsecured debt. As of Jan. 25, 2006, over 90% of each unsecured debt issue was tendered. As a result, substantially all of the restrictive covenants contained in the bond indentures have been removed. On Jan. 13, 2006, La Quinta announced its plans to redeem all shares of its 9% Series A Cumulative Preferred Stock and the corresponding depositary shares, effective Feb. 12, 2006. At closing on Jan. 25, 2006, the funds to do so were deposited into a trust. According to Moody's, the downgrade of La Quinta's unsecured debt reflects that the company's post-acquisition capital structure is highly levered with substantial amounts of secured debt, as well as lack of covenant protection for the remaining untendered debt. Blackstone has funded this transaction with $500 million in equity and $2.96 billion of primarily secured debt financing, resulting in a debt to assets of 87%, and debt to recurring annualized 2005 EBITDA of 8.8X. The upgrade of La Quinta's preferred stock to Ba3 reflects the refunding of these securities in anticipation of their redemption on Feb. 12, 2006. These ratings were downgraded and will be withdrawn: La Quinta Properties, Inc.: -- Senior unsecured debt to B2, from Ba2 -- senior unsecured debt shelf to (P)B2, from (P)Ba2 -- subordinated debt shelf to (P)B3, from (P)Ba3 -- preferred stock shelf to (P)Caa1, from (P)B1 La Quinta Corporation: -- Senior unsecured debt shelf to (P)Caa1, from (P)B1 -- subordinated debt shelf to (P)Caa2, from (P)B2 -- preferred stock shelf to (P)Caa3, from (P)B3 This rating was upgraded and will be withdrawn: La Quinta Properties, Inc.: -- Preferred stock to Ba3, from B1 La Quinta (NYSE: LQI) is a paired-share hospitality firm consisting of a REIT -- La Quinta Properties, Inc. -- and La Quinta Corporation. La Quinta owns, operates or franchises more than 600 hotels in 39 states under the: * La Quinta Inns, * La Quinta Inns & Suites, * Baymont Inn & Suites, * Woodfield Suites, and * Budgetel brands. The firm is based in Irving, Texas, USA. LINENS 'N THINGS: Fitch Initiates Coverage With Low-B Ratings ------------------------------------------------------------- Fitch initiated rating coverage of Linens 'n Things, Inc. (LIN) as: -- Issuer default rating 'B-'; -- Proposed asset-based revolver 'BB-/RR1'; and -- Proposed senior secured notes 'B-/RR4'. The Rating Outlook is Negative. These actions assume that the announced leveraged buyout and associated debt issuances close under the announced terms. Approximately $1,250 million of debt is covered by these actions. On Nov. 8, 2005, LIN announced that it had entered into a definitive agreement to be acquired by Apollo Management, L.P. together with certain co-investors including NRDC Real Estate Advisors I, LLC, for approximately $1.3 billion, or $28.00 per share in cash. LIN's acquisition is to be completed utilizing new debt and an equity contribution of approximately $650 million each, as well as cash on hand. Pricing for the transaction is approximately 8.7x latest 12 months ended Oct. 1, 2005 (LTM) operating EBITDA. The transaction, which has already been approved by LIN shareholders on Jan. 30, is expected to close simultaneously with the proposed notes offering. The ratings reflect LIN's position as the second largest specialty retailer of home furnishings as well as its broad geographic reach. The ratings are also based on: * LIN's significant leverage pro forma for the leveraged buyout; * its weak operating performance; and * intense competition in the home furnishings space. LIN has a broad geographic presence with 542 stores across 47 states and six Canadian provinces with LTM revenues of $2.7 billion. The company has increased its number of stores and square footage at a rapid pace, with compound annual growth rates of 11% and 10%, respectively, over the last three years. New stores have not performed as well as the company's more mature stores. In addition, the home furnishings market is highly competitive with many different types of retailers, including department stores, discounters and specialty retailers, selling home furnishings. As a result, LIN's comparable net sales have declined in each quarter of 2005, significantly weaker than its closest competitor. Following the leveraged buyout, the company intends to reduce new store openings and focus on improving the operations of its existing stores, while reducing capex from current levels. The company also plans to: * reduce the overall number of SKUs (stock-keeping units) in its stores; * establish a key item program; and * price key items competitively. LIN could benefit from operational improvement through its proposed initiatives; however, it remains to be seen how successfully such initiatives are implemented. Pro forma for the transaction, LIN's adjusted leverage, as defined by total adjusted debt to EBITDAR, would have been over 7.0x for the LTM ended Oct. 1, 2005. Liquidity is expected to be almost $600 million, consisting primarily of $500 million in asset-based revolving loans available. LIN will have adequate financial flexibility to meet its near-term capital requirements and debt service obligations. The Recovery Ratings and notching in the debt structure reflect Fitch's recovery expectations under a scenario in which distressed enterprise value is allocated to the various debt classes. The recovery ratings for the asset-based revolver ('RR1', reflecting expected 91%-100% recovery) benefit from substantial collateral of inventory and receivables, as well as borrowing limitations due to borrowing base computation, mandatory prepayments, and permanent reduction in commitment in certain circumstances, which preclude the issuance of significant amounts of debt without sizable increases in assets. The senior secured floating rate notes ('RR4', reflecting expected recovery of 31%-50%) reflect the expectation of average recovery prospects in a distressed case. MAJESCO ENTERTAINMENT: Losses Trigger Going Concern Doubt --------------------------------------------------------- Goldstein Golub Kessler LLP expressed substantial doubt about Majesco Entertainment Company's ability to continue as a going concern after it audited the Company's financial statements for the fiscal years ended Oct. 31, 2005 and 2004. The auditing firm pointed to the Company's recurring losses. The Company's auditors can be reached at: Goldstein Golub Kessler LLP 1185 Avenue of the Americas New York, NY 10036-2602 https://www.ggkllp.com/ Majesco reported a $70.9 million net loss for the fiscal year ended Oct. 31, 2005, versus an $11.2 million net loss last year. The increase in net loss is attributed to weak sales across all of the Company's product lines, primarily its premium game releases, which resulted in significant reserves relating to capitalized costs, increased provisions in price protection and other allowances. The Company generated revenue of $59.7 million for the 2005 fiscal year as compared to $121 million in fiscal 2004. At Oct. 31, 2005, the Company's balance sheet showed $30,081,000 in total assets and liabilities of $25,320,000. The Company had an $87,388,000 accumulated deficit at the end of fiscal 2005. Due to general weakness in the sector experienced both in its fourth quarter and the subsequent holiday selling season, coupled with the rising costs of developing and marketing Next Generation games, the Company revised its product strategy, and decided to sell-off its rights to development or to cancel many of its premium console titles still in development. In addition, the Company evaluated its game line-up for 2006 and beyond to determine the capitalized costs that were not fully recoverable. Accordingly, operating loss for fiscal 2005 included provisions for impairment of capitalized software costs and prepaid license fees of $26.3 million, relating to the sale, cancellation, or anticipated non-recoverable costs of such games. Jesse Sutton, President of Majesco commented, "This has been a difficult year for Majesco. We entered the premium console market with a high expectation for success, but as a result of a variety of factors we were not able to meet our expectations. Recently, we evaluated our product portfolio and have sold or cancelled most of our premium console titles that were scheduled for release in 2006 and beyond. The increased operating loss we reported today is largely a result of the non-cash charges that we recognized in the fourth quarter relating to these events." Revised Strategy and Corporate Restructuring Due to challenging market conditions, rising development and marketing costs for current and Next Generation console titles, and the disappointing results for the titles the Company published in the last year, Majesco is repositioning itself and shifting its product strategy away from the premium console game market. Going forward, Majesco will focus primarily on publishing value and handheld video games. Said Jesse Sutton, "Publishing value priced software and games for handheld systems has historically been one of our strengths. We believe that this strategy is more prudent for Majesco at this time and offers us the most opportunity for success as it requires a relatively low investment in development and marketing." To appropriately align its resources with its revised strategy and financial expectations the Company completed a recent restructuring, principally a 20% reduction in headcount. The Company expects to realize the full effect of the cost reductions in the second quarter ending April 30, 2006. In addition, the Company's sale of two titles, subsequent to the close of fiscal 2005, raised $8 million and together with the cancellation of titles, reduced its 2006 required cash outlay by roughly $30 million. About Majesco Headquartered in Edison, New Jersey, Majesco Entertainment Company (NASDAQ: COOL) -- http://www.majescoentertainment.com/-- provides digital entertainment products and content. The Company's diverse product lineup includes video games such as Infected(TM) for the PSP(PlayStation Portable) system, Aeon Flux(TM), and the forthcoming JAWS(TM) Unleashed, as well as digital entertainment products like Frogger(R) TV Arcade. Majesco now offers Game Boy Advance Video versions of DreamWorks Animation movies Shrek, Shrek 2 and Shark Tale. MERISTAR HOSPITALITY: S&P Upgrades Corporate Credit Rating to B --------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on hotel operating company MeriStar Hospitality Corp., including its corporate credit rating to 'B' from 'B-'. The outlook is stable. The Washington, D.C.-based company had about $1.6 billion in total debt outstanding as of Sept. 30, 2005. The upgrade follows MeriStar's announcement today that it has signed a definitive agreement to sell a portfolio of nine hotels and a golf and tennis club to an affiliate of The Blackstone Group for about $367 million in cash. The transaction is expected to close by the end of the first quarter of 2006, and the company plans to use the majority of the proceeds to further reduce debt. Additionally, Standard & Poor's expects MeriStar's operating performance to remain solid in the intermediate term given a healthy U.S. lodging environment. MESABA AIRLINES: Unions Balks at Court Filing to Reject Contracts ----------------------------------------------------------------- Mesaba Airlines filed a motion in bankruptcy court that requests authority to reject the collective bargaining agreements with the Air Line Pilots Association, International (ALPA), the Association of Flight Attendants (AFA), and the Aircraft Mechanics Fraternal Association (AMFA). The unions have made every effort possible to respond to management's request for cost savings, but are at odds over the depth of management's proposed cuts, especially in light of the enormous sums of money that Mesaba has transferred to its parent, MAIR Holdings. "It is outrageous for Mesaba management to go to these extremes to gut our pay, work rules and benefits, especially in light of the fact that Mesaba has been profitable for many years," stated Kevin Wildermuth, Negotiating Committee chairman of the Mesaba AMFA unit. "Our technicians have worked hard on behalf of our company, and our profitability led us to believe that our futures were secure." "ALPA has yet to see proof that these concessions are warranted -- and certainly not concessions that would force professional, skilled pilots' income levels to drop below federal poverty guidelines," claimed Captain Tom Wychor, chairman of the Mesaba ALPA unit. "It is clear that Mesaba is simply trying to manipulate the bankruptcy process to attack labor, and it is wrong." Mesaba management has proposed to slash wages while also imposing a 60% increase in health insurance premiums. Management is also seeking the right to outsource many jobs currently protected by job security provisions. Pilot pay currently starts at $21,000 per year. Flight attendants earn just $14,000 in starting pay, and mechanics start at $27,000. The cuts proposed by Mesaba are drastic -- in 2012 a starting pilot who elects family health insurance will gross just $10,700 annually. The unions point to Mesaba's parent, MAIR Holdings, as a critical factor in the bankruptcy. Mesaba produces almost all of MAIR's revenue, and MAIR held $120 million in cash and equivalents at the time Mesaba filed for bankruptcy. Big Sky Airlines, another MAIR subsidiary, has accrued over $13 million in losses since the carrier was purchased in December of 2002. Big Sky has not filed for bankruptcy protection. This year marks the 75th anniversary of the flight attendant profession and the 60th anniversary of the Association of Flight Attendants -- http://www.afanet.org/ More than 46,000 flight attendants join together to form AFA-CWA, the world's largest flight attendant union. AFA-CWA is part of the 700,000-member strong Communications Workers of America, AFL-CIO. Maintenance technicians at Mesaba are represented by AMFA -- http://www.amfanatl.org/-- a craft oriented, independent aviation union created in 1962 with over 16,000 members at eight airlines. AMFA's creed is, "Safety In The Air Begins With Quality Maintenance On The Ground." Founded in 1931, ALPA -- http://www.alpa.org/-- celebrates its 75th anniversary this year representing 62,000 pilots, including 850 Mesaba pilots, at 39 airlines in the U.S. and Canada. 