/raid1/www/Hosts/bankrupt/TCR_Public/060406.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Thursday, April 6, 2006, Vol. 10, No. 82
Headlines
ACCELLENT INC: Incurs $116.7 Million Net Loss in Fourth Quarter
ACXIOM CORP: ValueAct Nominates Three Directors to Board
AES CORP: Financial Restatements Trigger Senior Bank Loan Default
APX HOLDINGS: Has Until May 1 to File Schedules and Statements
APX HOLDINGS: U.S. Trustee Appoints Five-Member Official Committee
ASARCO LLC: Baker Botts OK'd as Subsidiary Debtors' Bankr. Counsel
ATLANTIS PLASTICS: Dec. 31 Balance Sheet Upside Down by $19.8 Mil.
AUTONATION INC: Gets Lender Commitments for $600 Million Term Loan
AVETA INC: Posts 51.4% Year-Over-Year Revenue Increase in 2005
BALLY TOTAL: Obtains Waivers from Senior Secured Lenders
BERRY PLASTICS: S&P Places B+ Corp. Credit Rating on CreditWatch
BIRCH TELECOM: Asks Court's Approval on SBC and BellSouth Deals
BLOCKBUSTER INC: Netflix Presses Patent Infringement Suit
BLUEGREEN CORP: Renews GE Receivables Facility & Doubles GMAC Loan
CARAUSTAR IND: Borrows $145M to Help Fund $257M Notes Redemption
CATHOLIC CHURCH: Spokane Wants to Settle 75 Abuse Claims for $46M
CBRL GROUP: S&P Rates $1.25 Billion Secured Credit Facility at BB+
CHARTER COMMS: Initiates Refinancing of $6.8 Billion Senior Loans
CHUMASH CASINO: S&P Lifts Corp. Credit & Sr. Unsec. Ratings to BB+
CIENA CORP: S&P Puts B Rating on Proposed $250 Million Sr. Notes
COLLINS & AIKMAN: Asks to Reject 15 Equipment Contracts
CONJUCHEM INC: January 31 Balance Sheet Upside-Down by $31.6 Mil.
CONSTELLATION BRANDS: Vincor Merger Cues Fitch to Affirm Ratings
CONSUMERS ENERGY: Fitch Rates $300 Million Credit Facility at BB+
CONSUMERS TRUST: Hires F. Treager to Advise on English Law Matters
CONVERSENT HOLDINGS: Moody's Lifts $188MM Term Loan Rating to B2
COSINE COMMS: Burr Pilger Raises Going Concern Doubt
DANA CORPORATION: Eight Brokers May Own or Acquire Large Positions
DANA CORP: Incurs $376 Million Net Loss in Fourth Quarter 2005
DANA CORP: Wants Court to Approve 1102(b)(3) Information Protocol
DEATH ROW: Files for Bankruptcy Following $107 Million Judgment
DEL LABORATORIES: S&P Lowers Corporate Credit Rating to B- from B
DYNEGY HOLDINGS: Fitch Rates $600 Million Credit Facility at BB-
ENRON CORP: Inks 24 Settlement Pacts Resolving Supply Disputes
ENTERGY NEW ORLEANS: Seeks $718,000,000 in Federal Funding
FAIRFAX FINANCIAL: Fitch Holds Low-B Ratings on Negative Watch
FINOVA GROUP: Prepaying Sr. Sec. Noteholders $59.35M on May 15
FIRST FRANKLIN: Moody's Rates Class B-2 Certificates at Ba1
FLYI INC: Has Until June 30 to File Chapter 11 Reorganization Plan
FORD CREDIT: Moody's Upgrades Ratings on 8 Securitization Tranches
FRIENDLY ICE CREAM: Posts $30MM Net Loss in 4th Qtr. Ended Jan. 1
GEARS LTD: Moody's Lifts Rating on Class E Certificates to Baa3
GENERAL MOTORS: Fitch Holds B Issuer Default Rating on Neg. Watch
GENERAL MOTORS: Fitch Revises GMAC Rating Watch Status to Positive
GENERAL MOTORS: $14 Billion Transaction Cues DBRS' Ratings Review
GENERAL MOTORS: DBRS Confirms B Ratings After Cerberus Deal Closes
GENEVA STEEL: Chapter 11 Trustee Wants to Retain Altman as Actuary
GENTEK INC: R.A. Rubin, with 6.07% Equity Stake, Wants Board Seat
GLATFELTER: Completes Purchase of NewPage Carbonless Biz for $80MM
GLATFELTER: Inks New $300 Million Senior Credit Facility
GLATFELTER (P.H.): S&P Rates Proposed $200 Million Notes at BB+
GLOUCESTER CREDIT: DBRS Places BBB Rating on Collateral Notes
GS AUTO: Moody's Lifts Ba3 Rating on Class D Securities to Ba1
H&E EQUIPMENT: Earns $14.7 Million of Net Income in 1st Quarter
INTEGRATED ELECTRICAL: Court Approves Amended Disclosure Statement
INTEGRATED ELECTRICAL: Gets Final Approval on $80MM DIP Financing
INTEGRATED ELECTRICAL: Gets Final Approval on Cash Collateral Use
INTERNATIONAL PAPER: Gets Access to $2 Billion of New Loans
INTERSTATE BAKERIES: Looks to ATL to Review 2006 Tax Assessments
J.L. FRENCH: Court Approves Kirkland & Ellis' Retention as Counsel
JP MORGAN: Moody's Puts Low-B Ratings on Two Certificate Classes
K2 INC: Earns $14.7 Million of Net Income in Fourth Quarter
KANSAS CITY SOUTHERN: Delays Filing of 2005 Annual Reports
KANSAS CITY SOUTHERN: S&P Lowers Preferred Stock Ratings to CCC
KMART CORP: Global Property's Request for Sanctions Draws Fire
KRATON POLYMERS: S&P Affirms B+ Rating & Revises Outlook to Stable
KRONOS INT'L: Fitch Rates Proposed EUR400 Million Sr. Notes at BB
LEVEL 3: Fitch Affirms CC Sub. Debt Rating With Stable Outlook
LEVITZ HOME: Subsidiary Completes New $89 Million Credit Facility
LG.PHILIPS DISPLAYS: Taps Beringea LLC as Investment Banker
LG.PHILIPS DISPLAYS: Taps Barrera Siqueiros as Special Counsel
LIFESTYLE INNOVATIONS: Dec. 31 Equity Deficit Widens to $6.1 Mil.
LOVESAC CORP: Hires Getzler Henrich as Restructuring Consultant
MARINE MANAGEMENT: Case Summary & 20 Largest Unsecured Creditors
MARK KALISCH: Case Summary & 6 Largest Unsecured Creditors
MAXTOR CORP: Cutting 900 Jobs in Singapore Plant
MERIDIAN AUTOMOTIVE: Ct. OKs First Industrial Sale-Leaseback Deal
MESABA AVIATION: Final DIP Hearing Adjourned to April 25
METROMEDIA INTERNATIONAL: Delays Filing of 2005 Annual Report
MICROVISION INC: PwC Expresses Going Concern Doubt Opinion
MIRANT CORPORATION: Incurs $1.3 Billion Net Loss in 2005
MMCA AUTO: Moody's Upgrades Ba3 Class B Securities Rating to Baa3
MORTON HOLDINGS: Howard Cohen Has Until May 3 to Object to Claims
NELLSON NUTRACEUTICAL: Panel Wants to Hire Reed Smith as Counsel
NOBEX CORPORATION: Panel Wants Court to Void Biocon Agreements
NTL INVESTMENT: Virgin Deal Cues DBRS to Confirm BB and B Ratings
NUTRAQUEST INC: Wants Until Oct. 9 to Remove Civil Actions
NVIDIA CORP: S&P Puts B+ Corporate Credit Rating on Positive Watch
OCA INC: Has Until October 10 to Make Lease-Related Decisions
OMEGA HEALTHCARE: Closes New $200 Million Credit Facility
OPTEUM MORTGAGE: Moody's Places Class M-10 Certs. Rating at Ba1
OWENS & MINOR: Prices $200 Million of 6.35% Senior Notes Due 2016
OWENS CORNING: Files Fifth Amended Plan & Disclosure Statement
PACIFIC LUMBER: Might Seek Protection Under The Bankruptcy Code
PLIANT CORP: Hiring Mesirow Financial as Financial Advisor
REGIONS AUTO: Moody's Confirms Ba3 Rating on Class C Securities
SAINT VINCENTS: Court Continues Stay of 21 Malpractice Suits
SANLUIS CORP: Fitch Affirms $133 Million Debts' CCC+ Ratings
SCOTIA PACIFIC: Might Seek Protection Under The Bankruptcy Code
SHURGARD STORAGE: Posts $494,000 Net Loss in Year Ended Dec. 31
SOLO CUP: Posts $8.1 Million Net Loss in Year Ended January 1
SOUTHERN STAR: S&P Rates $200 Million Sr. Unsecured Notes at BB+
STANDARD PARKING: Earns $14.7 Million of Net Income in 2005
STRESSGEN BIOTECHNOLOGIES: Reports Full-Year Financial Results
TANGER FACTORY: Sells Outlet Center for $14.7 Million in Minnesota
TAUBMAN CENTERS: Fitch Affirms $300 Mil. Pref. Stock's BB- Rating
TEKELEC: Delay in Filing Annual Reports Might Trigger a Default
TENET HEALTHCARE: Judge Declares Mistrial in San Diego Jury Trial
TENET HEALTHCARE: Fitch Affirms B- Senior Unsecured Bond Rating
TRANS-INDUSTRIES: Files for Chapter 11 Reorganization
TRANSCONTINENTAL INC: DBRS Confirms BBB(High) Debentures Rating
TRICOM SA: In Talks with Creditors to Restructure Balance Sheet
TRM CORP: Incurs $13.7 Million Net Loss in Fourth Quarter
U.S. CAN: Company's Request Prompts S&P to Withdraw B Rating
UAL CORP: Plan Oversight Committee Wants Itself Dissolved
UAL CORP: Settling Multi-Mil. Aircraft Dispute with Wells Fargo
UNITED RENTALS: S&P Holds BB- Corp. Credit Rating on Neg. Watch
VECTOR GROUP: Dec. 31 Balance Sheet Shows $33 Mil. Positive Equity
VENTURE HOLDINGS: Chapter 7 Trustee Taps Clark Hill as Co-Counsel
VITRO SA: Sells 51% of Vitrocrisa Stake to Libbey Inc. for $103MM
WARRIOR ENERGY: Files Prospectus for $172.5-Mil Stock Offering
WFS FINANCIAL: Moody's Lifts Ratings on 14 Classes of Securities
WHOLE AUTO: Moody's Lifts Ba3 Class D Securities Rating to Baa3
ZIFF DAVIS: S&P Lowers Sub. Debt Rating to CC With Neg. Outlook
* Andrew J. Torgove joins SSG as a Managing Director in New York
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
*********
ACCELLENT INC: Incurs $116.7 Million Net Loss in Fourth Quarter
---------------------------------------------------------------
Accellent Inc., a wholly owned subsidiary of Accellent Holdings
Corp. reported strong results for the three and twelve months
ended December 31, 2005, reflecting contributions from its
acquisition of MedSource Technologies, Inc., on June 30, 2004, and
continued organic growth.
KKR Acquisition of Accellent
As previously disclosed, on November 22, 2005, affiliates of
Kohlberg Kravis Roberts & Co. L.P. and Bain Capital completed
the acquisition of the Company in a transaction valued at
approximately $1.27 billion. As part of the transaction, members
of Accellent management partnered with KKR and Bain by retaining
an equity stake in Accellent. The acquisition resulted in several
large expenses for merger-related costs, debt prepayment
penalties, stock compensation, accelerated interest expense and
purchase accounting for inventory.
Recent Acquisitions
As previously announced, the Company completed two acquisitions in
the later part of 2005 focused on the growing spine and knee
replacement segments of the orthopaedic industry. On Sept. 12,
2005, the Company acquired substantially all of the assets of
Campbell Engineering, Inc., and on October 6, 2005, the Company
acquired Machining Technology Group, LLC. The 2005 acquisitions
strengthen the Company's ability to supply a full range of
innovative design, quick-turn development, engineering services,
component production and device assembly to its orthopaedic
customers. The results from the acquisitions are included in the
Company's historical results from the date of acquisition.
Fourth Quarter Financial Results
Net sales for the fourth quarter of 2005 increased 12.3% to
$120.9 million compared with $107.7 million in the corresponding
period of 2004. The net loss for the fourth quarter of 2005 was
$(116.7) million compared to net income in the corresponding
period of 2004 of $0.8 million. The net loss for the fourth
quarter of 2005 includes merger related costs of $47.9 million,
debt prepayment penalties of $29.9 million, write-offs of deferred
financing costs of $14.4 million, $2.4 million of bridge loan
expenses, stock based compensation charges of $13.1 million,
inventory step charges related to acquisitions of $10.8 million,
in-process R&D write-offs of $8.0 million, and restructuring and
other expenses of $0.6 million.
Adjusted EBITDA for the fourth quarter of 2005 increased 30.2% to
$26.2 million compared to $20.2 million in the corresponding
period of 2004.
Twelve-Month Financial Results
Net sales for the twelve months ended December 31, 2005,
increased 44.0% to $461.1 million compared with $320.2 million
in the corresponding period of 2004. MedSource was acquired on
June 30, 2004, and consequently the 2004 twelve-month results
only include MedSource from June 30, 2004. The acquisition of
MedSource and the 2005 acquisitions accounted for $97.3 million
of the increase in net sales for the twelve months ended
December 31, 2005. Net loss for the twelve months ended
December 31, 2005, was $(104.8) million compared to net loss in
the corresponding period of 2004 of $(5.6) million.
Adjusted EBITDA for the twelve months ended December 31, 2005, was
$98.3 million compared to $58.4 million in the corresponding
period of 2004.
Fourth Quarter Pro Forma Financial Results
Pro forma net sales for the fourth quarter ended December 31,
2005, increased 7.1% to $121.2 million compared with pro forma
net sales of $113.1 million in the corresponding period of 2004.
The Company's facility rationalization program negatively impacted
fourth quarter 2005 net sales by approximately 5%.
Pro forma Adjusted EBITDA for the fourth quarter ended December
31, 2005, increased 20.1% to $26.3 million compared to pro forma
Adjusted EBITDA of $21.9 million in the corresponding period of
2004. Pro forma adjusted EBITDA margins for the fourth quarter of
2005 improved to 21.7% from pro forma adjusted EBITDA margins of
19.4% in the fourth quarter of 2004.
Twelve-Month Pro Forma Financial Results
Pro forma net sales for the twelve months ended December 31, 2005,
increased 10.3% to $481.0 million compared with pro forma net
sales of $436.2 million in the corresponding period of 2004. The
Company's facility rationalization program negatively impacted
2005 net sales by approximately 4%.
Pro forma Adjusted EBITDA for the twelve months ended December 31,
2005, increased 32.7% to $105.5 million compared to pro forma
Adjusted EBITDA of $79.5 million in the corresponding period of
2004.
Accellent Inc. -- http://www.accellent.com/-- provides fully
integrated outsourced manufacturing and engineering services to
the medical device industry in the cardiology, endoscopy and
orthopaedic markets. Accellent has broad capabilities in design &
engineering services, precision component fabrication, finished
device assembly and complete supply chain management.
* * *
As reported in the Troubled Company Reporter on November 4, 2005,
Moody's Investors Service assigned a B2 corporate family rating to
Accellent Inc. Moody's also assigned a B2 rating to Accellent's
$450 million senior secured bank facilities and a Caa1 rating to
$325 million of senior subordinated notes issued by Accellent,
with an SGL-3 speculative grade liquidity rating.
As reported in the Troubled Company Reporter on November 3, 2005,
Standard & Poor's Ratings Services affirmed Accellent's 'B+'
corporate credit rating. S&P said the outlook is stable. At the
same time, S&P assigned a BB- rating to Accellent's $375 million
secured term loan B and $75 million revolving credit facility with
a recovery rating of '1', indicating a high expectation for full
recovery of principal in the event of a payment default. In
addition, Standard & Poor's assigned its 'B-' rating to the
company's $325 million fixed-coupon senior subordinated notes.
ACXIOM CORP: ValueAct Nominates Three Directors to Board
--------------------------------------------------------
Acxiom Corporation (Nasdaq: ACXM) received a letter from ValueAct
Capital Master Fund, LP, indicating its intention to nominate
three directors for election at Acxiom's 2006 annual shareholders
meeting:
a) Jeffrey W. Ubben, 44, co-founder and a managing member of
ValueAct Capital;
b) Louis J. Andreozzi, 47, sole member of Andreozzi
Consulting LLC, which provides consulting services to
ValueAct Capital; and
c) J. Michael Lawrie, 52, a partner at ValueAct Capital.
"We do not yet know the direction the ValueAct nominees seek for
the company, but it is clear that the current leadership and Board
are doing what is necessary to put the company on the right path,"
said Charles D. Morgan, Acxiom's chairman and company leader. "We
have again transformed the technology and offerings of the company
to meet increased demands from our clients. Our Board agreed that
we needed to make the investments for the long term, and our
shareholders are only now beginning to reap the benefits."
Lee Hodges, the company's chief operations leader, said, "Our
business planning and business execution processes, operational
trends, and sales pipeline activity give me confidence that the
company is positioned for even stronger financial success in
fiscal 2007, as reflected in the Financial Road Map the company
issued in January."
"We have also recently taken several strategic actions that will
financially validate the company's technology vision and ensure a
more rapid completion of the grid-computing solutions Acxiom and
EMC are jointly developing," Hodges continued. "We also expect to
benefit from two strategic, market-driven acquisitions completed
in fiscal 2006 - Digital Impact and InsightAmerica - that add
digital marketing and fraud- and risk-management solutions to
Acxiom's portfolio. And, we have turned our European operations
into a profitable enterprise and have laid the foundation to begin
adding more services to our data offerings there."
Morgan noted that "in contrast to ValueAct's criticisms of Acxiom,
stands the recent performance of the company. In fiscal 2006,
Acxiom realized a 23.5 percent increase in our stock price, an
improvement better than the performances of 60% of companies
listed on the Nasdaq exchange. In addition to the stock price
increase, we generated record revenue, earnings and free cash flow
in our third fiscal quarter."
The Board and senior leadership team have worked together to help
Acxiom meet its financial expectations in 50 of the past 55 fiscal
quarters, while increasing the company's revenues 13 fold during a
period of time when many of its competitors failed to sustain
their viability, Morgan noted.
"Acxiom has an extraordinarily well-qualified Board with proven
leaders from the world of business, government and academia,"
Morgan said. The Acxiom Board is comprised of nine members who
represent a broad cross-section of business experience and mature
judgment and perspectives.
Three non-management board members have the seasoning of being CEO
or Chairman of public companies; one director has served as Chief
of Staff to the President of the United States, and another has
also been a CFO of a public company. The Board also includes a
former CEO of a private company, a former Postmaster General of
the United States and current chief operations officer of a public
company, a noted scientist and former under secretary for
technology in the Department of Commerce, and a former college
president.
"The Board members believe that they should annually review the
composition and structure of the Board," Morgan said. In March,
the Board made two changes, appointing a new director and naming a
lead independent director. Presently, six of the nine Acxiom
Board members are independent based on Nasdaq guidelines,
including Michael J. Durham, who joined the Board in March.
Durham is a former director, president and chief executive officer
of Sabre, Inc. and former CFO of American Airlines, the world's
largest airline company.
Acxiom reported on March 6, 2006 that its independent directors
elected William T. Dillard II to serve in a newly created position
of lead independent director and vice chairman of the Board. In
the new position, Dillard, chairman and chief executive officer of
Dillard's, Inc., has agreed to provide a leadership role in
executive sessions and in other matters as appropriate.
Acxiom Board members up for election at the 2006 annual
shareholders meeting include Charles D. Morgan, Chairman of the
Board and company leader since 1975; and two independent
directors, Dr. Ann Die Hasselmo, managing director of Academic
Search Consultation Service and a Board member since 1993; and
William J. Henderson, chief operations officer of Netflix Inc. and
former postmaster general of the United States and a Board member
since 2001.
ValueAct's Ubben had earlier sought appointment to the Acxiom
Board, despite his desire to take the company private and
ValueAct's investments in Acxiom competitors. Ubben's request was
rejected by the Acxiom Board in May 2005, due to his conflict of
interest.
Subsequent to the Board's rejection of Ubben's candidacy, ValueAct
proposed to buy all the remaining shares of stock of the company
for $23 per share, later increasing its bid to $25 per share.
After due consideration, the Acxiom Board declined the proposals
and determined that they were opportunistic and not in the best
long-term interests of the company's shareholders, clients or
associates.
"While we have not felt it appropriate for Mr. Ubben to be a
member of our Board, I have had several conversations with him
over the last six months concerning our business strategy and
performance," Morgan said. "Mr. Ubben has indicated to me on more
than one occasion that he believes the company is headed in the
right direction, but ValueAct's letter shows us that Mr. Ubben and
his nominees think they can do a better job of leading Acxiom.
"Over the years, Mr. Ubben has made some constructive suggestions,
but generally he seems to have been looking for a quick price
appreciation related to a transaction rather than building long-
term shareholder value. This was confirmed when he approached us
in early 2005 about taking the company private, a move that placed
him at odds with the interests of all other shareholders," Morgan
continued.
"Acxiom's senior leadership team is united in its belief that
Acxiom's Board and leadership team together represent the right
team with the vision, strategy, discipline and experience to
deliver increasing profitability and leading-edge products and
services to the marketplace and the resulting increases in
shareholder value to investors."
Headquartered in Little Rock, Arkansas, Acxiom Corporation
(Nasdaq: ACXM) -- http://www.acxiom.com/-- integrates data,
services and technology to create and deliver customer and
information management solutions for many of the largest, most
respected companies in the world. The core components of Acxiom's
innovative solutions are Customer Data Integration technology,
data, database services, IT outsourcing, consulting and analytics,
and privacy leadership.
* * *
As reported in the Troubled Company Reporter on July 15, 2005,
Standard & Poor's Ratings Services affirmed its 'BB+' corporate
credit rating on Little Rock, Arkansas-based Acxiom Corp. At the
same, the outlook was revised to negative from positive,
reflecting the offer from the company's largest shareholder to buy
the remainder of the company's shares for $23 per share.
AES CORP: Financial Restatements Trigger Senior Bank Loan Default
-----------------------------------------------------------------
The AES Corporation will be restating its 2003 and 2004 financial
statements as a result of errors discovered by management during
the 2005 year-end closing process. The errors relate primarily to
three items:
-- correction of minority interest expense related to one of
the Company's foreign subsidiaries;
-- correction of tax expense related to additional withholding
taxes identified at one of the Company's foreign
subsidiaries and, certain adjustments derived from the
filing of the Company's 2004 income tax return in 2005; and
-- correction of the accounting for cash flow derivative
instruments as a result of a reassessment of the accounting
requirements.
Catherine M. Freeman, the Company's Vice President and Corporate
Controller, informs the Securities and Exchange Commission that
the Company's 2005 Annual Report on Form 10-K will reflect the
restated 2003 and 2004 financial results to correct errors in
those periods identified during its year-end closing process and
will be filed as soon as practicable. In addition, the Company
will file and restate its consolidated statement of operations for
the first, second, and third quarters of 2004 by amending its 2005
Quarterly Reports on Form 10-Q to reflect the restated amounts as
soon as practicable. The 2003, 2004 and interim period 2005
previously issued financial statements and report of the Company's
independent registered public accounting firm, Deloitte & Touche
LLP, should no longer be relied on.
The decision to restate prior financial statements was made on
March 31, 2006, by the Audit Committee of AES's Board of
Directors, on the recommendation of management and on discussion
with Deloitte & Touche. Based on management's review, it believes
that all errors were inadvertent and unintentional.
Default
As of March 31, 2006, the Company is in default under its senior
bank credit facility due to the restatement of its 2003 financial
statements. As a result, $200 million of the debt under the
Company's senior bank credit facility has been classified as
current on the balance sheet as of December 31, 2005. The Company
will need to obtain a waiver of this default and an amendment of
the representation relating to the 2003 financial statements
before the Company can borrow additional funds under the revolving
credit facility.
AES Corporation -- http://www.aes.com/-- is a global power
company. The Company operates in South America, Europe, Africa,
Asia and the Caribbean countries. Generating 44,000 megawatts of
electricity through 124 power facilities, the Company delivers
electricity through 15 distribution companies.
* * *
As reported in the Troubled Company Reporter on Jan. 11, 2006,
Moody's affirmed the ratings of The AES Corporation, including
its Ba3 Corporate Family Rating and the B1 rating on its senior
unsecured debt. Moody's said the rating outlook remains stable.
APX HOLDINGS: Has Until May 1 to File Schedules and Statements
--------------------------------------------------------------
The United States Bankruptcy Court for the Central District of
California gave APX Holdings, LLC, and its debtor-affiliates until
May 1, 2006, to file its Schedules of Assets and Liabilities and
Statement of Financial Affairs.
The Debtors tell the Court that they have a large number of
potential creditors and there are complex claims against each of
their estates. The Debtors tell the Court that the extension will
give them the time they need to sort through their business
records and organize the information necessary to accurately
complete their Schedules and Statements.
The Debtors have a limited number of employees available to
perform and oversee all of their chapter 11 reporting obligations.
The Debtors say that most of their time has been focused on
reporting obligations imposed by the Office of the U.S. Trustee.
The Debtors contend that if the extension weren't granted,
management would devote more time to compiling the schedules
rather than addressing numerous other legal and operational issues
arising during the early stages of the case.
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.
APX HOLDINGS: U.S. Trustee Appoints Five-Member Official Committee
------------------------------------------------------------------
The United States Trustee for Region 16 appointed five creditors
to serve on an Official Committee of Unsecured Creditors in APX
Holdings, LLC and its debtor-affiliates' chapter 11 cases:
1. Tri-State Staffing, Inc.
c/o Jay Schecter, Esq.
Vice President and General Counsel
160 Broadway, 15th Floor
New York, NY 10038
Tel: (212) 346-7960 or (212) 981-9506
Fax: (212) 346-9601
2. CRST Van Expedited, Inc.
c/o Wes Brackey
Secretary/Treasurer
3930 16th Avenue Southwest
Cedar Rapids, IA 52404
Tel: (319) 390-2691
3. Werner Enterprises, Inc.
c/o Richard S. Reiser, Esq.
Executive Vice President and General Counsel
P.O. Box 45308
Omaha, NE 68145-0308
Tel: (402) 894-3000
Fax: (402) 894-3736
4. NYK/GST Corporation
c/o William Maloney
Senior Vice President Finance
2417 East Carson Street, #210
Long Beach, CA 90810
Tel: (310) 518-6202
Fax: (310) 518-9443
5. W.W. Grainger, Inc.
c/o David S. Hanson, Esq.
Jane Hinton-Kedo, Esq. (alternate)
Legal Department
100 Grainger Parkway
Lake Forest, Il 60045-5201
Tel: (847) 535-1092
Fax: (847) 535-2050
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: Baker Botts OK'd as Subsidiary Debtors' Bankr. Counsel
------------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas in
Corpus Christi gave the 12 Subsidiary Debtors of ASARCO LLC to
employ Baker Botts LLP to serve as their bankruptcy counsel. The
Subsidiary Debtors' Chapter 11 cases are jointly administered with
ASARCO's case.
The Subsidiary Debtors are:
(1) Encycle, Inc.;
(2) ASARCO Consulting, Inc.;
(3) ALC, Inc.;
(4) American Smelting and Refining Company;
(5) AR Mexican Explorations, Inc.;
(6) AR Sacaton, LLC;
(7) ASARCO Master, Inc.;
(8) ASARCO Oil and Gas Company, Inc.;
(9) Bridgeview Management Company, Inc.;
(10) Covington Land Company;
(11) Government Gulch Mining Company, Limited; and
(12) Salero Ranch, Unit III, Community Association, Inc.
As reported in the Troubled Company Reporter on Feb. 24, 2006,
Baker Botts will:
(a) assist the Subsidiary Debtors in exploring restructuring
alternatives and developing and implementing a
reorganization strategy;
(b) develop, negotiate, and promulgate a Chapter 11 plan of
reorganization and disclosure statement for the Subsidiary
Debtors;
(c) advise the Subsidiary Debtors with respect to their rights
and obligations as debtors and other areas of bankruptcy
law;
(d) protect and preserve the Subsidiary Debtors' estates,
including, the prosecution, defense, negotiations and
prosecutions of all actions on filed for or against the
Subsidiary Debtors and their estates;
(e) prepare all necessary applications, motions, answers,
orders, briefs, reports and other papers in connection
with the administration of their estates;
(f) represent the Subsidiary Debtors at all hearings and
proceedings;
(g) perform all other necessary legal services in connection
with their Chapter 11 cases; and
(h) render general, non-bankruptcy legal services as the
Subsidiary Debtors may from time to time request,
including, without limitation, environmental, corporate,
real estate, litigation, tax, and other matters.
Most of the Subsidiary Debtors have no assets and current
operations, so compensation for Baker Botts' services will be paid
by ASARCO.
Baker Botts will not keep separate time entries for each of the
Subsidiary Debtors from the time records with services provided
to ASARCO. Baker Botts will seek compensation for services
provided to both ASARCO and the Subsidiary Debtors by filing a
single, combined fee application.
Baker Botts will be compensated on its standard hourly basis,
plus reimbursement of expenses charges incurred:
Professional Hourly Rate
------------ -----------
Partners $375-$700
Associates $195-$370
Paralegals $120-$185
Paralegal Clerks $50-$100
Mr. Kinzie discloses that, in matters relating to intercompany
claims, Baker Botts will not represent the Subsidiary Debtors in
the liquidation of any potential claim held by or against ASARCO,
or the determination of the priority status of any claim.
Instead, co-counsel with Baker Boots will handle any matters
related to any intercompany claim.
About ASARCO LLC
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).
ATLANTIS PLASTICS: Dec. 31 Balance Sheet Upside Down by $19.8 Mil.
------------------------------------------------------------------
Atlantis Plastics, Inc., delivered its consolidated financial
statements for the year ended Dec. 31, 2005, to the Securities and
Exchange Commission on Mar. 31, 2006.
The company reported $6,671,000 of net income on $424,326,000 of
net sales for the year ended Dec. 31, 2005.
At Dec. 31, 2005, the company's balance sheet showed $238,912,000
in total assets and $258,795,000 in total liabilities, resulting
in a $19,883,000 stockholders' deficit.
"Overall, we are extremely pleased with our fourth quarter and
full year 2005 operating results," Anthony F. Bova, President and
Chief Executive Officer, said.
"In the fourth quarter, we increased gross profit by 25%,
operating profit by 54% and EBITDA by 42%. For the full calendar
year, excluding the impact of the write-off of unconsummated
financing and option cancellation charges, we increased our gross
profit by 15%, operating profit by 27% and EBITDA by 20%.
"In our Plastic Films segment, we achieved excellent operating
results during a period characterized by unprecedented increases
in raw material costs as a result of the production disruptions
affecting the oil and gas industry caused by the Gulf Coast
hurricanes.
