/raid1/www/Hosts/bankrupt/TCR_Public/060405.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Wednesday, April 5, 2006, Vol. 10, No. 81
Headlines
ADELPHIA COMMS: Splitting Joint Venture Expenses with Comcast
AGA MEDICAL: Moody's Assigns B2 Credit & Corporate Family Ratings
AKSYS LTD: Inks $5 Million Bridge Financing Deal with Durus Life
ALDERWOODS GROUP: Service Merger Cues S&P to Put Rating on Watch
ALLEGHENY ENERGY: Board Wants Discretion in Recovering Bonuses
AMCAST INDUSTRIAL: Selling Casting Tech. Company to Highest Bidder
AMCAST INDUSTRIAL: Wants More Time to Decide on Gas City Leases
AMERICAN REAL: Reports $27.0 Million Net Loss for Fiscal Year 2005
AMERISTAR CASINOS: S&P Puts BB Corp. Credit Rating on Neg. Watch
APX HOLDINGS: Taps Klee Tuchin as Bankruptcy Counsel
ASARCO LLC: Wants to Implement $50 Mil. Strategic Hedging Program
AZTAR CORP: Submits $42 Per Share All-Cash Purchase Proposal
AZTAR CORP: Considering Colony and Ameristar Purchase Offers
BANCO GANADERO: Moody's Lifts Rating on Long-Term Deposits to B3
BANCO MERCANTIL: Moody's Upgrades Currency Deposit Rating to B2
BANCO NACIONAL: Moody's Lifts Long-Term Deposit Rating to B2
BASIC ENERGY: Moody's Puts B1 Rating on Proposed $200 Mil. Notes
BERNOULLI HIGH: Moody's Places Ba2 Rating on Senior Income Notes
BIRCH TELECOM: Designates Goldin Associates as Plan Trust Trustee
BIRCH TELECOM: Panel Designates Barsky as Estate Representative
CABLEVISION SYSTEMS: Gets Funds to Pay $3 Billion Special Dividend
CALPINE CORP: To Reduce Annual Costs by $150 Million by Downsizing
CALPINE CORP: Wants to Plan-Filing Deadline Extended to Dec. 31
CARRETERAS AUTOPISTAS: Moody's Puts Senior Secured Ratings at Ba1
CATHOLIC CHURCH: Classes & Treatment of Claims Under Portland Plan
CATHOLIC CHURCH: Portland Files First Modified Reorganization Plan
CAVALRY CLO: Moody's Places Ba2 Rating on $12 Mil. Class D Notes
CDC MORTGAGE: S&P Downgrades Class B-2 Transaction Rating to BB
CELLSTAR CORP: Inks $85 Million Amended Revolving Credit Facility
CENTERPOINT ENERGY: Closes on $2 Billion Amended Credit Facilities
CERVANTES ORCHARDS: Deere Wants Case Dismissed or Chap. 11 Trustee
CITIGROUP MORTGAGE: DBRS Rates $8.4MM Class B-4 Cert. at BB(High)
CONSTELLATION BRANDS: Acquires Vincor for US$1.31 Billion
CREATIVE ENTERPRISES: Case Summary & 8 Largest Unsec. Creditors
DAVIS PETROLEUM: Completes $150 Million Equity Sale to Evercore
DANA CORP: Court Tells Trans-Fleet to Justify Supply Interruption
DANA CORP: Selects Katten Muchin Rosenman as Securities Counsel
DANA CORPORATION: Taps PricewaterhouseCoopers as Auditors
DEATH ROW: Case Summary & 10 Largest Unsecured Creditors
DELTA AIR: Deloitte & Touche Expresses Going Concern Doubt
DELTA AIR: Gets Committee's Nod to Hedge 50% of Fuel Consumption
DELTA AIR: Pilots' Union Receives Authorization to Strike
DELTA AIR: May Seek Distress Termination of Pension Plans
DOANE PET: Incurs $25.3 Million Net Loss in Fourth Fiscal Quarter
EAGLE CREEK: Moody's Rates $11.8 Million Class D Notes at Ba2
ENDOLOGIX INC: Recurring Losses Prompt Going Concern Doubt
ENRON CORP: Distributes Over $4.6 Billion to Creditors
ENTERGY NEW ORLEANS: Wants to Hire Gordon Arata as Special Counsel
ENTERGY NEW ORLEANS: Wants Until Aug. 21 to File Chapter 11 Plan
EPIXTAR CORP: Taps Mahoney Cohen as Tax Consultants
EPIXTAR CORP: Unit Signs Lease Agreement with Raices Investment
EXUM RIDGE: Moody's Puts Ba1 Rating on $12 Million Class E Notes
FAIRFAX FINANCIAL: S&P Removes BB Rating from Negative CreditWatch
FOAMEX INT'L: Hires Assessment Technologies as Tax Consultants
FRASER SULLIVAN: Moody's Places Ba2 Ratings on Two Note Classes
GALLERIA INVESTMENTS: Wants Lamberth Cifelli as New Bankr. Counsel
GARDEN GROVE: Case Summary & 2 Largest Unsecured Creditors
GEM LIGOS: Moody's Places Ba2 Ratings on Note Classes D and Q
GENERAL MOTORS: Building US$600-Mil. Compact Car Plant in Mexico
GENERAL MOTORS: March Vehicle Sales Down 22% from Year-Ago Level
GENERAL MOTORS: S&P Holds B Corporate Credit Rating on Neg. Watch
GENERAL MOTORS: S&P Holds GMAC BB Rating on CreditWatch Developing
GLATFELTER (P.H.): S&P Puts BB+ Rating on $150 Mil. 6.875% Notes
GOLDENTREE CAPITAL: Moody's Rates $16.8 Mil. Class E Notes at Ba2
HAYES LEMMERZ: Amends $625 Million Senior Credit Facility
HI-LIFT: Case Summary & 21 Largest Unsecured Creditors
IELEMENT CORPORATION: Will Pay $560,000 Notes with Common Shares
INDEPENDENCE VII: Weak Cash Flow Cues Moody's Low-B Note Rating
INTERNATIONAL PAPER: Sells 5.1 Million Acres for $6.1 Billion
INTERSTATE BAKERIES: Selling Oakland Lot to Madison Park for $3.2M
J.L. FRENCH: Files Plan of Reorganization and Disclosure Statement
KERZNER INTERNATIONAL: Earns $52.2 Million in Year Ended Dec. 31
KMART CORP: Ct. Denies Kirkpatrick's Move to Dismiss SEC's Charges
KMART CORP: Wants Plan Modified to Allow Butler Action to Proceed
KOEN BOOK: Disclosure Statement Hearing Scheduled for May 9
LEAP WIRELESS: Earns $30 Million For the Year Ended December 31
LEHMAN XS: DBRS Places BBB Ratings on Three Certificate Classes
LEXTRON CORP: Wachovia Bank Wants Chapter 11 Case Dismissed
LEVEL 3: S&P Assigns CCC- Rating to Proposed $300 Million Notes
LIBERTY MEDIA: Increased Leverage Plan Cues Moody's Low-B Ratings
LIGAND PHARMACEUTICALS: Dec. 31 Equity Deficit Widens to $110 Mil.
LONGSHORE CDO: Moody's Places Ba2 Rating on $9 Mil. Income Notes
LUCENT TECHS: Alcatel Merger Cues Fitch to Place Ratings on Watch
MADISON PARK: Moody's Rates $22.5 Million Class D Notes at Ba2
MAXXAM INC: Deloitte & Touche Expresses Going Concern Doubt
MCMS INC: Trustee Has Until August 14 to Object to Claims
MERIDIAN AUTOMOTIVE: Joint Plan Filed Sans Disclosure Statement
MERIDIAN AUTOMOTIVE: Plan Classification & Treatment of Claims
MERIDIAN AUTOMOTIVE: Wants Exclusive Periods Extended to July 31
MONTAUK POINT: Moody's Puts Ba1 Rating on $4 Mil. Class G Notes
MSX INTERNATIONAL: S&P Downgrades Corporate Credit Rating to CCC+
NADER MODANLO: Chap. 11 Trustee Hires Shapiro Sher as Lead Counsel
NASER KAZEM: Indicted for Fraudulent Asset Disposition Under BIA
NATIONAL ENERGY: Approves Creditor Distributions Totaling $1.825B
NORTEK INC: Inks $200 Mil. Amended and Restated Credit Agreement
OCA INC: Hires Heller Draper as Bankruptcy Counsel
OFF MAIN: Case Summary & 20 Largest Unsecured Creditors
PACIFICA CDO: Moody's Places Ba2 Rating on $19 Mil. Class D Notes
PATRON SYSTEMS: Nets $4.82M from Sale of Pref. Shares & Warrants
PERFORMANCE TRANSPORTATION: Court OKs FTI as Financial Advisors
PERFORMANCE TRANSPORTATION: Winston & Strawn Represents Committee
PLIANT CORP: Valuation Analysis Under Plan of Reorganization
PLIANT CORP: Four-Year Financial Projections Under Chapter 11 Plan
PORT TOWNSEND: S&P Lowers Ratings to CCC With Negative Outlook
R&G FINANCIAL: Sells $150 Million of Series A Preferred Stock
REPUBLIC STORAGE: Section 341(a) Meeting Scheduled for May 11
REPUBLIC STORAGE: Wants Calfee Halter as Bankruptcy Counsel
SBA COMMS: Receives Senior Noteholder Consents to Amend Indenture
SEMGROUP LP: $800 Million Acquisition Cues Moody's Rating Review
SERVICE CORPORATION: S&P Puts BB Corp. Credit Rating on Neg. Watch
SND ELECTRONICS: Taps Neubert Pepe as Bankruptcy Counsel
SND ELECTRONICS: Wants Until April 24 to File Schedules
STONE TOWER: Moody's Rates $16 Million Class D Notes at Ba2
STRUCTURED ASSET: Moody's Lowers Ratings on Three Cert. Classes
TARRANT COUNTY: Moody's Junks B3 Rating on Housing Revenue Bonds
TENNECO INC: S&P Upgrades Rating to BB- With Stable Outlook
TERAYON COMMUNICATION: Delisted from Nasdaq Market on April 4
TEXAS STATE: Foreclosure Sale Cues Moody's to Junk Bond Ratings
TIG HOLDINGS: S&P Removes BB- Rating from Negative CreditWatch
TRUEYOU.COM: Equity Deficit Doubles to $53 Mil. in Past Six Months
TSA STORES: $1.34 Billion Buyout Deal Cues Moody's Low-B Ratings
UAL CORP: Settling U.S. Bank Aircraft Funding Dispute for $21.78M
UAL CORP: Supreme Court Rejects "Lease-Financing" Dispute Appeal
VERASUN ENERGY: Moody's Holds B3 Rating on $210 Mil. Senior Notes
US AIRWAYS: Moody's Puts $1.1 Bil. Credit Facility Rating at B2
WATERFORD GAMING: S&P Upgrades Rating to BB- With Stable Outlook
WINDSOR QUALITY: Moody's Rates $220 Mil. Credit Facilities at B1
WINMAX TRADING: Rosen Seymour Replaces Goldstein Golub as Auditor
WELLSFORD REAL: Releases 2005 Annual Financial Statements
ZENITH NATIONAL: Moody's Upgrades Ba1 Senior Debt Rating to Baa3
* Upcoming Meetings, Conferences and Seminars
*********
ADELPHIA COMMS: Splitting Joint Venture Expenses with Comcast
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Adelphia Communications Corporation and its debtor-affiliates ask
the U.S. Bankruptcy Court for the Southern District of New York to
approve:
a. a settlement of a postpetition cost-allocation dispute with
Comcast Corporation, TCI California Holdings, LLC, and TCI
Adelphia Holdings LLC -- the Comcast JV Partners; and
b. modification of the ACOM Debtors' existing cash management
protocol as necessary to implement the Settlement.
The Joint Ventures
Mark Shinderman, Esq., at Munger, Tolles & Olson LLP, in Los
Angeles, California, relates that Century-TCI California
Communications, L.P., Western NY Cablevision, L.P., and Parnassos
Communications, L.P., three of the ACOM Debtors, are partnerships
between the Comcast JV Partners and certain indirect Adelphia
subsidiaries:
* Century Exchange LLC owns 75% and TCI California owns the
remaining 25% of the equity in Century-TCI.
* Adelphia Western NY Holdings LLC owns 66.57% and TCI
Adelphia owns 33.33% of the equity in both Western NY and
Parnassos.
Century Exchange and Adelphia Western NY are referred to as the
Adelphia JV Partners.
The Joint Ventures through subsidiary partnerships own several
cable franchises that are operated and managed by wholly owned
subsidiaries of ACOM under certain management agreements between
the subsidiary partnerships and the managers. Under the
Management Agreements, the Joint Ventures pay a percentage of
their gross revenues to the Managers as a management fee.
Pursuant to an agreement between ACOM and the Comcast JV Partners
dated June 25, 2002, the Comcast JV Partners consented to the
commencement of voluntary Chapter 11 proceedings for the Joint
Ventures. As a condition to the effectiveness of the Consent
Agreement, ACOM, the Adelphia JV Partners and the Comcast JV
Partners amended the partnership agreements of the Joint
Ventures.
Comcast contended that the Joint Ventures require the consent of
the Comcast JV Partners for many transactions involving the ACOM
Debtors and a Joint Venture, and for matters involving claims
other Debtors may assert against the Joint Ventures, including
cost allocations and intercompany claims -- Consent Right.
Interim Cost Allocation
On March 2, 2005, the ACOM Debtors sought the Court's authority
to modify the borrowing limits of the Century-TCI and Parnassos
Borrower Groups under the DIP Agreement.
The Comcast JV Partners complained that certain reorganization
expenses and overhead costs had been improperly allocated to the
Joint Ventures in violation of the Management Agreements and the
Consent Agreement. The Comcast JV Partners argued that their
Consent Right prevented the ACOM Debtors from allocating any
postpetition expense among the ACOM Debtors and the Joint
Ventures without their consent, which had not been given.
Subsequently, the ACOM Debtors and the Comcast JV Partners agreed
to reverse certain allocations on an interim basis. Pursuant to
the April 11, 2005 Interim Cost Order, the parties reallocated
$33,600,000 -- $20,200,000 in postpetition expenses that had been
allocated to the Century-TCI Borrower Group and $13,400,000 in
postpetition expenses that had been allocated to the Parnassos
Borrower Group.
Since then, the ACOM Debtors have continued to apply the agreed
allocation reversals. They have also provided the Comcast JV
Partners with certain information concerning allocated costs and
have had negotiations with the Comcast JV Partners to resolve the
cost allocation disputes.
The ACOM Debtors and the Comcast JV Partners have now reached a
final settlement of the dispute. The parties agreed to:
1. a specific allocation of the Postpetition Expenses to the
Joint Venture Borrower Groups for actual postpetition
expenses incurred by the ACOM Debtors through September 30,
2005; and
2. a methodology to govern allocations of Postpetition
Expenses incurred after September 30, 2005.
The Settlement Agreement divides Postpetition Expenses into two
broad categories:
A. Reorganization Expenses, consisting of professional fees
and other expenses related to the administration of the
ACOM Debtors' bankruptcy cases, as well as non-operating
expenses and income.
The eight pools of Reorganization Expenses and the sum of
the reorganization expenses that fall within each pool are:
Historical Amount
Pool through September 2005
---- ----------------------
Sage, Prepetition Bank Debt, &
General Restructuring $122,100,000
Creditor Committee, certain
General Bankruptcy Costs, Accounting
Restatement & Management 302,700,000
Equity Committee 36,700,000
DIP Financing 5,700,000
Litigation Expenses 45,200,000
Bank Advisors 56,500,000
Other Reorganization Expenses and Income 5,500,000
Fee Committee Counsel 1,000,000
-----------------------
TOTAL $575,400,000
=======================
B. Operation Expenses, consisting generally of expenses
incurred by the ACOM Debtors in owning and operating their
cable and related business, including workers' compensation
insurance premiums.
The ACOM Debtors have agreed that costs not allocated to the
Joint Ventures will be allocated to the Other Debtor Groups.
A full-text copy of the Comcast JV Settlement Agreement is
available for free at http://ResearchArchives.com/t/s?76d
Cash Management Protocol
Mr. Schinderman notes that as a result of the reallocations and
the new allocation methodology, the Holding Company Debtor may be
allocated Postpetition Expenses that it will be unable to pay in
cash as required under the Cash Management Protocol.
Thus, the ACOM Debtors seek the Court's authority to modify the
Cash Management Protocol to provide that:
-- the aggregate principal amount of the Intercompany Loans
necessary to implement the Settlement Agreement with the
Comcast JV Partners and the related new cost allocation
methodology, not to exceed $320,000,000, together with all
accrued and unpaid interest, will mature and be repaid on
the effective date of the ACOM Debtors' Plan of
Reorganization; and
-- as of the date that the loans are made until maturity, the
aggregate principal amount of the loans will bear interest
at the rate equal to the blended rate of interest
applicable to the amounts borrowed under the DIP Agreement.
About Adelphia Communications
Headquartered in Coudersport, Pa., Adelphia Communications
Corporation (OTC: ADELQ) is the fifth-largest cable television
company in the country. Adelphia serves customers in 30 states
and Puerto Rico, and offers analog and digital video services,
high-speed Internet access and other advanced services over its
broadband networks. The Company and its more than 200 affiliates
filed for Chapter 11 protection in the Southern District of New
York on June 25, 2002. Those cases are jointly administered under
case number 02-41729. Willkie Farr & Gallagher represents the
ACOM Debtors. Kasowitz, Benson, Torres & Friedman, LLP, and Klee,
Tuchin, Bogdanoff & Stern LLP represent the Official Committee of
Unsecured Creditors. (Adelphia Bankruptcy News, Issue No. 126;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
AGA MEDICAL: Moody's Assigns B2 Credit & Corporate Family Ratings
-----------------------------------------------------------------
Moody's Investors Service assigned a B2 corporate family rating to
AGA Medical Corporation, and a B2 to the company's $240 million
senior secured credit facility. The company will use the proceeds
from the credit facility to refinance the company's existing debt,
to pay a $99 million shareholder dividend, and to pay various fees
and expenses.
The ratings reflect AGA's relatively small size, lack of
significant product line diversification, strong operating
margins, strong financial metrics and relatively short product
lifecycles. The ratings also reflect AGA's rapid growth, patent
protection, and the possible extension of its basic Amplatzer
occluder product design to other applications with larger market
potential.
Assignments:
* Corporate Family Rating, Assigned B2
* Senior Secured Bank Credit Facility, Assigned B2
The ratings outlook is stable.
The ratings are subject to review of final documentation,
including the receipt of audited financial statements for AGA for
the year ended Dec. 31, 2005 with an upqualified opinion from its
independent accountants. Moody's does not rate the company's $50
million of equity sponsor-held mezzanine debt or its $122 million
of convertible preferred equity.
These key rating factors affect AGA's rating and stable outlook:
First, AGA's small size for a medical device company and
high reliance on product line extensions of its Amplatzer
occluder design constrain the ratings.
Second, the company's relatively high R&D as a percentage of
revenues, relative to Moody's rated medical device company
universe, reflects shorter product lifecycles, the
continual need to innovate, and susceptibility to new and
potentially disruptive technologies.
Third, Moody's expects that AGA will maintain strong interest
coverage well in excess of 2 times over the next several
years and will actively manage down debt levels such that
retained cash flow-to-debt and free cash flow-to-debt are
roughly 12% and 10%, respectively, by the end of 2007.
Fourth, the ratings reflect Moody's expectation that, in light
of AGA's size, the company will maintain a conservative
capital structure to ensure sufficient resources for tuck-
in acquisitions, R&D, or as a means of self-insuring
against event risk.
A return of capital to shareholders, beyond the proposed $99
million dividend, and a concurrent reduction in debt protection
measures, could trigger a ratings downgrade. Moody's could also
downgrade the ratings if revenue growth falls below 6% per annum,
coupled with margin deterioration. The outlook could improve if
top-line growth and operating efficiencies increase cash flow
beyond our expectations, such that it leads to accelerated debt
reduction.
AGA Medical, based in Golden Valley, Minnesota, designs, develops
and manufactures occlusion devices to treat congenital heart
defects. Revenues in 2005 were approximately $98 million.
AKSYS LTD: Inks $5 Million Bridge Financing Deal with Durus Life
----------------------------------------------------------------
Aksys(R), Ltd. (Nasdaq: AKS), entered into definitive agreements
with Durus Life Sciences Master Fund Ltd. that provide the Company
with additional capital to support the Company's ongoing
operations and restructure the Company's current relationship with
Durus.
Terms of the Agreement
On March 31, 2006, Durus invested $5 million in cash as part of a
bridge financing to acquire senior secured notes of the Company.
The agreements contemplate a subsequent closing in which Durus
would exchange approximately $5 million of existing subordinated
promissory notes of the Company held by Durus for new shares of
the Company's Series B Preferred Stock, convertible into 5 million
shares of common stock at $1.00 per share, and warrants to
purchase 5 million shares of common stock at $1.10 per share.
At the subsequent closing Durus would also exchange approximately
$10.8 million of existing subordinated promissory notes of the
Company for approximately $10.8 million of the Company's senior
secured notes.
Durus will also provide the Company with a credit facility for up
to $5 million of additional senior secured notes, which would be
available to the Company under certain circumstances.
As part of the financing, Durus will also have the option to
invest up to an additional $15 million in cash to acquire
additional shares of preferred stock convertible into common stock
at $1.00 per share and additional warrants to purchase common
stock at $1.10 per share.
Durus has designated one director to join the Aksys Board of
Directors effective March 31 and will be entitled to designate a
majority of the members of the Company's board of directors at the
subsequent closing thereby giving it control over the management
of the Company.
Standstill and voting restrictions applicable to the shares of
common stock already owned by Durus have been eliminated, and
Durus is no longer obligated to reduce its ownership in Aksys.
The Company's Board of Directors has also taken action to
eliminate its Rights Agreement so that it will not be applicable
to Durus or the transactions with Durus.
Interim CEO Appointed
In addition, Larry Birch, Aksys' Senior Vice President and Chief
Financial Officer, has been appointed interim CEO and appointed to
the Company's Board of Directors, effective Friday, March 31.
Bill Dow has stepped down from his position as the Company's
President and Chief Executive Officer and will transition to a
strategic advisory role.
Shodhan Trivedi, President of Opax Investments, an asset
allocation firm focused on the global hedge fund arena, and a
director of Durus has joined the Company's Board of Directors as a
designee of Durus effective March 31.
Mr. Birch commented: "We would like to thank Bill for his
leadership over the last seven years, as well as his tireless
efforts to increase awareness of home dialysis in the market
place. We wish him well in all his future endeavors."
"Going forward, we will be concentrating on three major
initiatives, including a geographically focused sales and
marketing program, the development and launch of our next
generation PHD System, and a more efficient cash management
strategy," Mr. Birch continued. "We are excited to enter into
a new era for Aksys. The relationship with Durus is integral to
our repositioning for success, enabling us to compete more
efficiently in the rapidly emerging market of daily hemodialysis
in the home."
Financials Revision
Aksys also revised its preliminary fourth quarter and fiscal 2005
earnings, initially released on March 1, 2006. The revision
results from a decrease in the value of a vendor deposit by
$694,000 to reflect uncertainty associated with that vendor. This
adjustment-increased cost of goods sold for the fourth quarter and
year ended Dec. 31, 2005 to $3,198,000 and $14,925,000. The net
loss for the fourth quarter and year ended Dec. 31, 2005 increased
to $7,428,000 or $0.25 per share and $34,198,000 or $1.14 per
share.
Aksys has filed an extension notification with the SEC in
accordance with Rule 12b-25, which extended the filing date for
Aksys' Form 10-K until April 17, 2006. This extension provides
Aksys with additional time to reflect the Durus transaction in the
Form 10-K filing.
About Aksys Ltd.
Based in Lincolnshire, Ill., Aksys, Ltd. -- http://www.aksys.com/
-- produces hemodialysis products, providing services for patients
suffering from kidney failure. The Company's lead product, the
PHD(R) System, is a currently available, advanced technology
hemodialysis system designed to improve clinical outcomes of
patients and reduce mortality, morbidity and the associated high
cost of patient care. Aksys received the 2005 Frost & Sullivan
Medical Devices Award. In selecting Aksys for the award, Frost &
Sullivan named the Aksys Personal PHD System the "Enabling
Technology of the Year."
The Company's unaudited balance sheet at Dec. 31, 2005, showed
$19,850,000 in total assets and $22,461,000 in total liabilities,
resulting in a stockholders' deficit of $2,611,000.
ALDERWOODS GROUP: Service Merger Cues S&P to Put Rating on Watch
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Standard & Poor's Ratings Services placed its ratings on funeral
home and cemetery operator Alderwoods Group Inc., including its
'BB-' corporate credit rating, on CreditWatch with negative
implications.
In an announcement, Service Corporation International (BB/Watch
Neg/B-1) disclosed an agreement to acquire Alderwoods in a
transaction valued at about $1.2 billion, including the assumption
of Alderwoods' debt. Service Corp. has indicated that Alderwoods'
existing debt will remain outstanding or be refinanced. If it
were refinanced, the ratings on these issues would be withdrawn.
However, if the debt remains outstanding, it likely would assume
Service Corp.'s ratings once the transaction is completed.
Although the combined company will be larger and have a greater
geographical presence, the resultant capital structure may be
weaker, and its financial policy potentially more aggressive, such
that a lower rating is possible.
Standard & Poor's expects to review with Service Corp. management
its business strategy and financial plans relative to the
transaction, and monitor progress on the completion of the deal
that is expected toward the end of 2006.
ALLEGHENY ENERGY: Board Wants Discretion in Recovering Bonuses
--------------------------------------------------------------
One or more Allegheny Energy, Inc. shareholders are pushing for
the utility holding company to adopt a policy that it will
recapture bonuses paid to executives in the event of a
restatement of financial results. The Board of Directors says the
policy is "too rigid and mechanical" and urges shareholders to
vote to reject it. The move is one of seven proposals by some of
the Company's shareholders that will be up for a vote during the
Company's Annual Meeting of Shareholders on May 11, 2006.
Shareholders' Contention
The proposal is similar to the proposal voted at the Computer
Associates' August 2004 annual meeting. In October 2003, Computer
Associates announced that it had inflated revenues in the fiscal
year ending March 31, 2000, by reporting revenue from contracts
before they had been signed.
Bonuses for senior executives that year were based on income
exceeding goals. Sanjay Kumar, then CEO, received a $3.2 million
bonus based on Computer Associates' supposedly superior
performance. Mr. Kumar did not offer to return his bonus based on
discredited earnings.
The Company's shareholders want to have more options if the
Company finds itself in similar to the Computer Associates
scenario. If it appears that the Company reported erroneous
results that must be negatively restated, then the board should be
authorized and tasked to recoup executive pay that was not earned
or deserved, the shareholders resolution on the proposal asserted.
Board's Argument
In a proxy statement filed with the Securities and Exchange
Commission, the Board pointed out that the Sarbanes-Oxley Act of
2002 already requires that in the case of accounting restatements
due to material non-compliance, as a result of misconduct, with
any financial reporting requirement under the securities laws, a
public company's chief executive officer and chief financial
officer must reimburse the company for any bonus or other
incentive-based or equity-based compensation and profits from the
sale of the company's securities during the 12-month period
following initial publication of the financial statements that had
to be restated.
The proposed policy would require the Board to recoup all affected
bonuses and awards to executive officers without regard to the
specific facts and circumstances present in a particular case,
including whether an executive officer was in any way responsible
for the events requiring the restatement. In addition, the policy
called for by the proposal could contravene existing agreements
covering stock options, stock units and other forms of
compensation, as well as any employment agreements between the
Company and its senior executives.
The Board says the proposed policy will deprive it of its ability
to exercise discretion and make judgments that it deems are in the
best interest of the Company and its stockholders after taking
into account of all relevant facts and circumstances.
Annual Shareholders Meeting
The Company will hold its Annual Meeting of Stockholders at the
Hilton New York, 1335 Avenue of the Americas, New York, New York,
on May 11, 2006, at 9:30 a.m., Eastern Daylight Savings Time.
Other items in the agenda include:
(1) election of nine directors to hold office until the 2007
annual meeting and until their successors are duly elected
and qualified; and
(2) ratification of the appointment of the Company's
independent registered public accounting firm;
Shareholders will also be asked to vote on proposals calling for:
(1) adopting a policy for senior executives and directors to
commit to hold throughout their tenure at least 50% of all
Allegheny Energy shares;
(2) requiring the Chairman of the Board to have no other
management duties, titles, or responsibilities;
(3) requiring that key board committees of audit, nomination
and compensation be chaired by highly-qualified independent
directors who are not over-committed;
(4) adopting a policy that a significant portion of future
stock option grants to senior executives shall be
performance-based;
(5) adopting a policy that any merger, which includes "golden
parachutes or golden hellos", be required to allow
shareholders to vote on the dollar amount of such golden
pay as a separate item on the same ballot;
(6) asking the Board to redeem any future or current poison
pill, unless the poison pill is subject to a shareholder
vote as a separate ballot item, to be held as soon as may
be practicable.
Holders of record of the Company's common stock at the close of
business on March 16, 2006, will be entitled to vote at the
meeting.
A full-text copy of the Proxy Statement for this Annual Meeting is
available for free at http://ResearchArchives.com/t/s?6f9
Headquartered in Greensburg, Pa., Allegheny Energy, Inc. --
http://www.alleghenyenergy.com/-- is an investor-owned utility
consisting of two major businesses. Allegheny Energy Supply owns
and operates electric generating facilities, and Allegheny Power
delivers low-cost, reliable electric service to customers in
Pennsylvania, West Virginia, Maryland, Virginia and Ohio.
* * *
As reported in the Troubled Company Reporter on Jan. 20, 2006,
Standard & Poor's Ratings Services raised its corporate credit
ratings on diversified energy company Allegheny Energy Inc. and
its subsidiaries to 'BB+' from 'BB-'. S&P said the outlook is
positive.
As reported in the Troubled Company Reporter on June 15, 2005,
Moody's Investors Service assigned a Senior Implied rating of Ba1
to Allegheny Energy, Inc. and also assigned a Speculative Grade
Liquidity Rating of SGL-2. This is the first time that Moody's
has assigned both such ratings to AYE. The company's other
ratings, including the Ba2 senior unsecured rating, remain
unaffected.
AMCAST INDUSTRIAL: Selling Casting Tech. Company to Highest Bidder
------------------------------------------------------------------
Amcast Industrial Corporation and Amcast Automotive of Indiana,
Inc., ask the U.S. Bankruptcy Court for the District of Indiana in
Indianapolis for authority to sell all assets associated with
their Casting Technology Company under a pre-approved sale
procedure.
The Debtors' Casting Technology Company currently has
approximately 100 employees and manufactures aluminum steering
components and air compressor scroll housings using a squeeze
casting process.
The proceeds of the proposed sale will be used to pay down debt
owed to NexBank, SSB. NexBank claims a security interest in
substantially all of the Debtors' assets on account of prepetition
loans totaling approximately $82.6 million.
BID Procedures
Parties interested in acquiring CTC must submit sealed bids,
consisting of a completed and executed form of the asset purchase
Agreement, by 12:00 p.m. on April 7, 2006 to:
The Debtor:
Amcast Industrial Corporation
Attn: Richard A. Lindenmuth
706 E. Depot Street
Fremont, Indiana 46737
and Debtors' counsel:
Bracewell & Giuliani LLP,
Attn: William A. "Trey" Wood, III, Esq.
711 Louisiana, Suite 2300,
Houston, Texas 77002
Bidders must also make a good faith deposit equal to 10% of their
intended purchase price for CTC.
Parties offering the three highest qualified bids as well as
entities holding qualified bids in an amount equal to or within
$1 million of the third lowest bid will participate in an auction
scheduled at 10:00 a.m. on April 11, 2006. The auction will take
place at the offices of Dann Pecar Newman & Kleiman, PC, in
Indianapolis.
About Amcast Industrial
Headquartered in Fremont, Indiana, Amcast Industrial Corporation,
manufactures and distributes technology-intensive metal products
to end-users and suppliers in the automotive and plumbing
industry. The Company and four debtor-affiliates filed for
chapter 11 protection on Nov. 30, 2004. The U.S. Bankruptcy Court
for the Southern District of Ohio confirmed the Debtors' Third
Amended Joint Plan of Reorganization on July 29, 2005. The
Debtors emerged from bankruptcy on Aug. 4, 2005.
Amcast Industrial Corporation and Amcast Automotive of Indiana,
Inc., filed for chapter 11 protection a second time on Dec. 1,
2005 (Bankr. S.D. Ind. Case No. 05-33322). David H. Kleiman, Esq.,
and James P. Moloy, Esq., at Dann Pecar Newman & Kleiman, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtor and its affiliate filed for protection from their
creditors, they listed total assets of $97,780,231 and total
liabilities of $100,620,855.
AMCAST INDUSTRIAL: Wants More Time to Decide on Gas City Leases
---------------------------------------------------------------
Amcast Industrial Corporation and Amcast Automotive of Indiana,
Inc., ask the U.S. Bankruptcy Court for The Southern District of
Indiana, in Indianapolis to extend, until June 29, 2006, the
period within which they can elect to assume, assume and assign or
reject unexpired leases related to their Gas City wheel
manufacturing operations in Marion, Indiana.
The Debtors' primarily use their Gas City facility to manufacture
aluminum wheels for General Motors Corp. and other customers. The
lease was executed on May 19, 1992 and is set to terminate, if not
renewed, on May 18, 2091.
James P. Moloy, Esq., at Dann Pecar Newman & Kleiman, PC, tells
the Bankruptcy Court that the Debtors cannot reach a decision on
the Gas City leases unless their ongoing dispute with GM is
resolved.
The Debtors are currently negotiating the terms of their
contractual pricing with GM, their largest customer and revenue
source. The Debtors are asking for certain pricing concessions
from GM so that they can continue to operate profitably.
Mr. Moloy explains that the resolution of this dispute will impact
the Debtors' reorganization efforts, including whether the
Debtors' Gas City operations will continue.
About Amcast Industrial
Headquartered in Fremont, Indiana, Amcast Industrial Corporation,
manufactures and distributes technology-intensive metal products
to end-users and suppliers in the automotive and plumbing
industry. The Company and four debtor-affiliates filed for
chapter 11 protection on Nov. 30, 2004. The U.S. Bankruptcy Court
for the Southern District of Ohio confirmed the Debtors' Third
Amended Joint Plan of Reorganization on July 29, 2005. The
Debtors emerged from bankruptcy on Aug. 4, 2005.
Amcast Industrial Corporation and Amcast Automotive of Indiana,
Inc., filed for chapter 11 protection a second time on Dec. 1,
2005 (Bankr. S.D. Ind. Case No. 05-33322). David H. Kleiman, Esq.,
and James P. Moloy, Esq., at Dann Pecar Newman & Kleiman, P.C.,
represent the Debtors in their restructuring efforts. When the
Debtor and its affiliate filed for protection from their
creditors, they listed total assets of $97,780,231 and total
liabilities of $100,620,855.
AMERICAN REAL: Reports $27.0 Million Net Loss for Fiscal Year 2005
------------------------------------------------------------------
American Real Estate Partners, L.P. (NYSE: ACP) reported its 2005
financial results. The results reflect the full year results
for AREP's Oil & Gas, Gaming and Real Estate segments as well as
those of AREP's Home Fashion segment since its acquisition on
Aug. 8, 2005.
For 2005, the company incurred a $27.0 million net loss on total
revenues of $1.3 billion compared to a $153.8 million of net
income on total revenues of $670.3 million during 2004. The
increase in revenues was primarily due to the inclusion of AREP's
Home Fashion segment revenue. AREP enjoyed continued strong
performance in its Oil & Gas, Gaming and Real Estate businesses as
it reported operating income of $77.5 million for 2005 compared to
operating income of $92.7 million for 2004. Operating income in
2005 would have been $95.1 million higher but for the effect of
increased unrealized losses on oil and gas hedging contracts
($60.0 million), the inclusion of operating losses from recently
acquired home fashion segment ($22.4 million) and the effect of
increased holding company costs ($12.7 million) driven mainly by
recent transaction activity.
Net cash from operating activities increased by $145.8 million in
2005, to $245.7 million from $89.5 million in 2004, principally as
a result of increased non-cash charges in 2005. Despite strong
operating performance, the company's net earnings in 2005 declined
to a loss of $27.0 million from earnings of $153.8 million in
2004. Lower 2005 earnings were attributable in part to the effect
of non-cash charges, including $69.3 million in unrealized losses
on hedging contracts and a $52.4 million impairment charge
associated with the company's investment in GB Holdings, Inc. In
addition, earnings were affected by a $41.8 million increase in
interest expense associated with higher levels of outstanding debt
during 2005.
AREP ended 2005 with $4.0 billion in total assets, up from $2.9
billion a year earlier, while maintaining a strong balance sheet
with a net current position of $1.6 billion and cash and current
investments of $1.4 billion, an amount equivalent to the principal
amount of its long-term debt.
* * *
As reported in the Troubled Company Reporter on Jan. 26, 2005,
Moody's Investors Service affirmed its Ba2 senior unsecured
ratings on American Real Estate Partners, L.P. with a stable
outlook.
AREP -- http://www.areplp.com/-- is a master limited partnership
that has publicly traded depositary units (NYSE: ACP). AREP's
general partner is American Property Investors, Inc., which is a
wholly owned subsidiary of Becton Corp., which is owned by Carl
Icahn. Affiliates of Carl Icahn own approximately 86.5% of the
outstanding depositary units of AREP, and 86.5% of the firm's
cumulative pay-in-kind preferred units. Based in Mount Kisco, New
York, USA, American Real Estate Partners, L.P., is the holding
company of American Real Estate Holdings Limited Partnership, a
diversified operating company that directly or through its
subsidiaries engages in rental real estate, real estate
development, resort, hotel and casino operations, investments in
equity and debt securities, and oil and gas exploration and
production.
AMERISTAR CASINOS: S&P Puts BB Corp. Credit Rating on Neg. Watch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Ameristar
Casinos Inc., including its 'BB' corporate credit rating, on
CreditWatch with negative implications. The CreditWatch placement
follows Ameristar's announcement that it had launched an
unsolicited bid to acquire Aztar Corp. (BB/Watch Neg/--).
Based on the current proposed terms of $42 per share, the
transaction values Aztar at $2.25 billion in cash, including the
assumption of about $723 million in Aztar's debt.
At Dec. 31, 2005, Ameristar had about $780 million of debt
outstanding.
Pro forma lease-adjusted debt to EBITDA could increase to well
above levels currently expected over the near term as a result of
the cash offer. Ameristar's proposal follows Pinnacle
Entertainment Inc.'s (B+/Watch Neg/--) merger agreement to acquire
the company for $38 per share and Colony Capital LLC's proposal to
acquire the company for $41 per share.
If a deal is ultimately consummated, Standard & Poor's would
review several factors in resolving our CreditWatch listing.
These factors include:
* the combined company's pro forma capital structure;
* the potential for asset sales;
* management's near- and longer-term growth objectives,
specifically related to a potential re-development of the
Tropicana Las Vegas, integration plans; and
* overall financial policy.
APX HOLDINGS: Taps Klee Tuchin as Bankruptcy Counsel
----------------------------------------------------
APX Holdings, L.L.C. asks the U.S. Bankruptcy Court for the
Central District of California for permission to employ Klee,
Tuchin, Bogdanoff & Stern LLP, as their bankruptcy counsel.
Klee Tuchin will:
a. advice the Debtors regarding matters of bankruptcy law;
b. represent the Debtors in proceedings or hearing involving
matters of bankruptcy law;
c. assist the Debtors with the negotiation, documentation and
any necessary Court approval of transactions disposing of
property of the estate; and
d. advice the Debtors concerning the requirement of the
Bankruptcy Code, and federal and local rules relating to
the administration of their cases and the effect of these
cases on the operation of the Debtors.
Martin R. Barash, Esq., a partner at Klee Tuchin, tells the Court
that the Firm's professionals bill:
Professional Hourly Rate
------------ -----------
Partners $405 - $925
Associates $250 - $450
Paralegals $100 - $150
Mr. Barash assures the Court that the Firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Barash can be reached at:
Martin R. Barash, Esq.
Klee, Tuchin, Bogdanoff & Stern LLP
Fox Plaza
2121 Avenue of the Stars, 33rd Floor
Los Angeles, California 90067
Tel: (310) 407-4000
Fax: (310) 407-9090
http://www.ktbslaw.com/
Headquartered in Santa Fe Springs, California, APX Holdings LLC --
http://www.shipapx.com/-- provides small parcel and freight
delivery services to high volume commercial customers. The Debtor
and eight of its affiliates filed for chapter 11 protection on
Mar. 16, 2006 (Bankr. C.D. Calif. Case No. 06-10875). Martin R.
Barash, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP, represents
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they estimated assets
and debts of more than $100 million.
ASARCO LLC: Wants to Implement $50 Mil. Strategic Hedging Program
-----------------------------------------------------------------
ASARCO LLC's revenues and free cash flows are affected greatly by
market movements in the price of copper, James R. Prince, Esq.,
at Baker Botts LLP, in Dallas, Texas, tells the Court. As copper
prices increase, so does ASARCO's revenues. As copper prices
decrease, ASARCO's revenues and free cash flows drop and ASARCO's
liquidity suffers. Without adequate protection against declines
in the market price, Mr. Prince says, ASARCO's liquidity will
depend entirely on the continued strength of the copper market.
ASARCO's professionals have produced charts and graphs showing
that the current copper market is exceptionally strong. However,
Mr. Prince says, history has taught them that high markets cannot
be relied on forever.
If copper prices were to drop to $1.20 or below by the end of
2007, ASARCO's liquidity would be severely impaired and its
ability to maintain operations would be at risk, Mr. Prince says.
Mr. Prince asserts that a strategic hedging program is needed to
help ASARCO maintain sufficient liquidity through the end of
2007, and create a more stable cash flow environment for
reorganization.
ASARCO's Board of Directors has been advised of and has
considered multiple hedging strategies. All of the hedging
strategies being considered by the Board are strictly financial
instruments, Mr. Prince discloses.
Because none of the hedging strategies would obligate ASARCO to
settle the contracts through physical delivery of copper at a
future date, ASARCO would retain its ability to make copper sales
to end users and in markets, consistent with its previous sales
patterns. In addition, because the hedging strategies being
considered are financial, an interruption in copper production at
ASARCO during the period in which the hedges are in effect would
not negatively impact the value of the hedging instruments.
Although a significant amount of money will be allocated towards
the selected Hedging Program, Mr. Prince says, the amount should
not be viewed as lost capital. Rather, the true cost of the
Hedging Program is better evaluated as a cost of liquidity
insurance.
Without a strategic hedging program, ASARCO's cash position would
deteriorate in a declining copper-price environment. If ASARCO
implements a hedging program, then its investment would be offset
either by revenues from the hedging contracts in a falling price
environment, or by revenues from sales and operations if copper
prices remain steady or increase.
A committee led by ASARCO's Chief Executive Officer Doug
McAllister will oversee the strategic hedging program. The
members of the hedging committee are:
1. Gary Miller, ASARCO's vice president of Commercial;
2. Alan Kafka, ASARCO's consultant on risk and hedging
strategies;
3. a representative from Lehman Brothers, financial advisor to
ASARCO; and
4. a representative from FTI Consulting, Inc., financial
advisor to ASARCO's Official Committee of Unsecured
Creditors.
Accordingly, ASARCO seeks authority from the U.S. Bankruptcy Court
for the Southern District of Texas in Corpus Christi to implement
a strategic hedging program up to an aggregate cash outlay of
$50,000,000.
ASARCO Needs Prior Court Approval
The Board has not yet decided which hedging strategy ASARCO will
adopt, Mr. Prince discloses. ASARCO is requesting prior approval
before the Board decides on a specific hedging program strategy
because hedging costs are substantially cheaper in a strong
market.
Mr. Prince points out that the size of the hedging program and
ASARCO's role as a material producer in the copper market will
affect the copper market.
Mr. Prince relates that additional variables needed for the
hedging strategy, including strike prices, premiums, margin
requirements and expiration, may prove outdated and irrelevant by
the time the specifics of the hedging program is publicly out.
Furthermore, Mr. Prince says, implementing a hedging program of
this magnitude requires advance coordination with brokers,
commission merchants, and other counterparties. It will be more
difficult for ASARCO to get a commitment from these parties when
ASARCO cannot demonstrate that it has the necessary Court
authority to implement the proposed hedging strategy, Mr. Prince
asserts.
Objections Must be Filed Under Seal
ASARCO will notify interested parties of the specific trades
implementing the Hedging Program.
Any party can object to the hedging program within 24 hours after
the receipt of the notification from ASARCO. If no objection is
timely filed, then ASARCO may implement the Hedging Program
without further Court order.
Because disclosure of the specific hedging strategy could impact
the copper market, ASARCO asks the Court to allow all objections
and responses to be filed under seal.
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. Lehman Brothers Inc. provides the
ASARCO with financial advisory services and investment banking
services. Paul M. Singer, Esq., James C. McCarroll, Esq., and
Derek J. Baker, Esq., at Reed Smith LLP give legal advice to
the Official Committee of Unsecured Creditors and David J.
Beckman at FTI Consulting, Inc., gives financial advisory
services to the Committee. 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. The Court
appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7
Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at
Law Offices of Michael B. Schmidt represent the Chapter 7
Trustee. (ASARCO Bankruptcy News, Issue No. 19; Bankruptcy
Creditors' Service, Inc., 215/945-7000).
AZTAR CORP: Submits $42 Per Share All-Cash Purchase Proposal
------------------------------------------------------------
Ameristar Casinos, Inc., proposed to acquire Aztar Corporation
(NYSE: AZR) for $42 per common share. The all-cash proposal
values Aztar at approximately $2.25 billion, including the
assumption of debt, and is clearly superior to all previous
proposals. Ameristar believes the transaction would provide fair
value to Aztar's shareholders and would be immediately and
substantially accretive to Ameristar's earnings per share.
The combined company would be the fifth largest publicly traded
owner and operator of gaming properties in the U.S., with annual
revenues of approximately $2 billion generated by 12 properties
throughout the country.
Following the acquisition, Ameristar would have under its control
approximately 21,000 slot machines, 650 table games and 7,000
hotel rooms. Not only would the transaction greatly expand
Ameristar's scale and geographic diversification, with a presence
in two of the largest U.S. gaming markets (Las Vegas and Atlantic
City), it would also provide Ameristar with one of the best
remaining development opportunities on the Las Vegas Strip. Aztar
owns the Tropicana Resort and Casino located on approximately 34
acres on the "Strip" in Las Vegas, Nevada. The Tropicana Las
Vegas is located at the intersection known as the "New Four
Corners" at Las Vegas Boulevard and Tropicana Avenue.
The two companies have no overlap in the markets they serve. With
Ameristar's demonstrated integration, operations and development
experience, the Company expects to realize the substantial growth
potential of Aztar's property portfolio immediately following
completion of the transaction and over the long term.
"Ameristar's proposal for Aztar is clearly superior to Pinnacle's
and Colony's, and provides significant value to Aztar
shareholders," said Craig H. Neilsen, Ameristar's Chairman of the
Board, President and Chief Executive Officer. "This strategic
combination would also create substantial value for Ameristar and
its shareholders, both in the near term by establishing Ameristar
as a leading national competitor in the gaming industry with a
broader and more balanced geographic portfolio, and in the long
term by expanding the Company's growth platform. We are
particularly excited about the opportunity to apply our proven
track record of success to developing a truly world-class gaming
and entertainment property at one of the most attractive
development sites on the Strip."
"The Las Vegas and Atlantic City assets would also help leverage
the attractiveness of our Star Awards guest loyalty program at all
of our properties. With properties in many of the country's
largest gaming markets, and the global market reach of Las Vegas,
Ameristar would have the foundation to implement its effective
marketing programs to a national audience."
"Ameristar is committed to creating market-leading gaming and
entertainment destinations and has a long track record of
implementing improvements that enhance the guest experience, drive
market share growth, and improve cash flow," said Mr. Neilsen.
"We see immediate upside potential from Aztar's assets and believe
we can realize substantial incremental growth from the entire
portfolio by applying our centralized management structure and
leveraging our innovative slot initiatives, food quality, and
comprehensive marketing programs. Ameristar is well known in the
industry for its ability to generate market share-leading revenues
and profitable cash flows and has a history of delivering superior
EBITDA margins. We believe we can integrate Aztar's existing
property portfolio quickly and efficiently to maximize the value
of those properties and generate a strong return on investment, as
the Company has achieved historically. Ultimately, we are willing
to make this superior proposal because we believe Aztar's assets
have their highest potential within Ameristar and because we
believe we can maximize their value."
The combined company would also have a robust development strategy
that would provide a strong foundation for Ameristar's long-term
growth. In addition to the impact of operational improvements at
Aztar's properties, key projects currently underway that are
expected to provide growth in the near term include the addition
of Four Diamond-quality hotels and other amenities at Ameristar
St. Charles and Ameristar Black Hawk, and the casino and parking
expansions at Ameristar Vicksburg. In the longer-term, the
Company would look to redevelop Aztar's Las Vegas Tropicana
property and implement further enhancements at the Tropicana
property in Atlantic City.
"As always, we will target projects with the potential to generate
the highest returns on investment and best long-term value for our
shareholders," continued Mr. Neilsen. "We believe the first round
of improvements we would make at the various Aztar properties
would provide a quick payback and generate supplemental cash flows
to strengthen and support the Company's long- term growth
strategy. We are confident in our ability to schedule capital
expenditure projects to prudently manage leverage levels following
the completion of our combination with Aztar."
Ameristar's Board of Directors has unanimously approved the
proposal. Ameristar's proposal to acquire Aztar is subject to
limited confirmatory due diligence, which the Company is prepared
to commence immediately, and the execution of a definitive merger
agreement between the companies. Subject to satisfactory
completion of its due diligence and final Board approval,
Ameristar is prepared to enter into a merger agreement that, apart
from providing superior value to Aztar's shareholders, would be
substantially identical to Aztar's merger agreement with Pinnacle.
The transaction would also require the termination of Aztar's
agreement with Pinnacle and approval by Aztar's Board and
shareholders, as well as the satisfaction of certain customary
conditions, including Hart-Scott-Rodino antitrust clearance and
necessary approvals from gaming regulatory authorities.
Ameristar's proposal is not subject to any financing conditions
and Ameristar anticipates that it would be able to close the
transaction by the end of 2006, which is comparable to Pinnacle's
anticipated closing timetable.
"We are confident in our ability to close this transaction
expeditiously, given our proven experience working within strict
regulatory environments and executing large-scale transactions,
such as our Missouri acquisition in 2000, which we completed in
approximately two months," said Mr. Neilsen. "Following this
transaction, we would retain a prudent capital structure and
maintain a strong and flexible balance sheet that would allow us
to proceed with the redevelopment of the Tropicana in Las Vegas."
Ameristar has received a financing commitment from Wachovia
Securities, Merrill Lynch & Co. and Wells Fargo Bank to complete
the transaction. Lazard, Merrill Lynch & Co. and Wachovia
Securities are serving as financial advisors to Ameristar, and
Hughes Hubbard & Reed LLP is acting as Ameristar's legal counsel.
About Ameristar Casinos
Based in Las Vegas, Nevada, Ameristar Casinos, Inc. --
http://www.ameristarcasinos.com/-- engages in the development,
ownership, and operation of casinos and related entertainment
facilities in the United States.
About Aztar Corporation
Aztar Corp. -- http://www.aztarcorp.com/-- is a publicly traded
company that operates Tropicana Casino and Resort in Atlantic
City, New Jersey, Tropicana Resort and Casino in Las Vegas,
Nevada, Ramada Express Hotel and Casino in Laughlin, Nevada,
Casino Aztar in Caruthersville, Missouri, and Casino Aztar in
Evansville, Indiana.
* * *
As reported in the Troubled Company Reporter on March 15, 2006,
Standard & Poor's Ratings Services reported that its BB rating on
Aztar Corp. remains on CreditWatch with negative implications,
where they were placed on Feb. 16, 2006. The CreditWatch update
followed the announcement by Pinnacle that it has signed a
definitive merger agreement to acquire the outstanding shares of
Aztar.
AZTAR CORP: Considering Colony and Ameristar Purchase Offers
------------------------------------------------------------
Aztar Corporation (NYSE: AZR) reported that its Board of Directors
determined that each of the unsolicited proposals received from
Colony Capital Acquisitions, LLC and Ameristar Casinos, Inc., will
likely result in a superior proposal as defined in Aztar's merger
agreement, dated March 13, 2006, with Pinnacle Entertainment, Inc.
Aztar's Board authorized Aztar to enter into separate discussions
with each of Colony and Ameristar regarding their proposals.
On March 30, 2006, Colony made an unsolicited proposal to acquire
Aztar in a merger transaction in which the holders of Aztar common
stock would receive $41.00 per share in cash and the holders of
Aztar's Series B preferred stock would receive a commensurate
payment dictated by the terms of the securities.
On April 2, 2006, Ameristar made an unsolicited proposal to
acquire Aztar in a merger transaction in which the holders of
Aztar common stock would receive $42.00 per share in cash and the
holders of Aztar's Series B preferred stock would receive a
commensurate payment dictated by the terms of the securities.
Aztar is also party to a merger agreement with Pinnacle, under
which each share of Aztar common stock would be exchanged for $38
in cash and each share of Aztar Series B preferred stock would be
exchanged for $401.90 in cash. The transaction with Pinnacle is
subject to approval by Aztar's shareholders and the satisfaction
of customary closing conditions, including the receipt of
necessary regulatory and governmental approvals.
Aztar's Board will evaluate all aspects of the proposals from each
of Colony and Ameristar. Aztar's Board is not making any
recommendation at this time with respect to the proposals of
either Colony or Ameristar, and there is no assurance that a
transaction with either party will result from such discussions.
About Aztar Corporation
Aztar Corp. -- http://www.aztarcorp.com/-- is a publicly traded
company that operates Tropicana Casino and Resort in Atlantic
City, New Jersey, Tropicana Resort and Casino in Las Vegas,
Nevada, Ramada Express Hotel and Casino in Laughlin, Nevada,
Casino Aztar in Caruthersville, Missouri, and Casino Aztar in
Evansville, Indiana.
* * *
As reported in the Troubled Company Reporter on March 15, 2006,
Standard & Poor's Ratings Services reported that its BB rating on
Aztar Corp. remains on CreditWatch with negative implications,
where they were placed on Feb. 16, 2006. The CreditWatch update
followed the announcement by Pinnacle that it has signed a
definitive merger agreement to acquire the outstanding shares of
Aztar.
BANCO GANADERO: Moody's Lifts Rating on Long-Term Deposits to B3
----------------------------------------------------------------
Moody's Investors Service upgraded the long-term global local-
currency deposit ratings of Banco Mercantil S.A. and Banco
Nacional de Bolivia S.A. to B2 from Caa1; and the national scale
rating for local currency deposits to Aa2.bo from A1.bo and A2.bo
respectively. Moody's also upgraded the local currency deposit
ratings of Banco Ganadero S.A. to B3 from Caa2 on the global scale
and to Aa3.bo from Baa2.bo on the national scale. All ratings
have a stable outlook.
Additionally, Moody's upgraded the national scale rating for
foreign currency deposits of Banco Nacional de Bolivia to A1.bo
from A2.bo and of Banco Ganadero to Baa1.bo from Baa2.bo. These
ratings carry a stable outlook.
All other ratings assigned to Banco Nacional, Banco Mercantil and
Banco Ganadero remain unchanged.
Moody's VP-Senior Analyst Andrea Manavella explained that the
upgrade on the local currency ratings reflects the marginally
lower risk in the Bolivian system, which is resultant from the
gradual reduction of dollarization levels for bank deposits. Such
a trend makes it marginally easier for the monetary authorities to
support these banks in a situation of stress. As of December
2005, foreign currency deposits represented 81.2%. of total
deposits in the system, whereas in December 2003, they represented
90.5%.
Global local-currency deposit ratings indicate the relative credit
risk of banks on a globally comparable basis. The global local-
currency deposit ratings for the Bolivian banks reflect the banks'
financial strength as well as the relative importance of the
banks' deposit franchises within the Bolivian financial system and
their ownership characteristics. These factors are among the main
considerations in Moody's analysis of the predictability of
institutional support for local currency deposit obligations.
Moody's also explained that ratings in local currency do not take
into account the convertibility and transferability risks related
to the foreign currency ; therefore, these ratings may be higher
than those in foreign currency.
"The upgrade of these banks' global local currency ratings
resulted in the upgrade of national scale deposit ratings, as
those are largely derived from global local currency ratings",
said Manavella. "Moreover", the analyst noted, "gradual
improvements in the financial performance of Banco Nacional de
Bolivia and Banco Ganadero also explain the changes in their
national scale ratings in foreign currency".