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. MH/1993: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------ Debtor: MH/1993/Foods, Inc. aka Michele Foods 1600 W 167th Street, Suite 20 Calumet City, Illinois 60409 Bankruptcy Case No.: 06-00935 Chapter 11 Petition Date: February 3, 2006 Court: Northern District of Illinois Judge: Carol A. Doyle Debtor's Counsel: Bruce Dopke, Esq. P.O. Box 681246 Schaumburg, Illinois 60168 Tel: (847) 524-4811 Fax: (847) 524-4131 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Market Choice, Inc. Services $1,000,000 1829 Mecklenburg Highway Mooresville, NC 28115 Michele Hoskins Loans $75,000 1600 West 167th Street, Suite 20 Calumet City, IL 60409 Michele Foods Agreement $52,775 Manufacturing, Inc. 3965 Virginia Avenue Cincinnati, OH 45227 Exel Transportation Services $34,546 Services, Inc. Chicago Sweeteners, Inc. Security Interest $14,179 Internal Revenue Service Taxes $14,000 Holman Financial Group, Ltd. Security Interest $10,000 ShoreBank Business Assets $6,142 Dell Financial Services Equipment Lease $4,059 Land & Company Payment Plan $3,227 GFC Leasing Equipment Lease $884 Monogram Credit Card Bank Security Interest $511 Home Depot Credit Services Credit Card Charges $314 MUSICLAND HOLDING: Wants to Maintain Existing Insurance Policies ---------------------------------------------------------------- Musicland Holding Corp. and its debtor-affiliates maintain numerous insurance policies that provide coverage for general liability, workers' compensation, directors and officers liability, umbrella liability, automotive liability, crime, special risk, fiduciary liability and property. Those policies are essential to the preservation of the Debtors' business, property and assets. In many cases, coverage is required by various regulations, laws and contracts that govern the Debtors' business conduct. James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, tells the U.S. Bankruptcy Court for the Southern District of New York that the Debtors finance the premiums on some of their policies pursuant to premium financing agreements. Accordingly, the total annual premium for the policies currently financed by the Debtors is $1,772,964. The Debtors have four unpaid Premium Financing Agreements with AFCO Credit Corporation and one with St. Paul Travelers. AFCO alleges that it is a secured creditor with regard to the AFCO PFAs. Mr. Sprayregen discloses that the total annual premium for the Policies is $1,772,966. In June 2005, November 2005, December 2005 and January 2006, the Debtors made down payments totaling $444,887 and have financed the remaining $1,328,077 pursuant to the Existing PFAs. The Existing PFAs presently require monthly installments totaling $141,074 and bear total finance charges of $20,413 on the $905,970 total financed amount. Mr. Sprayregen points out that if the Debtors were unable to continue making payments on the Existing PFAs, the insurers would try to terminate the Policies, or AFCO would seek modification of the automatic stay to cancel the AFCO-financed Policies and receive its collateral. In addition, if the Policies were terminated, the Debtors would be required to obtain replacement insurance on an expedited basis and at tremendous cost. If the Debtors do not pay the premiums for the Policies, some carriers may be reluctant to continue doing business with the Debtors. In the current insurance market, any reduction in the number of available carriers may result in an increase in the Debtors' future insurance premiums. Further, maintenance of the directors and officers liability policy is also necessary to the retention of the Debtors' management. Mr. Sprayregen informs that the Debtors are presently engaged in negotiations with various premium-financing companies to decide the most favorable means of financing those premiums. Therefore, the Debtors ask the Court's permission to pay the financed premiums for the Policies and make loan payments to AFCO on account of the AFCO PFAs. Further, the Debtors seek the Court's authority to enter into new PFAs under Section 364(c)(2) of the Bankruptcy Code and the collateral be the unearned premiums that will be created. Mr. Sprayregen notes that the Debtors do not seek to assume the Policies at this time. Creditors Committee Objects The Official Committee of Unsecured Creditors tells the Court that it is necessary for the Committee to review the Policies in order to properly respond to the Debtors' request. According to Mark T. Power, Esq., at Hahn & Hessen LLP, in New York City, the Committee has requested information about the Policies from the Debtors and their financial advisors. However, as of January 25, 2006, neither the Committee nor their financial advisors have received sufficient information to enable the Committee to evaluate the merits of the request. Mr. Power says, that without an understanding of the basic provisions of the Policies as to coverage and terms, the Committee and the Court lack the information needed to determine whether the Debtors' request is appropriate. Accordingly, the Committee asks the Court to adjourn the hearing until the Committee and the Court can properly review the Policies underlying the PFAs. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents 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. (Musicland Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) MUSICLAND HOLDING: Walks Away from 68 Real Property Leases ---------------------------------------------------------- Musicland Holding Corp. and its debtor-affiliates have commenced the Chapter 11 Cases with a goal to promptly facilitate a balance sheet and operational reorganization by pursuing a business plan focused on a smaller group of core stores, together with their web platform and new business categories. James H.M. Sprayregen, Esq., at Kirkland & Ellis LLP, explains that to avoid paying unnecessary administrative expenses, the Debtors have identified 68 nonresidential real property leases that are no longer integral to the Debtors' ongoing business operations and present burdensome contingent liabilities. While some of these Leases may have expired prior to or on January 31, 2006, the Debtors sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's permission to reject the Leases as of the later of: -- the date that the Debtors vacate the premises by delivering the keys to the landlord at the mall manager's office; or -- January 31, 2006. Further, any property left in the premises after the effective date of rejection will be deemed abandoned by the Debtors. Mr. Sprayregen notes that some of the Leases have kick-out provisions that give the Debtors the right to terminate the Lease and vacate the property based on not having earned a specified dollar amount in sales. The Debtors will serve a copy of the Court order granting their request and notice of the Order to parties-in-interest. The Notice will provide that any objection to entry of the Order must be filed with the Court no later than 10 days after the service of the Order and served upon counsel to the Debtors and the Notice Parties. If no objection is timely filed and served, the request will be considered granted on a final basis. If any objection to the Order is timely and properly filed and served, the Debtors will attempt to reach a consensual resolution of the objection. If the parties are unable to so resolve any objection, the Debtors will schedule a hearing before the Court. If the objection is overruled by the Court or withdrawn the rejection of the affected lease will be deemed effective on the Petition Date. A schedule of the 68 Real Property Leases is available for free at http://bankrupt.com/misc/Musicland_68jan31leases.pdf Objections (1) Taubman Landlords Andrew S. Conway, Esq., at Honigman Miller Schwartz & Cohn LLP, in Bloomfield Hills, Michigan, tells the Court that the Debtors entered into non-residential real property leases, which are limited to commercial use, at Woodfield in Schaumburg, Illinois, and Stamford Town Center in Stamford, Connecticut. However, the Debtors failed to pay administrative rent under the Taubman Leases since January 12, 2006. The Debtors' failure to pay rent and other charges results in a substantial injury to the landlords. Mr. Conway also asserts that pursuant to Section 365 (d)(3) of the Bankruptcy Code, the Taubman Landlords are entitled to a reimbursement of their attorney's fee as part of the requirement that the Debtors fulfills all of their contractual obligations. Therefore, the Taubman Landlords ask the Court to compel the Debtors to immediately pay all postpetition administrative amounts due, including the amounts due for the January 12 through January 31, 2006, along with interests and attorneys fees. (2) CBL and Glimcher Properties On behalf of CBL & Associates Management, Inc., and Glimcher Properties Limited Partnership, Ronald E. Gold, Esq., at Frost Brown Todd LLC, in Cincinnati, Ohio, points out that the Debtors should not be permitted to reject the Leases prior to vacating the leased premises in the Shopping Centers because the Debtors have not offered any basis for nunc pro tunc rejection of the Leases. In addition, although the Debtors do not indicate their objective with respect to the payment of rent and other obligations under the Leases, Mr. Gold tells the Court that any rejection of the Leases must comply with the Debtors' obligations under Section 365 to timely pay all rent and other obligations due under the Leases through the later of the effective date of rejection and the date the Debtors vacate the Leased Premises. Mr. Gold discloses that as of January 27, 2006, the Debtors have not paid the Objecting Landlords stub rent for January 2006. Furthermore, an order authorizing the rejection of the Leases must require the Debtors to return the Leased Premises to the Objecting Landlords in accordance with the terms and conditions of the Leases, and must provide that any property remaining at the Leased Premises after the Debtors vacate will be deemed abandoned. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents 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. (Musicland Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEXICON INC: Earns $316,644 of Net Income in 3rd Quarter of 2005 ---------------------------------------------------------------- Nexicon, Inc., delivered its financial results for the quarter ended Sept. 30, 2005, to the Securities and Exchange Commission on Feb. 1, 2006. In the third quarter of 2005, Nexicon earned $316,644 of net income, in contrast to a $1,407,798 net loss for the same period last year. The Company generated $171,490 of revenue for the three months ended Sept. 30, 2005, as compared to $448,510 of revenue for the same period in 2004. The Company's balance sheet at Sept. 30, 2005, showed $300,973 in total assets, $1,544,298 of total current liabilities and $1,715,903 of derivative financial instruments, resulting in a stockholders' deficit of $2,959,228. As of Sept. 30, 2005, the Company had a working capital deficit of $1,434,581, Going Concern Doubt Stark, Winter, Schenkein & Co., LLP, expressed substantial doubt about Nexicon's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2004 and 2003. The auditing firm pointed to the Company's recurring losses from operations as well as working capital and stockholders' deficits. About Nexicon Headquartered in Albuquerque, New Mexico, Nexicon -- http://www.nexiconinc.com/-- offers next-generation products and services for intellectual property security, business intelligence, network monitoring and unified threat management, and billing support systems. The Charon Billing System serves as the adaptable, available and scalable nexus of Nexicon's powerful core process technology delivering highly efficient and effective solutions to customers worldwide. NMHG HOLDING: S&P Revises Outlook to Stable from Negative --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Portland, Oregon-based forklift truck manufacturer NMHG Holding Co., including the 'BB-' corporate credit rating on the company. At the same time, Standard & Poor's revised its outlook to stable from negative. At Sept. 30, 2005, the company had approximately $469 million of total debt outstanding. "The outlook revision reflects our opinion that NMHG's profitability should meaningfully improve in 2006 as the company fully achieves the benefits of pricing actions, as well as continued volume strength and lower new product implementation costs," said Standard & Poor's credit analyst Joel Levington. "Because of these improvements, we believe NMHG's prospective credit profile will be consistent with our expectations at the current ratings level." The speculative-grade ratings reflect NMHG's: * aggressive financial risk profile, * fair liquidity, and * weak business risk profile assessment, reflecting the company's leading positions within cyclical and volatile markets. NMHG competes in the global forklift truck market, which is limited in size, somewhat consolidated, and moderately capital intensive. Over the business cycle, the industry grows at GDP- like rates. Larger forklift manufacturers like NMHG are also gaining market share from vendor consolidation, which will give the company additional national account opportunities. However, the industry is both cyclical and volatile; currently, demand is solid for lift trucks, following weakness in the 2000-2002 period, although Standard & Poor's expects growth rates to decelerate in the near term. Although volumes are robust, NMHG's margins have been under significant pressure because of higher raw material prices and production inefficiencies caused by the company's changeover in most product lines. However, Standard & Poor's is anticipating that the company will be able to achieve stronger pricing and more fully realize the benefits of the significant operating leverage inherent in the business, which should drive operating margin expansion and profitability. Nonetheless, Standard & Poor's continue to view NMHG's profitability as weak, as the company has razor-thin margins and meaningful fixed capital investments. NMHG's strengths include: * its brands (both Hyster and Yale); * its economies of scale; and * its strong distribution network (particularly in the Americas). Its independent dealer network and large installed base in North America provide opportunities for the company to gain market share and participate in higher-margin aftermarket service and parts markets. Customer diversity is considered good, although the company's exposure to the automotive market will somewhat temper its good demand prospects. In the intermediate term, NMHG's strategic thrust will mainly be to improve internal operations. The company continues to implement demand flow technology, focusing on global procurement and new product introductions, all of which should improve margins and cash flow in the intermediate term. No acquisitions are expected. NORTEL NETWORKS: S&P Rates Proposed US$1.3 Billion Facility at B- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' debt rating to Nortel Networks Inc.'s (NNI) proposed US$1.3 billion credit facility due February 2007. NNI is a wholly owned subsidiary of Brampton, Ontario-based Nortel Networks Ltd. (NNL). Combined proceeds from the facility will be used to refinance maturing debt, primarily the US$1.3 billion NNL senior notes due Feb. 15, 2006. At the same time, Standard & Poor's affirmed its 'B-' long- term corporate credit and its 'B-2' short-term ratings on NNL. The outlook is stable. NNL, NNI, and NNL's parent, Nortel Networks Corp. (NNC), are collectively referred to as Nortel. "On completion of the refinancing, liquidity will remain at an adequate level, with total cash balances estimated to remain relatively unchanged from the year-end 2005 balance of US$3.0 billion," said Standard & Poor's credit analyst Joe Morin. The proposed US$1.3 billion one-year term credit facility will include a US$850 million senior secured Tranche A, as well as a US$450 million senior unsecured Tranche B. Tranche A of the facility, along with the existing NNL US$200 million notes due 2023 and the EDC support facility, will be secured by the U.S. and Canadian assets of NNL and its U.S. and Canadian subsidiaries. In addition, the facility will be guaranteed by NNL and NNC. Total secured debt and other obligations, which for analytical purposes includes just the US$300 million committed portion of the EDC support facility, will be US$1.35 billion, and will rank ahead of all other unsecured indebtedness of NNL and publicly listed parent NNC. The secured obligations rank ahead of unsecured debt with respect to the U.S. and Canadian assets. Standard & Poor's does not currently assign recovery ratings to secured bridge or short-term facilities of one year or less, which includes NNL's proposed interim facility. A recovery rating, therefore, has not been assigned and the ratings on the secured debt are, accordingly, equivalent to the corporate credit rating. The unsecured debt is also rated the same as the corporate credit rating, as total priority debt and obligations (US$1.35 billion in secured obligations) are less than 15% of total adjusted assets. In addition, the unsecured debt is only disadvantaged with respect to the U.S. and Canadian assets, which represent about 60% of NNL's total assets. The ratings on NNL are based on the consolidation with its parent, NNC. The ratings reflect: * a weak but stable spending environment for telecom equipment and services globally; * a highly competitive industry; * the company's high debt level; * weak credit protection