"While many of our competitors declared force majeure, our focus
on the maintenance of our resin supply channels allowed our
Plastic Films manufacturing facilities to run all production lines
without disruption and positioned our business to consistently
meet the film demands of our customers.
"Our net sales volume (measured in pounds) increased 7% for the
quarter and 4% for the full year. As a result of our continuing
focus on inventory management and margin protection, our Plastic
Films' gross profit and operating profit for the fourth quarter of
2005 increased 25% and 56%, respectively, from the fourth quarter
in 2004.
"For 2005, we increased our Plastic Films' gross profit by 16% and
operating profit by 27%, respectively, from the levels achieved in
2004. With the peaking of resin prices in the fourth quarter, we
expect an inventory correction in the first half of 2006 as all
end-users reduce inventory levels from the peak levels achieved in
the fourth quarter of 2005.
"Our Injection Molding segment had excellent operating results,
with strong customer demand in both our building products lines
and our traditional custom injection molded business.
"For the fourth quarter of 2005, sales increased 17%, gross profit
increased 34% and operating profit increased 96%. For the full
year 2005, sales increased 16%, gross profit increased 16% and
operating profit increased 31%, compared with the levels achieved
in 2004.
"As we move into 2006, we believe that our Injection Molding
business is positioned to see continued growth within the OEM
appliance sector, as well as continued market penetration and
expansion of our building products customer base.
"In our Profile Extrusion business, sales were up approximately
29% for the quarter and 37% for the full year, primarily resulting
from the acquisition of LaVanture in the fourth quarter of 2004.
"Our fourth quarter operating results were negatively impacted by
significant weakness in the RV sector and inefficiencies in
manufacturing after the plant consolidation and integration of the
LaVanture and Atlantis facilities in Elkhart, Indiana.
"Operating profit for the fourth quarter and full year 2005
decreased 38% and 17%, respectively, from the comparable periods
in 2004. We have implemented a specific operating plan to improve
the performance of this business segment."
Full-text copies of Atlantis Plastics, Inc.'s consolidated
financial statements for the year ended Dec. 31, 2005, are
available for free at http://ResearchArchives.com/t/s?777
About Atlantis Plastics, Inc.
Atlantis Plastics, Inc. -- http://www.atlantisstock.com/-- is a
leading U.S. manufacturer of polyethylene stretch and custom films
and molded plastic products. Stretch films are used to wrap
pallets of materials for shipping or storage. Custom films are
made-to-order specialty film products used in the industrial and
packaging markets. Atlantis' injection molded and profile extruded
plastic products are used primarily in the appliance, automotive,
agricultural, building supply, and recreational vehicle
industries.
At Dec. 31, 2005, the company's balance sheet shows a $19,883,000
stockholders' deficit compared to a $72,277,000 positive
stockholders' equity at Dec. 31. 2004.
* * *
As reported in the Troubled Company Reporter on Feb. 25, 2005,
Moody's Investors Service assigned ratings to Atlantis Plastics,
Inc.'s $145 million first lien credit facility at B2; $75 million
second lien term C loan at Caa1; senior implied rating at B2; and
senior unsecured issuer rating (non-guaranteed exposure) at Caa2.
Moody's said the outlook is stable at that time.
As reported in the Troubled Company Reporter on Feb. 22, 2005,
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on Atlanta, Georgia-based Atlantis Plastics, Inc.
At the same time, Standard & Poor's assigned its 'B' rating and
its recovery rating of '3' to the company's $25 million senior
secured revolving credit facility due 2011 and $120 million senior
secured term loan B due 2011.
Standard & Poor's also assigned its 'CCC+' rating and its recovery
rating of '5' to the company's $75 million junior secured term
loan C due 2012.
AUTONATION INC: Gets Lender Commitments for $600 Million Term Loan
------------------------------------------------------------------
AutoNation, Inc. (NYSE: AN) received commitments from lenders for
a $600 million term loan. Proceeds from this term loan will be
used to provide a portion of the funding required in connection
with AutoNation's equity tender offer and debt tender offer and
consent solicitation that were commenced on March 10, 2006.
The $600 million in term loan commitments exceeded AutoNation's
original expectations. Accordingly, AutoNation anticipates that
its previously reported offering of senior unsecured notes will be
reduced to an aggregate principal amount of $600 million.
AutoNation expects to finance the equity tender offer and debt
tender offer and consent solicitation with the proceeds of the
$600 million term loan, the net proceeds from the offering of the
$600 million principal amount of senior unsecured notes, revolving
credit facility borrowings of approximately $125 million and
approximately $200 million of existing cash on hand.
An updated presentation of the estimated sources and uses of funds
for this transactions is available at no charge at:
http://ResearchArchives.com/t/s?77c
As reported in the Troubled Company Reporter on March 29, 2006,
subject to certain conditions, the tender offers are scheduled to
expire at 10:00 a.m., New York City time, on April 12, 2006
(unless extended by the Company) and the financing transactions
are expected to be consummated concurrently with the expiration of
the tender offers.
The information agent for the tender offers and consent
solicitation is Innisfree M&A Incorporated. Requests for
documents relating to the tender offers and the consent
solicitation may be directed to:
Innisfree M&A Incorporated,
Telephone (212) 750-5833 (collect)
Toll Free (877) 825-8631
The dealer managers for the equity tender offer are:
J.P. Morgan Securities Inc.
Telephone (877) 371-5947
and
Banc of America Securities LLC
Telephone (888) 583-8900, ext. 8537
The dealer managers for the debt tender offer and consent
solicitation are:
J.P. Morgan Securities, Inc.
Telephone (212) 270-7407 (collect)
and
Wachovia Securities
Telephone (704) 715-8341 (collect)
About AutoNation Inc.
Headquartered in Fort Lauderdale, Florida, AutoNation, Inc. --
http://www.autonation.com-- is America's largest automotive
retailer and a component of the Standard and Poor's 500 Index.
AutoNation has approximately 27,000 full-time employees and owns
and operates 346 new vehicle franchises in 17 states.
* * *
As reported in the Troubled Company Reporter on Mar. 9, 2006,
Fitch downgraded AutoNation, Inc.'s ratings:
-- Issuer Default Rating to 'BB+' from 'BBB-'
-- $600 million bank credit facility to 'BB+' from 'BBB-'
-- Senior unsecured notes to 'BB+' from 'BBB-'
Fitch also expects to rate AutoNation's new senior unsecured notes
and Term Loan A 'BB+'. Fitch said the Rating Outlook is Negative.
AVETA INC: Posts 51.4% Year-Over-Year Revenue Increase in 2005
--------------------------------------------------------------
Aveta Inc., reported pro forma full-year revenues for 2005 of
$938.2 million, an increase of 51.4% over pro forma revenues of
$619.6 million in 2004. Pro forma earnings before interest,
taxes, depreciation and amortization grew 143.3% to $110.2 million
in 2005, compared to pro forma EBITDA of $45.3 million in 2004.
Aveta's membership base of enrolled Medicare beneficiaries grew
31.3% during 2005 to 130,543 at year's end.
Pro forma premium revenues from the company's core managed care
businesses, which focus on meeting the healthcare needs of seniors
and the chronically ill, totaled $905.7 million in 2005,
accounting for more than 95% of the company's total revenues and
representing 53% growth compared to the prior year.
Pro forma medical costs totaled $725.4 million in 2005,
representing a medical loss ratio of 80.1%, compared to a pro
forma medical loss ratio of 83.6% in 2004.
Pro forma administrative expenses were $103.6 million in 2005,
representing an administrative expense ratio of 11.0%, as compared
to a pro forma administrative expense ratio of 12.7% in 2004.
"2005 was a year of dynamic growth for Aveta as the number of
seniors in plans provided or managed by our operating companies in
Puerto Rico, California and Illinois grew by more than 30% while
our range of plan offerings and medical management services
continued to expand," said Timothy J. O'Donnell, President and
Chief Executive Officer of Aveta. "On a pro forma basis, medical
loss and administrative expense ratios improved, reflecting higher
reimbursements and Aveta's strong focus on its core competency of
community medical management, an innovative approach to
integrating healthcare prevention and treatment at the local
level. We credit that approach for the strong acceptance of
Aveta's MMM subsidiary, Puerto Rico's largest provider of Medicare
Advantage services. MMM received a 100th percentile overall
rating in customer satisfaction in the annual survey of Medicare
Advantage plan customers conducted by the Centers for Medicare and
Medicaid Services.
"We also took a number of steps that will position Aveta for
future growth," he said. "In December, Aveta successfully
completed a 144A private placement of 28.8 million shares of
common stock to institutional investors, generating $389 million
of proceeds. Part of the proceeds of the offering was used to
repay $165 million in company debt. The issuance of equity and
reduction in debt resulted in upgrades of the Company's credit
ratings by Moody's and Standard & Poor's.
"During the year, we received approvals from CMS to offer three
Special Needs Plans in 2006, including chronic special needs plans
in Puerto Rico and Illinois and a dual-eligibles special needs
plan in Puerto Rico. A number of senior appointments in late 2005
and early 2006, including those of CFO and COO, will ensure that
Aveta has the talent and management bandwidth to continue to build
its existing businesses and seek new opportunities going forward."
About Aveta Inc.
Headquartered in Fort Lee, N.J., Aveta -- http://www.aveta.com/--
is one of the largest companies focusing on Medicare Advantage and
a leader in addressing the unique healthcare needs of the
chronically ill. Caring for over 130,000 Medicare beneficiaries,
Aveta is the 5th largest for-profit Medicare Advantage enterprise,
and operates more Chronic SNPs than any other company.
* * *
As reported in the Troubled Company Reporter on Feb. 17, 2006,
Standard & Poor's Ratings Services raised its counterparty credit
rating on Aveta Inc. and its senior secured debt ratings on MMM
Holdings Inc. and NAMM Holdings Inc., to 'B' from 'B-' and removed
these ratings from CreditWatch. The outlook is positive.
The upgrade reflects Aveta's improved financial condition
attributed to strengthened health plan profitability and more
balance capital structure resulting from the repayment of debt and
addition of equity stemming from its recently completed private
placement of equity shares.
The credit facilities consist of a $287.6 million term loan due
August 2011 and a $20 million revolver due August 2012.
BALLY TOTAL: Obtains Waivers from Senior Secured Lenders
--------------------------------------------------------
In exchange for a $2,062,500 fee, Bally Total Fitness Holding
Corporation obtained an amendment and waiver from the lenders
under its $275 million senior secured credit facility that extends
both time for delivering audited financial statements for the
fiscal year ended Dec. 31, 2005, and unaudited financial
statements for the quarters ending March 31 and June 30, 2006,
while also permitting payment of consent fees to the holders of
its 10-1/2% Senior Notes due 2011 and its 9-7/8% Senior
Subordinated Notes due 2007.
On March 27, 2006, the company commenced the necessary consent
solicitation process with respect to its Senior Notes and
Subordinated Notes. The record date for determining holders
eligible to submit consents is March 20, 2006. Noteholders who
have already submitted Letters of Consent pursuant to the consent
documents distributed on March 27, 2006 are not required to take
any action to receive payment of the consent fee in the event the
requisite consents are received and the fee becomes payable in
accordance with the terms and conditions set forth in Bally's
Consent Solicitation Statements. Noteholders who have not yet
delivered consents are asked to submit the previously distributed
Letters of Consent in order to consent and receive any consent
fees that may be paid by the Company. The consent date is 5:00
p.m., New York City time, on April 7, 2006. As previously
reported in the Troubled Company Reporter on March 28, 2006,
holders of approximately 53% of the Subordinated Notes have
entered into agreements with Bally to consent to the requested
waivers.
Bally has retained MacKenzie Partners, Inc., to serve as the
information agent and tabulation agent for the consent
solicitation. Questions concerning the consent solicitation or
requests for documents may be directed to
MacKenzie Partners, Inc.
Attention: Jeanne Carr
Madison Square Station,
P.O. Box 865
New York NY 10160- 1051
Telephone (212) 929-5500 (collect)
Toll Free (800) 322-2885
About Bally Total
Bally Total Fitness -- http://www.ballyfitness.com/-- is the
largest and only U.S. commercial operator of fitness centers,
with approximately four million members and 440 facilities
located in 29 states, Mexico, Canada, Korea, China and the
Caribbean under the Bally Total Fitness(R), Crunch Fitness(SM),
Gorilla Sports(SM), Pinnacle Fitness(R), Bally Sports Clubs(R)
and Sports Clubs of Canada(R) brands. With an estimated 150
million annual visits to its clubs, Bally offers a unique
platform for distribution of a wide range of products and
services targeted to active, fitness-conscious adult consumers.
* * *
As reported in the Troubled Company Reporter on March 17, 2006,
Standard & Poor's Ratings Services held its ratings on Chicago-
based Bally Total Fitness Holding Corp., including the 'CCC'
corporate credit rating, on CreditWatch with developing
implications, where they were placed on Dec. 2, 2005.
The CreditWatch update follows Bally's announcement that it will
not meet the March 16, 2006, deadline for filing its annual
report on SEC Form 10-K for the year ending Dec. 31, 2005.
Bally currently anticipates filing its 2005 10-K in April 2006.
Bally's ratings were originally placed on CreditWatch on Aug. 8,
2005, following the commencement of a 10-day period after which
an event of default would have occurred under the Company's $275
million secured credit agreement's cross-default provision and
the debt would have become immediately due and payable.
Subsequently, Bally entered into a consent with lenders to
extend the 10-day period until Aug. 31, 2005. Prior to Aug. 31,
the company received consents from its bondholders extending its
waiver of default to Nov. 30, 2005.
BERRY PLASTICS: S&P Places B+ Corp. Credit Rating on CreditWatch
----------------------------------------------------------------
Standard & Poor's Ratings Services placed its ratings on Berry
Plastics Corp. on CreditWatch with developing implications,
including the 'B+' corporate credit rating. The CreditWatch
placement followed the company's announcement that its Board of
Directors is exploring strategic alternatives to maximize
shareholder value, including the possible sale or public offering
of the company. Berry has hired financial advisors to assist in
this process.
Evansville, Indiana-based Berry had total debt outstanding of
about $1.2 billion at Dec. 31, 2005.
Developing means the ratings could be raised, lowered, or
affirmed. "The acquisition of Berry by a company with a stronger
credit profile could result in an upgrade. Conversely, an
acquisition of Berry by a company with a weaker credit profile or
other initiatives that would deteriorate the firm's financial
profile could result in a downgrade," said Standard & Poor's
credit analyst Liley Mehta.
Standard & Poor's will monitor developments related to this
process and any associated financing plans, and will resolve the
CreditWatch after assessing the impact on the company's risk
profile.
The ratings on Berry, a 100%-owned operating subsidiary of
BPC Holding Corp., reflect:
* the company's business profile with large market shares in
its niche segments;
* a well-diversified customer base;
* strong customer relationships; and
* a highly leveraged financial profile.
With annual revenues of about $1.2 billion, privately held Berry
is a leading manufacturer and supplier of:
* rigid plastic injection-molded and thermoformed open-top
containers,
* aerosol overcaps,
* drinking cups,
* housewares,
* closures for the health care and food and beverage segments,
* pharmaceutical bottles, and
* prescription vials.
BIRCH TELECOM: Asks Court's Approval on SBC and BellSouth Deals
---------------------------------------------------------------
Birch Telecom, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to approve their
separate settlement agreements with:
1. BellSouth Corp.; and
2. AT&T Services, Inc., as agent for Illinois Bell Telephone
Company d/b/a SBC Illinois and Southwestern Bell Telephone,
LP d/b/a SBC Kansas, SBC Missouri, SBC Oklahoma and SBC
Texas.
The Debtors filed term sheets outlining these Settlement
Agreements under seal to prevent public disclosure of the
confidential commercial information they contain.
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.
BLOCKBUSTER INC: Netflix Presses Patent Infringement Suit
---------------------------------------------------------
Netflix Inc. wants to close rival Blockbuster Inc.'s online DVD
rental service, saying Blockbuster's scheme infringed on its own
patented business model, Reuters reports.
According to Reuters, Netflix asked a federal judge in Northern
California to stop Blockbuster from using its business model.
Netflix also wants to collect damages from Blockbuster.
BBC News reports that Netflix owns two patents to protect its
business method. Netflix claims that Blockbuster willfully and
deliberately violated its patent rights.
Netflix gives its 4.2 million subscribers access to a
comprehensive library of more than 55,000 film titles using its
proprietary recommendation service. The recommendation service
allows Netflix to create a customized store for each subscriber
and to generate personalized recommendations.
San Francisco law firm of Keker & Van Nest, LLP --
http://www.kvn.com/-- represents Netflix.
Blockbuster Inc. -- http://www.blockbuster.com/-- is a global
provider of in-home movie and game entertainment, with more than
9,000 stores throughout the Americas, Europe, Asia and Australia.
* * *
As reported in the Troubled Company Reporter on Mar. 15, 2006,
Moody's Investors Service affirmed Blockbuster Inc. long-term debt
ratings and its SGL-3 speculative grade liquidity rating:
* Corporate family rating at B3;
* Senior secured bank credit facilities at B3; and
* Senior subordinated notes at Caa3.
As reported in the Troubled Company Reporter on Nov. 15, 2005,
Standard & Poor's Ratings Services lowered its corporate credit
and bank loan ratings on Blockbuster Inc. to 'B-' from 'B' and the
subordinated note rating to 'CCC' from 'CCC+'. At the same time,
ratings on the company were removed from CreditWatch, where they
were placed with negative implications on August 3, 2005. S&P
said the outlook is negative.
As reported in the Troubled Company Reporter on Aug. 15, 2005,
Fitch downgraded Blockbuster Inc.'s:
-- Issuer default rating (IDR) to 'CCC' from 'B+';
-- Senior secured credit facility to 'CCC' from 'B+' with an
'R4' recovery rating;
-- Senior subordinated notes to 'CC' from 'B-' with an 'R6'
recovery rating.
Fitch said the Rating Outlook remains Negative.
BLUEGREEN CORP: Renews GE Receivables Facility & Doubles GMAC Loan
------------------------------------------------------------------
Bluegreen Corporation (NYSE: BXG) renewed a $125 million timeshare
receivables purchase facility with GE Real Estate acting as the
Facility Administrator and Purchaser, and increased its borrowing
capacity to $150 million from $75 million under an existing
acquisition, development, and construction facility with GMAC
Residential Funding Corporation.
Terms of the Purchase Facility
The GE Real Estate purchase facility allows for the sales of notes
receivable for a cumulative purchase price of up to $125 million
for a two-year period ending in March 2008. This facility
utilizes an owner's trust structure, pursuant to which Bluegreen
will sell or otherwise absolutely transfer timeshare receivables
to a special purpose subsidiary of Bluegreen and the subsidiary
will sell the receivables to the owner's trust without recourse to
Bluegreen or the subsidiary, except for breaches of customary
representations and warranties at the time of sale. Bluegreen
will continue to service the receivables that are sold under the
facility.
In March 2006, GMAC RFC increased to $150 million (from $75
million) an AD&C revolving credit facility for Bluegreen Resorts.
The borrowing period expires on Feb. 15, 2008, and outstanding
borrowings mature no later than Aug. 15, 2013, although specific
draws typically are due four years from the borrowing date.
Indebtedness under the $150 million facility bears interest at
30-day LIBOR plus 4.50%. As of Dec. 31, 2005, $33.4 million was
outstanding under this facility.
Also in March 2006, GMAC RFC extended the borrowing period to
Feb. 15, 2008 and the maturity date to Feb. 15, 2015 on
Bluegreen's existing $75 million revolving vacation ownership
receivables credit facility. This facility is used to borrow
funds collateralized by Bluegreen's eligible vacation ownership
receivables. As of Dec. 31, 2005, $25.4 million was outstanding
under this facility.
"We are proud to continue our relationship with these leading
commercial lenders," George F. Donovan, President and Chief
Executive Officer of Bluegreen, commented. "We believe that these
agreements reflect the quality of Bluegreen's receivables, the
soundness of our business model, and the promising outlook for our
Resorts business."
About Bluegreen Corporation
Headquartered in Boca Raton, Florida, Bluegreen Corporation
(NYSE:BXG) -- http://www.bluegreenonline.com/-- is a leading
provider of Colorful Places to Live and Play(R). Bluegreen
Resorts' flexible points-based vacation ownership system provides
approximately 150,000 owners access to over 40 resorts and an
exchange network of over 3,700 resorts and other vacation
experiences such as cruises. Bluegreen Communities has sold
over 49,000 planned residential and golf community homesites in
32 states since 1985. Founded in 1966, Bluegreen employs
approximately 4,900 associates. In 2005, Bluegreen ranked No.
57 on Forbes' list of The 200 Best Small Companies and No. 48 on
FORTUNE'S list of America's 100 Fastest Growing Companies.
Bluegreen Corp.'s 10-1/2% Senior Secured Notes due 2008 carry
Moody's Investors Service's B3 rating and Standard & Poor's
single-B rating.
CARAUSTAR IND: Borrows $145M to Help Fund $257M Notes Redemption
----------------------------------------------------------------
Caraustar Industries, Inc. (NASDAQ-NMS Symbol: CSAR) has called
for redemption of all of its outstanding 9-7/8% Senior
Subordinated Notes due 2011, as part of its strategic
transformation plan.
The aggregate outstanding principal amount of the Notes is
$257.5 million. In accordance with the terms of the Notes, the
outstanding principal balance will be redeemed on May 1, 2006, at
a price of $105.25 for each $100 of outstanding principal amount
of Notes plus accrued and unpaid interest from April 1, 2006, to
the redemption date. A notice of redemption is being sent to all
registered noteholders.
Caraustar also completed an amended and restated $145 million
five-year senior secured credit facility, consisting of a
$110 million revolver and a $35 million term loan. The senior
credit facility is secured by substantially all assets of the
company other than real property. Pricing is based on average
borrowing availability as defined under the revolver. Drawings
under the senior credit facility, together with available cash,
will be used to fund the redemption of the Notes.
Caraustar Industries Inc. -- http://www.caraustar.com/-- a
recycled packaging company, is one of the world's largest
integrated manufacturers of converted recycled paperboard.
Caraustar has developed its leadership position in the industry
through diversification and integration from raw materials to
finished products. Caraustar serves the four principal recycled
boxboard product end-use markets: tubes, cores and composite cans;
folding cartons; gypsum facing paper and specialty paperboard
products.
* * *
As reported in the Troubled Company Reporter on Jan. 24, 2006,
Standard & Poor's Ratings Services affirmed its ratings, including
its 'B+' corporate credit rating, on recycled paperboard producer,
Caraustar Industries Inc. on Jan. 20, 2006. S&P said the outlook
is stable.
CATHOLIC CHURCH: Spokane Wants to Settle 75 Abuse Claims for $46M
-----------------------------------------------------------------
The Diocese of Spokane asks the U.S. Bankruptcy Court for the
Eastern District of Washington to approve its offer to settle 75
sex abuse personal injury claims for $45,750,000, pursuant to Rule
9019 of the Federal Rules of Bankruptcy Procedure.
Additionally, the Debtor requests that the Bankruptcy Court submit
proposed findings and an order to the United States District Court
for the Eastern District of Washington wherein the Bankruptcy
Court approves the Motion under FRBP 9019.
The Settlement Offer is set forth in two letters sent to the Tort
Litigants Committee's counsel, James P. Stang, Esq., at Pachulski
Stang Ziehl Young Jones & Weintraub LLP, in Los Angeles,
California, from:
(1) The Most Reverend Bishop William S. Skylstad, Bishop of
Spokane; and
(2) Shaun M. Cross, Esq., at Paine, Hamblen, Coffin, Brooke &
Miller, LLP, in Spokane, Washington, the Diocese's
counsel.
Full-text copies of Bishop Skylstad's and Mr. Cross' Letters are
available for free at:
http://bankrupt.com/misc/SpokaneSettlementLetters.pdf
A list of the Settling Parties and the terms for a release of
certain entities were included in Mr. Cross' Letter as exhibits.
However, the exhibits are sealed to maintain confidentiality.
Under the Settlement Offer, the Diocese commits to:
(i) the allowance of the Settling Parties' Claims for
$45,750,000 in aggregate claim amount, or a lesser
amount, depending on the number of Settling Parties; and
(ii) an amendment of the Diocese's Plan of Reorganization to
reflect the terms and conditions for payment of the
Aggregate Allowed Claim and favorable collateralization
of all allowed sex abuse personal injury claims.
Settlement Terms
The salient terms of the Settlement Offer are:
(a) If the Settlement Offer is not accepted by all 75 of the
Settling Parties by June 1, 2006, the Diocese has the
absolute discretion to terminate the Settlement Offer and
void any previously received acceptances, or to proceed
with the Settlement Offer even if one or more of the
Settling Parties choose not to participate;
(b) Assuming all 75 individuals accept the Settlement Offer,
the Aggregate Allowed Claim will be $45,750,000, which is
the dollar figure arrived at by multiplying the number of
Settling Parties to the average settlement amount.
The Average Settlement Amount will be the gross sum of
$610,000, provided that the Average Settlement Amount will
be $650,000 upon default of any of the Diocese's
obligations under the Settlement Letter, which is not
cured within 30 days after the issuance of a written
notice of default.
If the Diocese defaults in the payment of the settlement,
the liquidated damages for the default will be a
$3,000,000 increase in the Aggregate Allowed Claim, or
$40,000 per Settling Party times the number of Settling
Parties, whichever is less. Each Settling Party is
responsible for his or her own fees, certain costs and
taxes;
(c) An amended Plan of Reorganization will provide that the
Aggregate Allowed Claim is payable in installments,
commencing on the Plan Effective Date.
Assuming all 75 individuals accept the Settlement Offer,
the installment schedule will be:
September 15, 2006 : $2,000,000
December 1, 2006 : $8,000,000
October 1, 2007 : $26,600,000
October 1, 2008 : $3,050,000
October 1, 2009 : $3,050,000
October 1, 2010 : $3,050,000
(d) The aggregate payments will be divided between the
Settling Parties in a process controlled exclusively by,
and paid for by, the Settling Parties.
The Diocese's Amended Plan will provide that the
settlement payments and all allowed sex abuse personal
injury claims are secured by certain property:
(1) First priority lien on all Diocesan and parish real
properties, including any properties that have
restrictive title;
(2) All insurance recoveries; and
(3) Miscellaneous promissory notes and claims of the
Diocese against third parties, including the parishes.
If any of the Collateral is liquidated before the due date
of the next installment, the proceeds are payable to a
trustee handling the funds and the payments will be
accelerated without any prepayment discount;
(e) The Collateral will be held by a trustee selected by the
Tort Litigants Committee and appointed by the Court. Any
foreclosure on the Collateral will be governed by
Washington law. The Trustee will also handle the
disbursement of the funds received from the Diocese;
(f) On the Plan Effective Date, all Diocese and parish
appeals of Judge Williams' Ruling in the adversary
proceeding brought by Litigants Committee with respect
"property of the estate" and the state court personal
injury suits will be dismissed with prejudice, subject to
a tolling of any statute of limitations if the order
approving the Plan is vacated;
(g) If the Court approves, and the Parishes support, the
Settlement Offer, the Litigants Committee will stay the
Adversary Proceeding against the Diocese. The Parishes,
the Diocese, and the Litigants Committee will ask the
District Court to stay the pending appeal from the summary
judgment ruling;
(h) The Settlement Offer seeks the Settling Parties' release
or assignment of sex abuse claims held against the Society
of St. Sulpice in consideration of a yet to be negotiated
contribution by the Sulpicians to the settlement fund,
which amount would be included in the $45,750,000
Settlement Amount.
(i) The Settlement Offer provides a framework for the
settlement of the adversary proceeding against certain
Catholic entities for payment of a confidential sum. This
is not a settlement of abuse claims against Morning Star
Boys Ranch. It would be a settlement of the adversary
Proceeding, which seeks to consolidate Morning Star, the
Catholic Cemeteries, Catholic Charities and Immaculate
Heart Retreat Foundation, into the bankruptcy estate; and
(j) The Settlement Offer provides that the Bishop and the
Diocese will undertake several non-monetary obligations
ranging from increasing the community's awareness of
sexual abuse by clergy, to providing information on
responses to allegations of sexual abuse by clergy, and
providing personal apologies to survivors.
Mr. Cross notes that in the absence of the Settlement Offer, the
Litigants Committee may file its own reorganization plan, which
would impose more onerous terms on the Diocese than those terms
incorporated into the Settlement Offer.
Mr. Cross notes that the Diocese's Settlement Request is slightly
different from the run-of-the-mill settlement request because the
Settlement Offer has a condition subsequent -- the acceptance by
the Settling Parties.
"The Diocese and the [Litigants Committee] structured the proposed
settlement in this fashion to address a unique problem in the
relationship between the Diocese and the Settling Parties,"
Mr. Cross explains.
Once the Court approves the Diocese's Settlement Offer, the
Litigants Committee will be able to allay the fears of the
Settling Parties that their acceptance will not be used against
them as a starting point in the settlement negotiations.
Moreover, Mr. Cross notes that absent a settlement, the Diocese
intends to file an appeal from any decision on the Property of the
Estate Adversary Proceeding to the Court of Appeals for the
Ninth Circuit and to seek review before the U.S. Supreme Court, if
necessary. The Appeals would involve complex First Amendment
issues, the applicability of the theory of substantive
consolidation to non-profit non-debtor defendants, and first-
impression interpretations of Washington statutes regarding
corporation sole.
The Settlement Offer anticipates a possible stay of certain
potential avoidance actions against the parishes and the related
entities, which will involve state real property law and First
Amendment issues, Mr. Cross adds.
Association Opposes Settlement
On behalf of the Association of Parishes, Ford Elsaesser, Esq., at
Elsaesser Jarzabek Anderson Marks Elliott & McHugh, in Sandpoint,
Idaho, argues that the request filed by the Diocese is on its face
a request to approve an offer, not a settlement.
Mr. Elsaesser asserts that the Diocese inaccurately characterizes
the matter as a settlement or compromise appropriate under Rule
9019 of the Federal Rules of Bankruptcy Procedure, even though the
other parties to the "settlement" have not accepted the "offer."
Mr. Elsaesser informs Judge Williams that the Association will
file objections on numerous factual and substantive legal grounds
to the settlement. Among the objections will be an assertion that
the Diocese is seeking approval of a settlement that is not
otherwise binding on both parties, and therefore, the Court is
being asked to provide an advisory opinion, rather than approve a
compromise.
Tort Committee Wants Settlement Stricken
Joseph E. Shickich, Jr., Esq., at Riddell Williams P.S., in
Seattle, Washington, contends the Diocese does not have an
executed settlement or compromise for the Court to approve.
Although the Diocese calls it a Rule 9019 request, Mr. Shickich
argues that the Diocese's settlement request is "really one
seeking approval of a sub rosa plan" that has not yet been written
or filed, and for which a disclosure statement has been neither
approved by the Court nor distributed to creditors.
Mr. Shickich says the Diocese has made a settlement offer -- "a
solicitation" -- to 75 litigants and non-litigants represented by
certain tort lawyers while excluding the remaining 117 victims who
have filed confidential proofs of claim.
"Inexplicably, the settlement offer was made by the [Diocese] and
then announced at press conferences . . . 37 days before the Bar
Date expired," Mr. Shickich notes.
The Tort Claimants Committee believes that the offer does not
provide the same treatment to all victims and prefers the 75
victims represented by certain tort lawyers over the rest.