National scale ratings for Bolivian banks, which carry the
identifier of ".bo", rank the likelihood of credit loss on local
and foreign currency obligations of issuers in a particular
country relative to other domestic issuers. The national scale
ratings are intended for domestic use only and are not globally
comparable. Moody's national scale ratings are not opinions on
absolute default risks; therefore, in countries with overall low
credit quality, even highly rated credits on the national scale
may be susceptible to default.
Banco Nacional de Bolivia S.A., headquartered in La Paz, Bolivia,
is a universal bank formed in 1872. Owned by the Bedoya and
Saavedra Groups, BNB had, as of December 2005, assets worth Bs
5,437 million and private sector deposits up to Bs 4,560 million,
which represented 18.8% of the market.
Banco Ganadero S.A. is a multiple commercial bank, owned and
controlled by the Monasterio group, an industrial and stock-
breeding group in Santa Cruz. Banco Ganadero is Bolivia's eighth-
largest bank in terms of private sector deposits, with Bs 1.192
million, and holds 5.2% market share as of December 2005.
Banco Mercantil S.A., based in La Paz, is a multiple commercial
bank owned in its majority by the Zuazo family. The bank owns an
important branch network and as of December 2005, assets worth Bs
4,514 million and private sector deposits worth Bs 3,714 million.
These ratings were upgraded:
Issuer: Banco Nacional de Bolivia S.A.
* Long-Term Global Local-Currency Deposits: upgraded to B2
from Caa1- Stable outlook
* National Scale Rating for Local Currency Deposits: upgraded
to Aa2.bo from A2.bo - Stable outlook
* National Scale Rating for Foreign Currency Deposits:
upgraded to A1.bo from A2.bo - Stable outlook
Issuer: Banco Ganadero S.A.
* Long-Term Global Local-Currency Deposits: upgraded to B3
from Caa2 - Stable outlook
* National Scale Rating for Local Currency Deposits: upgraded
to Aa3.bo from Baa2.bo - Stable outlook
* National Scale Rating for Foreign Currency Deposits:
upgraded to Baa1.bo from Baa2.bo - Stable outlook
Issuer: Banco Mercantil S.A.
* Long-Term Global Local-Currency Deposits: upgraded to B2
from Caa1 - Stable outlook
* National Scale Rating for Local Currency Deposits: upgraded
to Aa2.bo from A1.bo - Stable outlook
These ratings were not affected:
Issuer: Banco Nacional de Bolivia S.A.
* Long-Term Global Foreign-Currency Deposits: Caa1 - Stable
outlook
* Short-Term Global Foreign-Currency Deposits: NP - Stable
outlook
* Bank Financial Strength Rating: E - Stable outlook
Issuer: Banco Ganadero S.A.
* Long-Term Global Foreign-Currency Deposits: Caa2 - Stable
outlook
* Short-Term Global Foreign-Currency Deposits: NP - Stable
outlook
* Bank Financial Strength Rating: E - Stable outlook
Issuer: Banco Mercantil S.A.
* Long-Term Global Foreign-Currency Deposits: Caa1 - Stable
outlook
* Short-Term Global Foreign-Currency Deposits: NP - Stable
outlook
* National Scale Rating for Foreign Currency Deposits: A1.bo
- Stable outlook
* Bank Financial Strength Rating: E - Stable outlook
BANCO MERCANTIL: Moody's Upgrades Currency Deposit Rating to B2
---------------------------------------------------------------
Moody's Investors Service upgraded the long-term global local-
currency deposit ratings of Banco Mercantil S.A. and Banco
Nacional de Bolivia S.A. to B2 from Caa1; and the national scale
rating for local currency deposits to Aa2.bo from A1.bo and A2.bo
respectively. Moody's also upgraded the local currency deposit
ratings of Banco Ganadero S.A. to B3 from Caa2 on the global scale
and to Aa3.bo from Baa2.bo on the national scale. All ratings
have a stable outlook.
Additionally, Moody's upgraded the national scale rating for
foreign currency deposits of Banco Nacional de Bolivia to A1.bo
from A2.bo and of Banco Ganadero to Baa1.bo from Baa2.bo. These
ratings carry a stable outlook.
All other ratings assigned to Banco Nacional, Banco Mercantil and
Banco Ganadero remain unchanged.
Moody's VP-Senior Analyst Andrea Manavella explained that the
upgrade on the local currency ratings reflects the marginally
lower risk in the Bolivian system, which is resultant from the
gradual reduction of dollarization levels for bank deposits. Such
a trend makes it marginally easier for the monetary authorities to
support these banks in a situation of stress. As of December
2005, foreign currency deposits represented 81.2%. of total
deposits in the system, whereas in December 2003, they represented
90.5%.
Global local-currency deposit ratings indicate the relative credit
risk of banks on a globally comparable basis. The global local-
currency deposit ratings for the Bolivian banks reflect the banks'
financial strength as well as the relative importance of the
banks' deposit franchises within the Bolivian financial system and
their ownership characteristics. These factors are among the main
considerations in Moody's analysis of the predictability of
institutional support for local currency deposit obligations.
Moody's also explained that ratings in local currency do not take
into account the convertibility and transferability risks related
to the foreign currency ; therefore, these ratings may be higher
than those in foreign currency.
"The upgrade of these banks' global local currency ratings
resulted in the upgrade of national scale deposit ratings, as
those are largely derived from global local currency ratings",
said Manavella. "Moreover", the analyst noted, "gradual
improvements in the financial performance of Banco Nacional de
Bolivia and Banco Ganadero also explain the changes in their
national scale ratings in foreign currency".
National scale ratings for Bolivian banks, which carry the
identifier of ".bo", rank the likelihood of credit loss on local
and foreign currency obligations of issuers in a particular
country relative to other domestic issuers. The national scale
ratings are intended for domestic use only and are not globally
comparable. Moody's national scale ratings are not opinions on
absolute default risks; therefore, in countries with overall low
credit quality, even highly rated credits on the national scale
may be susceptible to default.
Banco Nacional de Bolivia S.A., headquartered in La Paz, Bolivia,
is a universal bank formed in 1872. Owned by the Bedoya and
Saavedra Groups, BNB had, as of December 2005, assets worth Bs
5,437 million and private sector deposits up to Bs 4,560 million,
which represented 18.8% of the market.
Banco Ganadero S.A. is a multiple commercial bank, owned and
controlled by the Monasterio group, an industrial and stock-
breeding group in Santa Cruz. Banco Ganadero is Bolivia's eighth-
largest bank in terms of private sector deposits, with Bs 1.192
million, and holds 5.2% market share as of December 2005.
Banco Mercantil S.A., based in La Paz, is a multiple commercial
bank owned in its majority by the Zuazo family. The bank owns an
important branch network and as of December 2005, assets worth Bs
4,514 million and private sector deposits worth Bs 3,714 million.
These ratings were upgraded:
Issuer: Banco Nacional de Bolivia S.A.
* Long-Term Global Local-Currency Deposits: upgraded to B2
from Caa1- Stable outlook
* National Scale Rating for Local Currency Deposits: upgraded
to Aa2.bo from A2.bo - Stable outlook
* National Scale Rating for Foreign Currency Deposits:
upgraded to A1.bo from A2.bo - Stable outlook
Issuer: Banco Ganadero S.A.
* Long-Term Global Local-Currency Deposits: upgraded to B3
from Caa2 - Stable outlook
* National Scale Rating for Local Currency Deposits: upgraded
to Aa3.bo from Baa2.bo - Stable outlook
* National Scale Rating for Foreign Currency Deposits:
upgraded to Baa1.bo from Baa2.bo - Stable outlook
Issuer: Banco Mercantil S.A.
* Long-Term Global Local-Currency Deposits: upgraded to B2
from Caa1 - Stable outlook
* National Scale Rating for Local Currency Deposits: upgraded
to Aa2.bo from A1.bo - Stable outlook
These ratings were not affected:
Issuer: Banco Nacional de Bolivia S.A.
* Long-Term Global Foreign-Currency Deposits: Caa1 - Stable
outlook
* Short-Term Global Foreign-Currency Deposits: NP - Stable
outlook
* Bank Financial Strength Rating: E - Stable outlook
Issuer: Banco Ganadero S.A.
* Long-Term Global Foreign-Currency Deposits: Caa2 - Stable
outlook
* Short-Term Global Foreign-Currency Deposits: NP - Stable
outlook
* Bank Financial Strength Rating: E - Stable outlook
Issuer: Banco Mercantil S.A.
* Long-Term Global Foreign-Currency Deposits: Caa1 - Stable
outlook
* Short-Term Global Foreign-Currency Deposits: NP - Stable
outlook
* National Scale Rating for Foreign Currency Deposits: A1.bo
- Stable outlook
* Bank Financial Strength Rating: E - Stable outlook
BANCO NACIONAL: Moody's Lifts Long-Term Deposit Rating to B2
------------------------------------------------------------
Moody's Investors Service upgraded the long-term global local-
currency deposit ratings of Banco Mercantil S.A. and Banco
Nacional de Bolivia S.A. to B2 from Caa1; and the national scale
rating for local currency deposits to Aa2.bo from A1.bo and A2.bo
respectively. Moody's also upgraded the local currency deposit
ratings of Banco Ganadero S.A. to B3 from Caa2 on the global scale
and to Aa3.bo from Baa2.bo on the national scale. All ratings
have a stable outlook.
Additionally, Moody's upgraded the national scale rating for
foreign currency deposits of Banco Nacional de Bolivia to A1.bo
from A2.bo and of Banco Ganadero to Baa1.bo from Baa2.bo. These
ratings carry a stable outlook.
All other ratings assigned to Banco Nacional, Banco Mercantil and
Banco Ganadero remain unchanged.
Moody's VP-Senior Analyst Andrea Manavella explained that the
upgrade on the local currency ratings reflects the marginally
lower risk in the Bolivian system, which is resultant from the
gradual reduction of dollarization levels for bank deposits. Such
a trend makes it marginally easier for the monetary authorities to
support these banks in a situation of stress. As of December
2005, foreign currency deposits represented 81.2%. of total
deposits in the system, whereas in December 2003, they represented
90.5%.
Global local-currency deposit ratings indicate the relative credit
risk of banks on a globally comparable basis. The global local-
currency deposit ratings for the Bolivian banks reflect the banks'
financial strength as well as the relative importance of the
banks' deposit franchises within the Bolivian financial system and
their ownership characteristics. These factors are among the main
considerations in Moody's analysis of the predictability of
institutional support for local currency deposit obligations.
Moody's also explained that ratings in local currency do not take
into account the convertibility and transferability risks related
to the foreign currency ; therefore, these ratings may be higher
than those in foreign currency.
"The upgrade of these banks' global local currency ratings
resulted in the upgrade of national scale deposit ratings, as
those are largely derived from global local currency ratings",
said Manavella. "Moreover", the analyst noted, "gradual
improvements in the financial performance of Banco Nacional de
Bolivia and Banco Ganadero also explain the changes in their
national scale ratings in foreign currency".
National scale ratings for Bolivian banks, which carry the
identifier of ".bo", rank the likelihood of credit loss on local
and foreign currency obligations of issuers in a particular
country relative to other domestic issuers. The national scale
ratings are intended for domestic use only and are not globally
comparable. Moody's national scale ratings are not opinions on
absolute default risks; therefore, in countries with overall low
credit quality, even highly rated credits on the national scale
may be susceptible to default.
Banco Nacional de Bolivia S.A., headquartered in La Paz, Bolivia,
is a universal bank formed in 1872. Owned by the Bedoya and
Saavedra Groups, BNB had, as of December 2005, assets worth Bs
5,437 million and private sector deposits up to Bs 4,560 million,
which represented 18.8% of the market.
Banco Ganadero S.A. is a multiple commercial bank, owned and
controlled by the Monasterio group, an industrial and stock-
breeding group in Santa Cruz. Banco Ganadero is Bolivia's eighth-
largest bank in terms of private sector deposits, with Bs 1.192
million, and holds 5.2% market share as of December 2005.
Banco Mercantil S.A., based in La Paz, is a multiple commercial
bank owned in its majority by the Zuazo family. The bank owns an
important branch network and as of December 2005, assets worth Bs
4,514 million and private sector deposits worth Bs 3,714 million.
These ratings were upgraded:
Issuer: Banco Nacional de Bolivia S.A.
* Long-Term Global Local-Currency Deposits: upgraded to B2
from Caa1- Stable outlook
* National Scale Rating for Local Currency Deposits: upgraded
to Aa2.bo from A2.bo - Stable outlook
* National Scale Rating for Foreign Currency Deposits:
upgraded to A1.bo from A2.bo - Stable outlook
Issuer: Banco Ganadero S.A.
* Long-Term Global Local-Currency Deposits: upgraded to B3
from Caa2 - Stable outlook
* National Scale Rating for Local Currency Deposits: upgraded
to Aa3.bo from Baa2.bo - Stable outlook
* National Scale Rating for Foreign Currency Deposits:
upgraded to Baa1.bo from Baa2.bo - Stable outlook
Issuer: Banco Mercantil S.A.
* Long-Term Global Local-Currency Deposits: upgraded to B2
from Caa1 - Stable outlook
* National Scale Rating for Local Currency Deposits: upgraded
to Aa2.bo from A1.bo - Stable outlook
These ratings were not affected:
Issuer: Banco Nacional de Bolivia S.A.
* Long-Term Global Foreign-Currency Deposits: Caa1 - Stable
outlook
* Short-Term Global Foreign-Currency Deposits: NP - Stable
outlook
* Bank Financial Strength Rating: E - Stable outlook
Issuer: Banco Ganadero S.A.
* Long-Term Global Foreign-Currency Deposits: Caa2 - Stable
outlook
* Short-Term Global Foreign-Currency Deposits: NP - Stable
outlook
* Bank Financial Strength Rating: E - Stable outlook
Issuer: Banco Mercantil S.A.
* Long-Term Global Foreign-Currency Deposits: Caa1 - Stable
outlook
* Short-Term Global Foreign-Currency Deposits: NP - Stable
outlook
* National Scale Rating for Foreign Currency Deposits: A1.bo
- Stable outlook
* Bank Financial Strength Rating: E - Stable outlook
BASIC ENERGY: Moody's Puts B1 Rating on Proposed $200 Mil. Notes
----------------------------------------------------------------
Moody's assigned a B1 rating to Basic Energy Services, Inc.'s
proposed $200 million senior unsecured notes offering and affirmed
the Ba3 rating on the company's amended $150 million senior
secured credit facility and the Ba3 Corporate Family Ratings.
Proceeds from the new notes offering will be used to refinance the
existing term loan of $90 million and revolver debt of about $96
million, which includes the funding of two recent acquisitions.
Moody's will withdraw the ratings on the term loan upon its re-
financing. The rating outlook remains stable.
On Nov. 22, 2005, Moody's upgraded Basic's Corporate Family Rating
to Ba3 to reflect the company's continued improvement in all of
its credit metrics, most notably its financial leverage. Pro-
forma for the new senior notes offering and the recent LeBus and
G&L acquisitions, total debt/EBITDA is approximately 1.8x and well
within the range for the current ratings.
The Ba3 rating also considers Basic's improved scale and
diversification of both its products and services as well as
improved regional diversification through more than a dozen
acquisitions over the past three years, which combined wit the
strong market conditions has resulted in EBITDA doubling during
that time. The ratings are also supported by a still favorable
outlook for the oilfield services sector given the continued
commodity price strength coupled with the ongoing volume
challenges facing the exploration and production companies, though
Moody's believes that the pace of the current up-cycle conditions
may decelerate this year. Also, more than 50% of the company's
operating earnings are from the durable and less commodity price
sensitive well-services segment, which focuses on existing oil and
gas production.
The ratings continue to remain constrained by the inherent
volatility and cyclicality of the oilfield services business;
event risk tied to the company's still active acquisition
strategy; the still relatively small scale compared to the
company's largest competitors; the company's singular exposure to
the very mature onshore U.S. market, most of which is in long-term
decline; and a meaningful part of the earnings and cash flows
derived from new drilling activity which is more commodity price
sensitive then the well services segment.
The stable outlook reflects: Moody's expectation that Basic will
continue to operate with the same conservative financial policies
and maintain leverage below 2.5x in the up-cycle; the current
sector outlook for oilfield services, which remains supportive at
least through 2006 and provides the company with visible earnings
and internal cash flow support for its fleet expansion and debt
service obligations; and the currently strong liquidity.
However, the outlook or ratings could face downward pressure if
management alters its conservative financial policies and funding
approach that results in sustained upcycle leverage increasing to
over 2.5x, or if downcycle leverage exceeds and remains over 3.0x;
if the company implements a dividend or a stock buyback program
which reduces cash available for growth and leverage reduction; or
if the company completes large debt-funded acquisitions.
A positive outlook, though unlikely in the near-term, would
require the company to complete amply equity-funded acquisitions
that are viewed to significantly increase its scale,
diversification and durability to its earnings and cash flows
while maintaining up-cycle leverage under 2.5x.
With a stable outlook, Moody's took these rating actions for Basic
Energy:
* Affirmed the Ba3 corporate family rating
* Affirmed the Ba3 rating on the $150 million amended senior
secured revolving credit facility.
* Assigned a B1 rating to the company's proposed $200 million
senior unsecured notes offering.
The existing revolving credit facility is sized at $150 million
and contains a $75 million accordion feature. The facility,
though secured by essentially all of the company's assets, is
currently rated at the Corporate Family Rating given the size
relative to the assets of the company combined with the fact that
it does not contain a borrowing base mechanism which would
otherwise make the facility self liquidating.
The note ratings are one notch below the Corporate Family Rating
to reflect the significant size of the secured debt carve-out,
which is $225 million for the current revolver including the
accordion feature plus a general basket of $40 million. Though
the company currently is not planning to utilize the revolver and
the notes are guaranteed by all subsidiaries, given the company's
acquisition appetite Moody's believes there may be material usage
to at least initially fund acquisitions.
The company generated approximately $147 million of pro-forma
EBITDA after taking into account the historical 2005 EBITDA
contribution from the recent acquisitions of G&L Tool and Le Bus
Oil Field Service Co. Compared to pro forma debt of $264 million,
which consists of the new notes, capital leases of $21 million,
and adjusted for operating leases, the company's leverage is about
1.8x. Book leverage is also manageable at approximately 45.70%.
Basic's liquidity position, pro forma for the notes offering will
be very solid as the company will have about $42 million in cash
on hand and the entire $150 million of availability under the
revolving credit facility. This combined with expected EBITDA for
2006 between $170 million and $200 million should provide ample
cover of the company's planned capex budget not including
acquisitions of $112 million, estimated interest expense of $17
million, and working capital needs of approximately $5 million to
$10 million, leaving ample room to fund acquisitions, increased
re-investment, and debt reduction.
Basic Energy Services, Inc., is headquartered in Midland, Texas.
BERNOULLI HIGH: Moody's Places Ba2 Rating on Senior Income Notes
----------------------------------------------------------------
Moody's Investors Service assigned these ratings to Notes issued
by Bernoulli High Grade CDO I, Ltd. and Bernoulli High Grade CDO
I, Inc.:
* Aaa to the $945,000,000 Class A1-A First Priority Senior
Secured Floating Rate Notes;
* Aaa to the $360,000,000 Class A1-B First Priority Senior
Secured Floating Rate Notes;
* Aaa to the $90,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes;
* Aa2 to the $60,000,000 Class B Third Priority Senior
Secured Floating Rate Notes;
* A2 to the $15,000,000 Class C Fourth Priority Senior
Deferrable Secured Floating Rate Notes;
* Baa2 to the $15,000,000 Class D Fifth Priority Mezzanine
Deferrable Secured Floating Rate Notes; and
* Ba2 to the Senior Income Notes.
According to Moody's, the ratings on the Notes address the
ultimate cash receipt of all required interest and principal
payments, as provided by the Notes' governing documents, and are
based on the expected loss posed to Noteholders, relative to the
promise of receiving the present value of such payments. Moody's
noted that, in the case of the Senior Income Notes, its rating
addresses solely the ultimate return of the Senior Income Note
Rated Balance, as defined in the governing documents.
The ratings reflect the risks due to the diminishment of cash flow
from the underlying portfolio consisting of structured finance
securities due to defaults, the safety of the transaction's legal
structure and the characteristics of the underlying assets.
Babcock and Brown Securities Pty Limited, a limited liability
company organized under the law of Australia, acting through its
offshore banking unit will serve as Collateral Manager for this
transaction.
BIRCH TELECOM: Designates Goldin Associates as Plan Trust Trustee
-----------------------------------------------------------------
Pursuant to their Confirmed Third Amended Joint Reorganization
Plan, Birch Telecom, Inc., and its debtor-affiliates designated
Goldin Associates, LLC, as their Plan Trust Trustee.
Under the Plan, the Plan Trust Trustee will be the transferor of
the Plan Trust Assets, New Promissory Note, the Assigned Avoidance
Actions and the Plan Trust Payment amounting to $75,000.
The Plan Trust Trustee, as overseer of the Plan Trust Agreement,
will, among others:
a) preserve and maximize the Plan Trust Assets;
b) make distributions to or for the benefit of the holders of
Allowed Claims entitled to distributions from the Plan
Trust, including holders of Allowed Lender Claims; and
c) prosecute or settle in its sole discretion the Assigned
Avoidance Action.
The Plan did not disclose the Plan Trust Trustee's fee
arrangement.
To the best of the Debtors' knowledge, Goldin Associates does not
hold any interest adverse to the Debtors and is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
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). Mark S. Chehi, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represents Birch and its
debtor-affiliates in its second chapter 11 restructuring since
2002. Robert P. Simons, Esq., and Kurt F. Gwynne, Esq., at Reed
Smith LLP, provide the Official Committee of Unsecured Creditors
with legal advice and Chanin Capital Partners LLC provides the
Committee with financial advisory services. When the Debtors
filed for protection from their creditors, they estimated more
than $100 million in assets and debts.
BIRCH TELECOM: Panel Designates Barsky as Estate Representative
---------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in the
Chapter 11 cases of Birch Telecom, Inc., and its debtor-
affiliates, designated Tamie Barsky as estate representative,
pursuant to their Confirmed Third Amended Joint Reorganization
Plan.
Under the Plan, the Estate Representative's principal duty is to
administer the Class 4 Settlement Fund.
Specifically, the Estate Representative will:
a) manage and coordinate the reconciliation, liquidation and
allowance/disallowance of all unresolved Class 4 General
Unsecured Claims and Convenience Claims, including filing
objections to those Claims;
b) engage, direct and pay, solely out of the Class 4
Settlement Fund in the Class 4 Settlement Account, the fees
and expenses of any attorneys and other advisors that might
be engaged by the Estate Representative to liquidate,
allow, disallow or otherwise settle Disputed Class 4
General Unsecured Claims;
c) direct Reorganized Debtors to make payments to holder of
Allowed Convenience Claims from funds of the Reorganized
Debtors; and
d) direct Reorganized Debtors to issue checks drawn on the
Class 4 Settlement Account to make:
-- payments of Available Class 4 Settlement Cash to
holders of Allowed General Unsecured Claims; and
-- other payments from the Class 4 Settlement Account in
satisfaction of Estate Representative Expenses.
In addition, the Estate Representative may in its sole discretion
direct the Reorganized Debtors to create a Disputed Claims Reserve
in the Class 4 Settlement Account on account of Disputed General
Unsecured Claims and for Estate Representative Expenses, and to
make on applicable Distribution Dates partial payments to holders
of Allowed General Unsecured Claims pending final liquidation and
allowance or disallowance of all Disputed and Unliquidated General
Unsecured Claims. The Class 4 Settlement Account is a segregated
escrow account for distribution to holders of Allowed Class 4
General Unsecured Claims.
The Plan did not disclose the Estate Representative's fee
arrangement.
To the best of the Committee's knowledge, Tamie Barsky does not
hold any interest adverse to the Debtors and is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code.
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). Mark S. Chehi, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represents Birch and its
debtor-affiliates in its second chapter 11 restructuring since
2002. Robert P. Simons, Esq., and Kurt F. Gwynne, Esq., at Reed
Smith LLP, provide the Official Committee of Unsecured Creditors
with legal advice and Chanin Capital Partners LLC provides the
Committee with financial advisory services. When the Debtors
filed for protection from their creditors, they estimated more
than $100 million in assets and debts.
CABLEVISION SYSTEMS: Gets Funds to Pay $3 Billion Special Dividend
------------------------------------------------------------------
Cablevision Systems Corporation' subsidiary, CSC Holdings, Inc.,
obtained access to an additional $3.5 billion under CSC Holdings'
Credit Agreement, dated as of February 24, 2006. CSC Holdings
borrowed the whole amount on March 29, 2006. Cablevision Systems
now has the funds to pay the special dividend it's been mulling.
Cablevision, however, needs to clear one a legal hurdle before it
can pay the distribution.
On March 27, 2006, Cablevision's signed a memorandum of
understanding to settle a lawsuit against the Company, its
directors and certain members and affiliates of the Dolan family.
The lawsuit pending in New York Supreme Court in Nassau County,
among other things, challenged, and sought to enjoin, the special
dividend. The proposed settlement is still subject to court
approval.
A special committee, consisting of Directors Thomas V.
Reifenheiser and Vice Admiral John R. Ryan USN (Ret.), is
evaluating further whether a dividend should be paid and, if so,
in what amount.
Used of the Proceeds
CSC Holdings used $400 million of the proceeds to repay Term Loan
A-2 borrowings under the Credit Agreement, and also paid accrued
interest on the Term Loan A-2 borrowings. $100 million will use
to pay fees and expenses of approximately $14 million incurred in
connection with the Incremental Facility and for general corporate
purposes. CSC Holdings set aside $3 billion to fund a special
dividend to Cablevision's shareholders.
Terms of the Loan
Borrowings under the Incremental Facility are CSC Holdings' direct
obligations, which are guaranteed by most of its restricted
subsidiaries and secured by the pledge of the stock of most of its
restricted subsidiaries. The interest rate on the borrowings is
the Eurodollar Rate plus 1.75%. The borrowings are to be repaid
in quarterly installments equal to 0.25% of the original aggregate
principal amount of the Incremental Facility over the first 24
quarters and 23.5% of the original aggregate principal amount over
the next three quarters and at the final, seven-year, maturity
date.
Principal covenants include a limitation on the incurrence of
additional indebtedness based upon a maximum ratio of total
indebtedness to cash flow of 7.50:1 reducing down in increments to
5.00:1 on and after January 1, 2010, and a ratio of total
borrowings under the Credit Agreement to cash flow of 4.5:1, and
restrictions on liens, dividends and distributions, asset
dispositions and transactions with affiliates.
As reported in the Troubled Company Reporter on March 22, 2006,
Moody's Investors Service assigned a Ba3 rating to CSC Holdings'
$3.5 billion senior secured term. Standard & Poor's Ratings
Services assigned its 'BB' rating to the loan with a recovery
rating of '2', indicating the expectation for substantial recovery
of principal in a default or bankruptcy.
Headquartered in New York City, New York, Cablevision Systems
Corporation -- http://www.cablevision.com/-- is one of the
nation's leading telecommunications and entertainment companies.
Cablevision currently operates the nation's single biggest cable
cluster, serving 3 million households in the New York metropolitan
area. Its portfolio of operations ranges from high-speed internet
access, robust digital cable television as well as advanced
digital telephone services, professional sports teams, world-
renowned entertainment venues and national television program
networks.
At Sept. 30, 2005, Cablevision Systems' balance sheet showed
liabilities exceeding assets by more than $2.4 billion.
CALPINE CORP: To Reduce Annual Costs by $150 Million by Downsizing
------------------------------------------------------------------
Calpine Corporation (OTC Pink Sheets: CPNLQ - News) identified a
number of non-core and non-strategic power plants for potential
sale. The company is also closing three additional offices, and,
as the company completes asset sales and construction activities,
will reduce its workforce by 775 employees. Through these
actions, Calpine is taking the necessary steps to:
* improve its financial performance,
* enhance its overall value, and
* make measurable progress towards emerging from Chapter 11 a
profitable, more competitive company.
"We are refocusing Calpine's resources on what we do best, power
generation," Robert P. May, Calpine's Chief Executive Officer,
stated. "We're downsizing our portfolio and market reach, and
focusing on core assets and markets where Calpine can best
compete. Calpine is selling high quality, non-core assets, and by
doing so, will become a smaller, more focused power company,
purposefully structured around profitable operating assets."
A systematic review of the entire company has identified
approximately 20 power plants in operation or under construction
that are no longer considered to be core operations due to a
combination of factors, including financial performance, market
prospects, and strategic fit. Accordingly, the company will be
seeking to sell the majority of these assets by the end of 2006.
At the completion of this effort, Calpine expects to retain a
generating portfolio of clean and reliable geothermal and natural
gas-fired power plants located in key North American markets.
To further reduce costs, Calpine has initiated measures to close
offices in Atlanta, Georgia, Boston, Massachusetts, and Dublin,
California. Day-to-day business operations will be primarily
consolidated into Calpine's San Jose, California headquarters as
well as offices in Houston, Texas, and Folsom, California.
Taken as a whole, these restructuring activities also necessitate
a decline in staffing to levels appropriate for a smaller, more
streamlined organization. As a result, Calpine will reduce
staffing by approximately 775 positions, the majority of which
will take place by the end of 2006 as the company completes both
plant sales and construction activities. Approximately 100
employees will be immediately affected.
"We're making the tough decisions that are essential for Calpine
to emerge from bankruptcy a viable and valuable enterprise," Mr.
May added. "I'm encouraged by the progress we are making in our
restructuring. Together with our cost-cutting actions announced
in February, we will reduce our annual costs by over $150 million.
I believe Calpine has good people, good assets, and all the right
ingredients for long term success."
About Calpine Corp.
Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities
with electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces. Its customized products and services
include wholesale and retail electricity, gas turbine components
and services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services. The Company filed for chapter 11 protection on Dec.
20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M.
Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and
Robert G. Burns, Esq., Kirkland & Ellis LLP represent the
Debtors in their restructuring efforts. Michael S. Stamer,
Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the
Official Committee of Unsecured Creditors. As of Dec. 19, 2005,
the Debtors listed $26,628,755,663 in total assets and
$22,535,577,121 in total liabilities.
CALPINE CORP: Wants to Plan-Filing Deadline Extended to Dec. 31
---------------------------------------------------------------
Calpine Corporation asks permission from the U.S. Bankruptcy Court
for the Southern District of New York to further extend its
exclusive periods to:
(a) file a plan of reorganization through Dec. 31, 2006;
and
(b) file and solicit acceptances of that plan through
March 31, 2007.
Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York,
relates that since the Dec. 20, 2005, the Debtors have taken many
steps toward emerging from Chapter 11, including:
(a) proposing, negotiating, amending and finalizing the terms
of their $2,000,000,000 DIP Financing;
(b) proposing, negotiating, amending and finalizing the terms
of the final order authorizing the Debtors' use of cash
collateral of all the Debtors' parent company and project-
level lenders;
(c) preparing for and defending against litigation arising in
connection with the Debtors' rejection of certain power
purchase agreements, including litigation at the District
Court and the expedited appeal to the Court of Appeals;
(d) determining whether and how each of the Debtors' numerous
projects should be restructured. Specifically, the
Debtors have identified certain under-performing projects
as the Designated Projects which may be sold, turned over
to creditors, idled or restructured;
(e) commencing review of thousands of executory contracts and
leases;
(f) implementing the relief authorized by the Court on the
Petition Date to preserve the Debtors' relationships with
their employees, customers, suppliers, lenders, lessors
and others;
(g) gathering the information required to complete the
Debtors' schedules and statements;
(h) stabilizing relationships with key energy trading
partners, including negotiation of a final safe harbor
trading order and the assumption of approximately 250
trading contracts and the negotiation of various new
trading contracts; and
(i) negotiating the final form of the utilities order and
negotiating utility deposits with many utility providers.
However, given the scale and complexity of the restructuring, Mr.
Cantor says much work remains to be done before the Debtors can
develop a business plan and propose a viable plan of
reorganization.
Mr. Cantor also notes that the Debtors have not yet filed their
Schedules and Statements or set a claims bar date. Accordingly,
the Debtors are not yet in a position to accurately evaluate
their assets and liabilities and the universe of claims against
them or determine an appropriate post-reorganization capital
structure.
Extension Is Warranted
Mr. Cantor tells the Court that the Debtors do not seek extension
to delay administration of the cases or to pressure creditors to
accept an unsatisfactory plan. Rather, he says an extension is
intended to facilitate an orderly, efficient and cost-effective
plan process for the benefit of all creditors. The failure to
extend the Exclusive Periods would defeat the fundamental purpose
of section 1121 of the Bankruptcy Code to provide the Debtors
with a reasonable opportunity to negotiate with creditors and
other parties in interest and propose a confirmable plan of
reorganization.
Mr. Cantor assures the Court that the Debtors have sufficient
liquidity to pay their postpetition bills as they come due,
including making current payments of interest to various lenders
at both the project and corporate levels and paying the fees of
the project lessors' and project and corporate creditors'
professional advisors. The Debtors also have sufficient
resources to meet all projected postpetition payment obligations
and based on projected cash outflows, have sufficient cash to
fund the Reorganization Cases.
About Calpine Corp.
Headquartered in San Jose, California, Calpine Corporation --
http://www.calpine.com/-- supplies customers and communities with
electricity from clean, efficient, natural gas-fired and
geothermal power plants. Calpine owns, leases and operates
integrated systems of plants in 21 U.S. states and in three
Canadian provinces. Its customized products and services include
wholesale and retail electricity, gas turbine components and
services, energy management and a wide range of power plant
engineering, construction and maintenance and operational
services. The Company filed for chapter 11 protection on Dec. 20,
2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri,
Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert
G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in
their restructuring efforts. Michael S. Stamer, Esq., at Akin
Gump Strauss Hauer & Feld LLP, represents the Official Committee
of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed
$26,628,755,663 in total assets and $22,535,577,121 in total
liabilities. (Calpine Bankruptcy News, Issue No. 11; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
CARRETERAS AUTOPISTAS: Moody's Puts Senior Secured Ratings at Ba1
-----------------------------------------------------------------
Moody' s assigned Ba1 senior secured ratings to Concesionaria de
Carreteras Autopistas y Libramientos de la Republica Mexicana's
MXN$1.75 billion CPO program. The rating outlook is stable.
Concesionaria De Carreteras Autopistas Y Libramientos De La
Republica Mexicana, S.A. de C.V. will issue up to MXN$1.75 billion
of Certificados Bursatiles with interest denominated in UDIS and a
15-year maturity. Banco Inbursa is also providing an irrevocable
line of credit in the amount of up to MXN$750 million with an
interest rate of 6.5%. The line of credit will rank pari passu
with the Certificados Bursatiles and will have a ten-year
repayment period. Proceeds from the Certificados and the line of
credit will fund construction works for the Autopista Tepic-Villa
Union toll road. The works include construction of Section 1, a
new section granted as part of the TVU concession agreement, and
upgrade work on Section 2, a tolled section of the road that is
already in operation.
TVU consists of a 238 km toll road running parallel to federal
highway 15 along the Pacific coast. The Concessionaire was
awarded a 30-year concession to build, operate and maintain the
toll road. Section 1 was assigned with rights to construct,
operate and maintain the section. Section 3 was granted with the
stipulation that the government assumes full construction
responsibility. Sections 2, 4 and 5 are already operational.
The ratings and outlook assigned to the Certificados reflect the
fundamental and structural credit strengths of the toll road,
including: a favorable alignment, moderate construction risk,
strong projected debt service coverage levels, and certain
protections afforded investors under the terms and conditions of
the concession and the trust agreement.
Moody's considers TVU's position to be strategically important.
TVU is a segment of a well-established traffic corridor that is a
primary north-south approach from Mexico City to Tijuana. The
road represents an important component of El Plan Nacional de
Desarollo, Mexico's economic development initiative focused on the
key transportation and infrastructure needs of the country. The
service area crosses the states of Nayarit and Sinaloa, which are
important agricultural zones, linking them north toward Mazatlan,
one of Mexico's busiest ports, and to the southern portion of the
country. The road also serves as a conduit for domestic tourist
travel for Mexican nationals wishing to travel within the region
to Mazatlan.
Built in the 1950s, the corridor enjoys an established user
profile made up of approximately 75% passenger vehicle traffic and
approximately 25% of commercial traffic -- buses and trucks. The
full alignment consists of three sections with an approximately 10
to 5-year toll collection history. Currently, trucks prefer to
use this high-speed, long journey road rather than using the
alternative road which runs for the most part parallel to the toll
road. Upon completion of Sections 1 and 3, the journey from Villa
Union to Tepic will be shortened by two hours, from the current
4.5 hours to approximately 2.5 hours. Currently traffic is lowest
on Mondays and grows incrementally through the weekend. Peak
traffic levels occur in the evenings as truckers prefer to cross
during low traffic periods.
The free alternative road provides somewhat limited competition.
The average time savings compared to the alternative free road is
on average about 20-40 minutes in each section. The free
alternative includes several segments that cross through local
towns and farms with various passenger and animal crossings. Given
the highly commercial nature of the service area and the long-
standing location of the toll road within the national transport
network, it seems likely that the well-established patterns of
user behavior will continue in the long run, absent a substantial
decline in the economy. Once the project is completed,
approximately 45% of toll revenues are expected to be derived from
sections 2-5, with the remaining revenues expected to be derived
from the longer Section 1.
Construction risk is considered moderate since works consist
essentially of an upgrade and expansion of an existing segment of
a road that has extensive traffic records and longstanding usage
patterns. Project works include various small bridges along the
alignment. Upgrade works for Section 2 largely involve
repavement. Risks are mitigated by a requirement that
Concessionaire maintain a reserve consisting of 17% of total
construction costs throughout the construction period.
Additionally, the insurance package is fairly standard, covering
physical damages, equipment damages, force majeure damages, etc.
Debt service coverage levels under the base case are projected at
1.4x over the next few years and increasing to 1.6x, which Moody's
views as strong for comparably rated toll roads. The base case
scenario assumes average annual traffic growth of 5% from 2006 to
2009 and more conservative, but constant growth thereafter. The
base case scenario also assumes prepayments of the Certificados.
Downside scenarios assuming lower or even zero traffic growth
indicate a robust ability to repay debt on schedule.
The Ba1 / Aa3.mx ratings and stable outlook also reflect
structural protections afforded investors under the terms of the
concession and the trust agreement. Under the terms of the
concession, the Concessionaire can't receive dividends until the
debt has been fully repaid, which creates a strong incentive for
prepayment of debt. Additionally, the concession requires a
contingency fund of MXN$55 million and a major maintenance fund of
MXN$2.5 million. Bondholders will also benefit from a debt
service reserve fund initially covering six months of debt service
and that will be subsequently funded up to twelve months of debt
service with operating cash flow.
TVU's ratings also consider a number of credit weaknesses that are
not fully mitigated. These weaknesses include the lack of
restrictions on additional debt, the participation by affiliated
companies in multiple aspects of the project, reliance on a dated
traffic study, and the lack of restrictions on potential
competitive toll roads.
Although we note that it is subject to approval by the Secretaria
de Comunicaciones y Transportes and such approval would likely be
directed toward improvements or extensions of the road, the
concession permits additional debt to be issued without
necessarily making existing bondholders whole for any potential
change in credit quality.
Additionally, we note that affiliates of the Concessionaire will
be providing construction services, operation and maintenance
services, and that an indirect affiliate will be providing the
line of credit to the project and other financial services to the
project. An indirect affiliate may also own some of the
Certificados. While these types of inter-relationships are
believed to be conducted on an arms-length and commercial basis,
we note that potential conflicts of interest may not be fully
mitigated.
Moody's also observes that the base case scenario reflects traffic
growth assumptions based on a somewhat dated traffic study. The
traffic study was undertaken by SEMIC in 2003 on behalf of the
SCT.
Lastly, although highly unlikely due to the physical configuration
of the corridor and the already existing alternative free road, we
note that the SCT has the right to build additional concessions
that might compete with the project. If that occurs, the
concession agreement stipulates compensation measures by the SCT
that would allow the concessionaire to recover initial investment
and additional expenses incurred in project operations. However,
it is likely that debt service coverage levels would be negatively
affected.
Factors that could move the rating up include a sizeable and
sustainable improvement in the road's cash flow in combination
with a significant increase in traffic growth.
Factors that could move the rating down include a significant
deterioration of cash flows due to increased operating costs or
lower traffic, a significant decline in the credit quality of
Mexico, or a detrimental change in the regulatory framework for
toll roads or negative regulatory interference in TVU.
Concesionaria De Carreteras Autopistas Y Libramientos De La
Rep£blica Mexicana, S.A. de C.V. is a subsidiary of Impulsora del
Desarollo Econ¢mico de America Latina, S.A. which owns Autopista
Tepic -- Villa Union, a 238 km toll road on Mexico's Pacific
Coast.
CATHOLIC CHURCH: Classes & Treatment of Claims Under Portland Plan
------------------------------------------------------------------
The First Modified Plan of Reorganization filed by the
Archdiocese of Portland in Oregon groups claims against the
Debtor into 13 classes:
Class Description
----- -----------
N/A Administrative Claims
N/A Priority Tax Claims
1 Non-Tax Priority Claims
2 Administrative Convenience Claims
3 Umpqua Claims
4 Perpetual Endowment Fund
5 Key Bank Guaranty Claim
6 General Unsecured Claims
7 Present Tort Claims
8 Future Claims
9 Supplemental Present Tort Claims
10 Retiree Benefit Claims
11 Donor Claims
12 Beneficiary Claims
13 Oregon Insurance Guaranty Association Claim
Classes 3, 4, 5, 6, 7, 8 and 13 are impaired and are entitled to
vote for the acceptance or rejection of the Modified Plan.
Class 9 is impaired but it is not entitled to vote because it is
duplicative of Class 8.
Classes 1, 2, 10, 11, and 12 are unimpaired and deemed to accept
the Modified Plan. Accordingly, these Classes are not allowed to
vote.
Portland estimates Administrative Claims to be $2,658,000, as of
the effective date of the Modified Plan, given the Effective Date
occurs in June 2006.
The projected recoveries for the holders of Allowed Claims under
the Modified Plan are:
Approximate Dates & Approximate Estimated
Class Allowed Amt. Amount of Distribution Recovery
----- ------------ ---------------------- ---------
1 $2,920 In full when the Claims 100%
become due, or if already
due, on the Effective
Date or if later, the
Allowance Date
2 $60,795 In full on the Effective 100%
Date or if later, the
Allowance Date
3 $361,800 180 consecutive equal 100%
monthly installments,
including principal and
interest at the non-default
contract rate, commencing
within 30 days following
the Effective Date, or if
later, the Allowance Date
4 $5,131,807 180 consecutive equal 100%
monthly installments,
including principal and
interest at the non-default
contract rate, commencing
within 30 days following
the Effective Date, or if
later, the Allowance Date
5 $20,218,730 Reorganized Debtor will N/A
assume the Key Bank guaranty
obligation and pay according
to its terms, subject to
revisions to the guaranty
agreement that will permit
the Reorganized Debtor to
cure any default and continue
making any payments required
of the principal obligor on
the underlying obligations
secured by the guaranty
before the guaranty obligation
would become due and payable.
6 $461,505 12 consecutive equal monthly 100%
installments, including
principal and interest at
the Plan Interest Rate,
commencing within 30 days
following the Effective
Date, or if later the
Allowance Date
7 Approximately Allowed Present Claims to be 100%
$2,000,000 paid by Claims Resolution
in settled Facility after the Claims
Present Tort become Allowed and as
Tort Claims, distributions are authorized
as of by the District Court. Any
March 28, claims for punitive damages
2006, plus will be subordinated to the
an payment of compensatory
additional damages, thus, it is unknown
amount for when distributions might be
Unresolved made for Punitive Damages
Present Tort
Claims to be
estimated by
the District
Court
8 To be To be paid by Claims 100%
estimated by Resolution Facility after
the District the Claims become Allowed
Court and as distributions are
authorized by the District
Court. Any claims for
Punitive Damages will be
subordinated to the payment
of compensatory damages,
thus it is unknown when
distributions might be made
for Punitive Damages
9 N/A - To be paid by Claims 100%
Included in Resolution Facility after
Class 8 the Claims become Allowed
and as distributions are
authorized by the District
Court. Any Claims for
Punitive Damages will be
subordinated to the payment
of compensatory damages,
thus, it is unknown when
distributions might be
made for Punitive Damages
10 $404,000 To be assumed and paid by 100%
the Archdiocese when due
in accordance with the
terms of the benefit plans
providing for payment of
the Claims
11 N/A Reorganized Debtor to comply N/A
with the Canon Law and civil
law regarding the donors'
intent and any restrictions
on the use and disposition
of donated property
12 N/A Reorganized Debtor to comply N/A
with the Canon Law and civil
law regarding the use and
disposition of property
held in trust or otherwise
for the benefit of the Parishes,
parishioners, and others
13 $2,641,071 If Allowed, to be paid by 100%
the Reorganized Debtor in
in 60 consecutive monthly
installments, including
principal and interest at
the Plan Interest Rate,
commencing within 30 days
following the Effective Date,
or if later, the Allowance Date
Key Bank's Claim
The Key Bank Guaranty Claim results from the Archdiocese's
guaranty of loans made to Assumption Village, LLC, Trinity Court,
LLC, and Village Enterprises, LLC, for construction loans to build
those projects. The Loans are secured by letters of credit issued
by Key Bank. The unpaid balance on the Loans currently totals
approximately $20,218,730. Neither the borrower's obligations on
the Loans nor the Archdiocese's guaranty obligations to Key Bank
are in default.
The Archdiocese has obtained information from Key Bank that it has
current appraisals showing the value of the properties to be worth
approximately $15,000,000. If the appraisal is correct, Key
Bank's Claim could be under secured by as much as $5,000,000.
Present Tort Claims
Allowed Present Tort Claims consist of three claims that were
settled prepetition totaling approximately $2,001,603. If any
Claims are allowed between now and the Effective Date, they will
be added to this number.
Unresolved Present Tort Claims allege damages of over
$500,000,000. In addition to Tort Claims alleging child sex
abuse, Unresolved Present Tort Claims include:
* torts allegedly committed while the Claimant was an adult;
and
* claims of co-defendants for indemnity or contribution for
the underlying tort claims.
As of March 28, 2006, the Archdiocese estimates that the amount of
Unresolved Present Tort Claims for child sex abuse is
approximately $30,518,139, plus approximately $7,000,000 in
tentatively resolved Claims. The Archdiocese estimates the
Unresolved Present Tort Claims, which are not based on child sex
abuse at approximately $500,000.
Thus, the Archdiocese's estimated value of all Unresolved Present
Tort Claims is currently approximately $38,000,000. Judge Perris
has stated that further work will need to be done to determine the
actual methodology to be used in estimating those Claims.
Oregon Insurance Guaranty Association Claim
Oregon Insurance Guaranty Association asserts a claim for
$2,641,071 against the Archdiocese based on prepetition payments
made by OIGA to pay settled Tort Claims that were insured by
insolvent insurance companies. OIGA made the payments under a
reservation of rights.
OIGA's Claim against the Archdiocese is based on the reservation.
OIGA asserts that it has no liability for payment of the Tort
Claims as the guarantor of the insolvent insurers' obligations.
The Archdiocese believes that OIGA's Claim should be disallowed.
If, however, the Claim is ultimately allowed, OIGA will receive
payment from the Archdiocese equal to 100% of its Allowed Claim in
monthly installments.
About Archdiocese of Portland
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents
the Official Tort Claimants Committee in Portland, and scores of
abuse victims are represented by other lawyers. David A. Foraker
serves as the Future Claimants Representative appointed in the
Archdiocese of Portland's Chapter 11 case. In its Schedules of
Assets and Liabilities filed with the Court on July 30, 2004, the
Portland Archdiocese reports $19,251,558 in assets and
$373,015,566 in liabilities. (Catholic Church Bankruptcy News,
Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CATHOLIC CHURCH: Portland Files First Modified Reorganization Plan
------------------------------------------------------------------
The Archdiocese of Portland in Oregon delivered its First
Modified Plan of Reorganization and accompanying Disclosure
Statement to the U.S. Bankruptcy Court for the District of Oregon
on March 28, 2006.
Among other things, the Modified Plan reflects:
* amendments to the classification and treatment of
claims;
* additional information, which include:
-- updates on the property of the estate litigation;
-- the filing of the Tort Claimants Committee's proposed
Plan for the Archdiocese; and
-- Judge Perris' opinion concerning estimation of tort
claims;
* additional information and clarification concerning assets
and liabilities of the Archdiocese;
* information with respect potential sources of funding; and
* amendments to the provision concerning the treatment of
punitive damages.
Leonard Vuylsteke, the Archdiocese's Director of Financial
Services relates that under the Modified Plan, Portland will
provide funds in an amount that the U.S. District Court for the
District of Oregon determines will be sufficient to pay all Claims
in full, based on the settled or agreed amount of the Claims,
which are resolved prior to the date confirming the Plan.
For those Claims that remain unresolved prior to the Confirmation
Date, Portland will provide funds in an amount, which the
District Court determines is likely to be awarded for the Claims
through settlements, arbitrations, or trials.
Payments to creditors will be channeled through a claims
resolution facility -- Archdiocese of Portland Claims Resolution
Facility, Inc. -- which will assume liability for, and will
resolve and pay, tort claims, including future claims. The
Archdiocese will provide funding to the Facility in an aggregate
amount that the District Court determines will be sufficient to
pay all Tort Claims in full, including Future Claims, and any
portion of those Claims for punitive damages or a penalty.
Except as provided, all Claims against the Archdiocese arising
prior to the entry of a Confirmation Order will be discharged as
of the Plan Effective Date.
Claims Resolution Facility
The Modified Plan provides that the Reorganized Debtor will own
Archdiocese of Portland Claims Resolution Facility, Inc., and that
it will be managed by a board of directors consisting of three
persons to be chosen by the Archbishop of Portland, upon
consultation with the Archdiocesan Finance Council.
A "Depository Trust" will be established pursuant to the Claims
Resolution Facility Agreement as a Qualified Settlement Fund with
the Tort Claimants being the beneficiaries of the Depository
Trust.
All funds paid by the Reorganized Debtor to the Facility for
payment of Tort Claims will be deposited in the Depository Trust.
These funds will not be available to the Facility to pay any other
expenses, Mr. Vuylsteke says.
If any funds are left in the Depository Trust after payment of the
Tort Claims, the funds will be returned to the Reorganized Debtor.
The Reorganized Debtor's obligations to the Facility will consist
of the amount necessary to pay:
(1) the operating expenses of the Facility, including defense
costs for resolution of the Tort Claims; and
(2) the amount, not to exceed the District Court's estimate,
that is necessary to pay the Allowed amount of the Tort
Claims in full, including the Future Claims and any
Punitive Damages.
The Reorganized Debtor's obligations to the Facility will be
funded by a line of credit in a sufficient amount to fund the
District Court's estimate of the Claims. The line of credit will
be secured by irrevocable letters of credit provided to the
Facility equal in amount to the District Court's estimation. As
the Reorganized Debtor makes payments to the Facility to pay
Claims, the Letters of Credit will be reduced in a corresponding
amount.
Mr. Vuylsteke relates that the Archdiocese has not yet secured
either the line of credit or the letters of credit because it is
currently unknown how much funding will actually be necessary.
The Amount can only be determined once the District Court has
issued its estimate of the amount of the Claims, Mr. Vuylsteke
says.
Nevertheless, the Archdiocese and its financial advisor, Mesirow
Financial Consulting, LLC, have discussed the line of credit
funding mechanism with a number of prospective lenders. Portland
is confident that it will be able to obtain the necessary funding
once the District Court provides the Archdiocese's estimate of the
Claims.
Depending on the amount of funding that will be necessary, the
Parishes may be required to provide a portion of the collateral
base for the line of credit, consisting of parish real property
and investments. The Archdiocese has had lengthy discussions with
the Parishioners Committee regarding these funding issues and
based on those discussions the Archdiocese believes it will be
able to obtain the necessary Parish consent to use the Parish
property, if necessary, as collateral to secure the line of credit
and obtain the letters of credit for the Facility.
Although Mr. Vuylsteke believes that Portland will be able to
obtain the necessary funding for the Plan, there is a possibility,
he says, that the Archdiocese will be unable or unwilling to do so
if the District Court's estimates are substantially higher than
the Archdiocese's current estimates.
The Archdiocese estimates the present known Tort Claims at
$38,000,000. No formal estimate of the Future Claims or Punitive
Damage claims has yet been made.
The Facility Agreement
The Claims Resolution Facility Agreement under the Modified Plan
does not require the Facility to provide any Claimant with an
appeal bond or other security in the event the Facility elects to
appeal any judgment awarded to a Tort Claimant. Although an
appeal bond of security is usually required under state law to
protect the judgment creditor in the event the judgment debtor is
unable to pay the judgment, the Archdiocese does not believe this
to be necessary under the Facility.
The Facility is required to manage the funds in the Facility for
payment of Tort Claims so as to assure that all Tort Claims are
fairly and equably paid, Mr. Vuylsteke explains. In addition, the
District Court must authorize any distributions to Tort Claimants
with a view toward preserving the funds and paying Tort Claimants
equally.
Therefore, Mr. Vuylsteke says, an appeal bond or other security
should not be necessary under these circumstances.
A full-text copy of the Claims Resolution Facility Agreement is
available for free:
http://bankrupt.com/misc/portland_facilityagreement.pdf
Punitive Damages
Under the Modified Plan, payment of punitive damages will be
subordinated to payment of all other Tort Claims, to the extent
they are not for punitive damages. At Closing, the Reorganized
Debtor will, in full release, satisfaction and discharge of all
punitive damages, execute and deliver the Facility Agreement
together with the initial payment, promissory notes, letters of
credit, and other required security documents to the Depository
Trustee, thereby establishing the Facility for the liquidation and
payment of all punitive damages.
Punitive Damages will not be paid until the District Court
determines that sufficient funds are available in the Facility to\
pay the claims without jeopardizing payment in full of the
compensatory portion of all other Tort Claims, including Future
Claims.
Because the Future Claims Bar Date will not occur for 15 years
from the Effective Date, it is possible that the District Court
will not authorize any payments for punitive damages for many
years, if at all, prior to the Future Claims Bar Date and the
resolution of all Future Claims.
Insurance Recoveries
The Archdiocese will assign its rights that have accrued for
covered losses relating to the Tort Claims to the Facility,
including the right to receive all Insurance Recoveries.
Upon resolution of the Insurance Claims against the Insurance
Companies, all Insurance Recoveries will be paid to the Facility
for deposit in the Depository Trust and used to pay Tort Claims.
The Modified Plan is intended to be "insurance neutral," meaning
all claims and defenses of the Archdiocese, the Facility, and the
Insurance Companies relating to the Insurance Claims, and all
rights of the Archdiocese, the Facility, and the Insurance
Companies relating to the Insurance Policies, will remain
unaffected by the Plan and Confirmation Order, Mr. Vuylsteke
explains.
Potential Sources of Funding
According to the Modified Plan, there are four main categories of
property in which the Archdiocese holds some type of interest:
(1) Unrestricted Archdiocesan Property, the current estimated
fair market value of which is $24,529,238;
(2) Restricted Archdiocesan Property, the current estimated
fair market value of which is $93,159,916;
(3) Parish and School Property valued at $389,820,856; and
(4) Insurance Recoveries valued substantially in excess of
$20,000,000.
Additional potential sources of funding identified by the
Archdiocese include annual payments from Oregon Catholic Press and
revenues from the Archdiocesan Cemeteries.
Feasibility
Mr. Vuylsteke notes that the Reorganized Debtor's ability to meet
its obligations under the Plan cannot be adequately analyzed until
the District Court completes its estimation of the Tort Claims.
For this reason, the Archdiocese refrained from preparing
projections of the amount of funding that will be needed or a
projected cash flow from the Archdiocese's operations and from
loans the Archdiocese will secure to fund payments under the Plan.
The Archdiocese will only be able to provide realistic cash flow
projections once the Claims estimation process is completed, Mr.
Vuylsteke says.
Nevertheless, the Archdiocese does not believe that the
projections are necessary or required for creditors to have
adequate information to determine whether to vote for, or against,
the Plan.
If creditors are willing to accept the District Court's
estimations that will establish the aggregate amount of the funds
to be made available to pay the Tort Claims, Portland states that
creditors should vote to accept the Plan.
The Bankruptcy Court will determine at confirmation if the
Archdiocese has obtained sufficient funding, or if the
Archdiocese and the Parishes have committed sufficient assets,
which will result in payments to Tort Claimants up to the
aggregate amount of the District Court's estimates. If the
Bankruptcy Court cannot make that determination, the Plan will not
be confirmed.
Best Interest Test & Liquidation Analysis
Either prior to, or as part of the confirmation hearing, the
District Court will estimate the aggregate amount necessary to pay
all Tort Claims in full. In doing so, the District Court will be
establishing the aggregate allowed amount of the Tort Claims for
purposes of confirming Portland's Plan and determining whether the
Plan is in the best interest of creditors.
By providing funding equal to the aggregate allowed amount of the
Claims, as determined at the time of confirmation, the Modified
Plan will satisfy the requirement that a plan provide creditors
with as much as they would receive in a Chapter 7 liquidation of
the Debtor's assets, Mr. Vuylsteke says.