measures; and * profitability that is lagging its global peers. These factors are only partially mitigated by the company's liquidity position, which should provide adequate financial flexibility in the medium term. Other key credit concerns are the remaining material weaknesses in the company's internal controls and a substantial amount of litigation against the company, the financial effect of which is not quantifiable at this point, including the potential effect of mediation with respect to certain litigation. The stable outlook reflects expectations for modest improvements in Nortel's operating performance, including modest growth in revenues, EBITDA, and cash flow. The company's current cash balances provide it with adequate flexibility at the current rating level, including the ability to repay the proposed credit facilities on maturity in February 2007. Should Nortel demonstrate more substantial improvements in performance, and credit measures strengthen as a result, the outlook could be revised to positive or the rating could be raised. Still, the substantial amount of litigation outstanding and material weaknesses in internal controls will be constraining factors on the rating until resolved. Conversely, should unexpected challenges in market conditions cause Nortel's performance measures to deteriorate further in the near term, the outlook could be revised to negative. NORTEL NETWORKS: Unit Gets $1.3 Bil. Loan to Finance Bond Maturity ------------------------------------------------------------------ Nortel Networks Corporation (NYSE/TSX: NT) and the Company's indirect subsidiary, Nortel Networks Inc. (NNI) have entered into binding commitments for a new one year credit facility in the aggregate principal amount of $1.3 billion arranged by: * J.P. Morgan Securities Inc., * Citigroup Corporate and Investment Banking, * ChaseBank N.A., * Royal Bank of Canada, and * Export Development Canada Subject to the terms and conditions of the commitments, the Lenders have agreed to provide NNI with a credit facility in the aggregate amount of $1.3 billion, consisting of: b) a senior secured one-year term loan facility in the amount of $850 million and c) a senior unsecured one-year term loan facility in the amount of $450 million. This new facility, which would mature in February 2007, will be used to refinance the outstanding $1.275 billion aggregate principal amount of 6.125% Notes due Feb. 15, 2006 of the Company's principal operating subsidiary, Nortel Networks Limited (NNL). The Company has elected to proceed with this financing while it continues to pursue important objectives, including the ongoing mediation efforts relating to two of its significant pending class action lawsuits in the United States. As the Company has previously disclosed, it cannot predict whether such mediation efforts will result in achieving a global settlement encompassing these two actions. The secured loan would be secured by a first priority lien on substantially all of the U.S. and Canadian assets of the Company, NNL and NNI. NNL's $200 million 6.875% Notes due June 15, 2023 and amounts outstanding under NNL's $750 million EDC performance-related support facility would be equally and ratably secured with the secured loan. The Company and NNL would guarantee NNI's obligations under the secured loan and amounts outstanding under NNL's $750 million EDC performance-related support facility during the term of the secured loan. As of Jan. 30, 2006, there was approximately $156 million of outstanding support utilized under the EDC Support Facility. The loans under the facility would bear interest equal to LIBOR plus an applicable margin as set forth in the commitment letter. The loan documentation would contain representations, warranties, covenants and events of default customary for financings of this type, including a minimum Adjusted EBITDA covenant for the secured loan and a covenant applicable to both loans that unrestricted cash and cash equivalents of NNC on a consolidated basis must at all times exceed $1 billion. NNI would be required to prepay the facility in certain circumstances, including in the event of certain debt or equity offerings or asset dispositions of collateral by the Company, NNL or NNI. The financing commitments permit the lenders, in consultation with the Company, to further syndicate the facility and are subject to the completion of definitive documentation for the facility and other customary conditions. The Company and NNI have agreed to a demand right exercisable at any time after May 31, 2006 pursuant to which they would be required to take all reasonable actions to issue senior unsecured debt securities in the capital markets to repay the credit facility. The Company's consolidated cash balance at the end of 2005 was approximately $3 billion. Headquartered in Ontario, Canada, Nortel Networks Corporation -- http://www.nortel.com/-- is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. Nortel Network Corp.'s 4-1/4% Senior Notes due 2008 carry Moody's Investors Service's B3 rating and Standard & Poor's B- rating. NORTHWEST AIRLINES: Pilots Union Leaders Authorize Strike Ballot ---------------------------------------------------------------- The elected representatives of the Northwest pilots union, as represented by the Air Line Pilots Association, Int'l (ALPA), voted unanimously on Feb. 3, 2006, to ballot the pilot group to authorize a strike. The exact timing of the ballot was left to the discretion of Master Executive Council (MEC) Chairman Capt. Mark McClain. This action by the NWA MEC comes after another week of negotiations with NWA management that produced few results. Although ALPA continues to present fair and competitive proposals, NWA management continues to act unreasonably by making demands instead of working with the pilot group to better secure NWA's future. The 1113(c) hearing, which opened Jan. 17, is expected to conclude Monday, Feb. 6. If ALPA and management are unable to reach an agreement, Judge Allan Gropper's ruling on whether or not to reject the pilot contract is expected no later than Feb. 16. If the U.S. Bankruptcy Court rejects ALPA's collective bargaining agreement with Northwest and the company unilaterally implements terms and conditions on pilots, NWA pilots have the right to strike. MEC Chairman Captain Mark McClain stated, "We must make contingency preparations in order to protect the quality of our careers here at Northwest Airlines. The strike vote will give our pilots an opportunity to demonstrate their opposition to management's overreaching demands." Throughout negotiations, Northwest pilots have bargained in good faith to achieve a fair consensual agreement that meets the requirements of NWA pilots and the needs of Northwest Airlines. At the same time, the pilot group has stood firm in its resolve to defend NWA pilots' jobs, wages and working conditions, denouncing the unreasonable demands made by management both in court and in negotiations. "Northwest pilots have already made tremendous sacrifices, including a 39% pay cut, to help our airline through these difficult times," Capt. McClain said. "If management is allowed to impose terms and conditions that cost NWA pilot jobs, we will have no choice but to defend our livelihoods and our careers." Founded in 1931, ALPA represents 62,000 pilots at 39 airlines in the U.S. and Canada. ALPA represents approximately 5,000 active NWA pilots and 700 furloughed pilots. Visit the ALPA website at http://www.alpa.organd the NWA pilot group website at http://www.nwaalpa.org. Northwest Airlines Corporation -- http://www.nwa.com/-- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. NOVELIS INC: Inks Multi-Year European Supply Agreement with Prefa ----------------------------------------------------------------- Novelis Inc. (NYSE: NVL) (TSX: NVL) signs a long-term contract for the supply of pre-painted aluminum sheet to Prefa. Details of the multi-million dollar supply agreement were not released. In addition, Novelis and Prefa will collaborate on initiatives to expand the use of pre-painted aluminum sheet in roofing applications. The companies will partner on extended supply chain initiatives to meet the service requirements of architects, builders and installers. As well, they will work jointly to develop innovative paint systems to enhance the aesthetics, durability and life-cycle benefits of their roofing products. Novelis has also awarded Prefa a license for the distribution of Falzonal(R), a pre-painted, standing-seam quality aluminum sheet produced by Novelis for a wide range of roofing and fagade architecture (http://www.falzonal.com/). Under the terms of the license, Prefa becomes sole distributor of Falzonal(R) in a number of European countries, most notably Germany and Austria. The material will be marketed alongside the full range of Prefa roofing systems and products, offering customers "one-stop shopping" for their roofing needs. "We are delighted that this strengthening of our co-operation with Novelis will provide a solid platform for innovation and growth, which will help develop our overall offer to the thriving market for aluminum roofing," Walter Pacher, Prefa managing director, said. "Novelis firmly believes in the value of working closely with its customers," Erwin Mayr, president of Novelis' Automotive, Painted and Specialties business unit, added. "This agreement with Prefa will provide many opportunities for joint work on product development and supply chain initiatives. Prefa's extensive experience in aluminum roofing, together with Novelis' materials and coatings expertise, will be a powerful combination in developing roofing solutions of the future." Prefa -- http://www.prefa.com/-- is one of Europe's fastest growing aluminum roofing manufacturers and marketers. With production facilities in Marktl, Austria, and Wasungen, Germany, as well as sales offices throughout Europe, the company has over 50 years' experience in the fabrication of aluminum roofing. Based in Atlanta, Georgia, Novelis Inc. -- http://www.novelis.com/ -- is the global leader in aluminum rolled products and aluminum can recycling. The company has 36 operating facilities in 11 countries and more than 13,000 employees. Novelis has the unrivalled capability to provide its customers with a regional supply of technically sophisticated rolled aluminum products throughout Asia, Europe, North America, and South America. Through its advanced production capabilities, the company supplies aluminum sheet and foil to the automotive and transportation, beverage and food packaging, construction and industrial, and printing markets. Novelis Inc.'s 7-1/4% Senior Notes due 2015 carry Moody's Investors Service's and Standard & Poor's single-B ratings. PERFORMANCE TRANSPORTATION: Chapter 11 Cases Jointly Administered ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York in Buffalo approved Performance Transportation Services, Inc., and its 13 debtor-affiliates' request for the joint administration of their bankruptcy cases. Judge Kaplan directs that all pleadings and papers filed in their Chapter 11 cases be captioned: UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF NEW YORK ------------------------------------- : In re: Leaseway Motorcar Transport : Company, et al., : Case No. 1-06-00107 : Chapter 11 Debtors. : : ------------------------------------- Judge Kaplan makes it clear that a creditor filing a proof of claim against any of the Debtors will file the claim in the particular Debtor's bankruptcy case and not in the jointly administered case. Rule 1015(b) of the Federal Rules of Bankruptcy Procedure provides that if two or more petitions are pending in the same court by or against a debtor and an affiliate, the court may order a joint administration of the estates. "Many of the motions, hearings and orders that will arise in the [Debtors'] Chapter 11 Cases will jointly affect each and every Debtor," Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, says. Mr. Graber asserted that joint administration will enable the Debtors to reduce fees and costs resulting from the administration of their Chapter 11 Cases and ease the onerous administrative burden of having to file multiple and duplicative documents. In addition, Mr. Graber contended that as a result of the joint administration: -- all of the Debtors' creditors will benefit from the reduced costs; -- the Court will be relieved of the burden of entering duplicative orders and maintaining duplicative files; and -- supervision of the administrative aspects of the Chapter 11 Cases by the United States Trustee will be simplified. Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) PERFORMANCE TRANSPORTATION: Creditors Meeting Set for March 6 ------------------------------------------------------------- Deirdre A. Martini, the United States Trustee for Region 2, will convene a meeting of creditors of Performance Transportation Services, Inc., and its debtor-affiliates on March 6, 2006, at 10:00 a.m. The meting will take place at the Office of the United States Trustee at 42 Delaware Avenue, Suite 100 in Buffalo, New York. This Meeting of Creditors is 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 Debtors under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) PERFORMANCE TRANSPORTATION: Has Until March 3 to File Schedules --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York extended, until March 3, 2006, Performance Transportation Services, Inc., and its debtor-affiliates' deadline to file their Schedules and Statements. Pursuant to Section 521(1) of the Bankruptcy Code, a debtor must file with the applicable court a schedule of all assets and liabilities, schedules of current income and expenditures and a statement of financial affairs. Rule 1007(c) of the Federal Rules of Bankruptcy Procedure allows a debtor to file its Schedules and Statements within 15 days of the commencement date of a bankruptcy case. An extension of time may be granted for "cause." Due to the nature of the Debtors' businesses, limited staff available to perform the required internal review of the Debtors' business and affairs, and the press of numerous other matters incident to the commencement of their Chapter 11 Cases, the Debtors said that the 15-day automatic extension under Bankruptcy Rule 1007(c) will not be sufficient. "Indeed, it would be onerous, if not impossible, to complete the Schedules and Statements within that deadline," Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, stated. The Debtors asserted that the volume of material that must be compiled and reviewed by their limited staff provides ample "cause" justifying the extension of time for filing the Schedules and Statements. Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) POINT TO POINT: Court Confirms First Amended Chapter 11 Plan ------------------------------------------------------------ The U.S. Bankruptcy Court for the Western District of Missouri confirmed the First Amended Plan of Reorganization filed by Point to Point Business Development, Inc. The Court confirmed the Debtor's Amended Plan on Jan. 20, 2006. The Court ruled that the Amended Plan: 1) complies with the applicable provisions of Sections 1129(a)(1) and (2) and was proposed in good faith as required under Section 1129(a)(3) of the Bankruptcy Code; 2) is fair and equitable to all parties-in-interest, including without limitation the Debtor, all unsecured creditors and all secured creditors; and 3) complies with each of the other nine requirements for confirmation outlined in Sec. 1129(a) of the Bankruptcy Code. As reported in the Troubled Company Reporter on Dec. 20, 2005, the Plan provides for the recovery of the bankruptcy assets, and the continuing operation of the Debtor to pay the amounts due under it. The Plan is drafted to allow for confirmation to proceed before final implementation of the Debtor's turnaround and before any value can be realized from the bankruptcy assets, because it passes the value of those assets directly to creditors on a pro rata basis. Treatment of Claims Administrative Claims and Priority Claims will be paid in full as they appear in the schedules. Secured creditors will receive a lump sum payment of $121,500 out of funds held in escrow immediately upon entry of an order approving the settlement between the Debtor and the secured creditors, plus $218,500 from amounts recovered or released by the estate's prosecution of the Declaratory Judgment Action. General unsecured creditors will be paid: -- their pro rata share of 20% the amount of monthly net profit actually earned in accordance with Generally Accepted Accounting Principles, at the end of each calendar quarter following confirmation of the Plan; plus -- 50% of net cash held at the end of the calendar year starting in 2006, payable in January the following year, from the operation of the Debtor's business for a period of not less than the length of time needed to pay to creditors the gross amount paid through the Plan on hard assets plus 20% or 30 months. In addition, as soon as practicable, unsecured creditors will get a pro rata distribution from any net bankruptcy assets collected or received by the estate. Equity security holders will be retained in exchange for new value contributions as follows: -- $250,000 to be contributed to operations as needed to capitalize operations and cover cash shortfalls; plus -- the guarantee of an additional $250,000 in loans to be made to the Debtor. A full-text copy of the Debtor's chapter 11 plan of reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=051018035536 Based in Liberty, Missouri, Point to Point Business Development, Inc. -- http://www.P2PMRO.com/-- says it helps clients lower costs through its maintenance, repair and operating (MRO) Web platform which enables manufacturers to streamline the process of supply ordering, reduce excess in inventory management, and more efficiently manage supply chains. Point to Point filed for chapter 11 protection (Bankr. W.D. Mo. Case No. 05-44642) on July 7, 2005. The Debtor estimated at the time of its chapter 11 filing that it had less than $50,000 in assets and $1 million to $10 million of debt. RESIDENTIAL REINSURANCE: Moody's Removes Notes' Rating From Watch ----------------------------------------------------------------- Moody's Investors Service removed from its watchlist for possible downgrade the $160 million of Variable Rate Notes Due June 8, 2006 currently rated Ba2 and issued by Residential Reinsurance 2003, Limited, a catastrophe bond. Moody's noted that in spite of the severe hurricane activity experienced in 2006, and in particular the effects of Hurricane Katrina, the transaction's Ultimate Net Losses for the Loss Occurrence Period is not expected to reach the attachment point due to these events. The attachment point for Residential Re 2003 is approximately $600 million and three months after the last event, the current estimate for the Ultimate Net Losses for the period does not exceed $470 million. The exposure period runs until May 2006 with the only additional loss exposure to the transaction arising from the potential occurrence of destructive earthquakes in the U.S. in the next 4 months. Rating Action: Remove from Moody's Watchlist for possible downgrade Issuer: Residential Reinsurance 2003, Limited * The ratings of the $160 million of Variable Rate Notes due June 8, 2006 currently rated Ba2 have been removed from the Moody's Watchlist for possible downgrade. RESORTS INT'L: Moody's Junks Ratings on $1.05 Billion Loans ----------------------------------------------------------- Moody's Investors Service lowered the ratings of Resorts International Holdings, LLC and assigned a negative ratings outlook following the company's announcement that it is not in compliance with certain quarterly leverage covenants, and that this non-compliance constitutes an event of default under the loan agreement. This non-compliance which is based on the company's Dec. 31, 2005 results, follows bank loan amendments in late 2005 that addressed previous covenant violations. These ratings were downgraded: -- Corporate family rating, to Caa1 from B2; -- $75 million first lien revolver due 2010, to Caa1 from B2; -- $625 million first lien term loan due 2012; to Caa1 from B2; -- $350 million second lien term loan due 2013, to Caa2 from B3; and -- Speculative grade liquidity rating, to SGL-4 from SGL-3. In addition to Resorts' deteriorating operating results, particularly for the month of December 2005, and continued covenant violations, the ratings and negative outlook take into account the uncertainty surrounding how bank lenders choose to apply their rights and remedies at this point in time as well as the uncertainty regarding the company's ability to stabilize operating results, even though there are indications that January 2006 results will show some improvements. Resorts International Holdings, LLC, owns and operates casino in: * Atlantic City, New Jersey; * the Chicagoland gaming market; and * Tunica, Mississippi. RGIS INVENTORY: S&P Assigns B+ to Planned $370 Million Bank Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to RGIS Inventory Specialists. At the same time, Standard & Poor's assigned its 'B+' rating to the company's planned $370 million bank loan. A recovery rating of '3' was also assigned to the loan, indicating the expectation of meaningful (50%-80%) recovery of principal in the event of a payment default. Proceeds from the bank loan will be used to pay a $300 million dividend to shareholders. "The ratings on RGIS," said Standard & Poor's credit analyst Robert Lichtenstein, "reflect inconsistent operating performance, a new management with little industry experience, and a highly leveraged capital structure that limits cash flow protection." ROMAN CORPORATION: Seeks Protection Under CCAA ---------------------------------------------- Roman Corporation Limited (TSX:RMN) and its active subsidiaries have filed for protection under the Companies' Creditors Arrangement Act (CCAA) to facilitate a restructuring and allow the group to return to profitability as a leading Canadian supplier of recycled boxboard and manufacturer of printed folding cartons. "These restructuring measures are required because of industry- wide problems affecting the North American paperboard and packaging industries which have negatively impacted our profitability," Helen Roman-Barber, Chairman and Chief Executive Officer of Roman, said. "Working with our lenders, we intend to implement a plan of restructuring that will be the foundation of a reorganized and profitable business. Roman expects that the reorganization will involve a sale of the reorganized business." It is not expected that there will be any value for the equity holders in this process. Also, Roman has negotiated $8 million debtor-in-possession financing to provide working capital during the restructuring process so that the company will have stability to operate its business as usual during the restructuring process and permit the company to provide uninterrupted service to its customers. The recycled paperboard packaging industry has been beset by serious difficulties over the past years, including the rise in the value of the Canadian dollar against the U.S. dollar leading to unprecedented price competition and margin compression. At the same time as currency fluctuations have depressed revenues and margins, a number of commodity price increases, most significantly in energy costs, have also served to depress margins. As reported on Jan. 23, 2006, Roman Corporation Limited reported that its senior lenders have granted a short-term waiver for a scheduled principal payment due on Friday Jan. 20, 2006, with respect to the Company's senior secured term loan. The senior lenders continue to monitor the Company's situation. The Company is continuing its previously announced refinancing efforts and, although no transaction has as yet been approved by the Company's board of directors, the Company expects to make an announcement imminently. Roman Corporation Limited -- http://www.romancorp.com/-- is a leading manufacturer of paperboard packaging for the consumer packaged goods industry. The Company's products are the packaging choice for some of the most recognizable national and private label brand manufacturers in North America. Consumer goods packaged with the Company's products range from food and household goods such as frozen and dry food, beverages, powered laundry detergent, batteries and light bulbs to toys, pet products and hardware. The Company operates production facilities that manufacturer 100% recycled paperboard as well conversion of paperboard into printed folding cartons. RURAL CELLULAR: Fitch Rates $475 Million Sr. Sub. Notes at CC ------------------------------------------------------------- Fitch assigned ratings for Rural Cellular Corporation (RCCC) as: * Issuer default rating (IDR) 'CCC'; * $60 million first lien credit facility 'B/RR1'; * $510 million second lien secured notes 'B-/RR2'; * $325 million senior unsecured notes 'CCC-/RR5'; * $475 million senior subordinated notes 'CC/RR6'; * 11.375% senior exchangeable preferred stock 'C/RR6'; * 12.25% junior exchangeable preferred stock 'C/RR6'. The Rating Outlook is Stable. The IDR rating incorporates the very high leverage and competitive operating environment for RCCC. Fitch remains concerned over: * the limited expectation for operating cash flow growth; * the event risk associated with potential universal service funding reform; and * the on-going subscriber growth challenges. While the company has adequate liquidity, no near term maturities, and expectations for modest free cash flow in 2006 primarily due to the decline in capital expenditures, Fitch believes the lack of expected cash flow growth does not adequately support RCCC's capital structure, currently evidenced by the nonpayment of approximately $50 million in annual cash dividends related to its exchangeable preferred securities, which total in excess of $400 million. Over the longer term, Fitch believes the company must address the preferred stock issue. However, options may be somewhat limited when considering the company's relatively low market capitalization compared with its total debt obligation. It's also noteworthy that two classes of preferred stock holders control four board positions with the potential for two additional seats to be elected by junior preferred stock holders if the nonpayment of preferred dividends continues. In addition, with the drawdown on RCCC's credit facility, the company does not have significant leeway under its financial covenants, which could prove challenging in the event of unfavorable business or economic conditions or significant Universal Service Fund (USF) reform. Operating trends over the past several quarters have been negative due to RCCC's 2.5 generation (G) network migration, which has resulted in: * higher SG&A and network costs; * customer service and network quality issues; and * pressure on roaming revenue with churn increasing to 3% for the latest quarter compared with a low 2% from a year ago. Margins have declined from mid-40s to the high-30s. Positively, with the completion of the 2.5G overlay in its markets, roaming revenue appears to have stabilized and is expected to grow with the increase in roaming minutes outpacing decreases in roaming yields. Nevertheless, with only 35% of its subscriber base migrated to either CDMA or GSM networks, RCCC will likely face continued postpaid subscriber declines and elevated churn until a majority of subscribers are migrated. As a result, while ARPU is materially higher with 2.5G subscribers, Fitch does not expect that significant improvements in revenue and operating cash flow are realistic due to the above pressures. Additionally, rural wireless operators, including RCCC, over the past few years have identified USF disbursements as an opportunity to materially increase cash flow at little to no additional cost to their operational plans. With the current USF program expiring in June 2006, Fitch expects that USF reform will likely lead to a more focused disbursement on providers' true investment in rural areas and wireless disbursements face the greatest amount of event risk associated with reductions. For RCCC, high cost support through the USF funding has risen materially since 2003 when it reached approximately $9 million per year growing to an estimated $41 million in 2005. Fitch calculates that this subsidy support represented approximately 6% of cash flow from operations in 2003 and has risen to more than 40% in 2005. Obviously, USF reform that leads to a material percentage reduction in support disbursements to RCCC could dramatically affect the company's financial strength. RCCC's liquidity position is adequate. Pro forma cash for the end of the third quarter of 2005 is approximately $120 million. RCCC drew down the majority of its revolving credit facility during the fourth quarter after making payment on four periods of senior preferred dividends to remedy the voting rights trigger event, which restricted RCCC from refinancing its debt or drawing on its credit facility. However, with the nonpayment of its recent senior preferred dividend, the voting rights trigger event was reinstated. Since RCC was able to refinance its senior subordinated debt due 2008, RCCC extended any maturities to 2010. The recovery ratings and notching among the different classes of debt reflect Fitch's modest expectations for recovery valuations in a distressed scenario given RCCC's total debt obligation and high reliance on roaming revenue and USF subsidy. SECURUS TECHS: S&P Puts B+ Corporate Credit Rating on Neg. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit and senior secured debt ratings on telecommunications services provider Securus Technologies Inc. CreditWatch with negative implications. The CreditWatch listing reflects the company's recent announcement that it has received a notice from AT&T Operations Inc. (AT&T/SBC) indicating its intentions to terminate its billing and collections agreement and the associated services with Securus, effective April 11, 2006. This notice followed preliminary approval by the Superior Court of the State of California of a settlement agreement surrounding allegations that Securus' subsidiaries, along with other inmate telecommunications providers, incorrectly charged for collect calls from a number of facilities as a result of systematic defects in inmate calling platforms. AT&T/SBC's decision to terminate this relationship was prompted by concerns that such a settlement may be viewed as admission of wrongdoing. Ongoing discussions between Securus and AT&T/SBC have resulted in the delay of the effective date of the termination notice until Feb. 11, 2006, as Securus aims to have the termination notice withdrawn. AT&T/SBC is a key provider of billing services to Dallas-based Securus, accounting for about $90 million of invoices during 2005. Based upon reported revenue during the first nine months of 2005, Securus' full year revenue base is estimated at $375 million. Should AT&T/SBC proceed with the termination of this relationship, Securus would be required to seek alternative billing methods, including direct billing by the company, within the AT&T/SBC territory. This would likely have a material adverse effect on collections performance and the company's financial condition and future operating results, and likely result in at least a one- notch downgrade. Standard & Poor's will continue to monitor the discussions between Securus and AT&T/SBC and review the ratings and outlook following a resolution. SEDGWICK CMS: S&P Assigns B+ Bank Loan Rating to $340MM Facility ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' counterparty credit rating to Sedgwick CMS Holdings Inc. The outlook is stable. At the same time, Standard & Poor's assigned its 'B+' bank loan rating to the company's senior secured credit facility totaling $340 million. The facility consists of: * a $300 million seven-year adjustable rate term B loan; and * a $40 million revolving credit facility, $25 million of which remains untapped at debt issuance. "The ratings reflect the company's good competitive position as the second-largest domestic third-party administrator, stable long-term recurring contracts, and a diversified revenue base," explained Standard & Poor's credit analyst Donovan Fraser. Offsetting the company's strengths is the relatively low interest coverage due to Sedgwick's increased debt burden and prospective integration risks associated with the acquisition by Fidelity National Financial Inc. (NYSE:FNF; BBB-/Watch Pos/--) and a group of financial investors. The aggregate purchase price of $635 million and other expenses was funded through a combined: * $330 million of cash equity investments from: -- FNF, -- Thomas H. Lee Partners L.P., and -- Evercore Capital Partners; and * $315 million in borrowings under the senior secured credit facility at the Sedgwick holding company level. FNF has about a 40% equity stake in Sedgwick, Thomas H. Lee owns approximately 40%, and Evercore owns the remaining 20%. The outlook is stable. Pro forma debt-to-total capital is expected to be about 47% with GAAP pretax interest coverage of approximately 2.1x. Standard & Poor's estimates that the company's ROR will decrease to about 5% in 2006 from 11% at year-end 2005 due to additional interest and amortization expenses related to the company's increased debt burden. Partially offsetting Standard & Poor's concerns are the company's long-term recurring contracts, and FNF's history of paying down debt ahead of schedule. SFK INTERNATIONAL: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: SFK International, LLC fka SFK International Corp. 304 Park Avenue South New York, New York 10010 Bankruptcy Case No.: 06-10196 Chapter 11 Petition Date: February 3, 2006 Court: Southern District of New York (Manhattan) Judge: Robert E. Gerber Debtor's Counsel: Sheila E. Carson, Esq. Lowenstein Sandler PC 65 Livingston Avenue Roseland, New Jersey 07068 Tel: (973) 597-2500 Fax: (973) 597-2400 Total Assets: $198,448 Total Debts: $1,197,695 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Shanghai Kane Top Trade $404,029 Import and Export Flat J, 6/F Huamin Empire Plaza No. 726, West Yan Road Shanghai 200050 Kesco Shipping Corp. Freight $236,725 15015 183rd Street Springfield Gardens, NY 11413 Scanwell Logistics, Inc. Freight $119,353 1995 Linden Boulevard Elmont, NY 11003 EPE Fashion Factory Co. Trade $86,000 Flat 704B706, 7th Floor 13 Hok Yuen Street Hunghorn KLN US Customs Prepetition $75,897 301 East Ocean Boulevard Customs Duty 14th Floor Long Beach, CA 90802-4828 Rical Logistics Freight $48,756 One Cross Island Plaza Rosedale, NY 11422 Cargo Connection Logistics Freight $41,661 c/o Accord Financial, Inc. P.O. Box 6704 Greenville, SC 29606 UTI Freight $29,501 P.O. Box 19043 Newark, NJ 07195 Delia's Trade $24,115 435 Hudson Street New York, NY 10014 Faro Services, Inc. Freight $15,736 3275 Alum Creek Drive Columbus, OH 43207 VA Resources, Inc. Computer $14,552 3200 Broadway, Suite 250 Garland, TX 75043 Evrim Giyim Sanayi Trade $11,183 Seyhli Koyu Transtek Cad. No. 39, 34906 Pendik Istanbul, Turkey World Fashion Exchange, Inc. Trade $10,450 301 N. Harrison Street, Suite 217 Princeton, NJ 08540 APL Logistics Freight $9,108 P.O. Box 2969 Carol Stream, IL 60132 St. Paul Travellers Club Insurance $9,082 & Specialty Remittance Center Hartford, CT 06183 Nationwide Warehouse Freight $8,078 P.O. Box 2400 Newark, NJ 07114 Steven F. Kimmel Member Services $7,083 23 Regency Place Agreement Weehawken, NJ 07086 Suleyman S. Coruh Payroll $6,000 Cal Hasan Street Aksoy Apartment B Blok 6/3 Camlik Etiler Istanbul, Turkey 34337 William Paganini Severance Package $5,770 252 Grand Boulevard Long Beach, NY 11561 Grunfeld, Desiderio, Lebowitz Legal Services $4,657 399 Park Avenue, 25th Floor New York, NY 10022 STEELCASE INC: S&P Assigns Preliminary BB+ Sub. Debt Rating ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'BBB-' senior unsecured debt rating and preliminary 'BB+' subordinated debt rating to Steelcase Inc.'s recently filed universal shelf registration. At the same time, Standard & Poor's affirmed its outstanding ratings on Steelcase, including the 'BBB-' corporate credit rating. The new shelf has an undesignated notional amount in accordance with the new SEC rules effective Dec. 1, 2005. Future proceeds from the issuance of securities off this shelf are expected to be used for general corporate purposes. The new shelf replaces the company's existing $200 million debt shelf registration filed in October 2004. As such, the preliminary 'BBB-' senior unsecured debt rating has been withdrawn. The outlook is stable. Grand Rapids, Michigan-based Steelcase had about $268.1 million of total debt outstanding at Nov. 25, 2005. "The ratings on Steelcase reflect its leading market position in the office furniture industry, broad distribution capability, and strong liquidity position," said Standard & Poor's credit analyst David Kang. "These factors are somewhat offset by the competitive and volatile nature of the office furniture industry, the company's sensitivity to raw-material price fluctuations, and its leveraged financial profile." Steelcase is the world's leading designer, marketer, and manufacturer of office furniture and complementary products and services. Steelcase operates on a worldwide basis within three reportable segments: * North America (57% of sales for the nine months ended Nov. 25, 2005); * Steelcase Design Partnership (12%); and * Other (31%), which includes International Sales (21.8%). The U.S. office furniture industry is highly competitive, with five companies garnering a significant portion of the market. Among these five, Steelcase is the largest, with about $2.8 billion in sales for the 12 months ended Nov. 25, 2005. Two other rated industry participants include: * Herman Miller Inc., with about $1.7 billion in sales for the 12 months ended Dec. 3, 2005; and * Knoll Inc., with about $779 million in sales for the 12 months ended Sept. 30, 2005. Steelcase benefits from a broad distribution network, including independent and owned dealers in more than 800 locations throughout the world. The office furniture industry is influenced by a variety of cyclical macroeconomic factors such as: * corporate profitability, * capital spending, * employment rates, and * commercial office construction. However, near-term growth prospects remain favorable. After three years of contraction, the U.S. office furniture industry grew by about 5% in calendar year 2004, with about 12% growth expected for 2005, according to the Business and Institutional Furniture Manufacturer's Association. The company's credit protection measures, though stronger than the medians for the 'BBB' rating category, remain appropriate for the ratings. Standard & Poor's expects the company to maintain credit protection measures stronger than the medians for the 'BBB' rating category, to offset the slightly weaker business risk profile. STELCO INC: Completes Sale of Subsidiaries' Shares to Mittal ------------------------------------------------------------ Stelco Inc. (TSX:STE) received a Court Order facilitating the sale of the shares of Norambar Inc., Stelwire Ltd. and Stelfil Lt,e to Mittal Canada Inc. The Order was granted at a hearing held Feb. 1, 2006, notwithstanding that Stelwire was still an applicant under Stelco's Companies' Creditors Arrangement Act proceedings. As a result of this Order, the transaction closed that day. A definitive agreement in this matter was announced on Nov. 23, 2005 with the stated expectation that the transaction would close early in 2006. The Court approved the sale on Dec. 12, 2005. Courtney Pratt, Stelco President and Chief Executive Officer, said, "I'm pleased for all concerned that the Court has facilitated the closing of this transaction. It provides the subsidiaries with ownership that views them as strategic assets. It provides certainty to their employees and retirees. And it assists Stelco in focusing on its integrated steel business going forward." Stelco, Inc. -- http://www.stelco.ca/-- is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. In early 2004, after a thorough financial and strategic review, Stelco concluded that it faced a serious viability issue. The Corporation incurred significant operating and cash losses in 2003 and believed that it would have exhausted available sources of liquidity before the end of 2004 if it did not obtain legal protection and other benefits provided by a Court-supervised restructuring process. Accordingly, on Jan. 29, 2004, Stelco and certain related entities filed for protection under the Companies' Creditors Arrangement Act. The Court extended the stay period under Stelco's Court-supervised restructuring from Dec. 12, 2005, until Mar. 3, 2006. STEVE'S SHOES: U.S. Trustee Appoints 7-Member Creditors Committee ----------------------------------------------------------------- The United States Trustee for Region 20 appointed seven creditors to serve on the Official Committee of Unsecured Creditors in Steve's Shoes, Inc.'s chapter 11 case: 1. Wolverine World Wide, Inc. Attn: Dorothy M. Morris Credit Dept. - Mail Code HC-1-24 9345 Courtland Dr. Rockford, Michigan 49351 Phone: 616-866-6203, Fax: 1-800-888-6142 2. Dr. Martens AirWair USA LLC Attn: Michael D. Kelsay 10 Northwest 10th Ave. Portland, Oregon 97209 Phone: 503-417-7080, Fax: 503-222-6880 3. Keen Footwear Attn: Ed Shollenberger 1201 Marina Village Pkwy, Ste. 301 Alameda, California 94501 Phone: 510-337-3033 ext. 203, Fax: 510-522-8255 4. Julie M. Minnick General Growth Properties 110 N. Wacker Dr. Chicago, Illinois 60606 Phone: 312-960-2707, Fax: 312-960-5993 5. Simon Property Group, LP Attn: Ronald M. Tucker 115 W. Washington St. Indianapolis, Indiana 46204 Phone: 317-263-2346, Fax: 317-263-7901 6. ECCO USA, Inc. Attn: Anthony Fabrizio 16 Delta Dr. Londonderry, New Hampshire 03053 Phone: 603-537-7300 7. Deckers Outdoor Corp. Attn: Michael Hida 495-A S. Fairview Ave. Goleta, California 93117 Phone: 805-967-7611, ext. 153, Fax: 603-537-9321 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Lenexa, Kansas, Steve's Shoes, Inc. -- http://www.stevesshoes.com/-- is a shoe retailer. The Company filed for chapter 11 protection on Jan. 6, 2006 ( Bankr. D. Kans. Case No. 06-20015). Thomas M. Mullinix, Esq., and Joanne B. Stutz, Esq., Evans & Mullinix, P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $9,494,325 and total debts of $20,200,821. STEVE'S SHOES: Committee Wants to Hire Kronish Lieb as Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors in Steve's Shoes, Inc.'s chapter 11 case asks the U.S. Bankruptcy Court for the District of Kansas for permission to employ Kronish Lieb Weiner & Hellman LLP as its counsel. Kronish Lieb will: 1) review financial information furnished by the Debtor to the Committee and review the Debtor's schedules, statement of affairs and business plan; 2) review and investigate the liens of purported secured party or parties and review and analyze accountant's work product and reports to the Committee; 3) confer with the Debtor's management and counsel and coordinate efforts to sell assets of the Debtor in a manner that maximizes the value for unsecured creditors; 4) advise the Committee about the ramifications regarding all of the Debtor's activities and motions before the Bankruptcy Court and investigate potential causes of action that may inure to the benefit of the Committee's constituency; 5) attend the meetings of the Committee and file appropriate pleadings on behalf of the Committee; 6) prepare various applications and memoranda of law submitted to the Court for consideration and handle all other matters relating to the representation of the Committee that may arise; 7) assist the Committee in negotiations with the Debtor and other parties in interest on any plan of reorganization or liquidation that may be proposed; and 8) perform all other legal services to the Committee that are necessary or proper in the Debtor's bankruptcy proceedings. Jay R. Indyke, Esq., a partner at Kronish Lieb, is one of the lead attorneys from the Firm performing services to the Committee. Mr. Indyke charges $650 per hour. Mr. Indyke reports Kronish Lieb's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Richard S. Kanowitz Partner $585 Greogry Plotko Associate $410 Brent Weisenberg Associate $350 Noah Falk Associate $245 Kronish Lieb assures the Court that it does not represent any interest materially adverse to the Committee, the Debtor or its estate pursuant to Section 327(a) of the Bankruptcy Code. Headquartered in Lenexa, Kansas, Steve's Shoes, Inc. -- http://www.stevesshoes.com/-- is a shoe retailer. The Company filed for chapter 11 protection on Jan. 6, 2006 ( Bankr. D. Kans. Case No. 06-20015). Thomas M. Mullinix, Esq., and Joanne B. Stutz, Esq., Evans & Mullinix, P.A., represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $9,494,325 and total debts of $20,200,821. TRU 2005: Fitch Rates $1.3 Billion Unsecured Credit Agreement at B ------------------------------------------------------------------ Fitch Ratings assigned a rating of 'B/RR3' to the $1.3 billion unsecured credit agreement of TRU 2005 RE Holding Co. I, LLC, a special purpose subsidiary of Toys 'R' Us, Inc. The proceeds were allocated as: * $927 million was used to repay part of the $1.9 billion unsecured bridge loan; * $285 million was used to pay down the secured revolver; and * the balance was used to pay expenses and fund reserves. Fitch rates TOY's IDR 'B-', and the Rating Outlook is Negative. The facility expires in December 2008 and has two one-year extension options. The borrowing entity has ownership of and leasehold interests in: * 382 of TOY's U.S. Toys 'R' Us and Babies 'R' Us stores; * three distribution centers; and * the corporate headquarters in Wayne, New Jersey. The loan is serviced through a rent payment made by Toys 'R' Us - Delaware, Inc. to the borrowing entity. The structural features of the facility and the borrowing entity cause Fitch to view this facility as having similar recovery prospects as TOY's other secured debt. These features include the bankruptcy-remote nature of the borrowing entity and the entity's ownership of the underlying properties, giving it first claim on those assets in a distressed situation. TXU CORP: Earns $356 Million in Fourth Quarter Ended Dec. 31, 2005 ------------------------------------------------------------------ TXU Corp. (NYSE: TXU) reported consolidated results for the fourth quarter and full year ended Dec. 31, 2005. TXU reported net income available to common shareholders of $356 million for the fourth quarter 2005 compared to a net loss available to common shareholders of $625 million for the fourth quarter 2004. Reflecting the successful execution of the company's ongoing restructuring and performance improvement program, operational earnings per share for the fourth quarter 2005 increased 153 percent relative to the fourth quarter 2004. Operational earnings, which exclude special items and discontinued operations, extraordinary gains or losses, and cumulative effect of changes in accounting principles, were $414 million during the fourth quarter 2005 compared to $184 million for the fourth quarter 2004. For the full year 2005, TXU reported net income available to common shareholders of $1.712 billion, compared to a net loss available to common shareholders of $386 million for 2004. Operational earnings per share for the full year 2005 increased 136% relative to 2004. In 2005, operational earnings were $1.615 billion, compared to $887 millionfor 2004. TXU's outlook for operational earnings for 2006 remains at a range of $5.50 to $5.75 per share of common stock, with the midpoint representing a 69% increase over 2005, and the outlook for 2007 operational earnings