Accordingly, the Tort Committee will file an extensive objection
to the Diocese's settlement request.
However, to avoid the expense to the estate in connection with a
hotly disputed hearing about the Offer, the Tort Committee asks
the Court to strike the settlement request since the Diocese
concedes that "it is just an offer and not an agreement".
FCR Finds Settlement Offer Unfair
Gayle E. Bush, in his capacity as Legal Representative for Future
Tort Claimants, informs Judge Williams that, with respect to the
Diocese's settlement request, certain issues need to be addressed.
For instance, Mr. Bush argues that the Court should determine
whether or not:
* it could consider the "settlement" when one party has not
agreed to it; and
* the Settlement, on its face, could be considered when
certain parties do not have the information that needs to be
provided in an amended disclosure statement.
Moreover, the Settlement Agreement should not be approved without
the Diocese's "substantial financial disclosures" about its
ability to fulfill its terms, Mr. Bush says.
According to Mr. Bush, the Settlement Agreement discriminates
against unsecured creditors, including future tort claimants.
About Diocese of Spokane
The Roman Catholic Church of the Diocese of Spokane filed for
chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on
Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen,
Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in
its restructuring efforts. When the Debtor filed for protection
from its creditors, it listed $11,162,938 in total assets and
$81,364,055 in total debts. (Catholic Church Bankruptcy News,
Issue No. 55; Bankruptcy Creditors' Service, Inc., 215/945-7000)
CBRL GROUP: S&P Rates $1.25 Billion Secured Credit Facility at BB+
------------------------------------------------------------------
Standard & Poor's Ratings Services assigned its 'BB+' rating to
CBRL Group Inc.'s $1.25 billion secured credit facility (which
consists of a $250 million revolver due 2011, an $800 million term
loan B, and a $200 million delayed draw term loan due 2013). At
the same time, the rating on the facility was placed on
CreditWatch with negative implications.
Standard & Poor's 'BB+' corporate credit and senior unsecured
ratings on the Lebanon, Tennessee-based restaurant operator remain
on CreditWatch with negative implications; ratings were placed on
CreditWatch on Jan. 25, 2006, and lowered to current levels on
March 17. Proceeds from the term loan will be used to finance
share repurchases in a tender offer. CBRL has two restaurant
concepts:
* Cracker Barrel Old Country Store (537 restaurants); and
* Logan's Roadhouse (152).
CBRL's board of directors has authorized a modified "Dutch
Auction" tender offer to purchase up to $800 million of common
stock. The company also intends to sell the common stock of its
wholly owned subsidiary, Logan's Roadhouse Inc., to the public.
"The debt-financed share repurchase represents a more aggressive
financial policy," said Standard & Poor's credit analyst Diane
Shand. "In addition, the proposed IPO of Logan's modestly
increases business risk, as it provided concept diversity and was
CBRL's growth vehicle," the analyst continued.
If the company repurchases $800 million of stock, pro forma total
debt to trailing 12 months EBITDA (ended Jan. 31, 2006) will rise
to about 4.4x from 1.9x currently. Standard & Poor's will then
lower its corporate credit and secured debt ratings on the company
to 'BB' from 'BB+' and assign a negative outlook, given CBRL's:
* more aggressive financial policy;
* leveraged capital structure; and
* weakened cash flow protection measures.
The unsecured notes will be rated 'B+', two notches below the
corporate credit rating, reflecting the relatively large amount of
secured debt in the capital structure. Should significantly fewer
shares be tendered, Standard & Poor's would review with CBRL
management any plan for revising the tender offer and for
additional share repurchases.
CHARTER COMMS: Initiates Refinancing of $6.8 Billion Senior Loans
-----------------------------------------------------------------
Charter Communications, Inc. (Nasdaq: CHTR) engaged
* J.P. Morgan Securities Inc.,
* Banc of America Securities LLC, and
* Citigroup Global Markets Inc.
to arrange and syndicate a refinancing of the existing senior
secured credit facilities held by Charter Communications
Operating, LLC. The proposed $6.8 billion credit facilities will
include:
* a new $300 million revolver/term credit facility,
* a $5 billion term loan due in 2013, and
* certain amendments to the existing $1.5 billion revolving
credit facility.
As proposed, Charter will benefit from extended debt maturities
and improved liquidity. Subject to market conditions, Charter
expects that the transaction would be completed within the next
few weeks.
About Charter Communications
Charter Communications -- http://www.charter.com/-- is the
nation's third-largest broadband communications company. Charter
provides a full range of advanced broadband services to the home,
including cable television on an advanced digital video
programming platform via Charter Digital Cable(R) brand and high-
speed Internet access marketed under the Charter Pipeline(R)
brand. Commercial high-speed data, video and Internet solutions
are provided under the Charter Business Networks(R) brand.
Advertising sales and production services are sold under the
Charter Media(R) brand.
* * *
As reported in the Troubled Company Reporter on Feb. 6, 2006,
Fitch Ratings assigned a 'CCC+' rating and 'RR3' Recovery Rating
to the $450 million of 10.25% senior notes due 2010 issued by
CCH II, LLC, in a private transaction. CCH II, LLC, is an
indirect subsidiary of Charter Communications, Inc. The proceeds
from the issuance are expected to be used to repay borrowings
under the Charter Communications Operating, LLC, credit facility.
In addition, Fitch has placed Charter's 'CCC' Issuer Default
Rating and the individual issue ratings of Charter and its
subsidiaries on Rating Watch Negative.
As reported in the Troubled Company Reporter on Feb. 2, 2006,
Standard & Poor's Ratings Services assigned its 'CCC-' rating to
the $450 million 10.25% senior notes due 2010 of CCH II LLC and
CCH II Capital Corp., which are indirect subsidiaries of cable TV
system operator Charter Communications Inc. Proceeds will be used
to reduce borrowings, but not commitments, under the Charter
Communications Operating LLC revolving credit facility.
The notes are being issued under Rule 144A with registration
rights. This offering represents an upsizing of the company's
proposed $400 million aggregate amount of two issues due in 2010
and 2013 originally rated on Jan. 26, 2006. The 2010 notes were
increased; the 2013 notes are not being issued and the rating on
this issue was withdrawn.
"The 'CCC+' corporate credit rating and all other ratings on
Charter and its subsidiaries were affirmed; the outlook is
negative," said Standard & Poor's credit analyst Eric Geil.
CHUMASH CASINO: S&P Lifts Corp. Credit & Sr. Unsec. Ratings to BB+
------------------------------------------------------------------
Standard & Poor's Ratings Services raised its corporate credit and
senior unsecured debt ratings for Chumash Casino & Resort
Enterprise (CCRE) to' BB+' from 'BB'. The outlook is stable.
"The upgrade reflects our assessment that operating results at
CCRE's Chumash Casino continue to be solid, resulting in credit
measures that are very strong even for the new rating," said
Standard & Poor's credit analyst Michael Scerbo. "We expect that
this trend will continue in the near term given the property's
limited competitive situation and high quality."
The ratings for Santa Ynez, California-based CCRE reflect:
* the continued solid performance of the Chumash Casino;
* its good quality;
* limited competition in its surrounding area; and
* strong credit measures for the rating.
Still, CCRE is reliant upon a single asset for its cash flow.
CCRE was created to operate the Chumash Casino for the Santa Ynez
Band of Chumash Indians.
CIENA CORP: S&P Puts B Rating on Proposed $250 Million Sr. Notes
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its B/Stable/--
ratings on Linthicum, Maryland-based Ciena Corp.
"At the same time, we assigned our 'B' rating to the company's
proposed issue of $250 million in convertible senior notes due
2013," said Standard & Poor's credit analyst Bruce Hyman.
Proceeds of the new issue will be used to provide additional funds
for general corporate purposes, including repurchases of the
company's outstanding notes.
The ratings on Ciena Corp. continue to reflect:
* the company's narrow business position;
* operating losses (although abating);
* substantial leverage; and
* the risks of continuing technology evolution,
tempered somewhat by the company's good cash balances.
Ciena, a supplier of optical telecommunications systems and
related products, had $684 million in debt and capitalized
operating leases outstanding as of Jan. 31, 2006.
Market conditions remain challenging, despite moderate sequential
revenue growth for nearly two years. Ciena's customer
concentration remains fairly high, with three customers totaling
about 35% of sales in fiscal 2005. Still, this is an improvement
from several historical years, when two customers had been more
than 50% of the company's sales.
COLLINS & AIKMAN: Asks to Reject 15 Equipment Contracts
-------------------------------------------------------
Collins & Aikman Corporation and its debtor-affiliates evaluated
15 contracts and determined that the contracts are no longer
useful to their ongoing operations. The Debtors seek authority
from the U.S. Bankruptcy Court for the Eastern District of
Michigan to reject the contracts effective April 6, 2006:
Counterparty Contract Description
------------ --------------------
IOS Capital, Inc. Product Schedule to Master Service
Agreement No. 1003060A71 for rental
of photocopier
IOS Capital, Inc. Product Schedule to Master Service
Agreement No. 1003060A81 for rental
of photocopier
IOS Capital, Inc. Product Schedule to Master Service
Agreement No. 1003060B1 for rental
of photocopier
IOS Capital, Inc. Product Schedule to Master Service
Agreement No. 1003060B6 for rental
of photocopier
IOS Capital, Inc. Product Schedule to Master Service
Agreement No. 1003060A5 for rental
of photocopier
IOS Capital, Inc. Product Schedule to Master Service
Agreement No. 1003060B3 for rental
of photocopier
Pitney Bowes Credit Equipment Lease for rental of mail
Corporation meter machine
Toyota Motor Credit Schedule No. 002-0001 to Master
Corporation Lease No. 15092 for rental of lift
Truck
Toyota Motor Credit Schedule No. 007-0001 to Master
Corporation Lease No. 15092 for rental of lift
truck
Toyota Motor Credit Schedule No. 008-0001 to Master
Corporation Lease No. 15092 for rental of lift
truck
Toyota Motor Credit Schedule No. 006-0001 to Master
Corporation Lease No. 15092 for rental of lift
truck
Toyota Motor Credit Schedule No. 005-0001 to Master
Corporation Lease No. 15092 for rental of lift
truck
Toyota Motor Credit Schedule No. 004-0001 to Master
Corporation Lease No. 15092 for rental of lift
truck
Toyota Motor Credit Schedule No. 002-0001 to Master
Corporation Lease No. 15092 for rental of lift
Truck
Toyota Motor Credit Schedule No. 014-0001 to Master
Corporation Lease No. 15092 for rental of lift
truck
Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in Chicago,
Illinois, tells the Court that the IOS Capital and Pitney Bowes
Agreements relate to office equipment leased by the Debtors for
use in their facility at 6385 Wall Street, in Sterling Heights,
Michigan, and their corporate headquarters. Due to the Debtors'
consolidation of their corporate headquarters and the closing of
the Wall Street facility on March 31, 2006, the Debtors no longer
need the office equipment in the operation of their businesses.
The Toyota Agreements relate to forklifts used at the Debtors'
facility at 2001 Christian B. Haas Road, in St. Clair, Michigan.
Mr. Schrock explains that the Debtors incur substantial
maintenance expenses in connection with these forklifts and, as a
result, want to replace them.
Headquartered in Troy, Michigan, Collins & Aikman Corporation
-- http://www.collinsaikman.com/-- is a global leader in cockpit
modules and automotive floor and acoustic systems and is a leading
supplier of instrument panels, automotive fabric, plastic-based
trim, and convertible top systems. The Company has a workforce of
approximately 23,000 and a network of more than 100 technical
centers, sales offices and manufacturing sites in 17 countries
throughout the world. The Company and its debtor-affiliates filed
for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case
No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP,
represents C&A in its restructuring. Lazard Freres & Co., LLC,
provides the Debtor with investment banking services. Michael S.
Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents
the Official Committee of Unsecured Creditors Committee. When the
Debtors filed for protection from their creditors, they listed
$3,196,700,000 in total assets and $2,856,600,000 in total debts.
(Collins & Aikman Bankruptcy News, Issue No. 28; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
CONJUCHEM INC: January 31 Balance Sheet Upside-Down by $31.6 Mil.
-----------------------------------------------------------------
ConjuChem Inc. (TSX: CJC) disclosed financial results for the
first quarter of fiscal 2006, ended Jan. 31, 2006.
"ConjuChem is making solid progress on the clinical front as 2006
advances. Subsequent to quarters end, we received clearance from
the FDA to conduct a Phase I/II trial for the treatment of Type 2
diabetes using our proprietary PC-DAC(TM): Exendin-4 compound. At
the same time, our Phase II study for DAC(TM): GRF for the
treatment of HIV related Lipodystrophy remains ongoing," said Vice
President and CFO Lennie Ryer. "We look forward to updating
shareholders on these two lead programs as the year progresses."
The Company posted a $9.7 million net loss for the quarter ended
Jan. 31, 2006, compared with $11.3 million for the quarter ended
Jan. 31, 2005. The decrease in net loss is mainly attributable to
a decrease in net research and development expenses of $1.7
million.
The Company recorded interest income on cash, short and long-term
investments of $80,886 for the quarter versus $137,775 in the same
period last year. The decrease in interest revenue was a result
of lower rates of return on invested funds caused by a general
decrease in market interest rates combined with a reduction in the
funds available for investment.
Net research and development expenses amounted to $6.1 million for
the quarter ended Jan. 31, 2006, compared with $7.9 million in the
same period last year. The decrease is largely attributable to
reduced costs of the clinical development programs compared to the
prior fiscal year.
General and administrative costs for the quarter ended Jan. 31,
2006 were $1.2 million compared with $929,442 for the same period
last year. The increase in General and Administrative expenses is
attributable to increased costs of insurance coverage and non-
recurring expenses incurred to recruit and relocate ConjuChem's
new President and CEO.
ConjuChem's balance sheet at Jan. 31, 2006, showed $12,615,651 in
total assets and $44,253,026 in total liabilities, resulting in a
$31,637,375 stockholders' deficit. As of Jan. 31, 2006, the
Company had cash and cash equivalents of $9.9 million and
$7.5 million in working capital.
Subsequent to quarter's end, ConjuChem announced a corporate
reorganization transaction that will strengthen its financial
position by adding an extra $6.4 million of gross proceeds to
ConjuChem's balance sheet. The Company explains that the
transaction will monetize accumulated tax losses, does not changes
the fundamental business of the Company, and is non-dilutive for
its shareholders.
About ConjuChem
ConjuChem Inc. -- http://www.conjuchem.com/-- is biotechnology
company, developing drugs to improve the treatment of human
diseases. At the core of ConjuChem is a powerful, proprietary
technology, which we are leveraging to create an attractive
portfolio of commercial drugs. The Company's primary focus is the
further development of a drug for Type 2 diabetes, which is
currently in Phase II testing.
CONSTELLATION BRANDS: Vincor Merger Cues Fitch to Affirm Ratings
----------------------------------------------------------------
Fitch affirmed these ratings on Constellation Brands, Inc.
(NYSE: STZ) after the company announced a definitive agreement
to acquire Vincor International Inc.:
-- Issuer Default Rating 'BB'
-- Bank credit facilities 'BB'
-- Senior unsecured notes 'BB'
-- Senior subordinated notes 'BB-'
The Rating Outlook is Stable. Approximately $4.2 billion in
aggregate debt (including debt related to the Vincor acquisition)
is covered by these actions.
STZ has a leading market position and broad portfolio of wine,
beer and spirits in diversified markets. The company has pursued
a strategy of growth through acquisitions financed primarily
through debt. The Vincor acquisition is valued at approximately
$1.3 billion including assumption of debt, and will be financed
entirely with new debt. The transaction is expected to benefit
from:
* STZ's significant global distribution capability and scale;
* revenue and cost synergies; and
* the addition of Canada as a new core market for the company
(in addition to the US, UK, Australia and New Zealand).
STZ has an excellent track record of integrating acquisitions and
the company has, at the same time, applied cash flow to support
capital spending and debt paydown. Recent major acquisitions
include:
* BRL Hardy Ltd. for $1,400 million in 2003; and
* Robert Mondavi Corp. for $1,355 million in 2004.
The acquisition multiple of around 13x EBITDA for Vincor is
similar to the 12.5x last twelve months EBITDA paid for Robert
Mondavi. However, total debt has increased as a result of
successive acquisitions, with a significant increase in interest
expense. In the past, STZ has been very successful at finding
synergies and paying down debt with its strong cash flow
generating assets.
It must be noted that the acquisition of Vincor comes at a time
when STZ is highly leveraged and has yet to demonstrate meaningful
debt reduction following the Robert Mondavi debt financed
acquisition in late 2004. There is no cushion within the current
rating level, thus extraneous uses of free cash flow or any
meaningful increase in the leverage ratio will have rating
implications.
The Stable Outlook reflects management's commitment to paying down
debt and a history of successfully integrating acquisitions. In
addition to high leverage, other concerns are:
* the recent pace of debt-financed acquisitions;
* beer contract uncertainty; and
* concentrated share voting control.
Using LTM results and the expectation of some debt paydown in the
fiscal fourth quarter, total debt/operating EBITDA and EBITDA
interest coverage are expected to approximate 4.3 to 4.5x and 3.4
to 3.6x, respectively, pro forma for the Vincor acquisition.
CONSUMERS ENERGY: Fitch Rates $300 Million Credit Facility at BB+
-----------------------------------------------------------------
Fitch assigned a rating of 'BB+' to Consumers Energy Company's
$300 million 364-day revolving credit facility. The facility is
secured by a second lien on the collateral securing Consumers'
first mortgage bonds (FMBs; rated 'BBB-' by Fitch). In addition,
Consumers can reserve $300 million of FMB capacity for external
new issuance, but if there is additional bonding capacity above
that amount, the loan facility will take FMB lien replacing some
of their second lien position. Consumers' Rating Outlook is
Stable.
Consumers ratings reflect:
* the regulated utility's solid stand-alone credit metrics;
* a low business risk profile; and
* recent constructive regulatory orders from the Michigan
Public Service Commission.
Rating concerns relate to the company's exposure to a sluggish
local economy, in particular the declining automotive sector, as
well as the continued high levels of consolidated debt relative to
cash flows at parent, CMS Energy (CMS, senior unsecured rated
'B+'; Rating Outlook Stable).
Consumers, the principle subsidiary of CMS Energy, is a
combination electric and natural gas utility that serves
approximately 1.79 million electric and 1.71 million gas customers
in Michigan's Lower Peninsula.
CONSUMERS TRUST: Hires F. Treager to Advise on English Law Matters
------------------------------------------------------------------
The Consumers Trust sought and obtained authority from the U.S.
Bankruptcy Court for the Southern District of New York to hire
Francis Tregear QC to advise David Rubin and Henry Lan, the
Receivers for the Debtor, and Lawrence Graham LLP, the Debtor's
special English law counsel.
As reported in the Troubled Company Reporter on Feb. 9, 2006, the
Debtor hired Lawrence Graham LLP to represent it in matters before
the High Court of Justice, Chancery Division, in London.
As reported in the Troubled Company Reporter on Mar. 13, 2006,
Mr. Tregear is expected to:
(1) take necessary actions before the High Court with respect
to tracing and marshaling the Debtor's assets;
(2) appear before the High Court to prosecute any actions
against individuals and entities resident in the United
Kingdom that may arise in connection with the
administration and management of the Debtor prior to the
commencement of the chapter 11 case;
(3) take necessary actions to enforce the automatic stay in
the United Kingdom or to facilitate the investigation of
the Debtor's affairs being conducted by the Debtor and the
Official Committee of Unsecured Creditors, including the
examination under Rule 2004 of the Federal Rules of
Bankruptcy Procedure of individuals and entities resident
in the United Kingdom; and
(4) advice with respect to the Trust's property and the scope
and interpretation of the High Court order appointing the
Receivers, including actions to obtain clarifications or
augmentation of the order or supplemental orders to
facilitate the ability of the Receivers and the Debtor to
carry out their fiduciary duties and obligations under the
Bankruptcy Code and the order of the High Court.
Mr. Tregear's current standard hourly rate is GBP375 per hour
(approximately $650 per hour).
Under the practices of the United Kingdom, only solicitors may
instruct and compensate barristers. Accordingly, the Debtor
requests that in lieu of direct payment of fees and expenses from
the Debtor to Mr. Tregear, it be authorized to remit payments to
Lawrence Graham, which, in turn, will compensate Mr. Tregear.
This arrangement does not prejudice the Debtor's right or the
right of any other party-in-interest to object to any fees or
expenses to be paid to Mr. Tregear through Lawrence Graham, Mr.
Friedman assures the Court.
Mr. Tregear assures the Court that he is "disinterested" as the
term is defined in Section 101(14) of the Bankruptcy Code and that
he does not hold any interest adverse to the Debtor.
Headquartered in London, England, The Consumers Trust filed for
chapter 11 protection on Dec. 5, 2005 (Bankr. S.D.N.Y. Case No.
05-60155). Jeff J. Friedman, Esq., at Katten Muchin Rosenman LLP,
represents the Debtor in its restructuring efforts. The Debtor
hired Fraser Milner Casgrain LLP to represent it in its ancillary
proceeding in Canada under the Canadian Companies' Arrangement
Act. David Rubin & Partners is the Debtor's financial advisor.
David L. Barrack, Esq., at Fulbright & Jaworski L.L.P represents
the Official Committee of Unsecured Creditors. When the Debtor
filed for protection from its creditors, it estimated between
$1 million to $10 million in total assets and more than
$100 million in total debts.
CONVERSENT HOLDINGS: Moody's Lifts $188MM Term Loan Rating to B2
----------------------------------------------------------------
Moody's Investors Service upgraded the ratings of the senior
secured revolving credit facility and the senior secured term loan
of Conversent Holdings, Inc., and Mountaineer Telecommunications,
LLC to B2. The corporate family rating was also upgraded to B2.
Moody's upgrade reflects Conversent's reduced financial risk
stemming from improved operating performance, increased free cash
flow generation, and the resulting reduction in leverage from debt
amortization and EBITDA growth. The company's performance was
further aided by the cost reductions associated with integrating
certain CHI and FiberNet operations in 2005.
The outlook was changed to developing, in light of the announced
acquisition of the company by the merging ChoiceOne and CTC
competitive telecommunications providers. The purchase price was
not disclosed, although Moody's expects the existing bank debt at
Conversent to be paid in full at closing.
Moody's rating actions:
CHI and FiberNet as co-borrowers:
* Corporate Family Rating -- B2 from B3
* Senior Secured Revolving Credit Facility due 2010
-- B2 from B3
* $188.8 million Senior Secured Term Loan due 2011
-- B2 from B3
The outlook on all ratings is developing.
Conversent is a competitive local exchange carrier servicing over
300 thousand access lines in markets located in Northeast US and
West Virginia. The company maintains its headquarters in
Marlborough, Massachusetts.
COSINE COMMS: Burr Pilger Raises Going Concern Doubt
----------------------------------------------------
Burr, Pilger & Mayer LLP expressed substantial doubt about CoSine
Communications, Inc.'s ability to continue as a going concern
after it audited the Company's financial statements for the years
ended Dec. 31, 2005 and Dec. 31, 2005. The auditing firm pointed
to the Company's decision to terminate most of its employees and
discontinue production activities in an effort to conserve cash as
well as ongoing evaluation of strategic alternatives.
CoSine earned $325,000 of net income on revenues of $934,000 for
the three months ended Dec. 31, 2005, in contrast to a $5.6
million net loss on revenues of $1,564,000 for the same period in
2004.
For the year ended Dec. 31, 2005, CoSine reported $3.3 million of
revenues and a $1.2 million net loss. In the prior year, the
Company posted $9.7 million of revenues and a net loss of $37.3
million.
In July 2005, CoSine completed the comprehensive review of
strategic alternatives, including a sale of CoSine, a sale or
licensing of intellectual property, a redeployment of its assets
into new business ventures, or a winding-up and liquidation of the
business and a return of capital.
The Company's Board of Directors approved a plan to redeploy
CoSine's existing resources to identify and acquire one or more
new business operations, while continuing to support its existing
customers and continuing to offer its intellectual property for
license or sale. The redeployment strategy involves the
acquisition of one or more operating businesses with existing or
prospective taxable earnings that can be offset by use of the
Company's net operating loss carry-forwards.
A full-text copy of the regulatory filing is available for free
at http://researcharchives.com/t/s?779
About CoSine
Based in San Jose, California, CoSine Communications, Inc. -
http://www.cosinecom.com/-- provides customer support services
for managed network-based Internet protocol and broadband service
providers under contract by a third party. In June 2005, the
Company's stock was delisted from the Nasdaq National Market
System and now trades in the over the counter market under the
symbol COSN.PK.
DANA CORPORATION: Eight Brokers May Own or Acquire Large Positions
------------------------------------------------------------------
As reported in the Troubled Company Reporter on Mar. 22, 2006,
Dana Corporation and its debtor-affiliates sought and obtained
permission on an interim basis from the U.S. Bankruptcy Court for
the Southern District of New York, to establish notification and
hearing procedures on claim and equity security transfers.
8 Parties Declare Claimholder Status
Eight parties inform the Court that, in their capacities as
broker-dealers or market makers, each of them could own or
acquire claims in excess of $100,000,000:
(1) Merrill Lynch, Pierce, Fenner & Smith Incorporated,
(2) Bear, Steams & Co. Inc.,
(3) UBS Securities LLC,
(4) Lehman Brothers Holdings Inc.,
(5) JPMorgan Chase & Co.,
(6) Citigroup Inc.,
(7) Morgan Stanley & Co., and
(8) American Real Estate Holdings Limited Partnership.
Pursuant to the Trading Procedures, (x) entities holding claims
exceeding $101,250,000 or (y) parties to leases, under which one
or more of the Debtors are lessees and pursuant to which payments
of $101,250,000 or more, in the aggregate, are or will become
due, are required to promptly inform the Court of their ownership
of the Claims.
AREH Wants Debtors to Produce Docs
Pursuant to Rule 37 of Federal Rules of Civil Procedure, American
Real Estate Holdings Limited Partnership asks the Court to compel
the Debtors to immediately produce documents in connection with
their request to establish notice and hearing procedures to limit
trading in Dana Corp. claims and equity securities.
The Debtors have unsecured debt of approximately $2.25 billion,
including more than $1.6 billion in unsecured bond debt. AREH is
a holder of the bonds, and has filed a Notice of Substantial
Claimholder Status. AREH may seek to acquire additional claims
against the Debtors and intends, in any event, to be an active
participant in the Debtors' cases pursuant to Section 1109 of the
Bankruptcy Code.
According to Andrew Dash, Esq., at Brown Rudnick Berlack Israels
LLP, in New York, the Trading Procedures, if granted, would place
onerous burdens on third party transactions in the Debtors' debt
securities, deprive claimholders of their right to participate in
the development of plans of reorganizations, possibly force
claimholders to sell a portion of their claim holdings at a loss,
and significantly injure AREH's business interests.
Starting on March 16, 2006, AREH asked the Debtors for
information to justify the Trading Procedures. AREH requested,
among others:
(1) all documents relied upon, reviewed, or consulted in
preparation of the Debtors' request and any supporting
documents, including any documents showing projected uses
of net operating losses or any other tax attributes;
(2) all documents concerning any analysis, study, review,
projections or other consideration of the Debtors' NOLs or
the Debtors' NOL carryovers or limitations on, or
expirations of, the carryovers;
(3) all documents concerning any analysis, study, review,
projections or other consideration of the Debtors'
projected future earnings, including any budgets or
business plans;
(4) all documents concerning any analysis, study, review,
projections or other consideration of the impact of the
Debtors' projected future earnings on useable NOL
carryovers or the impact of NOL carryovers on future
earnings; and
(5) all documents concerning any analysis, study, review,
projections or other consideration of any proposed or
contemplated sale of significant assets of the Debtors or
of any Debtor subsidiary or any affiliate of the Debtors.
However, AREH complains that the Debtors have unjustifiably
objected to many of the Document Requests and otherwise refused
or attempted to evade production.
The Debtors' failure to respond completely to the Document
Requests has unfairly and profoundly prejudiced AREH in its
preparation for the hearing on the Debtors' request, Mr. Dash
contends.
Mr. Dash notes that NOLs have value only to the extent that there
is taxable income against which the NOLs can be offset after the
Debtors' emergence from bankruptcy. Among other factors, unless
the Debtors will have significant taxable income soon after
emergence from bankruptcy, there can be no justification for the
extraordinary interference in the debt securities market, which
the Debtors seek to impose by the Trading Procedures.
Mr. Dash argues that the Debtors should be required to comply
with necessary and appropriate discovery on this most fundamental
of issues -- whether they have any realistic need for, or ability
to use, any NOLs.
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: Incurs $376 Million Net Loss in Fourth Quarter 2005
--------------------------------------------------------------
Dana Corporation and its debtor-affiliates reported its
preliminary, unaudited consolidated financial results for the
quarter and full year ended Dec. 31, 2005.
Fourth-Quarter 2005 Results
Sales for the fourth quarter of 2005 were $2,046 million,
compared to $1,988 million during the same period in 2004. The
company expects to report a net loss of $376 million for the
quarter, including a loss from continuing operations of $231
million. This compares to a net loss of $136 million in the
fourth quarter of 2004, which included a loss from continuing
operations of $72 million.
The fourth-quarter 2005 net loss will include unusual charges
expected to total $230 million, after tax. These include:
-- Charges of $123 million related to the previously
announced planned divestitures of the company's non-core
engine hard parts, fluid products, and pump products
businesses that are currently held for sale and will be
classified as discontinued operations;
-- Goodwill impairment of $53 million;
-- Realignment charges and related asset impairments of
$45 million;
-- A change in accounting related to the recognition of
asset retirement obligations of $2 million; and
-- A loss of $7 million on asset sales.
The balance of the fourth-quarter 2005 loss -- expected to
total $146 million, after tax -- will be from operations.
Continuing operations, before unusual items, are expected to
generate a loss of $126 million in the fourth quarter of 2005 as
compared to income of $54 million for the same period in 2004.
Discontinued operations are expected to produce a loss of $20
million, before unusual items, in the fourth quarter of 2005,
which compares to a loss of $19 million in the previous year's
fourth quarter.
Full-Year 2005 Results
Sales of continuing operations for the full year 2005 were
$8,611 million, compared to $7,775 million in 2004. The company
expects to report a 2005 net loss of $1,602 million versus net
income of $62 million in 2004. Included in the net loss for 2005
is an expected loss from continuing operations of $1,172 million
compared to income from continuing operations of $72 million in
2004. In addition to the unusual fourth-quarter 2005 charges
totaling $230 million, the year-on-year change in earnings is
expected to be driven primarily by unusual items recorded in the
third quarter of 2005. These items totaled $1,209 million and
included:
* The provision of a $918 million valuation allowance to
reduce Dana's net U.S. and U.K. deferred tax assets,
comprised of $835 million of deferred tax assets as of
Dec. 31, 2004, and additional benefits recognized
between the beginning of the year and June 30, 2005;
* An impairment charge of $275 million, after tax, to
reduce the book value of certain assets of the non-core
businesses that are now held for sale; and
* Aggregate charges of approximately $16 million related
to the sale of Dana's domestic fuel rail business and
the dissolution of an engine bearings joint venture.