Modified Plan Must be Approved
Mr. Vuylsteke notes that the Modified Plan provides significantly
"more money" for creditors than the Archdiocese would be forced to
pay if it were successful in the property of the estate
litigation.
If the Archdiocese's Plan is not confirmed and the appellate court
were to rule that the Parish Property is not available to pay
Claims, the Archdiocese might have little incentive at that point
to offer an amount that would be sufficient to pay the estimated
amount of all Claims, Mr. Vuylsteke adds.
Therefore, the Archdiocese urges creditors who are entitled to
vote, to vote to accept the Modified Plan and return their ballots
to The BMC Group, Inc. -- the noticing and claims agent -- on or
before the voting deadline.
The Archdiocese expects to emerge from bankruptcy in June 2006.
A blacklined copy of Portland's First Modified Disclosure
Statement is available for free at:
http://bankrupt.com/misc/Portland1stModDiscl_Statement_BL.pdf
A blacklined copy of Portland's First Modified Plan of
Reorganization is available for free at:
http://bankrupt.com/misc/Portland1stModPlan_BL.pdf
About Archdiocese of Portland
The Archdiocese of Portland in Oregon filed for chapter 11
protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004.
Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman
Shank LLP, represent the Portland Archdiocese in its restructuring
efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents
the Official Tort Claimants Committee in Portland, and scores of
abuse victims are represented by other lawyers. David A. Foraker
serves as the Future Claimants Representative appointed in the
Archdiocese of Portland's Chapter 11 case. In its Schedules of
Assets and Liabilities filed with the Court on July 30, 2004, the
Portland Archdiocese reports $19,251,558 in assets and
$373,015,566 in liabilities. (Catholic Church Bankruptcy News,
Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CAVALRY CLO: Moody's Places Ba2 Rating on $12 Mil. Class D Notes
----------------------------------------------------------------
Moody's Investors Service assigned these ratings to the Notes and
Composite Notes issued by Cavalry CLO I, Ltd.:
* Aaa to $80,000,000 Class A-1a Senior Secured Revolving
Floating Rate Notes due 2022;
* Aaa to $205,500,000 Class A-1b Senior Secured Floating Rate
Notes due 2022;
* Aa2 to $10,000,000 Class A-2 Senior Secured Floating Rate
Notes due 2022;
* A2 to $10,250,000 Class B-1 Senior Secured Deferrable
Floating Rate Notes due 2022;
* A2 to $12,750,000 Class B-2 Senior Secured Deferrable Fixed
Rate Notes due 2022;
* Baa2 to $27,000,000 Class C Senior Secured Deferrable
Floating Rate Notes due 2022;
* Ba2 to $12,000,000 Class D Secured Deferrable Floating Rate
Notes due 2022;
* Aa2 to $8,000,000 Type I Composite Notes due 2022; and
* A1 to $4,000,000 Type II Composite Notes due 2022.
The Moody's ratings of the Notes address the ultimate cash receipt
of all required interest and principal payments, as provided by
the Notes' governing documents, and are based on the expected loss
posed to Noteholders, relative to the promise of receiving the
present value of such payments. The Moody's rating of the Type I
Composite Notes and the Type II Composite Notes addresses only the
ultimate receipt of the "Rated Balance".
The ratings reflect the risks due to the diminishment of cash
flows from the underlying portfolio due to defaults, the
transaction's legal structure and the characteristics of the
underlying assets.
Regiment Capital Management, LLC, will manage the selection,
acquisition and disposition of collateral on behalf of the Issuer.
CDC MORTGAGE: S&P Downgrades Class B-2 Transaction Rating to BB
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its rating on class
B-2 from CDC Mortgage Capital Trust 2002-HE3 to 'BB' from 'BBB-'
and placed it on CreditWatch with negative implications. At the
same time, the 'BBB-' rating on class B-2 from CDC Mortgage
Capital Trust 2003-HE1 is placed on CreditWatch with negative
implications.
The lowered rating reflects actual and projected credit support
percentages that are insufficient to maintain the previous rating.
Excess interest has been insufficient to cover realized losses for
series 2002-HE3. During the past 12 months, average monthly
realized losses for this transaction amounted to $379,466, which
is 28.66% more than the average monthly excess interest of
$294,939 generated during the period. Additionally, the
overcollateralization level for the series is below its target.
The average monthly realized losses for series 2003-HE1 amounted
to $393,318 during the past 12 months, which is 22.90% more than
the average monthly excess interest of $320,036. Additionally,
the overcollateralization level for the series is below its
target.
The ratings on the two classes are placed on CreditWatch negative
because of the additional projected losses expected due to high
delinquencies. As of the February 2006 distribution date, total
delinquencies for series 2002-HE3 were 33.47%, with 18.96%
categorized as seriously delinquent (90-plus days, foreclosure,
and REO); for series 2003-HE1, total delinquencies were 28.22%,
with 15.49% categorized as seriously delinquent.
Standard & Poor's will continue to closely monitor the performance
of these transactions. If the delinquent loans translate into
realized losses that continue to outpace excess interest,
additional rating actions may be taken on these classes, depending
on the size of the losses and the remaining credit support.
The collateral for these transactions consists of pools of fixed-
and adjustable-rate mortgage loans secured by first liens on one-
to four-family residential properties.
Rating lowered and placed on creditwatch negative:
CDC Mortgage Capital Trust 2002-HE3
Rating
Class To From
----- -- ----
B-2 BB/Watch Neg. BBB-
Rating placed on creditwatch negative:
CDC Mortgage Capital Trust 2003-HE1
Rating
Class To From
----- -- ----
B-2 BBB-/Watch Neg. BBB-
CELLSTAR CORP: Inks $85 Million Amended Revolving Credit Facility
-----------------------------------------------------------------
On March 31, 2006, CellStar Corporation (OTC Pink Sheets: CLST)
signed an Amended and Restated Loan and Security Agreement with
its lending group led by Wells Fargo Foothill, part of Wells
Fargo & Company (NYSE: WFC). The agreement extends the terms
of the existing $85 million revolving credit facility to
September 2009 and provides for an interest rate reduction.
"This agreement is a key component of our capital structure and
will serve us well as we move forward," Mike Farrell, Executive
Vice President and Chief Administrative Officer, said. "We
appreciate the continued support of our lending group. Our lead
lender, Wells Fargo Foothill, has worked closely with us as we
continue to stabilize the company."
"We are glad to continue our relationship with CellStar," Victor
Barwig, Senior Vice President and Loan Portfolio Manager at Wells
Fargo Foothill, said. "We look forward to supporting the
management team and its plans for the future through this extended
facility."
The agreement also provides a mechanism for increased borrowing
capacity under the loan to pay off the 12% Senior Subordinated
Notes coming due January 2007, to the extent that the Company is
able to obtain credit insurance for certain foreign accounts
receivable, primarily out of its Miami export operations. The
Company continues to look for alternative financial arrangements
with regard to the Notes.
About Wells Fargo Foothill
Wells Fargo Foothill -- http://www.wffoothill.com/-- is a
leading provider of senior secured financing to middle market
companies across the United States and Canada. It is part of
Wells Fargo & Company, a diversified financial services company
with $482 billion in assets, providing banking, insurance,
investments, mortgage and consumer finance to more than 23 million
customers from more than 6,200 stores and the Internet
(http://www.wellsfargo.com/)across North America and elsewhere
internationally. Wells Fargo Bank, N.A. is the only bank in the
United States to receive the highest possible credit rating,
"Aaa," from Moody's Investor Service.
About CellStar Corporation
Headquartered in Coppell, Texas, CellStar Corporation --
http://www.cellstar.com/-- is a leading provider of logistics and
distribution services to the wireless communications industry.
CellStar has operations in North America and Latin America, and
distributes handsets, related accessories and other wireless
products from leading manufacturers to an extensive network of
wireless service providers, agents, MVNO's, insurance/warranty
providers and big box retailers. CellStar specializes in
completely integrated forward and reverse logistics solutions,
repair and refurbishment services, and in some of its markets,
provides activation services that generate new subscribers for
wireless service providers.
* * *
Moody's Investors Service assigned a Ca rating to CellStar Corp.'s
outstanding 12% Senior Subordinated Notes due January 2007 and a
B3 Long-Term Corporate Family Rating to the Company.
CENTERPOINT ENERGY: Closes on $2 Billion Amended Credit Facilities
------------------------------------------------------------------
CenterPoint Energy, Inc. (NYSE: CNP) successfully closed on
three new bank credit facilities, on March 31, 2006, totaling
$2.05 billion for the parent and its wholly owned subsidiaries,
CenterPoint Energy Houston Electric, LLC and CenterPoint Energy
Resources Corp.
"I am extremely pleased with the rates, tenor and terms of these
facilities, which are consistent with our financing strategy of
reducing borrowing costs, strengthening our liquidity and
providing financial flexibility for the company and its
subsidiaries," said Gary L. Whitlock, executive vice president and
chief financial officer of CenterPoint Energy. "We believe the
terms of these new facilities not only reflect the significant
improvement we have achieved in our credit metrics over the last
several years, but also the excellent relationships we have with
our banks."
The first credit facility at CenterPoint Energy is a five-year,
$1.2 billion senior unsecured revolving credit facility that
replaced a $1 billion, five-year facility established in March
2005. The new credit facility has a first drawn cost of LIBOR
plus 60 basis points at existing credit ratings, versus LIBOR
plus 87.5 basis points for the facility it replaced.
The second facility at CEHE, the company's electric transmission
and distribution subsidiary, is a five-year, $300 million senior
unsecured revolving credit facility that replaced a $200 million,
five-year facility established in March 2005. The new credit
facility has a first drawn cost of LIBOR plus 45 basis points at
existing credit ratings, versus LIBOR plus 75 basis points for the
facility it replaced.
The third facility at CERC, CenterPoint Energy's natural gas
distribution, pipelines and field services subsidiary, is a five-
year, $550 million senior unsecured revolving credit facility that
replaced a $400 million, five-year facility established in June
2005. The new credit facility has a first drawn cost of LIBOR
plus 45 basis points at existing credit ratings, versus LIBOR
plus 55 basis points for the facility it replaced.
The proceeds from these facilities will be used for general
corporate purposes.
The global coordinators for the three facilities are J.P. Morgan
Securities Inc. and Citigroup Global Markets Inc., who also served
as joint lead arrangers for the parent facility. Barclays Capital
and Wachovia Bank, National Association served as joint lead
arrangers for the CEHE facility. Citigroup Global Markets Inc.,
Banc of America Securities LLC and Deutsche Bank Securities Inc.
served as joint lead arrangers for the CERC facility. J.P. Morgan
Chase Bank, N.A. serves as the administrative agent for the parent
and CEHE facilities, and Citibank, N.A. serves as the
administrative agent for the CERC facility.
About CenterPoint Energy
Headquartered in Houston, Texas, CenterPoint Energy, Inc. --
http://www.centerpointenergy.com/-- is a domestic energy delivery
company that includes electric transmission and distribution,
natural gas distribution and sales, interstate pipeline and
gathering operations. The company serves more than five million
metered customers in Arkansas, Louisiana, Minnesota, Mississippi,
Oklahoma, and Texas. Assets total approximately $17 billion.
With about 9,000 employees, CenterPoint Energy and its predecessor
companies have been in the business for more than 130 years.
CenterPoint Energy, Inc.'s 2% Zero-Premium Exchangeable
Subordinated Notes due 2029 carry Moody's Investors Service's
Ba1 rating and Fitch Ratings' BB+ rating.
CERVANTES ORCHARDS: Deere Wants Case Dismissed or Chap. 11 Trustee
------------------------------------------------------------------
Deere Credit, Inc., asks the Honorable John A. Rossmeissl of the
U.S. Bankruptcy Court for the Eastern District of Washington to
dismiss the chapter 11 case of Cervantes Orchards and Vineyards
LLC or appoint a Chapter 11 Trustee.
DCI believes that cause exists to dismiss this case under Sections
1112(b)(4)(A), (B), (E), (F), (I), and (J) of the Bankruptcy Code.
If dismissal is not in the best interest of the Debtor's
creditors, DCI wants a Chapter 11 Trustee appointed under Section
1104(a)(3) of the Bankruptcy Code.
On Feb. 15, 2006, Judge Rossmeissl approved Cervantes' continued
use of cash collateral. That order provides that the Debtor's
authority to use cash collateral terminates five days after notice
of an unremediated default from Deere.
On Mar. 16, 2006, DCI sent a notice of default complaining that
the Debtor:
(a) failed to provide budget reports required under the cash
collateral order. Those reports were due on Feb. 15, 2006,
and Mar. 15, 2006;
(b) failed to provide bank statements and copies of cancelled
checks as required under the cash collateral order; and
(c) according to the Internal Revenue Service, failed to timely
file postpetition tax returns, and make postpetition tax
deposits as required under the cash collateral order.
If the Debtor fails to cure those defaults, it will not have the
ability to use cash collateral, and care for its assets.
DCI knows that the Debtor is working with its court-appointed
accountant to remedy the tax deficiencies and to file monthly
operating reports. However, DCI has not received any financial
information since Dec. 9, 2005. DCI said it is unsure how it
could take so long to produce simple monthly operating statements.
Roger W. Bailey, Esq., at Carlson Boyd & Bailey PLLC tells the
Court that one of the difficult aspects of this case is the extent
of consolidation with the Debtor's related entities. The
relationship remains a mystery because neither the Debtor nor the
related entities provide any financial reporting.
Roger W. Bailey, Esq., at Carlson Boyd & Bailey PLLC represents
Deere Credit, Inc.
Headquartered in Sunnyside, Washington, Cervantes Orchards and
Vineyards LLC filed for chapter 11 protection on Aug. 19, 2005
(Bankr. E.D. Wash. Case No. 05-06600). R. Bruce Johnston, Esq.,
at Law Offices of R. Bruce Johnston 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 $1 million to $10 million.
CITIGROUP MORTGAGE: DBRS Rates $8.4MM Class B-4 Cert. at BB(High)
-----------------------------------------------------------------
Dominion Bond Rating Service assigned these ratings to the C-BASS
Mortgage Loan Asset-Backed Certificates, Series 2006-CB3 issued by
Citigroup Mortgage Loan Trust 2006-CB3:
* $372.8 million, Class AV-1 -- New Rating AAA
* $97.7 million, Class AV-2 -- New Rating AAA
* $127.8 million, Class AV-3 -- New Rating AAA
* $94.5 million, Class AV-4 -- New Rating AAA
* $29.1 million, Class M-1 -- New Rating AA (high)
* $25.7 million, Class M-2 -- New Rating AA
* $16.0 million, Class M-3 -- New Rating AA (low)
* $13.9 million, Class M-4 -- New Rating A (high)
* $12.6 million, Class M-5 -- New Rating A
* $10.5 million, Class M-6 -- New Rating A (low)
* $10.1 million, Class B-1 -- New Rating BBB (high)
* $9.7 million, Class B-2 -- New Rating BBB
* $9.3 million, Class B-3 -- New Rating BBB (low)
* $8.4 million, Class B-4 -- New Rating BB (high)
The AAA ratings on the Class A Certificates reflect 17.75% of
credit enhancement provided by the subordinate classes, initial
overcollateralization, and monthly excess spread. The AA (high)
rating on Class M-1 reflects 14.30% of credit enhancement. The AA
rating on Class M-2 reflects 11.25% of credit enhancement. The AA
(low) rating on the M-3 class reflects 9.35% of credit
enhancement. The A (high) rating on the M-4 class reflects 7.70%
of credit enhancement. The "A" rating on Class M-5 reflects 6.20%
of credit enhancement. The A (low) rating on Class M-6 reflects
4.95% of credit enhancement. The BBB (high) rating on Class B-1
reflects 3.75% of credit enhancement. The BBB rating on Class B-2
reflects 2.60% of credit enhancement. The BBB (low) rating on the
class B-3 reflects 1.50% of credit enhancement. The BB (high)
rating on Class B-4 reflects 0.50% of credit enhancement. The
offered certificates are entitled to the benefits of an interest
rate swap agreement with The Bank of New York.
The ratings on the certificates also reflect the quality of the
underlying assets and the capabilities of Litton Loan Servicing LP
as Servicer, as well as the integrity of the legal structure of
the transaction. JPMorgan Chase Bank, National Association will
act as Trustee.
Interest and principal payments collected from the mortgage loans
will be distributed on the 25th day of each month commencing in
April 2006. Interest will be paid concurrently to the Class A
Certificates, followed by interest payments sequentially to the
subordinate classes. Principal collected will be paid exclusively
to the Class A Certificates until the step-down date unless each
of such classes has been paid down to zero. After the step-down
date, and provided that certain performance tests have been met,
principal payments may be distributed to the subordinate
certificates.
The mortgage loans in the underlying trust were originated by
various originators primarily including Ownit Mortgage Solutions,
Inc., New Century Mortgage Corp., and Encore Credit Corp. As of
the cut-off date, the aggregate principal balance of the mortgage
loans is $845,283,801. The weighted average mortgage coupon is
7.476%, the weighted average FICO is 640, and the weighted average
original loan-to-value ratio is 75.59%, without taking into
consideration the combined loan-to-value on the piggybacked loans.
CONSTELLATION BRANDS: Acquires Vincor for US$1.31 Billion
---------------------------------------------------------
Constellation Brands, Inc. (NYSE: STZ) signed an agreement Monday
to acquire Vincor International (TSX: VN).
The purchase will be completed through a statutory plan of
arrangement in Canada under which Constellation will acquire all
of the issued and outstanding common shares of Vincor at a cash
price of C$36.50.
The transaction price represents a premium of 55.5% to Vincor's
closing share price on Sept. 27, 2005, prior to Constellation's
initial approach, and a premium of 15.9% to Vincor's closing share
price on March 31, 2006.
"Discussions and diligence led the Constellation and Vincor
management teams and boards of directors to the conclusion that
this is a mutually beneficial transaction because it is a natural
fit for both companies," stated Richard Sands, Constellation
Brands chairman and chief executive officer.
"Through this combination, Canada will become a core market for
Constellation, while adding new and existing brands to our already
formidable portfolio in other key markets. Our cultures, values
and decentralized structures are similar, and we are confident
that this is in the best interest of both companies' brands,
shareholders, customers and employees. The combination of Vincor
with Constellation will result in a world class, all-star team of
people, vineyards, wineries and an unequalled international wine
portfolio, in addition to long-term value creation."
"We are pleased that Constellation has offered a value that fully
recognizes our strong brands, exceptional workforce and
significant international growth opportunities," said Donald
Triggs, president and chief executive officer, Vincor
International Inc. "Through the dedication and hard work of all
of our employees we have built one of the world's leading wine
companies. This transaction marks the next chapter in the
evolution of Vincor, providing strengthened international
distribution for our leading brands and new opportunities for our
employees. I would like to thank all of our shareholders and many
supporters who have contributed to the creation of a truly great
company and Canadian success story."
The transaction is valued at approximately C$1.52 (US$1.31)
billion, which includes approximately C$1.27 (US$1.09) billion of
equity, based on Vincor's approximately 34.8 million shares
outstanding on a fully diluted basis, and the assumption of
approximately C$250 (US$220) million of Vincor's net debt as of
Dec. 31, 2005.
The transaction will be modestly accretive to Constellation's
fiscal 2007 comparable earnings per share. Constellation has
received a commitment for an all-debt financing that would be
sufficient to complete the transaction. Closing of the
transaction is scheduled for the first week in June 2006, subject
to customary regulatory approvals and other closing conditions.
About Constellation Brands
Constellation Brands, Inc. -- http://www.cbrands.com/-- is a
leading international producer and marketer of beverage alcohol
brands with a broad portfolio across the wine, spirits and
imported beer categories. Well-known brands in Constellation's
portfolio include: Corona Extra, Corona Light, Pacifico, Modelo
Especial, Negra Modelo, St. Pauli Girl, Tsingtao, Black Velvet,
Fleischmann's, Mr. Boston, Paul Masson Grande Amber Brandy, Chi-
Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Stowells,
Blackthorn, Almaden, Arbor Mist, Vendange, Woodbridge by Robert
Mondavi, Hardys, Nobilo, Alice White, Ruffino, Robert Mondavi
Private Selection, Blackstone, Ravenswood, Estancia, Franciscan
Oakville Estate, Simi and Robert Mondavi Winery brands.
* * *
As reported in the Troubled Company Reporter on Jan. 13, 2006,
Fitch initiated rating coverage of Constellation Brands:
-- Issuer default rating 'BB';
-- Bank credit facility 'BB';
-- Senior unsecured notes 'BB';
-- Senior subordinated notes 'BB-'.
The Rating Outlook is Stable. Approximately $2.9 billion of debt
is covered by these actions.
As previously reported in the Troubled Company Reporter on Dec.
13, 2005, Standard & Poor's Ratings Services affirmed its 'BB'
corporate credit rating and other ratings on beverage alcohol
producer and distributor Constellation Brands Inc.
As reported in the Troubled Company Reporter on Nov. 16, 2005,
Moody's Investors Service assigned a (P)Ba2 rating to
Constellation Brands, Inc.'s then-proposed $1.2 billion senior
secured credit facility, proceeds of which are to be used to
finance the potential purchase of Vincor International Inc. -- no
debt rated by Moody's -- for approximately $1.2 billion.
Moody's assigned these ratings:
* (P)Ba2 for the proposed $1.2 billion incremental senior
secured credit facility consisting of:
-- a $300 million tranche A2 term loan, maturing in 2010, and
-- a $900 million tranche C term loan, maturing in 2012
These ratings were confirmed:
* Ba2 Corporate Family Rating
* $2.9 billion senior secured credit facility consisting of a:
-- $500 million revolver,
-- $600 million tranche A1 term loans, and
-- $1.8 billion tranche B term loans, Ba2
* $200 million 8.625% senior unsecured notes, due 2006, Ba2
* $200 million 8% senior unsecured notes, due 2008, Ba2
* GBP 80 million 8.5% senior unsecured notes, due 2009, Ba2
* GBP 75 million 8.5% senior unsecured notes, due 2009, Ba2
* $250 million 8.125% senior subordinated notes, due 2012, Ba3
The ratings outlook is changed to negative from stable.
The Speculative Grade Liquidity rating is SGL-2.
CREATIVE ENTERPRISES: Case Summary & 8 Largest Unsec. Creditors
---------------------------------------------------------------
Debtor: Creative Enterprises Development, LLC
2851 Candler Road, Suite 203
Decatur, Georgia 30034
Bankruptcy Case No.: 06-63700
Chapter 11 Petition Date: April 3, 2006
Court: Northern District of Georgia (Atlanta)
Debtor's Counsel: David L. Miller, Esq.
The Galleria - Suite 960
300 Galleria Parkway, Northwest
Atlanta, Georgia 30339
Tel: (404) 231-1933
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $500,000 to $1 Million
Debtor's 8 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Harrington, George & Dunn $21,300
1136 Hilburn Drive, Southeast
Atlanta, GA 30316
Delta Surveyors, Inc. $3,372
P.O. Box 571
Fayetteville, GA 30214
Jack Lewis & Associates $2,000
5460 Oakwood Drive
Stone Mountain, GA 30087
Genesis Project, Inc. $1,477
Linda H. Michael, FAIA $1,420
QB Engineering $1,000
Arborguard Tree Specialists $849
M.H. Michael Landscape Architects $429
DAVIS PETROLEUM: Completes $150 Million Equity Sale to Evercore
---------------------------------------------------------------
Davis Petroleum Corp. successfully completed its recapitalization
transaction.
As previously reported in the Troubled Company Reporter on
March 14, 2006, a private equity group led by Evercore Capital
Partners LP, which also includes the company's senior management,
Red Mountain Capital Partners, and Sankaty Advisors, an affiliate
of Bain Capital, purchased all the equity of Davis Petroleum,
Davis Offshore LP, and Davis Pipeline LP from the former owners
for approximately $150 million.
CEO Comments
"For Davis Petroleum to have completed this complex transaction in
just three weeks is an extraordinary achievement, and would not
have been possible without unwavering support from our Company's
management team and administrative staff, steadfast backing from
Evercore and its equity partners, patience of our exploration
partners, vendors, and lenders, and the intelligent planning and
flawless execution by our legal and financial advisors," said
Gregg Davis, President and CEO of Davis Petroleum. "I am very
grateful to everyone who made this possible."
"With our additional financial resources, Davis Petroleum is
poised for a new era of growth and success," Mr. Davis said. "We
have a very strong balance sheet and ample available funds to
continue our exploration and production activities. We are
particularly excited about our exploration and development
opportunities in the Texas and Louisiana onshore regions. The
additional capital will allow us to fully exploit and develop our
three deep-water finds in the Gulf of Mexico. We will also
continue expanding our presence and prospecting efforts in the
Rocky Mountain and Mid-Continent regions."
The Company completed the recapitalization under Chapter 11 of the
Bankruptcy Code, because a sale of the company outside of Chapter
11 required 100% shareholder approval, which could not be
obtained, while only two-thirds shareholder approval, which was
obtained, was needed in a Chapter 11 proceeding.
All pre-petition obligations have been paid in full from the
proceeds of the equity transaction.
New Board Members
John T. Dillon, Evercore Vice Chairman and former Chief Executive
Officer and Chairman of International Paper, has joined Davis'
Board. Also, James R. Montague, former head of International
Paper's oil and gas business, has joined the board and been
elected non-Executive Chairman.
About Evercore Partners
Evercore Partners Inc. -- http://www.evercore.com/-- is a
boutique financial advisory and investment firm. Evercore's
advisory business provides its corporate clients with counsel on
mergers, acquisitions, divestitures, restructurings and other
strategic transactions. Evercore's investing business manages
private equity and venture capital for institutional investors.
Evercore's private equity investing arm, Evercore Capital
Partners, has invested in a number of energy companies, including
Michigan Electric Transmission Company, Continental Energy
Services, and Energy Partners. Evercore recently extended its
investing business to create Evercore Asset Management, an
institutional asset management firm. Evercore serves a diverse
set of clients around the world from its offices in New York, Los
Angeles and San Francisco.
About Red Mountain Capital Partners
Based in Los Angeles, California, Red Mountain Capital Partners is
a private investment firm dedicated to investing in small
capitalization public and private companies with a private equity
approach. Red Mountain acquires strategic or control stakes in
public companies and participates in negotiated private equity
transactions on a selected basis. The firm was established by
Willem Mesdag, a former partner of Goldman, Sachs & Co. and the
head of its Los Angeles office.
About Sankaty Advisors
Sankaty Advisors, LLC, the credit affiliate of Bain Capital, LLC,
is one of the nation's leading private managers of high yield debt
obligations. With approximately $12 billion in committed capital
(as of Dec. 30, 2005), Sankaty invests in a wide variety of
securities, including leveraged loans, high-yield bonds, stressed
debt, distressed debt, mezzanine debt, structured products and
equity investments. Through a variety of funds, Sankaty Advisors
has the ability to invest in a company's capital structure at
every level from secured debt to equity, and can also provide
capital to growing companies with unique financing needs.
About Davis Petroleum Corp.
Headquartered in Houston, Texas, Davis Petroleum Corp. --
http://www.davispetroleumcorp.com/-- is an oil and gas
exploration and production company operating in the onshore and
intermediate-deep water Gulf of Mexico, Texas, Louisiana, Oklahoma
and the Rocky Mountain region. The Company filed for chapter 11
protection on March 7, 2006 (Bankr. S.D. Tex. Case No. 06-20152).
Rhett G. Campbell, Esq., Diana Merrill Woodman, Esq., and Matthew
Ray Reed, Esq., at Thompson & Knight LLP, and Nathaniel Peter
Holzer, Esq., at Jordan Hyden Womble Culbreth & Holzer PC,
represent the Debtors. When the Debtors filed for protection from
their creditors, they listed $50 to $100 million in estimated
assets and $50 to $100 million in estimated debts.
DANA CORP: Court Tells Trans-Fleet to Justify Supply Interruption
-----------------------------------------------------------------
As reported in the Troubled Company Reporter on Mar. 14, 2006,
Dana Corporation and its debtor-affiliates sought and obtained
authority from the U.S. Bankruptcy Court for the Southern District
of New York, to pay prepetition foreign vendors claims. The
Debtors estimated that the maximum amount to be paid to Foreign
Vendors is approximately $79,500,000.
The Debtors informed the Court that Trans-Fleet Enterprises, Inc.,
a subsidiary of International Management Services Company,
refused to perform its postpetition obligations under an executory
contract due to the Debtors' failure to pay the vendor's
prepetition claim.
At the Debtors' behest, the Court directs Trans-Fleet to show
cause why it should not be held in violation of Sections 362 and
365 of the Bankruptcy Code for willfully threatening to withhold
essential goods from the Debtors.
The Debtors have also identified Component Bar Products, Inc., as
a Repudiating Vendor. For reasons stated in open court, the
Debtors withdraw their Notice of Repudiating Vendor with respect
to Component Bar Products, and the related Order to Show Cause.
Headquartered in Toledo, Ohio, Dana Corporation --
http://www.dana.com/-- designs and manufactures products for
every major vehicle producer in the world, and supplies
drivetrain, chassis, structural, and engine technologies to those
companies. Dana employs 46,000 people in 28 countries. Dana is
focused on being an essential partner to automotive, commercial,
and off-highway vehicle customers, which collectively produce more
than 60 million vehicles annually. Corinne Ball, Esq., and
Richard H. Engman, Esq., at Jones Day, in Manhattan and
Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black,
Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio,
represent the Debtors. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor and investment
banker. Ted Stenger from AlixPartners serves as Dana's Chief
Restructuring Officer. When the Debtors filed for protection
from their creditors, they listed $7.9 billion in assets and
$6.8 billion in liabilities as of Sept. 30, 2005. (Dana
Corporation Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
DANA CORP: Selects Katten Muchin Rosenman as Securities Counsel
---------------------------------------------------------------
Dana Corporation and its debtor-affiliates ask permission from the
U.S. Bankruptcy Court for the Southern District of New York to
employ Katten Muchin Rosenman LLP as their special securities and
litigation counsel, nunc pro tunc to the Petition Date.
According to Michael L. DeBacker, Dana Corporation's vice
president, general counsel and secretary, Katten is well
qualified to represent the Debtors.
Katten's attorneys have played significant roles in an array of
securities litigation cases, including Basic, Inc. v. Levinson,
NTL Securities Litigation; Cross Media Securities Litigation; In
re Kmart, Inc. Securities Litigation; Alloy Securities
Litigation; Exide Technologies Securities Litigation; Enterasys
Networks Inc. Securities Litigation; Goodyear Tire & Rubber Co.
Derivatives Litigation; and In re OM Group, Inc. Securities and
Derivative Litigation.
For more than 15 years, Katten has provided legal advice to the
Debtors with respect to various securities matters, including the
issuance of the Debtors' securities, and the preparation and
filing of reports required under the Securities and Exchange Act
of 1934.
More recently, Katten has been representing Dana; Michael Burns,
Dana's chief executive officer; and Mr. Robert Richter, Dana's
former chief financial officer, in connection with numerous class
actions consolidated under John Johnson v. Dana Corporation, et
al., currently pending in the United States District Court for
the Northern District of Ohio.
Dana has also been named as a nominal defendant in various
shareholder derivative actions pending before the U.S. District
Court for the Northern District of Ohio (Case Nos. 3:05-CV-7464;
3:06-CV-7038; 3:06-CV-7044; 3:06-CV-7068; and 3:06-CV-7069).
Additionally, the SEC commenced a formal investigation concerning
Dana's compliance with certain disclosure obligations under the
federal securities law.
Katten will:
(a) assist in the preparation of the Debtors' SEC filings and
provide legal services related to the Debtors' outstanding
securities, including assisting in the negotiation of the
terms, and the issuance, of any securities that may
be issued in connection with a plan of reorganization;
(b) take all necessary actions to defend the Debtors, and
certain of their officers, in the pending securities
litigation matters and, if requested by the Debtors, in
any similar lawsuits that may be filed;
(c) give legal advice and representation to the Debtors and
any of their officers with respect to the current SEC
investigation against the Debtors and, if requested by the
Debtors, in any similar SEC investigations that may be
commenced;
(d) prepare on the Debtors' behalf all motions, applications,
answers and papers necessary to defend any actions
commenced against the Debtors in connection with the
issuance of securities or any alleged violation of federal
securities laws; and
(e) appear before the Ohio District Court and any other courts
or regulatory bodies in connection with the defense of any
securities litigation matter to the extent the matters
are not stayed.
The Debtors will pay Katten on an hourly basis, based on these
customary hourly rates:
Professional Hourly Rate
------------ -----------
Partners $445 to $765
Associates $255 to $465
Special Counsel $420 to $525
Of Counsel $365 to $650
Paralegal $140 to $205
The Debtors will also reimburse the firm for out-of-pocket
expenses.
On February 23, 2006, Dana paid Katten $100,000 in respect of
fees incurred but not billed before the Petition Date.
Robert L. Kohl, Esq., a member of Katten, discloses that the firm
currently represents or has recently represented parties-in-
interest in matters unrelated to the Debtors' bankruptcy cases.
Mr. Kohl maintains Katten does not hold or represent any interest
adverse to the Debtors' estates in the matters for which it is to
be engaged. He assures the Court that no conflict of interest
exists between the Debtors and Messrs. Burns and Richter with
respect to the Johnson Litigation. Should a conflict develop
between any positions adopted by the Parties, Katten will
terminate its representation of Messrs. Burns and Richter.
Headquartered in Toledo, Ohio, Dana Corporation --
http://www.dana.com/-- designs and manufactures products for
every major vehicle producer in the world, and supplies
drivetrain, chassis, structural, and engine technologies to those
companies. Dana employs 46,000 people in 28 countries. Dana is
focused on being an essential partner to automotive, commercial,
and off-highway vehicle customers, which collectively produce more
than 60 million vehicles annually. Corinne Ball, Esq., and
Richard H. Engman, Esq., at Jones Day, in Manhattan and
Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black,
Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio,
represent the Debtors. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor and investment
banker. Ted Stenger from AlixPartners serves as Dana's Chief
Restructuring Officer. When the Debtors filed for protection
from their creditors, they listed $7.9 billion in assets and
$6.8 billion in liabilities as of Sept. 30, 2005. (Dana
Corporation Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
DANA CORPORATION: Taps PricewaterhouseCoopers as Auditors
---------------------------------------------------------
Dana Corporation and its debtor-affiliates seek authority from the
U.S. Bankruptcy Court for the Southern District of New York,
under Sections 327(a) and 328(a) of the Bankruptcy Code, to employ
PricewaterhouseCoopers LLP as their independent auditors, pursuant
to an engagement letter dated July 11, 2005.
Michael L. DeBacker, Dana Corporation's vice president, general
counsel and secretary, explains that the Debtors continue to
require the assistance of independent auditors to:
(a) provide the Debtors with audits of their (i) financial
statements and (ii) internal controls over financial
reporting;
(b) comply with the requirement to provide audited financial
statements under Section 5.03(d) of the Senior Secured
Superpriority Debtor-in-Possession Credit Agreement, dated
as of the Petition Date, between the Debtors and the
lender parties; and
(c) fulfill the Debtors' public reporting obligations under
the Securities Exchange Act of 1934.
According Mr. DeBacker, PricewaterhouseCoopers is well suited to
serve as the Debtors' independent auditors. The firm (a) has
provided auditing services to numerous Fortune 500 companies and
other large business entities, (b) is one of the "Big 4"
accounting firms and (c) is widely recognized as one of the
world's leading providers of auditing and related services.
In addition, PricewaterhouseCoopers and its predecessors have
served as the Debtors' outside auditor since Dana's inception
over 100 years ago. The firm also provided other audit-related
services for the Debtors from time to time.
Effective on the Petition Date, PricewaterhouseCoopers will:
(a) audit and review the Debtors' consolidated financial
statements at December 31, 2005, and for the year then
ending;
(b) audit the Debtors' internal control over financing
reporting as of December 31, 2005;
(c) examine evidence supporting the amounts and disclosures in
the Debtors' financial statements, assessing accounting
principles used and significant estimates made by
management and evaluating the overall financial statement
presentation;
(d) obtain an understanding of the Debtors' internal control
over financial reporting, evaluating management's
assessment of the internal controls, and test and
evaluate the design and operating effectiveness of the
controls;
(e) apprise the Debtors' management and board of directors
of any identified significant deficiencies and material
weaknesses relating to the Debtors' internal control over
financial accounting;
(f) ensure that the Audit Committee of Dana's board of
directors is informed about various matters related to the
conduct of the firm's audit;
(g) provide auditing services related to divestitures, joint
ventures, debt agreements and certain of the Debtors'
employee benefit plans;
(h) provide certain audit-related tax services; and
(i) conduct financial due diligence related to acquisitions
and divestitures.
The Debtors will pay PricewaterhouseCoopers a $12,800,000 flat
fee, comprised of:
(i) $7,000,000 for the base Audit;
(ii) $3,300,000 in fees related to Audit-related Sarbanes-
Oxley work;
(iii) $1,300,000 for auditing services rendered in connection
with divestitures, joint ventures, debt agreements and
certain of the Debtors' employee benefit plans;
(iv) $500,000 for financial due diligence related to
acquisitions and divestitures; and
(v) $700,000 for miscellaneous audit and tax-related services
and certain subscription fees.
The Fee Estimate is for work identified as of January 2006 to be
performed by PricewaterhouseCoopers.
The Debtors will also reimburse the firm for actual and necessary
out-of-pocket expenses and internal per ticket charges for
booking travel. The firm estimates that reimbursable expenses
will total $900,000
The Parties anticipate that the filing of the Debtors' Chapter 11
cases will require PricewaterhouseCoopers to implement certain
bankruptcy-specific procedures in rendering auditing services to
the Debtors, which were not contemplated when the Fee Estimate
was developed. Because the additional services increase the
amount of work to be performed by the firm, the Debtors may
negotiate an additional fixed fee in respect of those services.
During the year immediately preceding the Petition Date, the
Debtors paid PricewaterhouseCoopers $11,039,741. Approximately
$7,600,000 of the amount reflects the advance payments towards
the Fee Estimate and the remaining amount relates to the Debtors'
2004 year-end audit and other audit related-fees.
Timothy Donnelly, a partner at PricewaterhouseCoopers, discloses
that the firm currently provides, or previously provided,
services to various parties-in-interest in matters unrelated to
the Debtors or their Chapter 11 cases.
Mr. Donnelly assures the Court that PricewaterhouseCoopers (a)
does not hold or represent any interest adverse to the Debtors or
their estates and (b) is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code.
Headquartered in Toledo, Ohio, Dana Corporation --
http://www.dana.com/-- designs and manufactures products for
every major vehicle producer in the world, and supplies
drivetrain, chassis, structural, and engine technologies to those
companies. Dana employs 46,000 people in 28 countries. Dana is
focused on being an essential partner to automotive, commercial,
and off-highway vehicle customers, which collectively produce more
than 60 million vehicles annually. Corinne Ball, Esq., and
Richard H. Engman, Esq., at Jones Day, in Manhattan and
Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black,
Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio,
represent the Debtors. Henry S. Miller at Miller Buckfire & Co.,
LLC, serves as the Debtors' financial advisor and investment
banker. Ted Stenger from AlixPartners serves as Dana's Chief
Restructuring Officer. When the Debtors filed for protection
from their creditors, they listed $7.9 billion in assets and
$6.8 billion in liabilities as of Sept. 30, 2005. (Dana
Corporation Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
DEATH ROW: Case Summary & 10 Largest Unsecured Creditors
--------------------------------------------------------
Debtor: Death Row Records Inc.
1617 Orchard Avenue
Compton, California 90221
Bankruptcy Case No.: 06-11205
Debtor affiliate filing separate chapter 11 petitions:
Entity Case No.
------ --------
Marion Knight, Jr. 06-11187
Type of Business: The Debtor is an independent record producer.
See http://www.deathrowrecords.net/deathrow.html
Chapter 11 Petition Date: April 4, 2006
Court: Central District Of California (Los Angeles)
Judge: Ellen Carroll
Debtors' Counsel: Robert S. Altagen, Esq.
1111 Corporate Center Drive, Suite 201
Monterey Park, California 91754
Tel: (323) 268-9588
Fax: (323) 268-8742
-- and --
Daniel J. McCarthy, Esq.
Hill, Farrer & Burrill, LLP
300 South Grand Avenue
Los Angeles, California 90071-3147
Tel: (213) 620-0460
Total Assets: $1,500,000
Total Debts: $119,794,000
Debtors' Consolidated List of 10 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Lydia Harris Default Judgment $107,000,000
c/o Rex Beaber, Esq.
1925 Century Park
East 5th Floor
Los Angeles, CA 90067
Franchise Tax Board Tax Debt $11,300,000
P.O. Box 2952
Sacramento, CA 95812-2952
Amanda Metcalf Default Judgment $483,000
20 Marin Bay Park Court
San Rafael, CA 94901
Internal Revenue Service Tax Debt $437,000
Insolvency I Stop 5022
300 North Los Angeles
Str. Room 4062
Los Angeles, CA 90012-9903
Christensen Fink Miller Default Judgment $350,000
10250 Constellation Boulevard for Legal Fees
19th Floor
Los Angeles, CA 90060
Bridgeport Music, Inc. Default Judgment $150,000
Harold Becks Legal Fees $74,000
Orchard Bank Contract Debt $15,000
Nextel Contract Debt $9,300
Cingular Wireless Contract Debt $1,100
DELTA AIR: Deloitte & Touche Expresses Going Concern Doubt
----------------------------------------------------------
Delta Air Lines, Inc., filed its annual report for the year ended
December 31, 2005, on Form 10-K with the U.S. Securities and
Exchange Commission.
Gerald Grinstein, Delta's chief executive officer, explains that
the benefits realized under the company's transformation
initiatives during 2005 were outpaced and masked by historically
high aircraft fuel prices, resulting to increases in fuel expense
by 46%, or $1.3 billion, compared to 2004.
Although revenue passenger miles, or traffic, and passenger
revenue rose 6% in 2005 compared to 2004, passenger mile yield
remained unchanged from the depressed level of the prior year.
According to Mr. Grinstein, since its Chapter 11 filing, Delta has
worked diligently to become a simpler, more efficient and customer
focused airline. As of December 1, 2005, it reduced capacity by
approximately 25% at Cincinnati, Ohio, with the intention of
increasing the percentage of local Cincinnati traffic from
approximately 35% to nearly 50%.
To respond to increased demand for service to emerging business
and leisure destinations, Delta is increasing international
capacity by approximately 25% by the summer of 2006 in comparison
to its schedule in the summer of 2005, with a focus on routes to
Europe, Latin America and the Caribbean.
Financial Results
For the full year 2005, Delta reported a consolidated net loss of
$3.8 billion. This compares to a net loss of $5.2 billion for
2004. Excluding reorganization and other unusual items, Delta
reported a full year 2005 net loss of $2.9 billion versus a full
For the year ended Dec. 31, 2005, Delta reported assets totaling
$20.039 billion and stockholders deficit of $9.895 billion.
A copy of Delta Air Lines Inc.'s annual report is available for
free at http://ResearchArchives.com/t/s?76f
Business Plan
Delta and its debtor-subsidiaries are seeking $3 billion in
annual financial benefits by the end of 2007 from revenue and
network improvements; savings to be achieved through the Chapter
11 restructuring process; and reduced Mainline employee cost.
This amount is in addition to the $5 billion in annual financial
benefits Delta is scheduled to achieve by the end of 2006, as
compared to 2002, under the transformation plan announced in
2004.
Delta's business plan contemplates that 7,000 to 9,000 jobs will
be eliminated system-wide by the end of 2007. A portion of these
reductions contributes to the company's targeted $930,000,000 in
annual labor cost savings, and the remainder contributes to its
targeted benefits from revenue and network productivity
improvements. The company intends to achieve these reductions
through changes aimed at strengthening its route network and
right-size its Cincinnati hub, increased outsourcing and reduced
overhead. The final number of job reductions will depend in part
on changes to the Debtors' fleet.
Ability to Continue as Going Concern
Deloitte & Touche, serves as Delta's independent auditor and
accountant with respect to the company's financials for the years
ended December 31, 2004 and December 31, 2005. Deloitte relates
that the company's recurring losses, labor issues and its
bankruptcy filing result in uncertainty regarding the realization
of assets and satisfaction of liabilities, without substantial
adjustments or changes in ownership, and raise substantial doubt
about the company's ability to continue as a going concern.
According to Mr. Grinstein, although the Debtors expect to file a
reorganization plan that provides for their emergence from
bankruptcy as a going concern, there can be no assurances at this
time that the Court will confirm the plan, or that the plan will
be implemented successfully.
Mr. Grinstein concedes that the Debtors' operations and their
ability to execute their business plan are subject to risks and
uncertainties, including:
(1) their Chapter 11 proceedings;
(2) employee strikes and other labor-related disruptions;
(3) their substantial liquidity needs;
(4) substantial restrictions imposed under the DIP Financing
Agreements;
(5) significant losses they have incurred in recent years,
which have had a material adverse effect on the their
financial condition; and
(6) risks associated with the airline industry.
About Delta Air
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. Timothy R. Coleman at The Blackstone Group
L.P. provides the Debtors with financial advice. Daniel H.
Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss
Hauer & Feld LLP, provide the Official Committee of Unsecured
Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey
Howard & Zukin Capital and James S. Feltman at Mesirow Financial
Consulting, LLC, serve as the Committee's financial advisors. As
of June 30, 2005, the Company's balance sheet showed $21.5 billion
in assets and $28.5 billion in liabilities. (Delta Air Lines
Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
DELTA AIR: Gets Committee's Nod to Hedge 50% of Fuel Consumption
----------------------------------------------------------------
As reported in the Troubled Company Reporter on Jan. 26, 2006, the
U.S. Bankruptcy Court for the Southern District of New York
authorized Delta Air Lines Inc. and its debtor-affiliates to
continue performance under existing Derivative Contracts and to
enter into, roll over, adjust, modify, and settle the Derivative
Contracts.
With respect to any Fuel Hedging Contract, the Court authorized
the Debtors to enter into fuel hedging contracts for up to 30% of
their monthly estimated fuel consumption. The Debtors may only
exceed the 30% limit with the approval of the Official Committee
of Unsecured Creditors or the Court.
In a Form 10-K filed with the U.S. Securities and Exchange
Commission, Gerald Grinstein, Delta's chief executive officer,
disclosed that, in February 2006, the Debtors obtained the
Creditors Committee's consent to hedge up to 50% of their
estimated 2006 aggregate fuel consumption, with no single month
exceeding 80% of their estimated fuel consumption.
The parties also agreed that the Debtors would not enter into any
fuel hedging contracts that extend beyond December 31, 2006,
without additional approval from the Creditors Committee or the
Court.
Delta recorded $4,271,000,000 in fuel expense in 2005, up 46%
from $2,924,000,000 in 2004.
According to Mr. Grinstein, because a market for derivatives in
aircraft fuel is not readily available, the Debtors periodically
use heating and crude oil derivative contracts to manage their
exposure to changes in aircraft fuel prices. Changes in the fair
value of these contracts are highly correlated to changes in
aircraft fuel prices.
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. Timothy R. Coleman at The Blackstone Group
L.P. provides the Debtors with financial advice. Daniel H.
Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss
Hauer & Feld LLP, provide the Official Committee of Unsecured
Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey
Howard & Zukin Capital and James S. Feltman at Mesirow Financial
Consulting, LLC, serve as the Committee's financial advisors. As
of June 30, 2005, the Company's balance sheet showed $21.5 billion
in assets and $28.5 billion in liabilities. (Delta Air Lines
Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
DELTA AIR: Pilots' Union Receives Authorization to Strike
---------------------------------------------------------
The Delta pilots, represented by the Air Line Pilots Association
International, voted overwhelmingly to authorize the union to
strike if their contract is rejected. Over 96% of the pilots
participated with 95% of those voting in favor. This ballot
authorizes the Delta pilots' union to cause a withdrawal from the
service of Delta Air Lines, at such time as they deem it prudent
and advisable.
"The Delta pilots will strike if their contract is rejected,"
Delta MEC Chairman, Captain Lee Moak, affirmed. The union's
governing body now has the ability to give Captain Moak that
authority.
Last week, the Delta pilots conducted a practice strike where
hundreds of Delta pilots simulated walking off the job.
Management has stated a pilot strike at Delta would be
devastating, yet they refuse to negotiate. Delta management has
the option to withdraw their 1113 motion to reject the pilots '
contract, negotiate with the pilots and restore stability.
Instead they continue to attack the pilots with overreaching
demands, despite very substantial recent concessions by the union.
Just 15 months ago, the Delta pilots voluntarily gave back
approximately 50% of the value of their contract, including a
32.5% pay cut. Delta has yet to acknowledge the full value of
those concessions, however they are demanding another 50% of the
value of the remaining contract, including an additional 18% pay
cut. Delta executives also openly acknowledge that due in large
part to their failure to fund the pilots' pension plan while in
bankruptcy, there is no hope of maintaining the current plan,
which will severely reduce the pensions of thousands of pilots.
The decision to reject the contract currently rests with a third-
party neutral panel in accordance with the terms of Letter of
Agreement 50, and their decision will be to either deny or grant
the Company's motion.
About ALPA
Founded in 1931, the Air Line Pilots Association represents 62,000
pilots at 39 airlines in the U.S. and Canada. ALPA represents
approximately 6,000 active Delta Air Lines pilots and 500
furloughed Delta pilots. Visit the ALPA website at
http://www.alpa.organd the Delta pilots' website at
http://www.deltapilots.org/.
About Delta Air
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. Timothy R. Coleman at The Blackstone Group
L.P. provides the Debtors with financial advice. Daniel H.
Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss
Hauer & Feld LLP, provide the Official Committee of Unsecured
Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey
Howard & Zukin Capital and James S. Feltman at Mesirow Financial
Consulting, LLC, serve as the Committee's financial advisors. As
of June 30, 2005, the Company's balance sheet showed $21.5 billion
in assets and $28.5 billion in liabilities.
DELTA AIR: May Seek Distress Termination of Pension Plans
---------------------------------------------------------
Based on their preliminary five-year forecast, under current
pension funding rules, the Delta Air Lines Inc. and its debtor-
affiliates need to seek distress termination of their defined
benefit pension plans for pilots and non-pilots in order to
successfully reorganize and emerge from Chapter 11, Gerald
Grinstein, Delta's chief executive officer, said in a Form 10-K
filed with the U.S. Securities and Exchange Commission.
The Employee Retirement Income Security Act of 1974 governs the
Debtors' funding obligations for the DB Plans. During the year
ended Dec. 31, 2005, the Debtors contributed $325,000,000 for the
Plans.
Assuming current funding rules and current plan design, the
Debtors estimate that the funding requirements under their DB
Plans for 2006, 2007 and 2008 will aggregate $3.4 billion,
excluding any liquidity shortfall contribution requirements under
the Pilot Plan. Substantially this entire amount relates to
benefits earned before Sept. 14, 2005.
A proposed legislation that passed in the U.S. Senate and is
pending in a House - Senate Conference Committee would extend the
Debtors' funding obligations for their DB Plans over 20 years.
"If the pending legislation is enacted in the form in which it
passed the U.S. Senate, we hope to avoid a distress termination
of the Nonpilot Plan, though there is no assurance that we can do
so," Mr. Grinstein said. "We currently believe, however, that
the existence of the lump sum option in the Pilot Plan and the
significant number of early pilot retirements it may drive make
it unlikely that we could satisfy our funding obligations to that
plan even if the pending legislation is enacted in the form in
which it passed the U.S. Senate."
Pilot Plan
Under the Pilot Plan, Delta pilots who retire can elect to
receive 50% of the present value of their accrued pension benefit
in a lump sum in connection with their retirement and the
remaining 50% of their accrued pension benefit as an annuity
after retirement.
According to Mr. Grinstein, in recent years, the Debtors' pilots
have retired prior to their normal retirement age of 60 at
greater than historical levels due to:
(1) a perceived risk of rising interest rates, which could
reduce the amount of their lump sum pension benefit; or
(2) concerns about their ability to receive a lump sum pension
benefit if a notice of intent to terminate the Pilot Plan
is issued during a restructuring under Chapter 11 of the
Bankruptcy Code.
As of January 31, 2006, approximately 1,700 of 5,900 pilots on
the active roster are at or over age 50 and thus were eligible to
retire at the beginning of February 2006.
While the Pilot Plan is currently prohibited from making the lump
sum payments, it is currently projected that the lump sum feature
would become available in October 2006 if the Pilot Plan is not
subject to termination proceedings prior to that date,
Mr. Grinstein relates.
About Delta Air
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. Timothy R. Coleman at The Blackstone Group
L.P. provides the Debtors with financial advice. Daniel H.
Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss
Hauer & Feld LLP, provide the Official Committee of Unsecured
Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey
Howard & Zukin Capital and James S. Feltman at Mesirow Financial
Consulting, LLC, serve as the Committee's financial advisors. As
of June 30, 2005, the Company's balance sheet showed $21.5 billion
in assets and $28.5 billion in liabilities. (Delta Air Lines
Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service,
Inc., 215/945-7000).
DOANE PET: Incurs $25.3 Million Net Loss in Fourth Fiscal Quarter
-----------------------------------------------------------------
Doane Pet Care Company reported net sales and earnings results for
its fiscal 2005 fourth quarter and full year.
For the fourth quarter of fiscal 2005 on a combined basis, the
Company's net sales were $249.2 million compared to $271.0 million
for the fourth quarter of fiscal 2004, a decrease of 8.0%. This
decrease was primarily due to the Company's domestic cost-sharing
arrangements and the related impact of passing through lower
commodity costs, as well as the impact of the previously announced
discontinuation of non-manufactured product distribution in the
U.S. In addition, the positive benefit of higher European sales
volumes was moderated by unfavorable foreign currency exchange
rate fluctuations, which had a 2.3% negative impact on total net
sales.
The Company reported a net loss of $25.3 million on a combined
basis for its fiscal 2005 fourth quarter compared to a net loss of
$4.8 million for its fiscal 2004 fourth quarter. The Company's
loss from operations on a combined basis was $8.4 million in the
2005 period compared to income from operations of $18.2 million in
the 2004 period. The positive impact of lower global commodity
costs was moderated by higher fuel and natural gas costs, which
impacted the Company's transportation, packaging and certain other
raw material costs. The net positive impact of these operational
items was more than offset by several charges related to the
Acquisition including:
(1) transaction costs totaling $21.7 million;
(2) a $1.8 million one time increase in cost of goods sold
resulting from a fair value adjustment to inventory; and
(3) increases of $1.1 million and $1.8 million in depreciation
and amortization expenses, respectively, resulting from
fair value adjustments to property, plant, equipment and
customer intangible assets.
In addition, the period-over-period change in the Company's income
from operations was impacted by a $6.0 million unfavorable change
in the fair value of the Company's derivative instruments.
Adjusted EBITDA increased 12.4%, or $3.2 million, in the 2005
fourth quarter to $29.0 million on a combined basis from
$25.8 million for the 2004 fourth quarter primarily due to
lower global commodity costs, partially offset by the related
pass-through impact of the Company's cost-sharing arrangements and
the energy related cost pressures.
Net cash provided by operating activities was $13.7 million on a
combined basis for the 2005 fourth quarter compared to net cash
provided by operating activities of $28.0 million for the 2004
fourth quarter. The positive benefit of higher Adjusted EBITDA
was offset by an increase in amounts due from customers in the
2005 fourth quarter compared to 2004 because of higher year end
promotional activities and strong December customer order
activity.
Full Year Results
For fiscal 2005, the Company's net sales decreased 5.7% to
$991.6 million on a combined basis from $1.1 billion for fiscal
2004. This decrease was primarily due to the Company's domestic
cost-sharing arrangements, and the related impact of passing
through lower commodity costs, and lower domestic sales volume,
including the impact of the previously announced discontinuation
of non-manufactured product distribution in the U.S., moderated by
higher European sales volume.
The Company reported a net loss of $44.7 million on a combined
basis for fiscal 2005 compared to a net loss of $45.6 million for
fiscal 2004. Income from operations was $32.4 million for the
current fiscal year compared to $35.1 million for fiscal 2004.
The decrease in income from operations in 2005 was due to
$23.4 million of transaction costs and $4.7 million in charges
related to the fair value adjustments incurred in connection with
the Acquisition and $8.8 million of charges related to plant
closings and other cost savings initiatives. These items were
moderated by lower global commodity costs in 2005 and $5.1 million
in favorable litigation settlements. Fiscal 2004 results were
impacted by $6.7 million of other operating expense, of which
$7.0 million related to the Company's European restructuring. In
addition, the period-over-period change in the Company's income
from operations was impacted by a $2.8 million favorable change in
the fair value of the Company's derivative instruments.
Adjusted EBITDA increased 21.8%, or $18.7 million, to
$104.6 million on a combined basis for fiscal 2005 from
$85.9 million for fiscal 2004 principally due to lower global
commodity costs, partially offset by the related pass-through
impact of the Company's domestic cost-sharing arrangements and the
energy related cost pressures.
Net cash provided by operating activities was $36.9 million on a
combined basis for fiscal 2005 compared to $21.3 million for
fiscal 2004. The positive year over year improvement in cash flow
from operating activities was due to higher Adjusted EBITDA.