remains at a two% increase relative to the midpoint of the 2006 outlook. After the successful restructuring of the company in 2004, TXU substantially completed the implementation of a broad-based continuous improvement program in 2005. The success of these efforts is evident in the company's 2005 fourth quarter and annual results. Based in Dallas, Texas, TXU Corp. -- http://www.txucorp.com/-- is an energy company that manages a portfolio of competitive and regulated energy businesses in North America. In TXU Corp.'s unregulated business, TXU Energy provides electricity and related services to 2.5 million competitive electricity customers in Texas, more customers than any other retail electric provider in the state. TXU Power has over 18,300 megawatts of generation in Texas, including 2,300 MW of nuclear and 5,837 MW of lignite/coal- fired generation capacity. The company is also one of the largest purchasers of wind-generated electricity in Texas and North America. TXU Corp.'s regulated electric distribution and transmission business, TXU Electric Delivery, complements the competitive operations, using asset management skills developed over more than one hundred years, to provide reliable electricity delivery to consumers. TXU Electric Delivery operates the largest distribution and transmission system in Texas, providing power to more than 2.9 million electric delivery points over more than 99,000 miles of distribution and 14,000 miles of transmission lines. TXU Corp.'s 6.55% Senior Notes due 2034 carry Moody's Investors Service's Ba1 rating and Standard & Poor's BB+ rating. UAL CORP: Reorganization Confirmation Cues S&P's Ratings Upgrade ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit ratings on UAL Corp. and subsidiary United Air Lines Inc. to 'B' from 'D', following confirmation of the companies' plan of reorganization. The new long-term rating outlook is stable. The 'B+' rating and '1' recovery rating on United's bank credit facility are not affected, and are affirmed, as those ratings, assigned Jan. 9, 2006, were based on an assumption of UAL and United exiting bankruptcy and on certain other conditions. Standard & Poor's at that time indicated that it expected to assign 'B' corporate credit ratings, with a stable outlook, to UAL and United upon their bankruptcy emergence. "The revised corporate credit ratings reflect United's participation in the price-competitive, cyclical, and capital- intensive airline industry, and difficult industry conditions, characterized by high and volatile fuel prices and fierce competition from low-cost carriers in the U.S. domestic market," said Standard & Poor's credit analyst Philip Baggaley. "The ratings also reflect UAL's highly leveraged financial profile. These weaknesses are mitigated to some extent by United's extensive and well-positioned route system [which provides good revenue potential, especially on international routes] and by reductions in labor costs and financial obligations achieved in bankruptcy," the credit analyst continued. United is the second-largest U.S. airline, and like other traditional, hub-and-spoke airlines ("legacy carriers"), it has suffered heavy losses since 2001, due to the effects of: * terrorism, * high fuel prices, and * low-cost competition in the U.S. domestic market. United and UAL entered Chapter 11 in December 2002, and, through a long and difficult reorganization, used the bankruptcy process to: a) reduce United's exposure to the competitive U.S. domestic market from almost two-thirds of flying to slightly more than half; b) secure substantial labor cost reductions in negotiations with its unions; c) terminate defined-benefit pension plans; and d) reduce total debt and lease obligations. UAL should report gradually improving earnings and credit measures, but the extent of improvement will depend significantly on general airline industry conditions, in particular on fuel prices and the degree of price competition in the U.S. domestic market. The outlook could be revised to positive if UAL can execute on its planned revenue and operating cost initiatives, which could, along with favorable industry conditions, permit the financial improvements forecast beyond 2006. Adverse industry conditions, which could include, in addition to those already cited, the effects of an economic slowdown, terrorism, or a global outbreak of epidemic disease, are the most likely potential causes of a revision to a negative outlook. VERIFONE INC: S&P Raises Corporate Credit & Loan Ratings to BB- --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and senior secured bank loan ratings on San Jose, California-based VeriFone Inc. to 'BB-' from 'B+'. The outlook is stable. "The upgrade reflects the company's improved financial profile, as well as strong revenue and earnings growth," said Standard & Poor's credit analyst Martha Toll-Reed. The company reported revenues of $485.4 million in the fiscal year ended October 2005, up 24% over the prior year. EBITDA margins have benefited from operating leverage and an emphasis on cost reductions, and are expected to remain in the mid- to high-teens percent range. With an outsourced manufacturing model and minimal capital expenditures, free operating cash flow is expected to be moderately positive. Debt reductions and earnings growth have strengthened VeriFone's financial profile. Although VeriFone has a limited history of making acquisitions, the company has stated its strategic intent to bolster growth through acquisitions. The current rating incorporates the capacity for VeriFone to make measured, modest- size acquisitions without impacting the rating. VILLAGES AT SARATOGA: Wants to Sell Property to Deer Canyon ----------------------------------------------------------- The Villages at Saratoga Springs, L.C., asks the U.S. Bankruptcy Court for the District of Utah for permission to sell its property to Deer Canyon Saratoga, LLC, free and clear of all liens, interests and encumbrances pursuant to Section 363 of the Bankruptcy Code. The property is a 474-acre tract of undeveloped land with associated contract rights and development information located at Saratoga Springs, Utah. The Debtor believes that these entities have valid liens on the property: 1. Eagle Mortgage Company, Inc.'s claim totaling approximately $12.3 million as of December 2005, plus accruing interest and fees and is secured by notes and deeds of trust; and 2. Utah County real property taxes totaling approximately $267,000. The Debtor reminds the Court that while considering Eagle Mortgage's motion for relief from stay, the Court learned that the property is valued at $25,326,000. Deer Canyon Agreement The Debtor reveals that it received an offer of $22 million for the property from Deer Canyon Saratoga, LLC. The Debtor assures the Court that Deer Canyon is neither an insider nor an affiliate. Pursuant to the purchase agreement, Deer Canyon will deposit $1 million and pay the balance at the closing of the purchase. In addition, the Debtor says, Deer Canyon will also pay a contingent amount of up to $2 million from future sales proceeds of the last 200 developed lots to be sold by Deer Canyon to the extent those lots sell for more than $110,000 each. Projects Full Payment to Creditors The Debtor believes the proceeds from the proposed sale will be greater than the aggregate value of all liens against the property. In fact, the Debtor believes that proceeds from the sale, after payment of the costs of sale, real property taxes and secured claims, will be sufficient to pay all costs of administration and allowed unsecured claims in full. Headquartered in Spanish Fork, Utah, The Villages at Saratoga Springs, LC filed for chapter 11 protection on Aug. 29, 2005 (Bankr. D. Utah Case No. 05-33380). Robert Fugal, Esq., at Bird & Fugal, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $26,002,293 in assets and $15,188,610 in debts. VINTAGE PETROLEUM: Occidental Merger Cues S&P's Ratings Withdrawal ------------------------------------------------------------------ Standard & Poor's Ratings Services withdrew its 'BB-/B-2' corporate credit rating on oil and gas exploration and production company Vintage Petroleum Inc. after the close of the company's acquisition by Occidental Petroleum Corp. The rating had been on CreditWatch with positive implications reflecting the acquirer's stronger credit quality. "The ratings on Vintage's debt were equalized with those of Occidental, reflecting the expectation that Occidental will provide guarantees," said Standard & Poor's credit analyst Ben Tscocanos. The ratings on Vintage's debt were removed from CreditWatch with positive implications. The ratings were placed on CreditWatch Oct. 14, 2005 when the deal was announced. VISKASE COS: S&P Revises CreditWatch Implications to Negative ------------------------------------------------------------- Standard & Poor's Ratings Services revised the CreditWatch implications on its ratings for Viskase Cos. Inc. to negative from developing. The 'B-' corporate credit rating and senior secured debt rating were originally placed on CreditWatch on May 5, 2005. Viskase is a casings producer based in Willowbrook, Illinois. "The CreditWatch revision reflects Viskase's deteriorating operating performance and liquidity position due to ongoing business challenges including a decline in sales volumes and higher costs related to the company's restructuring activities," said Standard & Poor's credit analyst Robyn Shapiro. The ratings could be lowered modestly if unfavorable operating trends persist or if Viskase is unable to preserve its liquidity position. Viskase previously announced that its Board of Directors has engaged Harris Williams Advisors to evaluate strategic alternatives, which include debt and/or equity financings, the sale of the company, and a rights offering. The CreditWatch is expected to be resolved as soon as more information becomes available related to the company's strategic direction, or if operating results deteriorate to the extent that would result in lower ratings. The ratings on Viskase reflect: * its vulnerable business risk profile as a global producer in the highly competitive casings niche within the packaging industry; * a narrow scope of operations; and * a highly leveraged financial risk profile, following the company's emergence from Chapter 11 bankruptcy protection in April 2003. Partially offsetting factors include: * steady end markets, * diversified customer relationships, and * consistency in raw-material costs. Viskase remains aggressively leveraged with total debt (adjusted to include capitalized operating leases) to EBITDA of about 5x. WAVERIDER COMMS: Amends 2004 Annual Report ------------------------------------------ WaveRider Communications Inc. delivered an amendment to its annual report for the years ended Dec. 31, 2004 and 2003 to the Securities and Exchange Commission on Jan. 30, 2006. The restatement arose from the Company's determination that it had not accounted for certain provisions of the Convertible Debentures, entered into on July 14, 2003, April 24, 2004 and November 15, 2004, as embedded derivatives. WaveRider determined that upon issuance of the first Convertible Debenture, that net-share settlement was no longer in the Company's control. As a result, the fair value of the embedded derivatives and certain instruments convertible or exercisable into common shares (notably the Company's Warrants) should be recorded as a liability, with any changes in the fair value between reporting dates recorded as derivative income or expense, as appropriate. WaveRider's restated balance sheet for the year ended Dec. 31, 2004, showed $3,837,572 in total assets and liabilities of $4,711,229, resulting in a stockholders' deficit of $873,657. The restated balance sheet for the year ended Dec. 31, 2003, showed $5,485,834 in total assets and liabilities of $5,777,186, resulting in a stockholders' deficit of $291,352. Going Concern Doubt Wolf & Company, PC, expressed substantial doubt about WaveRider's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2004 and 2003. The auditing firm pointed to the Company's recurring losses from operations and significant accumulated deficit. About WaveRider WaveRider Communications Inc. -- http://www.waverider.com/-- is a leader in broadband wireless deployments and technologies. WaveRider's Last Mile Solution(R) non-line-of-sight 900 MHz and 5.8 GHz networks enable communications providers to establish full-saturation coverage networks, deliver advanced communications services, and generate a rapid return on their investment. WaveRider is committed to the development of standards-based wireless technologies that support advanced applications and address the needs of the North American and International markets. WESTPOINT STEVENS: Steering Comm. Balks at Escrowed Funds Release ----------------------------------------------------------------- As reported in the Troubled Company Reporter on May 17, 2005, the 2nd Lien Agent asked the U.S. Bankruptcy Court for the Southern District of New York to: (a) terminate the adequate protection escrow, direct the Escrow Agent to release the escrowed adequate protection payments forthwith to the 2nd Lien Agent, and reinstate direct payments from WestPoint Stevens, Inc. and its debtor-affiliates to the 2nd Lien Agent; or (b) establish a schedule for the submission of expert reports concerning the valuation of the 2nd Lien Lenders' collateral as of the Petition Date and set a hearing for further determination of its Motion. The Escrow Order Gary M. Becker, Esq., at Kramer Levin Naftalis & Frankel LLP, in New York, relates that adequate protection payments of $31 million were made to Wilmington Trust Company, as Agent to the 2nd Lien Credit Agreement, through July 2004. In August 2004, R2 Top Hat, as holder of 40% of the 1st Lien claims, objected to the continuation of adequate protection payments to the 2nd Lien Lenders. To avoid a distracting fight over the issue at that time, the 1st Lien Agent, 2nd Lien Agent, the Debtors and the agent under the DIP Loan agreed, in a Court-approved stipulation, to escrow future adequate protection payments due the 2nd Lien Lenders. Since the entry of the Escrow Order, $2 million per month in adequate protection payments, starting with the payment due at the end of August 2004, have been placed in an account with the escrow agent, Wells Fargo Bank, N.A. As of May 10, 2005, the amount in escrow exceeds $18 million, with another $2 million due to be deposited at the end of May. Therefore, the amount in escrow at the Purchaser Selection Hearing on June 24, 2005, is expected to be $20 million. Pursuant to the Escrow Order, amounts held in escrow may be released by the Escrow Agent upon the entry of an order from the Court adjudicating the relative rights of the DIP lender, the 1st Lien Lenders, the 2nd Lien Lenders and the Debtors to the escrowed funds. The Escrow Order also provides that none of the amounts in escrow may be released to the Debtors or any other party -- except the DIP Lenders, 1st Lien Lenders or 2nd Lien Lenders -- until the DIP, the 1st Lien Obligations and the 2nd Lien Obligations have been satisfied in full. The Escrow Order contemplates that, once a hearing date has been set for the sale of substantially all the Debtors' assets or for confirmation of a plan of reorganization, the 2nd Lien Agent may file a motion seeking a determination as to the allocation of the amounts held in escrow. Steering Committee Objects On behalf of the Steering Committee, Sidney P. Levinson, Esq., at Hennigan, Bennett & Dorman, LLP, in Los Angeles, California, argue that based on the District Court's Opinion and Order, the funds in the adequate protection escrow should not be released to the Second Lien Agent or the Second Lien Lenders. Mr. Levinson relates that in its Opinion, the District Court rejected the premise that any adequate protection right of the Second Lien Lenders was sufficient to authorize the