Adjusted for unusual items, continuing operations are expected to
generate an after-tax loss of $215 million in 2005, compared to
income of $165 million in 2004. Discontinued operations, on the
same basis, are expected to report an after-tax loss of $36
million in 2005, compared to income of $48 million in the prior
year. Results from 2004 included income from the automotive
aftermarket businesses that were sold in November 2004.
Unusual items of $151 million, after tax, in 2004 included $171
million of charges recorded in the fourth quarter, as well as $20
million of net gains reported earlier in the year. The fourth-
quarter 2004 charges included costs associated with completing the
divestiture of the company's automotive aftermarket businesses,
two facility closures and other manufacturing realignments, and
the repurchase of approximately $900 million of long-term debt.
Business Segment Results for Continuing Operations
Sales in the Automotive Systems Group totaled $1,414 million in
the fourth quarter of 2005 and $5,941 million for the full year
2005, compared to $1,387 million and $5,384 million respectively
during the fourth quarter and full year 2004. On an EBIT basis,
the group expects to record income of $6 million during the fourth
quarter of 2005 and $187 million for the full year 2005, compared
to $49 million and $300 million during the respective periods in
2004.
Sales in the Heavy Vehicle Technologies and Systems Group
totaled $626 million in the fourth quarter of 2005 and $2,640
million for the full year 2005, compared to $580 million and
$2,299 million respectively during the fourth quarter and full
year 2004. On an EBIT basis, the group expects to record a loss
of $9 million during the fourth quarter of 2005 and income of
$72 million for the full year 2005, compared to earnings of
$36 million and $161 million during the respective periods in
2004.
Dana Will File 2005 Form 10-K Late
Dana will not file its 2005 Form 10-K by the March 31, 2006,
extended filing date because of the additional time required to
complete its financial statements and the related non-financial
disclosures, in light of the company's bankruptcy filing on
March 3, 2006, and to complete its assessment of internal control
over financial reporting. The company expects to file its 2005
Form 10-K by April 30, 2006. This report will include -- in
addition to Dana's audited financial statements and management's
discussion and analysis of financial condition and results of
operations -- information generally found in the proxy statement.
The company has suspended its quarterly conference calls and
annual shareholder meetings until further notice.
About Dana Corp
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: Wants Court to Approve 1102(b)(3) Information Protocol
-----------------------------------------------------------------
Dana Corporation and its debtor-affiliates ask the U.S. Bankruptcy
Court for the Southern District of New York to confirm that the
Official Committee of Unsecured Creditors -- or any other official
committee that may be appointed in their Chapter 11 cases -- is
not authorized or required to provide access to their confidential
and other non-public proprietary information, or to privileged
information, to its constituents who are not committee members.
As part of the Bankruptcy Abuse Prevention & Consumer Protection
Act of 2005, Congress enacted new Section 1102(b)(3) of the
Bankruptcy Code. The statute provides, in relevant part, that a
creditors' committee appointed under Section 1102(a) will
"provide access to information for creditors who (i) hold claims
of the kind represented by that committee; and (ii) are not
appointed to the committee."
However, Corinne Ball, Esq., at Jones Day, in New York, notes
that Section 1102(b)(3)(A) does not indicate how a creditors'
committee should provide access to "information" and, more
importantly, does not indicate the nature, scope or extent of the
"information" that a creditors' committee must provide to the
creditors that it represents. Furthermore, there appears to be
no legislative history to Section 1102(b)(3) that might shed
light on these issues.
Ms. Ball relates that the lack of specificity in new Section
1102(b)(3)(A) creates significant issues for debtors and
creditors' committees.
Typically, a debtor will share significant confidential and other
non-public proprietary information with a creditors' committee to
assist the committee in fulfilling its role in the Chapter 11
process. Creditors' committees may use this information to
assess, among other things, a debtor's capital structure,
opportunities for the restructuring of the debtor's business in
Chapter 11, the results of any operations of the debtor in the
bankruptcy case and the debtor's overall prospects for
reorganization under a Chapter 11 plan.
In addition, creditors' committees typically execute
confidentiality agreements or enter into other similar
arrangements with debtors, and the Debtors expect that any of
their Official Committees will do the same. Through these
agreements and other arrangements, a debtor can ensure that the
committee and its members and advisors will keep the debtor's
sensitive information confidential and will not use Confidential
Information except in connection with the Chapter 11 case and on
terms acceptable to the debtor.
Section 1102(b)(3)(A) raises these issues:
(i) Whether a creditors' committee could be required as part
of its new information sharing obligations to share a
debtor's Confidential Information with any creditor among
its constituency; and
(ii) Whether a creditors' committee could be required to share
information with any creditor that the committee
represents where that information is subject to the
attorney-client privilege or similar state, federal or
other jurisdictional law privilege, whether this privilege
is solely controlled by the committee or is a joint
privilege with the debtor or some other party.
The Debtors contend that an Official Committee would be
permitted, but not required, to provide access to Privileged
Information to any party, provided that (a) the Privileged
Information is not Confidential Information and (b) the relevant
privilege is held and controlled solely by the Official
Committee.
Ms. Ball explains that the Debtors operate in a highly
competitive industry and rely on confidential and proprietary
information in the conduct of their businesses. Dissemination of
the Debtors' Confidential Information to parties who are not
bound by any confidentiality agreement directly with the Debtors
could have disastrous results for the Debtors.
If the Debtors' general creditors could require an Official
Committee to give them access to Confidential Information in the
possession of the committee, the information easily could become
public and could be used by the Debtors' competitors and other
parties to the direct detriment to the Debtors, their business
operations and their reorganization efforts. This concern is
amplified because certain of the Debtors' competitors are
creditors or potential creditors of the Debtors, Ms. Ball points
out.
If there were a risk that Confidential Information given by the
Debtors to an Official Committee could be disclosed to any
creditor, the Debtors would be strongly discouraged from giving
Confidential Information to the Official Committee in the first
place. The inability of an Official Committee to gain access to
Confidential Information, in turn, would limit its ability to
fulfill its statutory obligations under the Bankruptcy Code.
Accordingly, it is not uncommon for a committee member itself,
who may otherwise have access to Confidential Information as a
result of executing a confidentiality agreement with the debtor,
to be denied access to information that would have some bearing
on the committee member's personal interests in a case,
including, the allowance or disallowance of its own claim, Ms.
Ball relates.
The Debtors propose that, among other reasonable limitations:
(a) no member of the Creditors' Committee or any other
Official Committee may have access to any information
regarding, or participate in any committee discussions
related to:
-- that member's business dealings with the Debtors;
-- any proposed transaction between that member and any of
the Debtors; or
-- any other matter in which that member has an actual or
potential conflict of interest; and
(b) creditors who are plaintiffs be denied access to any
information with respect to the Debtors' insurance assets
or other matters that are the subject of discovery in a
litigation.
Ms. Ball tells the Court that Dana is a public company with
publicly traded debt and equity. Dana is subject to the
requirements of federal securities laws, including Regulation FD
promulgated in 2000 under the Securities Exchange Act of 1934.
Regulation FD was enacted in response to the perception that
public companies were disclosing nonpublic material information
to certain parties before disclosing the same information to the
general public. Regulation FD requires that, whenever a public
company discloses material nonpublic information to certain
enumerated persons, the company must make public disclosure of
that same information:
(a) simultaneously for intentional disclosures; or
(b) promptly for non-intentional disclosures.
However, the disclosure requirements of Regulation FD do not
apply if material nonpublic information is disclosed to a person
or entity that expressly agrees to maintain the disclosed
information in confidence. As a result, to the extent otherwise
applicable, Regulation FD is not implicated when a debtor
provides Confidential Information to a creditors' committee if
the committee has executed a confidentiality agreement with the
debtor or has entered into a similar arrangement that satisfies
the exception to Regulation FD.
If an Official Committee were required to provide access to the
Debtors' Confidential Information to the Debtors' general
creditors, Ms. Ball says Regulation FD likely would be
implicated, since the creditors would not have confidentiality
agreements with the Debtors.
Ms. Ball further maintains that the Debtors and an Official
Committee face similar risks if the committee could be required
to provide creditors who are not committee members with access to
Privileged Information. If there is a risk that Privileged
Information would be turned over to creditors generally, with the
possible loss of the relevant privilege at that time, the entire
purpose of this privilege would be eviscerated, and an Official
Committee would be unable to obtain the independent and
unfettered advice and consultation that these privileges are
designed to foster. As a result, an Official Committee would be
hampered in its ability to fulfill its statutory role in the
Debtors' Chapter 11 cases.
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: Files for Bankruptcy Following $107 Million Judgment
---------------------------------------------------------------
Death Row Records Inc., and its owner, Marion "Suge" Knight, filed
chapter 11 bankruptcy petitions after a civil court entered a
$107 million judgment in favor of Lydia Harris.
Ms. Harris, a former associate who claims she helped start Death
Row Records with her former husband, Michael Harris, sued Mr.
Knight alleging that he cheated her out of a 50% stake in the
Company's music label.
Prior to the bankruptcy filing, a Los Angeles judge ordered the
record company into receivership to take control of Mr. Knight's
and his Company's assets.
The judge also directed Mr. Knight to disclose his finances.
According to the Associated Press, Mr. Knight said his personal
assets total no more than $50,000.
In his bankruptcy petition filed in the U.S. Bankruptcy Court for
the Central District Of California in Los Angeles, Mr. Knight
disclosed that Death Row has $1,500,000 in total assets and
$119,794,000 in total debts.
Headquartered in Compton, California, Death Row Records Inc. --
http://www.deathrowrecords.net/-- is an independent record
producer. The Company filed for chapter 11 protection on
April 4, 2006 (Bankr. C.D. Calif. Case No. 06-11205) (Carroll,
J.). Robert S. Altagen, Esq., in Monterey Park in California and
Daniel J. McCarthy, Esq., at Hill, Farrer & Burrill, LLP, in Los
Angeles, California, represent the Debtor in its restructuring
efforts.
DEL LABORATORIES: S&P Lowers Corporate Credit Rating to B- from B
-----------------------------------------------------------------
Standard & Poor's Ratings Services lowered its ratings on
cosmetics and pharmaceuticals manufacturer Del Laboratories Inc.,
including its corporate credit rating to 'B-' from 'B'.
The outlook is negative. About $383 million of debt is affected
by this action.
The downgrade is based on the company's weak operating performance
in fiscal 2005 and expectations that credit measures will remain
weak as the company continues to face a challenging operating
environment. Inefficiencies in its supply chain, increased
returns an d sales incentives, and rising freight and other costs
more than offset cost savings from other initiatives. The
Uniondale, New York-based company will need to demonstrate
operating stability and reduce leverage in fiscal 2006 in order to
maintain the revised ratings.
Del's sales declined about 1% in fiscal 2005 to $393 million.
While the company implemented significant cost-saving initiatives
after being acquired by Kelso & Co. in early 2005, higher returns
and inefficient execution of outsourcing initiatives have resulted
in EBITDA of about $48 million in fiscal 2005, below the $51
million level achieved in fiscal 2004. In fiscal 2005, Del also
made several senior management changes and hired a management
consulting firm, Synergetics Installations Worldwide, to help
address its weak operating performance.
While the company continues to implement initiatives to improve
its cost structure, significant margin improvement will be
challenged by commodity cost pressures and a highly competitive
operating environment. Del had negative free cash flow in fiscal
2005. The ratings do not incorporate any significant debt-
financed acquisitions.
DYNEGY HOLDINGS: Fitch Rates $600 Million Credit Facility at BB-
----------------------------------------------------------------
Fitch Ratings assigned a 'BB-' rating and 'RR1' Recovery Rating
to Dynegy Holdings Inc.'s (DYNH) fourth amended and restated
secured credit facility, which is the same rating level as the
secured credit facility it is replacing and is comprised of these:
-- three-year $400 million revolving credit facility; and
-- six-year $200 million letter of credit facility.
Fitch currently rates DYNH's outstanding ratings as:
-- Issuer Default Rating 'B-'
-- Secured credit facility 'BB-/RR1'
-- Second priority senior secured notes 'B+/RR1'
-- Senior unsecured notes 'B-/RR4'
-- Rating Outlook Stable
The credit facility, which will be used to provide operating
liquidity to support the company's power generation business,
benefits from a first priority lien on substantially all the
assets of DYNH and certain of Dynegy Inc.'s (DYN) assets and a
senior position in its capital structure. In addition, it is
guaranteed by DYN and most material subsidiaries of DYN and DYNH.
Ratings for DYNH's securities recognize the benefits of liability
management activities that the company is currently undertaking.
They also consider Fitch's current valuation of DYNH's generating
assets utilizing an independent power market model that calculates
the value for each of its generating plants based on the net
present value of its projected revenue stream. Fitch's valuation
of DYNH's enterprise value under distressed conditions has been
applied to the securities in the capital structure and other
claims in their relative priority. As a result of this analysis,
the credit facility has been assigned a 'BB-/RR1' rating which is
three notches above its IDR and reflects outstanding recovery
prospects exceeding 100% even under low-valuation scenarios.
DYN's liability management activities have several components and
when completed will cause a material change to the company's
capital structure resulting in lower overall debt levels. Key
activity components are:
* Last week, DYNH announced the receipt of tenders for its
second priority senior secured notes which in the aggregate
represent $1.663 billion or 95% of the outstanding balance.
Proceeds from the newly issued $750 million, 8.375% senior
notes due 2016 along with cash on hand will be used to fund
the tender.
* On March 15, 2006, DYNH began a conversion/consent
solicitation for its $225 million convertible subordinated
debentures whereby it would exchange a combination of cash
and common stock for the outstanding subordinated convertible
debentures.
* On March 7, 2006, DYNH paid $370 million to terminate its
Sterlington toll obligation. In its Recovery Rating
analysis, Fitch had considered the NPV of the estimated
out-of-the-money portion of the toll obligation as an
unsecured debt equivalent.
DYNH's 'B-' IDR recognizes a high level of business risk
associated with its mostly unhedged merchant generation operations
and the correlation of future financial performance to the level
of natural gas prices which are expected to remain volatile.
While credit measures should improve with less debt and lower
interest costs as a result of the liability management activities,
DYNH's overall credit profile should remain consistent with the
current IDR over the near term. Long-term improvement in
operating performances and future upgrades to the IDR will be
primarily dependent on a sustained power market recovery.
ENRON CORP: Inks 24 Settlement Pacts Resolving Supply Disputes
--------------------------------------------------------------
Reorganized Enron Corporation and its debtor-affiliates ask the
U.S. Bankruptcy Court for the Southern District of New York to
approve 24 separate settlement agreements between these parties:
Debtor Party Customer
------------ --------
Enron Energy Services, Inc. Shaw Diversified Services, Inc.,
as assignee of Shaw Industries
Group, Inc.
Enron Power Marketing Inc. TXU Electric Company
Enron Energy Marketing Corp. Cornerstone Network Inc.
Enron North America Corp. Oglethorpe Power Corporation
EEMC WestEd
ENA The American Coal Company
Enron Reserve Acquisition Equiva Trading Company n/k/a
Corp. Shell Oil Company
EESI Cliffstar Corporation
EESI Del Taco, Inc.
EEMC Mallard Holding Company, Buxton
Corporation & Valley Springs
Food Services, LLC
EESI & EEMC Oakhurst Industries, Inc.
EESI Telesector Resources group,
Inc., on behalf of Verizon
California, Inc.
EEMC Frisbie Management, Inc.
EESI Ponto Associates, Inc.
EESI Daifuku America Corporation
EEMC JS Foods
EESI S. Martinelli & Company, Inc.
Enron Corp., ENA, ENA Kerr McGee (Nevada) LLC
Upstream Company LLC
ENA Clark Oil Trading Company
EESI Genentech, Inc.
EESI Worthington Custom Plastics &
Blackhawk Automotive Plastics,
Inc.
EEMC A.M. Realty Management, Inc.
EEMC & EESI Ortek, Inc.
ECTRIC AS Bulkhandling, Baumarine AS,
Torvald Klaveness Commodities
AS, AS Klaveness Chartering, T.
Klaveness Shipping AS, Torvald
Klaveness Konsern AS, Klaveness
Relation AS, and Klaveness Ship
Investments AS
The Reorganized Debtors and the customers were parties to various
prepetition contracts relating to the Debtors' provision of power
or natural gas. Certain disputes arose under the supply
contracts.
Following negotiations, the parties entered into the Settlement
Agreements. The parties agree that:
1. Each customer will make a settlement payment to the
applicable Reorganized Debtor or Debtors; and
2. The parties will mutually release claims related to the
Contracts.
Most of the Settlement Agreements also provide that each
scheduled liability related to the Customers will be deemed
irrevocably withdrawn, with prejudice, and to the extent expunged
and disallowed in its entirety.
The Reorganized Debtors also agree to dismiss with prejudice
these adversary proceedings:
* Case No. 02-03542, ENA v. The American Coal
* Case No. 04-04320, EESI v. Del Taco, Inc.
* Case No. 04-02953, ENA et al. v. Westport
* Case No. 05-02582, EESI v. Cliffstar Corporation
* Case NO. 05-03061, ENA v. Clark Oil Trading Company
The Reorganized Debtors believe that the Settlement Agreements
will clearly benefit them and their creditors. The Agreements
will allow them to capture the value of the Contracts while
avoiding the costs associated with possible future litigation.
Judge Gonzalez approves the Settlement Agreements, with the
exception of ECTRIC's Agreement with the AS Bulkhandling Parties.
About Enron
Headquartered in Houston, Texas, Enron Corporation 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.
(Enron Bankruptcy News, Issue No. 169; Bankruptcy Creditors'
Service, Inc., 15/945-7000)
ENTERGY NEW ORLEANS: Seeks $718,000,000 in Federal Funding
----------------------------------------------------------
In a regulatory filing with the Securities and Exchange
Commission, Entergy Corporation disclosed that it is currently
preparing applications for Community Development Block Grant
funding.
In December 2005, the U.S. Congress passed and the President
signed the Katrina Relief Bill, a hurricane aid package that
includes $11.5 billion in Community Development Block Grants (for
the states affected by Hurricanes Katrina, Rita, and Wilma) that
allows state and local leaders to fund individual recovery
priorities. The bill includes language that permits funding for
infrastructure restoration.
Entergy says it is uncertain how much funding, if any, will be
designated for utility reconstruction, and the timing of those
decisions is also uncertain.
Last week, the Associated Press reports that three Entergy utility
units in Louisiana will seek a combined $1.35 billion in federal
funds to avoid big rate increases for its customers.
AP business writer Alan Sayre relates that Entergy New Orleans is
asking for $718,000,000 to rebuild electricity and natural gas
systems; Entergy Louisiana is asking for $472,000,000; and Entergy
Gulf States-Louisiana is seeking $164,000,000.
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)
FAIRFAX FINANCIAL: Fitch Holds Low-B Ratings on Negative Watch
--------------------------------------------------------------
The ratings for Fairfax Financial Holdings Limited, Odyssey Re
Holdings Corp and its insurance subsidiaries (Odyssey Re), and
TIG Holdings Inc. remained on Rating Watch Negative by Fitch
Ratings after Odyssey Re filed its 10-K and Fairfax (which owns
80% of Odyssey Re) filed its annual report this past Friday.
Both filings had been delayed due to additional time needed to
complete the restatement of Odyssey Re's financial results.
TIG's Negative Rating Watch reflects the alignment of the
company's and Fairfax's debt ratings given that Fairfax has
traditionally guaranteed TIG's debt. The holding company ratings
of Crum & Forster Holdings Corp, and the insurance company ratings
of:
* Crum & Forster Insurance Group,
* Northbridge Financial Insurance Group, and
* TIG Insurance Group
are not affected by this action.
In addition to the restatements previously announced, Odyssey Re
restated one additional ceded reinsurance contract entered into in
1995, which was changed from prospective to retroactive
reinsurance accounting for 2002 and subsequent periods. The
result was to increase Odyssey Re's net loss in 2005 to $105.4
million from $101.8 million reported previously, with a cumulative
impact to Sept. 30, 2005 shareholders' equity of a $35.6 million
decrease, compared to a decrease of $8.4 million previously
reported, all of which will be earned in future periods.
As a result of the restatements, Odyssey Re identified a material
weakness in its internal control over the accurate accounting for
its finite reinsurance transactions as of year-end 2005. Odyssey
Re will implement a remediation plan to address the material
weakness. Fairfax did not restate its financial results due to
Odyssey Re's restatement, concluding that it was not material to
Fairfax. In addition, the material weakness at Odyssey did not
result in a material weakness at Fairfax.
Fitch views as a positive development Odyssey Re's 10K filing with
relatively minor additional restatements as it has reduced a
significant uncertainty. However, the ratings remain on Negative
Rating Watch due to the substantial uncertainty surrounding the
ongoing investigations of Fairfax and Odyssey Re.
Fitch's ratings of Fairfax and its subsidiaries incorporate a
certain amount of risk related to the ultimate potential negative
effect of issues surrounding the company's use of finite
reinsurance and transactions in Fairfax securities, which have led
to various subpoenas received by Fairfax, its subsidiaries, its
independent auditors and a shareholder.
However, there is the increased risk that the ongoing
investigations by the Securities and Exchange Commission and the
U.S. Attorney's office for the Southern District of New York could
bring about a civil action against the company. Fitch believes
that any such action could negatively affect the companies'
franchise, reputation, and competitive position, particularly for
Odyssey Re as a reinsurer, in addition to the financial
implications of any fines and/or penalties levied. Fitch will
continue to monitor events for any additional developments related
to these ongoing investigations.
These ratings remain on Rating Watch Negative by Fitch:
Fairfax Financial Holdings Limited:
-- Issuer Default Rating 'BB-'
-- $62 million unsecured due April 15, 2008 'B+'
-- $466 million unsecured due April 15, 2012 'B+'
-- $100 million unsecured due Oct. 1, 2015 'B+'
-- $184 million unsecured due April 15, 2018 'B+'
-- $98 million unsecured due April 15, 2026 'B+'
-- $91 million unsecured due July 15, 2037 'B+'
-- $137 million convertible due July 15, 2023 'B+'
Fairfax, Inc.:
-- Issuer Default Rating 'BB-'
-- $101 million exchangeable due Nov. 19, 2009 'B+'
Odyssey Re Holdings Corp.:
-- Issuer Default Rating 'BBB-'
-- $50 million series A unsecured March 15, 2021 'BB+'
-- $50 million series B unsecured due March 15, 2016 'BB+'
-- $40 million unsecured due Nov. 30, 2006 'BB+'
-- $80 million convertible due June 15, 2022 'BB+'
-- $225 million unsecured due Nov. 1, 2013 'BB+'
-- $125 million unsecured due May 1, 2015 'BB+'
-- $50 million series A preferred shares 'BB'
-- $50 million series B preferred shares 'BB'
Odyssey Re Group:
Odyssey America Reinsurance Corporation:
Clearwater Insurance Company:
-- Insurer financial strength 'BBB+'
TIG Holdings, Inc.:
-- Issuer Default Rating 'BB-'
-- TIG Capital Trust I $52 million trust preferred stock
due 2027 'B'
These ratings remain unchanged by Fitch:
Crum & Forster Holdings Corp.:
-- Issuer Default Rating 'BB-'
-- $300 million unsecured due June 15, 2013 'B+'
Crum & Forster Insurance Group:
Crum & Forster Insurance Company:
Crum & Forster Indemnity Company:
The North River Insurance Company:
United States Fire Insurance Company:
-- Insurer financial strength 'BBB-'
Northbridge Financial Insurance Group:
Commonwealth Insurance Company
Commonwealth Insurance Company of America
Federated Insurance Company of Canada
Lombard General Insurance Company of Canada
Lombard Insurance Company
Markel Insurance Company of Canada
Zenith Insurance Co. (Canada)
-- Insurer financial strength 'BBB'
TIG Insurance Group:
TIG Indemnity Company:
TIG Insurance Company:
TIG Specialty Insurance Company:
-- Insurer financial strength 'BB+'
FINOVA GROUP: Prepaying Sr. Sec. Noteholders $59.35M on May 15
--------------------------------------------------------------
The Finova Group Inc., will prepay $59,358,980 to holders of
7.5% Senior Secured Notes Maturing 2009, with Contingent Interest
Due 2016 on May 15, 2006.
May 15 is also an interest payment date, so interest will be paid
on all Notes through May 14, 2006. Payments of principal and
interest will be made to holders of record as of 5:00 p.m., New
York City time, on May 8, 2006. Payments will be made pro-rata.
After the May 2006 prepayment, the Company will have prepaid
47% of the $2,967,949,000 principal amount outstanding as of
December 31, 2003. Prior payments on the Notes were:
Cumulative % of
Prepayment Date Record Date Principal Amount Principal Prepaid
--------------- ----------- ---------------- -----------------
May 15, 2004 May 10, 2004 $237,500,000 Approximately 8%
Aug. 16, 2004 Aug. 9, 2004 $326,410,310 19%
Oct.15, 2004 Oct. 7, 2004 $118,717,960 23%
Nov. 15, 2004 Nov. 5, 2004 $118,717,960 27%
Jan. 18, 2005 Jan. 10, 2005 $178,076,940 33%
Feb. 15, 2005 Feb. 8, 2005 $ 59,358,980 35%
Mar. 15, 2005 Mar. 8, 2005 $ 59,358,980 37%
May 15, 2005 May 9, 2005 $ 59,358,980 39%
Aug. 15, 2005 Aug. 8, 2005 $ 89,038,470 42%
Nov. 15, 2005 Nov. 7, 2005 $ 29,679,490 43%
Jan. 17, 2006 Jan. 9, 2006 $ 29,679,490 44%
Feb. 15, 2006 Feb. 8, 2006 $ 29,679,490 45%
May 15, 2006 May 8, 2006 $ 59,358,980 47%
The Trustee can be reached at address:
If by Mail:
The Bank of New York
P.O. Box 396
East Syracuse, New York 13057
Attn: Corporate Trust Operations
If by Courier:
The Bank of New York
111 Sanders Creek Parkway
East Syracuse, New York 13057
Attn: Corporate Trust Operations
About Finova
Headquartered in Scottsdale, Arizona, The Finova Group, Inc.,
provides commercial financing to small and mid-sized businesses;
other services include factoring, accounts receivable management,
and equipment leasing. The firm has three segments: Commercial
Finance, Specialty Finance, and Capital Markets. FINOVA targets
such markets as transportation, wholesaling, communication, health
care, and manufacturing. Loan write-offs had put the firm on
shaky ground. The Company and its debtor-affiliates and
subsidiaries filed for Chapter 11 protection on March 7, 2001
(U.S. Bankr. Del. 01-00697). Daniel J. DeFranceschi, Esq., at
Richards, Layton & Finger, P.A., represents the Debtors. FINOVA
has since emerged from Chapter 11 bankruptcy. Financial giants
Berkshire Hathaway and Leucadia National Corporation (together
doing business as Berkadia) own FINOVA through the almost
$6 billion lent to the commercial finance company.
At Dec. 31, 2005, The FINOVA Group Inc.'s equity deficit widened
to $611,731,000 from a $534,677,000 stockholders' equity
deficit at Dec. 31, 2004.
FIRST FRANKLIN: Moody's Rates Class B-2 Certificates at Ba1
-----------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by First Franklin Mortgage Loan Trust 2006-
FF4, Mortgage Pass-Through Certificates, Series 2006-FF4, and
ratings ranging from Aa1 to Ba1 to the mezzanine certificates in
the deal.
The securitization is backed by First Franklin originated
adjustable-rate and fixed-rate subprime mortgage loans acquired by
GS Mortgage Securities Corp. The ratings are based primarily on
the credit quality of the loans, and on the protection from
subordination, overcollateralization and excess spread, and an
interest rate swap agreement between the trust and Goldman Sachs
Mitsui Marine Derivative Products, L.P. Moody's expects
collateral losses to range from 4.25% to 4.75%.
National City Home Loan Services, Inc. will service the loans.
Moody's has assigned National City Home Loan Services, Inc., its
servicer quality rating as a primary servicer of subprime first
lien loans.
The complete rating actions are:
First Franklin Mortgage Loan Trust 2006- FF4
Mortgage Pass- Through Certificates, Series 2006- FF4
* Class A-1, Assigned Aaa
* Class A-2, Assigned Aaa
* Class A-3, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class M-7, Assigned Baa1
* Class M-8, Assigned Baa2
* Class B-1, Assigned Baa3
* Class B-2, Assigned Ba1
FLYI INC: Has Until June 30 to File Chapter 11 Reorganization Plan
------------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware extended,
until June 30, 2006, the period within which FLYi Inc. and its
debtor-affiliates have the exclusive right to file a chapter 11
plan. The Court also extended, until Aug. 31, 2006, the Debtors'
exclusive period to solicit acceptances of that plan.
As reported in the Troubled Company Reporter on Mar. 14, 2006,
M. Blake Cleary, Esq., at Young Conaway Stargatt & Taylor LLP, in
Wilmington, Delaware, relates that during the initial phase of
their Chapter 11 cases, the Debtors expended substantial efforts
on the sale and investment proposal process, including:
* refining their business plan;
* meeting with interested parties and facilitating their due
diligence; and
* reviewing the bids that were ultimately received.
The Debtors sought and obtained, shortly after the Debtors'
bankruptcy petition date, a Court order approving procedures to
solicit bids for an investment or sale proposal relating to their
business and assets.
When the Debtors did not receive an acceptable bid that
contemplated the continuation of their operations as a concern,
they implemented their contingency plans for the discontinuation
of scheduled flight operations. The Debtors discontinued their
scheduled flight operations on Jan. 5, 2006.
Since then, the Debtors focused on winding down their affairs and
maximizing the value of their assets. The Debtors are currently
in the process of orderly disposing their remaining assets.
As of Mar. 2, 2006, the Debtors have closed or are in the
process of closing:
a. their concourse lease at Washington-Dulles International
Airport to United Airlines, Inc.;
b. an airbus purchase agreement with AVSA S.A.R.L.; and
c. the sale of:
i. a cabin trainer,
ii. slots at Westchester County Airport, and
iii. certain miscellaneous assets.
The Debtors also spent considerable time and resources returning
the entire fleet of 80 aircraft to their lessors and lenders.
Mr. Cleary contends that the Debtors' Chapter 11 cases have been
complex, requiring the Debtors to pursue a parallel-track during
a 60-day period involving an investment or sale proposal process
and contingency planning. In addition, the Debtors have not yet
had sufficient time to prepare a disclosure statement having
adequate information on which the creditors can make an informed
decision whether to vote on a plan.
Based on their cash on hand and estimated value of their
remaining assets, the Debtors believe that they will be in a
position to confirm and consummate a Chapter 11 plan and
disclosure statement during the second quarter of 2006.
In connection with the plan process, the Debtors will also be
commencing the claims reconciliation process. The general bar
date is March 31, 2006. Once the Bar Date passes, the Debtors
will have a better understanding of the amount and nature of
claims against the Company that will need to be addressed in
their Chapter 11 plan, Mr. Cleary points out.
The requested extension of the Exclusive Periods will not
prejudice the legitimate interests of any creditor, Mr. Cleary
assures the Court. The Debtors are in constant communication
with the Official Committee of Unsecured Creditors and its
professionals.
Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast
Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent
of Independence Air Inc., a small airline based at Washington
Dulles International Airport. The Debtor and its six affiliates
filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del.
Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon,
Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at
Young, Conaway, Stargatt & Taylor, represent the Debtors in their
restructuring efforts. Brett H. Miller, Esq., at Otterbourg,
Steindler, Houston & Rosen, P.C., represents the Official
Committee of Unsecured Creditors. As of Sept. 30, 2005, the
Debtors listed assets totaling $378,500,000 and debts totaling
$455,400,000. (FLYi Bankruptcy News, Issue No. 15; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
FORD CREDIT: Moody's Upgrades Ratings on 8 Securitization Tranches
------------------------------------------------------------------
Moody's Investors Service upgraded 68 securities from 44 auto loan
backed securitizations and confirmed one tranche from one auto
loan backed securitization. The rating action reflects a
strengthening in the credit profile of the securities, based upon
the actual performance of the transactions and the build up of
credit enhancement relative to expected future losses in the
underlying receivables pools.
The build up of credit enhancement as a percent of the current
outstanding principal balance of the pools has been the result of
different factors such as the inclusion of nondeclining
enhancements as well as the initial trapping of excess spread
within transactions. In addition to the higher credit enhancement
levels, some of the auto loan pools are performing in line with,
or slightly better than, Moody's initial expectations.
The current upgrades are a product of Moody's ongoing monitoring
process of the sector. In the auto loan sector, where the loss
curve is reasonably predictable, deals generally have 12 months of
performance data before securities are considered for upgrade. In
addition, deals with a pool factor under approximately 15% are
excluded from the review process.
Upgrades:
* AmeriCredit Automobile Receivables Trust 2004-1; Class B,
Upgraded from Aa2 to Aa1
* AmeriCredit Automobile Receivables Trust 2004-1; Class C,
Upgraded from A1 to Aa2
* AmeriCredit Automobile Receivables Trust 2004-1; Class D,
Upgraded from Baa2 to A2
* AmeriCredit Canada Automobile Receivables Trust, Series
C2002-1, Class B, Upgraded from A1 to Aa1
* Bank One Auto Securitization Trust 2003-1; Class B, Upgraded
from Aa3 to Aa1
* BMW Vehicle Owner Trust 2003-A; Class B, Upgraded from A1
to Aa2
* Capital Auto Receivables Asset Trust 2003-2, Class B,
Upgraded from Aa3 to Aa2
* Capital Auto Receivables Asset Trust 2004-2, Class B,
Upgraded from A2 to A1
* Capital Auto Receivables Asset Trust 2004-2, Class C,
Upgraded from Baa3 to Baa2
* Capital One Prime Auto Receivables Trust 2004-2, Class B,
Upgraded from A3 to A1
* Capital One Prime Auto Receivables Trust 2004-3, Class B,
Upgraded from A3 to A2
* CarMax Auto Owner Trust 2003-1, Class C, Upgraded from
A3 to A2
* CarMax Auto Owner Trust 2004-1, Class C, Upgraded from
A1 to Aa3
* CarMax Auto Owner Trust 2004-1, Class D, Upgraded from
Baa3 to Baa2
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-1, Upgraded from A1 to Aa3
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-2, Upgraded from Baa3 to Baa2
* Chase Manhattan Auto Owner Trust 2003-A, Certificates,
Upgraded from Aa3 to Aa1
* Chase Manhattan Auto Owner Trust 2003-C, Certificates,
Upgraded from A1 to Aa3
* Ford Credit Auto Owner Trust 2003-B, Class C, Upgraded
from Aa3 to Aa1
* Ford Credit Auto Owner Trust 2004-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-2, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class C, Upgraded
from Baa2 to A2
* Ford Credit Auto Owner Trust 2005-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class C, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class C, Upgraded
from Aa3 to Aa2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class D, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class E, Upgraded
from Ba3 to Baa3
* GS Auto Loan Trust 2003-1, Class D, Upgraded from Ba1
to Baa3
* GS Auto Loan Trust 2004-1, Class D, Upgraded from Ba3 to Ba1
* MMCA Auto Owner Trust 2002-2, Class A-4, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-2, Class B, Upgraded from Ba3
to Baa3
* MMCA Auto Owner Trust 2002-3, Class B, Upgraded from A1
to Aa1
* MMCA Auto Owner Trust 2002-3, Class C, Upgraded from Baa1
to A1
* MMCA Auto Owner Trust 2002-4, Class B, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-4, Class C, Upgraded from A2
to Aa2
* MMCA Auto Owner Trust 2002-5, Class B, Upgraded from Aa2
to Aa1
* MMCA Auto Owner Trust 2002-5, Class C, Upgraded from A2
to Aa2
* Regions Auto Receivables Trust 2002-1, Class B, Upgraded
from Aa3 to Aa1
* Regions Auto Receivables Trust 2002-1, Class C, Upgraded
from Baa2 to A2
* Regions Auto Receivables Trust 2003-1, Class B, Upgraded
from A1 to Aa3
* Regions Auto Receivables Trust 2003-1, Class C, Upgraded
from Baa2 to A3
* USAA Auto Owner Trust 2003-1, Class B, Upgraded from Aa3
to Aa2
* USAA Auto Owner Trust 2004-1, Class B, Upgraded from A3
to A2
* USAA Auto Owner Trust 2004-2, Class B, Upgraded from Baa3
to Baa1
* USAA Auto Owner Trust 2004-3, Class B, Upgraded from Baa3
to Baa2
* Wachovia Auto Owner Trust 2004-A, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class C, Upgraded from
Baa3 to A3
* WFS Financial 2003-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2003-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-1 Owner Trust, Class C, Upgraded from Aa3
to Aa2
* WFS Financial 2004-2 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-2 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-2 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-3 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-3 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-3 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-4 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2005-1 Owner Trust, Class C, Upgraded from A2
to A1
* WFS Financial 2005-1 Owner Trust, Class D, Upgraded from
Baa2 to Baa1
* Whole Auto Loan Trust 2003-1, Class D, Upgraded from Baa3
to A3
* Whole Auto Loan Trust 2004-1, Class C, Upgraded from Baa1
to A3
* Whole Auto Loan Trust 2004-1, Class D, Upgraded from Ba3
to Baa3
* World Omni Auto Receivables Trust 2003-A, Class B, Upgraded
from A2 to Aa2
Confirm:
* Regions Auto Receivables Trust 2003-2, Class C, confirm
rating at Ba3
FRIENDLY ICE CREAM: Posts $30MM Net Loss in 4th Qtr. Ended Jan. 1
-----------------------------------------------------------------
Friendly Ice Cream Corporation (AMEX: FRN) reported its financials
results for the fourth quarter and fiscal year ended Jan. 1, 2006.
Fourth Quarter Results
Total company revenues were $123.5 million in the fourth quarter
of 2005, a decrease of $16.1 million, or 11.5%, as compared to
total revenues of $139.5 million for the fourth quarter of 2004.
The 2005 fourth quarter included 13 weeks of operations compared
to 14 weeks for the 2004 fourth quarter. The additional week
contributed approximately $10.7 million in total revenues in the
fourth quarter of 2004.
Restaurant revenues were $91.6 million in the fourth quarter of
2005, a decrease of $14.2 million, or 13.4%, as compared to
restaurant revenues of $105.8 million for the fourth quarter of
2004.
Restaurant revenues declined by $9.0 million due to the additional
week in the 2004 fourth quarter and by $5.3 million due to the re-
franchising of 24 company-operated restaurants over the last
fifteen months.
Comparable restaurant sales decreased 1.3% for company-operated
restaurants and 3.1% for franchised restaurants for the quarter
ended Jan. 1, 2006, compared to the quarter ended Jan. 2, 2005.
Higher gasoline prices during the first three weeks of September
2005 post hurricane Katrina had a negative impact on restaurant
revenues.
This negative sales trend continued through the month of October,
while sales for the months of November and December were
relatively flat when compared to the prior year.
Foodservice revenues were $28.2 million in the fourth quarter of
2005, a decrease of $2.1 million, or 7.0%, as compared to
foodservice revenues of $30.4 million for the fourth quarter of
2004.
Franchise revenues were $3.6 million in the fourth quarter of
2005, an increase of $200,000, or 5.9%, as compared to franchise
revenues of $3.4 million for the fourth quarter of 2004.
During the fourth quarter of 2005, the Company entered a three-
year cumulative loss position as contemplated by SFAS No. 109,
"Accounting for Income Taxes" and based on this and other factors,
recorded a non-cash charge of $22.2 million to income tax expense
to increase the deferred tax valuation allowance to $32.1 million.
The valuation allowance has no bearing on the Company's ability to
use any such tax benefits to offset taxes on tax returns in future
years.
During 2005, the Company disposed of 14 company-owned restaurant
properties and held an additional 11 properties that were for sale
as of Jan. 1, 2006.
It was determined that the operating results of these 25
restaurants and the net gain on disposals should be reported
separately as discontinued operations, with prior year results for
these restaurants similarly re-classified.
The operating results of these 25 restaurants were included in the
restaurant business segment in previously issued financial
reports. The discontinued operations loss was $200,000 in the
2005 fourth quarter and $300,000 in the 2004 fourth quarter.
The net loss for the three months ended Jan. 1, 2006, was $30.2
million compared to a net loss of $200,000 reported for the three
months ended Jan. 2, 2005.
The fourth quarter 2005 net loss included $22.2 million in
additional non-cash tax expense related to an increase in the
deferred tax valuation allowance.
Fourth quarter 2004 results included an additional pension
settlement expense of $2.2 million pre-tax ($1.3 million after-
tax).
Full-Year Results
For the full year ended Jan. 1, 2006, total company revenues were
$531.3 million as compared to total revenues of $557.6 million for
the year ended Jan. 2, 2005.
Fiscal 2005 included 52 weeks of operations compared to 53 weeks
in the prior year. The estimated impact of the additional week
contributed approximately $10.7 million in total revenues in
fiscal 2004.
Restaurant revenues were $400.8 million in the year ended Jan. 1,
2006, a decrease of $30.9 million, or 7.2%, as compared to
restaurant revenues of $431.8 million for the year ended Jan. 2,
2005.
Restaurant revenues declined by $9.0 million due to the additional
week in fiscal 2004 and by $20.3 million due to the re-franchising
of 42 company-operated restaurants over the last twenty-four
months.
Comparable restaurant sales decreased 1.2% for company-operated
restaurants and increased 0.4% for franchised restaurants for the
twelve months ended Jan. 1, 2006 compared to the twelve months
ended Jan. 2, 2005.
While the Company believes that restaurant revenues were
negatively affected by the post hurricane Katrina economy,
comparable restaurant sales were also impacted by an unfavorable
shift in the timing of the year-end holiday period.
New Year's Day was included in the prior year first quarter and is
not included in the current year.
Foodservice revenues were $116.1 million in the year ended Jan. 1,
2006, an increase of $3.5 million, or 3.0%, as compared to
foodservice revenues of $112.6 million for the year ended Jan. 2,
2005.
Franchise revenues were $14.5 million in the year ended Jan. 1,
2006, an increase of $1.3 million, or 9.5%, as compared to
franchise revenues of $13.2 million for the year ended Jan. 2,
2005.
For the full year, discontinued operations income was $0.3 million
in 2005 and discontinued operations loss was $0.6 million in 2004.
The net loss for the year ended Jan. 1, 2006, was $27.3 million
compared to a net loss of $3.4 million, or $0.45 per share,
reported for the year ended Jan. 2, 2005.
The net loss for fiscal 2005 included $22.2 million in additional
non-cash tax valuation allowance.
Results for fiscal 2004 included an additional pension settlement
expense of $2.2 million pretax ($1.3 million after-tax).
Also, included in the 2004 results were $8.2 million in expenses
($4.8 million after-tax) for debt retirement and restructuring
costs, which were partially offset by a gain on litigation
settlement.
Performance Highlights
In the fourth quarter of 2005, Friendly's continued to pursue its
key strategic objectives to:
-- enhance the dining experience,
-- expand through franchising and re-franchising, and
-- grow higher margin revenues.
Key business highlights for the quarter include:
-- Ongoing improvements to the Friendly's dining experience
based on feedback from the new Internet-based guest feedback
system.
-- The opening of one new company-operated restaurant and four
new franchised restaurants.
-- The re-franchising of five company-operated restaurants,
which resulted in a gain on franchise sales of restaurant
operations and properties of $137 thousand.
-- Continued growth in the number of supermarket chains that
carry Friendly's decorated cakes, which are now being sold in
approximately 650 supermarkets.
Revolving Credit Facility
On Mar. 15, 2006, the Company amended and restated its $35 million
revolving credit facility as of Dec. 30, 2005, to revise certain
financial covenants (including leverage, interest coverage,
minimum EBITDA and the deletion of the tangible net worth
covenant) and permit certain transactions to be excluded from the
annual capital expenditures limit.
As a result of the amendments, the Company was in compliance with
the covenants in the Credit Facility as of Jan. 1, 2006. In
connection with the amendments to the Facility, Bank of America
and certain other lenders assigned their interest in the Credit
Facility to Wells Fargo Foothill.
Subsequently, Wells Fargo Foothill has assigned a portion of their
interest in the facility to TD Banknorth.
A full-text copy of Friendly Ice Cream Corporation's 2005
Annual Report is available at no extra charge at
http://ResearchArchives.com/t/s?773
Friendly Ice Cream Corporation -- http://www.friendlys.com/-- is
a vertically integrated restaurant company serving signature
sandwiches, entrees and ice cream desserts in a friendly, family
environment in 530 company and franchised restaurants throughout
the Northeast. The company also manufactures ice cream, which is
distributed through more than 4,500 supermarkets and other retail
locations. With a 70-year operating history, Friendly's enjoys
strong brand recognition and is currently remodeling its
restaurants and introducing new products to grow its customer
base.
At Jan. 1, 2006, Friendly Ice Cream's stockholders' deficit
widened to $141,838,000 from a $105,026,000 deficit at Jan. 2,
2005.
* * *
As reported in the Troubled Company Reporter on Mar. 24, 2006,
Standard & Poor's Ratings Services lowered its corporate credit
rating on restaurant operator Friendly Ice Cream Corp. to 'B-'
from 'B'. The senior unsecured debt rating was also lowered to
'CCC+' from 'B-'. The outlook is negative. Total debt
outstanding as of Jan. 1, 2006, was $234 million.
GEARS LTD: Moody's Lifts Rating on Class E Certificates to Baa3
---------------------------------------------------------------
Moody's Investors Service upgraded 68 securities from 44 auto loan
backed securitizations and confirmed one tranche from one auto
loan backed securitization. The rating action reflects a
strengthening in the credit profile of the securities, based upon
the actual performance of the transactions and the build up of
credit enhancement relative to expected future losses in the
underlying receivables pools.
The build up of credit enhancement as a percent of the current
outstanding principal balance of the pools has been the result of
different factors such as the inclusion of nondeclining
enhancements as well as the initial trapping of excess spread
within transactions. In addition to the higher credit enhancement
levels, some of the auto loan pools are performing in line with,
or slightly better than, Moody's initial expectations.
The current upgrades are a product of Moody's ongoing monitoring
process of the sector. In the auto loan sector, where the loss
curve is reasonably predictable, deals generally have 12 months of
performance data before securities are considered for upgrade. In
addition, deals with a pool factor under approximately 15% are
excluded from the review process.
Upgrades:
* AmeriCredit Automobile Receivables Trust 2004-1; Class B,
Upgraded from Aa2 to Aa1
* AmeriCredit Automobile Receivables Trust 2004-1; Class C,
Upgraded from A1 to Aa2
* AmeriCredit Automobile Receivables Trust 2004-1; Class D,
Upgraded from Baa2 to A2
* AmeriCredit Canada Automobile Receivables Trust, Series
C2002-1, Class B, Upgraded from A1 to Aa1
* Bank One Auto Securitization Trust 2003-1; Class B, Upgraded
from Aa3 to Aa1
* BMW Vehicle Owner Trust 2003-A; Class B, Upgraded from A1
to Aa2
* Capital Auto Receivables Asset Trust 2003-2, Class B,
Upgraded from Aa3 to Aa2
* Capital Auto Receivables Asset Trust 2004-2, Class B,
Upgraded from A2 to A1
* Capital Auto Receivables Asset Trust 2004-2, Class C,
Upgraded from Baa3 to Baa2
* Capital One Prime Auto Receivables Trust 2004-2, Class B,
Upgraded from A3 to A1
* Capital One Prime Auto Receivables Trust 2004-3, Class B,
Upgraded from A3 to A2
* CarMax Auto Owner Trust 2003-1, Class C, Upgraded from
A3 to A2
* CarMax Auto Owner Trust 2004-1, Class C, Upgraded from
A1 to Aa3
* CarMax Auto Owner Trust 2004-1, Class D, Upgraded from
Baa3 to Baa2
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-1, Upgraded from A1 to Aa3
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-2, Upgraded from Baa3 to Baa2
* Chase Manhattan Auto Owner Trust 2003-A, Certificates,
Upgraded from Aa3 to Aa1
* Chase Manhattan Auto Owner Trust 2003-C, Certificates,
Upgraded from A1 to Aa3
* Ford Credit Auto Owner Trust 2003-B, Class C, Upgraded
from Aa3 to Aa1
* Ford Credit Auto Owner Trust 2004-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-2, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class C, Upgraded
from Baa2 to A2
* Ford Credit Auto Owner Trust 2005-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class C, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class C, Upgraded
from Aa3 to Aa2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class D, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class E, Upgraded
from Ba3 to Baa3
* GS Auto Loan Trust 2003-1, Class D, Upgraded from Ba1
to Baa3
* GS Auto Loan Trust 2004-1, Class D, Upgraded from Ba3 to Ba1
* MMCA Auto Owner Trust 2002-2, Class A-4, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-2, Class B, Upgraded from Ba3
to Baa3
* MMCA Auto Owner Trust 2002-3, Class B, Upgraded from A1
to Aa1
* MMCA Auto Owner Trust 2002-3, Class C, Upgraded from Baa1
to A1
* MMCA Auto Owner Trust 2002-4, Class B, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-4, Class C, Upgraded from A2
to Aa2
* MMCA Auto Owner Trust 2002-5, Class B, Upgraded from Aa2
to Aa1
* MMCA Auto Owner Trust 2002-5, Class C, Upgraded from A2
to Aa2
* Regions Auto Receivables Trust 2002-1, Class B, Upgraded
from Aa3 to Aa1
* Regions Auto Receivables Trust 2002-1, Class C, Upgraded
from Baa2 to A2
* Regions Auto Receivables Trust 2003-1, Class B, Upgraded
from A1 to Aa3
* Regions Auto Receivables Trust 2003-1, Class C, Upgraded
from Baa2 to A3
* USAA Auto Owner Trust 2003-1, Class B, Upgraded from Aa3
to Aa2
* USAA Auto Owner Trust 2004-1, Class B, Upgraded from A3
to A2
* USAA Auto Owner Trust 2004-2, Class B, Upgraded from Baa3
to Baa1
* USAA Auto Owner Trust 2004-3, Class B, Upgraded from Baa3
to Baa2
* Wachovia Auto Owner Trust 2004-A, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class C, Upgraded from
Baa3 to A3
* WFS Financial 2003-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2003-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-1 Owner Trust, Class C, Upgraded from Aa3
to Aa2
* WFS Financial 2004-2 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-2 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-2 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-3 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-3 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-3 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-4 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2005-1 Owner Trust, Class C, Upgraded from A2
to A1
* WFS Financial 2005-1 Owner Trust, Class D, Upgraded from
Baa2 to Baa1
* Whole Auto Loan Trust 2003-1, Class D, Upgraded from Baa3
to A3
* Whole Auto Loan Trust 2004-1, Class C, Upgraded from Baa1
to A3
* Whole Auto Loan Trust 2004-1, Class D, Upgraded from Ba3
to Baa3
* World Omni Auto Receivables Trust 2003-A, Class B, Upgraded
from A2 to Aa2
Confirm:
* Regions Auto Receivables Trust 2003-2, Class C, confirm
rating at Ba3
GENERAL MOTORS: Fitch Holds B Issuer Default Rating on Neg. Watch
-----------------------------------------------------------------
General Motors Corp.'s announcement that it has agreed to sell a
controlling interest in GMAC does not affect the company's current
Issuer Default Rating of 'B', which remained on Rating Watch
Negative by Fitch Ratings. Fitch's 'RR4' Recovery Rating (30-50%
recovery estimate) remained unchanged, as the sale of a 51%
interest in GMAC was anticipated in the recovery rating analysis.
The previously-expected sale provides enhanced liquidity to GM
that will be required:
* to finance the restructuring of its North American auto
operations over the near term; and
* to provide continued confidence in its liquidity position to
its supply base.
Prior to the closing of this transaction, liquidity is expected to
erode due to:
* continuing operating losses;
* further financial support to Delphi; and
* its own restructuring program (including the recently-
announced employee buyout programs).
Resolution of the Rating Watch status will focus on the ability of
Delphi and GM to reach, and get ratified, a new collective
bargaining agreement with the UAW, so as to assure the
uninterrupted supply of parts to GM. A strike at Delphi that
forces a material shutdown of production at GM would be expected
to result in a revision of GM's IDR into the CCC category.
Delphi and the UAW have numerous and significant unresolved
issues, and Delphi's petition to void its labor contracts and
force a deadline on talks heightens the risks for Delphi, UAW and
GM to reach a negotiated agreement within the time frame. A court
ruling would signify the failing of the negotiations and likely
result in labor actions that would be highly destructive to Delphi
and GM. Delphi's petition to void supply contracts with GM also
emphasizes the continuing challenge that GM faces with regard to
Delphi over the short-term - continued escalation in financial
support to Delphi and its workers, and the inability to benefit
from a restructured Delphi in the near term. Given the
significant reductions in headcount, facilities, wages and
benefits that are ultimately expected to occur under Delphi's
restructuring plan, Fitch believes that there remains a
substantial risk of some form of supply disruption to GM as events
unfold.
GM's integral role in the Delphi-UAW discussions are effectively
the opening rounds of the 2007 contract talks between the UAW and
the domestic OEM's. The ability of Delphi and GM to address such
issues as:
* the jobs bank,
* the ability to outsource,
* the flexibility to shut plants, and
* changes to specific wage and benefit programs at Delphi
will provide insights into the priorities and hurdles involved in
the 2007 contract talks.
Delphi's significantly underfunded pension plan remains one of the
open issues, and its efforts to transition these plans from a
defined benefit structure to a defined contribution plan bear
close watching. The ability of Delphi to accomplish this would
speak to the willingness of the UAW to negotiate on this point,
and could have implications for the September 2007 negotiations
and the OEMs efforts in this area. An inability to transition
these plans could be a significant obstacle in reaching an
agreement, although an alternative scenario could involve the PBGC
and an extension of funding requirements. This could also be an
area that could involve additional financial support from GM.
Delphi and GM have announced the terms of employee buyout packages
that are being offered, which could significantly reduce the
headcount at both entities. However, the extent of acceptances by
hourly workers, the financial cost to GM, and the ultimate impact
on GM's cost structure has yet to be defined. The buyout packages
were an expected component of GM's financial support to Delphi,
which GM estimates at between $5.5 billion and $12 billion. Fitch
projects that the low end of this range will continue to increase.
GM has taken a number of steps to address its cost structure over
the long-term, including employee reduction programs, and changes
to pension and health care programs. With a significant
downsizing of capacity, hourly workers and salaried workers
projected at GM over the next several years, there will
undoubtedly be an adjustment period that will result in
inefficiencies across GM's operations and processes. Combined
with a long and extensive restructuring of the automotive supply
base and changes to GM's purchasing programs, direct cost savings
will not translate into commensurate margin improvement in the
short term. Given stresses in the supplier base and high
commodity costs, meaningful cost reductions will still have to be
accomplished largely through changes to the company's existing
contract terms with the UAW.
Operating losses, financial support to Delphi and the costs of
GM's own restructuring program will continue to erode GM's
liquidity until the sale of the GMAC stake, which is expected to
occur in the fourth quarter. Initial proceeds from the sale of
$10 billion, along with additional liquidity supplied by the
runoff of other assets over the next several years (which GM
estimates at $4 billion), provide GM with needed additional
resources and time to address its structural cost issues.
However, the ability to reverse negative cash flows will also be
dependent on GM's ability to stem market share losses and
stabilize the revenue line, which is not expected to occur in
2006. Cash and short-term VEBA at Dec. 31, 2005, was $20.4
billion, supplemented by $2 billion in proceeds from the sale of
shares in Suzuki, as well as approximately $15 billion in long-
term VEBA. Fitch also notes that GM has questioned its ability to
draw on its $5.6 billion revolver.
Given:
* GM's current liquidity,
* the size of the revolver versus the company's liabilities,
and
* the circumstances which would cause GM to draw upon this
revolver,
Fitch has not incorporated this as an important source of
liquidity in the near term.
GENERAL MOTORS: Fitch Revises GMAC Rating Watch Status to Positive
------------------------------------------------------------------
Fitch Ratings revised the Rating Watch Status of General Motors
Acceptance Corporation, Residential Capital Corporation and
related subsidiaries to Positive from Evolving, indicating that
the ratings may be upgraded or maintained at current levels. The
Rating Watch revision to Positive follows the announcement of a
definitive agreement for the sale of a 51% stake in GMAC to an
investor group led by Cerberus Capital Management, L.P. and
includes Citigroup Inc., and Aozora Bank Ltd. The deal will
result in upfront cash proceeds of about $10 billion for General
Motors Corp. Upon closing, Cerberus will have effective control
GMAC with GM retaining 49% ownership.
GMAC and ResCap were initially placed on Rating Watch Evolving on
Oct. 17, 2005, after GM's announcement that it was seeking to sell
a majority interest in GMAC. GM's Long-Term Issuer Default Rating
remains at 'B' and on Rating Watch Negative and is unaffected by
this announcement. This action affects approximately $131 billion
of debt and deposits as of Dec. 31, 2005.
The deal, as currently structured has these key features:
-- Conversion of GMAC and allowable subsidiaries to a limited
liability company from a C-corp. Typically, regulated banks
can not be operated as an LLC;
-- Transfer of a significant portion of GMAC's existing U.S.
auto lease and some retail assets to GM. The total of these
assets is around $20 billion. New lease originations, post
closing, will reside with GMAC;
-- The ability for GM to repurchase the automotive finance
business under certain conditions;
-- Establishment of detailed operating agreements between GM
and GMAC, including limitations on intercompany obligations;
-- Minimum hold period for the investor group;
-- Preserves scope of GMAC's financing relationship with GM,
particularly with respect to financing volumes and credit
standards; and
-- Establishment of $25 billion Citigroup funding facility.
This transaction benefits GMAC bondholders by removing contingent
legal risks, such as those arising from the Pension Benefit
Guaranty Corporation or potential for substantive consolidation in
a GM bankruptcy. In addition, this transaction creates avenues of
growth for GMAC in businesses unrelated to GM, such as residential
mortgage, insurance, and non-GM automotive financing, which the
company has not been able to pursue as freely given its current
constraints.
Given GMAC's:
* size,
* market position,
* financing requirements, and
* growth opportunities,
Fitch believes that Cerberus would be strongly incented to operate
GMAC in a manner that would ensure the company has ready access to
cost-effective financing.
One of the primary goals GM has of selling its stake is to achieve
an investment grade rating for GMAC. While in many respects, GMAC
possesses characteristics of an investment grade company, its
ongoing business relationship with GM brings with it an element of
risk not generally evident with investment grade issuers.
However, Fitch would expect that GMAC's capital, liquidity, and
funding plans will directly incorporate GM's weakened financial
condition and the structural challenges facing what is in effect
GMAC's largest customer. Fitch does not believe that the proposed
ownership structure, by itself, precludes an investment grade
rating for GMAC. Fitch cautions that establishment of a steady
state rating for GMAC and ResCap with a Stable Outlook may go past
the closing of the transaction.
Pending closing, Fitch will consider GM's rating and could
downgrade GMAC's rating if uncertainties arise on completion of
the transaction. Fitch does believe that the transaction will
allow a degree of delinkage between the ratings of GM and GMAC.
In that sense, Fitch will view GMAC's relationship with GM as akin
to a customer concentration and to the extent any issues at GM
either begin to or potentially could manifest themselves at GMAC,
Fitch will factor in the relative implications on GMAC's overall
credit quality and earnings, and could potentially result in a
rating or Outlook change for GMAC.
In considering the future direction of GMAC and ResCap's ratings,
Fitch will examine these:
-- The ability of the GM and Cerberus to close the deal within
expected timeframes and in accordance with the terms of the
agreement. This includes the likelihood of receipt of any
necessary approvals, consents, and waivers. Although Fitch
does not anticipate any issues, during the watch period, the
rating agency will monitor the status of any necessary
approvals and consents and any undue delay could result in a
change in its rating or watch.
-- The potential impact and likelihood of increased labor
unrest at either GM or Delphi on GMAC.
-- That no material and adverse change has occurred at GM
between now and the closing of the transaction.
-- The expected pace of asset diversification within GMAC with
greater specificity on those areas targeted for growth.
-- Expected capital management plans of GMAC post closing.
Fitch recognizes that certain limitations will exist
relative to book equity and dividends, however, Fitch will
focus its analysis on expected capitalization as it relates
to risk.
-- GMAC's future funding plans. Fitch would expect changes as
result of its new ownership and will consider the company's
ability to increase funding flexibility.
-- The impact of new ownership on day-to-day operations. This
will also include Cerberus' ability to retain key GMAC
management.
-- Current notching of ResCap and GMAC, including any plans for
GMAC Bank. At present, Fitch rates ResCap two notches above
GMAC.
Fitch revised the Rating Watch on these ratings to Positive from
Evolving:
General Motors Acceptance Corp.:
GMAC International Finance B.V.:
GMAC Bank GmbH:
General Motors Acceptance Corp., Australia:
General Motors Acceptance Corp. of Canada Ltd.:
-- Issuer Default Rating 'BB'
-- Senior debt 'BB'
General Motors Acceptance Corp.:
GMAC International Finance B.V.:
GMAC Bank GmbH:
GMAC Australia Finance:
General Motors Acceptance Corp. (U.K.) Plc.:
General Motors Acceptance Corp. Australia:
General Motors Acceptance Corp. of Canada Ltd.:
General Motors Acceptance Corp. (N.Z.) Ltd.:
-- Short-Term Issuer 'B'
Residential Capital Corp.:
-- Issuer Default Rating (IDR) 'BBB-'
-- Senior debt 'BBB-'
-- Short-Term Issuer 'F3'
These ratings remain on Rating Watch Evolving by Fitch:
GMAC Bank:
-- Issuer Default Rating (IDR) 'BBB-'
-- Long-term deposits 'BBB'
-- Short-term deposits 'F3'
-- Support '3'
This rating has been placed on Rating Watch Evolving:
GMAC Bank:
-- Individual 'B/C'
GENERAL MOTORS: $14 Billion Transaction Cues DBRS' Ratings Review
-----------------------------------------------------------------
Dominion Bond Rating Service maintained General Motors Acceptance
Corporation and its subsidiaries "Under Review with Developing
Implications". The action follows the announcement that General
Motors Corporation has signed a definitive agreement to sell a 51%
interest in GMAC to a Consortium led by Cerberus Capital
Management, LP for total proceeds of $14 billion. The transaction
is expected to close in the fourth quarter of 2006, subject to
obtaining all necessary regulatory approvals.