The Acquisition
On October 24, 2005, pursuant to the Agreement and Plan of Merger
dated August 28, 2005, Ontario Teachers' Pension Plan Board, or
OTPP, acquired beneficial ownership of substantially all of the
outstanding capital stock of the Company's Parent, Doane Pet Care
Enterprises, Inc., or Parent. The purchase price associated with
the Acquisition was allocated as follows:
Fair value of assets acquired:
Current assets $ 173,600,000
Property, plant and equipment 288,500,000
Intangible assets 286,000,000
Goodwill 321,200,000
Other assets 26,300,000
Gross assets acquired 1,095,600,000
Liabilities assumed 153,800,000
Deferred tax liabilities, net 93,100,000
--------------
Purchase price of net assets acquired $ 848,700,000
==============
Comments and Outlook
Doug Cahill, the Company's President and CEO, said, "We ended the
year ahead of our performance targets and are very pleased with
our operating and financial performance for both the fourth
quarter and full year. With a less volatile commodities cost
structure, an improved capital structure as a result of our
ownership change, as well as our ongoing productivity and cost
savings focus, our future business prospects remain quite strong.
We are, however, exercising near term caution for the first
quarter of 2006 due to the impact higher energy costs are having
on our packaging, freight and other operating costs, as well as
lower than planned volume due to reduced promotional activity. We
are in the process of implementing price increases to alleviate
the impact of these higher costs, and will see the resulting
benefit of these actions beginning in the 2006 second quarter."
About Doane Pet Care Company
Doane Pet Care Company -- http://www.doanepetcare.com/-- based in
Brentwood, Tennessee, is the largest manufacturer of private label
pet food and the second largest manufacturer of dry pet food
overall in the United States. The Company sells to approximately
550 customers around the world and serves many of the top pet food
retailers in the United States, Europe and Japan. The Company
offers its customers a full range of pet food products for both
dogs and cats, including dry, semi-moist, soft-dry, wet, treats
and dog biscuits.
Doane Pet Care Company's 10-5/8% Senior Subordinated Notes due
2015 carry Moody's Investors Service's Caa1 rating and Standard &
Poor's B- rating.
EAGLE CREEK: Moody's Rates $11.8 Million Class D Notes at Ba2
-------------------------------------------------------------
Moody's Investors Service assigned ratings to these notes issued
by Eagle Creek CLO Ltd.:
* Aaa to the $183,600,000 Class A-1 Senior Secured Floating
Rate Notes Due 2018;
* Aaa to the $45,900,000 Class A-2 Senior Secured Floating
Rate Notes Due 2018;
* A2 to the $23,200,000 Class B Second Priority Deferrable
Floating Rate Notes Due 2018;
* Baa2 to the $12,700,000 Class C Third Priority Deferrable
Floating Rate Notes Due 2018; and
* Ba2 to the $11,800,000 Class D Fourth Priority Deferrable
Floating Rate Notes Due 2018.
Moody's ratings reflect the quality of the collateral pool, the
enhancement afforded the senior classes by the capital structure,
the legal documentation of the transaction, and its review of the
collateral manager's prior experience and capacity to manage the
portfolio.
40|86 Advisors, Inc., a wholly-owned subsidiary of Conseco, Inc.
is located in Carmel, Indiana, will act as collateral manager.
ENDOLOGIX INC: Recurring Losses Prompt Going Concern Doubt
----------------------------------------------------------
PricewaterhouseCoopers LLP in Orange County, California, raised
substantial doubt about Endologix, Inc.'s ability to continue as a
going concern after auditing the company's consolidated financial
statements (and internal control over financial reporting) as of
Dec. 31, 2005. The auditor pointed to the company's recurring
losses from operations.
Financials
The company reported a $15,518,000 net loss on $7,139,000 of total
revenues for the year ended Dec. 31, 2005.
At Dec. 31, 2005, the company's balance sheet showed $47,944,000
in total assets, $5,737,000 in total liabilities, and $42,207,000
in total stockholders' equity.
"We are highly confident in our ability to continue driving sales
growth for the Powerlink(R) System as we continue gaining
physician acceptance.
"Our four sequential quarters of increased domestic product usage
indicates that a growing number of physicians are finding a place
for the Powerlink System in their practices," Paul McCormick,
president and chief executive officer of Endologix said.
"Data from clinical studies using our Powerlink System are
exceptionally solid and we are refining sales force hiring
criteria to mirror those of our most successful sales
representatives, with the expectation of increasing throughput
from our sales force.
"Based on our expected revenue from sales of the Powerlink System
and our ability to adjust certain operating expenses if revenues
do not meet our expectations, we believe that our current cash
balance, in combination with cash receipts generated from product
sales, will be sufficient to fund ongoing operations through at
least Dec. 31, 2006," he added.
"However, if appropriate, we may consider alternatives for
additional financing, which could involve equity or debt."
A full-text copy of Endologix, Inc.'s Annual Report is available
for free at http://ResearchArchives.com/t/s?76a
About Endologix
Endologix, Inc. -- http://www.endologix.com/-- develops and
manufactures minimally invasive treatments for vascular diseases.
Endologix's Powerlink System is an endoluminal stent graft for
treating abdominal aortic aneurysms. AAA is a weakening of the
wall of the aorta, the largest artery in the body, resulting in a
balloon-like enlargement. Once AAA develops, it continues to
enlarge and, if left untreated, becomes increasingly susceptible
to rupture. The overall patient mortality rate for ruptured AAA is
approximately 75%, making it the thirteenth leading cause of death
in the U.S.
ENRON CORP: Distributes Over $4.6 Billion to Creditors
------------------------------------------------------
The ninth distribution to creditors of Enron Corp. and its debtor-
affiliates totaled $4,676,400,000, consisting of $4,108,400,000 in
cash and shares of Portland General Electric Company stock valued
at $568,000,000. Since November 2004, Enron has returned
$5,829,600,000 to creditors in twice-yearly distributions, in
April and November, as well as in "catch-up" claims paid on an
interim basis every two months.
"Today's distribution is the most significant amount recovered to
date and represents a tremendous financial outcome for the Enron
estate," said John Ray, President and Chairman of the Board. "We
are dedicated to continuing the process of resolving the remaining
claims, recovering amounts due to creditors from third parties and
distributing value."
The April 3, 2006 distribution included 27,036,445 shares of PGE,
which represents approximately 43% of PGE's 62,500,000 issued and
outstanding shares. The remaining 35,463,555 PGE shares will be
held by the Disputed Claims Reserve, which is not affiliated with
Enron, for future distribution to creditors of Enron by the
Bankruptcy Court in accordance with the Chapter 11 Plan. The
Disputed Claims Reserve currently consists of $4,688,800,000 in
cash and $745,000,000 PGE share value.
A summary of Plan Distributions under Enron's Plan is available at
no charge at http://bankrupt.com/misc/PlanDistributions.pdf
About Enron
Headquartered in Houston, Texas, Enron Corporation --
http://www.enron.com/-- filed for chapter 11 protection on
December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following
controversy over accounting procedures, which caused Enron's stock
price and credit rating to drop sharply. Judge Gonzalez confirmed
the Company's Modified Fifth Amended Plan on July 15, 2004, and
numerous appeals followed. The Debtors' confirmed chapter 11 Plan
took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and
Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent
the Debtors in their restructuring efforts. Luc A. Despins, Esq.,
Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank,
Tweed, Hadley & McCloy, LLP, represent the Official Committee of
Unsecured Creditors.
ENTERGY NEW ORLEANS: Wants to Hire Gordon Arata as Special Counsel
------------------------------------------------------------------
Entergy New Orleans, Inc., asks the U.S. Bankruptcy Court for the
Eastern District of Louisiana's permission to employ Gordon,
Arata, McCollam, Duplantis & Eagan LLP, to represent the Company
in two lawsuits filed by the Gordon Plaintiffs.
Reverend C. S. Gordon, Jr., on behalf of New Zion Baptist Church,
J. Michael Malec, Darryl Malek-Wiley, Willie Webb, Jr., and
Maison St. Charles, L.L.C., d/b/a Quality Inn Maison St. Charles,
filed two actions, one with the Council of the City of New
Orleans and another in the Civil District Court for the Parish of
Orleans, against Entergy New Orleans, Inc., and other Entergy
entities.
The Gordon Suit asserts restitution of ascertainable losses of
money and damages for violations of Louisiana antitrust laws
arising from ENOI's manipulation and abuse of its fuel adjustment
charges.
GAMDE is currently working as counsel for Entergy Corp., the
Debtor's parent. GAMDE has represented Entergy and its various
operating companies, including ENOI, for more than 12 years and
has significant experience with a broad range of issues affecting
Entergy and its affiliates.
GAMDE's attorneys have significant background and experience with
respect to the Gordon Matters, R. Patrick Vance, Esq., at Jones,
Walker, Waechter, Poitevent, Carrere & Denegre, LLP, in New
Orleans, Louisiana, tells the Court.
Mr. Vance asserts that GAMDE's specialized knowledge and
familiarity with the Gordon issues, which the Debtor's general
counsel does not currently possess and which could be gained only
with significant expense, makes GAMDE's retention essential to the
efficient and economical representation of ENOI in the Gordon
Matters.
Mr. Vance discloses that the Bank of New York, as successor
trustee, and the Official Committee of Unsecured Creditors do not
object to ENOI's request.
As special counsel, GAMDE will:
(a) advise the Debtor with respect to its litigation strategy
in the Gordon Matters;
(b) defend the Debtor in the Gordon Matters;
(c) participate in negotiations concerning the Gordon Matters;
(d) prepare all motions, conduct pre-trial and trial
activities in the Gordon Matters, and prosecute or defend
any appeal taken in the proceedings;
(e) take any steps necessary to protect the Debtor's interests
in the Gordon Matters; and
(f) perform all other necessary legal services and provide all
other necessary legal advice to the Debtor as may be
requested in connection with the Gordon Matters.
The firm's current hourly rates are:
Professionals Hourly Rates
------------- ------------
Ewell E. Eagan $250
Martin E. Landrieu $215
Marcy V. Massengale $190
Wendy Hickok Robinson $190
Other Partners $150
Other Associates $150
Other Paralegals $85
Ewell E. Eagan, Jr., Esq., a partner at Gordon, Arata, McCollam,
Duplantis & Eagan, LLP, assures the Court that the firm does not
represent any adverse interest to the Debtor or its estate, and is
a "disinterested person" as the term is defined in Section 101(14)
of the Bankruptcy Code.
Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc.
-- http://www.entergy-neworleans.com/-- is a wholly owned
subsidiary of Entergy Corporation. Entergy New Orleans provides
electric and natural gas service to approximately 190,000 electric
and 147,000 gas customers within the city of New Orleans. Entergy
New Orleans is the smallest of Entergy Corporation's five utility
companies and represents about 7% of the consolidated revenues and
3% of its consolidated earnings in 2004. Neither Entergy
Corporation nor any of Entergy's other utility and non-utility
subsidiaries were included in Entergy New Orleans' bankruptcy
filing. Entergy New Orleans filed for chapter 11 protection on
Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J.
Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the
Debtor in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed total assets of
$703,197,000 and total debts of $610,421,000. (Entergy New
Orleans Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
ENTERGY NEW ORLEANS: Wants Until Aug. 21 to File Chapter 11 Plan
----------------------------------------------------------------
Entergy New Orleans, Inc., further asks the U.S. Bankruptcy Court
for the Eastern District of Louisiana to extend the period by
which it has the exclusive right to file a plan of reorganization
until August 21, 2006, and the period to solicit and obtain
acceptance of that plan until October 18, 2006.
R. Patrick Vance, Esq., at Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, LLP, in New Orleans, Louisiana, tells the
Court that the Debtor still has a number of material unresolved
contingencies and adequate information to formulate a plan does
not presently exist.
Until now, the Debtor cannot yet, with certainty, quantify the
amount of physical or economic damage it suffered as a result of
Hurricane Katrina, Mr. Vance points out. In addition, the Debtor
still cannot predict its recovery from insurance proceeds or when
the proceeds can be realized. The Debtor is also seeking
government assistance and regulatory recoveries but it remains
unclear whether or when these initiatives will prove fruitful,
Mr. Vance adds.
The Debtor prefers to delay formulating a plan until a time when
it can estimate its losses more accurately, Mr. Vance says.
Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc.
-- http://www.entergy-neworleans.com/-- is a wholly owned
subsidiary of Entergy Corporation. Entergy New Orleans provides
electric and natural gas service to approximately 190,000 electric
and 147,000 gas customers within the city of New Orleans. Entergy
New Orleans is the smallest of Entergy Corporation's five utility
companies and represents about 7% of the consolidated revenues and
3% of its consolidated earnings in 2004. Neither Entergy
Corporation nor any of Entergy's other utility and non-utility
subsidiaries were included in Entergy New Orleans' bankruptcy
filing. Entergy New Orleans filed for chapter 11 protection on
Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J.
Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the
Debtor in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed total assets of
$703,197,000 and total debts of $610,421,000. (Entergy New
Orleans Bankruptcy News, Issue No. 14; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
EPIXTAR CORP: Taps Mahoney Cohen as Tax Consultants
---------------------------------------------------
Epixtar Corp. and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of Florida in Miami for permission
to retain Stephen Danner, CPA, and the accounting firm of Mahoney
Cohen & Company, CPA, PC, as their tax consultants, nunc pro tunc
to Jan. 30, 2006.
Mr. Danner and his firm will provide tax advice in connection
with the formulation and structure of the Debtors' plan of
reorganization.
The Debtors propose to pay Mr. Danner $300 per hour for his
services. The standard hourly rates for Mahoney Cohen's other
professionals range from $75 to $375.
Mr. Danner assures the Bankruptcy Court that his firm does not
hold any interest adverse to the Debtors' estates and is a
"disinterested person" as that term is defined in Section 101(14)
of the Bankruptcy Code.
About Mahoney Cohen
Mahoney Cohen -- http://www.mahoneycohen.com/-- is the premier
certified public accounting and management consulting firm
servicing the middle market. The firm currently has a staff of
over 225, including 26 partners, and offices in New York City,
Miami, Florida and Boca Raton, Florida. Mr. Danner is considered
an expert in the area of tax and estate planning with more than 25
years of experience in both national and regional public
accounting firms. He has worked with many closely held companies
to reduce their current income taxes while planning for a
successful transition or sale of the business.
About Epixtar
Based in Miami, Florida, Epixtar Corp. -- http://www.epixtar.com/
-- fdba Global Assets Holding, Inc., aggregates contact center
capacity and robust telephony infrastructure to deliver
comprehensive, turnkey services to the enterprise market. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 6, 2005 (Bank. S.D. Fla. Case No. 05-42040). Michael D.
Seese, Esq., at Kluger, Peretz, Kaplan & Berlin, P.L., represents
the Debtors in their restructuring efforts. Glenn D. Moses, Esq.,
at Genovese Joblove & Battista, P.A., represents the Company's
Official Committee of Unsecured Creditors. When the Debtors filed
for protection from their creditors, they listed total assets of
$30,376,521 and total debts of $39,158,724.
EPIXTAR CORP: Unit Signs Lease Agreement with Raices Investment
---------------------------------------------------------------
NOL Group, Inc., a debtor-affiliate of Epixtar Corp., asks the
U.S. Bankruptcy Court for the Southern District of Florida in
Miami for authority to ink a lease agreement with Raices
Investment Corp.
NOL, formerly the Internet Service Provider segment of Epixtar's
operations, needs to rent rack space from Raices to store value
added platform equipment used in its business operations and to
gain access T1 Internet connection.
Pursuant to the terms of the lease agreement, NOL will pay a
$1,990 deposit for the rack space and pay $1,990 monthly rent
during the six-month duration of the lease.
NOL needs separate space to store its equipment since Epixtar has
surrendered its ISP related businesses to Laurus Master Fund, Ltd.
As reported in the Troubled Company Reporter on March 28, 2006,
The Debtors owed Laurus approximately $16.25 million as of Sept.
21, 2005. Under a settlement approved in December 2005, Laurus
extended a $2.5 million debtor-in-possession financing, consented
to the Debtors' use of cash collateral, and took over ownership of
the Debtors' ISP related assets in exchange for a $12 million
credit against amounts owed by the Debtors.
A copy of the lease agreement is available for a fee at:
http://www.researcharchives.com/bin/download?id=060404023959
About Epixtar
Based in Miami, Florida, Epixtar Corp. -- http://www.epixtar.com/
-- fdba Global Assets Holding, Inc., aggregates contact center
capacity and robust telephony infrastructure to deliver
comprehensive, turnkey services to the enterprise market. The
Company and its debtor-affiliates filed for chapter 11 protection
on Oct. 6, 2005 (Bank. S.D. Fla. Case No. 05-42040). Michael D.
Seese, Esq., at Kluger, Peretz, Kaplan & Berlin, P.L., represents
the Debtors in their restructuring efforts. Glenn D. Moses, Esq.,
at Genovese Joblove & Battista, P.A., represents the Company's
Official Committee of Unsecured Creditors. When the Debtors filed
for protection from their creditors, they listed total assets of
$30,376,521 and total debts of $39,158,724.
EXUM RIDGE: Moody's Puts Ba1 Rating on $12 Million Class E Notes
----------------------------------------------------------------
Moody's Investors Service assigned these ratings to Notes issued
by Exum Ridge CBO 2006-1, Ltd.:
* Aaa to $225,000,000 Class A Contingent Funding Notes Due
2011;
* Aa2 to $15,000,000 Class B Floating Rate Notes Due 2011;
* A2 to $12,000,000 Class C Floating Rate Deferrable Notes Due
2011;
* Baa2 to $12,000,000 Class D Floating Rate Deferrable Notes
Due 2011;
* Ba1 to $12,000,000 Class E Floating Rate Deferrable Notes
Due 2011.
The Moody's ratings of the Notes address the ultimate cash receipt
of all interest and principal payments required by such notes'
governing documents and are based on the expected loss posed to
the holders relative to the promise of their receiving the present
value of such payments. The ratings of the notes are also based
upon the transaction's legal structure and the characteristics of
the collateral pool, which will consist primarily of U.S. dollar-
denominated High Yield Bonds and Loans.
FAIRFAX FINANCIAL: S&P Removes BB Rating from Negative CreditWatch
------------------------------------------------------------------
Standard & Poor's Ratings Services removed its 'BB' counterparty
credit ratings on Fairfax Financial Holdings Ltd. and Crum &
Forster Holdings Corp. from CreditWatch negative and affirmed the
ratings.
At the same time, Standard & Poor's removed its 'BB-' counterparty
credit rating on TIG Holdings Inc. from CreditWatch negative and
affirmed the ratings.
Also, Standard & Poor's revised its outlook on Fairfax Financial
Holdings Ltd.'s (FFH) ongoing operating insurance companies
(collectively, Fairfax) to stable from positive and affirmed its
'BBB' counterparty credit and financial strength ratings on the
companies.
The outlook on all these companies is stable.
These holding company ratings were placed on CreditWatch negative
in response to the announcement by FFH on March 16, 2006, that it
would delay filing its 2005 annual report. The delay was caused
by the announcement by its 80%-owned affiliate, Odyssey Re
Holdings Corp. (NYSE:ORH), that it filed notice with the SEC that
Odyssey Re would delay the filing of its 2005 annual 10-K report.
On March 31, 2006, FFH and Odyssey Re both filed year-end 2005
results, with the cumulative impact of the restatement through
Sept. 30, 2005, being a decrease to shareholders' equity of $35.6
million at Odyssey Re. There was no impact to FFH's financial
statements, and the company's year-end 2005 figures remain as
published on Feb. 9, 2006.
"The ratings on FFH are based on its improving competitive
position, strong consolidated capitalization (even after
adjustments for finite reinsurance), and improved financial
flexibility," explained Standard & Poor's credit analyst Damien
Magarelli. "Offsetting these positive factors are reserves, which
though not an immediate concern, have frequently been strengthened
and might require some further modest charges; some very poor
acquisitions and sizeable reserve charges for which FFH has
utilized finite reinsurance; and debt to support operating company
obligations, resulting in high debt leverage."
Lastly, FFH's consolidated underwriting performance in 2005 after
including hurricane losses was a 108% combined ratio, but the
company's net loss of $498 million, largely driven by pretax
losses ($178 million) at Odyssey Re Holdings and runoff ($642
million) remain inconsistent with a positive outlook.
A positive outlook might be warranted based on year-end 2006
financial statements, should earnings improve and produce a
sizeable net profit. Earnings should also no longer be dependant
on realized capital gains, net investment income, or be reduced
significantly by runoff segment losses to support a positive
outlook. The outlook could be changed to negative:
* if earnings do not improve in 2006;
* if there is significant turnover in management;
* if there is significant regulatory adverse development;
* if reserves develop adversely;
* if there are significant one-off runoff segment charges; or
* if holding company cash is not maintained near $300 million.
FOAMEX INT'L: Hires Assessment Technologies as Tax Consultants
--------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gave Foamex
International, Inc., and its debtor-affiliates permission to
employ Assessment Technologies, Ltd., as their property tax
consultants.
As reported in the Troubled Company Reporter on Mar. 14, 2006, the
Debtors believed that ATL is well qualified to serve as their
property tax consultants, and has the background and expertise to
help them achieve tax savings.
Specifically, ATL will:
(a) review targeted tax assessments on the Debtors' owned or
leased property;
(b) analyze the economic feasibility of attaining reduced
taxes;
(c) represent the Debtors before the appropriate tax assessors
and court authorities to adjust assessments, unclaimed
taxes or claimed tax amounts; and
(d) take reasonable actions to further its plan for
administration, without additional approval requirements.
The Debtors will pay ATL 40% of all Net Tax Savings they will
receive as a result of ATL's efforts for each tax year. The Net
Tax Savings is the balance of the Tax Savings that remains after
deducting for reimbursement of ATL's expenses.
Headquartered in Linwood, Pa., Foamex International Inc. --
http://www.foamex.com/-- is the world's leading producer of
comfort cushioning for bedding, furniture, carpet cushion and
automotive markets. The Company also manufactures high-
performance polymers for diverse applications in the industrial,
aerospace, defense, electronics and computer industries. The
Company and eight affiliates filed for chapter 11 protection on
Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693).
Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP,
represent the Debtors in their restructuring efforts. Houlihan,
Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the
ad hoc committee of Senior Secured Noteholders. As of July 3,
2005, the Debtors reported $620,826,000 in total assets and
$744,757,000 in total debts. (Foamex International Bankruptcy
News, Issue No. 15; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
FRASER SULLIVAN: Moody's Places Ba2 Ratings on Two Note Classes
---------------------------------------------------------------
Moody's Investors Service reported that it had assigned ratings to
these notes issued by Fraser Sullivan CLO I Ltd.:
* Aaa to the $50,000,000 Class A-1 Senior Secured Floating
Rate Revolving Notes, Due 2020;
* Aaa to the $298,000,000 Class A-2 Senior Secured Floating
Rate Term Notes, Due 2020;
* Aa2 to the $32,000,000 Class B Senior Secured Floating Rate
Notes, Due 2020;
* A2 to the $31,000,000 Class C Senior Secured Deferrable
Floating Rate Notes, Due 2020;
* Baa2 to the $22,800,000 Class D-1 Senior Secured Deferrable
Floating Rate Notes, Due 2020;
* Baa2 to the $10,200,000 Class D-2 Senior Secured Deferrable
Fixed Rate Notes, Due 2020;
* Ba2 to the $10,200,000 Class E-1 Senior Secured Deferrable
Floating Rate Notes, Due 2020; and
* Ba2 to the $4,800,000 Class E-2 Senior Secured Deferrable
Fixed Rate Notes, Due 2020.
Moody's also assigned ratings Baa2 to the U.S.$15,000,000
Composite Obligations, Due 2020.
Moody's ratings reflect the quality of the collateral pool, the
enhancement afforded the senior classes by the capital structure,
the legal documentation of the transaction, and its review of the
collateral manager's prior experience and capacity to manage the
portfolio.
Fraser Sullivan Investment Management, LLC, located in New York,
New York, will act as collateral manager.
GALLERIA INVESTMENTS: Wants Lamberth Cifelli as New Bankr. Counsel
------------------------------------------------------------------
Galleria Investments LLC asks the U.S. Bankruptcy Court for the
Northern District of Georgia for permission to employ Lamberth,
Cifelli, Stokes & Stout, P.A. as its new bankruptcy counsel.
Lamberth Cifelli will:
a. advise, assist and represent the Debtor with respect to its
rights, powers, duties, and obligation in the
administration of its case, and the collection,
preservation and administration of assets of the Debtor's
estate;
b. advise, assist and represent the Debtor with regard to any
claims and causes of action which the estate may have
against various parties;
c. institute appropriate adversary proceedings or other
litigation with regard to any claims and causes of action;
d. advise and represent the Debtor with regard to the review
and analysis of any legal issues incident to any claims of
causes of action;
e. advise, assist and represent the Debtor with regard to
investigation of the desirability and feasibility of the
rejection or assumption and potential assignment of any
executory contracts or unexpired leases;
f. advise, assist and represent the Debtor with regard to
liens and encumbrances asserted against property of the
estate and potential avoidance actions for the benefit of
the estate and initiate and prosecute appropriate
proceedings;
g. advise, assist and represent the Debtor in connection with
all applications, motions, or complaints concerning
reclamation, sequestration, relief from stays, disposition
or other use of assets of the estate, and all other similar
matters;
h. advise, assist and represent the Debtor with regard to the
preparation, drafting, and negotiation of a plan of
reorganization or liquidation and accompanying disclosure
statement;
i. advise, assist and represent the Debtor in the negotiation
with other parties presenting a plan of reorganization or
liquidation and accompanying disclosure statement;
j. advise, assist and represent the Debtor in connection with
the sale or other disposition of any assets of the estate;
k. prepare pleadings, applications, motions, reports, and
other papers incidental to the administration of the
Debtor's case;
l. conduct examinations as may be necessary pursuant to
Bankruptcy Rule 2004 or as otherwise permitted under
applicable law;
m. provide support and assistance to the Debtor with regard to
the proper receipt disbursement, and accounting for funds
and property of the estate;
n. provide support and assistance to the Debtor with regard to
the review of claims against the Debtor, the investigation
of amounts properly allowable and the appropriate priority
or classification of the same, and the filing and
prosecution of objections to claims as appropriate; and
o. perform any and all legal services incident or necessary to
the proper administration of the Debtor's chapter 11 case
and the representation of the Debtor in the performance of
its duties and exercise of its rights and powers under the
bankruptcy Code.
G. Frank Nason, IV, Esq., a member of Lamberth Cifelli, tells the
Court that the Firm's professionals bill between $175 to $385 per
hour.
Mr. Nason assures the Court the Firm does not have any interest
adverse to the Debtor, its estate and its creditors.
Previous Counsel
The Debtor previously sought and obtained authority from the Court
to employ Thomerson, Spears & Robl, LLC, as its bankruptcy
counsel. On March 16, 2006, the Debtor terminated the services of
Thomerson Spears. The Debtor did not disclose why they terminated
the services of Thomerson Spears.
About Galleria Investments LLC
Headquartered in Decatur, Georgia, Galleria Investments LLC
operates a shopping center in Duluth, Georgia. The company filed
for chapter 11 protection on Mar. 6, 2006 (Bankr. N.D. Ga. case
No. 06-62557). G. Frank Nason, IV, Esq., at Lamberth Cifelli
Stokes & Stout, P.A., 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.
Galleria Investments has been under state court receivership since
Feb. 24, 2006.
GARDEN GROVE: Case Summary & 2 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Garden Grove Restaurant & Bar LLC
12403 South Orange Blossom Trail
Orlando, Florida 32837
Bankruptcy Case No.: 06-00674
Type of Business: The Debtor operates a restaurant.
Chapter 11 Petition Date: April 3, 2006
Court: Middle District of Florida (Orlando)
Debtor's Counsel: James H. Monroe, Esq.
James H. Monroe, P.A.
P.O. Box 540163
Orlando, Florida 32854
Tel: (407) 872-7447
Fax: (407) 246-0008
Total Assets: $1,270,450
Total Debts: $903,704
Debtor's 2 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
American Express $4,967
Delta Skymiles
P.O. Box 360002
Fort Lauderdale, FL 33336
Internal Revenue Service $1,678
400 West Bay Street, Suite 35045
Stop 5740, Group 5
Jacksonville, FL 32202
GEM LIGOS: Moody's Places Ba2 Ratings on Note Classes D and Q
-------------------------------------------------------------
Moody's assigns these ratings to seven classes of notes issued by
GEM LIGOs III, Limited:
* Aaa to the $383,000,000 Class A-1 Floating Rate Senior
Secured Delayed Drawdown Notes Due 2021;
* Aaa to the $84,000,000 Class A-2 Floating Rate Senior
Secured Term Notes Due 2021;
* Aa2 to the $30,000,000 Class A-3 Floating Rate Senior
Secured Term Notes Due 2021;
* A3 to the $29,000,000 Class B Floating Rate Senior
Subordinated Secured Term Notes Due 2021;
* Baa2 to the $24,000,000 Class C Floating Rate Subordinate
Secured Term Notes Due 2021;
* Ba2 to the $12,000,000 Class D Floating Rate Junior
Subordinate Secured Term Notes Due 2021; and
* Ba2 to the $2,000,000 Class Q Notes Due 2021.
The collateral manager is TCW Asset Management Company.
GENERAL MOTORS: Building US$600-Mil. Compact Car Plant in Mexico
----------------------------------------------------------------
General Motors Corp. will spend $600 million to $650 million to
build a small-car assembly plant in Mexico, employing 1,800 to
2,300 workers, the Associated Press reports.
The plant is expected to become operational in 2008. It will be
build in the central Mexican state of San Luis Potosi, according
GM spokesman Carlos Gelista. He told the AP that the Mexican
government is providing financial incentives for the project, with
construction starting in May or June.
The plant will produce compact and subcompact vehicles that will
not be sold in the United States, the same report says.
"We are looking to try to export some of the production of that
plant to Central America and South America," he told the Detroit
Free Press. He did not say how many vehicles it would build
annually but said it would make 30 vehicles an hour.
About General Motors
General Motors Corp. -- http://www.gm.com/-- the world's largest
automaker, has been the global industry sales leader for 75 years.
Founded in 1908, GM today employs about 327,000 people around the
world. With global headquarters in Detroit, GM manufactures its
cars and trucks in 33 countries. In 2005, 9.17 million GM cars
and trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn and Vauxhall. GM operates one of the
world's leading finance companies, GMAC Financial Services, which
offers automotive, residential and commercial financing and
insurance. GM's OnStar subsidiary is the industry leader in
vehicle safety, security and information services.
* * *
As reported in the Troubled Company Reporter on April 3, 2006,
Moody's Investors Service lowered the ratings of General Motors
Corporation: Corporate Family Rating and senior unsecured to B3
from B2 and Speculative Grade Liquidity Rating to SGL-3 from
SGL-2. The outlook is negative. GMAC and ResCap are unaffected.
The GM rating actions came in response to the company's disclosure
that restatements of its 2002, 2003 and 2004 financial statements
could result in the acceleration of as much as $3 billion in
various lease obligations and in the company potentially not being
be able to borrow under its $5.6 billion unused revolving credit
facility.
As reported in the Troubled Company Reporter on March 31, 2006,
Standard & Poor's Ratings Services placed all its ratings,
including its 'B' long-term and 'B-3' short-term corporate credit
ratings, on General Motors Corp. on CreditWatch with negative
implications. This action stems from:
* GM's disclosure in its 2005 10-K that the recent restatement
of its previous financial statements raises potential issues
regarding access to its $5.6 billion standby credit facility;
and
* the possibility that certain lease obligations of as much as
$3 billion could be subject to possible claims of:
-- acceleration,
-- termination, or
-- other remedies.
As reported in the Troubled Company Reporter on March 22, 2006,
Fitch retained its ratings for General Motors Acceptance Corp. and
its wholly owned subsidiary Residential Capital Corp. on Rating
Watch Evolving:
GMAC:
-- L-T Issuer Default Rating 'BB'
ResCap:
-- L-T Issuer Default Rating 'BBB-'
The ratings remained on Watch Evolving following GMAC's
announcement that it will delay filing their SEC form 10-K(s) and
will be required to either restate or reclassify certain items in
prior financial statements to address a recently surfaced
accounting issue.
GENERAL MOTORS: March Vehicle Sales Down 22% from Year-Ago Level
----------------------------------------------------------------
General Motors dealers in the United States sold 365,375 new cars
and trucks in March, down 14% from year-ago levels. Total car
sales were down 22%, and truck sales were down 9%.
GM's retail sales in March were down 17% compared to strong
year-ago deliveries. Fleet sales were down 5%. Daily rental
sales declined by 8% compared to last year. Commercial sales
were up 7%.
"March sales were solidly in line with the targets established in
our U.S. turnaround plan," said Mark LaNeve, General Motors North
America vice president, Vehicle Sales, Service and Marketing. "We
knew that comparisons to a year ago would be difficult because of
high daily rental sales and expensive incentives last March. We
are pleased that consumers are reacting very favorably to our
great new products, with the Chevy Tahoe, Impala and HHR; Buick
Lucerne; Cadillac Escalade; and GMC Yukon all having a great
month."
Retail sales of GM launch vehicles were up 30% compared to
February and accounted for one-third of GM's total deliveries for
the month. Success of GM's launch vehicles is a critical
component of GM's North America turnaround strategy.
GM's retail selling rate in March was 3.0 million units, a level
that is consistent with GM North American Operations' turnaround
strategy. The retail selling rate has stabilized in recent
months, improving from just above 2.7 million units in the fourth
quarter of 2005.
"We've made a strategic decision to focus on retail sales and move
away from marginally profitable business that in the end is a drag
on our sales results and profitability," LaNeve added. "This is
how we are providing consumers with the best value in the
industry, building strong brands, improving the quality of our
market share and turning around our U.S. business."
HUMMER set another sales record in March, with total sales up
176%. Retail deliveries rose 165%. HUMMER's March results were
driven by continued strong H3 sales. H3 has widened its sales
lead in the entry luxury utility segment, capturing over 70% of
the segment for the calendar year-to-date.
Saab also improved its retail sales performance in March, with
retail deliveries up 15%. This increase was led by 9-3 sales and
the addition of the 9-7X to Saab's portfolio.
The redesigned Saturn Vue lengthened its streak of year-over-year
sales improvements, posting a sales increase for the tenth
consecutive month.
March sales for GM Certified Used Vehicles, Cadillac Certified
Pre-Owned Vehicles, Saab Certified Pre-Owned Vehicles and HUMMER
Certified Pre-Owned Vehicles, were 47,170 units, up 15.5% from
last March. Certified sales from Used Cars from Saturn were
unavailable at press time. Total year-to-date certified GM sales,
excluding March sales of Used Cars from Saturn, are 124,232 units,
comparable to the same period last year.
In March, GM North America produced 460,000 vehicles (182,000 cars
and 278,000 trucks). This is up 59,000 units, or 14%, compared to
March 2005 when the region produced 401,000 vehicles (162,000 cars
and 239,000 trucks). Production totals include joint venture
production of 15,700 vehicles in March 2006 and 22,000 vehicles in
March 2005.
GM North America built 1.255 million vehicles (496,000 cars and
759,000 trucks) in the first quarter of 2006. This is up 73,000
units, or 6%, compared to first quarter 2005 when the region
produced 1.182 million vehicles (470,000 cars and 712,000 trucks).
The region's 2006 second-quarter production forecast remains
unchanged at 1.20 million vehicles (445,000 cars and 755,000
trucks). In the second quarter of 2005, the region produced 1.247
million vehicles (458,000 cars and 789,000 trucks).
About General Motors
General Motors Corp. -- http://www.gm.com/-- the world's largest
automaker, has been the global industry sales leader for 75 years.
Founded in 1908, GM today employs about 327,000 people around the
world. With global headquarters in Detroit, GM manufactures its
cars and trucks in 33 countries. In 2005, 9.17 million GM cars
and trucks were sold globally under the following brands: Buick,
Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel,
Pontiac, Saab, Saturn and Vauxhall. GM operates one of the
world's leading finance companies, GMAC Financial Services, which
offers automotive, residential and commercial financing and
insurance. GM's OnStar subsidiary is the industry leader in
vehicle safety, security and information services.
* * *
As reported in the Troubled Company Reporter on April 3, 2006,
Moody's Investors Service lowered the ratings of General Motors
Corporation: Corporate Family Rating and senior unsecured to B3
from B2 and Speculative Grade Liquidity Rating to SGL-3 from
SGL-2. The outlook is negative. GMAC and ResCap are unaffected.
The GM rating actions came in response to the company's disclosure
that restatements of its 2002, 2003 and 2004 financial statements
could result in the acceleration of as much as $3 billion in
various lease obligations and in the company potentially not being
be able to borrow under its $5.6 billion unused revolving credit
facility.
As reported in the Troubled Company Reporter on March 31, 2006,
Standard & Poor's Ratings Services placed all its ratings,
including its 'B' long-term and 'B-3' short-term corporate credit
ratings, on General Motors Corp. on CreditWatch with negative
implications. This action stems from:
* GM's disclosure in its 2005 10-K that the recent restatement
of its previous financial statements raises potential issues
regarding access to its $5.6 billion standby credit facility;
and
* the possibility that certain lease obligations of as much as
$3 billion could be subject to possible claims of:
-- acceleration,
-- termination, or
-- other remedies.
As reported in the Troubled Company Reporter on March 22, 2006,
Fitch retained its ratings for General Motors Acceptance Corp. and
its wholly owned subsidiary Residential Capital Corp. on Rating
Watch Evolving:
GMAC:
-- L-T Issuer Default Rating 'BB'
ResCap:
-- L-T Issuer Default Rating 'BBB-'
The ratings remained on Watch Evolving following GMAC's
announcement that it will delay filing their SEC form 10-K(s) and
will be required to either restate or reclassify certain items in
prior financial statements to address a recently surfaced
accounting issue.
GENERAL MOTORS: S&P Holds B Corporate Credit Rating on Neg. Watch
-----------------------------------------------------------------
Standard & Poor's Ratings Services held all of its ratings on
General Motors Corp., including its 'B' long-term and 'B-3' short-
term corporate credit ratings, on CreditWatch with negative
implications after the company's announcement that it has entered
into an agreement to sell a 51% ownership stake in General Motors
Acceptance Corp. (GMAC; BB/Watch Dev/B-1) to a consortium headed
by unrated Cerberus Capital Management L.P.
"Our preliminary assessment is that if the GMAC transaction is
completed as proposed, GMAC's long-term rating would be raised to
'BB+'," said Standard & Poor's credit analyst Robert Schulz.
Standard & Poor's will finalize its assessment (including
determining GMAC's outlook) near the time of the transaction's
closing, which GM expects to be in late 2006.
Estimated cash proceeds to GM at closing are expected to be about
$10 billion, which will bolster GM's liquidity significantly, but
GM's claim on GMAC's future cash flow and earnings will be
diminished. Over the next three years, GM expects to receive a
total of $14 billion, including the proceeds received at closing.
Standard & Poor's does not expect GM to distribute a meaningful
portion of the sale proceeds to shareholders, and GM's ratings
would be jeopardized if this were to occur.
GM should benefit from near-term stability of funding support for
its automotive business if, as is expected, GMAC's funding costs
improve from the capital market's perception of GMAC and from
severing the absolute linkage in the ratings between the two
companies. Still, in the long term, GM could face the risk that
GMAC's new owners would seek to reduce funding support for GM's
automotive business. The potential for future divisiveness among
GMAC's owners for economic or business reasons also poses risks,
and potential further GMAC ownership changes and their effects
over the long term are unknown.
Standard & Poor's now believes it could lower GM's ratings at any
time because of evolving events at former unit Delphi Corp.; an
interim downgrade is possible prior to resolution of the
CreditWatch. Although Standard & Poor's initially placed GM's
ratings on CreditWatch because of a likely incremental reduction
in liquidity stemming from suspect access to its committed bank
facility, and the potential acceleration of certain lease
agreements, the rating agency have become even more concerned
about how developments at Delphi are unfolding.
If Delphi is successful in rejecting its high-cost labor contracts
and a large portion of its auto parts supply contracts with GM,
this could prove extremely costly to GM, particularly if a
significant work stoppage at Delphi occurs in resolving these
issues. Court hearings on these Delphi matters are scheduled for
early May.
GENERAL MOTORS: S&P Holds GMAC BB Rating on CreditWatch Developing
-----------------------------------------------------------------
Standard & Poor's Ratings Services held its ratings on General
Motors Acceptance Corp. (GMAC; 'BB/B-1') and on GMAC's subsidiary,
Residential Capital Corp. (ResCap; 'BBB-/A-3'), on CreditWatch
with developing implications after the announcement by ultimate
parent General Motors Corp. (B/Watch Neg/B-3; see the separate
research update published today on RatingsDirect, Standard &
Poor's Web-based research and credit analysis system) that GM has
entered into a definitive agreement to sell a 51% ownership stake
in GMAC to a consortium headed by:
* Cerberus Capital Management L.P.,
* Citigroup Inc., and
* Aozora Bank Ltd.
"Based on our preliminary assessment, we currently believe that if
the transaction is completed as proposed, GMAC's long-term rating
would be raised to 'BB+', and ResCap's long- and short-term
ratings would be raised to 'BBB/A-2'," said Standard & Poor's
credit analyst Scott Sprinzen.
Standard & Poor's will finalize its assessment (including
determining the rating outlooks on all three companies) near the
time of the transaction's closing, which GM expects to be in the
fourth quarter of 2006. The rating agency will consider:
* the final terms of the transaction;
* the new owners' strategy;
* Standard & Poor's expectations regarding GMAC's performance;
and
* prospects, and the evolving situation at GM.
The transaction is subject to a number of U.S. and international
regulatory and other approvals. If the transaction is not
completed and GM does not take other steps to justify rating it
differently from GMAC, GMAC's ratings would be equalized with
those on GM, and the rating gap between GMAC and ResCap would
likely be kept at two notches.
"We believe the proposed transaction will result in a lower risk
of default at GMAC, compared with that at GM, making it
appropriate to sever the absolute linkage in the ratings between
the two," Mr. Sprinzen continued. Chief among the measures that
would afford substantial protection to GMAC creditors are:
-- With the reduction in GM's ownership stake in GMAC, if GM
were to file for bankruptcy, GM would not be able
unilaterally to cause GMAC to also file for bankruptcy
protection;
-- Under U.S. pension regulations, GMAC would no longer be part
of the GM "control group." Standard & Poor's assumes that
GMAC would not be liable for any unfunded pension liability
of GM's, should GM's U.S. pension plans be terminated;
-- Various existing arrangements between GMAC and GM will be
modified. Standard & Poor's expects GMAC's exposure to GM
will be tightly limited;
-- Standard & Poor's assumes that under the governance
procedures that would be implemented, GM's ability to
influence the operating policies of GMAC -- including its
underwriting standards -- would be significantly restricted;
Moreover, GMAC's financial leverage would be reduced, and
Standard & Poor's assumes GMAC would retain significant
earnings over the next few years;
-- Standard & Poor's assumes the capital markets would, like
the rating agency, view the transaction favorably, which
should help GMAC regain some access to the unsecured term
debt market, thereby enhancing its funding flexibility and
reduce its borrowing costs; and
-- GMAC's funding flexibility will also benefit from a
$25 billion syndicated funding facility being arranged
by Citigroup.
Despite the beneficial aspects of the proposed transaction, GMAC
would continue to face some GM-related risks. The value of GMAC's
core automotive finance franchise would still be influenced by
GM's fortunes. If GM's competitiveness deteriorates further,
especially if GM were ultimately to declare bankruptcy, this could
have a severe effect on the credit and residual loss levels
associated with GMAC's retail and wholesale loan and lease
portfolios. Also, Standard & Poor's believes there is potential
for future divisiveness among GMAC's owners from diverging
business or economic interests. Moreover, potential further
ownership changes in the long term are unknown.
Despite these concerns, Standard & Poor's believes the protections
afforded by the proposed transaction, coupled with:
* GMAC's business diversity,
* excellent asset quality, and
* considerable profit potential,
would be sufficient to justify a significantly higher rating on
GMAC than on GM.
As indicated above, Standard & Poor's expects the ratings on
ResCap to remain two notches above GMAC's, reflecting ResCap's
ability to operate its mortgage businesses separately from GMAC's
auto finance business, from which ResCap is partially insulated by
financial covenants and governance provisions. However, the
rating agency expects to continue to link the ratings on ResCap
with those on GMAC, in view of the latter's full ownership of
ResCap.
GLATFELTER (P.H.): S&P Puts BB+ Rating on $150 Mil. 6.875% Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' senior
unsecured bank loan rating to the $300 million credit facility
maturing in 2011 of Glatfelter (P.H.) Co. (BB+/Stable/--), based
on preliminary terms and conditions.
At the same time, Standard & Poor's placed its 'BB+' ratings on
Glatfelter's existing $150 million 6.875% notes maturing 2007 on
CreditWatch with negative implications. All other ratings,
including the company's corporate credit rating, were affirmed.
The outlook is stable.
The credit facility is comprised of:
* a $200 million revolving credit facility;
* a $50 million term loan A; and
* a $50 million term loan B.
Proceeds from the credit facility will be used:
* to refinance amounts outstanding under the company's existing
$125 million credit facility;
* to fund recently announced acquisitions; and
* for general corporate purposes.
"We will resolve the CreditWatch on the existing 6.875% notes upon
our review of the terms on the new credit facility," said Standard
& Poor's credit analyst Dominick D'Ascoli. "We could lower the
rating one notch on the notes."
York, Pennsylvania-based Glatfelter produces coated and uncoated
freesheet and lightweight paper at its mills in the:
* U.S.,
* Germany, and
* France.
Standard & Poor's expects Glatfelter' profitability to improve
through benefits associated with:
* the recent acquisitions of:
-- the carbonless paper business of NewPage Corp.
(B/Stable/--), and
-- unrated J.R. Crompton Ltd.'s Lydney Mill, located in
the U.K.; and
* cost savings expected from its European restructuring program.
Although Standard & Poor's views the factors affecting its rating
on Glatfelter as balanced, a softening of demand or an increase in
costs that weaken historically modest cash flows could result in
its revising the outlook to negative. In addition, an unfavorable
resolution to environmental issues could also result in a negative
rating action. A revision of the outlook to positive is unlikely
given the company's weak business profile risk.
GOLDENTREE CAPITAL: Moody's Rates $16.8 Mil. Class E Notes at Ba2
-----------------------------------------------------------------
Moody's Investors Service assigned these ratings to eleven classes
of notes issued by GoldenTree Capital Opportunities, L.P.:
* Aaa to the $98,600,000 Class A-1 First Priority Senior
Secured Notes Due 2020;
* Aaa to the $50,000,000 Class A-2 First Priority Senior
Secured Delayed Draw Notes Due 2020;
* Aaa to the $50,000,000 Class A-3 First Priority Senior
Secured Revolving Notes Due 2020;
* Aa2 to the $38,500,000 Class B-1 Second Priority Floating
Rate Secured Notes Due 2020;
* Aa2 to the $3,000,000 Class B-2 Second Priority Fixed Rate
Secured Notes Due 2020;
* A2 to the $19,400,000 Class C-1 Third Priority Floating Rate
Secured Deferrable Notes Due 2020;
* A2 to the $10,000,000 Class C-2 Third Priority Fixed Rate
Secured Deferrable Notes Due 2020;
* Baa2 to the $21,200,000 Class D-1 Fourth Priority Floating
Rate Secured Deferrable Notes Due 2020;
* Baa2 to the $5,000,000 Class D-2 Fourth Priority Fixed Rate
Secured Deferrable Notes Due 2020;
* Ba2 to the $16,800,000 Class E Fifth Priority Secured
Deferrable Notes Due 2020; and
* A2 to the $5,294,000 Class X Principal Protected Notes Due
2030.
The ratings reflect Moody's evaluation of the underlying
collateral as of the Closing Date, the transaction's structure,
the draft legal documentation, and the expertise of the manager,
GoldenTree Asset Management, LP.
Moody's stated that the ratings of these notes address the
ultimate cash receipt of all required interest and principal
payments required by the governing documents and are based on the
expected losses posed to holders of notes relative to the promise
of receiving the present value of such payments.
The transaction, underwritten by Merrill Lynch, is a
securitization of middle market and broadly syndicated loans.
HAYES LEMMERZ: Amends $625 Million Senior Credit Facility
---------------------------------------------------------
Hayes Lemmerz International, Inc. (Nasdaq: HAYZ), concluded an
agreement with its lending group, led by Citigroup North America,
Inc. as administrative agent, to amend its $625 million senior
secured credit facility. Among other changes, the amendment
favorably modifies certain financial covenants.
"This amendment provides Hayes Lemmerz with additional financial
flexibility as we continue to rationalize our manufacturing
footprint, implement cost reduction initiatives, and capitalize on
growth opportunities within our core businesses and in select
geographic regions. We appreciate our lending group's continuing
support of our strategic direction and financial priorities," said
Curtis Clawson, President, CEO and Chairman of the Board.
FY 2005 Earnings Guidance Update
The Company also updated its fiscal 2005 earnings guidance issued
on Dec. 8, 2005. The Company expects revenue of approximately
$2.3 billion for the full fiscal year ended January 31, 2006, in
line with previous guidance of $2.2 billion to $2.3 billion.
Adjusted EBITDA, excluding certain non-cash charges for impairment
of goodwill and long-lived assets, is expected to be approximately
$185 million, in line with its previous guidance of $180 million
to $190 million. Capital Expenditures for the year are expected
to be approximately $125 million, slightly lower than previous
guidance of $130 million.
Consistent with its strategy of investing in core businesses in
the right geographic markets, the Company recently announced
consolidation of its North American and International Wheel Groups
to create a new Global Wheel Group and the closure of its
Huntington, Indiana facility. The Company would also be making
further organizational and employee wage and benefit changes in
North America. The Company expects combined cost savings from all
of these actions of at least $35 million annually.
"These initiatives are consistent with our strategic objective of
streamlining and improving the efficiencies of our business in
higher cost regions, in order to remain competitive in these
countries," said Mr. Clawson.
The Company also anticipates that it will record charges of
approximately $195 million for the impairment of goodwill and an
additional $160 million for the impairment of long-lived assets.
Both of these charges are non-cash and will be recorded in the
fourth quarter of 2005.
About Hayes Lemmerz
Based in Northville, Michigan, Hayes Lemmerz International, Inc.
-- http://www.hayes-lemmerz.com/-- is a leading global supplier
of automotive and commercial highway wheels, brakes, powertrain,
suspension, structural and other lightweight components. The
company has 36 facilities and over 10,000 employees worldwide.
A full-text copy of the Amended Credit Agreement is available at
no charge at http://ResearchArchives.com/t/s?764
* * *
As reported in the Troubled Company Reporter on Mar. 27, 2006,
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating on Hayes Lemmerz International Inc. on CreditWatch
with negative implications because of the poor near-term earnings
and cash-flow prospects for the wheel manufacturer amid
challenging conditions in the automotive industry.
Northville, Michigan-based Hayes has total debt of about $850
million, and it has underfunded employee benefit obligations of
$400 million.
HI-LIFT: Case Summary & 21 Largest Unsecured Creditors
------------------------------------------------------
Debtor: Hi-Lift of New York, Inc.
aka Toyota Lift of New York
20 Central Avenue
Farmingdale, New York 11735
Bankruptcy Case No.: 06-40943
Debtor affiliate filing separate chapter 11 petitions:
Entity Case No.
------ --------
TMR Realty Inc. 06-40942
Type of Business: Hi-Lift of New York, Inc. sells and
distributes Toyota tractors and forklifts.
See http://www.toyotaforklift.com/
TMR Realty Inc. is engaged in the real estate
business. Two of the Debtors' affiliates,
Forklift of New York, Inc. and Industrial
Material Handling Co. of New York, Inc.,
previously filed for a joint chapter 11
protection on July 5, 2001 (Bankr. E.D. N.Y.,
Case No. 01-18994).
Chapter 11 Petition Date: April 3, 2006
Court: Eastern District of New York (Brooklyn)
Debtors' Counsel: Kevin J. Nash, Esq.
Finkel Goldstein Rosenbloom & Nash, LLP
26 Broadway, Suite 711
New York, New York 10004
Tel: (212) 344-2929
Fax: (212) 422-6836
Entity Estimated Assets Estimated Debts
------ ---------------- ---------------
Hi-Lift of New York, Inc. $1 Million to $10 Million to
$10 Million $50 Million
TMR Realty Inc. $50,000 to $1 Million to
$100,000 $10 Million
A. Hi-Lift of New York, Inc.'s 20 Largest Unsecured Creditors:
Entity Nature of Claim Claim Amount
------ --------------- ------------
Toyota Motor Sales-Parts Trade Debt $164,377
19001 South Western Avenue
Torrance, CA 90501
Electric Battery Co., Inc. Trade Debt $145,841
178-15 Eveleth Road
Jamaica, NY 11434-3405
Battery Builders Inc. Trade Debt $74,876
P.O. Box 5005
31 West 238 91st Street
Haperville, IL 60567
Forklift Headquarters Trade Debt $42,750
Northwest Ind., Batter Trade Debt $34,894
American Express Trade Debt $13,180
Market Lift Inc. Trade Debt $8,997
Renu Industrial Tire Trade Debt $5,913
Inter City Tire Trade Debt $4,609
Nextel Communication Trade Debt $4,367
Keyspan Energy Trade Debt $3,666
Dependable Hydraulic Inc. Trade Debt $3,113
Allied Aero Service Inc. Trade Debt $2,774
Exxon Mobil Trade Debt $2,450
Cintas Corporation Trade Debt $2,428
Mini-Trac Computer System Trade Debt $1,987
Allway Transport Trade Debt $1,925
Ford Motor Credit Co. Trade Debt $1,875
Double Check Auto Elect. Trade Debt $1,860
Lift-Rite Inc. Trade Debt $1,756
B. TMR Realty Inc.'s Largest Unsecured Creditor:
Entity Nature of Claim Claim Amount
------ --------------- ------------
IAM National Pension Fund Trade Debt $8,278,720
1300 Connecticut Avenue
Northwest Suite 300
Washington, D.C. 20036-1711
IELEMENT CORPORATION: Will Pay $560,000 Notes with Common Shares
----------------------------------------------------------------
iElement Corporation will not have to pay in cash its indebtedness
to 12 holders of its promissory notes. The Company and the
noteholders signed an agreement amending the terms of the
Company's repayment obligations amounting to $560,053.
The Noteholders agreed to waive the accrued but unpaid principal,
in exchange for the future right to convert the amount to shares
of the Company's common stock at a conversion price of $0.035 per
share. Both the prior notes and the new convertible secured
promissory notes are non-interest bearing. The first payment on
each of the new convertible promissory notes is due in September
2006 with a total of 36 monthly installments through August 2009.
Two of the notes are held by Kramerica, Inc., a Company in which
iElement's Chief Executive Officer and Director Ivan Zweig, is the
sole shareholder, officer and director. The Company owes
Kramerica $120,000. Six of the Noteholders are Mr. Zweig's
immediate family. The Company owes $256,956 to Mr. Zweig's
immediate family. Both the prior notes and the new convertible
secured promissory notes in favor of Kramerica and Mr. Zweig's
family are secured by substantially all of the Company's assets.
The remaining four note holders are currently unaffiliated with
the Company. In addition, the remaining four notes were and
remain unsecured.
About iElement Corporation
iElement Corporation -- http://www.ielement.com/-- provides
telecommunications services to small and medium sized businesses.
IElement provides broadband data, voice and wireless services by
offering integrated T-1 lines as well as a Layer 2 Private Network
and VOIP solutions. IElement has a network presence in 18 major
markets in the United States, including facilities in Los Angeles,
Dallas, and Chicago.
Going Concern Doubt
Bagell, Josephs & Company, L.L.C., expressed substantial doubt
about iElement's ability to continue as a going concern after it
audited the Company's financial statements for the fiscal year
ended March 31, 2005, due to operating losses and capital
deficits.
INDEPENDENCE VII: Weak Cash Flow Cues Moody's Low-B Note Rating
---------------------------------------------------------------
Moody's Investors Service assigned these ratings to the Notes
issued by Independence VII CDO, Ltd.:
* Aaa to $360,000,000 Class A-1A First Priority Senior Secured
Floating Rate Delayed Draw Notes due 2045;
* Aaa to $60,000,000 Class A-1B First Priority Senior Secured
Floating Rate Notes due 2045;
* Aaa to $30,600,000 Class A-2 Second Priority Senior Secured
Floating Rate Notes due 2045;
* Aa2 to $60,000,000 Class B Third Priority Senior Secured
Floating Rate Notes due 2045;
* Aa3 to $28,500,000 Class C Fourth Priority Senior Secured
Floating Rate Notes due 2045;
* A3 to $15,000,000 Class D Fifth Priority Mezzanine
Deferrable Floating Rate Notes due 2045;
* Baa2 to $24,900,000 Class E Sixth Priority Mezzanine
Deferrable Floating Rate Notes due 2045; and
* Ba1 to $5,400,000 Class F Seventh Priority Mezzanine
Deferrable Floating Rate Notes due 2045.