impairment of the contractual rights of the Objecting First Lien Lenders. Based on the District Court's ruling, the Bankruptcy Court is to determine whether the Second Lien Lenders can now receive the escrowed funds without impairment or derogation of the existing contractual and other rights of the Objecting First Lien Lenders. Mr. Levinson states that if the Court is not prepared to deny the request to release escrow, the Court must defer issuing a final ruling until it determines how much cash is realized by the sale of the Securities in which the Objecting First Lien Lenders and the Second Lien Lenders were granted replacement liens. Furthermore, Mr. Levinson tells that if the sale of the Securities does not yield a sufficient amount to pay the Objecting First Lien Lenders in full, and the Escrowed Interest Payments are distributed to the Second Lien Lenders, then the Court should not impair the contractual rights of the Objecting First Lien Lenders to provide adequate protection to the Second Lien Lenders. In the event the Court concludes on a final basis that the Second Lien Lenders are entitled to the escrowed funds, Mr. Levinson asserts that the Second Lien Agent's Proposed Order should be modified. Specifically, Mr. Levinson says, the provisions dissolving the escrow and directing payment of the escrowed funds should be modified considering that the immediate transfer of the funds and the dissolution of the account prior to completion of any appeal initiated with respect to the Proposed Order would violate the terms in the Adequate Protection Escrow Stipulation. Mr. Levinson notes that under the terms of the Adequate Protection Escrow Stipulation, escrowed funds cannot be released until there is the entry of an order adjudicating the rights to the funds and the order becomes a final non-appealable order, or any appeal of that order has been finally resolved with no further appeal. In addition, Mr. Levinson points out that the Proposed Order contains other provisions that were not part of the Court's Preliminary Ruling or otherwise inconsistent, which should be deleted. The Proposed Order includes: -- a finding by the Bankruptcy Court that interprets the District Court's November 16 Opinion and Order as it applies to the escrowed funds to which the Bankruptcy Court has yet to express any opinion of the effect; -- findings that the right of the First Lien Lenders to seek additional adequate protection could only be adjudicated in accordance with Rule 9024 of the Federal Rules of Bankruptcy Procedure and the decisions interpreting the requirements of that rule. The Court's Preliminary Ruling made no mention of Rule 9024, nor any findings that the First Lien Lenders' rights to request additional adequate protection were constrained in any way by the limitations imposed by Rule 9024; and -- a finding that "no evidence was presented to the Court that, as of the date the Escrow Stipulation was entered, a diminution in value had occurred in the First Lien Lenders' collateral that would have entitled them to any form of additional adequate protection." The Court did not make the finding in its Preliminary Ruling, rather it indicated the opposite. Accordingly, the Steering Committee asks the Court to deny, or defer ruling on, the request to release escrow; or in the alternative, modify the Proposed Order in accordance with its proposed revisions. Headquartered in West Point, Georgia, WestPoint Stevens, Inc. -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) WHITEHALL JEWELLERS: Agrees to Merge with Prentice and Holtzman --------------------------------------------------------------- Whitehall Jewellers, Inc. (OTC:JWLR.PK) inked a merger agreement with Prentice Capital Management, LP and Holtzman Opportunity Fund, L.P. Prentice and Holtzman will commence a cash tender offer for all outstanding shares of Whitehall common stock at $1.60 per share, net to the seller in cash, subject to certain limited conditions. The offer is expected to commence on or about Feb. 8, 2006, and will remain open for a minimum of 20 business days. Any shares not purchased in the offer will be acquired for the same price in cash in a second-step merger, subject to certain limited conditions. After consultation with the Company's financial and legal advisors, the Board of Directors of Whitehall concluded that the previously announced Newcastle proposal no longer constitutes a "Superior Proposal" in light of the revised Prentice transaction. In connection with the merger agreement, the parties are terminating the securities purchase agreement previously entered into with Prentice and Holtzman. The special meeting of stockholders that was previously postponed to Feb. 6, 2006 in connection with the Company's proxy and that securities purchase agreement has been cancelled. The Jan. 31, 2006 maturity of Whitehall's bridge term loan credit agreement dated Oct. 3, 2005 is being extended for three years, subject to customary conditions, in connection with the merger agreement, and the Lenders are making an additional $20 million loan to Whitehall for working capital and general corporate purposes. On Feb. 1, 2006, Whitehall was in default under its senior credit agreement. However, Whitehall's senior lenders are waiving these defaults and consenting to the extension of the bridge term loan maturity date and the making of the additional $20 million loan. The senior lenders also are reinstating $10 million in availability under the credit facility. Headquartered in Chicago, Illinois, Whitehall Jewellers, Inc. -- http://www.whitehalljewellers.com/-- is a national specialty retailer of fine jewelry, operating 387 stores in 38 states. The Company has announced that it intends to close a number of stores in the near term. The Company operates stores in regional and super regional shopping malls under the names Whitehall Co. Jewellers, Lundstrom Jewelers and Marks Bros. Jewelers * * * As previously reported in the Troubled Company Reporter, the Board of Directors of Whitehall Jewellers, Inc. (OTC:JWLR.PK) reported that Newcastle Capital Management, L.P. finally has made an offer that does not have a financing contingency. Newcastle has initiated an unsolicited tender offer for Whitehall stock. To consider whether the Newcastle proposal is a superior offer, the Board requires that Newcastle provide conclusive evidence that it has the cash to complete a transaction as well as evidence of its ability and commitment to promptly complete a transaction. The Board hopes that Newcastle will quickly provide the requested evidence as the Board and the Company can no longer afford delays. Specifically, the company's bank line expires on Jan. 31, 2006, as does the company's bridge loan and its vendors can terminate their agreement to accept payment of their past due invoices over time. Bankruptcy Warning Without a firm deal, such as one the company currently has in place with Prentice Capital Management, L.P., the company will likely be forced to pursue a restructuring or bankruptcy, which may severely impact the Company's stockholders as well as the Company's other constituencies. The Board is dedicated to seeing that this does not occur. The Board is hopeful that Newcastle will understand and provide the Board with the needed information in the extremely short period available. The company once again reiterates its recommendation that stockholders vote for the management/Prentice proposals and nominees at the Jan. 19, 2005, shareholders meeting. WINDOW ROCK: U.S. Trustee Says Disclosures Statement is Inadequate ------------------------------------------------------------------ Steven J. Katzman, Esq., the U.S. Trustee for Region 16, objects to the Disclosure Statement explaining the Plan of Reorganization proposed by Window Rock Enterprises Inc. The U.S. Trustee says that the Disclosure Statement does not contain adequate information -- neither the right amount or the right kind -- for creditors to make informed decisions when the Debtor asks them to vote to accept the Plan. The U.S. Trustee's objections to the Disclosure Statement include: a) the Debtor's failure to disclose that recoveries of approximately $4 million from Bancroft Life & Casualty Inc. have already been collected; b) the Debtors failure to account for almost $6 million in prepetition expenses for professional fees, deposits and retainers; c) a provision in the Disclosure Statement purportedly giving the Debtor the right to treat equity interests based on a side agreement with its sole shareholder, Mr. Stephen Cheng, and not on the application of the Bankruptcy Code and controlling case law; d) the lack of key information with regard to expected recoveries of unsecured creditors in the event of a chapter 7 liquidation; and c) a provision allowing Mr. Cheng to retain his 100% ownership in the Debtor by contributing new value and cramming down the plan over the objection of unsecured creditors, who will not be paid in full. Mr. Cheng proposes to invest $500,000 as new value. However, the U.S. Trustee says the Debtor failed to describe how this figure was agreed on as an amount sufficient to satisfy the "market test" approach to new value. The "market test" approach attempts to determine the adequacy of any proposed new value by exposing it to market forces. The U.S. Trustee also complains that the Disclosure Statement fails to satisfactorily provide information on the proposed settlement with Mr. Cheng and his affiliates. The Debtor may hold claims for damages against Mr. Cheng for his alleged mismanagement of the Debtor's business that gave rise to litigation with the Federal Trade Commission. Mr. Cheng wants to settle these claims for $500,000. The U.S. Trustee says the Debtors don't provide information in the Disclosure Statement that will help creditors determine if this amount is reasonable. Headquartered in Brea, California, Window Rock Enterprises Inc. -- http://windowrock.net/-- manufactures and sells all-natural dietary and nutritional supplements. The Debtor is also producing its own TV, radio and print advertising campaigns for nutritional and dietary supplements and has distribution in over 40,000 Food Drug Mass Clubs as well as Health and Fitness Channels. The Company filed for chapter 11 protection on Nov. 23, 2005 (Bankr. C.D. Calif. Case No. 05-50048). Robert E. Opera, Esq., Winthrop Couchot, PC represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of more than $100 million. XERIUM TECH: Subsidiary Acquires Coldwater Covers for $6.8 Million ------------------------------------------------------------------ Xerium Technologies, Inc. (NYSE: XRM) acquires privately-held Coldwater Covers, Inc. from The Coldwater Group, Inc. of Atlanta, Georgia. Under the terms of the transaction, Xerium's subsidiary -- Stowe Woodward LLC -- acquired all of the equity of Coldwater Covers, Inc., together with the company's manufacturing facility located in Oxford, Alabama, for a total purchase price of approximately $6.8 million. "The Coldwater Covers business is an ideal extension to the line of roll covers and mechanical services that we provide through the global operations of our Stowe Woodward division," Tom Gutierrez, Xerium's President and Chief Executive Officer, said. "Coldwater Covers has brought to market several new and innovative roll cover technologies and, like Stowe Woodward, has established a strong reputation for quality and customer service." About Coldwater Covers, Inc. Headquartered in Atlanta, Georgia, Coldwater Covers, Inc. -- http://www.coldwatercovers.com/-- manufactures polyurethane and composite roll covers and bowed rolls, primarily for the paper industry. A division of The Coldwater Group, Inc., Coldwater Covers provides a broad array of mechanical services for rolls used in papermaking and a variety of other industrial applications. The Coldwater Group, Inc. retained Coldwater Seals, Inc., a manufacturer of suction roll sealing strips and paper machine drainage elements. About Xerium Technologies, Inc. Headquartered in Wesborough, Massachusetts, Xerium Technologies, Inc. -- http://xerium.com/-- is a leading global manufacturer and supplier of two types of products used primarily in the production of paper: clothing and roll covers. The company, which operates around the world under a variety of brand names, owns a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production, all designed to optimize performance and reduce operational costs. With 35 manufacturing facilities in 15 countries around the world, Xerium Technologies has approximately 3,900 employees. Headquartered in Westborough, Massachusetts, Stowe Woodward, a unit of Xerium Technologies, Inc., is a leading supplier of roll covers, bowed rolls and manufacturing services for the pulp and paper industry. Stowe Woodward has established a record for success through a combination of technological innovation and attentive customer service. A global technology leader in roll covers since it was founded in 1886, Stowe Woodward has manufacturing operations around the world. * * * As reported in the Troubled Company Reporter on Jan. 24, 2006, Moody's Investors Service changed the outlook on Xerium Technologies, Inc.'s ratings to negative from stable, and affirmed the company's corporate family rating at B1. The change in outlook to negative reflects Xerium's weaker than expected operating performance primarily due to production inefficiencies in North America and delays in achieving benefits from cost reduction initiatives. Moody's believes the impact of these issues, coupled with a difficult pricing environment for roll covers and to a lesser extent clothing products, will continue to negatively affect operating performance over the intermediate term. Affirmed ratings are: * Corporate family rating; B1 * Guaranteed senior secured term loan B; B1 * Guaranteed senior secured revolving credit facility; B1 XEROX CAPITAL: S&P Puts $27 Mil. Certificates' B- Rating on Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-' rating on the $27 million corporate-backed trust securities certificates issued by CorTS Trust for Xerox Capital Trust I on CreditWatch with positive implications. This swap-independent synthetic transaction is weak-linked to the underlying $27 million 8% series B capital securities due Feb. 1, 2027, issued by Xerox Capital Trust I. The CreditWatch placement reflects the Jan. 26, 2006, placement of the ratings on the underlying assets on CreditWatch with positive implications. * Gardner Carton Names Irving Apar as Partner in New York Office ---------------------------------------------------------------- Gardner Carton & Douglas LLP reported that Irving C. Apar, Esq., has joined the firm as a partner in its Corporate and Corporate Trust Practice in New York. Mr. Apar brings more than 20 years of experience as a corporate and securities attorney to the firm. Mr. Apar's practice focuses on representing clients with respect to corporate trust matters. Mr. Apar has represented financial institutions serving in trustee and various other capacities in numerous transactions, including global financings, corporate and municipal financings, TIA qualified and exempt financings, secured and unsecured debt transactions, private placements, project financings, escrows, taxable and tax-exempt securities offerings, sale/leasebacks, equipment leases, mortgages and other conduit financings. Mr. Apar has also been active in the development of various new banking products, working with numerous issuers and underwriters to structure financings and develop documentation relating to these new financial products. "We are delighted to have Irv join our growing corporate and corporate trust practice," said Harold Kaplan, Chairman of Gardner Carton & Douglas and a leading corporate trust practitioner who is particularly well known for his work in bond defaults. "I have personally known Irv and admired him for many years as he is truly a leader in the corporate trust bar. His addition to GCD