DBRS's ratings for GMAC will remain "Under Review with Developing
Implications" until that time. Upon closing, given no material
changes to the details of the actual transaction, and no material
changes to the general market/economic environment and status of
GM, DBRS expects that its rating of GMAC will remain BBB (low).
Moreover, upon completion of the transaction, DBRS believes that
this transaction will effectively de-link the ratings of GMAC from
that of GM. Further, given no changes in the standalone
performance at Residential Capital Corporation, DBRS expects to
maintain the one notch differential between the rating of ResCap
and that of GMAC.
Complete rating action:
* Residential Capital Corporation Commercial Paper
-- Under Review, Developing, R-2 (middle)
* General Motors Acceptance Corporation Commercial Paper
-- Under Review, Developing, R-2 (low)
* General Motors Acceptance Corporation (N.Z.) Limited
Commercial Paper -- Under Review, Developing, R-2 (low)
* General Motors Acceptance Corporation (U.K.) plc
Commercial Paper -- Under Review, Developing, R-2 (low)
* General Motors Acceptance Corporation of Canada, Limited
Commercial Paper -- Under Review, Developing, R-2 (low)
* General Motors Acceptance Corporation, Australia
Commercial Paper -- Under Review, Developing, R-2 (low)
* GMAC Bank GmbH Commercial Paper -- Under Review, Developing
R-2 (low)
* GMAC Commercial Mortgage Funding Asia, K.K. Commercial Paper
-- Under Review, Developing, R-2 (low)
* GMAC Commercial Mortgage Funding, plc Commercial Paper
Under Review, Developing, R-2 (low)
* GMAC International Finance B.V. Commercial Paper
-- Under Review, Developing, R-2 (low)
* GMAC, Australia (Finance) Limited Commercial Paper
-- Under Review, Developing, R-2 (low)
* Residential Capital Corporation Senior Unsecured Debt
-- Under Review, Developing, BBB
* General Motors Acceptance Corporation Long-Term Debt
-- Under Review, Developing, BBB (low)
* General Motors Acceptance Corporation (N.Z.) Limited
Medium & Long-Term Debt -- Under Review, Developing,
BBB (low)
* General Motors Acceptance Corporation of Canada, Limited
Notes & Debentures (guar. by GMAC) -- Under Review,
Developing, BBB (low)
* General Motors Acceptance Corporation, Australia Medium &
Long-Term Debt -- Under Review, Developing, BBB (low)
* GMAC Bank GmbH Medium & Long-Term Debt -- Under Review,
Developing, BBB (low)
* GMAC Commercial Mortgage Funding Asia, K.K. Medium & Long-
Term Debt -- Under Review, Developing, BBB (low)
* GMAC Commercial Mortgage Funding, plc Long-Term Debt
-- Under Review, Developing, BBB (low)
* GMAC International Finance B.V. Medium & Long-Term Debt
-- Under Review, Developing, BBB (low)
GMAC's ratings have been closely tied to GM's ratings reflecting
the close linkage of the two entities. The sale of 51% of GMAC by
GM to the Consortium is sufficient to decouple the ratings of GMAC
from GM, in DBRS's opinion. However, as a quasi-captive finance
entity, GMAC will continue to be dependent on the financing of GM
products and as such, will continue to be reliant on the volume,
pricing, and ongoing asset value of GM automobiles. Although this
transaction contains substantial actions to reduce GMAC's balance
sheet exposure to GM, which includes eliminating the vast majority
of direct GM debt, GM-related products will continue to generate
approximately 50% to 60% of GMAC's net profits.
DBRS notes that there is an issue with GM, which affects GMAC. Due
to the restatement of its previous financial statements, there is
now uncertainty regarding GM's ability to access its $5.6 billion
unsecured standby line of credit facility. GM itself has cash and
short-term VEBA of $20.4 billion but also has a negative working
capital position of roughly $20 billion, and accounts payable of
$26 billion. With a possible prolonged strike at Delphi
Corporation, most of GM's U.S. plants would close due to a parts
shortage. This would result in a challenge to liquidity in a
worst-case situation. In addition, this could affect the closing
of the GMAC sale, and cause DBRS to reduce GMAC's rating into the
B range. In the event that this takes place, the rating for
ResCap would also be reduced to one notch above that of GMAC's.
GENERAL MOTORS: DBRS Confirms B Ratings After Cerberus Deal Closes
------------------------------------------------------------------
Dominion Bond Rating Service confirmed the ratings of General
Motors Corporation and General Motors of Canada Limited following
the announcement that GM has signed a definitive agreement to sell
a 51% interest in General Motors Acceptance Corporation to a
Consortium led by Cerberus Capital Management, LP, a private
investment firm, and including Citigroup Inc., and Aozora Bank,
Ltd.
GM will receive approximately $14 billion in cash from the
transaction, including approximately $10 billion in cash upon
closing. The transaction is expected to close in the fourth
quarter of 2006, subject to obtaining all necessary regulatory
approvals. The trends of the ratings remain Negative.
* General Motors Corporation Commercial Paper
-- Confirmed R-3 (middle)
* General Motors of Canada Limited Commercial Paper
-- Confirmed R-3 (middle)
* General Motors Corporation Long-Term Debt
-- Confirmed B (high)
* General Motors Corporation Convertible Debentures
-- Confirmed B (high)
* General Motors Corporation Ind. Dev. Empower. Zone Rev.
Bds., S2004, Issued by NYC Ind. Dev. Agency, Guar. by GMC
-- Confirmed B (high)
* General Motors of Canada Limited Long-Term Debt
-- Confirmed B (high)
DBRS views the sale of a controlling interest in GMAC to the
Consortium to be mildly negative, on a net basis, to GM but is not
material enough to impact the Company's current ratings. The
completion of the sale of a controlling interest in GMAC to the
Consortium has these positive impacts on GM:
(1) GM will receive cash proceeds of approximately $10 billion
by the time of closing, and the remaining $4 billion
within three years. The new cash will add to GM's
liquidity position and increases GM's financial
flexibility in executing its turnaround plan. This is
important in view of the uncertainties regarding GM's
ability to access its $5.6 billion unsecured standby
facility as a result of GM's recent restatement of its
prior financial statements;
(2) Selling a controlling interest in GMAC to the Consortium
will result in the decoupling of the ratings of GMAC from
GM. This allows GMAC to have better access to the
unsecured market at a more reasonable cost, which would
enhance GMAC's growth potential and profitability which,
in turn, will boost the returns of GM's stake in GMAC; and
(3) The conclusion of the sale would eliminate a major
distraction to GM's senior management allowing them to
focus on turning around the North American automotive
operations.
The sale has these negative repercussions to GM:
-- GM has lost control over its most valuable asset and has
given up 51% of the large annual contribution from GMAC.
GM would have been reporting losses the last few years
without GMAC;
-- GM is selling GMAC at a discount to net book value and will
report a loss of $1.1 to $1.3 billion on an accounting
basis. GM has negotiated a fair price for GMAC under the
circumstances, but is reducing shareholder value in selling
a highly profitable business at a discount to net book
value;
-- Despite the existence of a "Service Agreement" to ensure a
good working relationship going forward, GM will lose some
flexibility in its dealings with, as well as support from,
GMAC, which now operates on an arm's length-basis; and
-- With the loss of control, GM will lose the flexibility to
raise cash by demanding dividends from GMAC.
DBRS notes that due to the restatement of its previous financial
statements, there is now uncertainty regarding GM's ability to
access its $5.6 billion unsecured standby line of credit facility.
This creates a potential liquidity problem for GM, which has a
negative working capital position of over $20 billion, and
accounts payables of $26 billion versus $20.4 billion in cash and
short-term VEBA. In the event of a prolonged Delphi Corporation
strike, most of GM's U.S. plants would close due to parts
shortages. As a result, the roughly $20.4 billion in cash and
short-term VEBA would be needed to pay the $26 billion in payables
and, without the $5.6 billion in bank lines, liquidity would
become an issue.
The key elements of the sale transaction are:
1) The Consortium will pay GM approximately $14 billion over
the next three years for 51% of the common equity of GMAC;
2) GM will retain 49% of the common equity of GMAC, certain
retail and lease assets of GM with an estimated net book
value of $4 billion that will monetize over three years;
3) GM will take a non-cash pre-tax charge to earnings of
approximately $1.1 billion to $1.3 billion associated with
the sale of 51% of GMAC;
4) GM and the Consortium will invest $1.9 billion in cash in
new GMAC preferred equity -- $1.4 billion of which will be
issued to GM, and $500 million to the Consortium;
5) GM will receive $2.7 billion cash distribution from GMAC
related to the conversion of most of GMAC and its U.S.
subsidiaries to a limited liability company prior to
closing;
6) GMAC's unsecured direct exposure to GM will be reduced to
approximately $400 million and will be capped at no more
than $1.5 billion;
7) GM will have an option to acquire GMAC's global automotive
finance operations, exercisable under certain conditions
for ten years after the closing of the transaction;
8) The GMAC board will have 13 members, six appointed by the
Consortium, four appointed by GM, and three independent
members. The outside directors hold the balance of power
in the board and, hence, strengthen the independence of the
GMAC board;
9) Separately, Citigroup will also arrange two syndicated
asset-based funding facilities that total $25 billion,
which will support GMAC's ongoing business. Citigroup has
committed $12.5 billion in the aggregate to these two
facilities; and
10) GM and GMAC will enter into a ten-year agreement in which
GMAC continue to provide GM and its dealers and customers
with the same board range of financial products and
services. GMAC will be the exclusive provider of financial
products involving GM-sponsored consumer marketing
incentives around the world.
GENEVA STEEL: Chapter 11 Trustee Wants to Retain Altman as Actuary
------------------------------------------------------------------
James T. Markus, the chapter 11 Trustee of Geneva Steel LLC and
its debtor-affiliates, asks the U.S. Bankruptcy Court for the
District of Utah for permission to retain Ian H. Altman and his
firm, Altman & Cronin Benefit Consultants, LLC, as his actuary and
expert.
The Trustee wants Mr. Altman to evaluate claims asserted by the
Pension Benefit Guaranty Corporation against the estates.
Specifically, Mr. Altman will:
a) prepare on behalf of the Trustee any necessary reports and
papers as dictated by the outstanding unliquidated claims
filed by the PBGC, or as required by the Court, and to
represent the Trustee in related proceedings or hearings;
b) assist the Trustee in analyzing the PBGC work papers and
proofs of claim;
c) review, analyze and advise the Trustee regarding the
actuarial defenses to the PBGC claims;
d) assist the Trustee in negotiation with the PBGC regarding
any possible consensual resolution and payment of the PBGC
claims;
e) review and analyze the validity of the PBGC claims filed and
advised the Trustee as to the filing of objections to any
claims, if necessary;
f) assist the Trustee in determining appropriate discount rates
and net present values for any claims that relate to amounts
accruing in the future or over time; and
g) perform all other necessary actuarial and expert services as
may be prompted by the needs of the Trustee.
Mr. Altman will bill the Debtors $440 per hour for his work.
The Trustee provided Mr. Altman with a list of all creditors with
claims greater than $200,000, parties in litigation with the
Trustee and those who had requested special notice. Mr. Altman
reviewed that list and, to the best of his knowledge, he and his
firm are "disinterested" as that term is used in Sec. 101(14) of
the Bankruptcy Code and does not represent or hold an interest
adverse to the Debtors' estates or the Trustee.
Headquartered in Provo, Utah, Geneva Steel LLC owns and operates
an integrated steel mill. The Company filed for chapter 11
protection on January 25, 2002 (Bankr. Utah Case No. 02-21455).
Andrew A. Kress, Esq., Keith R. Murphy, Esq., and Stephen E.
Garcia, Esq., at Kaye Scholer LLP, represent the Debtor in its
chapter 11 proceeding. James T. Markus was appointed as the
chapter 11 Trustee for the Debtor's estate on June 22, 2005.
John F. Young, Esq., at Block Markus & Williams, LLC represents
the chapter 11 Trustee. Dianna M. Gibson, Esq., and J. Thomas
Beckett, Esq., at Parsons Behle & Latimer, represent the Official
Committee of Unsecured Creditors. When the Company filed for
protection from its creditors, it listed $262 million in total
assets and $192 million in total debts.
GENTEK INC: R.A. Rubin, with 6.07% Equity Stake, Wants Board Seat
-----------------------------------------------------------------
Richard A. Rubin, Hawkeye Capital Management, LLC and Hawkeye
Capital Master disclose that they own 618,298 shares of GenTek
Inc. Those shares represent a 6.07% equity stake in the company
and were acquired at a cost of $10,895,906, or an average of
$17.62 per share. GenTek stock traded around $24 per share
yesterday, generating almost $4 million in paper profits for
Mr. Rubin and Hawkeye.
Mr. Rubin is the managing member of Hawkeye Capital Management,
which is the manager of Hawkeye Capital Master, a pooled
investment vehicle organized as a Cayman Islands series trust.
Mr. Rubin wants to be nominated to a seat on GenTek's Board of
Directors.
GenTek Inc. -- http://www.gentek-global.com/-- provides specialty
inorganic chemical products and services for treating water and
wastewater, petroleum refining, and the manufacture of personal-
care products, valve-train systems and components for automotive
engines and wire harnesses for large home appliance and automotive
suppliers. GenTek operates over 60 manufacturing facilities and
technical centers and has approximately 6,900 employees.
The Company incurred $822,000 net loss on $919,962,000 of net
revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the
company's balance sheet shows $757,812,000 in total assets,
$672,437,000 in total liabilities, and $85,375,000 in positive
stockholders' equity.
The Company's common shares are traded in the Nasdaq National
Market under the symbol "GETI".
* * *
As reported in the Troubled Company Reporter on Feb. 24, 2005,
Moody's Investors Service assigned these new ratings to GenTek
Inc.:
* B2 for the $60 million senior secured revolving credit
facility, due 2010,
* B2 for the $235 million senior secured term loan B, due 2011,
* Caa1 for the $135 million second-lien term loan, due 2012,
* B2 senior implied rating, and
* Caa2 issuer rating.
and said the rating outlook is stable. The ratings and outlook,
Moody's indicated, are subject to review of the final
documentation of the financing transaction.
GLATFELTER: Completes Purchase of NewPage Carbonless Biz for $80MM
------------------------------------------------------------------
Glatfelter (NYSE:GLT) completed its acquisition of NewPage
Corporation's carbonless business operations, based in Chillicothe
and Fremont, Ohio, for $80 million in cash plus an estimated
working capital adjustment of $1.8 million, subject to certain
post-closing adjustments. The acquired business had revenues of
approximately $440 million in 2005 and employs about 1,700 people.
These facilities will operate as part of the Printing & Carbonless
Papers Division of Glatfelter's Specialty Papers Business Unit.
"The completion of this transaction marks a significant milestone
in our vision to become the global supplier of choice in Specialty
Papers and Engineered Products," George H. Glatfelter II, Chairman
and Chief Executive Officer, said. "A comprehensive program is
underway to integrate these assets into Glatfelter's Specialty
Papers business. We look forward to building a powerful specialty
platform around the Chillicothe and Fremont facilities to better
serve our customers and build greater value for shareholders."
About Glatfelter
Based in York, Pa., Glatfelter --http://www.glatfelter.com/-- is
a global manufacturer of specialty papers and engineered products.
U.S. operations include facilities in Spring Grove, Pa., and
Neenah, Wis. International operations include facilities in
Germany, France and the Philippines and an office in China.
Glatfelter's common stock is traded on the New York Stock Exchange
under the ticker symbol GLT.
Glatfelter's 6-7/8% Series B Notes due 2007 carry Moody's Investor
Service's Ba1 rating and Standard & Poor's Rating Services' BB+
rating.
* * *
As reported in the Troubled Company Reporter on April 5, 2006,
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.
GLATFELTER: Inks New $300 Million Senior Credit Facility
--------------------------------------------------------
Glatfelter (NYSE:GLT) entered into a new $300 million senior
credit facility consisting of:
* a $200 million revolver and
* a $100 million term loan.
Proceeds from the facility will be used:
* to refinance its existing revolving credit facility,
* to finance recently reported acquisitions and
* for general corporate purposes.
Credit Suisse Securities (USA) LLC and PNC Capital Markets LLC are
serving as joint lead arrangers and book runners. Credit Suisse,
Cayman Islands Branch and PNC Bank, National Association are
providing the initial funding commitments.
About Glatfelter
Based in York, Pa., Glatfelter --http://www.glatfelter.com/-- is
a global manufacturer of specialty papers and engineered products.
U.S. operations include facilities in Spring Grove, Pa., and
Neenah, Wis. International operations include facilities in
Germany, France and the Philippines and an office in China.
Glatfelter's common stock is traded on the New York Stock Exchange
under the ticker symbol GLT.
Glatfelter's 6-7/8% Series B Notes due 2007 carry Moody's Investor
Service's Ba1 rating and Standard & Poor's Rating Services' BB+
rating.
* * *
As reported in the Troubled Company Reporter on April 5, 2006,
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.
GLATFELTER (P.H.): S&P Rates Proposed $200 Million Notes at BB+
---------------------------------------------------------------
Standard & Poor's Ratings Services assigned Glatfelter (P.H.) Co.
(BB+/Stable/--) a 'BB+' senior unsecured rating on its proposed
$200 million notes, based on preliminary terms and conditions.
At the same time, Standard & Poor's placed this rating on
CreditWatch with negative implications.
"The 'BB+' rating on the proposed $200 million of senior
unsecured notes incorporates our expectations that these notes
will receive the same guarantees as the company's $300 million
credit facility," said Standard & Poor's credit analyst Dominick
D'Ascoli. "If the proposed notes do not receive the same
guarantees, we will lower the rating on the notes to 'BB'."
The company will use proceeds from the proposed $200 million
senior unsecured note offering to:
* refinance the 6.875% notes due in 2007; and
* repay outstanding balances under the new revolving credit
facility.
York, Pennsylvania-based Glatfelter is a moderate-size paper
producer with modest free cash flows in a competitive and cyclical
industry.
Pro forma for the new credit facility, proposed bond issuance, and
related acquisitions, Standard & Poor's expects liquidity to be
around $150 million, composed mainly of availability under the new
$200 million revolving credit facility maturing in 2011. Asset
sales will generate additional cash, as the company is planning to
sell 40,000 acres of timberlands over a three- to five-year
period, with total pretax proceeds expected in the $150 million-
$200 million range. Standard & Poor's expects these proceeds to
be used for debt reduction. The company will continue to own
approximately 41,000 acres of strategic timberlands.
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
our revising the outlook to negative. In addition, Standard &
Poor's could lower the ratings if there is an unfavorable
resolution to environmental issues. It is unlikely the rating
agency would revise the outlook to positive, given the company's
weak business profile risk.
GLOUCESTER CREDIT: DBRS Places BBB Rating on Collateral Notes
-------------------------------------------------------------
Dominion Bond Rating Service assigned these ratings to Gloucester
Credit Card Trust:
* Gloucester Credit Card Trust Series 2006-1 Class A Notes
-- New Rating AAA
* Gloucester Credit Card Trust Series 2006-1 Collateral Notes
-- New Rating BBB
The ratings are based on the high level of credit enhancement
available in the form of excess spread and for the Class A Notes
preferential access to cash flows over the Collateral ownership
interest, which constitutes 15.5% of the total Series 2006 1
amount. Excess spread and a Spread Account offer protection to
the Collateral Notes.
Proceeds from the issuance of the Notes were applied towards the
purchase of undivided co-ownership interests in a pool of
receivables arising from eligible MasterCard accounts originated
and serviced by MBNA Bank Canada. Both the Class A and the
Collateral Notes for Series 2006-1 have an Expected Final Payment
Date of Mar. 15, 2011.
MBNA Canada, a wholly owned subsidiary of MBNA America, has been
issuing credit cards in Canada since January 1998 and has
receivables in excess of CDN$4.7 billion as of Jan. 1, 2006.
GS AUTO: Moody's Lifts Ba3 Rating on Class D Securities to Ba1
--------------------------------------------------------------
Moody's Investors Service upgraded 68 securities from 44 auto loan
backed securitizations and confirmed one tranche from one auto
loan backed securitization. The rating action reflects a
strengthening in the credit profile of the securities, based upon
the actual performance of the transactions and the build up of
credit enhancement relative to expected future losses in the
underlying receivables pools.
The build up of credit enhancement as a percent of the current
outstanding principal balance of the pools has been the result of
different factors such as the inclusion of nondeclining
enhancements as well as the initial trapping of excess spread
within transactions. In addition to the higher credit enhancement
levels, some of the auto loan pools are performing in line with,
or slightly better than, Moody's initial expectations.
The current upgrades are a product of Moody's ongoing monitoring
process of the sector. In the auto loan sector, where the loss
curve is reasonably predictable, deals generally have 12 months of
performance data before securities are considered for upgrade. In
addition, deals with a pool factor under approximately 15% are
excluded from the review process.
Upgrades:
* AmeriCredit Automobile Receivables Trust 2004-1; Class B,
Upgraded from Aa2 to Aa1
* AmeriCredit Automobile Receivables Trust 2004-1; Class C,
Upgraded from A1 to Aa2
* AmeriCredit Automobile Receivables Trust 2004-1; Class D,
Upgraded from Baa2 to A2
* AmeriCredit Canada Automobile Receivables Trust, Series
C2002-1, Class B, Upgraded from A1 to Aa1
* Bank One Auto Securitization Trust 2003-1; Class B, Upgraded
from Aa3 to Aa1
* BMW Vehicle Owner Trust 2003-A; Class B, Upgraded from A1
to Aa2
* Capital Auto Receivables Asset Trust 2003-2, Class B,
Upgraded from Aa3 to Aa2
* Capital Auto Receivables Asset Trust 2004-2, Class B,
Upgraded from A2 to A1
* Capital Auto Receivables Asset Trust 2004-2, Class C,
Upgraded from Baa3 to Baa2
* Capital One Prime Auto Receivables Trust 2004-2, Class B,
Upgraded from A3 to A1
* Capital One Prime Auto Receivables Trust 2004-3, Class B,
Upgraded from A3 to A2
* CarMax Auto Owner Trust 2003-1, Class C, Upgraded from
A3 to A2
* CarMax Auto Owner Trust 2004-1, Class C, Upgraded from
A1 to Aa3
* CarMax Auto Owner Trust 2004-1, Class D, Upgraded from
Baa3 to Baa2
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-1, Upgraded from A1 to Aa3
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-2, Upgraded from Baa3 to Baa2
* Chase Manhattan Auto Owner Trust 2003-A, Certificates,
Upgraded from Aa3 to Aa1
* Chase Manhattan Auto Owner Trust 2003-C, Certificates,
Upgraded from A1 to Aa3
* Ford Credit Auto Owner Trust 2003-B, Class C, Upgraded
from Aa3 to Aa1
* Ford Credit Auto Owner Trust 2004-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-2, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class C, Upgraded
from Baa2 to A2
* Ford Credit Auto Owner Trust 2005-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class C, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class C, Upgraded
from Aa3 to Aa2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class D, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class E, Upgraded
from Ba3 to Baa3
* GS Auto Loan Trust 2003-1, Class D, Upgraded from Ba1
to Baa3
* GS Auto Loan Trust 2004-1, Class D, Upgraded from Ba3 to Ba1
* MMCA Auto Owner Trust 2002-2, Class A-4, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-2, Class B, Upgraded from Ba3
to Baa3
* MMCA Auto Owner Trust 2002-3, Class B, Upgraded from A1
to Aa1
* MMCA Auto Owner Trust 2002-3, Class C, Upgraded from Baa1
to A1
* MMCA Auto Owner Trust 2002-4, Class B, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-4, Class C, Upgraded from A2
to Aa2
* MMCA Auto Owner Trust 2002-5, Class B, Upgraded from Aa2
to Aa1
* MMCA Auto Owner Trust 2002-5, Class C, Upgraded from A2
to Aa2
* Regions Auto Receivables Trust 2002-1, Class B, Upgraded
from Aa3 to Aa1
* Regions Auto Receivables Trust 2002-1, Class C, Upgraded
from Baa2 to A2
* Regions Auto Receivables Trust 2003-1, Class B, Upgraded
from A1 to Aa3
* Regions Auto Receivables Trust 2003-1, Class C, Upgraded
from Baa2 to A3
* USAA Auto Owner Trust 2003-1, Class B, Upgraded from Aa3
to Aa2
* USAA Auto Owner Trust 2004-1, Class B, Upgraded from A3
to A2
* USAA Auto Owner Trust 2004-2, Class B, Upgraded from Baa3
to Baa1
* USAA Auto Owner Trust 2004-3, Class B, Upgraded from Baa3
to Baa2
* Wachovia Auto Owner Trust 2004-A, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class C, Upgraded from
Baa3 to A3
* WFS Financial 2003-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2003-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-1 Owner Trust, Class C, Upgraded from Aa3
to Aa2
* WFS Financial 2004-2 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-2 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-2 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-3 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-3 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-3 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-4 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2005-1 Owner Trust, Class C, Upgraded from A2
to A1
* WFS Financial 2005-1 Owner Trust, Class D, Upgraded from
Baa2 to Baa1
* Whole Auto Loan Trust 2003-1, Class D, Upgraded from Baa3
to A3
* Whole Auto Loan Trust 2004-1, Class C, Upgraded from Baa1
to A3
* Whole Auto Loan Trust 2004-1, Class D, Upgraded from Ba3
to Baa3
* World Omni Auto Receivables Trust 2003-A, Class B, Upgraded
from A2 to Aa2
Confirm:
* Regions Auto Receivables Trust 2003-2, Class C, confirm
rating at Ba3
H&E EQUIPMENT: Earns $14.7 Million of Net Income in 1st Quarter
---------------------------------------------------------------
H&E Equipment Services, Inc. (NASDAQ: HEES), disclosed its
financial operating results for the fourth quarter and year ended
December 31, 2005.
Fourth Quarter 2005 Highlights:
-- Revenues increased 41.0% to $185.5 million;
-- EBITDA increased 66.7% to $42.7 million;
-- Income from operations increased 123.6% to $25.9 million;
-- Net income increased $13.1 million to $14.7 million;
-- Rental rates increased approximately 13%; and
-- Gross margin increased in new and used equipment sales,
rentals and service.
"We are very pleased with our fourth quarter results as every
segment of our business significantly outperformed last year's
fourth quarter," said John Engquist, H&E Equipment Services
president and chief executive officer. "Strong demand for
construction equipment, the inherent advantages of our integrated
model and solid execution by our management team contributed to
our strong financial performance."
"New equipment sales during the quarter were particularly strong,
up 55.6% from a year ago, driven by solid demand for new cranes,
aerial work platforms and earthmoving equipment. Rental revenues
were also up significantly in the fourth quarter, increasing 24.3%
versus the fourth quarter of 2004. Approximately half of the
increase in rental revenues was attributable to higher rental
rates with the balance coming from fleet growth and greater
equipment utilization. Strong demand for used cranes, aerial work
platforms and earthmoving equipment resulted in a 51.3% increase
in used equipment sales during the quarter. Higher new and used
equipment sales also translated into stronger parts and service
revenues, which increased 40.9% from a year ago," commented Leslie
Magee, H&E Equipment Services chief financial officer.
"Gross margin on equipment rentals, new and used equipment sales,
and service each increased versus the fourth quarter of 2004.
Higher gross margins in these businesses translated to a 123.6%
increase in our income from operations versus the same quarter
last year," added Magee.
2006 Outlook
"Looking to 2006, we continue to see strong growth. We believe
non-residential construction spending, the key driver of our
business, is in the early stages of a multi-year expansion," said
Mr. Engquist. "We also anticipate continued growth in
construction spending in the regions where we have focused our
operations -- the southwest, southeast, gulf coast and
intermountain regions of the nation."
For the year 2006, the Company expects total revenues in the range
of approximately $675 million to $690 million, EBITDA in the range
of approximately $170 million to $180 million and earnings per
share in the range of approximately $1.00 to $1.15, assuming an
effective tax rate of approximately 29%. The Company's 2006
guidance reflects the impact of the Eagle High Reach Equipment
acquisition consummated on February 28, 2006, but does not reflect
the impact that SFAS No. 123 (R), Share Based Payment, may have on
the Company's results of operations or the dilution of earnings
per share for any common stock equivalents that could be granted
by the Company in 2006.
H&E Equipment Services, Inc. -- http://www.he-equipment.com/-- is
one of the largest integrated equipment services companies in the
United States with 47 full-service facilities throughout the
Intermountain, Southwest, Gulf Coast, West Coast and Southeast
regions of the United States. The Company is focused on heavy
construction and industrial equipment and rents, sells and
provides parts and service support for four core categories of
specialized equipment: (1) hi-lift or aerial platform equipment;
(2) cranes; (3) earthmoving equipment; and (4) industrial lift
trucks. The Company trades on the Nasdaq Stock Exchange under the
symbol "HEES."
* * *
As reported in the Troubled Company Reporter on Feb. 20, 2006,
Standard & Poor's Ratings Services raised its corporate credit
rating on rental equipment company H&E Equipment Services Inc.
(formerly known as H & E Equipment Services LLC) to 'BB-' from
'B+'.
At the same time, Standard & Poor's raised its rating on H & E's
$165 million first-lien revolving credit facility due in 2009.
That rating is now 'BB+', two notches higher than the corporate
credit rating, while the recovery rating on the facility is '1',
meaning that full recovery of principal is expected in the event
of a default. The rating on H & E's $200 million second-lien
notes, due in 2012, rose to 'B+', one notch lower than the
corporate credit rating, and was assigned a recovery rating of
'3'. This indicates that S&P expects a meaningful recovery of
principal (50%-80%) in the event of a default after full recovery
of the first-lien facility. S&P said the outlook is stable.
INTEGRATED ELECTRICAL: Court Approves Amended Disclosure Statement
------------------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Texas issued an amended order approving the second amended
disclosure statement explaining Integrated Electrical Services,
Inc., and its debtor-affiliates' second amended plan of
reorganization.
The Court determined that the Disclosure Statement contains
adequate information -- the right amount of the right kind for
creditors to make informed decisions when the Debtor asks them to
vote to accept the Plan.
The Second Amended Plan and Disclosure Statement incorporate the
role and concerns of the Official Committee of Equity Security
Holders. The Equity Committee was appointed by the United States
Trustee on March 8, 2006, two days before the hearing of the First
Disclosure Statement, to represent the interests of all holders
of Class 8 equity interests in the Debtors.