The Moody's ratings of the Notes address the ultimate cash receipt
of all required interest and principal payments, as provided by
the Notes' governing documents, and are based on the expected loss
posed to Noteholders, relative to the promise of receiving the
present value of such payments.
The ratings reflect the risks due to the diminishment of cash
flows from the underlying portfolio due to defaults, the
transaction's legal structure and the characteristics of the
underlying assets.
Declaration Management & Research LLC will manage the selection,
acquisition and disposition of collateral on behalf of the
Issuer."
INTERNATIONAL PAPER: Sells 5.1 Million Acres for $6.1 Billion
-------------------------------------------------------------
International Paper Co. (NYSE: IP) reported definitive agreements
with two separate investor groups under which it will sell a total
of approximately 5.1 million acres of forestlands for aggregate
proceeds of approximately $6.1 billion. The sale of forestlands
is part of International Paper's transformation plan to focus on
uncoated papers and industrial and consumer packaging.
Terms of the Agreement
International Paper will sell approximately 3.8 million acres of
forestlands located across the southern U.S. and 440,000 acres in
Michigan to an investor group led by Resource Management Service,
LLC for approximately $5 billion in cash and notes at closing.
Under a separate agreement, International Paper will sell
approximately 900,000 acres of forestland in Louisiana, Texas and
Arkansas to an investor group led by TimberStar for approximately
$1.1 billion in cash and notes at closing.
As previously reported in the Troubled Company Reporter on March
31, 2006, upon closing these sales and the sales to conservation
groups, International Paper will have sold 5.4 million acres,
or approximately 85%, of its U.S. forestland holdings, and will
have realized proceeds of approximately $6.5 billion. The company
believes these combined transactions represent the largest private
forestland sale in U.S. history.
"These agreements for the sale of forestlands at very attractive
valuations are important steps forward in our plan to increase our
focus and improve returns to shareowners," said John Faraci,
International Paper chairman and chief executive officer. "The
strong value achieved is a testament to the expertise of our
forest resources team and their excellent management of the
forestlands. As we transition much of our forestland to new
ownership, we continue to demonstrate our commitment to
sustainable forestry and environmental conservation. The
agreements we have negotiated will ensure this fiber will continue
to come from sustainably managed forestlands."
Because of the size and scope of these transactions and the
extensive title work involved in completing them, International
Paper expects to receive a portion of the proceeds in the third
quarter, with the bulk of proceeds arriving in the 2006 fourth
quarter. The gain on these sales will be dependent upon the final
amount of proceeds and costs at closing, with the timing of gain
recognition to be determined by the accounting treatment of the
forestland sales transactions and the fiber supply agreements.
Sale of 4.2 million acres to RMS
RMS led negotiations for the 4.2 million-acre purchase on behalf
of an investor group comprising RMS, Atlanta-based Forest
Investment Associates, and other investors. The agreement with
this group includes a 20-year fiber supply agreement for
International Paper's pulp and paper mills in the South, a 10-year
fiber supply agreement on the Michigan forestlands for IP's
coated paper facilities in the region, and a 10-year fiber supply
agreement for IP's wood products facilities, all at market prices.
Under the terms of the agreement, the forestlands will continue to
be managed and third-party certified under the requirements of the
Sustainable Forestry Intitiative(R) Standard.
Sale of 900,000 acres to TimberStar
The agreement with TimberStar includes a 50-year fiber supply
agreement for IP's pulp and paper mills, and a 30-year fiber
supply agreement for IP's wood products facilities, both at market
prices. These forestlands will also continue to be managed and
third-party certified under the requirements of the SFI Standard.
Other Assets and Forestlands
International Paper is still exploring the sale of approximately
300,000 acres, principally in New York. IP's remaining acreage,
approximately 830,000 acres primarily in the South, will be
retained by the company and some may be later sold to maximize the
value of the land.
Transformation Plan
In July 2005, International Paper reported a three-part
transformation plan to improve returns, strengthen the balance
sheet and return cash to shareowners. The plan includes:
* focusing the company's portfolio on two key platform
businesses;
* improving shareowner returns through mill realignments and
additional cost improvements in those businesses; and
* exploring options, including sale or spin-off, for other
businesses.
The sale of the U.S. forestlands is the second significant step in
the transformation process, following the sale of the company's
majority interest in Carter Holt Harvey Limited in late 2005.
About Resource Management Service
Based in Birmingham, Alabama, RMS -- http://www.resourcemgt.com/
-- is an independent timberland investment management firm that
manages forest investments in the U.S. South on behalf of private
clients and institutional investors.
About TimberStar
TimberStar -- http://www.timberstar.com/-- is a new timber and
timberland company founded with a singular objective: to provide
flexible financial and operational solutions to owners of
timberland in the U.S. and Canada. TimberStar combines proven
expertise in timberland investment and operations with the
significant financial resources of a multi-billion-dollar publicly
traded specialty finance company.
About International Paper
International Paper Inc. -- http://www.internationalpaper.com/--
is the world's largest paper and forest products company.
Businesses include paper, packaging, and forest products. As one
of the largest private forest landowners in the world, the company
manages its forests under the principles of the Sustainable
Forestry Initiative (R) (SFI) program, a system that ensures the
continual planting, growing and harvesting of trees while
protecting wildlife, plants, soil, air and water quality.
* * *
As reported in the Troubled Company Reporter on July 22, 2005,
Moody's Investors Service assigned International Paper Company
these ratings:
* Senior Unsecured Baa2
* Subordinate Shelf (P)Baa3
* Preferred Shelf (P)Ba1
INTERSTATE BAKERIES: Selling Oakland Lot to Madison Park for $3.2M
------------------------------------------------------------------
Interstate Bakeries Corporation and its debtor-affiliates are
currently using a property located at 945 53rd Street, in Oakland,
California, for the operation of a thrift store and a depot. The
Property is comprised of a 1.45-acre land with an 18,891-square
foot building.
Samuel S. Ory, Esq., at Skadden Arps Slate Meagher & Flom LLP, in
Chicago, Illinois, tells the U.S. Bankruptcy Court for the Western
District of Missouri that the Debtors want to sell the Property
subject to their option to lease it for up to six months after the
closing of the sale from the successful bidder, to enable them to
continue to wind down operations and relocate to a more suitable,
cost efficient space in the area.
The Lease provides for a $7,000 monthly base rent. The total
base rental for the full six-month term of the Lease, if
the Debtors do not terminate it earlier, is $42,000.
With the assistance of Hilco Industrial, LLC, and Hilco Real
Estate, LLC, the Debtors have decided to sell the Property to
Madison Park Financial Corporation, as the stalking horse bidder,
for $3,200,000, subject to higher and better offers and the
Option.
The Sale Agreement with Madison Park provides for a $320,000
escrow deposit.
If the Debtors exercise the Option, any personal property located
on the Property on the Closing Date will remain their property
after the closing and those not sold or otherwise removed from
the Property prior to expiration of the Lease will be deemed
abandoned to the Proposed Purchaser on the expiration of the
Lease.
If the Debtors do not exercise the Option, any personal property
located on the Property on the Closing Date will be transferred
to the Proposed Purchaser at Closing.
The Debtors have the right and ability to terminate the Lease at
any time upon 30 days' prior notice. The Lease provides that the
Debtors are responsible for payment of utilities and repairs to
the Property and the Proposed Purchaser is responsible for the
payment of real property taxes.
The Debtors will deliver good and marketable fee simple title to
the Land and Improvements, free and clear of liens, other than
Permitted Exceptions. The Property is being sold as-is, where-
is, with no representations or warranties, reasonable wear and
tear, casualty and condemnation excepted.
Bidding Procedures
The Debtors intend to use the Court-approved Bidding Procedures.
For the Oakland Property:
* the Bid Deadline is April 5, 2006, as may be extended by the
Debtors in their sole discretion;
* the Auction Date is April 10, 2006, as may be changed in the
Debtors' sole discretion. Qualified Bidders will be
permitted to participate in the Auction by teleconference;
* the Minimum Bid is $3,300,000;
* the Debtors agree to provide Bid Protection to the Proposed
Purchaser in the form of a termination fee equal to $64,000,
which is 2% of the Purchase Price;
* the Debtors reserve the right to elect not to hold an
Auction, to change the time and location of the Auction and
to impose other terms and conditions as they may determine
to be in the best interests of their estates, their
creditors, and other parties-in-interest.
Payment of Taxes
In connection with the sale of the Oakland Property, the Debtors
propose to pay to the Alameda County, California, tax collector:
(a) real and personal property taxes and special charges with
respect to the Property in the principal amount of
$17,216; and
(b) $0 in penalties and delinquent charges with respect to any
and all delinquent taxes with respect to the Property.
The payments will be in full satisfaction of all real property
taxes for the Property for the tax year 2004-2005 and all prior
tax years.
The Debtors and the Successful Bidder will prorate 2005-2006 real
and personal property taxes as of the Closing Date in accordance
with the terms of the Successful Sale Agreement.
The Debtors will publish notices and advertisements of the Sale
in the Oakland Tribune prior to the Bid Deadline. The Debtors
ask the Court to deem the notice as proper notice to any other
interested parties whose identities are unknown to them.
Accordingly, the Debtors ask the Court to:
(a) approve the sale of the Oakland Property; and
(b) grant them authority to compromise and pay the tax claims.
About Interstate Bakeries
Headquartered in Kansas City, Missouri, Interstate Bakeries
Corporation is a wholesale baker and distributor of fresh baked
bread and sweet goods, under various national brand names,
including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R),
Merita(R) and Drake's(R). The Company employs approximately
32,000 in 54 bakeries, more than 1,000 distribution centers and
1,200 thrift stores throughout the U.S.
The Company and seven of its debtor-affiliates filed for chapter
11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No.
04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at
Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in
their restructuring efforts. Kenneth A. Rosen, Esq., at
Lowenstein Sandler, PC, represents the Official Committee of
Unsecured Creditors. Peter D. Wolfson, Esq., at Sonnenschein Nath
& Rosenthal, LLP, represents the Official Committee of Equity
Security Holders. When the Debtors filed for protection from
their creditors, they listed $1,626,425,000 in total assets and
$1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior
subordinated convertible notes due August 15, 2014, on August 12,
2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue
No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000)
J.L. FRENCH: Files Plan of Reorganization and Disclosure Statement
------------------------------------------------------------------
J.L. French Automotive Castings, Inc. filed its Plan of
Reorganization and Disclosure Statement, on April 4, 2006, that
outline how the company will satisfy claims in its Chapter 11 case
and emerge successfully as a reorganized company. The Plan's
terms are consistent with those outlined by the company when it
filed its voluntary petitions under Chapter 11 on Feb. 10, 2006.
"We are on track with our reorganization, as evidenced by today's
filing which has been completed in less than 60 days since we
first entered Chapter 11," stated Jack F. Falcon, chairman, CEO
and president. "During this time, we have operated our business
as we intended: We have entered into new business agreements with
major customers, commenced shedding underutilized assets, and
maintained our organizational leadership in its entirety. We are
optimistic that we will complete the reorganization and emerge
with a new, revitalized balance sheet by the end of the second
quarter of this year."
Plan Funding
Distributions under the Plan will be made through new cash
investment, as well as exit financing of no less than
$255 million, of which $205 million will be a term loan and a
revolver of $50 million, with at least $30 million unfunded
capacity at the time the Plan becomes effective. The company is
considering several exit financing proposals and expects to have
an exit financing commitment.
Terms of the Plan
The Plan, which outlines the treatment of claims as divided
into various creditor classes, calls for the repayment in full
of the first lien debt totaling approximately $295 million.
All classes related to the payment of debtor-in-possession
financing claims, administrative expenses, priority claims and
capital leases and other secured claims will be paid in full.
The second lien notes claims, which total approximately
$177 million, will be converted into 8%-22% of the new common
stock and three tranches of warrants for new common stock in the
reorganized company. The warrants will have strike prices ranging
from $195 million to $295 million in equity value.
Holders of second lien notes claims may also participate in
a Rights Offering that will raise between $110 million and
$130 million in exchange for 78%-92% of the new equity. This
cash will help finance the reorganized company's exit from Chapter
11. The Rights Offering will commence concurrent with Plan
solicitation. The company recently received Court approval to
pay fees to those parties that made commitments to backstop the
Rights Offering.
Trade creditors will receive 100% of the face amount of their
claims, but will not receive interest on those claims.
General unsecured creditors other than holders of senior
subordinated 11-1/2% notes and trade creditors will receive their
pro rata shares of the greater of $50,000 or common stock having a
value equal to certain property unencumbered by liens.
The subordinated 11-1/2% notes are contractually subordinated to
the second lien notes claims, and holders of those notes will not
receive any distributions unless the second lien notes claims have
been satisfied in full.
Preferred and common equity holders will receive no distribution
under the Plan.
Balance Sheet and Income Statement
As of Dec. 31, 2005, J.L. French had approximately $465 million in
first and second lien senior secured debt and $28.9 million in
11.5% senior subordinated unsecured notes due 2009. The company
incurred the majority of this debt as a result of an expansion and
acquisition program in the late 1990s. When J.L. French completes
its reorganization, it anticipates long-term debt of approximately
$26 million, in addition to the new $205 million term facility
that will be added to the balance sheet. As of Dec. 31, 2005, the
company had approximately $268 million in consolidated net
operating losses.
The company's 2005 revenues were approximately $482 million, most
of which the company generated in its continuing operations in
Wisconsin and Kentucky in the U.S. and in Spain.
About J.L. French
Headquartered in Sheboygan, Wisconsin, J.L. French Automotive
Castings, Inc. -- http://www.jlfrench.com/-- is one of the
world's leading global suppliers of die cast aluminum components
and assemblies. There are currently nine manufacturing locations
around the world including plants in the United States, United
Kingdom, Spain, and Mexico. The company has fourteen
engineering/customer service offices to globally support our
customers near their regional engineering and manufacturing
locations. The Company and its debtor-affiliates filed for
chapter 11 protection on Feb. 10, 2006 (Bankr. D. Del. Case No.
06-10119 to 06-06-10127). James E. O'Neill, Esq., Laura Davis
Jones, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang
Ziehl Young & Jones, and Marc Kiesolstein, P.C., at Kirkland &
Ellis LLP, represent the Debtors in their restructuring efforts.
When the Debtor filed for chapter 11 protection, it estimated
assets and debts of more than $100 million.
KERZNER INTERNATIONAL: Earns $52.2 Million in Year Ended Dec. 31
----------------------------------------------------------------
Kerzner International Limited delivered its financial statements
for the year ended Dec. 31, 2005, to the Securities and Exchange
Commission on Mar. 31, 2006.
The company reported $52,217,000 of net income on $721,524,000 of
net revenues for the year ended Dec. 31, 2005.
At Dec. 31, 2005, the company's balance sheet showed
$2,276,622,000 in total assets, $1,111,097,000 in total
liabilities, and $1,161,762,000 in total stockholders' equity.
A full-text copy of Kerzner International Limited's Annual Report
is available at no charge at http://ResearchArchives.com/t/s?772
About Kerzner International
Kerzner International Limited -- http://www.kerzner.com/--
through its subsidiaries, is a leading international developer and
operator of destination resorts, casinos and luxury hotels. The
Company is also a 37.5% owner of BLB Investors, L.L.C., which owns
Lincoln Park in Rhode Island and pari-mutuel racing facilities in
Colorado. In the U.K., the Company is currently developing a
casino in Northampton and received a Certificate of Consent from
the U.K. Gaming Board in 2004. In its luxury resort hotel
business, the Company manages ten resort hotels primarily under
the One&Only brand. The resorts, featuring some of the top-rated
properties in the world, are located in The Bahamas, Mexico,
Mauritius, the Maldives and Dubai. An additional One&Only
property is currently in the planning stages in South Africa.
* * *
As reported in the Troubled Company Reporter on Mar. 22, 2006,
Moody's Investors Service placed the ratings on review for
downgrade on Kerzner International Limited's Ba3 Corporate Family
Rating and B2 Guaranteed Senior Subordinate Ratings; and Kerzner
International North America, Inc.'s (P) B2 Guaranteed Senior
Subordinate shelf.
As reported in the Troubled Company Reporter on Mar. 22, 2006,
Standard & Poor's Ratings Services placed its ratings on the
hotels and a casino owner and operator Kerzner International Ltd.,
including its 'BB-' corporate credit rating, on CreditWatch with
negative implications.
KMART CORP: Ct. Denies Kirkpatrick's Move to Dismiss SEC's Charges
------------------------------------------------------------------
As previously reported, the Securities and Exchange Commission
brought an action to the U.S. District Court for the Eastern
District of Michigan, alleging that a number of Kmart
Corporation's employees and vendors participated in schemes that
led to Kmart overstating its revenues and understating its
expenses.
Subsequently, the SEC settled its claims against certain of the
named Defendants and a final judgment was entered against them on
December 2, 2004.
Of the eight named Defendants, only three remain:
-- David C. Kirkpatrick and David N. Bixler, who were employed
by vendors who contracted with Kmart; and
-- John Paul Orr, a Kmart employee.
Messrs. Kirkpatrick, Bixler, and Orr are alleged to have acted in
concert with Kmart employees -- and in Mr. Orr's case, vendors --
in prematurely reporting allowances earned by Kmart under vendor
contracts.
Specifically, on its Form 10-K filing for the 2000 fiscal year
Kmart allegedly reported vendor allowances that were to be earned
in the 2001 fiscal year, as earned in the 2000 fiscal year.
According to the SEC, the practice of pulling forward vendor
allowances is contrary to generally accepted accounting
principles, and resulted in Kmart:
* understating its cost of goods sold; and
* overstating its earnings in the years preceding Kmart's
bankruptcy filing in January 2002.
Collectively, Messrs. Kirkpatrick, Bixler, and Orr's misconduct
caused Kmart's net income for the fourth quarter and fiscal year
2000 to be overstated by approximately $24,000,000 when originally
reported.
Individually, the SEC alleges that Messrs. Kirkpatrick and Bixler
each caused an overstatement of $3,000,000, and that Mr. Orr
overstated $12,350,000. In addition, Mr. Orr caused Kmart's net
income to be overstated by $2,500,000 in the 1999 fiscal year.
Based on these allegations, the SEC asserted several claims
against the three Defendants.
Each Defendant is alleged to have violated:
(1) or aided and abetted a violation of Section 10(b) the
Securities Exchange Act of 1934 (15 U.S.C. Section 78j(b))
and Rule 10b-5 (17 C.F.R. Section 240.10b-5);
(2) the books and records provision of Rule 13b2-1 of the
Exchange Act;
(3) Section 13(b)(5) of the Exchange Act; or
(4) aided and abetted a violation of the reporting provisions
of the Exchange Act -- Section 13(a), Rule 12b-20, Rule
13a-1, and Section 20(e).
Additionally, Mr. Orr is alleged to have violated -- and Messrs.
Kirkpatrick and Bixler are alleged to have aided and abetted a
violation of -- Rule 13b2-2.
Requests to Dismiss
Pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil
Procedure, Messrs. Kirkpatrick, Bixler, and Orr asked the
Michigan District Court to dismiss the complaint, contending that:
(a) the SEC failed to allege facts implicating them in Kmart's
alleged wrongdoing;
(b) the collective and individual amounts that Kmart allegedly
over- and under-stated revenues and costs in fiscal year
2000, is insignificant vis-a-vis Kmart's total sales
revenues of $37,000,000,000 and sales costs of
$29,700,000,000.
Court Rules on Requests
District Court Judge Victoria A. Roberts points out that both
Messrs. Kirkpatrick and Bixler were representatives of third-party
vendors who allegedly indirectly contributed to Kmart's filing
with the SEC in which Kmart overstated its revenues for the 2000
fiscal year and understated its expenses.
However, Judge Roberts notes that there are no allegations that
either Messrs. Kirkpatrick or Bixler were directly involved in the
preparation or issuance of the Form 10-K. Rather, they are only
alleged to have signed off on documents -- the VATS forms -- which
ultimately were incorporated in the figures that went into the
Form 10-K filed by Kmart.
Although Mr. Orr was a Kmart employee who was more directly
involved with Kmart, Judge Roberts notes that there is no basis to
hold Mr. Orr more culpable than Messrs. Kirkpatrick and
Bixler. There are no allegations with respect to any of the
allowances that Mr. Orr allegedly pulled forward, and that he was
directly involved in the preparation or issuance of the Form 10-K
for the 1999 or 2000 fiscal years, Judge Roberts says.
Like Messrs. Kirkpatrick and Bixler, Mr. Orr is only alleged to
have executed, or directed others to execute, VATS forms that were
incorporated into Kmart's Form 10-K.
Therefore, Judge Roberts says, the three Defendants are not guilty
of Section 10(b) and Rule 10b-5 antifraud violations.
The Michigan Court, accordingly, grants Mr. Bixler's request to
dismiss five counts of violations asserted against him.
Except with respect to his request to dismiss all counts
concerning the $2,500,000 and $3,250,000 allowances, which the
Court denied, Judge Roberts approves the rest of Mr. Orr's request
to dismiss.
Mr. Kirkpatrick's request to dismiss all counts asserted by the
SEC, on the other hand, is denied, except for his request to
dismiss the allegation that he is in direct violation of Section
10(b) and Rule 10b-5, which gained the Court's approval.
Aiding and Abetting
According to Judge Roberts, to state a claim for aiding and
abetting against the Defendants in the case, the SEC only needs to
plead sufficient facts to support a finding that the Defendants
had a general awareness that their acts were part of overall
activity that was improper, and that they knowingly provided
substantial assistance in the violation.
Judge Roberts denies Mr. Kirkpatrick's request to dismiss the
SEC's aiding and abetting charges against him because Mr.
Kirkpatrick:
-- communicated with Albert M. Abood, the Divisional Vice
President of non-perishable products in Kmart's food and
consumables division and, therefore, knew that Mr. Abood
intended to report a $3,000,000 advance as though it were
earned in 2000; and
-- executed the two VATS forms totaling $3,000,000 which, on
their face, created the impression that the $3,000,000 was
tendered for an agreement that was performed during the
2000 fiscal year; and
-- falsely confirmed the accuracy of the terms appearing on
the face of the VATS forms with Kmart's auditors.
Unlike the allegations against Mr. Kirkpatrick, Judge Roberts
maintains that there are no direct allegations, or facts from
which one could infer that Mr. Bixler was aware of the purpose of
Mr. Abood's demand for an increase in allowances.
Mr. Orr, on the other hand, had a general awareness of the
impropriety of his actions and proceeded knowingly, Judge Roberts
says. Mr. Orr's actions constituted substantial assistance in the
overall scheme to defraud investors regarding Kmart's actual
revenues and expenses in the 2000 fiscal year. Thus, Mr. Orr's
request to dismiss the SEC's aiding and abetting charges with
regard to certain $2,500,000 and $3,250,000 allowances is denied.
Books and Records Violations
The Michigan District Court holds that Messrs. Kirkpatrick and
Orr knowingly caused Kmart's books and records to be falsified and
knowingly circumvented Kmart's internal accounting controls.
Accordingly, Judge Roberts denies both Defendants' requests to
dismiss the alleged "books and records" violations charged against
them.
Mr. Bixler's request to dismiss the Books and Records Allegation
against him is approved though because the SEC failed to plead
facts supporting its contention that Mr. Bixler is guilty of the
same violations.
Rule 13b2-2 Violation
Judge Roberts explains that Rule 13b2-2 prohibits officers and
directors from making false or misleading statements to an
accountant or omitting material facts relative to the preparation
of financial statements.
Judge Roberts rules that the SEC's assertion that Mr. Bixler is
guilty of violating Rule 13b2-2 must fail because the SEC has not
alleged facts to support its claim that the VATS form Bixler
executed was false or that he misrepresented the terms of the
allowance during his meeting with PricewaterhouseCoopers auditors.
Furthermore, there are no allegations indicating that Mr. Bixler
was aware that Kmart's auditor did not already have a copy of the
letter, which was co-signed by Mr. Abood, or that Mr. Bixler
played any part in concealing the letter from PwC.
Judge Roberts further notes that the SEC's allegation that Mr.
Orr directly violated Rule 13b2-2 by "causing the falsification"
of the VATS form must likewise fail because the SEC does not
adequately allege that Mr. Orr, directly or indirectly, falsified
the $7,000,000 VATS form or that he submitted it to PwC. The SEC
only alleges that Darrell J. Edquist, one of Mr. Orr's
subordinates falsified the form, and that Mr. Edquist confirmed
its allegedly false terms when PwC inquired.
There are no allegations that Mr. Orr directed his subordinate or
Mr. Edquist's actions, or that he was even aware of them, Judge
Roberts maintains.
Reporting Violations
Section 13(a) and Rules 12b-20 and 13a-1 violations require
issuers of registered securities to file various reports relative
to those securities and to supplement them as necessary to ensure
that they are not misleading.
Judge Roberts notes that the SEC adequately stated a claim for
violation of the reporting provisions by Mr. Kirkpatrick for the
$3,000,000 allowance, and Mr. Orr for the $2,500,000 and
$3,250,000 allowances because they aided and abetted Kmart's
violation of Section 10(b) and Rule 10b-5.
Messrs. Kirkpatrick and Orr are alleged to have knowingly executed
or caused to be executed VATS forms that misrepresented the date
that funds received for vendor allowances were earned.
As with the other claims against Mr. Bixler, the reporting
violation charges must also fail because the SEC failed to plead
facts showing that Mr. Bixler made any misrepresentations on the
VATS form, Judge Roberts explains.
A full-text copy of the Michigan District Court's Ruling on the
Requests to Dismiss is available for free at:
http://bankrupt.com/misc/kmart_michigandistrictcourtorder.pdf
About Kmart
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. 108; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KMART CORP: Wants Plan Modified to Allow Butler Action to Proceed
-----------------------------------------------------------------
Prior to the bankruptcy filing, Lurlene Butler commenced a
personal injury lawsuit against Kmart Corporation and other
defendants in the state courts of Yazoo County, Mississippi.
William Barrett, Esq., at Barack Ferrazzano Kirschbaum Perlman &
Nagelberg LLP, in Chicago, Illinois, notes that the action was
later removed to, and is currently pending before, the U.S.
District Court for the Southern District of Mississippi.
When the Debtors filed for Chapter 11, the District Court Action
was automatically stayed. The Mississippi Court suspended the
Action pending relief from the automatic stay.
On April 29, 2002, Ms. Butler filed Claim No. 12342 in the
Debtors' Chapter 11 cases based on the same allegations asserted
in the District Court Action.
In September 2002, the District Court Action was closed solely for
statistical purposes.
Subsequently, Ms. Butler's attorney sought and obtained the
Mississippi Court's approval to withdraw as counsel.
Mr. Barrett relates that the injunction provision of the Debtors'
confirmed Plan of Reorganization must be modified to allow the
District Court Action to proceed.
Kmart, hence, asks the Court to partially modify the Plan
Injunction with respect to the District Court Action, solely to
permit the Action to proceed either to a dismissal, settlement, or
final judgment.
However, Kmart requests that the Plan Injunction remain in effect
with respect to any and all possible actions by Ms. Butler to
execute on any final order or judgment that may be entered against
Kmart, the Kmart estates, the Reorganized Debtors, or any of their
property.
Kmart further reserves all rights in connection with challenging
-- in the U.S. Bankruptcy Court for the Northern District of
Illinois -- certain aspects of any order or judgment that may be
entered by the Mississippi Court.
About Kmart
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. 108; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
KOEN BOOK: Disclosure Statement Hearing Scheduled for May 9
-----------------------------------------------------------
The U.S. Bankruptcy Court for the District of New Jersey will
convene a hearing on May 9, 2006, to consider the adequacy of
information contained in the Disclosure Statement explaining Koen
Book Distributors, Inc., nka Book Distributors, Inc., and the
Official Committee of Unsecured Creditors' Joint Plan of
Liquidation.
Overview of the Plan
The plan will be funded using any cash remaining and proceeds of
the liquidation of the assets and causes of action of the Debtor's
estate.
Asset Sales
On Sept. 22, 2005, the Debtor entered into an Inventory Purchase
Agreement with Baker & Taylor for the purchase and sale of the
Debtor's book inventory for $4.5 million. The Court approved that
agreement on Oct. 7, 2005.
On Oct. 3, 2005, the Debtor entered into an Asset Purchase
Agreement with Levy Home Entertainment pursuant to which Levy will
purchase the Debtor's assets, the name "Koen Book Distributors"
and certain unexpired executory contracts for $300,000. The Court
approved the Debtor's agreement with Levy on Oct. 17, 2005.
Treatment of Claims
Under the plan, Administrative Claims, Priority Tax Claims and
Priority Claims will be paid in full.
Holders of general unsecured claims will receive their pro rata
share of the cash remaining after payment of all other claims,
exclusive of any reserves established by the Koen Trustee for
Disputed Claims. Unsecured claim holders will also receive their
pro rata share of the beneficial interests in the Koen Trust. The
Debtor tells the Court that if there are sufficient funds to pay
unsecured claims in full, then holders of unsecured claims will
also receive 3.52% interest.
Holders of interests in the Debtor will receive no distribution
and those interests will be cancelled.
A full-text copy of the Debtor and Committee's disclosure
statement explaining their Joint Plan of Liquidation is available
for a fee at:
http://www.researcharchives.com/bin/download?id=060404023256
About Koen Book
Headquartered in Moorestown, New Jersey, Koen Book Distributors,
Inc., nka Book Distributors, Inc. -- http://www.koen.com/-- is a
book wholesaler specializing in bestsellers and independent press
titles. The company filed for chapter 11 protection on July 11,
2005 (Bankr. D. N.J. Case No. 05-32376). Aris J. Karalis, Esq.,
at Ciardi, Maschmeyer & Karalis, P.C., represents the Debtor.
Bruce D. Buechler, Esq., and Bruce S. Nathan, Esq., at Lowenstein
Sandler, PC, represent the Official Committee of Unsecured
Creditors. When the Debtor filed for protection from its
creditors, it estimated assets and debts between $10 million and
$50 million.
LEAP WIRELESS: Earns $30 Million For the Year Ended December 31
---------------------------------------------------------------
Leap Wireless International, Inc. (NASDAQ: LEAP) announced
consolidated financial and operational results for the fourth
quarter and full year ended Dec. 31, 2005, reflecting strong year-
over-year growth in service revenues and adjusted operating income
before depreciation and amortization.
Solid operational performance was led by the addition of nearly
46,000 net new customers during the fourth quarter, bringing the
total number of net customer additions for the year to just over
117,000.
These additions represent a 53% increase over the net additions of
approximately 29,000 in the fourth quarter of 2004 and a 21%
improvement over the full year net additions of approximately
97,000 for 2004.
The Company ended 2005 with approximately 1,668,000 total
customers and a customer churn rate of 4.1% for the fourth quarter
and 3.9% for the full year 2005.
Total revenues for the fourth quarter were $228.9 million,
an increase of $22.3 million over the total revenues of
$206.6 million for the fourth quarter of 2004.
Operating income for the fourth quarter was $10.8 million, an
increase of $5.9 million over the $4.9 million for the fourth
quarter of 2004.
Net income was $5.0 million for the fourth quarter. This compares
to the net loss of $6.6 million for the fourth quarter of 2004.
"The Company had another successful quarter, reflecting continued
execution of the strategic growth plans we have established for
our business," Doug Hutcheson, president and chief executive
officer of Leap said.
"Based on the results of the fourth quarter and full year 2005,
and our first quarter outlook for new customers and adjusted
OIBDA, we believe the broad impact and value of our actions are
becoming evident. We look forward to continuing progress in the
coming year as we expand our services and market presence
throughout 2006."
For the full year 2005, total revenues were $914.7 million, an
$88.7 million improvement over total revenues of $826.0 million
for the full year 2004.
Operating income for 2005 was $69.8 million, an increase of
$100.0 million over an operating loss of $30.2 million for 2004.
Net income for 2005 was $30.0 million.
This compares to net income of $904.8 million for the full year
2004, which included $962.4 million of reorganization items, net,
reflecting the net impact of fresh-start reporting and other
bankruptcy-related items.
Adjusted operating income before depreciation and amortization for
the fourth quarter of 2005 was $64.2 million, up $13.5 million
from the adjusted OIBDA of $50.7 million for the fourth quarter of
2004.
For the full year 2005, adjusted OIBDA was $275.0 million,
an increase of $52.2 million from the adjusted OIBDA of
$222.8 million for 2004.
Adjusted OIBDA represents OIBDA adjusted to exclude the effects
of: gain/loss on sale of wireless licenses and operating assets,
impairment of indefinite-lived intangible assets, and stock-based
compensation expense.
The adoption of fresh-start reporting as of July 31, 2004 resulted
in material adjustments to the historical carrying values of the
Company's assets and liabilities.
As a result, the Company's post-emergence balance sheets,
statements of operations and statements of cash flows are not
comparable in many respects to the Company's financial statements
for periods ending prior to the Company's emergence from
Chapter 11.
"We are very pleased with the strong adjusted OIBDA performance
delivered in the fourth quarter, and believe that our focus on
cost management is readily apparent in the results we delivered
for the quarter and for 2005 as a whole," Dean Luvisa, acting
chief financial officer for Leap said.
"For the year, our adjusted OIBDA was up by more than $50 million,
an impressive year-over-year improvement resulting from our
increased customer activity, higher overall average revenues per
user, and a commitment to cost leadership as a primary element of
our core business strategy."
"As a result of our continued focus on top-line growth and
underlying cost efficiency, the Company performed well ahead of
our original expectations for 2005."
"We have demonstrated the Company's ability to deliver strong
financial performance while investing in new services to meet the
needs of our customers, launching new markets for future growth
and satisfying our regulatory obligations," Luvisa continued.
"In the past year, we grew revenue and adjusted OIBDA, lowered our
cost of capital and improved our liquidity, while acquiring
licenses that will allow us to build our market clusters and
increase our covered POPs by up to 70% in 2006."
"Looking forward, we see a business well prepared for expansion
and development as a result of the strong growth anticipated in
both new and existing Cricket markets over the coming quarters."
A full-text copy of Leap Wireless International, Inc.'s 2005
Annual Report is available at no extra charge at
http://ResearchArchives.com/t/s?763
About Leap Wireless
Leap Wireless International, Inc. -- http://www.leapwireless.com/
-- headquartered in San Diego, Calif., is a customer-focused
company providing innovative mobile wireless services targeted to
meet the needs of customers under-served by traditional
communications companies. With the value of unlimited wireless
services as the foundation of its business, Leap pioneered both
the Cricket(R) and Jump(TM) Mobile services. Through a variety of
low, flat rate, service plans, Cricket service offers customers a
choice of unlimited anytime local voice minutes, unlimited anytime
domestic long distance voice minutes, unlimited text, instant and
picture messaging and additional value-added services over a high-
quality, all-digital CDMA network. Designed for the urban youth
market, Jump Mobile is a unique prepaid wireless service that
offers customers free unlimited incoming calls from anywhere with
outgoing calls at an affordable 10 cents per minute and free
incoming and outgoing text messaging. Both Cricket and Jump
Mobile services are offered without long-term commitments or
credit checks.
* * *
As reported in the Troubled Company Reporter on Mar. 9, 2006,
Standard & Poor's Ratings Services placed its ratings for San
Diego, California-based wireless carrier Leap Wireless
International Inc., including the 'B-' corporate credit rating, on
CreditWatch with negative implications.
LEHMAN XS: DBRS Places BBB Ratings on Three Certificate Classes
---------------------------------------------------------------
Dominion Bond Rating Service assigned these ratings to the
Mortgage Pass-Through Certificates, Series 2006-5, issued by
Lehman XS Trust:
* $608.1 million, Class 1-A1A -- New Rating AAA
* $67.6 million, Class 1-A1B -- New Rating AAA
* $162.4 million, Class 2-A1 -- New Rating AAA
* $44.7 million, Class 2-A2 -- New Rating AAA
* $42.5 million, Class 2-A3 -- New Rating AAA
* $25.0 million, Class 2-A4A -- New Rating AAA
* $2.8 million, Class 2-A4B -- New Rating AAA
* $16.6 million, Class M1 -- New Rating AA (high)
* $15.1 million, Class M2 -- New Rating AA
* $9.9 million, Class M3 -- New Rating AA (low)
* $7.8 million, Class M4 -- New Rating AA (low)
* $7.8 million, Class M5 -- New Rating A (high)
* $6.2 million, Class M6 -- New Rating A
* $5.2 million, Class M7 -- New Rating A (low)
* $5.2 million, Class M8 -- New Rating BBB (high)
* $5.2 million, Class M9 -- New Rating BBB
* $5.2 million, Class M10 -- New Rating BBB
The AAA ratings on the class series 1-A and 2-A reflect the credit
enhancement provided by the monthly excess spread, including
targeted overcollateralization of 0.75% of the collateral, and the
subordinate classes. The AA (high) rating on Class M1 reflects
7.25% of credit enhancement. The AA rating on Class M2 reflects
5.80% of credit enhancement. The AA (low) ratings on Classes M3
and M4 reflect 4.85% and 4.10% of credit enhancement respectively.
The A (high) rating on Class M5 reflects 3.35% of credit
enhancement. The "A" rating on Class M6 reflects 2.75% of credit
enhancement. The A (low) rating on class M7 reflects 2.25% of
credit enhancement. The BBB (high) rating on Class M8 reflects
1.75% of credit enhancement. The BBB rating on Class M9 reflects
1.25% of credit enhancement. The BBB rating on Class M10 reflects
0.75% of OC.
The ratings on the Certificates also reflect the quality of the
underlying assets and the capabilities of Aurora Loan Services
LLC, as Master Servicer, as well as the integrity of the legal
structure of the transaction. Citibank, N.A. will act as Trustee.
The supplemental interest trust will hold an interest rate swap
agreement for the benefit of the group 1 senior certificateholders
and the offered subordinate certificateholders, as provided by ABN
AMRO Bank N.V.
Interest and principal payments collected from the mortgage loans
will be distributed on the 25th day of each month commencing in
April 2006. Interest will be paid to the Senior Certificates on a
pro rata basis, followed by interest paid sequentially to the
subordinate classes. Principal will be paid exclusively to the
Senior Certificates, unless paid down to zero, until the step-down
date. After the step-down date, and provided that certain
performance tests have been met, principal payments may be
distributed to the subordinate classes. Excess spread will be
applied each month to reach and replenish the OC target before the
step-down date. Additionally, the level of OC may be allowed to
step down to 1.50% of the then-current collateral balance of the
mortgage loans.
A majority of the mortgage loans in the underlying trust were
originated by Lehman Brothers Bank, FSB. The remaining mortgage
loans were originated by American Home Mortgage Investment Corp.
and various other originators. Approximately half of the
underlying trust is comprised of 30-year fixed-rate mortgage
loans. The remaining half is composed of 30-year hybrid
adjustable-rate mortgage loans with two-, three-, or five-year
initial fixed-rate interest periods. Thereafter, these loans
adjust according to the Six-Month CD, Six-Month LIBOR, or One-Year
LIBOR every six or 12 months plus a gross margin. As of the cut-
off date, the aggregate-collateral balance of the trust is
$1,039,728,072. The aggregate weighted average mortgage coupon is
7.229%; the weighted average FICO score is 689; and the weighted
average original loan-to-value ratio is 76.49%. Approximately 71%
of the mortgage loans have interest only features requiring
payments of full interest for three, five, or ten years after the
loan origination.
LEXTRON CORP: Wachovia Bank Wants Chapter 11 Case Dismissed
-----------------------------------------------------------
Wachovia Bank, successor by merger to SouthTrust Bank, asks the
U.S. Bankruptcy Court for the Southern District of Mississippi to
dismiss Lextron Corporation's chapter 11 case.
Wachovia Bank relates to the Court that on Aug. 26, 2005, the
Court approved the Debtor's First Amended Disclosure Statement.
However, the Debtor was unable to obtain plan confirmation due to
Internal Revenue Service's objection.
On Oct. 26, 2005, the Debtor filed its Second Amended Disclosure
Statement and Chapter 11 Plan. During the Disclosure Statement
hearing, the Debtor failed once again to obtain confirmation of
the Second Amended Plan over the Internal Revenue Service's
objection.
The U.S. Trustee set a hearing on April 6, 2006, to allow the
Debtor to find a buyer for the Debtor's assets but unfortunately,
no buyer has been found.
Wachovia Bank believes that there is no real alternative left for
the Debtor and the case is due to be dismissed, rather than
converted, because Wachovia Bank or the IRS hold a lien on all of
the Debtor's assets. To the extent there may be exist
unencumbered assets, Wachovia Bank's claim for failed adequate
protection will prime ordinary administrative expense claims and
unsecured claims. Thus, a chapter 7 conversion won't give benefit
other creditors.
Headquartered in Jackson, Mississippi, Lextron Corporation --
http://www.lextroncorporation.com/-- manufactures electrical
and electronic assemblies for the telecommunications and
automotive industries. The Debtor filed for chapter 11 protection
on Feb. 12, 2004 (Bankr. S.D. Miss. Case No. 04-00826). Craig M.
Geno, Esq., at Harris & Geno, PLLC, represents the Debtor in its
restructuring efforts. When the Debtor filed for protection from
its creditors, it didn't state its assets but estimated debts to
more than $10 million.
LEVEL 3: S&P Assigns CCC- Rating to Proposed $300 Million Notes
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'CCC-' rating to
the proposed $300 million 12.25% senior notes of Level 3 Financing
Inc., a subsidiary of Broomfield, Colorado-based Level 3
Communications Inc. The notes represent an addition to the
$250 million 12.25% senior notes due 2013 issued on March 14,
2006, and will be treated as a single series of notes with that
issue. The notes will be issued under Rule 144A with registration
rights.
Under the indentures of Level 3, the new debt will constitute
purchase money indebtedness associated with the $68.5 million cash
portion of the March 20, 2006, acquisition of Progress Telecom LLC
and for the purchase of other communications assets. All ratings
on Level 3, including the CCC+/Stable/B-3 corporate credit rating,
are affirmed.
"The ratings on Level 3 reflect very high credit risk from
elevated leverage and negative discretionary cash flow caused by
weak operating performance stemming from prolonged long-distance
telecommunications industry weakness," said Standard & Poor's
credit analyst Eric Geil.
The company continues to suffer price compression from industry
overcapacity and competition, which is undermining positive
effects of rising business volume.
Negative cash flow from operations and high capital expenditures
for new products and network upgrades needed to attract new
business, are prolonging negative discretionary cash flow.
Potential acquisition activity also could weigh on the financial
profile. Tempering factors include:
* a sizable cash balance,
* an absence of meaningful debt maturities until 2008, and
* modest benefits from industry consolidation.
LIBERTY MEDIA: Increased Leverage Plan Cues Moody's Low-B Ratings
-----------------------------------------------------------------
Moody's Investors Service placed Liberty Media Corporation's Ba1
corporate family and senior unsecured long term debt ratings on
review for downgrade reflecting concerns of looming event risk
associated with management's intent to increase leverage in
pursuit of strategic acquisitions and to realign its businesses.
Moody's remains concerned with the potential for increased
structural subordination if QVC's bank facilities become fully
drawn, or debt is placed at future operating subsidiaries. The
review for downgrade also reflects Moody's concern that Liberty's
business profile will change with investments in less liquid or
developing stage companies as well as possible investments outside
Liberty's core media expertise.
The review will consider the impact of the company's strategies on
the future composition of Liberty's asset mix as the company seeks
to use debt to acquire potentially higher risk, developing stage
companies. The timing and execution risk involved and the
possible resultant metrics of such a strategy as well as the
pursuit of Liberty Capital and Liberty Interactive tracking stocks
and debt allocation will also be considered. The review will
evaluate Liberty's handling of its July 2006 maturities and the
extent to which the refinancing could be pushed-down to operating
subsidiaries. The review will contemplate the possibility of
increased structural subordination in the event the bank
facilities at QVC are fully drawn or additional debt is placed at
other operating subsidiaries.
Liberty Media Corporation is a holding company owning interests in
a broad range of electronic retailing, communications, and
entertainment businesses. The company maintains its headquarters
in Englewood, Colorado.
Issuer: Liberty Media Corporation
On Review for Possible Downgrade:
* Corporate Family Rating, Placed on Review for Possible
Downgrade, currently Ba1
* Senior Unsecured Conv./Exch. Bond/Debenture, Placed on
Review for Possible Downgrade, currently Ba1
* Senior Unsecured Regular Bond/Debenture, Placed on Review
for Possible Downgrade, currently Ba1
* Senior Unsecured Shelf, Placed on Review for Possible
Downgrade, currently (P)Ba1
* Subordinated Shelf, Placed on Review for Possible Downgrade,
currently (P)Ba2
Outlook Actions: Outlook, Changed To Rating Under Review From
Negative
LIGAND PHARMACEUTICALS: Dec. 31 Equity Deficit Widens to $110 Mil.
------------------------------------------------------------------
Ligand Pharmaceuticals Incorporated (Pink Sheets: LGND) delivered
its audited financial statements for the year ended Dec. 31, 2005,
to the Securities and Exchange Commission on Apr. 3, 2006.
The delay in filing the company's Annual Reports was due to the
additional time needed to complete the evaluation and audit of
internal control over financial reporting required by Section 404
of the Sarbanes-Oxley Act of 2002.
The SOX 404 process was delayed as a result of the restatement of
the company's consolidated financial statements, which did not end
until late in 2005.
BDO Seidman, LLP, the company's auditor, did not issue an opinion
related to management's assessment of internal control over
financial reporting and the effectiveness of the Company's
internal control over financial reporting. The Company also
expects to report material weaknesses in internal control over
financial reporting.
Material Weaknesses
The auditor identified eight material weaknesses in internal
control over financial reporting:
(1) ineffective controls and procedures to ensure that revenues
are recognized in accordance with generally accepted
accounting principles;
(2) inadequate records and documentation supporting the
decisions made and the accounting for complex transactions;
(3) inadequate finance and accounting department manpower and
insufficient qualified accounting personnel to identify and
resolve complex accounting issues in accordance with
generally accepted accounting principles;
(4) inadequate financial reporting and close procedures;
(5) ineffective and non-independent internal audit department;
(6) ineffective spreadsheet controls used in connection with
the Company's financial processes, including review,
testing, access and integrity controls;
(7) existence of accounting system access rights of certain
members of the Company's accounting and finance department
that are incompatible with the current roles and duties of
those individuals; and
(8) inability of management to properly maintain the Company's
documentation of the internal control over financial
reporting during 2005 and inability to substantively
commence the process to update such documentation and
assessment until December 2005.
Financials
The company reported a $36,399,000 net loss on $176,608,000 of
total revenues for the year ended Dec. 31, 2005.
At Dec. 31, 2005, the company's balance sheet showed $314,619,000
in total assets and $412,693,000 in total liabilities, resulting
in an $110,419,000 stockholders' deficit.
The company's Dec. 31 balance sheet also showed strained liquidity
with $132,967,000 in total current assets available to pay
$235,211,000 in total current liabilities coming due within the
next 12 months.
"Ligand's strong product sales growth of 37% in the fourth quarter
of 2005 compared to the same period in 2004 reflects a 52%
increase of AVINZA sales to $33.4 million and a 62% increase of
AVINZA sales to $112.8 million for the full year 2005 compared to
2004," Paul V. Maier, Ligand's senior vice president and chief
financial officer, said.
"The continued progressive improvement in product gross margins to
82% in the fourth quarter of 2005 compared to 63% in the fourth
quarter of 2004 contributed to an overall product gross margin of
76% for the full year 2005 compared to 67% for 2004.
"Coupled with declining operating expenses (excluding co-promotion
expense) compared to the prior year, we achieved a reduction in
quarterly operating losses to $700,000 in the fourth quarter of
2005, an improvement sequentially in each quarter of 2005.
"In addition, the Company generated net operating cash of $8.4
million for the year ended Dec. 31, 2005, and ended the year with
$88.8 million in cash, cash equivalents, short-term investments,
and restricted investments.
"The continuing improvement in 2005 operating results and cash
flow further strengthens the Company's financial profile and
supports the ongoing strategic process during fiscal 2006.
"We are pleased with our 2005 growth compared to prior year,
although we note that fourth quarter AVINZA (primarily due to our
decision to eliminate some low margin Medicaid business) and
ONTAK(R) product demand softened and our operating groups are
working to improve that demand.
"We are also tackling the detailed, voluminous work of completing
the evaluation of internal control over financial reporting
required by Section 404 of SOX," Maier said.
A full-text copy of Ligand Pharmaceuticals Incorporated's
2005 Annual Report is available at no extra charge at
http://ResearchArchives.com/t/s?76e
About Ligand Pharmaceuticals Incorporated
Ligand Pharmaceuticals Incorporated (Pink Sheets: LGND) --
http://www.ligand.com/-- discovers, develops and markets new
drugs that address critical unmet medical needs of patients in the
areas of cancer, pain, skin diseases, men's and women's hormone-
related diseases, osteoporosis, metabolic disorders, and
cardiovascular and inflammatory diseases. Ligand's proprietary
drug discovery and development programs are based on its
leadership position in gene transcription technology, primarily
related to intracellular receptors.
At Dec. 31, 2005, the company's stockholders' deficit swelled to
$110,419,000 from a $75,317,000 deficit at Dec. 31, 2004.
LONGSHORE CDO: Moody's Places Ba2 Rating on $9 Mil. Income Notes
----------------------------------------------------------------
Moody's assigned ratings to six classes of notes issued by
Longshore CDO Funding 2006-1 Ltd:
* Aaa to the $618,750,000 Class A-1 Floating Rate Notes Due
2046;
* Aaa to the $63,750,000 Class A-2 Floating Rate Notes Due
2046;
* Aa2 to the $30,000,000 Class B Floating Rate Notes Due
2046;
* A3 to the $21,750,000 Class C Floating Rate Notes Due 2046;
* Baa2 to the $6,750,000 Class D Floating Rate Deferrable
Interest Notes Due 2046; and
* Ba2 to the $9,000,000 Income Notes Due 2046.
The collateral manager is SAI Investment Adviser, Inc.
LUCENT TECHS: Alcatel Merger Cues Fitch to Place Ratings on Watch
-----------------------------------------------------------------
Fitch Ratings placed Lucent Technologies' ratings on Rating Watch
Positive and Alcatel's ratings on Rating Watch Negative, after the
announcement of a merger agreement between the two.
Lucent's debt and ratings:
-- 'BB-' (BB minus) Issuer Default Rating;
-- 'BB-' (BB minus) senior unsecured debt;
-- 'B' subordinated convertible debentures and convertible
trust preferred securities; all on RWP.
Approximately $5.4 billion of Lucent's debt is affected by Fitch's
action.
Alcatel's debt and ratings:
-- 'BBB-' (BBB minus) IDR;
-- 'BBB-' (BBB minus) senior unsecured debt;
-- 'F3' Short-term rating; all on RWN.
Approximately EUR3 billion of Alcatel's debt is affected by
Fitch's action.
This action follows the announcement that Lucent will merge with
Alcatel in a stock transaction whereby Lucent shareholders will
receive 0.1952 shares of Alcatel for each Lucent American
Depository Shares. Fitch expects resolve the Rating Watch once it
has met with management to discuss the proposed merger. The
subsequent analysis will include a review of the combined entity's
operating and financial policies and expected cost savings.
The RWP of Lucent reflects the stronger business and financial
profile of the merged group relative to Lucent on a stand alone
basis. The RWN of Alcatel reflects the possibility of a downgrade
of the company's Long-term Issuer default rating in the light of a
more highly geared balance sheet.
The merged company will have:
* greater product depth and geographic reach;
* a stronger presence in telecommunications and information
technology services and solutions; and
* an ability to leverage their R&D efforts more efficiently.
The balance sheet of the combined company is expected to be
stronger with more than $10 billion in cash and approximately $9.4
billion in debt. In addition, the combined company is expected to
have approximately $25 billion in revenues. Currently, management
has stated that it expects to achieve $1.7 billion in cost
synergies within three years, including a 10% reduction in the
combined workforce.
Both Boards of Directors have already unanimously approved the
transaction, which is expected to close in the next 6 to 12
months. Alcatel shareholders will own approximately 60% of the
combined company and Lucent shareholders will own 40%. Customary
for transactions of this magnitude, completion of the merger is
subject to certain conditions including approval by shareholders
of both companies and that of government regulators.
MADISON PARK: Moody's Rates $22.5 Million Class D Notes at Ba2
--------------------------------------------------------------
Moody's assigned ratings to nine classes of notes issued by
Madison Park Funding II, Ltd.:
Moody's Ratings:
* Aaa to the $509,750,000 Class A-1 Floating Rate Notes Due
2020;
* Aaa to the $100,000,000 Class A-2a Floating Rate Notes Due
2020;
* Aa1 to the $11,250,000 Class A-2b Floating Rate Notes Due
2020;
* Aa2 to the $38,000,000 Class A-3 Floating Rate Notes Due
2020;
* A2 to the $25,000,000 Class B-1 Deferrable Floating Rate
Notes Due 2020;
* A2 to the $25,000,000 Class B-2 Deferrable Fixed Rate Notes
Due 2020;
* Baa2 to the $25,000,000 Class C-1 Deferrable Floating Rate
Notes Due 2020;
* Baa2 to the $5,000,000 Class C-2 Deferrable Fixed Rate Notes
Due 2020; and
* Ba2 to the $22,500,000 Class D Deferrable Floating Rate
Notes Due 2020.
The collateral manager is Credit Suisse Alternative Capital.
Moody's stated that the ratings of the Notes address the ultimate
cash receipt of all required interest and principal payments
required by the governing documents and are based on the expected
losses posed to holders of notes relative to the promise of
receiving the present value of such payments.
MAXXAM INC: Deloitte & Touche Expresses Going Concern Doubt
-----------------------------------------------------------
Deloitte & Touche LLP in Houston, Texas, raised substantial doubt
about MAXXAM Inc. and its subsidiaries' ability to continue as a
going concern. DELOITTE pointed to the difficulties of:
-- MAXXAM Inc. and its subsidiaries in realizing their
timber-related assets and discharge their timber-related
liabilities in the normal course of business;
-- The Pacific Lumber Company, an indirect subsidiary, in
meeting its loan agreement covenants; and
-- Scotia Pacific Company LLC, an indirect subsidiary, in
paying the interest on the timber notes.
Financials
MAXXAM Inc. and its subsidiaries delivered their financial
statements for the year ended Dec. 31, 2005, to the Securities and
Exchange Commission on Mar. 15, 2006.
The company reported a $4,000,000 net loss on $406,400,000 of net
sales for the year ended Dec. 31, 2005.
At Dec. 31, 2005, the company's balance sheet showed
$1,048,300,000 in total assets and $1,709,600,000 in total assets,
resulting in a $661,300,000 stockholders' deficit.
A full-text copy of MAXXAM Inc.'s Annual Report is available for
free at http://ResearchArchives.com/t/s?762
Forest Products Operations
Net sales for forest products operations decreased to $45 million
for the fourth quarter of 2005, as compared to $52.9 million for
the fourth quarter of 2004. The $7.9 million decrease in net
sales was due to a decline in lumber shipments, compounded by a
decline in the average sales price of redwood lumber during the
fourth quarter of 2005, as compared to the same period in 2004.
Operating losses were $5.4 million for the fourth quarter of 2005,
compared to operating income of $2.2 million during the same
period in 2004, primarily due to decreased net sales, higher
production costs, and a $4.6 million impairment charge related to
the write down of certain long-lived assets.
Real Estate Operations
Real estate sales were $73.1 million for the fourth quarter of
2005, as compared to $39.7 million during the same period a year
ago. This significant increase is due to several large acreage
and parcel sales at the Company's Palmas del Mar and Mirada
developments during the fourth quarter of 2005.
As the proceeds from these sales have not been redeployed in other
real estate assets, the real estate segment does not expect that
it will be able to achieve this level of quarterly sales in the
future.
Racing Operations
Net sales and operating results for the Company's racing
operations improved for the fourth quarter of 2005, as compared to
the same period in 2004, principally due to increased wagering.
Corporate Operations
The Corporate segment's operating losses represent general and
administrative expenses that are not specifically attributable to
the Company's operating segments.
Investment, interest and other income was $9.0 million for the
fourth quarter of 2005, as compared to $3.8 million for the fourth
quarter of 2004. This increase is primarily the result of a
reversal of a liability related to prior period intercompany
interest and an increase in investment income.
Liquidity Update of Subsidiaries
The cash flows of The Pacific Lumber Company and Scotia Pacific
Company LLC, indirect subsidiaries of MAXXAM, have been materially
adversely affected by ongoing regulatory, environmental and
litigation challenges.
Both Palco and ScoPac continue to experience liquidity
difficulties.
A. ScoPac Bankruptcy Warning
ScoPac's management has concluded that, in the absence of
significant regulatory relief and accommodations, ScoPac's annual
timber harvest levels and cash flows from operations will, for at
least the next several years, be substantially below both
historical levels and the levels necessary to allow ScoPac to
satisfy its debt service obligations in respect of the Timber
Notes.