further enhances the strength of our practice and our commitment to serving our clients nationally and, especially, in New York." Prior to joining Gardner Carton & Douglas, Mr. Apar was co-head of the Corporate Trust Practice Group of Emmet, Marvin & Martin, LLP in New York, where he had also served as a member of the firm's executive, strategic, compensation and hiring committees. Mr. Apar received his J.D. from Columbia University School of Law in 1981 and his B.A., summa cum laude, from Queens College in 1977. About Gardner Carton & Douglas LLP Founded nearly 100 years ago, Gardner Carton & Douglas LLP is a leading national law firm with offices in Chicago, Washington, DC, New York, Milwaukee and Albany. The firm has approximately 230 lawyers and advisors practicing in corporate law, corporate restructuring, customs and international trade, government relations, health law, HR law (employee benefits and employment), intellectual property, litigation and dispute resolution, real estate and environmental law, and wealth planning and philanthropy. GCD is the by-invitation firm representing Chicago in the World Law Group, a global consortium of firms in large cities worldwide. * Osler's Robin Schwill Examines Canadian DIP Financing ------------------------------------------------------- Robin B. Schwill, Esq., at Osler, Hoskin & Harcourt LLP, examines each of the significant changes in insolvency law reform initiated by the enactment of Bill C-55 and how those changes will impact "debtor-in-possession" (DIP) financing in an article posted at http://www.osler.com/resources.aspx?id=10732&tracklink=em10732 Post-petition financing "is of direct interest to debtors facing the need to restructure, to lenders active or contemplating entering the DIP financing market, and to all existing secured lenders and other stakeholders that are often directly affected by a court's granting of a DIP financing order," Mr. Schwill says. "If Bill C-55 is proclaimed into force as drafted, a new mid- market for DIP financing will be created, granting priority to a DIP lender over existing secured lenders will have statutory authority, and the ability to obtain DIP financing upon an initial application will be significantly curtailed. In its hurried enactment, Bill C-55 misses the opportunity to address a number of significant issues in this area which would have gone a long way to increasing the overall efficiency of the existing common law DIP financing regime, Mr. Schwill continues. Mr. Schwill is a partner in the Insolvency & Restructuring Group of Osler, Hoskin & Harcourt LLP's Business Law Department. From Toronto, his practice focuses on corporate turnarounds, work-outs, and restructurings; distressed asset sales and acquisitions; secured and unsecured creditor rights enforcement; and all facets of Companies' Creditors Arrangement Act and Bankruptcy and Insolvency Act proceedings. Mr. Schwill has acted for debtors, purchasers, secured creditors, unsecured creditors, private and court-appointed receivers, interim receivers, monitors and trustees in bankruptcy in all facets of insolvency, credit recovery and asset realization proceedings. * BOND PRICING: For the week of Jan. 30 - Feb. 3, 2006 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 2 Adelphia Comm. 6.000% 02/15/06 3 Adelphia Comm. 7.750% 01/15/04 59 Adelphia Comm. 7.750% 01/15/09 64 Adelphia Comm. 7.875% 05/01/09 68 Adelphia Comm. 8.125% 07/15/03 63 Adelphia Comm. 8.375% 02/01/08 69 Adelphia Comm. 9.250% 10/01/02 68 Adelphia Comm. 9.375% 11/15/09 71 Adelphia Comm. 9.875% 03/01/05 68 Adelphia Comm. 9.875% 03/01/05 68 Adelphia Comm. 9.875% 03/01/07 69 Adelphia Comm. 10.250% 06/15/11 73 Adelphia Comm. 10.250% 11/01/06 66 Adelphia Comm. 10.500% 07/15/04 65 Adelphia Comm. 10.875% 10/01/10 69 Allegiance Tel. 11.750% 02/15/08 24 Allegiance Tel. 12.875% 05/15/08 28 Alt Living Svcs 7.000% 06/01/04 1 Amer & Forgn Pwr 5.000% 03/01/30 60 Amer Color Graph 10.000% 06/15/10 73 American Airline 9.980% 01/02/13 69 Ames Dept. Stores 10.000% 04/15/06 0 AMR Corp. 9.800% 10/01/21 71 AMR Corp. 10.125% 06/01/21 74 AMR Corp. 10.200% 03/15/20 75 AMR Corp. 10.290% 03/08/21 73 Amtran Inc. 9.625% 12/15/05 4 Anker Coal Group 14.250% 09/01/07 0 Antigenics 5.250% 02/01/25 58 Anvil Knitwear 10.875% 03/15/07 46 Apple South, Inc. 9.750% 06/01/06 3 Archibald Candy 10.000% 11/01/07 0 Asarco Inc. 7.875% 04/15/13 61 Asarco Inc. 8.500% 05/01/25 61 AT Home Corp. 4.750% 12/15/06 1 ATA Holdings 12.125% 06/15/10 4 ATA Holdings 13.000% 02/01/09 5 Atlantic Coast 6.000% 02/15/34 11 Atlas Air, Inc. 8.770% 01/02/11 57 Autocam Corp. 10.875% 06/15/14 70 Aviation Sales 8.125% 02/15/08 54 Avondale Mills 10.250% 07/01/13 71 Bank New England 8.750% 04/01/99 8 Bank New England 9.500% 02/15/96 5 Big V Supermarkets 11.000% 02/15/04 0 BTI Telecom Corp. 10.500% 09/15/07 52 Budget Group, Inc. 9.125% 04/01/06 0 Builders Transpt 8.000% 08/15/05 0 Burlington North 3.200% 01/01/45 57 Cellstar Corp. 12.000% 01/15/07 42 Charter Comm. Hld. 8.625% 04/01/09 74 Charter Comm. Hld. 10.000% 04/01/09 75 Charter Comm. Hld. 10.000% 05/15/11 51 Charter Comm. Hld. 10.250% 01/15/10 70 Charter Comm. Hld. 11.125% 01/15/11 53 Charter Comm. Inc. 5.875% 11/16/09 72 CIH 10.000% 05/15/14 51 Ciphergen 4.500% 09/01/08 75 Clark Material 10.750% 11/15/06 0 CMI Industries 9.500% 10/01/03 0 Collins & Aikman 10.750% 12/31/11 31 Color Tile Inc. 10.750% 12/15/01 0 Comcast Corp. 2.000% 10/15/29 39 Covad Communicat 3.000% 03/15/24 68 CPNL-Dflt12/05 4.000% 12/26/06 10 CPNL-Dflt12/05 4.750% 11/15/23 27 CPNL-Dflt12/05 6.000% 09/30/14 19 CPNL-Dflt12/05 7.625% 04/15/06 43 CPNL-Dflt12/05 7.750% 04/15/09 43 CPNL-Dflt12/05 7.750% 06/01/15 9 CPNL-Dflt12/05 7.875% 04/01/08 44 CPNL-Dflt12/05 8.500% 02/15/11 28 CPNL-Dflt12/05 8.625% 08/15/10 28 CPNL-Dflt12/05 8.750% 07/15/07 45 CPNL-Dflt12/05 10.500% 05/15/06 42 Cray Inc. 3.000% 12/01/24 75 Cray Research 6.125% 02/01/11 25 Curagen Corp. 4.000% 02/15/11 72 Curagen Corp. 4.000% 02/15/11 73 Curative Health 10.750% 05/01/11 61 DAL-Dflt09/05 9.000% 05/15/16 23 Dana Corp. 5.850% 01/15/15 69 Dana Corp. 7.000% 03/01/29 69 Dana Corp. 7.000% 03/15/28 69 Decrane Aircraft 12.000% 09/30/08 71 Delco Remy Intl. 9.375% 04/15/12 36 Delco Remy Intl. 11.000% 05/01/09 43 Delphi Auto Syst. 6.500% 05/01/09 57 Delphi Corp. 6.500% 08/15/13 57 Delphi Trust II 6.197% 11/15/33 28 Delta Air Lines 2.875% 02/18/24 22 Delta Air Lines 7.541% 10/11/11 63 Delta Air Lines 7.700% 12/15/05 23 Delta Air Lines 7.900% 12/15/09 24 Delta Air Lines 8.000% 06/03/23 23 Delta Air Lines 8.187% 10/11/17 61 Delta Air Lines 8.300% 12/15/29 24 Delta Air Lines 8.540% 01/02/07 29 Delta Air Lines 8.540% 01/02/07 29 Delta Air Lines 8.540% 01/02/07 54 Delta Air Lines 8.540% 01/02/07 61 Delta Air Lines 9.200% 09/23/14 73 Delta Air Lines 9.250% 03/15/22 23 Delta Air Lines 9.250% 12/27/07 17 Delta Air Lines 9.300% 01/02/10 54 Delta Air Lines 9.375% 09/11/07 69 Delta Air Lines 9.450% 02/26/06 54 Delta Air Lines 9.480% 06/05/06 47 Delta Air Lines 9.750% 05/15/21 23 Delta Air Lines 9.875% 04/30/08 72 Delta Air Lines 10.000% 05/17/09 62 Delta Air Lines 10.000% 06/01/10 49 Delta Air Lines 10.000% 06/01/10 69 Delta Air Lines 10.000% 06/01/11 26 Delta Air Lines 10.000% 06/01/11 64 Delta Air Lines 10.000% 06/05/11 54 Delta Air Lines 10.000% 06/18/13 63 Delta Air Lines 10.000% 08/15/08 23 Delta Air Lines 10.060% 01/02/16 62 Delta Air Lines 10.080% 06/16/07 60 Delta Air Lines 10.080% 06/16/08 58 Delta Air Lines 10.080% 06/16/08 58 Delta Air Lines 10.080% 06/16/08 58 Delta Air Lines 10.125% 01/02/10 39 Delta Air Lines 10.125% 05/15/10 23 Delta Air Lines 10.125% 06/16/10 58 Delta Air Lines 10.125% 06/16/10 58 Delta Air Lines 10.125% 06/16/10 61 Delta Air Lines 10.375% 02/01/11 23 Delta Air Lines 10.375% 12/15/22 24 Delta Air Lines 10.430% 01/02/11 20 Delta Air Lines 10.500% 04/30/16 69 Delta Air Lines 10.790% 03/26/14 20 Delta Mills Inc. 9.625% 09/01/07 39 Diva Systems 12.625% 03/01/08 1 Duane Reade Inc. 9.750% 08/01/11 73 Dura Operating 9.000% 05/01/09 52 Dura Operating 9.000% 05/01/09 52 Duty Free Intl. 7.000% 01/15/04 4 DVI Inc. 9.875% 02/01/04 15 Enrnq-Dflt05/05 7.375% 05/15/19 39 Epix Medical Inc. 3.000% 06/15/24 64 Exodus Comm Inc. 5.250% 02/15/08 0 Exodus Comm Inc. 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 3 Fedders North Am 9.875% 03/01/14 61 Federal-Mogul Co. 7.375% 01/15/06 37 Federal-Mogul Co. 7.500% 01/15/09 36 Federal-Mogul Co. 8.160% 03/06/03 34 Federal-Mogul Co. 8.370% 11/15/01 33 Federal-Mogul Co. 8.800% 04/15/07 36 Finova Group 7.500% 11/15/09 34 FMK-Dflt03/04 10.750% 04/15/11 74 FMXIQ-Dflt09/05 13.500% 08/15/05 15 Foamex LP-Dflt 9.875% 06/15/07 13 Ford Motor Co. 6.500% 08/01/18 69 Ford Motor Co. 6.625% 02/15/28 69 Ford Motor Co. 7.400% 11/01/46 68 Ford Motor Co. 7.500% 08/01/26 70 Ford Motor Co. 7.700% 05/15/97 68 Ford Motor Co. 7.750% 06/15/43 66 Ford Motor Cred 5.250% 03/21/11 73 Ford Motor Cred 5.500% 10/20/11 74 Ford Motor Cred 5.570% 01/21/14 73 Ford Motor Cred 5.570% 02/20/14 73 Ford Motor Cred 5.570% 02/20/14 73 Ford Motor Cred 5.650% 12/20/11 73 Ford Motor Cred 5.750% 02/21/12 73 Ford Motor Cred 6.000% 01/20/15 73 Ford Motor Cred 6.000% 02/20/15 74 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 11/20/14 72 Ford Motor Cred 6.050% 02/20/14 73 Ford Motor Cred 6.050% 03/20/12 74 Ford Motor Cred 6.050% 03/20/14 74 Ford Motor Cred 6.050% 04/21/14 74 Ford Motor Cred 6.050% 12/22/14 73 Ford Motor Cred 6.050% 12/22/14 73 Ford Motor Cred 6.050% 12/22/14 74 Ford Motor Cred 6.100% 02/20/15 72 Ford Motor Cred 6.150% 01/20/15 70 Ford Motor Cred 6.150% 12/22/14 72 Ford Motor Cred 6.200% 03/20/15 73 Ford Motor Cred 6.250% 01/20/15 71 Ford Motor Cred 6.250% 03/20/15 72 Ford Motor Cred 6.500% 02/20/15 74 Ford Motor Cred 6.500% 03/20/15 75 Ford Motor Cred 6.550% 12/20/13 74 Ford Motor Cred. 7.250% 07/20/17 74 Gateway Inc. 2.000% 12/31/11 70 General Motors 7.400% 09/01/25 69 General Motors 7.700% 04/15/16 74 General Motors 8.100% 06/15/24 70 General Motors 8.250% 07/15/23 73 General Motors 8.375% 07/15/33 75 General Motors 8.800% 03/01/21 74 Global Health SC 11.000% 05/01/08 1 GMAC 5.900% 01/15/19 74 GMAC 5.900% 10/15/19 74 GMAC 6.150% 09/15/19 72 GMAC 6.750% 03/15/20 72 Golden Books Pub 10.750% 12/31/04 0 Gulf Mobile Ohio 5.000% 12/01/56 74 Gulf States Stl 13.500% 04/15/03 0 HNG Internorth 9.625% 03/15/06 37 Imperial Credit 9.875% 01/15/07 0 Inland Fiber 9.625% 11/15/07 49 Insight Health 9.875% 11/01/11 67 Iridium LLC/CAP 10.875% 07/15/05 25 Iridium LLC/CAP 11.250% 07/15/05 24 Iridium LLC/CAP 13.000% 07/15/05 25 Iridium LLC/CAP 14.000% 07/15/05 25 Isolagen Inc. 3.500% 11/01/24 54 JIS Corp. 5.250% 04/29/02 0 Kaiser Alum&Chem 9.875% 02/15/02 51 Kaiser Alum&Chem 10.875% 10/15/06 50 Kaiser Alum&Chem 10.875% 10/15/06 51 Kaiser Alum&Chem 12.750% 02/01/03 9 Kellstrom Inds. 5.500% 06/15/03 1 Key3Media Group 11.250% 06/15/11 0 Kmart Corp. 8.540% 01/02/15 16 Kmart Corp. 8.990% 07/05/10 14 Kmart Corp. 9.350% 01/02/20 26 Kmart Corp. 9.780% 01/05/20 73 Kmart Funding 8.800% 07/01/10 30 Kmart Funding 9.440% 07/01/18 56 Level 3 Comm. Inc. 2.875% 07/15/10 71 Level 3 Comm. Inc. 6.000% 09/15/09 69 Liberty Media 3.750% 02/15/30 55 Liberty Media 4.000% 11/15/29 59 Lifecare Holding 9.250% 08/15/13 55 LTV Corp. 8.200% 09/15/07 0 MacSaver Financl 7.400% 02/15/02 3 MacSaver Financl 7.600% 08/01/07 3 MCMS Inc. 9.750% 03/01/08 0 Merisant Co. 9.500% 07/15/13 63 Metamor WorldWid 2.940% 08/15/04 1 MHS Holdings Co. 16.875% 09/22/04 0 Motels of Amer. 12.000% 04/15/04 68 Movie Gallery 11.000% 05/01/12 73 Mrs. Fields 9.000% 03/15/11 70 MSX Int'l. Inc. 11.375% 01/15/08 70 Muzak LLC 9.875% 03/15/09 62 Nat'l Steel Corp. 8.375% 08/01/06 9 Nat'l Steel Corp. 9.875% 03/01/09 10 New Orl. Grt. N. Rr. 5.000% 07/01/32 72 Nexprise Inc. 6.000% 04/01/07 0 North Atl Trading 9.250% 03/01/12 60 Northern Pac Ry 3.000% 01/01/47 58 Northern Pac Ry 3.000% 01/01/47 58 Northwest Airlines 6.625% 05/15/23 35 Northwest Airlines 7.248% 01/02/12 13 Northwest Airlines 7.360% 02/01/20 70 Northwest Airlines 7.625% 11/15/23 35 Northwest Airlines 7.626% 04/01/10 61 Northwest Airlines 7.875% 03/15/08 34 Northwest Airlines 8.070% 01/02/15 60 Northwest Airlines 8.130% 02/01/14 43 Northwest Airlines 8.700% 03/15/07 37 Northwest Airlines 8.875% 06/01/06 37 Northwest Airlines 8.970% 01/02/15 25 Northwest Airlines 9.179% 04/01/10 26 Northwest Airlines 9.875% 03/15/07 35 Northwest Airlines 10.000% 02/01/09 35 NTK Holdings Inc. 10.750% 03/01/14 64 Nutritional Src 10.125% 08/01/09 60 NWA Trust 11.300% 12/21/12 69 Oakwood Homes 7.875% 03/01/04 14 Oakwood Homes 8.125% 03/01/09 14 OSU-Dflt10/05 13.375% 10/15/09 0 O'Sullivan Ind. 10.630% 10/01/08 61 Outboard Marine 9.125% 04/15/17 0 Overstock.com 3.750% 12/01/11 65 PCA LLC/PCA Fin 11.875% 08/01/09 23 Pegasus Satellite 9.625% 10/15/05 9 Pegasus Satellite 12.375% 08/01/06 10 Pegasus Satellite 12.500% 08/01/07 10 Pegasus Satellite 13.500% 03/01/07 0 Pen Holdings, Inc. 9.875% 06/15/08 62 Phar-Mor Inc. 11.720% 09/11/02 1 Piedmont Aviat 9.900% 11/08/06 0 Piedmont Aviat 10.000% 11/08/12 9 Piedmont Aviat 10.200% 05/13/12 0 Piedmont Aviat 10.250% 01/15/49 0 Piedmont Aviat 10.250% 01/15/49 9 Piedmont Aviat 10.350% 03/28/11 0 Pinnacle Airline 3.250% 02/15/25 74 Pixelworks, Inc. 1.750% 05/15/24 67 Pliant-Dflt01/06 13.000% 06/01/10 20 Pliant-Dflt01/06 13.000% 06/01/10 22 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 11.500% 02/15/06 0 Primedex Health 11.500% 06/30/08 57 Primus Telecom 3.750% 09/15/10 32 Primus Telecom 5.750% 02/15/07 64 Primus Telecom 8.000% 01/15/14 63 Primus Telecom 12.750% 10/15/09 58 PSINet Inc. 10.000% 02/15/05 0 PSINet Inc. 11.000% 08/01/09 0 Railworks Corp. 11.500% 04/15/09 0 Read-Rite Corp. 6.500% 09/01/04 15 Refco Finance 9.000% 08/01/12 64 Reliance Grp Hld 9.000% 11/15/00 23 Reliance Grp Hld 9.750% 11/15/03 0 RJ Tower Corp. 12.000% 06/01/13 73 Salton Inc. 12.250% 04/15/08 68 Solectron Corp. 0.500% 02/15/34 74 Source Media Inc. 12.000% 11/01/04 0 Sterling Chem 11.250% 04/01/07 0 Tekni-Plex Inc. 12.750% 06/15/10 59 Teligent Inc. 11.500% 12/01/07 0 Tom's Foods Inc. 10.500% 11/01/04 5 Toys R Us 7.375% 10/15/18 74 Trans Mfg. Oper. 11.250% 05/01/09 62 Transtexas Gas 15.000% 03/15/05 1 Tribune Co. 2.000% 05/15/29 73 Triton Pcs Inc. 8.750% 11/15/11 66 Triton Pcs Inc. 9.375% 02/01/11 66 Tropical Sportsw 11.000% 06/15/08 10 Twin Labs Inc. 10.250% 05/15/06 2 United Air Lines 7.270% 01/30/13 62 United Air Lines 7.371% 09/01/06 58 United Air Lines 7.762% 10/01/05 68 United Air Lines 7.870% 01/30/19 64 United Air Lines 8.250% 04/26/08 3 United Air Lines 9.000% 12/15/03 21 United Air Lines 9.020% 04/19/12 71 United Air Lines 9.125% 01/15/12 21 United Air Lines 9.350% 04/07/16 71 United Air Lines 9.560% 10/19/18 70 United Air Lines 9.750% 08/15/21 23 United Air Lines 10.250% 07/15/21 22 United Air Lines 10.670% 05/01/04 23 United Air Lines 11.210% 05/01/14 23 Univ Health Svcs 0.426% 06/23/20 57 Universal Stand 8.250% 02/01/06 1 US Air Inc. 10.250% 01/15/49 6 US Air Inc. 10.250% 01/15/49 6 US Air Inc. 10.250% 01/15/49 6 US Air Inc. 10.250% 01/15/49 7 US Air, Inc. 10.550% 01/15/49 25 US Air, Inc. 10.700% 01/01/49 26 US Air, Inc. 10.700% 01/15/49 3 US Air, Inc. 10.700% 01/15/49 25 US Air, Inc. 10.750% 01/15/49 13 US Air, Inc. 10.750% 01/15/49 25 US Air, Inc. 10.800% 01/01/49 4 US Air, Inc. 10.800% 01/01/49 27 US Air, Inc. 10.800% 01/01/49 28 US Air, Inc. 10.900% 01/01/49 6 Us Airways Pass 6.820% 01/30/14 65 Venture Holdings 9.500% 07/01/05 1 Venture Holdings 11.000% 06/01/07 1 Venture Holdings 12.000% 06/01/09 0 WCI Steel Inc. 10.000% 12/01/04 69 Werner Holdings 10.000% 11/15/07 21 Westpoint Steven 7.875% 06/15/05 0 Westpoint Steven 7.875% 06/15/08 0 Wheeling-Pitt St 5.000% 08/01/11 70 Winstar Comm Inc. 10.000% 03/15/08 0 Winstar Comm Inc. 12.750% 04/15/10 0 ********* 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 Soriano-Baaclo, Marjorie Sabijon, Terence Patrick F. Casquejo, Christian Q. Salta, Jason A. Nieva, Lucilo Pinili, Jr., Tara Marie A. Martin, Marie Therese V. Profetana, Shimero R. Jainga 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 ***