The Original Plan
The principal economic terms of the Plan of Reorganization filed
by the Debtors provide for the Company's balance sheet to be
restructured on the effective date of the Plan in this manner:
(a) the allowed Class 5 claims (Senior Convertible Note
Claims) will be refinanced from the proceeds of the term
exit facility;
(b) the allowed Class 6 claims (Senior Subordinated Note
Claims) will be converted into 82% of the new IES common
stock to be issued pursuant to the Plan, before giving
effect to new options to be issued pursuant to a long term
incentive plan;
(c) all outstanding shares of prepetition IES common stock
will be cancelled and the holders of allowed interests in
Class 8 (IES Common Stock Interests) will receive a pro
rata share of 15% of the new IES common stock to be issued
pursuant to the Plan, before giving effect to new options
to be issued pursuant to a long term incentive plan;
(d) all prepetition, outstanding stock options, warrants,
stock rights, and other rights to purchase or acquire
prepetition IES common stock in Class 9 will be cancelled;
and
(e) all undisputed claims, including Class 1 (Priority
Claims), Class 2 (Credit Agreement Claims), Class 3
(Secured Claims), Class 4 (Unsecured Claims), Class 7
(Subordinated Claims), and Class 10 (IES Subsidiary Debtor
Interests) will either be reinstated or paid in full on
the effective date of the Plan, to the extent that the
Bankruptcy Court does not permit the Debtors to pay them
in the ordinary course of business during the pendency of
the Chapter 11 Cases.
Under the Plan, there are four classes of impaired claims or
equity interests, three of which are entitled to vote:
(i) Class 5 (Senior Convertible Note Claims);
(ii) Class 6 (Senior Subordinated Note Claims); and
(iii) Class 8 (IES Common Stock Interests).
Holders of equity interests in Class 9 (IES Other Equity
Interests) are not entitled to receive a distribution on account
of their interests and are therefore deemed to have rejected the
Plan.
The Plan is supported by holders who hold approximately 61% of
the Senior Subordinated Notes, and it is expected that the
Debtors will easily obtain sufficient votes from Class 6
claimants to confirm the Plan pursuant to Section 1129(b) of the
Bankruptcy Code. Furthermore, the Debtors have commitment letters
from Bank of America to provide both debtor-in-possession
financing and exit financing on a senior secured basis.
A full-text copy of the Disclosure Statement is available for
free at http://researcharchives.com/t/s?5c8
A full-text copy of the Plan of Reorganization is available for
free at http://researcharchives.com/t/s?5c9
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. As of Dec. 31, 2005, Integrated Electrical reported
assets totaling $400,827,000 and debts totaling $385,540,000.
(Integrated Electrical Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc. 215/945-7000)
INTEGRATED ELECTRICAL: Gets Final Approval on $80MM DIP Financing
-----------------------------------------------------------------
The United States Bankruptcy Court for the Northern District of
Texas authorized Integrated Electrical Services, Inc., and its
debtor-affiliates, on a final basis, to, obtain up to $80 million
in postpetition loans, advances, letters of credit and other
financial accommodations under a postpetition credit agreement
with Bank of America, N.A., as agent for the DIP Lenders.
All obligations under the DIP Loan Agreement, including all loans
made by the DIP Lenders to the Debtors, together with all
interest, fees and all other sums and charges which are payable
by the Debtors at anytime, are secured by a:
(a) superpriority claim, pursuant to Section 364(c)(1) of the
Bankruptcy Code, superior to any and all administrative
expenses of the Debtors other than the Carve-Out and
Trustee Fees, but pari passu with the superpriority claims
granted to Federal Insurance Company, SureTec Insurance
Company and Edmund C. Scarborough, as Individual Surety,
under the DIP bonding facilities;
(b) perfected first priority lien on all unencumbered property
of the Debtors, pursuant to Section 364(c)(2);
(c) perfected junior lien on all property of the Debtors,
pursuant to Section 364(c)(3), that is subject to valid
and unavoidable Permitted Liens, to the extent that the
Permitted Liens are not otherwise primed; and
(d) perfected first priority senior priming lien on all of the
property of the Debtors, pursuant to Section 364(d)(1),
subject only to valid and unavoidable Permitted Liens that
are in existence on the Petition Date, that under
applicable law are senior to and have not been
subordinated to the liens and security interests of Bank
of America under its Loan and Security Agreement dated
August 1, 2005, with the Debtors.
The $54,590,201 in commercial standby letters of credit BofA
issued under the Prepetition Loan Agreement will continue in full
force and effect, and are deemed to be issued and outstanding
under the DIP Loan Agreement. Accordingly, any reimbursement
obligations of the Debtors resulting from postpetition draws on
any of the Prepetition Letters of Credit, as well as all other
obligations under the Prepetition Credit Documents will
constitute Obligations under the DIP Loan Agreement.
The Debtors and the DIP Lenders are authorized to implement by
mutual consent, in accordance with the terms of the DIP Loan
Agreement, any amendments to and modifications of the DIP Loan
Agreement, or any of the Loan Documents, without further Court
order provided that the amendment or modification does not
constitute a material change to the terms of the DIP Loan
Agreement.
The DIP Facility will mature on the sooner of:
(i) 12 months from the closing date of the DIP Loan Agreement;
(ii) the effective date of a plan of reorganization; or
(iii) the acceleration of the loans and the termination of the
Commitment in accordance with the DIP Loan Agreement.
Upon occurrence of a Default or an Event of Default under the DIP
Loan Agreement, the DIP Lenders are authorized, in their sole
discretion, to cease making DIP Loans to the Debtors. Upon the
occurrence and during the continuance of an Event of Default:
* The DIP Lenders will be authorized, in their sole
discretion, to terminate the DIP Loan Agreement and demand
payment of the Post-Petition Debt then outstanding; and
* The DIP Lenders will be entitled to an emergency hearing
upon three days notice with respect to relief from the
automatic stay provided for by Section 362 to allow the
DIP Lenders to enforce their security interests and liens
granted under the DIP Loan Agreement.
Other than with respect to Excluded Collateral securing the DIP
bonding facilities with SureTec, Federal, and Scarborough for so
long as any Prepetition Debt or Postpetition Debt remains
outstanding, the Debtors are prohibited from incurring or
assuming any security interest, encumbrances, lien or other
security arrangement of any kind, on or with respect to any of
their assets.
A full-text copy of the Final DIP Order dated March 27, 2006, is
available at no charge at:
http://bankrupt.com/misc/IES_FinalDIPOrder.pdf
About Integrated Electrical
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. As of Dec. 31, 2005, Integrated Electrical reported
assets totaling $400,827,000 and debts totaling $385,540,000.
(Integrated Electrical Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc. 215/945-7000)
INTEGRATED ELECTRICAL: Gets Final Approval on Cash Collateral Use
-----------------------------------------------------------------
The U.S. Bankruptcy Court for the Northern District of Texas gave
Integrated Electrical Services, Inc., and its debtor-affiliates
authority, on a final basis, to use cash collateral and provide
adequate protection to Bank of America, N.A.
The Debtors have revised their initial 13-week budget by including
an additional four weeks of projections.
A copy of the Debtors' updated budget is available for free at
http://ResearchArchives.com/t/s?77b
Prepetition Debt
As reported in the Troubled Company Reporter on Feb. 24, 2006, the
Debtors told the Court that prior to filing for bankruptcy, their
primary sources of working capital were cash flow from operations
and advances under a Loan and Security Agreement dated as of
August 1, 2005, with Bank of America, N.A.
The Pre-Petition Credit Agreement consists of an $80,000,000
revolving credit facility with a letter of credit sub-facility.
As of January 31, 2006, Integrated Electrical Services, Inc., and
its debtor-affiliates' obligations under the Pre-Petition Credit
Agreement were comprised entirely of reimbursement obligations
with respect to outstanding letters of credit. No amounts were
drawn on the revolving facility.
The Debtors' obligations under the Pre-Petition Credit Agreement
are secured by a lien on substantially all of their assets,
excluding assets pledged to secure surety bond obligations.
The Debtors need to use cash and the proceeds of existing
accounts receivable and other collateral to maintain the
operation of their businesses and preserve their value as going
concerns. These essential items, however, constitute part of the
collateral package securing the Debtors' obligations under the
Pre-Petition Credit Agreement and surety bonds issued by Federal
Insurance Company.
Headquartered in Houston, Texas, Integrated Electrical Services,
Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is
an electrical and communications service provider with national
roll-out capabilities across the U.S. Integrated Electrical
Services offers seamless solutions and project delivery of
electrical and low-voltage services, including communications,
network, and security solutions.
The Company provides everything from system design, installation,
and testing to long-term service and maintenance on a wide array
of projects. With approximately 140 locations nationwide, the
Company is prepared to seamlessly manage and deliver all your
electrical, security, and communication requirements. The Debtor
and 132 of its affiliates filed for chapter 11 protection on
Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel
C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson &
Elkins, L.L.P., represent the Debtors in their restructuring
efforts. As of Dec. 31, 2005, Integrated Electrical reported
assets totaling $400,827,000 and debts totaling $385,540,000.
(Integrated Electrical Bankruptcy News, Issue No. 6; Bankruptcy
Creditors' Service, Inc. 215/945-7000)
INTERNATIONAL PAPER: Gets Access to $2 Billion of New Loans
-----------------------------------------------------------
International Paper Company entered into a $500,000,000 364-Day
Credit Agreement and a $1,500,000,000 5-Year Credit Agreement,
both dated March 31, 2006, with:
* JPMorgan Chase Bank, N.A., as Administrative Agent,
* Citibank, N.A., as Syndication Agent;
* Banc of America Securities LLC as Documentation Agent;
* BNP Paribas, as Documentation Agent;
* Deutsche Bank Securities Inc., as Documentation Agent;
* J.P. Morgan Securities Inc. as Lead Arranger and Joint
Bookrunner; and
* Citigroup Global Markets, Inc., as Lead Arranger and Joint
Bookrunner,
The Credit Agreements replace the Company's:
(1) $1,250,000,000 5-Year Credit Agreement, dated as of
March 30, 2004; and
(2) $1,500,000,000 3-Year Credit Agreement, dated as of
March 6, 2003 (subsequently reduced to $750 million).
The Company terminated the undrawn Old 5-Year Agreement in
accordance with its terms. The undrawn Old 3-Year Agreement
expired on March 6, 2006, in accordance with its terms.
Financial Covenants
The covenants and other obligations of the Company in the Credit
Agreements are substantially similar to those contained in the Old
Credit Agreements, including these two key financial covenants
buried in the 364-Day Facility:
-- International Paper promises to limit its Total Debt to
Total Capital ratio to 0.60 to 1 at all times; and
-- International Paper agrees it will not permit its
Consolidated Net Worth to fall below $9,000,000,000.
The New Credit Agreements provide additional flexibility to enable
the Company to complete the divestitures contemplated by its
transformation plan. In addition, the Company may, at its option
and subject to meeting certain conditions, extend the maturity
date of all loans under the 364-Day Credit Agreement for an
additional one year.
Transformation Plan
In July 2005, the Company disclosed 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.
As reported in the Troubled Company Reporter yesterday, the
Company inked definitive agreements with two separate investor
groups under which it will sell a total of approximately
5.1 million acres of forestland for $6.1 billion. The sale of the
forestlands is part of the Company's transformation plan to focus
on uncoated papers and industrial and consumer packaging.
A full-text copy of the 364-Day Credit Agreement is available for
free at http://ResearchArchives.com/t/s?77e
A full-text copy of the 5-Year Credit Agreement is available for
free at http://ResearchArchives.com/t/s?77f
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.
* * *
Moody's Investors Service assigned a Ba1 Preferred Shelf rating on
International Paper in July 2005.
INTERSTATE BAKERIES: Looks to ATL to Review 2006 Tax Assessments
----------------------------------------------------------------
Interstate Bakeries Corporation and its debtor-affiliates and
Assessment Technologies Ltd. amended the terms of their Service
Agreement to reflect:
(a) the addition of tax year 2006, aside from tax year 2005
and all prior years, as available tax years for ATL's
services and fees;
(b) that ATL's fee amount is reduced to 20% of all Net Tax
Savings for services related to tax year 2006 only; and
(c) that payment for services for tax year 2006 will be paid
to ATL within 30 days of its Actual Receipt Date of Tax
Savings.
As reported in the Troubled Company Reporter on April 12, 2005,
the Court gave the Debtors permission to employ Assessment
Technologies Ltd., as their property tax consultant.
As the Debtors' tax consultant, Assessment Technologies:
(a) reviews targeted tax assessments on the Debtors'
properties, including supporting data, calculations and
assumptions produced by the appropriate appraisal or
assessing authority, together with information provided by
the Debtors;
(b) represents the Debtors before appropriate tax assessing,
collecting and court authorities using reasonable,
appropriate and available means to adjust the assessment,
unclaimed tax or claimed tax amount; and
(c) uses local, state or federal remedies available.
The Debtors pay the firm 35% of all Net Tax Savings received for
each tax year.
Judge Jerry Venters approved the parties' amendment to the Service
Agreement.
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. 37; Bankruptcy Creditors' Service, Inc., 215/945-7000)
J.L. FRENCH: Court Approves Kirkland & Ellis' Retention as Counsel
------------------------------------------------------------------
J.L. French Automotive Castings, Inc., and its debtor-affiliates
sought and obtained authority from the U.S. Bankruptcy Court for
the District of Delaware to retain Kirkland & Ellis LLP as their
bankruptcy counsel.
Kirkland & Ellis will:
a) advise the Debtors with respect to their powers and duties
as debtors-in-possession in the continued management and
operation of their businesses and properties;
b) attend meetings and negotiate with representatives of
creditors and other parties-in-interest, take all necessary
action to protect and preserve the Debtors' estates,
including prosecuting actions on the Debtors' behalf,
defending any action commenced against the Debtors and
representing the Debtors' interests in negotiations
concerning all litigation in which the Debtors are
involved, including objections to claims filed against the
estates;
c) prepare all motions, applications, answers, orders, reports
and papers necessary to the administration of the Debtors'
estates;
d) take any necessary action on behalf of the Debtors to obtain
approval of a disclosure statement and confirmation of the
Debtors' plan of reorganization;
e) represent the Debtors in connection with obtaining
postpetition financing;
f) advise the Debtors in connection with any potential sale of
assets;
g) appear before the Court, any appellate Courts and the U.S.
Trustee and protect the interests of the Debtors' estates
before those Courts and the U.S. Trustee;
h) consult with the Debtors regarding tax matters; and
i) perform all other necessary legal services and provide all
other necessary legal advice to the Debtors in connection
with these Chapter 11 cases.
The Debtors tell the Court that the Firm's professionals bill:
Designation Hourly Rate
----------- -----------
Partners $520 - $950
Of Counsel $280 - $685
Associates $245 - $520
Paraprofessionals $110 - $240
The professionals who will provide services to the Debtors:
Professional Hourly Rate
------------ -----------
Marc Kieselstein $745
Roger J. Higgins $545
Erin N. Brady $480
Daryll V. Marshall $475
Uday Gorrepati $315
Kathryn Koenig $295
Thad Davis $275
Marc Kieselstein, Esq., a Kirkland & Ellis partner, assures the
Court that the Firm does not hold or represent any interest
adverse to the Debtors' estates.
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.
JP MORGAN: Moody's Puts Low-B Ratings on Two Certificate Classes
----------------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by JP Morgan Mortgage Acquisition Corp 2006-
FRE2, and ratings ranging from Aa1 to Ba2 to the subordinate
certificates in the deal.
The securitization is backed by Fremont Investment & Loan
originated, adjustable-rate and fixed-rate, subprime mortgage
loans acquired by JP Morgan Mortgage Acquisition Corp. The
ratings are based primarily on the credit quality of the loans,
and on the protection from subordination, excess spread,
overcollateralization, and an interest rate swap agreement
provided by JP Morgan Chase Bank NA. Moody's expects collateral
losses to range from 5.50% to 6.00%.
JP Morgan Chase Bank NA will service the loans.
The complete rating actions are:
JP Morgan Mortgage Acquisition Corp 2006-FRE2
Asset-Backed Pass-Through Certificates, Series 2006-FRE2
* Class A-1, Assigned Aaa
* Class A-2, Assigned Aaa
* Class A-3, Assigned Aaa
* Class A-4, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class M-7, Assigned Baa1
* Class M-8, Assigned Baa2
* Class M-9, Assigned Baa3
* Class M-10, Assigned Ba1
* Class M-11, Assigned Ba2
The Class M-10 and M-11 certificates were sold in a privately
negotiated transaction without registration under the Securities
Act of 1933 under circumstances reasonably designed to preclude a
distribution thereof in violation of the Act. The issuance has
been designed to permit resale under Rule 144A.
K2 INC: Earns $14.7 Million of Net Income in Fourth Quarter
-----------------------------------------------------------
K2 Inc. (NYSE:KTO) reported net sales for the fourth quarter ended
December 31, 2005, of $353.5 million versus $338.9 million in the
prior year, an increase of 4.3%. Adjusted net income for the
fourth quarter of 2005 was $14.7 million compared to Pro Forma
Adjusted net income of $11.8 million for 2004.
Net sales for the year ended December 31, 2005, were $1.3 billion
versus $1.2 billion in the prior year, an increase of 9.4%.
Adjusted net income for fiscal year 2005 was $39.0 million
compared to Adjusted net income of $31.9 million for 2004.
Richard Heckmann, Chairman and Chief Executive Officer, said, "In
terms of core operations before charges, we are very pleased with
our results in the fourth quarter with strong growth in earnings
over the comparable period in 2004. With the exception of
paintball, all of our major business lines generated an
improvement in 2005. We continue to feel strongly that we have
assembled at K2 the most unique collection of brands in sporting
goods, with a #1 market share in 8 major product categories.
From 2002 to 2005 our sales have grown from $582 million to
$1.3 billion, and our operating income from $27 million to over
$78 million before the charges that we are taking in 2005. We
have demonstrated the power of our brands and our manufacturing
and distribution capabilities as evidenced by 2005 sales growth in
excess of 9%, improved profitability with gross margins increasing
from 29.3% in 2002 to 34.6% in 2005, and operating margins from
4.7% in 2002 to 5.9% in 2005 before charges. Our balance sheet is
strong, and we have recently closed a new $250 million five year
bank facility with lower pricing and increased flexibility.
"Despite our steady progress in growing earnings, we have taken a
non-cash charge related to our goodwill and certain other
intangibles. One of the key indicators, which led to the charge
was that our book value significantly exceeded our market
capitalization on the date of our annual impairment test. Due to
the current accounting standards and valuation techniques used for
measuring the value of intangible assets, a significant charge was
necessary. As a result of the charges, our book value per share
is now lower than the recent trading price of our stock. I would
emphasize that this charge is non-cash, and does not have any
impact on operations, or any material effect on any debt agreement
or material contract at the company.
"For 2006, our forecast range is for growth in both operating and
net income in excess of 10% over 2005 levels, before charges. We
expect to achieve these results by a continued focus on new
product introductions and innovations, and efficiencies in
manufacturing, distribution, and cost containment. As we complete
this year's ski season, we are particularly proud of the fact that
we have again improved our U.S. market position in winter sports,
and that athletes on K2(R), Volkl(R) and Madshus(R) skis and
snowboards won a total of 43 medals at the Winter Olympics, a
record for our company."
Review of Comparable 2005 Sales and Profit Trends
K2's net sales were $1,014 million and $1,069 million for the 2004
and 2005 fiscal years reflecting sales growth of 5.5% for 2005,
excluding sales of 2004 material acquisitions including Volkl,
Marker and Marmot, which were acquired in the third quarter of
2004. K2's net sales were $907 million and $987 million for the
2004 and 2005 fiscal years, respectively, reflecting sales growth
of 8.8%, excluding sales from these 2004 material acquisitions and
paintball products, which declined in 2005. K2's net sales were
$306 million and $325 million for the 2004 and 2005 fourth
quarters reflecting sales growth of 6.2%, excluding sales from
paintball products, which declined in the 2005 fourth quarter.
K2's gross profit, excluding restructuring charges of
$2.8 million, in the fourth quarter of 2005 increased to 35.9% of
net sales, as compared to 34.5% in the comparable 2004 period.
Gross profit, excluding restructuring charges, for the twelve
months ended December 31, 2005, increased to 34.6% of net sales,
as compared to 33.3% for the 2004 comparable period. Gross profit
as a percentage of net sales in the 2005 fourth quarter benefited
from higher gross margins from winter sports product lines.
K2's operating profit, excluding non-cash intangible charges and
restructuring charges, as a percentage of net sales for the fourth
quarter of 2005 increased to 7.9% compared to 6.3% in the
comparable 2004 period. Operating profit, excluding non-cash
intangible charges and restructuring charges, increased to 5.9% of
net sales for the full year 2005 as compared to 5.5% for the full
year 2004 including Pro Forma operating losses for the first and
second quarters of 2004 for Volkl, Marker and Marmot which were
acquired mid-year 2004. For the fourth quarter of 2005 selling,
general and administrative expenses, excluding non-cash intangible
charges and restructuring charges, as a percentage of net sales
decreased slightly to 28.0% compared to 28.1% of net sales for
the fourth quarter of 2004. For the twelve months ended
December 31, 2005, selling, general and administrative expenses,
excluding non-cash intangible charges and restructuring charges,
increased as a percentage of net sales to 28.7% as compared to
26.6% in the prior year, with the increase due principally to
the full year inclusion of Volkl, Marker and Marmot which closed
mid-year 2004.
Balance Sheet
At December 31, 2005, cash and accounts receivables decreased
slightly to $392.2 million as compared to $395.5 million at
December 31, 2004. Inventories at December 31, 2005, increased to
$359.0 million from $325.1 million at December 31, 2004, primarily
as a result of the growth in new product lines.
The Company's total debt increased to $437.3 million at December
31, 2005 from $415.9 million at December 31, 2004. The increase
in debt as of December 31, 2005 is primarily the result of growth
in working capital.
Sarbanes-Oxley Act of 2002
Section 404 of the Sarbanes-Oxley Act of 2002 requires K2,
commencing with its 2004 Annual Report, to provide management's
annual report on its assessment of the effectiveness of its
internal control over financial reporting and, in connection with
such assessment, an attestation report from its independent
registered public accountant, Ernst & Young LLP. In order to
comply with the requirements of Section 404, K2 estimates that it
incurred total expenses of approximately $2.9 million in 2005 and
total expenses of approximately $2.5 million in 2004.
Outlook for 2006
On a quarterly basis for 2006, K2 expects that seasonality in
sales and earnings per share will be similar to the quarterly
trends in 2005. For the first and second quarters of 2006, K2
forecasts sales in the range of $635 million to $650 million.
About K2
K2 Inc. is a premier, branded consumer products company with a
portfolio of leading brands including Shakespeare(R), Pflueger(R)
and Stearns(R) in the Marine and Outdoor segment; Rawlings(R),
Worth(R) and K2 Licensed Products in the Team Sports segment;
K2(R), Volkl (R), Marker(R), Ride(R) and Brass Eagle(R) in the
Action Sports segment; and, Adio(R), Marmot(R) and Ex Officio(R)
in the Apparel and Footwear segment. K2's diversified mix of
products is used primarily in team and individual sports
activities such as fishing, watersports activities, baseball,
softball, alpine skiing, snowboarding and in-line skating. Among
K2's other branded products are Hodgman(R) waders, Miken(R)
softball bats, Tubbs(R) and Atlas(R) snowshoes, JT(R) and Worr
Games(R) paintball products, Planet Earth(R) apparel and
Sospenders(R) personal floatation devices.
Adio(R), Atlas(R), Brass Eagle(R), Ex Officio(R), Hodgman(R),
JT(R), K2(R), Marker(R), Marmot(R), Pflueger(R), Planet Earth(R),
Rawlings(R), Ride(R), Shakespeare(R), Sospenders(R), Stearns(R),
Tubbs(R), Volkl(R), Worth(R) and Worr Games(R) are trademarks or
registered trademarks of K2 Inc. or its subsidiaries in the United
States or other countries.
* * *
As reported in the Troubled Company Reporter on Mar. 30, 2006,
Moody's Investors Service confirmed K2 Inc.'s Ba3 corporate family
rating, but lowered the company's senior unsecured notes rating to
B1 from Ba3. The company's ratings outlook is negative.
This rating was lowered:
* $200 million of 7.375% senior unsecured notes due 2014
to B1 from Ba3.
This rating was confirmed:
* Corporate family rating at Ba3;
KANSAS CITY SOUTHERN: Delays Filing of 2005 Annual Reports
----------------------------------------------------------
Kansas City Southern (NYSE:KSU) reported that during the
preparation of its year-end financial reports for 2005, certain
errors were identified in the calculation of its deferred income
tax balances that arose in the years prior to 2003.
The Company has determined that its deferred tax liability balance
at Dec. 31, 2002, and subsequent dates was understated by
approximately $8 million.
The Company has also determined that the errors had no material
impact on earnings as reported in the annual periods ended
Dec. 31, 2003, 2004, and 2005.
Accordingly, the Company expects that its consolidated financial
statements to be included in its Annual Report on Form 10-K for
the year ended Dec. 31, 2005, will include an adjustment to its
previously presented consolidated balance sheets to reflect
reductions of its retained earnings at Dec. 31, 2002, and
subsequent periods of approximately $8 million, with corresponding
increases in its deferred income taxes payable.
The Company expects that management's assessment of the
effectiveness of internal controls over financial reporting as of
Dec. 31, 2005, to be included in the Company's annual report on
Form 10-K, will indicate the existence of a material weakness in
the Company's internal controls relating to its corporate tax
function.
The Company is developing a plan of remedial action to address the
weaknesses in internal controls identified with respect to the
proper reporting of income taxes.
The Company requires additional time to finalize its financial
statements and disclosures to be included in its Form 10-K and
obtain the appropriate reports from KPMG LLP, the Company's
independent registered public accounting firm.
Accordingly, the Company has filed with the Securities and
Exchange Commission a notification of late filing on Form 12b-25
extending the deadline to file the Company's Annual Report on Form
10-K for up to 15 days. As of press time, the company still has
not filed its Annual Reports.
Headquartered in Kansas City, Mo., KCS is a transportation holding
company that has railroad investments in the U.S., Mexico and
Panama. Its primary U.S. holding includes KCSR, serving the
central and south central U.S. Its international holdings include
Kansas City Southern de Mexico, serving northeastern and central
Mexico and the port cities of Lazaro Cardenas, Tampico and
Veracruz, and a 50 percent interest in Panama Canal Railway
Company, providing ocean-to-ocean freight and passenger service
along the Panama Canal. KCS' North American rail holdings and
strategic alliances are primary components of a NAFTA Railway
system, linking the commercial and industrial centers of the U.S.,
Canada and Mexico.
* * *
As reported in the Troubled Company Reporter on Dec. 9, 2005,
Standard & Poor's Ratings Services assigned a preliminary 'BB-'
senior secured rating, a preliminary 'B+' senior unsecured rating,
and a preliminary 'B-' preferred stock rating to Kansas City
Southern's (BB-/Stable/--) universal shelf registration.
KANSAS CITY SOUTHERN: S&P Lowers Preferred Stock Ratings to CCC
---------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'BB-' ratings on
Kansas City Southern and Kansas City Southern de Mexico S.A. de C.
V. (previously TFM S.A. de C.V.) on CreditWatch with negative
implications. At the same time, the company's preferred stock
ratings were lowered to 'CCC' from 'B-'. Those ratings remain on
CreditWatch with negative implications, where they were placed on
March 23, 2006.
The rating actions follow recent negative developments, including
a delay in the company's 2005 10-K filing and last week's
announcement that a special shareholders' meeting held to address
dividend payment restrictions had been adjourned indefinitely.
The lower preferred stock ratings reflect an increased risk of
Kansas City Southern failing to make the next dividend payments on
its preferred stock. Standard & Poor's placed the corporate
credit and other ratings on CreditWatch on concerns about Kansas
City Southern's liquidity in the wake of these events.
Standard & Poor's believes that the failure to provide audited
financial statements on a timely basis is an event of default
under the credit facility.
"While Kansas City Southern is likely pursuing a waiver with its
lenders, we believe that the failure to provide financial
statements, coupled with limitations imposed by the failure to
meet threshold covenant levels under its bond indentures, has
hampered the company's access to liquidity, at least in the short
term," said Standard & Poor's credit analyst Lisa Jenkins.
In addition, the company's recent financial performance has fallen
below expectations, partly due to the impact of the Gulf Coast
hurricanes in 2005.
Kansas City Southern announced last month that it failed to meet a
bond indenture covenant threshold and was therefore restricted
from paying cash dividends on its preferred stock. The covenant
issue was primarily due to a noncash charge of $37.8 million
incurred in the third quarter of 2005 to recognize additional
costs related to occupational and personal injury claims. The
company called for a shareholder meeting to vote on a proposed
amendment to terms of its 4.25% preferred stock, to allow for the
payment of dividends in stock, but the meeting was adjourned due
to failure to achieve a quorum.
If shareholder approval is eventually granted, the preferred stock
ratings will be reevaluated in the context of the agreement
reached with the shareholders and Kansas City Southern's overall
credit quality. Failure to achieve shareholder approval for the
change in terms would likely result in a lowering of the rating to
'C' until the next dividend payment due date (mid-May) and then
'D' once the dividend payments are missed.
All ratings could be lowered if the company fails to address
liquidity concerns or fails to demonstrate the likelihood of
improved financial results over the near to intermediate term.
KMART CORP: Global Property's Request for Sanctions Draws Fire
--------------------------------------------------------------
On February 14, 2005, Global Property Services, Inc., served its
initial discovery requests on Kmart Corporation, which sought,
among others, documentation of their agreement and the services
that GPS provided for Kmart.
Rather than produce the documents in the manner requested, Kmart
sent a written response which indicated that GPS, or a party
acting on its behalf, may inspect and copy the documents that are
found at 3100 West Big Beaver Road, in Troy, Michigan.
Accordingly, GPS made arrangements for reviewing the documents.
However, the day before the first inspection was to occur, Kmart
changed its mind about the manner of production and reverted back
to producing documents in the manner Global had originally
requested to be completed in March 2005.
On April 26, 2005, Kmart produced a 66-page document.
David A. Newby, Esq., at Johnson & Newby, LLC, in Chicago,
Illinois, relates that after reviewing the 66-page document, GPS
became concerned about Kmart's discovery practices, due to:
(1) the paucity of the documents produced; and
(2) Kmart's failure to produce the internal documents that
GPS knew existed, which meant that either Kmart:
-- had not produced all of its responsive documents; or
-- had not properly maintained evidence in its possession,
custody, or control.
On May 2, 2005, GPS' counsel requested immediate assurances from
Kmart's counsel.
Kmart responded and stated that that it has produced responsive
documents that were found at its headquarters; it continues to
search for responsive documents at headquarters and at individual
Kmart stores; and, it will supplement its document production with
any additional responsive documents that it finds.
Kmart's promise to maintain documents says nothing about whether
it has already destroyed relevant documents.
In the months that followed, Kmart's assurances turned out to be
unreliable as its practices have given rise to a concern that
evidence is being destroyed, Mr. Newby explains.
In June 2005, a teleconference between GPS and Kmart resulted to
the parties' agreement compelling Kmart to respond to the
discovery requests. The U.S. Bankruptcy Court for the Northern
District of Illinois enforced agreed-upon deadlines for the
production of documents from various sources within Kmart's
organization.
Consequently, Kmart produced 2,614 pages of documents from its
corporate headquarters. Kmart then made multiple assurances that
it had complied with the Court's Order and had produced all
documents from its headquarters.
Mr. Newby notes, however, that the assurances were not accurate
and that Kmart has violated the Court's Order because Kmart
produced an additional 5,992 pages of documents on February 2,
2006.
In response to GPS' second discovery request for documents --
which sought production of personnel files from eight key
witnesses in the case -- Kmart refused to produce any information
from the requested files and instead, responded to each request
with an identical objection.