ScoPac projects that, without additional liquidity, its cash flows
from operations, together with funds available under its line of
credit, will be insufficient, by a substantial amount, to pay the
entire amount of interest due on the July 20, 2006, payment date
on its Timber Notes.
ScoPac also expects to incur interest shortfalls for at least the
next several years after the July 20, 2006, payment date.
In order to address future cash flow requirements, ScoPac is in
the process of marketing certain non-timberland properties like
ranchlands and recreational areas, as well as certain non-
strategic timberlands.
ScoPac will be forced to take extraordinary actions, which may
include: laying off employees, shutting down various operations,
and seeking protection by filing under the Bankruptcy Code.
B. Palco Bankruptcy Warning
Palco is in default under its $35 million term loan and its
$30 million asset-based revolving credit facility. Palco
estimates that without necessary amendments to these credit
agreements and sufficient additional liquidity, its cash flow from
operations, together with funds available under its revolving
credit facility, will not provide sufficient liquidity to fund its
current level of operations for the next several years.
In the event that Palco is unable to secure the necessary
liquidity to fund its expected future working capital shortfalls,
it would be forced to take extraordinary actions, which may
include: further reducing expenditures by laying off employees,
shutting down various operations, and seeking protection by filing
under the Bankruptcy Code.
Treasury Stock
MAXXAM may from time to time purchase shares of its common stock
on national exchanges or in privately negotiated transactions.
About MAXXAM Inc.
MAXXAM Inc. (AMEX: MXM) is engaged in a wide range of businesses
from aluminum and timber products to real estate and horse racing.
The Company's timber subsidiary, Pacific Lumber, owns about
205,000 acres of old-growth redwood and Douglas fir timberlands in
Humboldt County, California. MAXXAM's real estate interests
include commercial and residential properties in Arizona,
California, and Texas, and Puerto Rico. The company also owns the
Sam Houston Race Park, a horseracing track near Houston.
At Dec. 31, 2005, the company's stockholders' deficit widened to
$661,300,000 from a $657,100,000 deficit at Dec. 31, 2004.
MCMS INC: Trustee Has Until August 14 to Object to Claims
---------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extend,
until Aug. 14, 2006, the period within which Francis A. Monaco,
Jr., the chapter 11 Liquidating Trustee appointed in the
bankruptcy cases of MCMS, Inc., and its debtor-affiliates, can
object to requests for payment or proofs of claims pursuant to the
Debtors' confirmed First Amended Consolidated Liquidating Plan of
Reorganization.
Mr. Monaco tells the Bankruptcy Court that he needs more time to
complete his review of proofs of claim filed in the Debtors'
bankruptcy cases to ensure that they have been properly scheduled.
In addition, Mr. Monaco says that he is in the process of settling
certain remaining preference actions. To the extent settlements
are reached and the parties agree to a waiver of claims,
additional claims objection will need to be filed in order to
formally expunge the disputed claims.
Mr. Monaco tells the Court that the extension will afford him a
sufficient opportunity to make fully informed decisions concerning
the resolution of claims and to communicate with the claimants.
Mr. Monaco assures the Court that the Debtors' adversaries will
not be prejudiced by the extension because it will allow them an
opportunity to communicate with him regarding the propriety of
their claims.
Following the sale of its business and associated trade names and
trademarks, MCMS, Inc., changed its name to Custom Manufacturing
Services, Inc. Debtor MCMS Customer Services, Inc., has also
changed its name to CMS Customer Services, Inc. The Debtors filed
for chapter 11 protection on September 18, 2001 (Bankr. D. Del.
Case No. 01-10477) and converted these cases under Chapter 7
Liquidation of the Bankruptcy Code on May 13, 2002. Eric D.
Schwartz, Esq., and Donna L. Harris, Esq., at Morris, Nichols,
Arsht & Tunnell represent the Debtors as they wind-up their
assets. Francis A. Monaco, Jr., at Monzack & Monaco, P.A., and
Charles L. Glerum, Esq., at Choate, Hall & Stewart serves the
Committee's counsel. When the company filed for protection from
its creditors, it listed $173,406,000 in total assets and
$343,511,000 in total debt.
MERIDIAN AUTOMOTIVE: Joint Plan Filed Sans Disclosure Statement
---------------------------------------------------------------
Meridian Automotive Systems, Inc., its eight debtor-affiliates,
and Camulos Master Fund LP, DK Acquisition Partners, L.P., and
Stanfield Capital Partners LLC, in their capacities as
Prepetition First Lien Lenders, delivered to the U.S. Bankruptcy
Court for the District of Delaware a Joint Plan of Reorganization
on March 30, 2006.
Richard E. Newsted, president and chief executive officer of
Meridian Automotive Systems, Inc., discloses that the Plan is
premised on the pooling of the Debtors' assets solely for
purposes of actions associated with the confirmation and
consummation of the Plan.
Accordingly, each and every Claim filed or to be filed in the
Debtors' Chapter 11 Cases against any of the Debtors will be
deemed:
-- filed against the consolidated Debtors; and
-- a single consolidated Claim against, and obligation of all,
the consolidated Debtors.
The Plan does not contemplate the merger or dissolution of, or
the transfer or commingling of any assets of, any of the Debtors
except to accomplish the distributions under the Plan.
The pooling of assets will not effect:
1. the legal and corporate structures of the Debtors as they
will be reorganized on the effective date of the Plan; or
2. any guarantees that are required to be provided on and
after the Effective Date in connection with:
(i) The Exit Facility, which is comprised of the Exit
Revolving Credit Facility and the Exit Term Loan
Credit Facility.
The Exit Revolving Credit Facility is a senior
secured revolving credit facility to be obtained by
Reorganized Meridian on the Effective Date, allowing
total borrowing capacity of $125,000,000.
The Exit Term Loan Credit Facility is a senior
secured term loan to be obtained by Reorganized
Meridian on the Effective Date in the principal
amount of $100,000,000.
(ii) The Exit Second Lien Notes, which are senior notes
aggregating not more than $150,000,000, to be issued
to investor by Reorganized Meridian pursuant to the
Exit Second Lien Notes Purchase Agreement, or to be
issued as a term loan under the Exit Facility.
(iii) The New Third Lien Notes, which are notes to be
issued by Reorganized Meridian to Holders of
Prepetition First Lien claims who receive the
Cash/Note Treatment or the Alternate Cash/Note
Treatment under the Plan.
Determination of Issuance Value
The aggregate issuance value of the New Common Stock will equal
the enterprise value of Reorganized Meridian minus the sum of:
1. the amounts drawn under the Exit Revolving Credit Facility;
2. the face amount of the Exit Term Loan Facility;
3. the aggregate face amount of the Exit Second Lien Notes;
4. the aggregate face amount of the New Third Lien Notes, if
any;
5. the aggregate Class A Stated Value of the Class A
Convertible Preferred Stock;
6. the net proceeds of the Fowlerville Sale/Leaseback; and
7. the estimated unpaid Professional Compensation Claims.
The U.S. Bankruptcy Court for the District of Delaware will
determine the aggregate Issuance Value, as well as the per share
Issuance Value, at the Confirmation Hearing.
Continued Corporate Existence
On the Effective Date, Meridian will merge with and into
Reorganized Meridian, with Reorganized Meridian surviving the
merger and all issued and outstanding capital stock of Meridian
will be extinguished. Immediately after the consummation of the
merger, Reorganized Meridian will issue:
(a) the New Common Stock to the Holders of Prepetition Second
Lien Secured Claims; and
(b) the Class A Convertible Preferred Stock to Holders of
Prepetition First Lien Claims and Prepetition Second Lien
Secured Claims.
After the Effective Date, the Reorganized Debtors will continue
to exist as separate corporate entities in accordance with the
applicable law in the jurisdictions in which they are
incorporated and pursuant to their certificates or articles of
incorporation and by-laws in effect prior to the Effective Date,
except to the extent amended pursuant to the Plan.
Litigation Trusts
As of the Effective Date, a trust will be established to which
all Avoidance Actions and Reserved Actions will be contributed
and will be administered by an oversight committee. A separate
trust will be established, if Class 3 rejects the Plan, to which
the Lien Avoidance Action will be contributed. It will also be
administered by an oversight committee. The Lien Avoidance
Action refers to the complaint filed by the Official Committee of
Unsecured Creditors against the First and Second Lien Lenders.
No Disclosure Statement
Robert S. Brady, Esq., at Young, Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, informs Judge Walrath that Meridian
needs more time to complete a disclosure statement.
Mr. Brady assures the Court that once the disclosure
statement is completed, it will be filed with the Court and the
Debtors will seek a hearing on it.
Accordingly, Meridian seeks the Court's authority to file the
Plan without a disclosure statement. Meridian further asks the
Court to fix a deadline by which it must file a disclosure
statement.
A full-text copy of the Debtors' Joint Plan of Reorganization is
available for free at http://ResearchArchives.com/t/s?76b
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. Eric E. Sagerman, Esq.,
at Winston & Strawn LLP represents the Official Committee of
Unsecured Creditors. The Committee also hired Ian Connor
Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A.,
to prosecute an adversary proceeding against Meridian's First Lien
Lenders and Second Lien Lenders to invalidate their liens. When
the Debtors filed for protection from their creditors, they listed
$530 million in total assets and approximately $815 million in
total liabilities. (Meridian Bankruptcy News, Issue No. 24;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
MERIDIAN AUTOMOTIVE: Plan Classification & Treatment of Claims
--------------------------------------------------------------
Under the Joint Plan of Reorganization, Meridian Automotive
Systems, Inc., and its debtor-affiliates group claims and
interests into seven classes:
Class Claims Status
----- ------ ------
N/A Administrative Expense Claims Unimpaired
N/A DIP Claims Unimpaired
N/A Priority Tax Claims Unimpaired
N/A Professional Compensation Claims Unimpaired
1 Priority Non-tax Claims Unimpaired
2 Other Secured Claims Unimpaired
3 Prepetition First Lien Claims Impaired
4 Prepetition Second Lien Secured Claims Impaired
5 General Unsecured Claims Impaired
6 Prepetition Subordinated Claims Impaired
7 Prepetition Meridian Interests and Impaired
all related Claims
Treatment of Claims
Allowed Administrative Expense Claims, DIP Claims, Priority Tax
Claims, Professional Compensation Claims, and Priority Non-tax
Claims will be paid in cash, in full.
Allowed Other Secured Claims will be Reinstated and rendered
Unimpaired in accordance with Section 1124 of the Bankruptcy
Code.
If Class 3 rejects the Plan, that portion, if any, of a
Prepetition First Lien Claim that is determined by the U.S.
Bankruptcy Court for the District of Delaware to constitute a
Prepetition First Lien Deficiency Claim will be classified in
Class 5.
If the Class accepts the Plan, then each Holder of a Prepetition
First Lien Claim will, on the Effective Date, in full and complete
satisfaction, settlement and discharge of its Allowed Claim,
receive a Lien Avoidance Release and, in accordance with its
Ballot election, either:
(a) cash equal to 88% of its Claim;
(b) (i) cash equal to 50% of its Claim; and (ii) New Third
Lien Notes in amount equal to 50% of its Allowed Claim; or
(c) (i) cash equal to 80% of its Allowed Claim; and (ii) Class
a Convertible Preferred Stock with an aggregate Class A
Stated Value on the Effective Date equal to 20% of the
Holder's Allowed Claim. Receipt of Class A Convertible
Preferred Stock pursuant to the Cash/Equity Treatment will
for all purposes be equal to payment of the Class A Stated
Value of the stock.
If the Class rejects the Plan, then, notwithstanding the
rejection, the Debtors will seek confirmation of the Plan. In
this event, the Court will estimate the amount of Allowed Claims
and establish the Prepetition First Lien Avoidance Reserve.
In full and complete satisfaction, settlement and discharge of
its Allowed Claim, each Holder of a Prepetition First Lien
Secured Claim will receive the Distributions as may be required
in accordance with the Claim based on the final resolution of the
Lien Avoidance Action, and will receive on the Effective Date, in
accordance with its Ballot election, either:
(a) cash equal to 85% of its estimated Allowed Claim;
(b) (i) cash equal to 30% of its estimated Claim; and (ii) New
Third Lien Notes in amount equal to 70% of its estimated
Allowed Prepetition First Lien Secured Claim; or
(c) (i) cash equal to 80% of its estimated Allowed Prepetition
First Lien Secured Claim; and (ii) Class A Convertible
Preferred Stock with an aggregate Class A Stated Value on
the Effective Date equal to 20% of the Holder's estimated
Allowed Prepetition First Lien Secured Claim. Receipt of
Class A Convertible Preferred Stock pursuant to the
Alternate Cash/Equity Treatment will be equal to payment
of the Class A Stated Value of the stock.
Each Holder of an Allowed Prepetition Second Lien Secured Claim,
in full and complete settlement, release and discharge of the
Claim will receive:
(a) its Pro Rata Share of the distributions of the Litigation
Trust as the same may be determined by the Court; and
(b) * its Pro Rata share of New Common Stock;
* in the event that the Offering Amount exceeds $0, the
right, through the Preferred Equity Offering, to acquire
for cash its Pro Rata share of Class A Convertible
Preferred Stock up to the Offering Amount at a purchase
price discount of 25%, that is, $15 million in cash
would purchase shares of Class A Convertible Preferred
Stock having $20,000,000 aggregate Class A Stated Value;
* a Lien Avoidance Release, if Class 4 accepts the Plan;
and
* for the Committed Holders, a share of a total commitment
fee equal to $1,400,000, based on the Holder's
commitment as stated in the Preferred Equity Funding
Agreement, payable in Class A Convertible Preferred
Stock.
Holders of General Unsecured Claims and Allowed Prepetition
Subordinated Claims will receive its Pro Rata Share of:
* the General Unsecured Claims Trust Interests, the
Prepetition First Lien Claim Trust Interests, the
Prepetition Second Lien Claim Trust Interests and the
Prepetition Subordinated Claim Trust Interest, as
applicable;
* the distributions of the Litigation Trust as may be
determined by the Court; and
* the Contingent Value Rights, if any, held by the CVR Agent
for the benefit of Holders of Allowed General Unsecured
Claims.
All Prepetition Meridian Interests will be cancelled and
extinguished on the Effective Date. The Holders of Prepetition
Meridian Interests will not be entitled to receive or retain any
property on account of the Interests.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. Eric E. Sagerman, Esq.,
at Winston & Strawn LLP represents the Official Committee of
Unsecured Creditors. The Committee also hired Ian Connor
Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A.,
to prosecute an adversary proceeding against Meridian's First Lien
Lenders and Second Lien Lenders to invalidate their liens. When
the Debtors filed for protection from their creditors, they listed
$530 million in total assets and approximately $815 million in
total liabilities. (Meridian Bankruptcy News, Issue No. 24;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
MERIDIAN AUTOMOTIVE: Wants Exclusive Periods Extended to July 31
----------------------------------------------------------------
Meridian Automotive Systems, Inc., and its debtor-affiliates ask
Judge Walrath of the U.S. Bankruptcy Court for the District of
Delaware to further extend their exclusive periods to:
(a) file a plan of reorganization through May 31, 2006; and
(b) solicit acceptances of that plan through July 31, 2006.
Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP,
in Wilmington, Delaware, relates that on September 29, 2005, the
Debtors presented their long-range business plan to the financial
advisors representing the various creditor constituencies in
their Chapter 11 cases.
According to Mr. Brady, the Debtors need more time to seek a
global resolution of intercreditor differences within a framework
that allows them to provide leadership and encourages
negotiations and thoughtful interaction.
Mr. Brady tells the Court that as of March 31, 2005, the Debtors
reported $530,000,000 in total assets and $815,000,000 in
total liabilities on a consolidated basis. The Debtors generated
net sales of more than $1,000,000,000 during fiscal year 2004.
Mr. Brady contends that to deny a further extension of the
Debtors' Exclusive Periods would defeat the very purpose of
Section 1121 of the Bankruptcy Code -- to afford a debtor a
meaningful and reasonable opportunity to negotiate with creditors
and propose and confirm a plan of reorganization.
The Court will convene a hearing on April 10, 2006, to consider
the Debtors' request. By application of Del. Bankr.LR 9006-2,
the Debtors' exclusive periods are automatically extended until
the conclusion of that hearing.
Headquartered in Dearborn, Mich., Meridian Automotive Systems,
Inc. -- http://www.meridianautosystems.com/-- supplies
technologically advanced front and rear end modules, lighting,
exterior composites, console modules, instrument panels and other
interior systems to automobile and truck manufacturers. Meridian
operates 22 plants in the United States, Canada and Mexico,
supplying Original Equipment Manufacturers and major Tier One
parts suppliers. The Company and its debtor-affiliates filed for
chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos.
05-11168 through 05-11176). James F. Conlan, Esq., Larry J.
Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at
Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon
L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks,
Esq., at Young Conaway Stargatt & Taylor, LLP, represent the
Debtors in their restructuring efforts. Eric E. Sagerman, Esq.,
at Winston & Strawn LLP represents the Official Committee of
Unsecured Creditors. The Committee also hired Ian Connor
Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A.,
to prosecute an adversary proceeding against Meridian's First Lien
Lenders and Second Lien Lenders to invalidate their liens. When
the Debtors filed for protection from their creditors, they listed
$530 million in total assets and approximately $815 million in
total liabilities. (Meridian Bankruptcy News, Issue No. 24;
Bankruptcy Creditors' Service, Inc., 215/945-7000).
MONTAUK POINT: Moody's Puts Ba1 Rating on $4 Mil. Class G Notes
---------------------------------------------------------------
Moody's Investors Service assigned these ratings to Notes issued
by Montauk Point CDO, Ltd. and Montauk Point CDO, Inc.:
* Aaa to the $262,000,000 Class A-1 First Priority Senior
Secured Floating Rate Notes Due 2042;
* Aaa to the $38,000,000 Class A-2 Second Priority Senior
Secured Floating Rate Notes Due 2042;
* Aa2 to the $44,000,000 Class B Third Priority Senior Secured
Floating Rate Notes Due 2042;
* Aa3 to the $16,000,000 Class C Fourth Priority Senior
Secured Floating Rate Notes Due 2042;
* A2 to the $11,400,000 Class D Fifth Priority Mezzanine
Deferrable Secured Floating Rate Notes Due 2042;
* Baa2 to the $11,400,000 Class E Sixth Priority Mezzanine
Deferrable Secured Floating Rate Notes Due 2042;
* Baa3 to the $2,000,000 Class F Seventh Priority Mezzanine
Deferrable Secured Floating Rate Notes Due 2042; and
* Ba1 to the $4,000,000 Class G Eighth Priority Mezzanine
Deferrable Secured Floating Rate Notes Due 2042.
According to Moody's, the ratings on the Notes address the
ultimate cash receipt of all required interest and principal
payments, as provided by the Notes' governing documents, and are
based on the expected loss posed to Noteholders, relative to the
promise of receiving the present value of such payments.
The ratings reflect the risks due to the diminishment of cash flow
from the underlying portfolio consisting of structured finance
securities due to defaults, the safety of the transaction's legal
structure and the characteristics of the underlying assets.
Fortis Investment Management USA, Inc. will serve as Collateral
Manager for this transaction.
MSX INTERNATIONAL: S&P Downgrades Corporate Credit Rating to CCC+
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
ratings on Southfield, Michigan-based MSX International Inc. to
'CCC+' from 'B-'. Standard & Poor's also lowered the senior
secured debt and subordinated debt ratings on the company.
MSX is a provider of business services to the automotive industry.
The outlook is negative.
"The rating actions reflect our concern that the company will be
challenged to refinance its various upcoming debt maturities, in
particular those for its second-lien secured debt due in October
2007 and for its subordinated debt due January 2008," said
Standard & Poor's credit analyst Nancy C. Messer.
To position itself for this refinancing, Standard & Poor's
believes MSX must stabilize EBITDA by maintaining its profitable
business with original equipment manufacturers (OEMs) in the
difficult automotive market. It must also show its potential to
expand by winning new business awards and must generate cash from
asset sales.
Although the company has programs in place to accomplish these
goals, it may not necessarily succeed. Cash flow has been
inadequate for the company to meaningfully reduce debt in recent
years, despite its continued healthy EBITDA margins, which it
managed to generate in the face of declining revenues. As a
result, leverage remains very aggressive, interest coverage is
weak, and liquidity is constrained. MSX had total balance-sheet
debt of $254 million as of Oct. 2, 2005, and annual revenues of
$465 million.
The ratings on MSX reflect the company's highly leveraged
financial risk profile and its participation in cyclical and
competitive markets. The company provides:
* engineering services,
* human capital management services, and
* other collaborative business services
to U.S. automakers and dealers, many of whom are very financially
challenged.
The company generates revenues from service fees, which are not
directly tied to production volumes. However, the company's
revenues have been eroded since 2000 because severe competition
among the OEMs has led them to reduce levels of contract staffing
such as MSX provides.
Although MSX has shifted its new business effort to aftermarket
services provided by the automotive dealer network, most of its
current revenues still come from OEMs. Standard & Poor's assesses
the company's business risk profile as vulnerable because of
deteriorating fundamentals in the OEM market. Ford Motor Co.
accounted for 36% of MSX's 2004 revenues, DaimlerChrysler AG 13%,
Fiat SpA 9%, and General Motors Corp. 7%.
NADER MODANLO: Chap. 11 Trustee Hires Shapiro Sher as Lead Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Maryland gave
Christopher B. Mead, the chapter 11 Trustee for the estate of
Nader Modanlo, permission to employ Shapiro Sher Guinot & Sandler
as his counsel.
As reported in the Troubled Company Reporter on Feb. 9, 2006,
the Trustee hired Shapiro Sher as his counsel to provide him
with bankruptcy related legal services. The Firm will avoid
duplicating services performed by the Trustee's co-counsel,
London & Mead.
Shapiro Sher will:
1) advise the chapter 11 Trustee regarding possession and
management of the Debtor's assets and represent the Trustee
in connection with any proceedings for relief from stay
which may be instituted in the Bankruptcy Court;
2) prepare on behalf of the Trustee all necessary applications,
motions, answers, orders, reports and other legal papers
required by the Court;
3) advise, assist and represent the Trustee in preparing,
filing and prosecuting a disclosure statement and plan of
reorganization in the Debtor's chapter 11 case ;
4) represent the Trustee in collateral litigation before the
Bankruptcy Court and other courts, including appellate
Courts; and
5) render all other necessary legal services to the Trustee in
carrying out his duties and responsibilities in the Debtor's
chapter 11 case.
Richard M. Goldberg, Esq., a member at Shapiro Sher, is one of
the lead attorneys from the Firm performing services for the
chapter 11 Trustee.
Nader Modanlo of Potomac, Maryland, is the President of Final
Analysis Communication Services, Inc. Mr. Modanlo filed for
chapter 11 protection on July 22, 2005 (Bankr. D. Md. Case No.
05-26549). Joel S. Aronson, Esq., at Ridberg Sherbill & Aronson
LLP, represents the Debtor. When the Debtor filed for protection
from his creditors, he listed total assets of $776,237 and total
debts of $106,002,690. Christopher B. Mead is the chapter 11
Trustee for the Debtor's estate.
NASER KAZEM: Indicted for Fraudulent Asset Disposition Under BIA
----------------------------------------------------------------
The Royal Canadian Mounted Police, Greater Toronto Area Commercial
Crime Section, Toronto West Site, charged Naser Kazem, 36, of
Toronto, Ontario, with offenses under the Bankruptcy and
Insolvency Act.
As a result of the RCMP investigation, Mr. Kazem was charged with
four counts under the Bankruptcy and Insolvency Act relating to
the disposition of property obtained on credit and not paid for.
His first appearance is scheduled for April 28, 2006 at Old City
Hall in Toronto.
The RCMP and the Office of the Superintendent of Bankruptcies
continue to investigate a number of allegations of breaches of the
Bankruptcy and Insolvency Act including the fraudulent disposition
of property, failing to keep proper books of account and failure
to comply with duties.
"This partnership will continue to focus its efforts on
undertaking criminal investigations where evidence of wrong doing
exists," Inspector Brian Verheul of the RCMP GTA Commercial Crime
Section, said. "The objective is to maintain confidence in the
integrity of the Bankruptcy and Insolvency Process."
NATIONAL ENERGY: Approves Creditor Distributions Totaling $1.825B
-----------------------------------------------------------------
National Energy & Gas Transmission, Inc., discloses that as of
March 2006, it has approved creditor distributions totaling
$1,825,000,000 in the form of note redemptions and Class 3 cash
distributions. About 90% of these distributions have been paid
to allowed claimholders and the remainder is being held by a
third party trustee pending the resolution of disputed claims.
Future distributions, which will be considered by the NEGT Board
of Directors as excess cash becomes available, are expected to
range from $230,000,000 to $490,000,000 depending on the
resolution of several contingent issues.
NEGT also disclosed that the Class 3 Creditor Recovery has
already reached 44% and is expected to range from 51% to 62%.
The range of potential recoveries is caused by the uncertainty of
the amount of some cash inflows and the impact of several
unresolved claims, which include ET tolling guarantees and other
disputed claims.
A full-text copy of a Report about the Status of NEGT's
Liquidation, dated March 2006, is available for free at
http://ResearchArchives.com/t/s?76c
Headquartered in Bethesda, Maryland, PG&E National Energy Group,
Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas
Transmission, Inc.) develops, builds, owns and operates electric
generating and natural gas pipeline facilities and provides energy
trading, marketing and risk-management services. The Company
filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md.
Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman,
Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr &
Gallagher represent the Debtors in their restructuring efforts.
When the Company filed for protection from its creditors, it
listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT
received bankruptcy court approval of its reorganization plan in
May 2004, and emerged from bankruptcy on Oct. 29, 2004. (PG&E
National Bankruptcy News, Issue No. 57; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
NORTEK INC: Inks $200 Mil. Amended and Restated Credit Agreement
----------------------------------------------------------------
Nortek, Inc. entered into an Amended and Restated Credit Agreement
with its banks to expand its revolving credit facility from
$100 million to $200 million and to modify certain covenants
to reflect the growth in Nortek and its improved earnings.
"We are extremely pleased with this amendment to our bank credit
facility as it provides Nortek with additional liquidity and
flexibility to support our future growth," said Nortek's Chairman
and Chief Executive Officer, Richard L. Bready.
Headquartered in Providence, Rhode Island, Nortek, Inc. --
http://www.nortek-inc.com-- (a wholly owned subsidiary of Nortek
Holdings, Inc., which is a wholly owned subsidiary of NTK
Holdings, Inc.) is a leading international designer, manufacturer
and distributor of high quality, competitively priced commercial
and residential ventilation, HVAC and home technology comfort,
convenience and entertainment products. Nortek offers a broad
array of products for improving the environments where people live
and work. Its products include: range hoods, bath fans, indoor
air quality systems, medicine cabinets and central vacuums,
heating and air conditioning systems, and home technology
offerings, including audio, video, entry and security and other
products.
Nortek, Inc.'s 8-1/2% Senior Subordinated Notes due 2014 carry
Moody's Investors Service's Caa1 rating and Standard & Poor's CCC+
rating.
OCA INC: Hires Heller Draper as Bankruptcy Counsel
--------------------------------------------------
Oca, Inc., and its debtor affiliates sought and obtained authority
from the U.S. Bankruptcy Court for the Eastern District of
Louisiana to employ Heller, Draper, Hayden, Patrick & Horn,
L.L.C., as their bankruptcy counsel.
Heller Draper is expected to:
a. advice the Debtors with respect to their rights, powers and
duties as debtors and debtors-in-possession in the
continued operation and management of their respective
businesses and properties;
b. prepare and pursue confirmation of a plan of reorganization
and approval of a disclosure statement;
c. prepare on behalf of the Debtors all necessary
applications, motions, answers, proposed orders, other
pleading, notices, schedules and other documents, and
reviewing all financial and other reports filed;
d. advice the Debtors concerning and preparing responses to
applications, motions, pleading, notices and other
documents which may be filed by other parties and served;
e. appear in Court to protect the interests of the Debtors;
f. represent the Debtors in connection with obtaining
postpetition financing;
g. advice the Debtors concerning and assisting in the
negotiation and documentation of financing agreements, cash
collateral orders and related transactions;
h. investigate into the nature and validity of liens asserted
against the property of the Debtors, and advising the
Debtors concerning the enforceability of these liens;
i. investigate and advice the Debtors concerning and taking
such action as may be necessary to collect income and
assets in accordance with applicable law, and recover
property for the benefit of the Debtor's estate;
j. advice and assist the Debtors in connection with any
potential property dispositions;
k. advice the Debtors concerning executory contract and
unexpired lease assumptions, assignments and rejection and
lease restructuring, and recharacterizations;
l. assist the Debtors in reviewing, estimating and resolving
claims asserted against the Debtors' estate;
m. commence and conduct litigation necessary and appropriate
to assert rights held by the Debtors, protect assets of the
Debtors' chapter 11 estate or otherwise further the goal of
completing the Debtors' successful reorganization; and
n. perform all other legal services for the Debtors which may
be necessary and proper in this proceeding.
William H. Patrick, III, Esq., a member of Heller Draper, tells
the Court that the Firm's professional bill:
Professional Hourly Rate
------------ -----------
William H. Patrick, III, Esq. $350
Douglas S. Draper, Esq. $350
Jan M. Hayden, Esq. $350
Warren Horn, Esq. $325
Tristan Manthey, Esq. $295
Designation Hourly Rate
----------- -----------
Other Partners $295 - $350
Associates $225 - $260
Paralegal $60 - $100
Mr. Patrick assures the Court that the Firm is "disinterested" as
that term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Patrick can be reached at:
William H. Patrick III, Esq.
Heller, Draper, Hayden, Patrick & Horn, L.L.C.
650 Poydras Street, Suite 2500
New Orleans, Louisiana 70130
Tel: (504) 581-9595 or (504) 568-1888
Fax: (504) 525-3761 or (504) 522-0949
http://www.hellerdraper.com/
Based in Metairie, Louisiana, OCA, Inc. -- http://www.ocai.com/--
provides a full range of operational, purchasing, financial,
marketing, administrative and other business services, as well as
capital and proprietary information systems to approximately 200
orthodontic and dental practices representing approximately almost
400 offices. The Company and its debtor-affiliates filed for
Chapter 11 protection on March 14, 2006 (Bankr. E.D. La. Case No.
06-10179). William H. Patrick, III, Esq., at Heller Draper Hayden
Patrick & Horn, LLC, represents the Debtors. When the Debtors
filed for protection from their creditors, they listed
$545,220,000 in total assets and $196,337,000 in total debts.
OFF MAIN: Case Summary & 20 Largest Unsecured Creditors
-------------------------------------------------------
Debtor: Off Main Furniture, Inc.
4667 North University Drive
Coral Springs, Florida 33067
Bankruptcy Case No.: 06-11200
Type of Business: The Debtor supplies a wide variety of
office and home furniture. See
http://offmainfurniture.com/
Chapter 11 Petition Date: April 4, 2006
Court: Southern District of Florida (Fort Lauderdale)
Judge: John K. Olson
Debtor's Counsel: Paul J. Battista, Esq.
Genovese Joblove & Battista, P.A.
100 Southeast 2 Street #4400
Miami, Florida 33131
Tel: (305) 349-2300
Fax: (305) 349-2310
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
US Small Business Administration $319,811
Disaster Assistance - Area 2
One Baltimore Place, Suite 300
Atlanta, GA 30308
Hickory Hills $113,858
P.O. Box 40501
Hoyle Street Valdese, NC 28690
Inland Southeast $66,963
550 Fairway Drive
Deerfield Beach, FL 33321
The Taubman Company $53,799
Bank of America, N.A. $52,350
Flexsteel $33,236
WTVJ-TV o NBC6 $25,980
Shermag $24,581
WTV o NBC5 $23,315
Southern Furniture $21,876
Legacy $21,501
IRT Partners, LP $17,421
Chase $17,402
Barcalounger $17,374
Sofa Trend $16,579
Hooker $15,773
Stylecraft Lamps $13,505
Corporate Art $9,089
Canadel $8,676
Mark Roberts $8,622
PACIFICA CDO: Moody's Places Ba2 Rating on $19 Mil. Class D Notes
-----------------------------------------------------------------
Moody's assigned ratings to ten classes of notes issued by
Pacifica CDO V, Ltd., a CLO transaction managed by Alecentra, Inc:
* Aaa to the $361,250,000 Class A-1 Senior Secured Floating
Rate Notes Due 2020;
* Aa2 to the $28,750,000 Class A-2 Senior Secured Floating
Rate Notes Due 2020;
* A2 to the $25,650,000 Class B-1 Senior Secured Deferrable
Floating Rate Notes Due 2020;
* A2 to the $5,850,000 Class B-2 Senior Secured Deferrable
Fixed Rate Notes Due 2020;
* Baa2 to the $18,750,000 Class C Senior Secured Deferrable
Floating Rate Notes Due 2020;
* Ba2 to the $19,000,000 Class D Secured Deferrable Floating
Rate Notes Due 2020;
* Baa2 to the $500,000 Type I Composite Notes Due 2020;
* Aa2 to the $6,000,000 Type II Composite Notes Due 2020;
* Baa2 to the $6,000,000 Type III Composite Notes Due 2020;
and
* Baa2 to the $12,000,000 Type IV Composite Notes Due 2020.
Moody's stated that the ratings of these notes address the
ultimate cash receipt of all required interest and principal
payments required by the governing documents and are based on the
expected losses posed to holders of notes relative to the promise
of receiving the present value of such payments.
PATRON SYSTEMS: Nets $4.82M from Sale of Pref. Shares & Warrants
----------------------------------------------------------------
Patron Systems Inc. netted $4,820,501 from the issue of $100,000
units, each consisting of:
* 20 shares of Series A Preferred Stock; and
* Common Stock Purchase Warrants to purchase up to 416,667
shares of the Company's common stock.
The Series A Convertible Preferred Stock has a stated value of
$5,000 per share, has no maturity date and carries a dividend of
10% per annum. Dividends will accrue on a cumulative basis and
will be payable when the Board of Directors declares so or in case
the Company will be liquidated.
The Series A Preferred Stock is convertible, at the option of the
holder, into common shares, par value $0.01 per share at an
initial conversion price of $0.08 based on the stated value of the
Series A Preferred Stock, subject to adjustment.
The Warrants have a term of 5 years and an exercise price of $0.10
per share. The Company will file with the Securities and Exchange
Commission, no later than May 30, 2006, a registration statement
to allow the public resale of the common shares issuable upon
exercise of the Warrants and conversion of the Series A Preferred
Stock.
The aggregate proceeds in the Series A Financing were comprised
of:
-- $720,001 associated with the conversion of bridge notes
purchased by four accredited investors introduced by Laidlaw
& Company (UK) Ltd.;
-- $1,250,000 provided by Apex Investment Fund V, LP; and
-- $2,850,500 from 46 accredited investors introduced by
Laidlaw.
Laidlaw acted as placement agent in the Series A Financing. For
its services as placement agent, the Company paid Laidlaw
$435,050, including an advisor fee and a non-accountable expense
reimbursement, and issued to Laidlaw warrants to purchase up to
8,234,170 common shares at an exercise price of $0.10 per share.
The Company also previously issued 1,500,000 common shares to
Frank Mazzola, a Laidlaw employee, under the terms of consulting
agreements dated June 4, 2004, August 8, 2004, and November 17,
2004, in consideration of advisory services provided to the
Company.
Stubbs Alderton & Markiles, LLP, is holding $2,183,066 of the
proceeds in escrow until an out-of-court restructuring agreement
signed between the Company and its creditors is fully implemented.
The Escrow Agent will make monthly disbursements. The whole
amount can be released once 99% of the creditors' claims are
satisfied. A full-text copy of the Escrow Agreement is available
for free at http://ResearchArchives.com/t/s?770
Patron Systems Inc. -- http://www.patronsystems.com/-- was
established in 2002 to provide Immediate Intelligent Information
Security(TM) solutions to corporations, public safety
organizations, local and state governments, and federal
governmental agencies. The Patron portfolio focuses on the most
critical asset of the enterprise -- its intellectual property --
providing continuous, layered, security for data in motion, data
in applications, and data at rest.
At December 31, 2005, the company's balance sheet showed
$11,818,638 in total assets and a $20,074,468 stockholders
deficit.
PERFORMANCE TRANSPORTATION: Court OKs FTI as Financial Advisors
---------------------------------------------------------------
The U.S. Bankruptcy Court for the Western District of New York
authorized Performance Transportation Services, Inc., and its
debtor-affiliates to employ FTI Consulting, Inc., as their
financial advisors
As reported in the Troubled Company Reporter on Feb. 23, 2006, the
Debtors hired FTI to:
a. assist the Debtors with information and analyses required
pursuant to their debtor-in-possession financing;
b. assist with the identification and implementation of cash
management procedures;
c. assist with the review and development of a long-range
business plan and supporting analyses;
d. assist with the identification of executory contracts and
leases and performance of cost/benefit evaluations with
respect to the affirmation or rejection of each;
e. assist in the preparation of financial information for
distribution to creditors and others, including 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;
f. attend meetings and assist in discussions with potential
investors, banks and other secured lenders, the Official
Committee of Unsecured Creditors and any other committees
appointed in the Debtors' Chapter 11 cases, the United
States Trustee, other parties-in-interest and their
professionals, as requested;
g. assist in the preparation of information and analyses
necessary for the confirmation of a plan of reorganization
in the Debtors' Chapter 11 cases, including information
contained in the disclosure statement;
h. assist in the evaluation and analysis of avoidance actions,
including fraudulent conveyances and preferential
transfers;
i. provide accounting and tax support;
j. testify on case-related issues as required by the Debtors;
and
k. render other general business consulting or other
assistance as the Debtors' management or counsel may deem
necessary that are consistent with the role of a financial
advisor and not duplicative of services provided by
other professionals in the Debtors' Chapter 11 proceedings.
The Debtors will pay FTI at these hourly rates:
Senior Managing Directors $595 - 695
Directors / Managing Directors $435 - 590
Associates / Consultants $215 - 405
Administration / Paraprofessionals $95 - 175
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).
James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A.
Hirsch, Esq., at Kirkland & Ellis, LLP, and 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. 6; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PERFORMANCE TRANSPORTATION: Winston & Strawn Represents Committee
-----------------------------------------------------------------
The Official Committee of Unsecured Creditors of Performance
Transportation Services, Inc., and its debtor-affiliates sought
and obtained permission from the U.S. Bankruptcy Court for the
Western District of New York to retain Winston & Strawn LLP as its
counsel, effective Feb. 8, 2006.
Winston & Strawn is an international law firm with 875 attorneys
in nine offices in Chicago, Geneva, London, Los Angeles, Moscow,
New York, Paris, San Francisco, and Washington, D.C. The
Committee believes that the firm's attorneys have extensive
restructuring experience with respect to the trucking and
transportation industries.
Winston & Strawn will:
a. provide legal advice to the Committee with respect to its
duties and powers in the Debtors' Chapter 11 cases;
b. consult with the Committee, the Debtors and other parties-
in-interest concerning the administration of the Chapter 11
cases;
c. assist the Committee in its investigation of the acts,
conduct, assets, liabilities, and financial condition of
the Debtors, operation of the Debtors' businesses and the
desirability of continuing or selling the businesses or
assets, and any other matters relevant to the cases;
d. assist the Committee in evaluating claims against the
estates or held by the estates, including analysis of and
possible objections to the validity, priority, amount,
subordination, or avoidance of claims and transfers of
property in consideration of the claims;
e. assist the Committee in participating in the formulation of
a Chapter 11 plan, including the Committee's communications
with unsecured creditors concerning any plan;
f. assist the Committee with any effort to request the
appointment of a trustee or examiner;
g. advise and represent the Committee in connection with
matters generally arising in the Debtors' Chapter 11 cases,
including the obtaining of credit, the sale of assets, and
the rejection or assumption of executory contracts and
unexpired leases;
h. appear before the Court, any other federal court, state
court or appellate courts; and
i. perform other legal services as may be required or which
are in the interests of unsecured creditors.
The firm's customary hourly rates at its United States offices
are:
Professional Hourly Rate
------------ -----------
Partners $365 - $800
Associates $200 - $485
Legal assistants $100 - $260
David Neier, Esq., a partner at Winston & Strawn, assures the
Court that Winston & Strawn, its members, counsel and associates:
-- are not or were not a creditor, an equity security holder
or an insider of the Debtors;
-- have not been, within two years before the Petition Date, a
director, officer, or employee of the Debtors; and
-- do not have an interest materially adverse to the interest
of the estates or of any class of creditors or equity
security holders by reasons of any relationship to the
Debtors for any other reason.
Hence, Mr. Neier asserts, Winston & Strawn is a "disinterested
person" as that term is defined in Section 101(14) of the
Bankruptcy Code, as modified by Section 1107(b).
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).
James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A.
Hirsch, Esq., at Kirkland & Ellis, LLP, and 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. 6; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PLIANT CORP: Valuation Analysis Under Plan of Reorganization
------------------------------------------------------------
At the request of Pliant Corporation and its debtor-affiliates,
their financial advisors, Jefferies & Company, Inc., prepared an
analysis of the going-concern equity value of the Reorganized
Debtors. The Debtors contend that the analysis of their
reorganization value will assist them in evaluating:
a. the relative recoveries of holders of Allowed Claims and
Interest under the Plan;
b. whether the Plan satisfied the "best interests" test under
the Bankruptcy Code; and
c. the value of the shares of securities to be issued under
the Plan.
In preparing a valuation analysis, Jefferies:
-- reviewed certain internal financial and operating data of
the Debtors;
-- discussed with certain senior executives the current
operations and prospects of the Debtors;
-- reviewed operating and financial forecasts prepared by the
Debtors, including the projections;
-- discussed with the Debtors' senior executives key
assumptions related to the projections;
-- prepared discounted cash flow analyses based on the
projections, utilizing various discount rates and terminal
value multiples;
-- considered the market multiples of certain publicly-traded
companies in businesses reasonably comparable to the
operating businesses of the Debtors;
-- considered the transaction multiples of acquisitions
involving companies in businesses reasonably comparable to
the Debtors' operating businesses; and
-- considered other analyses as Jefferies deemed necessary
under the circumstances.
Based on its analyses, Jefferies estimates the Debtors' total
enterprise value to range from approximately $860,000,000 to
$980,000,000 with a mid-point value of $920,000,000.
Jefferies reduced the mid-point TEV estimate by the estimated pro
forma net debt levels of the Reorganized Debtors as of June 30,
2006 -- approximately $681,100,000 -- to calculate a $238,900,000
implied reorganized equity value, including both preferred and
common equity, of the Reorganized Debtors.
In the event that the Holders of the Old Note Claims do not
receive the $20,000,000 aggregate principal amount of the Tack-On
Notes pursuant to the Plan, the holders of the Old Note Claims
are to receive New Senior Subordinated Notes, in the aggregate
principal amount of $35,000,000. Thus, the pro forma net debt
levels will increase by $15,000,000 to $696,100,000, resulting in
a reduction of the implied reorganized equity value from
$238,900,000 to $223,900,000.
Midpoint Reorganization Value
-----------------------------
$35M New Senior
$20M Subordinated
Tack-On Notes
----------- -----------
Reorganization Value $920.0 mil. $920.0 mil.
Less: Debt 681.1 mil. 696.1 mil.
----------- -----------
New Preferred and Common
Equity Value $238.9 mil. $223.9 mil.
=========== ===========
Upon the Debtors' emergence, the equity portion of the
reorganized capital structure will consist of:
a. new Series AA Redeemable Preferred Stock with a liquation
preference of approximately $335,600,000;
b. new Series M Preferred Stock and units in the Deferred Cash
Incentive Plan; and
c. Common Stock.
As the liquidation preference of the new preferred equity is
greater than the total implied reorganized equity value,
Jefferies estimates that there is no implied reorganized Common
Stock value at the Effective Date of the Plan and all of the
implied reorganized equity value of $238,900,000 -- or
$223,900,000 if the holders of the Old Note Claims do not receive
the Tack-On Notes -- will be attributable to the new Series AA
Redeemable Preferred Stock, the new Series M Preferred Stock and
to the units in the Deferred Cash Incentive Plan.
The Series M Preferred Stock and units in the Deferred Cash
Incentive Plan will initially be entitled, in the aggregate, to
7.5% of the equity value of New Pliant. The percentage may be
increased to an aggregate of 8% of the equity value of the New
Pliant under certain circumstances.
Thus, to estimate the midpoint reorganization value of the
securities, 8% of the total implied midpoint reorganized equity
value -- $19,100,000 -- has been allocated to the Series M
Preferred Stock and units in the Deferred Cash Incentive Plan,
and 92% of the total implied midpoint reorganized equity value --
$219,800,000 -- has been allocated to the Series AA Redeemable
Preferred Stock.
If the holders of the Old Note Claims do not receive the Tack-On
Notes, the implied midpoint reorganization value of the Series M
Preferred Stock and units in the Deferred Cash Incentive Plan
decreases to $17,900,000, and the implied midpoint reorganization
value of the Series AA Preferred Stock decreases to $206,000,000.
Midpoint Reorganization Value
-----------------------------
$35M New Senior
$20M Subordinated
Tack-On Notes
----------- -----------
Series AA Redeemable
Preferred Stock $219.8 mil. $206.0 mil.
Series M Preferred Stock and
Deferred Cash Incentive Plain 19.1 mil. 17.9 mil.
Common Stock 0.0 mil. 0.0 mil.
----------- -----------
$238.9 mil. $223.9 mil.
=========== ===========
Jefferies makes it clear that the estimated range of values
represents a hypothetical value that reflects the Debtors'
estimated intrinsic value derived through the application of
various valuation methodologies. The equity value ascribed in
the analysis does not purport to be an estimate of a post-
reorganization trading value.
Jefferies also points out that the value of an operating business
is subject to uncertainties and contingencies that are difficult
to predict and will fluctuate with changes in factors affecting
the financial conditions and prospects of such a business. As a
result, Jefferies advices, the estimate of the Debtors' implied
equity value is not necessarily indicative of actual outcomes.
Jefferies assumed the accuracy, completeness and fairness of all
of the financial and other information available to it from
public sources or those provided by the Debtors.
About Pliant
Headquartered in Schaumburg, Illinois, Pliant Corporation --
http://www.pliantcorp.com/-- produces value-added film and
flexible packaging products for personal care, medical, food,
industrial and agricultural markets. The Debtor and 10 of its
affiliates filed for chapter 11 protection on Jan. 3, 2006
(Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq.,
at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S.
Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the
Debtors in their restructuring efforts. The Debtors tapped
McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy
counsel. The Ontario Superior Court of Justice named RSM
Richter, Inc., as the Debtors' information officer in their
restructuring proceeding under Companies Creditors Arrangement Act
in Canada. As of Sept. 30, 2005, the company had $604,275,000 in
total assets and $1,197,438,000 in total debts. (Pliant
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PLIANT CORP: Four-Year Financial Projections Under Chapter 11 Plan
------------------------------------------------------------------
In connection with the development of their Joint Plan of
Reorganization, Pliant Corporation and its debtor-affiliates, with
the assistance of their financial advisors, Jefferies & Company,
Inc., prepared consolidated projected financial results for each
of the years ending December 31, 2006, through and including 2009.
The Projections are intended to illustrate the estimated effects
of the Plan and certain related transactions on the results of
operations, cash flow and financial position of the reorganized
Debtors for the four-year period, Pliant Vice President and
General Counsel Stephen T. Auburn, says.
The Projections, among others, assume the confirmation and
consummation of the Plan, as filed with the Court, and the
Debtors' emergence from Chapter 11 on June 30, 2006.
The Debtors prepared two sets of financial projections:
1. One assumes that $20,000,000 Tack-On Note will be issued
to the Old Noteholders; and
2. The other assumes that the $35,000,000 in New Senior
Subordinated Notes will be issued in the event the holder
of the Old Note Claims are not able to receive the Tack-On
Notes pursuant to the Plan.
The Projections, Mr. Auburn points out, have not been prepared to
comply with the guidelines established with respect to
Projections by the Securities and Exchange Commission or the
American Institute of Certified Public Accountants, have not been
audited, and are not presented in accordance with Generally
Accepted Accounting Principles.
Based on the Projections, the Debtors believe that New Pliant and
the reorganized Debtors will be able to make all payments
required pursuant to the Plan, and therefore, that confirmation
of the Plan is not likely to be followed by liquidation or the
need for further reorganization. The Debtors also believe that
they will be able to repay or refinance all of the indebtedness
under the Plan at or prior to the maturity of the indebtedness.
Pliant Corporation, et al.
Unaudited Projected Balance Sheet
$20M Tack On Note
(In Millions)
As of December 31,
--------------------------------------
2006 2007 2008 2009
-------- -------- -------- --------
Cash $9.0 $9.0 $9.0 $79.9
Receivables 145.1 147.3 142.7 137.2
Inventories 108.1 107.9 102.1 95.6
Prepaid expenses 7.6 7.6 7.6 7.6
Deferred income taxes 10.5 10.5 10.5 10.5
-------- -------- -------- --------
Current assets $280.2 $282.2 $271.9 $330.8
-------- -------- -------- --------
Plant & Equipment, net 297.7 302.8 306.3 311.3
Goodwill & Intangibles 194.7 192.4 191.0 190.1
Other assets 43.5 36.0 28.5 21.0
-------- -------- -------- --------
Total assets $816.1 $813.4 $797.7 $853.1
======== ======== ======== ========
Revolver $96.9 $62.2 $3.5 -
Trade accounts payable 90.3 91.9 85.7 $78.7
Interest payable 10.2 10.4 10.2 9.8
Other current liabilities 47.4 47.4 47.4 47.4
Current portion of LT-debt 1.3 1.3 1.3 1.3
-------- -------- -------- --------
Current liabilities $246.2 $213.2 $148.1 $137.2
-------- -------- -------- --------
Other LT-debt, net 586.1 624.8 668.0 715.1
Other LT-liabilities 29.4 29.4 29.4 29.4
Deferred income tax 30.8 30.8 30.8 30.8
-------- -------- -------- --------
Total Liabilities $892.4 $898.1 $876.3 $912.6
-------- -------- -------- --------
Equity
Preferred Stock 388.8 441.8 502.1 570.6
Shareholders' Equity (465.1) (526.6) (580.8) (630.1)
-------- -------- -------- --------
Total Liabilities
& Shareholders' Deficit $816.1 $813.4 $797.7 $853.1
======== ======== ======== ========
Pliant Corporation, et al.
Unaudited Projected Statements of Operations
$20M Tack On Note
(In Millions)
For the Year Ended December 31,
--------------------------------------
2006 2007 2008 2009
-------- -------- -------- --------
Trade Pounds Sold 910.3 934.0 958.4 983.5
Net Sales $1,234.8 $1,205.6 $1,167.3 $1,120.5
Cost of Goods Sold 1,080.0 1,036.1 980.8 917.9
-------- -------- -------- --------
Gross profit 154.9 169.5 186.6 202.6
-------- -------- -------- --------
Operating Expenses
Selling, General
& Admin 83.8 84.4 84.9 86.4
Research & Development 6.9 9.2 9.4 9.7
Restructuring & others 15.7 - - -
-------- -------- -------- --------
Total operating expenses 106.3 93.6 94.3 96.0
-------- -------- -------- --------
Operating Income 48.6 75.9 92.2 106.6
Interest expense 83.8 82.1 82.2 82.9
Other income/expense (0.1) (0.5) (0.5) (0.5)
-------- -------- -------- --------
Income (loss) from
continuing operations
before taxes (35.2) (5.7) 10.6 24.2
-------- -------- -------- --------
Income tax expense 1.4 1.4 3.0 3.3
Gain on extinguishment
of debt, net of tax 245.2 - - -
-------- -------- -------- --------
Net Income (Loss) $208.6 ($7.2) $7.6 $20.9
======== ======== ======== ========
Income (loss) from
continuing operations
before taxes ($35.2) ($5.7) $10.6 $24.2
Interest 83.8 82.1 82.2 82.9
Depreciation,
amortization
and FA impairments 42.7 45.5 47.9 51.0
Restructuring &
other costs 15.7 - - -
-------- -------- -------- --------
EBITDA $107.0 $121.9 $140.7 $158.1
======== ======== ======== ========
Pliant Corporation, et al.
Unaudited Projected Statement of Cash Flows
$20M Tack On Note
(In Millions)
For the Year Ended December 31,
--------------------------------------
2006 2007 2008 2009
-------- -------- -------- --------
CASH FLOW FROM OPERATIONS
Net Income $224.7 ($8.4) $6.1 $19.2
Depreciation &
amortization 42.7 45.5 47.9 51.0
Deferred income taxes 0.2 - - -
Amortization/write-off
of deferred financing cost 7.5 7.5 7.5 7.5
Accretion on debt discount 35.2 38.7 43.3 47.1
Gain on extinguishment
of debt (260.2) - - -
Changes in assets &
liabilities:
Accounts Receivable (7.4) (2.2) 4.5 5.5
Inventories (1.3) 0.2 5.8 6.5
Prepaid expenses & other 1.1 - - -
Accounts payable 37.9 1.6 (6.2) (7.0)
Accrued liabilities (27.6) 0.2 (0.2) (0.4)
Other assets 1.4 - - -
Other liabilities 0.2 - - -
-------- -------- -------- --------
Cash provided from
(used in) operations $54.4 $83.1 $108.7 $129.5
-------- -------- -------- --------
CASH FLOW FROM INVESTING
Capital expenditures -
GAAP ($47.6) ($48.0) ($50.0) ($55.0)
-------- -------- -------- --------
Cash provided from
(used in) investing ($47.6) ($48.0) ($50.0) ($55.0)
-------- -------- -------- --------
CASH FLOW FROM FINANCING
Borrowings (Repayments)
of revolver ($34.0) ($34.8) ($58.7) ($3.5)
Borrowings (Repayments)
of other debt 28.3 - - (0.0)
Payment of capitalized
loan/consent fees (6.2) - - -
-------- -------- -------- --------
Cash provided from
(used in) financing ($11.9) ($34.8) ($58.7) ($3.5)
-------- -------- -------- --------
EFFECT OF EXCHANGE RATE
ON CASH 0.5 (0.3) - -
-------- -------- -------- --------
NET INCREASE (DECREASE)
IN CASH ($4.6) ($0.0) ($0.0) $70.9
CASH AT BEGINNING
OF PERIOD 13.6 9.0 9.0 9.0
-------- -------- -------- --------
CASH AT END OF PERIOD $9.0 $9.0 $9.0 $79.9
======== ======== ======== ========
Pliant Corporation, et al.
Unaudited Projected Balance Sheet
$35M New Senior Subordinated Notes
(In Millions)
As of December 31,
--------------------------------------
2006 2007 2008 2009
-------- -------- -------- --------
Cash $9.0 $9.0 $9.0 $78.2
Receivables 145.1 147.3 142.7 137.2
Inventories 108.1 107.9 102.1 95.6
Prepaid expenses 7.6 7.6 7.6 7.6
Deferred income taxes 10.5 10.5 10.5 10.5
-------- -------- -------- --------
Current assets $280.2 $282.2 $271.9 $329.0
-------- -------- -------- --------
Plant & Equipment, net 297.7 302.8 306.3 311.3
Goodwill & Intangibles 194.7 192.5 191.1 190.2
Other assets 43.5 36.0 28.5 21.0
-------- -------- -------- --------
Total assets $816.1 $813.5 $797.8 $851.4
======== ======== ======== ========
Revolver $94.6 $61.1 $3.8 -
Trade accounts payable 90.3 91.9 85.7 $78.7
Interest payable 12.4 10.4 10.2 9.8
Other current liabilities 47.4 47.4 47.4 47.4
Current portion of LT-debt 1.3 1.3 1.3 1.3
-------- -------- -------- --------
Current liabilities $246.1 $212.1 $148.4 $137.2
-------- -------- -------- --------
Other LT-debt, net 602.2 640.8 681.3 725.2
Other LT-liabilities 29.4 29.4 29.4 29.4
Deferred income tax 30.8 30.8 30.8 30.8
-------- -------- -------- --------
Total Liabilities $908.5 $913.1 $889.9 $922.6
-------- -------- -------- --------
Equity
Preferred Stock 388.8 441.8 502.1 570.6
Shareholders' Equity (481.2) (541.4) (594.2) (641.8)
-------- -------- -------- --------
Total Liabilities
& Shareholders' Deficit $816.1 $813.5 $797.8 $851.4
======== ======== ======== ========
Pliant Corporation, et al.
Unaudited Projected Statements of Operations
$35M New Senior Subordinated Notes
(In Millions)
For the Year Ended December 31,
--------------------------------------
2006 2007 2008 2009
-------- -------- -------- --------
Trade Pounds Sold 910.3 934.0 958.4 983.5
Net Sales $1,234.8 $1,205.6 $1,167.3 $1,120.5
Cost of Goods Sold 1,080.0 1,036.1 980.8 917.9
-------- -------- -------- --------
Gross profit 154.9 169.5 186.6 202.6
-------- -------- -------- --------
Operating Expenses
Selling, General
& Admin 83.8 84.4 84.9 86.4
Research & Development 6.9 9.2 9.4 9.7
Restructuring & others 15.7 - - -
-------- -------- -------- --------
Total operating expenses 106.3 93.6 94.3 96.0
-------- -------- -------- --------
Operating Income 48.6 75.9 92.2 106.6
Interest expense 83.8 82.1 82.2 82.9
Other income/expense (0.1) (0.5) (0.5) (0.5)
-------- -------- -------- --------
Income (loss) from
continuing operations
before taxes (34.1) (7.0) 9.1 22.5
-------- -------- -------- --------
Income tax expense 1.4 1.4 3.0 3.3
Gain on extinguishment
of debt, net of tax 260.2 - - -
-------- -------- -------- --------
Net Income (Loss) $224.7 ($8.4) $6.1 $19.2
======== ======== ======== ========
Income (loss) from
continuing operations
before taxes ($34.1) ($7.0) $9.1 $22.5
Interest 82.7 83.3 83.6 84.6
Depreciation,
amortization
and FA impairments 42.7 45.5 47.9 51.0
Restructuring &
other costs 15.7 - - -
-------- -------- -------- --------
EBITDA $107.0 $121.9 $140.7 $158.1
======== ======== ======== ========
Pliant Corporation, et al.
Unaudited Projected Statement of Cash Flows
$35M New Senior Subordinated Notes
(In Millions)
For the Year Ended December 31,
--------------------------------------
2006 2007 2008 2009
-------- -------- -------- --------
CASH FLOW FROM OPERATIONS
Net Income $208.6 ($7.2) $7.6 $20.9
Depreciation &
amortization 42.7 45.5 47.9 51.0
Deferred income taxes 0.2 - - -
Amortization/write-off
of deferred financing cost 7.5 7.5 7.5 7.5
Accretion on debt discount 36.3 38.6 40.4 43.9
Gain on extinguishment
of debt (245.2) - - -
Changes in assets &
liabilities:
Accounts Receivable (7.4) (2.2) 4.5 5.5
Inventories (1.3) 0.2 5.8 6.5
Prepaid expenses & other 1.1 - - -
Accounts payable 37.9 1.6 (6.2) (7.0)
Accrued liabilities (27.6) (2.1) (0.2) (0.4)
Other assets 1.4 - - -
Other liabilities 0.2 - - -
-------- -------- -------- --------
Cash provided from
(used in) operations $56.8 $82.0 $107.3 $128.0
-------- -------- -------- --------
CASH FLOW FROM INVESTING
Capital expenditures -
GAAP ($47.6) ($48.0) ($50.0) ($55.0)
-------- -------- -------- --------
Cash provided from
(used in) investing ($47.6) ($48.0) ($50.0) ($55.0)
-------- -------- -------- --------
CASH FLOW FROM FINANCING
Borrowings (Repayments)
of revolver ($36.3) ($33.5) ($57.3) ($3.8)
Borrowings (Repayments)
of other debt 28.3 - - (0.0)
Payment of capitalized
loan / consent fees (6.2) - - -
-------- -------- -------- --------
Cash provided from
(used in) financing ($14.2) ($33.5) ($57.3) ($3.8)
-------- -------- -------- --------
EFFECT OF EXCHANGE RATE
ON CASH 0.5 (0.4) - -
-------- -------- -------- --------
NET INCREASE (DECREASE)
IN CASH ($4.6) ($0.0) ($0.0) ($69.2)
CASH AT BEGINNING
OF PERIOD 13.6 9.0 9.0 9.0
-------- -------- -------- --------
CASH AT END OF PERIOD $9.0 $9.0 $9.0 $78.2
======== ======== ======== ========
Headquartered in Schaumburg, Illinois, Pliant Corporation --
http://www.pliantcorp.com/-- produces value-added film and
flexible packaging products for personal care, medical, food,
industrial and agricultural markets. The Debtor and 10 of its
affiliates filed for chapter 11 protection on Jan. 3, 2006
(Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq.,
at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S.
Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the
Debtors in their restructuring efforts. The Debtors tapped
McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy
counsel. The Ontario Superior Court of Justice named RSM
Richter, Inc., as the Debtors' information officer in their
restructuring proceeding under Companies Creditors Arrangement Act
in Canada. As of Sept. 30, 2005, the company had $604,275,000 in
total assets and $1,197,438,000 in total debts. (Pliant
Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
PORT TOWNSEND: S&P Lowers Ratings to CCC With Negative Outlook
--------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured ratings on Port Townsend, Washington-based
Port Townsend Paper Corp. to 'CCC' from 'CCC+'. The outlook is
negative.
"The downgrade reflects our concern that the company could default
on its financial obligations as soon as April 17, 2006, when a
$7.5 million semiannual bond interest payment is due," said
Standard & Poor's credit analyst Dominick D'Ascoli.
The company has stated that it will need an additional $5 million
of liquidity to make the April 17 interest payment. The bank
lenders could release $3 million of availability upon the delivery
of 2004 audited financial statements if the lenders accept the
report of the independent auditor. In addition, the company has
asked for a waiver of certain covenants that will allow $2 million
of additional borrowings under the revolving credit facility.
"The downgrade also reflects the company's continued inability to
complete the audit of its 2004 financial statements and the
plethora of adjustments being made in the restatement of 2002 and
2003 financial results," Mr. D'Ascoli.
Port Townsend is in violation of reporting covenants under its
credit facility agreement and bond indenture. The credit facility
lenders have granted an additional extension to April 15, 2006,
for the delivery of 2004 audited results. The company has not
obtained a waiver from the bondholders. Should the company
receive notice from the bondholders, it may not be able to cure
the violation in a timely manner, resulting in an event of default
and an acceleration of the debt.
"We will lower the ratings if the company does not fully service
its debt obligations on their scheduled date," Mr. D'Ascoli said.
"We could raise the ratings if business conditions allow the
company to rebuild liquidity and appear sustainable and if the
company completes the audit of its financial statements without
significant adjustments to its preliminary financial results."
Port Townsend is a small manufacturer of packaging products that
focuses on selling corrugated boxes and kraft paper to customers
near its manufacturing facilities in Washington and British
Columbia.
R&G FINANCIAL: Sells $150 Million of Series A Preferred Stock
-------------------------------------------------------------
R&G Financial Corporation, a Puerto Rico-chartered bank holding
company, is selling, through its wholly owned Florida subsidiary,
R&G Acquisition Holdings Corporation, $150 million of non-
cumulative perpetual, Series A preferred stock. The Series A
Preferred Stock:
(a) is being sold to a small group of investors in a private
placement which will close on March 31, 2006,
(b) pays a 9.5% annual dividend rate which is payable in
quarterly installments, and
(c) is non-callable for seven years, except in certain
circumstances including a change of control of RGF, RAC or
its wholly owned subsidiary, R-G Crown Bank, FSB, subject
to regulatory approval.
R&G Acquisition's Series A Preferred Stock has the same priority
with respect to dividends and rights upon liquidation as R&G
Financial's other outstanding series of preferred stock with
respect to R&G Financial. The Series A Preferred Stock has been
structured to fully count as Tier 1 regulatory capital on
consolidation.
Terms of a Securities Purchase Agreement
R&G Acquisition is contributing $15 million to R-G Crown and will
retain $15 million, which is $750,000 more than the dividend
payments due on the Series A Preferred Stock for one year. R&G
Acquisition will transfer to R&G Financial $120 million of the
remaining proceeds, which R&G Financial will use to make capital
contributions to R-G Premier Bank of Puerto Rico, its Puerto Rico
commercial bank, and R-G Mortgage Corporation, its wholly owned
Puerto Rico mortgage corporation subsidiary, as needed, and for
general corporate purposes. RGF has previously stated in its
public filings that both it and its two banking subsidiaries, R-G
Premier and R-G Crown, were well capitalized at Dec. 31, 2005.
The new capital will further strengthen the regulatory capital
ratios of R&G Financial and its subsidiary banks.
In connection with the transaction, R&G Financial is granting the
investors immediately exercisable warrants to purchase between an
aggregate of 8 and 10 million shares of R&G Financial common stock
at an exercise price which will range from $12 - $14 per share.
Initially, warrants for 10 million shares have been issued at a
$12.00 per share exercise price. For every quarter that R&G
Acquisition pays its dividend on the Series A Preferred Stock:
(a) the number of warrants decreases by 250,000, down to a
minimum of 8 million shares, and
(b) the per share exercise price increases by $0.25, up to a
maximum of $14.00 per share.
Conversely, if R&G Acquisition fails to pay a quarterly dividend,
the number of R&G Financial warrants correspondingly increases and
the exercise price correspondingly decreases, but never to more
than 10 million shares or less than a $12.00 per share exercise
price. The ability of R&G Financial and its subsidiaries to pay
dividends is subject to the prior approval of its regulators.
Additional Purchase Rights Investments
R&G Acquisition is also granting the investors Additional Purchase
Rights Investments that provide the investors with the right to
monetize a 20% interest in the value of R&G Acquisition and R-G
Crown. In accordance with an Additional Purchase Rights
Investment Agreement, the APRIs have an initial aggregate value of
$80 million. Beginning five years from the date of closing of the
private placement, or earlier in the event of a change of control,
and not later than ten years from the closing of the private
placement, the investors can require an appraisal of R&G
Acquisition/R-G Crown, which shall be based on the average of the
public market value and the control sale value of the entity.
Upon exercise of the APRIs, at R&G Financial's election, it may
issue shares of R&G Financial common stock or cash to the
investors equal to the greater of:
(a) 20% of the appraised value so determined or
(b) $80 million, in each case minus the strike price
An aggregate of 8 million APRIs have been issued to the investors
at an exercise price of $10.00 per APRI. For every quarter that
R&G Acquisition shall fail to pay a dividend on the Series A
Preferred Stock, the exercise price of the APRIs will decline by
$0.4894375.
Under the various agreements, the investors must pay for the
exercise of the RGF warrants or the APRI through a corresponding
reduction in the outstanding Series A Preferred Stock, subject to
regulatory approval, thereby minimizing the dilutive impact of the
exercise.
R&G Financial and R&G Acquisition have agreed not to take certain
actions that would impair or jeopardize the investment made by the
investors. Thus, for so long as the Series A Preferred Stock is
outstanding, R&G Acquisition will not
(a) pledge the common stock of R-G Crown or
(b) issue debt or equity senior to the Series A Preferred Stock
without the permission of the holders of a majority in
interest
of the Series A Preferred Stock, except that outstanding
indebtedness such as R&G Acquisition's trust preferred
securities may be refinanced on more favorable terms.
Further, R&G Financial and R&G Acquisition will not permit
(a) RG Premier or R-G Crown to make distributions of
dividends when the effect would cause them to not be
"well capitalized" or at any time when the bank is not
well capitalized under applicable regulations or
(b) permit R-G Crown to engage in transactions with affiliates
that would violate applicable regulations.
If R&G Financial or R&G Acquisition violates either of the first
two covenants, or if R&G Acquisition incurs a loss of $100 million
or more (or the investors incur a loss in value of RAC of $20
million or more) as the result of violations of the last two
covenants (except, that with respect to the covenant on
transactions with affiliates, the monetary penalty only applies to
transactions where R&G Acquisition or its subsidiary improperly
purchases assets from an affiliate):
(a) the exercise price of the R&G Financial warrants declines
to $1.00 per warrant,
(b) the exercise price of each APRI declines from $10.00 to
$0.01, and
(c) R&G Financial and R&G Acquisition are required to use
commercially reasonable best efforts to sell R-G Crown.
Financial Stocks, Inc., which manages over $3 billion in assets
and specializes in investing in banks, thrifts, insurance
companies, REITs, real estate operating companies and specialty
finance companies, was the lead investor in the private placement.
Steve Stein, FSI's co-founder and its Chairman and Chief Executive
Officer, has been elected a member of the Board of Directors of
RAC and R-G Crown. Elliott Associates, L.P. was also a major
investor in the transaction. Elliott, along with a sister fund,
has more than $5.6 billion of capital under management and
provides private capital to both private and public firms
worldwide. Keefe Bruyette & Woods, Inc. served as placement agent
and R&G Financial's financial advisor in connection with the
private placement. KBW delivered an opinion to the RGF Board of
Directors in connection with the transaction. Patton Boggs LLP
served as RGF's counsel in connection with the private placement.
FSI was represented by Alston & Bird LLP and Elliott was
represented by Dechert LLP in this transaction.
CEO Comment
Mr. Victor Galan, RGF's Chairman and Chief Executive Officer,
commenting on the transaction, stated: "I am extremely gratified
at the significant demonstration of confidence in RGF and its
future prospects which has been shown by these investors. The
dollars raised in this offering will bolster our capital position
and those of our bank subsidiaries. The capital is intended to
serve as a bridge that will allow us to complete our financial
restatement process and get current in our public financial
reporting responsibilities, and will allow for reasonable balance
sheet growth through 2007, at which time we would hope to be able
to access the public capital markets at a more normalized
valuation."
Mr. Galan continued: "Our management team, along with outside
consultants, is working diligently to complete the restatement of
our consolidated financial statements for the years ended Dec. 31,
2002 through 2004. While no assurance can be given because there
are many factors beyond our control, we hope to be able to file
our Form 10-K/A for 2004 as early as possible during the summer of
2006. Our expectation and intention would be to begin to file our
2005 reports thereafter as expeditiously as possible. At the same
time, we are diligently working at strengthening our internal
controls and implementing changes that have been recommended by
outside consultants. We have also been making significant
progress negotiating the 'unwinding' of loan sale transactions we
previously engaged in with other Puerto Rico financial
institutions that have been recharacterized as secured borrowings.
We are optimistic that we will be able to resolve a significant
number of these transactions in the near future, which will
facilitate our ability to sell a substantial portion of such loans
to third party investors, thereby further strengthening our
capital position. All such 'unwinding' transactions will be
undertaken following the approval of our regulators."
Common Stock Dividend
The company also has indicated that its previous common stock
dividend of $0.09375, or $0.375 when annualized, per share, which
was paid on March 23, 2006, will be the last dividend paid on the
common stock until the company completes the restatement of its
audited financial statements and gets current in its public
reporting obligations for 2005 and 2006. With respect to the
March dividend, Mr. Galan again refused to accept any dividend on
his Class A shares of common stock, which thereby facilitated a
higher dividend payment to the Class B public stockholders than
would otherwise have been the case.
In taking such action, the Board of Directors at its March 29
Board meeting determined that it was prudent and appropriate to
suspend further dividend payments on the common stock to conserve
the Company's capital as it strives to complete its restatement
and public reporting obligations.
Finally, the company indicated that pursuant to its outstanding
regulatory orders with the federal government and the Commonwealth
of Puerto Rico, it had requested and received permission to pay
its dividend obligations for April on its four outstanding series
of preferred stock and four of its trust preferred securities
issues that have payments due in April.
Headquartered in Hato Rey, Puerto Rico, R&G Financial Corporation
-- http://www.rgonline.com/-- is a diversified financial holding
company with operations in Puerto Rico and the United States,
providing banking, mortgage banking, investments, consumer finance
and insurance through its wholly owned subsidiaries R-G Premier,
R-G Crown, its Florida-based federal savings bank, R&G Mortgage
Corporation, Puerto Rico's second largest mortgage banker,
Mortgage Store of Puerto Rico, Inc., a subsidiary of R&G Mortgage,
R-G Investments Corporation, the Company's Puerto Rico broker-
dealer, and R-G Insurance Corporation, its Puerto Rico insurance
agency. At Dec. 31, 2005, the Company operated 34 bank branches
in Puerto Rico, 33 bank branches in the Orlando, Tampa/St.
Petersburg and Jacksonville, Florida and Augusta, Georgia markets,
and 63 mortgage offices in Puerto Rico, including 32 facilities
located within R-G Premier's banking branches.
* * *
As reported by the Troubled Company Reporter on March 22, 2006,
Fitch Ratings keeps R&G Financial Corporation's BB Preferred Stock
rating on Watch Negative.
REPUBLIC STORAGE: Section 341(a) Meeting Scheduled for May 11
-------------------------------------------------------------
The U.S. Trustee for Region 9 will convene a meeting of Republic
Storage Systems Company, Inc.'s creditors at 10:30 p.m., on
May 11, 2006, at Frank T. Bow Federal Building, 201 Cleveland
Avenue Southwest, Basement B-13 in Canton, Ohio. This is the
first meeting of creditors required under 11 U.S.C. Sec. 341(a) in
all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
Headquartered in Canton, Ohio, Republic Storage Systems Company,
Inc. -- http://www.republicstorage.com/-- an employee-owned firm,
manufactures industrial and commercial shelving, storage rack,
mezzanine systems and shop equipment. The Company filed for
Chapter 11 protection on March 14, 2006, (Bankr. N.D. Ohio Case
No. 06-60316). James Michael Lawniczak, Esq., at Calfee, Balter &
Griswold, LLP, 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.
REPUBLIC STORAGE: Wants Calfee Halter as Bankruptcy Counsel
-----------------------------------------------------------
Republic Storage Systems Company, Inc., asks the U.S. Bankruptcy
Court for the Northern District of Ohio for permission to employ
Calfee Halter & Griswold L.L.P. as its bankruptcy counsel.
Calfee Halter will:
(a) advise the Debtor with respect to its powers and duties as
debtor-in-possession in the continued management and
operation of its business and properties, including the
rights and remedies of the Debtor with respect to its
assets and with respect to the claims of creditors;
(b) attend meetings and negotiate with representatives of
creditors and other parties in interest and advise and
consult on the conduct of these chapter 11 cases,
including all of the legal and administrative requirements
of operating in chapter 11;
(c) assist the Debtor with the preparation of its Schedules of
Assets and Liabilities and Statements of Financial
Affairs;
(d) advise the Debtor in connection with any contemplated
sales of assets or business combinations, including
negotiating agreements, formulating and implementing
appropriate procedures with respect to the closing of any
such transactions, and counseling the Debtor in connection
with such transactions;
(e) advise the Debtor in connection with any necessary post-
petition financing arrangements and negotiate and draft
documents relating thereto;
(f) advise the Debtor on matters relating to the evaluation of
the assumption, rejection or assignment of unexpired
leases and executory contracts;
(g) advise the Debtor with respect to legal issues arising in
or relating to the Debtor's ordinary course of business,
including attending senior management meetings, meetings
with the Debtor's financial and turnaround advisors and
meetings of the board of directors;
(h) take all necessary action to protect and preserve the
Debtor's estates, including the prosecution of actions on
its behalf, the defense of actions commenced against it,
negotiations concerning all litigation in which the Debtor
is involved and objecting to claims filed against the
Debtor's estates;
(i) prepare all motions, applications, answers, orders,
reports and papers necessary to the administration of the
estate;
(j) negotiate and prepare a plan or plans of reorganization,
disclosure statement and all related agreements and/or
documents and taking any necessary action on behalf of the
Debtor to obtain confirmation of such plan or plans, as
required;
(k) attend meetings with third parties and participate in
negotiations with respect to the above matters;
(l) appear before this Court, any appellate courts and protect
the interests of the Debtor's estates before such courts;
(m) perform all other necessary legal services and providing
all other necessary legal advice to the Debtor in
connection with this chapter 11 case, including but not
limited to environmental, labor, pension/employee
benefits, tax, corporate and intellectual property
matters; and
(n) perform all other necessary legal services and providing
all other necessary legal advice as requested by the
Debtor including but not limited to environmental, labor,
pension/employee benefits, tax, corporate and intellectual
property matters.
James M. Lawniczak, Esq., a member of Calfee Halter, tells the
Court that the Firm's associates bill between $155 to $260 per
hour and its partners bill between $260 and $480 per hour.
Mr. Lawniczak assures the Court that the Firm is "disinterested"
as that term is defined in Section 101(14) of the Bankruptcy Code.
Mr. Lawniczak can be reached at:
James M. Lawniczak, Esq.
Calfee Halter & Griswold L.L.P.
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114-2688
Tel: (216) 622-8200
Fax: (216) 241-0816
http://www.calfee.com/
About Republic Storage
Headquartered in Canton, Ohio, Republic Storage Systems Company,
Inc. -- http://www.republicstorage.com/-- an employee-owned firm,
manufactures industrial and commercial shelving, storage rack,
mezzanine systems and shop equipment. The Company filed for
Chapter 11 protection on March 14, 2006, (Bankr. N.D. Ohio Case
No. 06-60316). James Michael Lawniczak, Esq., at Calfee, Balter &
Griswold, LLP, 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.
SBA COMMS: Receives Senior Noteholder Consents to Amend Indenture
-----------------------------------------------------------------
SBA Communications Corporation (Nasdaq: SBAC), pursuant to its
cash tender offers and consent solicitations for any and all of
its 9-3/4% Senior Discount Notes due 2011, which were co-issued by
its wholly owned subsidiary, SBA Telecommunications, Inc., and its
8-1/2% Senior Notes due 2012, has received the consents necessary
to adopt certain proposed amendments to the indentures under which
the Notes were issued. The proposed amendments will eliminate
substantially all of the restrictive covenants and certain events
of default. Adoption of the proposed amendments requires the
consent of holders of at least a majority in aggregate principal
amount at maturity of the outstanding 9-3/4% Notes and outstanding
8-1/2% Notes.
The proposed amendments to the applicable indenture will become
operative when tendered Notes are accepted for payment, which is
expected to be promptly after the expiration of the Offers and
Consent Solicitations. The Offers and Consent Solicitations are
currently scheduled to expire at 12:00 midnight, New York City
time, on April 20, 2006, unless extended. Withdrawal rights with
respect to the Offers and Consent Solicitations expired
at 5:00 p.m., New York City time, on March 31, 2006.
The Offers and Consent Solicitations are subject to the
satisfaction of certain remaining conditions, including:
(1) the consummation of the acquisition of 100% of the common
stock of AAT Communications Corp. and
(2) the consummation of the required financing, as well as
other customary conditions.
The terms of the Offers and Consent Solicitations are described in
the Offer to Purchase and Consent Solicitation Statement dated
March 20, 2006 and the related Consent and Letter of Transmittal,
copies of which may be obtained from D.F. King & Co., Inc.
SBA has engaged Deutsche Bank Securities Inc. and J.P. Morgan
Securities Inc. to act as joint dealer managers and solicitation
agents in connection with the Offers and Consent Solicitations.
Questions regarding the Offers and Consent Solicitations may be
directed to:
Deutsche Bank Securities Inc.
Attn: Alexandra Barth
High Yield Capital Markets
Telephone (212) 250-5655
or
J.P. Morgan Securities Inc.
Liability Management Group
Telephone (866) 834-4666
Requests for documentation may be directed to the information
agent for the Offers and Consent Solicitations:
D.F. King & Co., Inc.
Telephone (212) 269-5550 (for Banks and Brokers)
Toll-Free (800) 431-9645
Based in Boca Raton, Florida, SBA Communications Corporation --
http://www.sbasite.com/-- is an independent owner and operator of
wireless communications infrastructure in the United States. SBA
generates revenue from two primary businesses -- site leasing and
site development services. The primary focus of the Company is
the leasing of antenna space on its multi-tenant towers to a
variety of wireless service providers under long-term lease
contracts. Since it was founded in 1989, SBA has participated in
the development of over 25,000 antenna sites in the United States.
At Dec. 31, 2005, SBA Communications Corporation's balance sheet
showed a $81,431,000 positive stockholders' equity compared to a
$88,671,000 deficit at Dec. 31, 2004.
* * *
As reported in the Troubled Company Reporter on March 21, 2006,
Standard & Poor's Ratings Services affirmed the ratings on
Boca Raton, Florida-based wireless tower operator SBA
Communications Corp., including its 'B+' corporate credit rating.
The outlook is stable.
At the same time, Standard & Poor's placed the ratings of
St. Louis, Missouri-based wireless tower operator AAT
Communications Corp. on CreditWatch with negative implications,
including its 'BB-' corporate credit rating.
SEMGROUP LP: $800 Million Acquisition Cues Moody's Rating Review
----------------------------------------------------------------
Moody's placed SemGroup, L.P.'s ratings on review for downgrade
upon its announced acquisition of TransMontaigne, Inc., for
approximately $800 million in cash, including assumed debt,
working capital funding needed, and fees. Moody's also placed
TMG's ratings under review with direction uncertain.
We estimate that TMG is generating in the range of $60 million of
normalized adjusted annual operating EBITDA, including
approximately $15 million at TMG's minority owned, though
controlled, master limited partnership TransMontaigne Partners,
L.P. TMG is TLP's managing general partner and largest common
unit holder, holding TLP's 2% general partner interest and 39% of
TLP's common units. TMG has been incurring in the range of $26
million to $28 million of interest expense per year.
Moody's anticipates that the acquisition will be funded with a
combination of senior unsecured notes, working capital secured
bank borrowings, and secured term bank borrowings. Absent
substantial common equity funding, it is likely SemGroup's ratings
would be downgraded upon our near-term evaluation of the pro-forma
business, capital, and liquidity structures. TMG's ratings may be
confirmed or possibly downgraded upon final review. For
SemGroup's ratings to be confirmed, it would need to decide to add
substantial common equity funding to the overall acquisition
funding package For TMG's ratings to be upgraded, SemGroup would
need to both raise additional common equity and assume TMG's debt.
Absent SemGroup support of rated TMG debt, that debt could be
downgraded if SemGroup's debt is downgraded.
Debt ratings affected by the review for downgrade are SemGroup's
Ba3 corporate family rating, B1 senior unsecured note rating;
SemCrude L.P.'s Ba3 senior secured term loan, Ba3 senior secured
bank revolver, and Ba2 senior working capital secured bank
revolver; and Canadian subsidiary SemCams L.P.'s senior secured
term loan. TMG ratings affected include its B1 corporate family
rating and B3 senior subordinated note rating.
SemGroup believes that TMG's refined petroleum products storage
terminaling and marketing business fits well as an important
expansion, in terms of assets, regional and local markets, and
geographic expanse, of its SemFuels refined products storage and
marketing business. TMG operates refined product storage
terminals and other logistics assets located principally along the
south-to-north Plantation and Colonial refined product pipelines.
In addition to elevated post-acquisition long-term debt leverage,
both SemGroup and TMG operate large refined products marketing
businesses requiring substantial bank working capital facilities.
SemGroup also operates a very large crude oil marketing business,
and other hydrocarbon marketing businesses, that also require
large working capital facilities.
In Moody's view, the elevated pro-forma long-term debt leverage,
plus the merged business's need for large bank facilities to
support the marketing business, reinforce the importance of
substantial common equity funding to ensure market confidence and
SemGroup's access to working capital liquidity and support to
conduct the marketing business. Moody's also notes that a
significant proportion of SemGroup's pro-forma pipeline and
storage throughput volumes are generated by itself in its pro-
active middleman hydrocarbon sourcing and marketing activity, both
as principal and agent.
Assuming an all debt, no common equity scenario, Moody's estimates
SemGroup's initial pro-forma Debt/Capitalization to be in the
range of 75%, total outstanding debt to be in the $2 billion
range, and pro-forma book equity in the range of $500 million.
Consolidated proforma total debt to pro-forma LTM EBITDA appears
to be in the 4.5 to 5.25 times range and proforma interest
coverage is anticipated to be in the range of 2.5 to 3.0 times.
We anticipate that pro-forma consolidated adjusted 2006 EBITDA
will be in the $375 million to $425 million range before hedging
gains and losses and before expected interest expense in the range
of $175 million. SemGroup faces the substantial managerial,
operating, and marketing challenges of successfully integrating
TMG's assets into its operating structure and conduct a far larger
refined products marketing business than it has in the past.
SemGroup is engaged in the midstream crude oil, refined product,
natural gas liquids, and natural gas sector functions that
facilitate the flow of hydrocarbons from the Gulf Coast and Mid-
Continent into the crude oil and refined product-short Midwest
regions. It also conducts a refined products storage,
terminaling, and marketing business in the United Kingdom through
its recently acquired Milford Haven business for $142 million from
Petroplus. It also operates a large asphalt distribution and
marketing business.
SemGroup engages in:
(1) crude oil gathering, marketing, terminaling, and storage
in owned and third party pipelines and above ground
storage terminals;
(2) marketing and storage of NGL's;
(3) the gathering, processing, and marketing of natural gas;
and
(4) the purchasing, marketing, and storage of asphalt cement,
emulsions, and polymers.
Its policies require all positions to be fully hedged, physically
or with exchange traded or over-the-counter futures and options,
until sold.
SemGroup moves an average of 620,000 barrels of crude oil per day,
markets over 225,000 barrels of refined products and 130,000
barrels of NGL's per day, and is one of the largest asphalt
marketers in North America. It is constructing roughly 11 bcf of
natural gas storage capacity, handles roughly 664 mmbtu per day of
natural gas, and markets roughly 369 mmbtu per day of physical
natural gas and natural gas hedging.
SemGroup buys, and simultaneously sells or hedges, crude oil from
producers or in wholesale bulk purchases; it physically gathers
and moves crude oil purchased in the Mid-Continent and Gulf Coast
producing regions, and from Gulf Coast import terminals, to its
Mid-Continent and Midwest storage terminals; it blends it
according to refiner need; and delivers it to refining customers.
It is adding another 2 million barrels of storage capacity at the
key Cushing, Oklahoma crude oil transportation and storage hub.
SemGroup also acts as a gatherer, aggregator, marketer, storage
operator, and hedged trader of NGL's, condensate, and crude oil,
supplying those commodities principally to Mid-Continent
refiners/processors. It has large storage capacity at the key
Conway, Kansas NGL storage hub. It acts as a natural gas gatherer
and processor, generating a portion of its NGL stream. Downstream
from the refiner/processor, it acts as aggregator, hedged trader,
and distributor of natural gas liquids, condensate, light refined
products, heavy refined products, and asphalt.
SemGroup, L.P. is headquartered in Tulsa, Oklahoma.
SERVICE CORPORATION: S&P Puts BB Corp. Credit Rating on Neg. Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on funeral
home and cemetery operator Service Corporation International,
including its 'BB' corporate credit ratings, on CreditWatch with
negative implications.
Service Corp. announced an agreement to acquire Alderwoods Group
Inc. (BB-/Watch Neg/--) in a transaction valued at about $1.2
billion, including the assumption of Alderwoods debt. The
transaction is expected to close by the end of 2006.
If completed, Service Corp.'s revenue base would increase to about
$2.5 billion from $1.7 billion, and it would broaden its
geographic presence. Service Corp.'s larger revenue base would be
5x larger than the next largest deathcare company, Stewart
Enterprises (BB/Negative/--).
However, the acquisition price, based on Alderwood's EBITDA, is
very high at 11.7x. Service Corp. expects significant cost
savings, including synergies to effectively reduce the acquisition
multiple to 7.2x.
"Permanent financing of $856 million of new debt is likely to
result in a weaker capital structure that could be consistent with
a lower rating," said Standard & Poor's credit analyst David
Peknay.
Standard & Poor's expects to review with management its business
strategy and financial plans relative to its willingness and
ability to restore its credit strength to a level consistent with
the current rating, given business risks and financial policy.
SND ELECTRONICS: Taps Neubert Pepe as Bankruptcy Counsel
--------------------------------------------------------
SND Electronics, Inc., asks the U.S. Bankruptcy Court for
the District of Connecticut for permission to employ Neubert,
Pepe & Monteith, P.C. as its bankruptcy counsel.
Neubert Pepe will:
a. advise the Debtor of its rights, powers, and duties as
debtor and debtor-in-possession continuing to operate and
manage the business and property;
b. advise the Debtor concerning, and assisting in the
negotiation and documentation of, financing agreements,
debt restructuring, and related transactions;
c. review the nature and validity of any liens asserted
against the property of the Debtor, and advising the Debtor
concerning the enforceability of such liens;
d. advise the Debtor concerning the action that might be taken
to collect and recover property for the benefit of the
Debtor's estate;
e. prepare on the Debtor's behalf necessary and appropriate
applications, motions, pleadings, draft orders, notices,
schedules, and other documents, and reviewing all financial
and other reports to be filed in the Debtor's chapter 11
case;
f. advise the Debtor concerning, and prepare responses to,
applications, motions, pleadings, notices, and other papers
which may be filed and served in the Debtor's chapter 11
case;
g. counsel the Debtor in connection with the formulation,
negotiation, and prosecution of a plan of reorganization
and related documents; and
h. perform all other services for and on behalf of the Debtor
which may be necessary or appropriate in the administration
of the chapter 11 case.
The Debtor tells the Court that the Firm will charge their
customary hourly rates for this engagement. Documents submitted
to the Court did not say how much those rates are. The Debtor
however disclosed that it has paid Neubert Pepe a $75,000
retainer.
Douglas S. Skalka, Esq., principal of Neubert Pepe, assures the
Court that the Firm is "disinterested" as that term is defined in
Section 101(14) of the Bankruptcy Code.
Headquartered in Greenwich, Connecticut, SND Electronics, Inc. --
http://www.snd.com/-- distributes electronic equipment for
computer and communications products. The company filed for
chapter 11 protection on Mar. 9, 2006 (Bankr. D. Conn. Case No.
06-30286). Douglas S. Skalka, Esq., at Neubert, Pepe, and
Monteith, P.C., represents the Debtor in its restructuring
efforts. As of Feb. 24, 2006, the Debtor reported assets totaling
$10,323,554 and debts totaling $12,703,812.
SND ELECTRONICS: Wants Until April 24 to File Schedules
-------------------------------------------------------
SND Electronics, Inc., asks the U.S. Bankruptcy Court for the
District of Connecticut to extend, until April 24, 2006, the
deadline to file its schedules of assets and liabilities and
statements of financial affairs.
The Debtor tells the Court that the commencement of the case was
necessitated on an emergency basis providing insufficient time to
undertake the process of assimilating the information necessary to
complete the Schedules and Statements during the time required
under Section 1007(c) of the Bankruptcy Rules;
Furthermore, the Debtor relates that in the early stages of its
case, it has been required to seek authority on an emergency basis
to, among other things, pay pre-petition employee wages and to
negotiate and to obtain authority to use cash collateral on an
interim basis. Finally, the Debtor says that its business records
are voluminous and complex in nature thus requiring additional
time to review for purposes of accurately completing the Schedules
and Statements.
The Debtor contends that these reasons provide "sufficient cause"
to warrant the extension.
Headquartered in Greenwich, Connecticut, SND Electronics, Inc. --
http://www.snd.com/-- distributes electronic equipment for
computer and communications products. The company filed for
chapter 11 protection on Mar. 9, 2006 (Bankr. D. Conn. Case No.
06-30286). Douglas S. Skalka, Esq., at Neubert, Pepe, and
Monteith, P.C., represents the Debtor in its restructuring
efforts. As of Feb. 24, 2006, the Debtor reported assets totaling
$10,323,554 and debts totaling $12,703,812.
STONE TOWER: Moody's Rates $16 Million Class D Notes at Ba2
-----------------------------------------------------------
Moody's Investors Service assigned ratings to these notes issued
by Stone Tower CLO IV Ltd.:
* Aaa to the $567,000,000 Class A-1 Floating Rate Notes Due
2018;
* Aa2 to the $42,500,000 Class A-2 Floating Rate Notes Due
2018;
* A2 to the $33,500,000 Class B Deferrable Floating Rate Notes
Due 2018;
* Baa2 to the $29,000,000 Class C-1 Floating Rate Notes Due
2018 and $2,000,000 Class C-2 Fixed Rate Notes Due 2018; and
* Ba2 to the $16,000,000 Class D Floating Rate Notes Due 2018.
In addition, Moody's assigned a Baa2 rating to the Class J Blended
Securities.
Proceeds from the issuance will be used to purchase a diversified
pool consisting primarily of U.S. Dollar denominated loans which
will be managed by Stone Tower Debt Advisors LLC.
According to Moody's, its ratings of the notes address the
ultimate cash receipt of all required interest and principal
payments, as provided by the notes' governing documents, and are
based on the expected loss posed to holders of the notes, relative
to the promise of receiving the present value of such payments.
The ratings reflect the risks due to the diminishment of cash flow
from the underlying portfolio due to defaults, the safety of the
transaction's legal structure and the characteristics of the
underlying assets.
STRUCTURED ASSET: Moody's Lowers Ratings on Three Cert. Classes
---------------------------------------------------------------
Moody's Investors Service completed its review of several
transaction issued by Structured Asset Securities Corporation. As
a result of this review, Moody's upgraded its ratings on one
certificate and downgraded its ratings on three certificates that
had been previously placed on review.
The transactions, issued in 2001 and 2002, are backed primarily by
first lien adjustable- and fixed-rate Jumbo/Alt-A and Subprime
mortgage loans. The upgrade is based on stronger than anticipated
loan performance and current credit enhancement level provided by
subordination relative to projected loss.
Class B of Structured Asset Securities Corp 2002-HF1 and the two
most subordinate classes of Structured Asset Securities Corp 2002-
BC1 transactions have been downgraded based on existing credit
enhancement levels being low given the current projected losses on
the underlying pool. Structured Asset Securities Corp 2002-BC1
transaction has recently stepped down, and the most subordinate
class has received a significant amount of principal, causing a
decline in credit enhancement levels for the other classes of this
transaction. Furthermore, high severities on the liquidated
properties have caused overcollateralization to decline, which
prompted Moody's to revise its ratings on the most subordinate
class of Structured Asset Securities Corp 2002-BC1 securitization.
Moody's complete rating actions are:
Upgrade:
Issuer: Structured Asset Securities Corporation
* Series 2001-6; Class B3, upgraded from Baa3 to Baa1
Downgrade:
Issuer: Structured Asset Securities Corporation
* Series 2002-BC1; Class M3, downgraded from Baa3 to Ba1
* Series 2002-BC1; Class B, downgraded from Baa3 to B1
* Series 2002-HF1; Class B, downgraded from Ba1 to B1
TARRANT COUNTY: Moody's Junks B3 Rating on Housing Revenue Bonds
----------------------------------------------------------------
Moody's Investors Service downgraded to Caa1 from B3 the
underlying rating on Tarrant County Housing Finance Corporation's
Multifamily Housing Revenue Bonds Senior Series 2001A. The senior
series bonds continue to be MBIA insured and carry a Aaa insured
rating. At this time Moody's also affirms the C rating on the
Subordinate Series 2001C bonds. The outlook on all tranches of
debt remains negative. This rating downgrade is based on
continued taps to senior debt service, a sustained trend of
occupancy deterioration, and the complete depletion of repair for
replacement reserves.
Legal Security: Special obligation of the issuer. Bonds are
secured by rental revenue and any funds pledged to bondholders
under the trust indenture.
Recent Developments: In order to fund the Dec. 1, 2005 debt
service payment of principal and interest, a $260,000 withdrawal
was made from senior reserves. The remaining senior reserve fund
balance is currently $558,400. Moody's expects that this will
cover any shortfall for Crossroad's June 2006 interest payment to
bondholders; however, if monies are not replenished -- as they
have not been since the first withdrawal in 2003 -- Moody's is not
confident that funds will be sufficient to fully support the
December 2006 principal and interest payment. The subordinate
series C reserve fund continues to carry a balance of $1,020.
Strengths:
* According to the property manager, The Lynd Company, a
February influx of cash receipts has helped to alleviate the
property's immediate cash flow difficulties, allowing for
payment of some overdue payables and some investment in
deferred maintenance.
* The Lynd Company is experienced in property management and
seems to be very aware of difficulties at the property.
Management has also been exceedingly responsive to Moody's
requests for project information, allowing us access to
regular unaudited operating statements. Moody's believes
that Lynd's strong management skill will be an important
factor in helping to improve the financial condition of the
project, to the extent that other fundamental conditions
also improve.
Challenges:
* Physical occupancy reached a significant low of 72% in
February 2006, compared to a rate of 78% in February 2005.
According to management, vacancy has worsened due to the Ft.
Worth city government's relocation of some Section 8
voucher-eligible tenants. Upon city inspectors' recent
visit to the property, building code violations such as
peeling paint, damaged gutters, and the de-lamination of the
meter room door were cited. The city housing authority was
obliged to relocate tenants to other area affordable housing
units, thus leading to a spiral effect of increased
vacancies at Crossroads. Per our recent conversations with
management, these violations were remedied in February and
March, and management expects that the vacancy loss will
soon be lessened.
* The decline of rental and investment income coupled with
stable to slightly increasing expenses has led to an almost
exponential negative effect on net operating income, and
thus a severe erosion of the debt service coverage ratio.
Based on one-month numbers, February 2006 NOI is 50% less
than February 2005 NOI. For the same period, considering a
one-month debt service coverage requirement, February 2006
reflects a coverage ratio of only .46 for the senior
tranche, while the same calculation for February 2005
delivered a ratio of .92.
* Repair for replacement reserve has been completely depleted
and carries a balance of $10.41 as of February 28, 2006.
According to Lynd, due to this shortfall, capital repairs
have had to be funded from operating income, further adding
to the property's financial distress.
Moody's will continue to monitor Crossroad's financial position
through review of audited and intermediate statements as well as
discussion with the trustee and management. As the ratings
indicate, the bonds offer poor financial security, with revenue
and associated obligation not well safeguarded in the future.
Moody's will continue to monitor Crossroad's financial position
through review of audited and intermediate statements as well as
discussion with the trustee and management. As the ratings
indicate, the bonds offer poor financial security, with revenue
and associated obligation not well safeguarded in the future.
Outlook: The outlook on the bonds continues to be negative, as
evidenced by sustained deterioration of the property's financial
condition.
What could change the rating up -- Clear signs of significant
financial recovery, such as greatly improved NOI and DSCR.
What could change the rating down -- Further draw on senior
reserves such that complete payments to bondholders cannot be
made.
TENNECO INC: S&P Upgrades Rating to BB- With Stable Outlook
-----------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on Lake
Forest, Illinois-based auto supplier Tenneco Inc., including the
corporate credit rating on the company, which was raised to 'BB-'.
The ratings were also removed from CreditWatch with positive
implications, where they were placed Jan. 30, 2006, (except for
the recovery ratings on the company's senior secured debt, which
were not on CreditWatch).
The outlook is stable. At Dec. 31, 2005, the company had $1.4
billion in balance-sheet debt.
"The upgrade reflects our view that Tenneco's recent performance
in a very difficult environment for auto suppliers supports a
higher rating, as do the company's business and financial
prospects for 2006 and beyond," said Standard & Poor's credit
analyst Robert Schulz.
Despite the difficult environment, Tenneco's credit measures
improved in 2005 as the company benefited from:
* the good diversity among its customers;
* business platforms; and
* regions of operation.
However, it is still exposed to the production problems of its
large customers General Motors Corp. (GM; B/Watch Neg/B-3) and
Ford Motor Co. (BB-/Negative/B-2) (though less so than many other
auto suppliers). Another risk factor is that potential near-term
work stoppages at auto supply companies Delphi Corp. or Tower
Automotive Corp. could affect the entire industry.
Credit measures are expected to only gradually improve during
2006. However, they could strengthen further over the next couple
of years with expected earnings improvement in 2007, when new
business is expected to emerge with changing emissions standards
in vehicles.
The company's business profile is considered weak, as Tenneco is
exposed to highly competitive and cyclical automotive markets that
partially negate the benefits of its strong market positions.
Tenneco is a leading global supplier of emissions control and
ride-control products to the challenging automotive original
equipment market and aftermarket. Its direct sales to automakers,
spread across more than 200 automotive platforms, make up about
75% of its revenues, while aftermarket sales contribute 25%.
About 46% of sales are generated in North America and 46% in the
European segment.
The company should see more favorable growth prospects as stricter
emission control rules come into effect. There will also be
demand for improved vehicle stability. And the company should
further benefit from its growing share in commercial vehicle
markets and from the expected long-term growth of the Chinese
automotive market. All these growth factors should somewhat
alleviate the company's difficulties with important customers
General Motors and Ford, who suffered weak production schedules in
North America in 2005.
TERAYON COMMUNICATION: Delisted from Nasdaq Market on April 4
-------------------------------------------------------------
The NASDAQ Listing Qualifications Panel de-listed Terayon
Communication Systems, Inc.'s (Nasdaq: TERNE) securities from The
NASDAQ National Market on April 4, 2006.
As previously reported in the Troubled Company Reporter on March
3, 2006, the Company had communicated to the Panel that it would
not be able to restate its financial statements for:
(a) the fiscal year ended Dec. 31, 2004,
(b) the four quarters of fiscal 2004 and
(c) the first two quarters of fiscal 2005 by the March 31, 2006
deadline set by the Panel,
nor would Terayon be able to file:
(a) its Quarterly Report on Form 10-Q for the quarter ended
Sept. 30, 2005,
(b) its Annual Report on Form 10-K for the fiscal year ended
Dec. 31, 2005, or
(c) the proxy statement for the 2005 annual shareholders'
meeting by the deadline.
"Terayon is committed to regaining compliance with all SEC
reporting requirements in a timely manner," Jerry Chase, Terayon's
CEO, said. "We continue to work diligently to resolve our
accounting issues and complete and file our financial reports.
Other than our ongoing operating leases, we are debt-free with
sufficient cash, and our management team remains focused on the
business, managing daily operations, executing against our plans
and delivering to our customers' requirements."
Terayon expects that quotations for its common stock will appear
in the Pink Sheets, and effective with the move to the Pink
Sheets, Terayon expects that its trading symbol will be TERN.PK.
Terayon intends to appeal the Panel's decision to the NASDAQ
Listing and Hearing Review Council; however, this appeal will not
stay the ruling of the Panel. There can be no assurances that the
Review Council will grant Terayon's appeal.
About Pink Sheets LLC
Based in New York City, Pink Sheets -- http://www.pinksheets.com/
-- is a privately owned company that provides broker-dealers,
issuers and investors with electronic and print products and
information services designed to improve the transparency of the
Over-the-Counter markets. The products are designed to increase
the efficiency of OTC markets, leading to greater liquidity and
investor interest in OTC securities. Pink Sheets centralized
information network is a source of competitive market maker
quotations, historical prices and corporate information about OTC
issues and issuers. Pink Sheets is neither an SEC-Registered
Stock Exchange nor a NASD Broker/Dealer. Investors must contact a
NASD Broker/Dealer to trade in a security quoted on the Pink
Sheets.
About Terayon
Based in Santa Clara, Calif., Terayon Communication Systems, Inc.
-- http://www.terayon.com/-- provides real-time digital video
networking applications to cable, satellite and telecommunication
service providers worldwide, which have deployed more than 6,000
of Terayon's digital video systems to localize services and
advertising on-demand and brand their programming, insert millions
of digital ads, offer HDTV and other digital video services.
* * *
Nasdaq Delisting
As reported in the Troubled Company Reporter on March 3, 2006, the
filing of the Company's Form 10-Q for the quarter ended Sept. 30,
2005 will be further delayed pending the completion of the
restated consolidated historical financial statements. Because of
the delay in filing the Form 10-Q, the Company is not in
compliance with The Nasdaq Stock Market's continued listing
requirement set forth in Nasdaq Marketplace Rule 4310(c)(14).
As previously disclosed, the Company received letters from The
Nasdaq Stock Market dated Nov. 17, 2005 and Jan. 4, 2006 regarding
the Company's failure to file its Form 10-Q for the quarter ended
Sept. 30, 2005, and its failure to solicit proxies and hold an
annual meeting of shareholders on or before Dec. 31, 2005.
On Jan. 17, 2006, a NASDAQ Listing Qualifications Panel agreed to
continue the listing of the Company's common stock on The Nasdaq
National Market subject to three conditions:
(1) on or before Jan. 31, 2006, the Company was required to
provide NASDAQ with certain information related to the
Audit Committee's inquiry;
(2) on or before March 31, 2006, the Company must file the
Form 10-Q for the quarter ended Sept. 30, 2005 and all
required restatements;
(3) on or before March 31, 2006, the Company must file the
proxy statement for the 2005 annual meeting, with a record
date set and a meeting to be held as soon thereafter as
possible.
While the Company provided NASDAQ with a response to questions
relating to the internal accounting review on Jan. 31, 2006 and
is making every effort to comply with the remaining requirements,
there can be no assurance that the Company will be able to do so
within the Panel's deadlines, or that the Company's common stock
will continue to be listed on the Nasdaq National Market.
Notice of Default
The Company engaged a financial advisor, Chanin Capital Partners,
to explore alternatives with respect to restructuring its
outstanding 5% Convertible Subordinated Notes due 2007. The Notes
currently outstanding have an aggregate principal amount of $65
million. As previously reported, on Jan. 12, 2006, the Company
received a letter from holders of more than 25% in aggregate
principal amount of Notes outstanding providing written notice to
the Company that it is in default based on the Company's failure
to file its Form 10-Q for the quarter ended Sept. 30, 2005. If
the default is not cured
within 60 days of this notice, March 13, 2006, an event of default
will occur and the trustee or holders of at least 25% in aggregate
principal amount of the Notes then outstanding, upon notice to the
Company, may accelerate the maturity of the Notes and declare the
entire principal amount of the Notes, together with all accrued
and unpaid interest thereon, to be due and payable immediately.
TEXAS STATE: Foreclosure Sale Cues Moody's to Junk Bond Ratings
---------------------------------------------------------------
Moody's Investors Service downgraded the ratings of Texas State
Affordable Housing Corporation Multifamily Housing Revenue Bonds
Series 2001A to Caa1 from B2, and Subordinate Series 2001C to Ca
from Caa1. The Series 2001B bonds matured on May 1, 2002 and no
longer carry Moody's rating.
The downgrades on Series 2001A and Subordinate Series 2001C bonds
reflect the pending foreclosure sale of the properties scheduled
for April 4, 2006 and the uncertainty that bondholders will
recover the full principal on the bonds with the proceeds from the
sale. The outlook on the bonds is developing to reflect such
uncertainty. As of Feb. 7, 2006, $4,860,977.50 is available in
the Series 2001A debt service reserve fund and $195,416.58 is
available in the Subordinate Series 2001C debt service reserve
fund representing a deficit of $140,022.50 and $401,683.42,
respectively. The Series 2001A reserve fund, if tapped, is
sufficient to pay debt service on May 1, 2006 while the
Subordinate Series 2001C reserve fund is not.
Credit Strength: The current trustee is experienced in distressed
projects and has determined that it is in the best interest of
bondholders to proceed with the foreclosure sale on April 4, 2006
at the direction of the majority of bondholders
Credit Challenge: Distribution of funds to bondholders as a result
of the foreclosure sale is expected to take place within a couple
of weeks following April 4, 2006, thus it is unlikely that
bondholders will receive regular debt service payment scheduled
for May 1, 2006
Recent Developments/Results: Since Moody's August 2005 rating
actions, the trustee was able pay Nov. 1, 2005 debt service
payment for Series 2001A with revenues generated from the
projects; however it was necessary to transfer moneys from the
Subordinate Series 2001C bond debt service reserve fund to make
the full payment for the subordinated bonds. Following notices to
the borrower, the trustee reports that the debt service reserve
funds remain underfunded and unreplenished since they were first
tapped for the May 1, 2005 debt payments. The ongoing erosion of
debt service coverage levels since October 2003 and the necessary
taps on the debt service reserve funds last May are direct results
of the declines in rental revenues generated by the three
properties. Based on unaudited financial statements as of Nov.
30, 2005 and annualized projections on the properties, debt
service coverage ratios remain below 1x for both series of bonds.
Failure on the part of the borrower to maintain a debt service
coverage ratio requirement of 1.10x and the borrower's failure to
initiate facilities operations review by a management consultant
constitute defaults under the loan agreement. The failure on the
part of the borrower to replenish the bond debt service reserve
funds is also an event of default under the loan agreement. Each
event of default under the loan agreement is also an event of
default under the trust indenture. The trustee accelerated the
bonds on Feb. 7, 2006 and will proceed with the foreclosure sale
of the properties scheduled for April 4, 2006, both at the
direction of the majority of bondholders.
Outlook:
The outlook for the bonds is developing, reflecting the
uncertainty that bondholders will recover the full principal on
the bonds with the proceeds from the sale.
TIG HOLDINGS: S&P Removes BB- Rating from Negative CreditWatch
--------------------------------------------------------------
Standard & Poor's Ratings Services removed its 'BB' counterparty
credit ratings on Fairfax Financial Holdings Ltd. and Crum &
Forster Holdings Corp. from CreditWatch negative and affirmed the
ratings.
At the same time, Standard & Poor's removed its 'BB-' counterparty
credit rating on TIG Holdings Inc. from CreditWatch negative and
affirmed the ratings.
Also, Standard & Poor's revised its outlook on Fairfax Financial
Holdings Ltd.'s (FFH) ongoing operating insurance companies
(collectively, Fairfax) to stable from positive and affirmed its
'BBB' counterparty credit and financial strength ratings on the
companies.
The outlook on all these companies is stable.
These holding company ratings were placed on CreditWatch negative
in response to the announcement by FFH on March 16, 2006, that it
would delay filing its 2005 annual report. The delay was caused
by the announcement by its 80%-owned affiliate, Odyssey Re
Holdings Corp. (NYSE:ORH), that it filed notice with the SEC that
Odyssey Re would delay the filing of its 2005 annual 10-K report.
On March 31, 2006, FFH and Odyssey Re both filed year-end 2005
results, with the cumulative impact of the restatement through
Sept. 30, 2005, being a decrease to shareholders' equity of $35.6
million at Odyssey Re. There was no impact to FFH's financial
statements, and the company's year-end 2005 figures remain as
published on Feb. 9, 2006.
"The ratings on FFH are based on its improving competitive
position, strong consolidated capitalization (even after
adjustments for finite reinsurance), and improved financial
flexibility," explained Standard & Poor's credit analyst Damien
Magarelli. "Offsetting these positive factors are reserves, which
though not an immediate concern, have frequently been strengthened
and might require some further modest charges; some very poor
acquisitions and sizeable reserve charges for which FFH has
utilized finite reinsurance; and debt to support operating company
obligations, resulting in high debt leverage."
Lastly, FFH's consolidated underwriting performance in 2005 after
including hurricane losses was a 108% combined ratio, but the
company's net loss of $498 million, largely driven by pretax
losses ($178 million) at Odyssey Re Holdings and runoff ($642
million) remain inconsistent with a positive outlook.
A positive outlook might be warranted based on year-end 2006
financial statements, should earnings improve and produce a
sizeable net profit. Earnings should also no longer be dependant
on realized capital gains, net investment income, or be reduced
significantly by runoff segment losses to support a positive
outlook. The outlook could be changed to negative:
* if earnings do not improve in 2006;
* if there is significant turnover in management;
* if there is significant regulatory adverse development;
* if reserves develop adversely;
* if there are significant one-off runoff segment charges; or
* if holding company cash is not maintained near $300 million.
TRUEYOU.COM: Equity Deficit Doubles to $53 Mil. in Past Six Months
------------------------------------------------------------------
TrueYou.Com, Inc., delivered its quarterly report on Form 10-Q for
the quarter ending December 31, 2005, to the Securities and
Exchange Commission on February 31, 2006.
The Company reported $14,967,000 net loss on $15,318,000 of
net revenues for the quarter ending December 31, 2005. At
December 31, 2005, the Company's balance sheet shows $52,950,000
in total assets and $106,188,000 in total debts. As of
December 31, 2005, the Company's equity deficit widened to
$53,238,000 from a $24,157,000 equity deficit at June 30, 2005.
The Company's management expressed substantial doubt about the
Company's ability to continue as a going concern pointing to the
its large operating losses, negative cash flow from operations,
and working capital deficit. As of December 31, 2005, the Company
reported a $2,169,000 working capital deficit and $11,797,000
negative cash flow from operations. The Company says its ability
to continue as a growing concern ultimately depends on its ability
to increase sales and reduce expenses to a level that will allow
it to operate profitably and sustain positive operating cash
flows.
A full-text copy of the company's latest quarterly report is
available at no charge at http://ResearchArchives.com/t/s?75e
TrueYou.Com, Inc., develops, acquires and publishes self-
improvement information: Web-based and direct-to-direct personal,
potential, and professional development programs designed for
businesses.
TSA STORES: $1.34 Billion Buyout Deal Cues Moody's Low-B Ratings
----------------------------------------------------------------
Moody's Investors Service assigned a B2 corporate family rating to
TSA Stores, Inc., and a B1 rating to the $225 million senior
secured term loan B. This is the first time that Moody's has
rated the debt of TSA Stores, Inc., a wholly owned direct
subsidiary of The Sports Authority, Inc. The rating outlook is
stable.
First-time ratings assigned:
* Corporate family at B2; and
* $225 million senior secured term loan B maturing
April 2013 at B1.
The outlook is stable.
The ratings take into account The Sports Authority, Inc.'s
agreement to be taken private in a leveraged buyout by affiliates
of Leonard Green & Partners in a transaction valued at
approximately $1.34 billion. The financing structure for the
transaction will consist at the TSA level of draws totaling $320
million under an unrated senior secured $750 million asset-based
revolving bank credit facility, $225 million in the B1 rated
senior secured term loan B, $350 million in unrated senior
subordinated notes, and $438 million in equity contributed by
Leonard Green, representing roughly 33% of the total transaction.
The transaction value represents a multiple of roughly 7.2 times
reported EBITDA for the fiscal year ended Jan. 28, 2006. Using
Moody's standard analytic adjustments funded leverage would be
6.5x, with a fully-drawn revolver increasing this to 7.32x.
Ratings are restrained by the limited levels of free cash flow
that are expected to be generated over the next two years.
The Sports Authority is the result of the combination of the
legacy The Sports Authority and Gart Sports, along with the
Sportmart banner. It currently operates a total of 398 stores in
45 states, and is the number two retailer in terms of sales of
sporting goods in the U.S. behind Dicks Sporting Goods, carrying a
broad assortment of brands including Nike, The North Face, Under
Armour, and Columbia Sportswear.
The stable outlook reflects The Sports Authority's solid position
in the retail sporting goods segment, as well as Moody's
expectation that the business will continue to run smoothly during
the expected transitions that need to occur, i.e., continued
systems and distribution integrations, as well as the re-badging
of the Gart and Sportmart stores to The Sports Authority banner.
The B1 rating of the $225 million senior secured term loan B
recognizes its senior position in the capital structure with the
unrated $750 million asset based revolver, balanced by its
inferior collateral position in the form of a second lien on
accounts receivable and inventory, but a first lien on all other
assets including the trademark. While hard asset collateral
coverage is somewhat marginal, likely resulting in an enterprise-
value based recovery, there is a substantial amount of junior
capital beneath this level of debt.
At present revolver levels, a multiple of 3.1x would be required
to fully repay both the unrated revolver and the term loan B.
Assuming a fully-drawn revolver, an enterprise value multiple of
5.2x would be required for full repayment given no change in the
current EBITDA level, which seems reasonable given the current
strength of the brand and franchise. The term loan B is
guaranteed by all current and future direct and indirect
subsidiaries, as well as by its parent, The Sports Authority, Inc.
The contractual term loan amortization is nominal at 1% per year,
with a bullet at maturity; however, there is a 75% excess cash
flow sweep with step downs.
Prospectively, upward rating pressure would occur once The Sports
Authority begins generating free cash flow in excess of 5% of
debt, and Debt/EBITDA reduces below 5x on a sustainable basis.
Conversely, if free cash flow to debt remains negative for an
extended period, or if debt/EBITDA does not reduce to below 6.5x
by fiscal year end January 2007, downward rating pressure would be
generated.
The Sports Authority, Inc., headquartered in Englewood, Colorado,
is a leading retailer of sporting goods in the United States, with
398 stores in 45 states.
UAL CORP: Settling U.S. Bank Aircraft Funding Dispute for $21.78M
-----------------------------------------------------------------
UAL Corporation and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Northern District of Illinois to approve settlements
with U.S. Bank National Association.
David A. Agay, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, relates that prior to the Debtors' bankruptcy filing,
they entered into a financial transaction with respect to an
aircraft bearing tail number N368UA under which U.S. Bank acts as
indenture trustee.
U.S. Bank filed Claim No. 33777, which asserted claims for all
rent and other sums that may be due and payable under the lease
and financing documents relating to the Aircraft. Claim No.
33777 was subsequently amended by Claim No. 43408.
The Debtors and U.S. Bank entered into a term sheet that
contemplated the restructuring of the Lease. In accordance with
the Term Sheet, the parties agreed that U.S. Bank's claims
related to the Aircraft will be consolidated as Claim No. 43408
and allowed as a prepetition, general unsecured claim for
$78,404,000.
U.S. Bank also filed Claim No. 35496 against the Debtors, which
asserted a contingent lease rejection claim related to the
Financing Transaction.
On September 17, 2004, the Debtors sought and obtained the
Court's authority to reject the lease related to the Aircraft
under the Financing Transaction.
Subsequently, the U.S. Bank filed Claim No. 43789, which amended
and superseded Claim No. 35496 to allege specific liabilities
related to the Rejection. Claim No. 43789 asserts an
administrative liability of $6,445,976 for unpaid postpetition,
pre-rejection, basic rent and related costs, and a general,
unsecured claim of $21,367,829, for damages stemming from the
Rejection.
United and the U.S. Bank, after a series of good-faith
negotiations, have also reached an agreement to resolve Claim No.
43789 by allowing the claim as an administrative liability for
$2,020,3333 and as prepetition, general unsecured liability for
$19,763,746.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. Judge Wedoff confirmed
the Debtors' Second Amended Plan on Jan. 20, 2006. The Company
emerged from bankruptcy protection on February 1, 2006. (United
Airlines Bankruptcy News, Issue No. 117; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
UAL CORP: Supreme Court Rejects "Lease-Financing" Dispute Appeal
----------------------------------------------------------------
The United States Supreme Court received petitions for a writ of
certiorari by HSBC Bank and the California Statewide Communities
Development Authority regarding litigation over the
recharacterization of complex transactions to obtain money to
build or improve premises at the San Francisco airport.
The High Court denied the petition and refused to hear the appeal
on March 6, 2006.
CSCDA and HSBC brought the appeal after the U.S. Circuit Court of
Appeals for the Seventh Circuit held that the 1997 transaction
between UAL Corporation and its debtor-affiliates and the CSCDA is
not a "true lease" under California law. The Seventh Circuit
ruled that the transaction between the Debtors and the CSCDA is a
secured loan and not a lease under Section 365 of the Bankruptcy
Code.
CSCDA issued about $155,000,000 of bonds for United Airlines,
Inc., to fund a maintenance facility and aircraft parking at SFO.
However, United ceased making debt service payments on that debt
and other airport bonds after filing for bankruptcy, causing the
bonds to default. CSCDA argued that the payments represented
rent, which is exempt from discharged in Bankruptcy Court, rather
than interest on debt.
The Supreme Court rejection means that the CSCDA and HSBC Bank
USA, as trustee for the bonds, must attempt to recover the money
that United allegedly owes through a trial before the Bankruptcy
Court.
According to Bloomberg News, the rebuff may help United in a
series of similar fights involving Los Angeles and Denver bonds.
Headquartered in Chicago, Illinois, UAL Corporation --
http://www.united.com/-- through United Air Lines, Inc., is the
holding company for United Airlines -- the world's second largest
air carrier. The Company filed for chapter 11 protection on
December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M.
Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq.,
and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they listed $24,190,000,000
in assets and $22,787,000,000 in debts. Judge Wedoff confirmed
the Debtors' Second Amended Plan on Jan. 20, 2006. The Company
emerged from bankruptcy protection on February 1, 2006. (United
Airlines Bankruptcy News, Issue No. 119; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
VERASUN ENERGY: Moody's Holds B3 Rating on $210 Mil. Senior Notes
-----------------------------------------------------------------
Moody's Investors Service affirmed VeraSun Energy Corporation's B3
corporate family rating and the B3 rating of the company's $210
million senior secured notes due 2012. The outlook was moved to
positive from stable. The positive outlook reflects the
improvement in the credit risk from raising capital in the equity
markets and expansion of its business through the construction of
two additional plants.
Rating actions:
* Corporate Family Rating -- B3
* Speculative Grade Liquidity rating -- SGL1
* Guaranteed senior secured notes, $210 million due 2012 -- B3
The positive outlook reflects the continuing favorable industry
conditions and positive developments at VeraSun. The recently
announced equity initial public offering along with cash from
operations will provide the company the needed capital to build
its fourth and fifth plants and therefore expand revenues and cash
flows. Investors in VeraSun's notes will benefit from the
additional plant, property and equipment as the notes are secured
by a first priority lean on substantially all fixed assets of the
company and its subsidiaries. The IPO proceeds will also support
VeraSun's liquidity over the next one to two years.
The rating could move up if the industry dynamics supported a
higher rating and VeraSun continued to be successful in executing
their strategy, maintained a conservative financial philosophy and
was able to generate internally the balance of the funds over the
IPO financing required to finance the construction of plants four
and five. Moody's would expect the firm to focus on funding its
expansion and maintaining a relatively conservative debt profile.
The rating could be adversely impacted by industry dynamics and
economics, failure to generate meaningful cash flow, higher
leverage or deteriorating credit metrics.
The primary ratings factors currently influencing VeraSun's rating
are:
Business Profile: The fact that government regulations are
critical to the demand for ethanol and underpin the favorable
economics of the business is the single most important factor
incorporated into the rating. Moody's believes that the recent
federal legislation, as well as robust spot margins for ethanol,
will lead to over investment in the industry, negatively affecting
profitability for industry players. Additionally, there is no
guaranty that the legislation will be renewed when it expires,
thereby changing the economics of the industry.
The Energy Policy Act of 2005 is the latest federal legislation,
which established a renewable fuels standard mandating a minimum
annual use of ethanol. It did not provide liability protection
for the use of MTBE, which further boosts the demand for ethanol
as an alternative to MTBE. There is a federal ethanol excise tax
incentive program which provides gasoline distributors that blend
ethanol with gasoline a federal excise tax rate deduction of $0.51
per gallon of ethanol blended in gasoline. This directly supports
the economics of producing ethanol and there can be no assurance
the program will be renewed in 2010 when it expires. There is a
federal tariff of $0.54 per gallon on imported ethanol that
offsets the excise tax credit benefit for imported ethanol,
however 24 Latin American and Caribbean countries are exempt from
this and imports could impact the US industry.
Exposure to Volatile Raw Materials -- Moody's views the
ethanol market as more risky than most commodity prices due to
the lack of correlation between input costs and ethanol
prices. Both raw material inputs and ethanol prices can be
volatile and it is not possible to lock in the crush spread,
although VeraSun does attempt to hedge its corn and natural
gas costs.
Diversity -- VeraSun's single product focus and limited
operational and geographic diversity are reflected in the B
rating. The addition of two ethanol production facilities
will benefit VeraSun in this area, but relative to other
diversified chemicals manufacturers, VeraSun will always be
viewed as focused and undiversified, which contributes to
risk.
Commodity -- The commodity nature of ethanol means that
VeraSun suffers from having little or no ability to influence
the pricing of its product.
Market Share/Competitive Advantage -- VeraSun participates
in a highly fragmented market, but has large enough production
to gain from some economies of scale which could leave VeraSun
as the low cost producer and best apt to survive when the
industry enters a downturn. However, VeraSun does compete
against two major competitors in the industry that have
substantially greater resources than it does.
Size and Stability: VeraSun's modest size and single operating
division structure is supportive of a single B rating. We note,
however, that VeraSun's two plants are large for their industry
and therefore do enjoy some economies of scale relative to the
competition. The stability of EBITDA would be low for VeraSun
given its exposure to commodity prices and the probability that
the ethanol industry will be negatively impacted by over capacity
some time in the future.
Financial Strength: Currently, VeraSun has strong financial
metrics that support its rating and, if it were not for the
uncertainty surrounding the industry, could support a higher
rating. The current rating takes into account the potential for
additional leverage as the company seeks to expand further and the
substantial margin risk due to changes in the industry over the
next seven years. Currently, leverage is at approximately 50% of
the capital structure. We view VeraSun's sourcing additional
capital from the equity markets favorably. This will bring
VeraSun's debt to total capital down significantly and provides
capital for two additional plants that will expand sales and
profits. Moody's also notes that the existing notes due 2012 will
benefit from the addition of the property, plant & equipment
associated with plants four and five into the collateral package
backing the notes.
The speculative grade liquidity rating of SGL-1 reflects the high
existing cash balances, additional cash proceeds from the planned
equity issuance, strong gross cash flows from operations and a $30
million asset based credit facility, which had available borrowing
capacity of $24.2 million as of Feb. 28, 2006. Financial covenants
in the revolver include a minimum tangible net worth and a minimum
working capital level.
VeraSun Energy Corporation, headquartered in Brookings, South
Dakota, is the second largest producer of ethanol in the United
States with two facilities with production capacity of 230 million
gallons per year. Both plants use the dry mill production
process. Revenues for LTM ended Dec. 31, 2005, which reflect the
operations for the full year of only one of VeraSun's two plants,
were approximately $236 million.
US AIRWAYS: Moody's Puts $1.1 Bil. Credit Facility Rating at B2
---------------------------------------------------------------
Moody's Investors Service assigned a B2 rating to the $1.1 billion
secured credit facility of US Airways Group, Inc. Additionally,
Moody's upgraded selected tranches of certain Enhanced Equipment
Trust Certificates supported by payments from US Airways Inc.,
affirmed the remaining tranches, and withdrew the rating on one US
Airways EETC that was repaid. Ratings on EETCs supported by
America West Airlines, Inc. were affirmed. Moody's also assigned a
B3 corporate family rating at the Parent level and withdrew the
corporate family rating previously assigned to America West
Airlines, Inc. The outlook has been changed to stable.
The stable outlook reflects Moody's expectation of non-fuel cost
savings in line with the company's plan of up to $250 million as
the operations of US Airways and America West Airlines are
integrated, modest revenue benefits from a somewhat stronger
pricing environment, and improving liquidity. Nonetheless,
Moody's notes that the company is in the early stages of the
integration of the two airlines and meaningful challenges remain,
especially on the labor front, before a low-cost operation is
sustainable.
The outlook also anticipates some merger-related revenue
opportunities through better connections of U.S. cities served
separately by the two airlines, an enhanced frequent flyer
program, and expanding selected transatlantic and Latin America
markets where passenger yields have been strong. The proposed
Credit Facility eases the near term pressure on liquidity by
extending the maturities on certain existing loans. Unrestricted
cash balances at FYE 2005 of $1.58 billion are adequate for near
term needs as the company raised approximately $1 billion of
capital post-merger. Consequently, Moody's expects the company to
fund all of its near term cash requirements through its operating
cash flow or cash on hand.
Among the factors considered in the rating is the market position
of the combined airlines. US Airways Group, Inc. is a
predominately domestic carrier, which has achieved a lower overall
cost through the US Airways bankruptcy. The extensive domestic
network of the combined systems position the company to be
successful in it business model as a low cost carrier. US Airways
and America West Airlines continue to operate separately with
separate airline operating certificates, although management plans
to combine the operating authority and is working on a transition
plan.
The hurdles to fully integrate the airlines and deliver on the
business plan were also considered among the rating factors. Labor
continues to be a significant obstacle to fully achieving the low
cost structure. Although the company has made strides in merging
the work force, it is likely to be at least another year before
the workforce can be fully integrated. As well, the company is
working on developing a common platform for its systems, including
reservations and the frequent flyer programs, which is expected to
take some time still.
Further, financial results are highly sensitive to jet fuel
prices. The company has a very limited hedging program, and the
prospects of passing on fuel costs to the consumer through higher
fares may limit the leisure bookings attracted to low fares and
which are important to the business plan. Moody's also notes that
the ability to sustain a low cost structure also depends on an
appropriate level of investment in the fleet. The company will
take delivery of only three new aircraft in 2006. With a
relatively older fleet compared to other carriers, the company's
cost structure may be pressured upwards through higher maintenance
as well as lower fuel efficiency, thereby weakening its relative
competitiveness in markets with high penetration from other low-
cost carriers.
Further, leverage remains high for the rating category despite US
Airways having discharged approximately $3.3 billion of debt
through the Chapter 11 bankruptcy process. Consolidated pro forma
debt to EBITDA was 15.2x for 2005, and EBIT to interest expense
was 0.2x. As well, Moody's expects the company to be free cash
flow breakeven at best for FY 2006, even with a modestly better
operating environment as transition costs and high fuel could
negatively affect the cost structure. Ratings could improve if
the company reduces debt or improves operations to sustain debt to
EBITDA below 7x with EBIT to interest expense approaching 1.5x.
Conversely, ratings could come under pressure if balance sheet
cash or cash flows were to decline significantly from their
expected levels.
US Airways Group has made notable progress since the September
2005 merger. Since then, the company has obtained single-carrier
certification from the National Mediation Board, and is
implementing its transitional labor agreements at competitive
wages. Aircraft leasing expense has been reduced from its
historical level; 55 aircraft were returned to lessors in 2005 and
an additional 20 aircraft are likely to be returned in 2006 as
overlapping service is removed from the system. Unit revenues
grew substantially in 2005 supported by stability in domestic
yields and stronger demand in cities served by its Express
regional provider, as well as increased leisure traffic. However,
the company reported a significant net loss as a result of higher
fuel prices and a $100 million restructuring charge for returned
aircraft at America West Airlines.
All EETC's supported by payments from America West are affirmed.
The Aaa ratings for certain of the US Airways EETC's that are
based on the support of insurance policies issued by monoline
insurance companies have also been affirmed.
The rating upgrades for the EETC's supported by US Airways
reflects its successful reorganization and its September 2005
emergence from bankruptcy and improving secondary market values
for the aircraft collateralizing the transactions. All of the
aircraft collateralizing the transactions are manufactured by
Airbus and include the A320 family and A330 aircraft. The A320's
are in high demand at the moment.
All classes of the EETC's continue to be supported by liquidity
facilities intended to pay up to 18 months of interest in the
event US Airways or America West defaults on payment obligations
under the equipment notes. Any future changes in the underlying
credit quality of the company and its ratings, or meaningful
changes in the value of the aircraft pledged as collateral, and/or
changes in the status of the liquidity facilities or the credit
quality of the liquidity provider could cause a change in the
ratings of all classes of the EETC's.
The B2 rating for the Credit Facility, one notch above the
corporate family rating, reflects the value of the collateral
securing the loan, principally the unrestricted cash and cash
equivalents, upstream guarantees from the main operating
subsidiaries, its senior position relative to approximately $625
million in unsecured debt, and the frequency of appraisals for all
collateral. Debt outstanding will not change, as the Credit
Facility will refinance existing debt and will extend maturities
with a new final maturity of 2011. Covenants include minimum
EBITDAR to fixed charges of 0.86 to 1.0 through Sept. 30, 2006,
0.9 to 1.0 through Dec. 31, 2006 and 0.93 to 1.0 through Mar. 31,
2007 as well as minimum unrestricted cash and cash equivalents of
$750 million at all times.
Ratings assigned:
* US Airways Group, Inc. senior secured bank credit facility
at B2, corporate family rating at B3
Rating withdrawn:
* America West Airlines, Inc. corporate family rating of B3
Rating upgraded for the EETC's supported by payments from US
Airways:
* Series 1998-1 Class A: to Ba1 from Ba2
* Class B: to Ba3 from Caa1
* Class C: to B3 from C
* Series 1999-1 Class A: to Ba1 from Ba2
* Class B: to Ba3 from Caa1
* Class C: to B3 from C
* Series 2000-3 Class C: to B3 from C
* Series 2001-1 Class C: to B3 from C
Ratings withdrawn:
* Series 2000-1 Series G: Aaa withdrawn
US Airways Group, Inc. and its two operating subsidiaries, US
Airways, Inc. and America West Airlines, Inc. are headquartered in
Phoenix, Arizona.
WATERFORD GAMING: S&P Upgrades Rating to BB- With Stable Outlook
----------------------------------------------------------------
Standard & Poor's Ratings Services raised its ratings on
Waterford Gaming LLC, including its corporate credit rating to
'BB-' from 'B+'. The outlook is stable.
The upgrade reflects the company's improved credit measures
and the expectation that this trend will continue over the
intermediate term as the issuer's outstanding bond issue
continues to amortize.
Waterford Gaming's excess cash flow after interest payments is
swept (mandatorily) to pay down the notes. As of Dec. 31, 2005,
$130 million was outstanding under the notes, down from $155
million when they were issued in June 2003. Also, one semiannual
interest payment was deposited into an interest escrow reserve
account.
WINDSOR QUALITY: Moody's Rates $220 Mil. Credit Facilities at B1
----------------------------------------------------------------
Moody's Investors Service upgraded Windsor Quality Food Company
Ltd.'s corporate family rating and the rating on its $220 million
senior secured bank credit facilities to B1 from B2. The rating
outlook is stable.
The rating upgrade reflects the successful integration of
Specialty Brands, Inc., that was purchased by Windsor from Fremont
Partners in December 2004. The transaction more than doubled the
size of the company, and at the time carried a fair degree of
financial and integration risk. Over the past year, the company
has been able to achieve most of the planned cost savings, partly
justifying both the high multiple paid for SBI and the high
closing leverage that resulted from the largely debt financed
deal.
By the end of fiscal 2005, Windsor had reduced debt/EBITDA
comfortably below its proforma budget of 5.0x and improved cash
flow of the consolidated company considerably. In addition, the
company has substantially completed the integration of two
separate sales and marketing organizations, distribution and
warehouse networks, and IT platforms while maintaining stable
overall operating performance. The increased manufacturing scale
resulting from the acquisition of SBI provided significant cost
opportunities, the majority of which Windsor was able to capture
in the first year of combined operation. Moody's expects that
under Windsor management, the former SBI operations will exhibit
more stability and receive more management focus following a
series of ownership changes at SBI over the past five years.
These ratings of Windsor Quality Food Company Ltd. have been
upgraded:
* Corporate Family Rating to B1 from B2;
* $75 million senior secured revolving credit, maturing 2009
to B1 from B2;
* $45 million senior secured term loan A, maturing 2009 to B1
from B2;
* $100 million senior secured term loan B, maturing 2010 to B1
from B2;
Ratings outlook - Stable.
Moody's does not rate Windsor's $85 million senior subordinated
notes due 2012. The ratings on the senior secured bank debt are
not notched up from the Corporate Family Rating because the bank
facilities represent the bulk of Windsor's debt.
Windsor's ratings are based on the key rating drivers outlined in
Moody's Global Consumer Packaged Goods Industry Methodology. The
B1 ratings balance credit metrics that are at or slightly below
the rating category against qualitative factors that are somewhat
stronger than the rating category, particularly with respect to
segmental diversification, customer exposure and financial policy.
Overall, Windsor's ratings reflect:
Scale and Diversification -- Windsor's ratings are limited by
its relatively small size and limited geographic diversity.
The company has good brand and segmental diversity with a
portfolio that consists of a variety of ethnic and niche
frozen food products. The acquisition of SBI added frozen
Mexican appetizers and snack foods, frozen coated appetizers,
and frozen filled pasta to the product portfolio; and resulted
in a more balanced sales channels mix due to its higher retail
and foodservice focus.
Windsor has good segmental diversification: Mexican (35%), ]
Asian (8%), pre-cooked meats (22%), pasta (19%), coated
appetizers (12%) and other (4%); and channel diversification:
retail (27%), industrial (22%) and foodservice (52%).
Franchise Strength and Growth Potential -- Windsor's products
compete primarily in frozen and/or ethnic foods. Within these
narrow categories its brands are generally top 3 in market
share. The ethnic foods category has attractive growth
potential-its current growth rate is approximately twice that
of the overall food industry. Windsor has limited national
retail brand recognition, partly reflecting its specialty in
international flavors, but several have strong regional
appeal. In foodservice-approximately half of total sales-
Windsor's products are well known among its customers which
are increasingly interested in ethnic cuisine. The ratings
are also supported by Windsor's strong track record of steady
organic sales growth and stable margins.
Customer Exposure -- Windsor has broad and balanced channel
coverage with modest customer concentration in both retail
and foodservice. Its varied product offerings complement and
sustain customer relationships among broadline distributors,
retail and warehouse, and national chains; but its relatively
small size limits bargaining power.
Cost Efficiency and Profitability -- Windsor has an
established track record of generating stable profit margins
and cash flow; however, the company's operating margins are
materially below peer average, primarily due to its limited
scale. Windsor has successfully integrated several major
acquisitions including Quality Sausage in 1990, Keebler Frozen
Foods in 1996 and most recently, Specialty Brands in 2004.
Over time, Windsor's acquisition strategy, pursued prudently,
should yield higher margins as the company achieves greater
scale. The ratings consider the impact of the currently high
commodity input costs, and that a significant amount of
commodity price volatility in Windsor's foodservice business
is passed through to customers.
Financial Policy and Credit Metrics -- Windsor is privately
owned and controlled by an investor/management group that has
been stable, supportive and committed. Leveraged acquisitions
are central to the company's growth strategy which
periodically erodes financial cushion. However, management
has demonstrated a willingness to restore financial
flexibility following a significant acquisition and prior to
embarking on a further transaction. Although shareholder
distributions are not a near-term priority, at some point in
the future investors may seek either a large payout or a
complete exit.
Windsor's credit metrics generally fall in the B rating
category and are trending positively, reflecting ongoing cost
cutting and integration activities. Windsor's weakest credit
metric is EBIT/Interest, which is slightly below the B range,
while its strongest metric is Debt/EBITDA which is at the low
end of the B range.
The stable rating outlook assumes that Windsor will continue
to report stable operating margins, generate steady sales
growth and maintain a conservative financial profile. It also
assumes no leveraged acquisitions in the near-term.
Windsor completed the acquisition of Specialty Brands just
over a year ago during which time the company successfully
targeted significant cost reductions and scale efficiencies,
some of which are yet to be fully reflected in the company's
financial performance. To the extent that the company is able
to further improve profitability and reduce leverage such that
Debt/EBITDA declines below 4.5x and EBITA/Interest reaches
2.5, an upgrade could occur.
While Windsor's financial policy currently favors debt
protection, Moody's expects that the company will pursue
additional leveraged acquisitions in the future, which could
result in a downgrade. A downgrade could also occur if
operating performance declines such that Debt/EBITDA increases
above 5.0x or EBITA/Interest falls below 1.5.
Windsor Quality Food Company Ltd., based in Houston, Texas is a
manufacturer of frozen foods specializing in international variety
with FY05 sales of over $600 million.
WINMAX TRADING: Rosen Seymour Replaces Goldstein Golub as Auditor
-----------------------------------------------------------------
Winmax Trading Group, Inc., engaged accountants Rosen Seymour
Shapss Martin & Company LLP, to audit its financial statements for
the year ending December 31, 2005. Goldstein Golub Kessler LLP,
the Company's previous auditor, declined to stand for re-election.
Goldstein Golub's report on the financial statements for the year
ended December 31, 2004, was not subject to an adverse or
qualified opinion or a disclaimer of opinion and was not modified
as to uncertainty, audit scope or accounting principles.
The Company did not have an unresolved disagreement with Goldstein
Golub on matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure during its
retention of Goldstein Golub from Jan. 13, 2004, to Dec. 20, 2005.
Winmax Trading Group Inc. is a dynamic and diversified
international company. The company specializes in retailing gem
and precious gem jewelry using their multimedia and technology
operating divisions to help brand and grow operations.
The Company's balance sheet showed $227,944 in total assets at
Sept. 30, 2005, and liabilities of $2,443,182, resulting in a
stockholders' deficit of $2,215,238.
WELLSFORD REAL: Releases 2005 Annual Financial Statements
---------------------------------------------------------
Wellsford Real Properties, Inc. (AMEX:WRP) reported that its net
assets in liquidation at Dec. 31, 2005, totaled $56,569,414
or $8.74 per share based upon 6,471,179 shares outstanding at
Dec. 31, 2005.
WRP had announced in November 2005 that its stockholders approved
the Plan of Liquidation at WRP's annual meeting held on Nov. 17,
2005.
After the approval of the Plan by the stockholders, WRP completed
the sale of its largest asset, the three residential rental phases
of its Palomino Park project for $176,000,000.
On Dec. 14, 2005, the Company made an initial liquidating
distribution of $14.00 per share, aggregating approximately
$90,597,000, to its stockholders.
For all periods preceding stockholder approval of the Plan on
Nov. 17, 2005, WRP's financial statements are presented on the
going concern basis of accounting.
As required by generally accepted accounting principles, WRP
adopted the liquidation basis of accounting as of the close of
business on Nov. 17, 2005.
Under the liquidation basis of accounting, assets are stated at
their estimated net realizable value and liabilities are stated at
their estimated settlement amounts, which estimates will be
periodically reviewed and adjusted as appropriate.
At Dec. 31, 2005, WRP had total assets of $126,670,151, comprised
primarily of real estate assets under development of $44,233,031,
investments in joint ventures of $20,453,074, cash of $41,027,086
and restricted cash and investments of $18,953,325.
Total liabilities and minority interests of $70,100,737 at
Dec. 31, 2005, were comprised of the reserve for estimated costs
during the period of liquidation of $24,057,079, mortgage notes
and construction loans payable of $19,250,344, the deferred
compensation liability of $14,720,730 and other accruals and
liabilities of $12,072,584.
During the period Nov. 18, 2005, to Dec. 31, 2005, WRP reported a
reduction of $90,319,588 in net assets in liquidation,
substantially the result of the distribution to stockholders.
Prior to the approval of the Plan and the adoption of the
liquidation basis of accounting, WRP reported a $936,621 net loss
on $2,140,491 of revenues during the period Oct. 1, 2005, through
Nov. 17, 2005.
WRP reported $3,018,292 of net income on $14,710,475 of revenues
during the period Jan. 1, 2005, to Nov. 17, 2005.
Remaining Activities, Assets and Investments
At Dec. 31, 2005, WRP's remaining activities, assets and
investments were:
-- The 259 unit Gold Peak condominium development in Highlands
Ranch, Colorado is the remaining phase from our Palomino
Park development. WRP is currently constructing Gold Peak
and had 84 units under contract at Dec. 31, 2005. Gold Peak
unit sales commenced in January 2006;
-- The Orchards, a single-family home development in East Lyme,
Connecticut, upon which WRP commenced building 101 single
family homes on 139 acres. An additional 60 homes could be
built on a contiguous parcel of land. The model home was
completed during the fourth quarter of 2005. The completion
of the initial homes and closings of initial sales are
expected to occur in 2006;
-- A 75% interest in a joint venture that owns two land parcels
aggregating approximately 300 acres in Claverack, New York.
One land parcel is subdivided into seven single-family home
lots upon which WRP intends to build and sell custom
designed homes. The remaining 235 acres, known as The
Stewardship, are currently subdivided into six single family
home lots with the intent to increase the number of
developable residential lots to 49 lots, improve the land
and construct and sell single family homes;
-- Interests in Reis, Inc., a real estate information and
database company;
-- A 10% interest in Clairborne Fordham, a company that
currently owns the remaining two unsold residential units of
a 50-story, 277 unit, luxury condominium apartment project
in Chicago, Illinois; and
-- A project in Beekman, New York, where WRP owned
approximately 10 acres of land and has a contract, secured
by a first mortgage lien on the property, to acquire a
contiguous 14 acre parcel. This investment was sold in
January 2006.
The Plan
The Plan contemplates the orderly sale of each of WRP's remaining
assets, which are either owned directly or through WRP's joint
ventures, the collection of all outstanding loans from third
parties, the orderly disposition or completion of construction of
development properties, the discharge of all outstanding
liabilities to third parties and, after the establishment of
appropriate reserves, the distribution of all remaining cash to
stockholders.
WRP currently contemplates that approximately 36 months after the
approval of the Plan any remaining assets and liabilities would be
transferred into a liquidating trust. The liquidating trust would
continue in existence until all liabilities have been settled, all
remaining assets have been sold and proceeds distributed and the
appropriate statutory periods have lapsed.
WRP's net assets in liquidation aggregated $56,569,414. This
amount presents development projects at estimated net realizable
value after giving effect to the present value discounting of
estimated net proceeds.
All other assets are presented at estimated net realizable value
on an undiscounted basis. The amount also includes a reserve for
future estimated general and administrative expenses and other
costs during the liquidation.
Estimated net realizable value reflects economic changes and
various other changed circumstances over recent months. There can
be no assurance that these estimated values will be realized, nor
if the reserve for future estimated general and administrative
expenses is adequate. That amount should not be taken as an
indication of the timing or amount of future distributions to be
made by WRP.
The timing and amount of interim liquidating distributions and
final liquidating distributions will depend on the timing and
amount of proceeds the Company will receive upon the sale of the
remaining assets and the extent to which reserves for current or
future liabilities are required.
Accordingly, there can be no assurance that there will be any
liquidating distributions prior to a final liquidating
distribution.
A full-text copy of Wellsford Real Properties, Inc.'s 2005 Annual
Report is available at no extra charge at
http://ResearchArchives.com/t/s?767
Wellsford Real Properties, Inc. is a company in liquidation. The
Company was formed to operate as a real estate merchant-banking
firm to acquire, develop, finance and operate real properties and
invest in private and public real estate companies. At Dec. 31,
2005, the Company's remaining primary operating activities are the
development, construction and sale of three residential projects.
ZENITH NATIONAL: Moody's Upgrades Ba1 Senior Debt Rating to Baa3
----------------------------------------------------------------
Moody's Investors Service upgraded the senior debt rating of
Zenith National Insurance Corp to Baa3 from Ba1 and the insurance
financial strength ratings of Zenith's insurance subsidiaries to
A3 from Baa1. The outlook for the ratings is stable.
According to Moody's, the upgrade was prompted by Zenith's strong
operating performance and capital growth over the past few years
as well as by the recent reduction in financial leverage
attributable to the conversion of $124 million in convertible debt
into equity in 2005. The favorable operating results and reduced
financial leverage profile compare favorably to similarly-rated
peers on a variety of quantitative financial metrics. Going
forward, Moody's believes that management intends to operate the
company with a reduced financial leverage profile.
Zenith's credit strengths include its demonstrated track record of
underwriting discipline and opportunistic growth strategy, along
with a focus on profitability over revenue growth. In addition,
the ratings reflect the company's reasonable financial
flexibility, given its reduction in financial leverage, a high
quality investment portfolio and good liquidity. These
fundamental strengths are tempered by Zenith's concentration in
the difficult and volatile workers' compensation and property
reinsurance lines of business and by the regulatory and
competitive risks associated with writing the majority of its
business in California and Florida.
Moody's expects that, at the current ratings level, Zenith will
maintain financial leverage below 20% while maintaining a combined
ratio below 110%, earnings coverage above 6x, and gross
underwriting leverage below 5x. In addition, the current rating
contemplates no negative developments in the workers' compensation
environment or legislation that would clearly reduce earnings
prospects. Given the historic volatility of its single line of
business and regulatory/geographic concentration, Moody's notes
that Zenith's current operating profile constrains the rating at
its current level. On the other hand, negative developments in
the workers' compensation environment or legislation,
deterioration in earnings and organic capital generation, and
financial leverage above 20% could lower the ratings.
These ratings have been upgraded:
* Zenith National Insurance Corp. -- senior unsecured debt
to Baa3 from Ba1 and subordinate debt to Ba1 from Ba2;
* Zenith Insurance Company -- insurance financial strength
to A3 from Baa1;
* ZNAT Insurance Company -- insurance financial strength to
A3 from Baa1; and
* Zenith National Insurance Capital Trust 1 -- trust preferred
stock to Ba1 from Ba2.
Moody's most recent rating action on Zenith was on June 16, 2005
when Moody's affirmed the insurance financial strength ratings and
debt ratings and changed the outlook to positive.
Zenith National Insurance Corp, based in Los Angeles, California,
writes primary worker's compensation insurance in the states of
California and Florida. For 2005, Zenith reported net premiums
earned of $1.2 billion and net income of $158 million.
Shareholders' equity was $713 million as of Dec. 31, 2005.
* Upcoming Meetings, Conferences and Seminars
---------------------------------------------
April 5-8, 2006
MEALEYS PUBLICATIONS
Insurance Insolvency and Reinsurance Roundtable
Fairmont Scottsdale Princess, Scottsdale, Arizona
Contact: http://www.mealeys.com/
April 6, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Commercial Lenders Breakfast
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
April 6-7, 2006
BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES
The Seventh Annual Conference on Healthcare Transactions
Successful Strategies for Mergers, Acquisitions,
Divestitures, and Restructurings
The Millennium Knickerbocker Hotel, Chicago,
Illinois
Contact: 903-595-3800; 1-800-726-2524;
http://www.renaissanceamerican.com/
April 6, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Poker Night & Mixer
Vancouver, British Columbia
Contact: 403-294-4954 or http://www.turnaround.org/
April 7, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Board Meeting
Much Shelist, Chicago, Illinois
Contact: 815-469-2395 or http://www.turnaround.org/
April 11, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Comedy Night at Governors
TBA, Levittown, New York
Contact: 631-251-6296 or http://www.turnaround.org/
April 12, 2006
TURNAROUND MANAGEMENT ASSOCIATION
The Great Debate
ANZ Bank, Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
April 12, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Meeting
Marriott Tyson's Corner, Vienna, Virginia
Contact: 703-912-3309 or http://www.turnaround.org/
April 12, 2006
BEARD AUDIO CONFERENCES
Fundamentals of Corporate Bankruptcy and Restructuring
Audio Conference
Contact: 240-629-3300;
http://www.beardaudioconferences.com/
April 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Monthly Dallas/Ft. Worth meeting
CityPlace Center, Dallas, Texas
Contact: 214-228-9706 or http://www.turnaround.org/
April 18-22, 2006
AMERICAN BANKRUPTCY INSTITUTE
Annual Spring Meeting
JW Marriott, Washington, D.C.
Contact: 1-703-739-0800; http://www.abiworld.org/
April 18, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Key Indicators in Financial Distress
Kansas City, Missouri
Contact: http://www.turnaround.org/
April 19, 2006
PRACTISING LAW INSTITUTE
Residential Real Estate Contracts & Closings
New York, New York
Contact: http://www.pli.edu/
April 25, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Luncheon
Citrus Club, Orlando, FL
Contact: 561-882-1331 or http://www.turnaround.org/
April 25, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Fraud and Forensic Accounting in a Restructuring Context
Duquesne Club, Pittsburgh, Pennsylvania
Contact: http://www.turnaround.org/
April 26, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Dinner with The Honourable Allan Wachowich, Chief Justice of
the Court of Queen's Bench of Alberta
Petroleum Club, Edmonton, Alberta
Contact: 403-294-4954 or http://www.turnaround.org/
April 27, 2006
TURNAROUND MANAGEMENT ASSOCIATION
TBA
Syracuse, New York
Contact: 716-440-6615 or http://www.turnaround.org/
April 27, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Panel Program on the Role of Trustees and Examiners &
Networking Reception
Arizona
Contact: http://www.turnaround.org/
May 2006
TURNAROUND MANAGEMENT ASSOCIATION
Regional Golf Event
TBD, Austin (tentative), Texas
Contact: 214-228-9706 or http://www.turnaround.org/
May 2, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Organization of Women
Di Bruno Bros., Philadephia, Pennsylvania
Contact: 215-657-5551 or http://www.turnaround.org/
May 3, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Fundamentals of Turnaround Management for SMEs
University of Technology, Sydney, Australia
Contact: http://www.turnaround.org/
May 4, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Texas Hold 'em Networking Event
TBA, St. Louis, Missouri
Contact: 815-469-2935 or http://www.turnaround.org/
May 4, 2006
TURNAROUND MANAGEMENT ASSOCIATION
InterChapter Texas Hold 'em
TBA - Missouri
Contact: 815-469-2935 or http://www.turnaround.org/
May 4, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Commercial Lenders Breakfast
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
May 4-6, 2006
AMERICAN LAW INSTITUTE - AMERICAN BAR ASSOCIATION
Fundamentals of Bankruptcy Law
Chicago, Illinois
Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/
May 5, 2006
AMERICAN BANKRUPTCY INSTITUTE
Nuts & Bolts for Young Practitioners
Alexander Hamilton Custom House, New York, New York
Contact: 1-703-739-0800; http://www.abiworld.org/
May 5, 2006
TURNAROUND MANAGEMENT ASSOCIATION
The Amendments to the Bankruptcy Code - Seven Months Later
Mid-Day Club, Chicago, Illinois
Contact: http://www.turnaround.org/
May 7-9, 2006
INTERNATIONAL BAR ASSOCIATION
Restructuring Among the Ruins
Hotel Bretagne
Athens, Greece
Contact: harriet.rowland@int-bar.org or
http://www.ibanet.org/
May 8, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Women's Golf 101
TBA - New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
May 8, 2006
AMERICAN BANKRUPTCY INSTITUTE
NYC Bankruptcy Conference
Millennium Broadway, New York, New York
Contact: 1-703-739-0800; http://www.abiworld.org/
May 10, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Meeting
Center Club, Baltimore, Maryland
Contact: 703-912-3309 or http://www.turnaround.org/
May 10, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Function
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
May 11, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Casino Night
TBA, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
May 11, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Wicked Theatre Event
Oriental Theatre, Chicago, Illinois
Contact: 815-469-2935 or http://www.turnaround.org/
May 17, 2006
TURNAROUND MANAGEMENT ASSOCIATION
South Florida Dinner
Bankers Club, Miami, FL
Contact: 561-882-1331 or http://www.turnaround.org/
May 18, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Breakfast
TBA, Bergen County, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
May 18, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Eastside Wine & Dine
TBA, Seattle, Washington
Contact: 503-223-6222 or http://www.turnaround.org/
May 18, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Troubled Loan Workout Seminar
National Cable Television Center & Museum, Denver, CO
Contact: http://www.turnaround.org/
May 18, 2006
TURNAROUND MANAGEMENT ASSOCIATION
13 Week Cash Flow Workshop
Standard Club, Chicago, Illinois
Contact: http://www.turnaround.org/
May 18, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Forensic Accounting (Arizona Chapter Meeting)
Arizona
Contact: http://www.turnaround.org/
May 18-19, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Annual Great Lakes Regional Conference and Golf Tournament
Ellicottville, New York
Contact: 716-440-6615 or http://www.turnaround.org/
May 18-19, 2006
BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES
Third Annual Conference on Distressed Investing Europe
Maximizing Profits in the European Distressed Debt Market
Le Meridien Piccadilly Hotel, London, UK
Contact: 903-595-3800; 1-800-726-2524;
http://www.renaissanceamerican.com/
May 22, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Women's Golf 101
TBA, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
May 22, 2006
TURNAROUND MANAGEMENT ASSOCIATION
LI TMA Annual Golf Outing
Indian Hills Golf Club, Long Island, New York
Contact: 631-251-6296 or http://www.turnaround.org/
May 23-26, 2006
AMERICAN BANKRUPTCY INSTITUTE
5th ABI Litigation Skills Symposium
King and Spalding LLP, Atlanta, Georgia
Contact: 1-703-739-0800; http://www.abiworld.org/
May 24, 2006
TURNAROUND MANAGEMENT ASSOCIATION
"Toot Your Own Horn" Forum
TBA, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
May 25, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Doctor Heal Thyself - Health Care Turnaround
Portland, Oregon
Contact: http://www.turnaround.org/
May 30, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Speaker Session
TBA, Vancouver, British Columbia
Contact: 403-294-4954 or http://www.turnaround.org/
May 30, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Luncheon
Centre Club, Tampa, Florida
Contact: 561-882-1331 or http://www.turnaround.org/
June 1, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Commercial Lenders Breakfast
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
June 1-2, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Southeast Regional Conference
Amelia Island, Florida
Contact: 410-347-7391 or http://www.turnaround.org/
June 5, 2006
TURNAROUND MANAGEMENT ASSOCIATION
TMA NY Golf & Tennis Outing -
MEMBERS & SPONSORSHIP REGISTRATION
Fresh Meadow Country Club, Lake Success, New York
Contact: 646-932-5532 or http://www.turnaround.org/
June 7-10, 2006
ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS
22nd Annual Bankruptcy & Restructuring Conference
Grand Hyatt, Seattle, Washington
Contact: http://www.airacira.org/
June 8, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Speaker Series #2
Ernst & Young Tower, Calgary, Alberta
Contact: 403-294-4954 or http://www.turnaround.org/
June 8, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Hedge Fund / Private Equity Round Table
CityPlace Center, Dallas, Texas
Contact: http://www.turnaround.org/
June 8-9, 2006
MEALEYS PUBLICATION
Asbestos Bankruptcy Conference
Ritz-Carlton Hotel, Chicago, Illinois
Contact: http://www.mealeys.com/
June 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
How Are the Old Clients Doing?
Duquesne Club, Pittsburgh, Pennsylvania
Contact: http://www.turnaround.org/
June 14, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Annual Charity Golf Outing
Harborside Golf Course, Chicago, Illinois
Contact: 815-469-2935 or http://www.turnaround.org/
June 14, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Golf Outing / Spouse Social
Portland, Oregon
Contact: 503-223-6222 or http://www.turnaround.org/
June 14, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Signature Luncheon, Charity Event
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
June 14, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Meeting
Marriot Tyson's Corner, Vienna, Virginia
Contact: 703-912-3309 or http://www.turnaround.org/
June 14, 2006 (tentative)
TURNAROUND MANAGEMENT ASSOCIATION
LI TMA Texas Hold'em for Charity
Long Island, New York
Contact: 631-251-6296 or http://www.turnaround.org/
June 15, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Afghanistan - The Ultimate Turnaround Challenge
Oak Hill Country Club, Rochester, New York
Contact: http://www.turnaround.org/
June 15-18, 2006
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800; http://www.abiworld.org/
June 20, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Breakfast
TBA, Morristown, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
June 21-23, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Global Educational Symposium
Hyatt Regency, Chicago, Illinois
Contact: http://www.turnaround.org/
June 22-23, 2006
BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES
Ninth Annual Conference on Corporate Reorganizations
Successful Strategies for Restructuring Troubled
Companies
The Millennium Knickerbocker Hotel, Chicago,
Illinois
Contact: 903-595-3800; 1-800-726-2524;
http://www.renaissanceamerican.com/
June 27, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Luncheon
Citrus Club, Orlando, Florida
Contact: 561-882-1331 or http://www.turnaround.org/
June 27, 2006
TURNAROUND MANAGEMENT ASSOCIATION
What to Do When Internal Crime Strikes Your Company
New Jersey
Contact: http://www.turnaround.org/
June 29, 2006
TURNAROUND MANAGEMENT ASSOCIATION
5th Annual Lenders Panel - Arizona Chapter
National Bank of Arizona Conference Center, Phoenix, AZ
Contact: http://www.turnaround.org/
June 29 - July 2, 2006
NORTON INSTITUTES ON BANKRUPTCY LAW
Bankruptcy Law Institute
Jackson Lake Lodge, Jackson Hole, Wyoming
Contact: 770-535-7722 or
http://www2.nortoninstitutes.org/
July 11, 2006
TURNAROUND MANAGEMENT ASSOCIATION
The New Bankruptcy Code Nine Months Later
Rivers Club, Pittsburgh, Pennsylvania
Contact: http://www.turnaround.org/
July 12, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Function
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
July 12, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Meeting
Center Club, Baltimore, Maryland
Contact: 703-912-3309 or http://www.turnaround.org/
July 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Women's Event
TBA, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
July 13-16, 2006
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Newport Marriott, Newport, Rhode Island
Contact: 1-703-739-0800; http://www.abiworld.org/
July 18, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Breakfast
Marriott, Red Bank, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
July 18-19, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Distressed & Turnaround Investing Congress
Swiss"tel The Drake, New York, New York
Contact: http://www.turnaround.org/
July 19, 2006
TURNAROUND MANAGEMENT ASSOCIATION
South Florida Dinner
South Florida
Contact: 561-882-1331 or http://www.turnaround.org/
July 25, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Luncheon
Centre Club, Tampa, Florida
Contact: 561-882-1331 or http://www.turnaround.org/
July 26-29, 2006
AMERICAN BANKRUPTCY INSTITUTE
Southeast Bankruptcy Workshop
The Ritz Carlton Amelia Island, Amelia Island, Florida
Contact: 1-703-739-0800; http://www.abiworld.org/
July 31, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Annual Golf & Tennis Outing
Raritan Valley Country Club, Bridgewater, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
July 31, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Summer Social BBQ
Colonial Springs Country Club, Long Island, New York
Contact: 631-251-6296 or http://www.turnaround.org/
August 3, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Commercial Lenders Breakfast
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
August 3-5, 2006
AMERICAN BANKRUPTCY INSTITUTE
Mid-Atlantic Bankruptcy Workshop
Hyatt Regency Chesapeake Bay, Cambridge, Maryland
Contact: 1-703-739-0800; http://www.abiworld.org/
August 9, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Professional Development Meeting
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
August 15, 2006
TURNAROUND MANAGEMENT ASSOCIATION
DIP Panel Discussion
Kansas City, Missouri
Contact: http://www.turnaround.org/
August 16, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Family Night Baseball with the NJ Jackals
(Yogi Berra Autograph Night)
Jackals Stadium, Montclair, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
August 25, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Annual Fishing Trip
Point Pleasant, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
August 29, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Luncheon
Citrus Club, Orlando, Florida
Contact: 561-882-1331 or http://www.turnaround.org/
September 6, 2006
TURNAROUND MANAGEMENT ASSOCIATION
4th Annual Alberta Golf Tournament
Kananaskis Country Golf Course, Kananaskis, Alberta
Contact: 403-294-4954 or http://www.turnaround.org/
September 7, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Business Mixer
TBA, Seattle, Washington
Contact: 503-223-6222 or http://www.turnaround.org/
September 7-8, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Saratoga Regional Conference
Gideon Putnam Hotel, Saratoga Springs, New York
Contact: http://www.turnaround.org/
September 7-9, 2006
AMERICAN BANKRUPTCY INSTITUTE
Southwest Bankruptcy Conference
Wynn Las Vegas, Las Vegas, Nevada
Contact: 1-703-739-0800; http://www.abiworld.org/
September 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Meeting
Marriott Tyson's Corner, Vienna, Virginia
Contact: 703-912-3309 or http://www.turnaround.org/
September 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Breakfast
TBA, Secaucus, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
September 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
LI Turnaround Formal Event
Long Island, New York
Contact: http://www.turnaround.org/
September 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Function
Sydney, Australia
Contact: 0438 653 179 or www.turnaround.org
September 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Formal Event - Major Speaker to be Announced
Long Island, New York
Contact: 631-251-6296 or http://www.turnaround.org/
September 17-24, 2006
NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES
Optional Alaska Cruise
Seattle, Washington
Contact: 800-929-3598 or http://www.nabt.com/
September 20, 2006
TURNAROUND MANAGEMENT ASSOCIATION
South Florida Dinner
Bankers Club, Miami, Florida
Contact: 561-882-1331 or http://www.turnaround.org/
September 24, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Restructuring the Troubled High Tech Company
Arizona
Contact: http://www.turnaround.org/
September 26, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Luncheon
Centre Club, Tampa, Florida
Contact: 561-882-1331 or http://www.turnaround.org/
September 27, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Joint Education Program with NYIC Joint Reception
CFA/RMA/IWIRC
Woodbridge Hilton, Iselin, NJ
Contact: http://www.turnaround.org/
September 27, 2006
TURNAROUND MANAGEMENT ASSOCIATION
7th Annual Cross Border Business Restructuring and
Turnaround Conference
Banff, Alberta
Contact: http://www.turnaround.org/
October 5, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Commercial Lenders Breakfast
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
October 10, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Meeting
Center Club, Baltimore, Maryland
Contact: 703-912-3309 or http://www.turnaround.org/
October 11, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Professional Development Meeting
Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
October 11-14, 2006
TURNAROUND MANAGEMENT ASSOCIATION
2006 Annual Conference
Milleridge Cottage, Long Island, New York
Contact: 312-578-6900; http://www.turnaround.org/
October 17, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Updates on the New Bankruptcy Law
Kansas City, Missouri
Contact: http://www.turnaround.org/
October 19, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Billards Networking Night - Young Professionals
TBA, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
October 26, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Speaker Series #3
TBA, Calgary, Alberta
Contact: 403-294-4954 or http://www.turnaround.org/
October 26, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Speaker Series #3
TBA, Calgary, Alberta
Contact: 403-294-4954 or http://www.turnaround.org/
October 31, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Luncheon
Citrus Club, Orlando, Florida
Contact: 561-882-1331 or http://www.turnaround.org/
October 31 - November 1, 2006
INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION
IWIRC Annual Conference
San Francisco, California
Contact: http://www.iwirc.com/
November 1, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Halloween Isn't Over! - Ghosts of turnarounds past who
remind you about what you should have done differently
Portland, Oregon
Contact: http://www.turnaround.org/
November 1-4, 2006
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
National Conference of Bankruptcy Judges
San Francisco, California
Contact: http://www.ncbj.org/
November 7, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Breakfast
Marriott, Bridgewater, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
November 8, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Breakfast Meeting
Marriott Tyson's Corner, Vienna, Virginia
Contact: 703-912-3309 or http://www.turnaround.org/
November 8, 2006
TURNAROUND MANAGEMENT ASSOCIATION
TMA Australia National Conference
Sydney, Australia
Contact: http://www.turnaround.org/
November 14, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Luncheon Program
St. Louis, Missouri
Contact: 815-469-2935 or http://www.turnaround.org/
November 15, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Joint Reception with NYIC/NYTMA
TBA, New York
Contact: 908-575-7333 or http://www.turnaround.org/
November 15, 2006
LI TMA Formal Event
TMA Australia National Conference
Long Island, New York
Contact: http://www.turnaround.org/
November 15, 2006
TURNAROUND MANAGEMENT ASSOCIATION
South Florida Dinner
Citrus Club, Orlando, Florida
Contact: 561-882-1331 or http://www.turnaround.org/
November 16, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Bankruptcy Judges Panel
Duquesne Club, Pittsburgh, Pennsylvania
Contact: http://www.turnaround.org/
November 16, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Dinner Program
TBA, Seattle, Washington
Contact: 503-223-6222 or http://www.turnaround.org/
November 23, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Martini Party
Vancouver, British Columbia
Contact: 403-294-4954 or http://www.turnaround.org/
November 28, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Luncheon
Centre Club, Tampa, FL
Contact: 561-882-1331 or http://www.turnaround.org/
November 29, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Special Program
TBA, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
November 30-December 2, 2006
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Hyatt Regency at Gainey Ranch, Scottsdale, Arizona
Contact: 1-703-739-0800; http://www.abiworld.org/
December 6, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Holiday Dinner
Portland, Oregon
Contact: 503-223-6222 or http://www.turnaround.org/
December 7, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Networking Breakfast
The Newark Club, Newark, New Jersey
Contact: 908-575-7333 or http://www.turnaround.org/
December 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
LI TMA Holiday Party
TBA, Long Island, New York
Contact: 631-251-6296 or http://www.turnaround.org/
December 13, 2006
TURNAROUND MANAGEMENT ASSOCIATION
Christmas Function
GE Commercial Finance, Sydney, Australia
Contact: 0438 653 179 or http://www.turnaround.org/
February 2007
AMERICAN BANKRUPTCY INSTITUTE
International Insolvency Symposium
San Juan, Puerto Rico
Contact: 1-703-739-0800; http://www.abiworld.org/
April 11-15, 2007
AMERICAN BANKRUPTCY INSTITUTE
ABI Annual Spring Meeting
J.W. Marriott, Washington, DC
Contact: 1-703-739-0800; http://www.abiworld.org/
March 27-31, 2007
TURNAROUND MANAGEMENT ASSOCIATION
Spring Conference
Four Seasons Las Colinas, Dallas, Texas
Contact: http://www.turnaround.org/
March 29-31, 2007
ALI-ABA
Chapter 11 Business Reorganizations
Scottsdale, Arizona
Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/
June 6-9, 2007
ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS
23rd Annual Bankruptcy & Restructuring Conference
Westin River North, Chicago, Illinois
Contact: http://www.airacira.org/
June 14-17, 2007
AMERICAN BANKRUPTCY INSTITUTE
Central States Bankruptcy Workshop
Grand Traverse Resort, Traverse City, Michigan
Contact: 1-703-739-0800; http://www.abiworld.org/
July 12-15, 2007
AMERICAN BANKRUPTCY INSTITUTE
Northeast Bankruptcy Conference
Marriott, Newport, RI
Contact: 1-703-739-0800; http://www.abiworld.org/
October 10-13, 2007
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
National Conference of Bankruptcy Judges
Orlando, Florida
Contact: http://www.ncbj.org/
October 16-19, 2007
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Copley Place, Boston, Massachusetts
Contact: 312-578-6900; http://www.turnaround.org/
December 6-8, 2007
AMERICAN BANKRUPTCY INSTITUTE
Winter Leadership Conference
Westin Mission Hills Resort, Rancho Mirage, California
Contact: 1-703-739-0800; http://www.abiworld.org/
March 25-29, 2008
TURNAROUND MANAGEMENT ASSOCIATION
TMA Spring Conference
Ritz Carlton Grande Lakes, Orlando, Florida
Contact: http://www.turnaround.org/
September 24-27, 2008
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
National Conference of Bankruptcy Judges
Scottsdale, Arizona
Contact: http://www.ncbj.org/
October 28-31, 2008
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Copley Place, Boston, Massachusetts
Contact: 312-578-6900; http://www.turnaround.org/
October 5-9, 2009
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
Marriott Desert Ridge, Phoenix, Arizona
Contact: 312-578-6900; http://www.turnaround.org/
2009 (TBA)
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
National Conference of Bankruptcy Judges
Las Vegas, Nevada
Contact: http://www.ncbj.org/
October 4-8, 2010
TURNAROUND MANAGEMENT ASSOCIATION
TMA Annual Convention
JW Marriott Grande Lakes, Orlando, Florida
Contact: http://www.turnaround.org/
2010 (TBA)
NATIONAL CONFERENCE OF BANKRUPTCY JUDGES
National Conference of Bankruptcy Judges
New Orleans, Louisiana
Contact: http://www.ncbj.org/
The Meetings, Conferences and Seminars column appears in the
Troubled Company Reporter each Wednesday. Submissions via e-mail
to conferences@bankrupt.com are encouraged.
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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.
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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. Marie Therese V. Profetana, Shimero Jainga, Emi Rose S.R.
Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo,
Christian Q. Salta, Jason A. Nieva, Lucilo Junior M. Pinili, Tara
Marie A. Martin and Peter A. Chapman, Editors.
Copyright 2006. 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 $725 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.
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