In March 3, 2006, Kmart informed GPS that it was still in the
process of gathering and reviewing electronic documents for their
witnesses.
Mr. Newby believes that Kmart is unable to locate many responsive
e-mails from its former employees, as "such e-mails are
automatically destroyed pursuant to Kmart's document destruction
policies, and Kmart has made no efforts to stop that process."
At this point, Mr. Newby says, the question is not whether GPS has
been prejudiced, but rather to what extent.
To date, four Kmart employees, and a few third party witnesses,
have been deposed.
GPS has likewise produced over 13,000 pages of e-mail
communication in response to Kmart's discovery requests.
GPS Wants Sanction and Discovery
Against this backdrop, GPS asks the Court to sanction Kmart for
its spoliation of evidence.
Pursuant to Rule 2004 of the Federal Rules of Bankruptcy
Procedure, GPS further asks Judge Sonderby to:
* compel the production of the requested personnel files;
* permit GPS to re-notice Lily Petrovic, a Kmart accounts
payable clerk and one of Kmart's witnesses, for deposition,
at Kmart's expense; and
* direct Kmart to pay GPS' costs and attorneys' fees
incurred in bringing its discovery request.
Mr. Newby relates that during Ms. Petrovic's deposition, she
referenced several documents and other information from her files.
Because Kmart has not provided the purported documents to GPS
prior to the deposition, GPS' counsel was not able to ask
Ms. Petrovic specific questions about the documents, mark the
documents as exhibits, and test the accuracy or validity of the
documents.
Kmart Responds
George R. Mesires, Esq., at Barack Ferrazzano Kirschbaum
Perlman & Nagelberg LLP, in Chicago, Illinois, contends that GPS
seeks not only to halt discovery, but to have the Court enter
summary judgment in its favor without having to prove its case.
According to Mr. Mesires, no sanction could be appropriate where
there is no contention, much less evidence, that Kmart
intentionally destroyed specific documents.
GPS' assertion that Kmart altered or destroyed evidence is
predicated on the fact that, because Kmart did not impose a
"litigation hold," unspecified e-mails stored on computer back-up
tapes or on personal hard drive space of former employees may have
been deleted in the ordinary course under Kmart's document
retention policies, Mr. Mesires adds.
Mr. Mesires argues that GPS' allegations neither establish
spoliation nor justify the imposition of sanctions.
In particular, GPS does not:
-- establish a "trigger date" for a litigation hold;
-- identify relevant documents that have been destroyed; or
-- establish that it has been prejudiced in any way.
Furthermore, Mr. Mesires asserts that GPS' request to compel does
not meet its burden to establish basis for reopening the
deposition of Ms. Petrovic, at Kmart's expense. GPS fails to
identify any documents that it believes were not previously
produced. Had GPS done so, Mr. Mesires continues, Kmart could
verify whether the documents were newly produced and cooperate
with GPS to permit limited additional questioning on the
documents.
Equally unfounded, Mr. Mesires notes, is GPS' effort to obtain the
personnel files of several witnesses, some of whom it has already
deposed. The files contain information about the employees'
salary, medical and personal issues, and performance reviews,
which has no bearing either on GPS' contract and tort claims
against Kmart or on its postpetition invoice claim.
In any event, Mr. Mesires says, Kmart will submit the files to the
Court for in camera inspection to verify that they nowhere mention
GPS or otherwise contain any relevant information.
Nevertheless, since GPS' request is without legal or factual
basis, Kmart asks the Court to deny it.
GPS Wants Shawkey Yoakim's File
David A. Newby, Esq., at Johnson & Newby, LLC, in Chicago,
Illinois, notes that Kmart's discovery responses revealed that in
objecting to GPS' claims, Kmart relied on its audit of GPS, which
audit was initiated and conducted by Shawkey Yoakim.
GPS believes that Mr. Yoakim's audit was improper, inaccurate, and
incomplete. Moreover, Kmart continues to use the findings from
Mr. Yoakim's audit to justify its tortious interference, breach of
contract, defamation, and failure to pay invoices.
GPS requested information from Mr. Yoakim's personnel file to
determine what training and experience Mr. Yoakim had that
qualified him to conduct the audit. GPS also sought information
from the file related to any evaluations of Mr. Yoakim's job
performance.
However, Kmart refused to produce any information from Mr.
Yoakim's personnel file, claiming that they are only relevant in
the employment litigation context and that his file contains some
confidential information.
Mr. Newby informs Judge Sonderby that GPS does not desire all of
the information contained within Mr. Yoakim's file, nor has
interest in information related to Mr. Yoakim's compensation or
benefits or any other confidential materials.
GPS is also confident that in the exercise of its discretion, the
Court will be able to separate confidential, personal information
from the materials that will aid GPS in discovering and testing
Mr. Yoakim's qualifications, training, evaluations, and review.
The information will enable GPS to challenge the validity,
thoroughness, and trustworthiness of Kmart's audit.
Mr. Newby notes that the production of information from personnel
files is not restricted to types of cases. If the information
contained within a personnel file could lead to the discovery of
relevant evidence, that information must be produced.
Moreover, while Kmart conceded that GPS is free to inquire about
Mr. Yoakim's experience, qualifications, and performance
evaluations at his deposition, GPS also has the right to test his
answers and impeach him.
GPS, hence, asks the Court to grant its request and compel the
Kmart to produce information from Mr. Yoakim's personnel file.
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)
KRATON POLYMERS: S&P Affirms B+ Rating & Revises Outlook to Stable
------------------------------------------------------------------
Standard & Poor's Ratings Services revised its outlook on Kraton
Polymers LLC and its parent, Polymer Holdings LLC, to stable from
negative. At the same time, Standard & Poor's affirmed all
ratings on Kraton and Polymer Holdings, including its 'B+'
corporate credit ratings.
The outlook revision reflects the trend of improving operating
performance over the past year.
"Through greater focus on pricing initiatives and better operating
efficiency, Kraton was able to increase margins in a very
challenging raw material environment. As a result, credit
protection measures have improved to levels considered more
appropriate at the current ratings," said Standard & Poor's credit
analyst George Williams.
While raw materials are expected to remain elevated in 2006,
Kraton should be well positioned to preserve or slightly improve
its financial profile through a continued focus on pricing and
cost-reduction efforts.
The ratings on the Houston, Texas-based company reflect its weak
business risk profile derived from its narrow focus on the
styrenic block polymers (SBCs) market. The ratings also reflect a
difficult raw-material environment and a highly leveraged
financial profile.
Kraton is a leading producer of SBCs with about $975 million in
annual sales and approximately $568 million of debt outstanding
(excluding operating leases and unfunded postretirement benefits).
The company produces both:
* unhydrogenated SBCs (USBCs); and
* hydrogenated SBCs (HSBCs),
sold under the:
* Kraton D; and
* Kraton G brand names, respectively.
SBCs offer:
* flexibility,
* resilience,
* strength, and
* durability
to a wide range of products in a number of end-use markets,
including:
-- paving and roofing,
-- adhesive, sealants and coatings,
-- compounding channels,
-- packaging and films, and
-- personal care.
The SBC market should grow by about 6% a year, with faster growth
expected in HSBCs, which are primarily used in compounding and
polymer systems. USBC growth is typically slower because of some
concentration of sales to the more mature footwear market. Still,
demand for both USBCs and HSBCs will show some cyclicality with
economic conditions.
KRONOS INT'L: Fitch Rates Proposed EUR400 Million Sr. Notes at BB
-----------------------------------------------------------------
Fitch Ratings affirmed Kronos International, Inc.'s ratings as:
-- Issuer Default Rating at 'BB'
-- Senior secured credit facility at 'BB+'
-- Senior secured notes at 'BB'
At the same time, Fitch assigned a 'BB' to KII's proposed private
placement offering of EUR400 million senior secured notes due
2013.
Fitch also affirmed Valhi, Inc. as:
-- IDR at 'BB-'
-- Senior secured credit facility at 'BB-'
The Rating Outlook for both KII and Valhi remains Stable.
Cash proceeds from KII's new EUR400 million senior secured notes
due 2013 are expected to be used to repay its existing EUR375
million, 8 7/8% senior secured notes due 2009 at the stated
redemption price of 104.437%, plus accrued and unpaid interest.
Debt levels will be modestly higher as a result of KII's
refinancing activities; however KII is expected to have greater
financial flexibility by lowering its future gross interest
expense and extending its maturities of long-term debt.
The Stable Rating Outlook reflects the likelihood that Valhi and
KII's near-term financial performance and debt levels should
remain steady as titanium dioxide (TiO2) business conditions
improve. TiO2 prices are expected to continue to trend upward in
2006. Supply should improve and come back into balance as a
result of DuPont's Mississippi facility resuming full operations
during the second quarter of 2006. However, strengthening TiO2
demand should also keep prices firm as the second quarter is
typically a seasonally strong period. No major production
additions are planned until the end of the decade.
The rating affirmation of KII's ratings is supported by:
* its strong market position in Europe;
* strong profitability; and
* stable cash flow.
In the current favorable pricing environment for TiO2, Fitch
expects cash flow to improve in the near term. Free cash flow was
$53 million in 2005 compared to $49 million in 2004. KII's
indenture for the existing senior secured notes includes
limitations on restricted payments and at Dec. 31, 2005, KII had
the ability to declare approximately $92 million in dividends. No
dividends were declared during 2005. The credit ratings could be
negatively affected by dividends paid, if they are not supported
by operational cash flow. The company's liquidity was adequate
with $63 million in cash and $92 million available under its
undrawn senior secured credit facility (matures June 2008) at
Dec. 31, 2005. Additionally, KII has no significant near-term
maturities of long-term debt.
The rating affirmation of Valhi's ratings is supported by:
* its ownership in diverse businesses, specifically its
significant ownership of Kronos Worldwide, Inc.; and
* its strong operating margins and market position as a TiO2
producer.
The rating rationale also incorporates:
* Valhi's complex corporate structure;
* dependence on dividends from affiliates;
* fundamentally acquisitive strategy; and
* dividend policy.
Credit strengths include Valhi's sufficient liquidity of $219
million at Dec. 31, 2005, comprised of:
* $120 million cash at the parent level; and
* $99 million available under its undrawn senior secured credit
facility (matures October 2006).
Additionally, Valhi has no significant near-term maturities of
long-term debt. Fitch's concerns include dividends or potential
share repurchase activity not supported by operational cash flow.
In regards to Valhi's potential, indirect exposure to lead paint
litigation there have been no new developments, as discussed in
Fitch's affirmation of Valhi's ratings on March 22, 2006.
For the LTM ending Dec. 31, 2005, credit statistics for Valhi and
KII remain sufficient for the rating category with operating
EBITDA-to-gross interest expense of 3.8x and 4.0x, respectively.
Valhi's balance sheet debt at 2005 year-end was approximately
$717 million of which $454 million resides at KII. Valhi and KII
had a total debt-to-operating EBITDA ratio of 2.7x and 2.8x,
respectively, for the full year 2005. Total adjusted debt-to-
operating EBITDAR ratios, incorporating gross rent, for Valhi and
KII were 3.0x and 3.0x, respectively for the same period.
Kronos International, Inc. is Europe's second largest producer of
TiO2 pigments. The company is a wholly owned subsidiary of Kronos
Worldwide, Inc., a holding company which has additional ownership
interests in certain North American TiO2 producers. TiO2 pigments
are used in:
* paints,
* paper,
* plastics,
* fibers, and
* ceramics.
KII generated approximately $851 million of sales and reported
EBITDA of approximately $164 million in 2005.
Valhi is a holding company with direct and indirect ownership
stakes in:
* NL Industries and Kronos Worldwide, Inc., producers of TiO2
pigments;
* CompX, a producer of locks and ball bearing slides, serving
the office furniture industry;
* TIMET, a producer of titanium metals products; and
* Waste Control Specialists, a provider of hazardous waste
disposal services.
Valhi generated $1.45 billion of sales and approximately $261
million of EBITDA in 2005. Kronos Worldwide, Inc. is the fifth-
largest TiO2 producer in the world and has a significant presence
in Europe, through its operating subsidiary, KII.
LEVEL 3: Fitch Affirms CC Sub. Debt Rating With Stable Outlook
--------------------------------------------------------------
Fitch affirmed the 'CCC' issuer default rating, along with each
individual issue rating assigned to Level 3 Communications, Inc.
(Level 3) and Level 3 Financing, Inc. This rating action follows
Level 3's announcement that it will issue $300 million of 12.25%
senior unsecured notes due 2013 at Level 3 Financing. Fitch
assigned a rating of 'B' to the new notes as well as a recovery
rating of 'RR1'. Level 3's Rating Outlook is Stable.
Approximately $6.4 billion of debt as of first-quarter 2006
(1Q'06) is affected by this rating action.
The affirmation reflects:
* Level 3's high leverage;
* large amount of negative free cash flow;
* large debt maturities starting 2010; and
* the execution risk associated with changing its revenue mix
from declining mature services to more growth-oriented
services.
Leverage at Level 3 has grown due to debt increases out-stripping
cash flow growth. Nevertheless, secured leverage remains low at
approximately 1.5x operating EBITDA compared to more than 11x for
the consolidated company.
Similar to the company's issuance of $400 million of senior notes
at Level 3 Financing on March 10, this current offering will
replenish cash used in completing acquisitions as well as fund
expected 2006 capital spending. Fitch expects that Level 3 will
have a cash and marketable securities balance of approximately
$1.4 billion as of 1Q'06, which is materially above the company's
current liquidity needs. Therefore, Fitch expects that Level 3
will employ its excess cash to reduce consolidated leverage either
through debt reduction or acquisitions that would increase cash
flow. Level 3 will have the opportunity to call its 9.125% senior
notes due 2008 on May 1, of which $399 million is outstanding.
The current issuance does reduce the recovery prospects of the
indebtedness at Level 3 Communications, by increasing the debt at
Level 3 Financing to $1.93 billion. If the company does not take
advantage of the opportunity to call debt on May 1, or does not
announce another de-leveraging event, the senior unsecured issue
ratings at Level 3 Communications could be downgraded due to
weaker recovery prospects. The recovery prospects at Level 3
Financing remain strong with an expected full recovery, which is
reflected in the ratings at this issuer. In contrast, Fitch
expects that the recovery prospects of Level 3 Communications, in
a distressed scenario, would be less than 20% at the company's
current leverage, which is reflected in the ratings for the debt
issues at Level 3 Communications holding company.
Level 3's capital structure consists of:
* a fully drawn $730 million secured term loan due 2011;
* $1.2 billion of senior unsecured notes at Level 3 Financing;
* $3.84 billion of senior unsecured notes;
* $876 million of subordinated notes at Level 3; and
* a $70 million headquarters mortgage.
The Stable Rating Outlook for the company's IDR reflects:
* the company's cash and marketable securities balance;
* the increasing success of expanding growth service revenues;
and
* expected benefits of the WilTel and Progress Telecom
operations integration.
Nevertheless, negative rating actions would occur if the company
is unable to continue to strengthen the revenue mix or if the rate
of negative free cash flow improvement is not achieved
particularly related to 2007 prospects among other considerations.
Fitch has affirmed these ratings with a Stable Outlook:
Level 3 Communications, Inc.:
-- Issuer default rating 'CCC'
-- Senior unsecured 'CCC-/RR5'
-- Subordinated 'CC/RR6'
Level 3 Financing, Inc.:
-- Issuer default rating (IDR) 'CCC'
-- Senior secured term loan 'B/RR1'
-- Senior unsecured 'B/RR1'
LEVITZ HOME: Subsidiary Completes New $89 Million Credit Facility
-----------------------------------------------------------------
Levitz Furniture entered into an $89 million, three-year revolving
credit facility, which will be used by the Company's new
management team to reinvigorate one of America's leading specialty
retailers of furniture, bedding and home furnishings.
The $89 million credit facility was arranged by Banc of America
Securities, LLC and Back Bay Capital Funding LLC. It replaces the
Company's $55 million credit facility announced in December 2005.
"This is an important milestone as we begin to aggressively
implement our revitalization plans for this respected brand," said
Thomas Baumlin, Chief Executive Officer, Levitz Furniture. "We
have further expanded our liquidity position, roughly doubling the
Company's potential borrowing ability to ensure we have ample
funds to continue to execute our vision to make Levitz Furniture
the premier specialty furniture retailer in the markets in which
it competes. We are very pleased to be working with Banc of
America and Back Bay Capital, two highly respected institutions."
Store Openings
Consistent with its revitalization plans, the Company also plans
to open several new stores:
* Staten Island, New York, Paramus, New Jersey, and Bronx,
New York in the April-May period,
* Summerlin, Nevada in early summer,
* Murrieta, California in the early fall and
* Valley Stream, New York in the late fall.
April Grand Opening celebrations are planned for the Staten
Island, Paramus, Farmingdale, New York, Hawthorne, California, and
South Sacramento, California store locations.
In addition, the Company was proceeding with its store renovation
plans slated for the late spring, including projects in:
* Elmhurst, New York,
* Paramus, New Jersey,
* New Anaheim, California, and
* Victorville, California.
"This is the most recent of many important markers we have hit
since we bought the assets of Levitz from bankruptcy. We are
pleased to note we have surpassed every major objective we have
set since we have owned the company," said Jonathan Duskin,
Managing Director of Prentice Capital Management, LP, the new
owner of Levitz Furniture. "Our new management team has made
tremendous strides in only a few months, restoring trade
confidence and rebuilding the Levitz consumer franchise. We would
like to thank our many associates, vendors and customers for their
support, and we are confident all our partners will prosper as we
deliver on our promise to reinvigorate this great retailer."
About Levitz Home
Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc.
-- http://www.levitz.com/-- is a leading specialty retailer of
furniture in the United States with 121 locations in major
metropolitan areas principally the Northeast and on the West Coast
of the United States. The Company and its 12 affiliates filed for
chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case
No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq.,
at Jones Day, represent the Debtors in their restructuring
efforts. When the Debtors filed for protection from their
creditors, they reported $245 million in assets and $456 million
in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman
LLP represents the Official Committee of Unsecured Creditors.
Levitz sold substantially all of its assets to Prentice Capital on
Dec. 19, 2005.
LG.PHILIPS DISPLAYS: Taps Beringea LLC as Investment Banker
-----------------------------------------------------------
LG.Philips Displays USA, Inc., asks the U.S. Bankruptcy Court for
the District of Delaware for permission to employ Beringea LLC as
its investment banker.
Beringea LLC will:
a. provide advice regarding market conditions and the
divestiture process;
b. develop an appropriate divestiture strategy;
c. prepare divestiture information describing the
Debtor, its operations and financial performance;
d. assemble pro forma operating and balance sheet
statements;
e. identify potential acquirers (utilizing the
assistance of Hendy Consulting);
f. publicize the divestiture of the Debtor's assets in
appropriate trade and financial journals;
g. organize a data room (virtual or otherwise);
h. negotiate structure and terms with prospective
acquirers;
i. Coordinate acquirer due diligence;
j. conduct an auction of the Debtor's assets in
accordance with Section 363 of the Bankruptcy Code;
k. assist with the preparation and negotiation of
closing documentation; and
l. provide general financial advisory services on an
as-needed basis.
The Debtor tells the Court that it will pay Beringea LLC a $50,000
retainer and, in the event the Debtor executes a Letter of Intent,
term sheet, or the like with a potential acquirer, pay Beringea an
additional $50,000 fee.
The Debtor discloses that if it concludes a transaction during the
term of the engagement, or if Beringea advises or consults with
respect to an offer, agreement, commitment, letter of intent, or
the like during the term of the engagement, which leads to a
concluded transaction within six months of the termination of the
engagement, the Debtor will compensate Beringea with a transaction
fee paid at closing in an amount equal to 2.5% of the transaction
value (and no less than $350,000). The transaction fee, however,
will be reduced by the amount the $50,000 letter of intent fee
payment received by Beringea.
David Eberly, a senior managing director of Beringea LLC, assures
the Court that the Firm is "disinterested" as that term is defined
in Section 101(14).
Headquartered in San Diego, California, LG.Philips Displays USA,
Inc. is an indirect American affiliate of LG.Philips Displays
Holding B.V. The company manufactures cathode ray tubes that are
incorporated into television sets and computer monitors. The
company filed for chapter 11 protection on Mar. 15, 2006 (Bankr.
D. Del. Case No. 06-10245). Adam Hiller, Esq., at Pepper Hamilton
LLP represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated
assets of more than $100 million and debts between $50 million and
$100 million.
LG.PHILIPS DISPLAYS: Taps Barrera Siqueiros as Special Counsel
--------------------------------------------------------------
LG.Philips Displays USA, Inc., asks the U.S. Bankruptcy Court for
the District of Delaware for permission to employ Barrera
Siqueiros y Torres Landa, S.C., as its special counsel.
The Debtor tells the Court that in order to continue its
relationship with its Mexican affiliate, LG.Philips Displays
Mexico S.A. de C.V., it will require:
* an understanding of Mexican law and guidance on strategies
to protect its assets;
* advice on Mexican insolvency laws and their interplay with
the laws of the United States; and
* assistance in enforcing the automatic stay and other stays
and injunctions imposed by the Court on foreign entities in
Mexico by instituting ancillary proceedings in the courts
of Mexico.
As special counsel Barrera Siqueiros will assist, advice and
represent the Debtor in resolving these issues. The Debtor says
that Barrera Siqueiros will also provide the same services to its
Mexican affiliate concerning the same issues.
The Debtor tells the Court that it will pay the Firm its usual
hourly rates at the time services are rendered. Documents
submitted to the Court did not say how much those rates are.
Omar Guerrero-Rodriguez, Esq., a partner at Barrera Siqueiros,
assures the Court that the Firm is "disinterested" as that term is
defined in Section 101(14) of the Bankruptcy Code.
Mr. Guerrero-Rodriguez can be reached at:
Omar Guerrero-Rodriguez, Esq.
Barrera Siqueiros y Torres Landa, S.C.
Montes Urales 470 - Piso 1
Lomas de Chapultepec
11000 Mexico, D.F., Mexico
Tel: +52-55-5-540-8000
Fax: +52-55-5-520-5115
http://www.bstl.com.mx
Headquartered in San Diego, California, LG.Philips Displays USA,
Inc. is an indirect American affiliate of LG.Philips Displays
Holding B.V. The company manufactures cathode ray tubes that are
incorporated into television sets and computer monitors. The
company filed for chapter 11 protection on Mar. 15, 2006 (Bankr.
D. Del. Case No. 06-10245). Adam Hiller, Esq., at Pepper Hamilton
LLP represents the Debtor in its restructuring efforts. When the
Debtor filed for protection from its creditors, it estimated
assets of more than $100 million and debts between $50 million and
$100 million.
LIFESTYLE INNOVATIONS: Dec. 31 Equity Deficit Widens to $6.1 Mil.
-----------------------------------------------------------------
Lifestyle Innovations, Inc., delivered its financial statements
for the second fiscal quarter ended Dec. 31, 2005, to the
Securities and Exchange Commission on Mar. 22, 2006.
The company reported a $74,452 net loss on $1,632 of revenues for
the three months ended Dec. 31, 2005.
At Dec. 31, 2005, the company's balance sheet showed $32,875 in
total assets and $6,172,192 in total liabilities, resulting in a
$6,139,317 stockholders' equity deficit.
The company's Dec. 31 balance sheet also showed strained liquidity
with $3,731 in total current assets available to pay $6,016,336 in
total current liabilities coming due within the next 12 months.
Full-text copies of Lifestyle Innovations' financial statements
are available for free at:
Second Quarter Ended
Dec. 31, 2005 http://ResearchArchives.com/t/s?75a
Year Ended
June 30, 2005 http://ResearchArchives.com/t/s?75b
Going Concern Doubt
Creason & Associates, P.L.L.C., in Tulsa, Oklahoma, raised
substantial doubt about Lifestyle Innovations, Inc.'s ability to
continue as a going concern after auditing the consolidated
financial statements for the year ended June 30, 2005. The
auditor pointed to the company's working capital deficiency;
insufficient cash flows; continued losses; and equity deficiency.
At June 30, 2005, the Company sold a majority of its operations
and only nominal operations remain.
About Lifestyle Innovations, Inc.
Lifestyle Innovations, Inc., provides builders, homeowners and
commercial customers with complete installation and equipment for
structured wiring, security, personal computer networking, audio,
video, home theater, central vacuum and accent lighting. It
operates in the United States. On June 30, 2005, the Group sold
LST of Baltimore Inc. and discontinued its operations.
At Dec. 31, 2005, the company's stockholders' equity deficit
widened to $6,139,317 from a $6,000,336 deficit at June 30, 2005.
LOVESAC CORP: Hires Getzler Henrich as Restructuring Consultant
---------------------------------------------------------------
The Honorable Mary F. Walrath of the U.S. Bankruptcy Court for
the District of Delaware gave The LoveSac Corporation and its
debtor-affiliates permission to hire Getzler Henrich & Associates
LLC as restructuring consultant.
Getzler Henrich has been retained as crisis managers and
management consultants to debtors, creditors, creditors'
committees, investors and others in numerous bankruptcy cases
including:
* Wire Rope Corporation,
* O-Cedar Brands,
* Cross Media,
* Intimate Touch,
* U.S. Gen New England,
* The Coland Group, and
* GT Brands Holdings.
Doyle Judd, LoveSac's CFO, asserted that the Debtors need Getzler
Henrich's assistance to maximize the value of their estates and
achieve their overall chapter 11 goals.
Getzler Henrich will:
(1) provide the Debtors consulting services on various aspects
of their day-to-day business, including, its operations,
financial affairs, and sales and marketing services;
(2) provide the Debtors management services, including, crisis
management and interim management (as required);
(3) assist with the preparation of projections, including
feasibility analysis and schedules;
(4) assess operations and recommend the restructuring or
disposition of operations as appropriate;
(5) monitor the orderly liquidation of terminated operations
(if any);
(6) assist management in the development and negotiation of a
plan of reorganization;
(7) assist with the analysis and reconciliation of claims
against the Debtors and other bankruptcy avoidance
actions;
(8) assist the Debtors in complying with the reporting
requirements of the Bankruptcy Code, Federal Rules of
Bankruptcy Procedure and local bankruptcy rules in
Delaware, including reports, monthly operating statements
and schedules;
(9) consult with all other retained parties, secured lenders,
creditors' committee and other parties-in-interest, with
the approval of the Debtors' designated officer;
(10) participate in Court hearings and, if necessary, provide
expert testimony in connection with any hearing before the
Court; and
(11) perform other tasks as appropriate as may be requested by
the Debtors' management or counsel.
Getzler Henrich received a $50,000 retainer. It's employees
charge these hourly rates:
Principal $335 to $500
Director $295 to $335
Associate $225 to $295
Getzler Henrich's Vice Chairman, William H. Henrich, assured the
Court that the firm is "disinterested" as defined in Section
101(14) of the Bankruptcy Code.
Headquartered in Salt Lake City, Utah, The LoveSac Corporation --
http://www.lovesac.com/-- operates and franchises retail stores
selling beanbags furniture. The LoveSac Corp. and three
affiliates filed for chapter 11 protection on Jan. 30, 2006
(Bankr. D. Del. Case No. 06-10080). Anthony M. Saccullo, Esq.,
and Charlene D. Davis, Esq., at The Bayard Firm and P. Casey
Coston, Esq., at Squire, Sanders & Dempsey LLP represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection from their creditors, they estimated assets and
debts between $10 million to $50 million.
MARINE MANAGEMENT: Case Summary & 20 Largest Unsecured Creditors
----------------------------------------------------------------
Debtor: Marine Management Contractors, Inc.
311 Wall Street
Lafayette, Louisiana 70506
Tel: (337) 984-8088
Bankruptcy Case No.: 06-50194
Type of Business: The Debtor specializes in employment
placement services.
Chapter 11 Petition Date: April 5, 2006
Court: Western District of Louisiana (Lafayette/Opelousas)
Debtor's Counsel: D. Patrick Keating, Esq.
117 West Landry Street, P.O. Box 490
Opelousas, Louisiana 70571
Tel: (337) 594-8200
Fax: (337) 942-2821
Estimated Assets: $500,000 to $1 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 20 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
EMIGAR $436,000
522 South 77 Sunshine Strip
Harlingen, TX 78550
Bollinger Shipyard $217,000
8365 Highway 308 South
Lockport, LA 70374
Conrad Industries $100,000
P.O. Box 790
Morgan City, LA 70381
G&J Land & Marine $100,000
P.O. Box 649
Morgan City, LA 70381
Coastal Food Service $71,258
Petroleum Towers $49,000
Coastal Offshore Cellular Service $30,275
Oats & Hudson $28,595
D&B Boat Rentals $23,895
West Jefferson Medical Center $13,908
Acadiana Center of Orthopedic & $12,000
Occupational Medicine
Quality Plus Insurance $11,800
Strasburger Attorneys $11,528
Coastwide Electric $11,326
World Ship Supply $10,771
ASCO USA $10,750
Cingular Wireless $9,390
Superior Shipyard $8,570
Fuelman $8,523
Williams & Wells $7,154
MARK KALISCH: Case Summary & 6 Largest Unsecured Creditors
----------------------------------------------------------
Debtor: Mark Allen Kalisch
aka Marco Kalisch
101 West 57th Street, 10-I
New York, New York 10019
Bankruptcy Case No.: 06-10706
Type of Business: The Debtor's wife, Mayra Diaz Kalisch,
previously filed for chapter 11 protection on
October 16, 2005 (Bankr. S.D. N.Y., Case No.
05-48660).
Chapter 11 Petition Date: April 5, 2006
Court: Southern District of New York (Manhattan)
Judge: Robert D. Drain
Debtor's Counsel: Gabriel Del Virginia, Esq.
Law Offices of Gabriel Del Virginia
641 Lexington Avenue, 21st Floor
New York, New York 10022
Tel: (212) 371-5478
Fax: (212) 371-0460
Estimated Assets: $1 Million to $10 Million
Estimated Debts: $1 Million to $10 Million
Debtor's 6 Largest Unsecured Creditors:
Entity Claim Amount
------ ------------
Bank of New York $1,020,000
P.O. Box 748
Harrison, NY 10528
Maple Trade Finance Corporation $500,000
c/o Backenroth Frankel & Krinsky
489 Fifth Avenue, 28th Floor
New York, NY 10017
Bank of America $114,700
P.O. Box 660576
Dallas, TX 75266
American Express $36,800
Chase $29,300
Citibank $5,700
MAXTOR CORP: Cutting 900 Jobs in Singapore Plant
------------------------------------------------
Maxtor Corporation (NYSE: MXO) provided an update to its financial
guidance for the first quarter ended April 1, 2006. While
industry conditions during the first quarter were within typical
seasonal expectations, Maxtor faced challenges related to its
pending acquisition by Seagate Technology.
During the first quarter, Maxtor experienced lower than expected
unit volume growth, largely attributable to the pending
acquisition. This lower than expected unit growth, combined with
marginal merger-related market share losses, placed increased
pressure on the Company's already burdened cost structure and
constrained Maxtor's ability to compete, especially on the low-end
of the desktop drive market. In addition, due to the pending
Seagate merger transaction, the Company was unable to realize some
component cost improvements that it anticipated in the quarter,
which also negatively affected the gross profit margin.
Because of the decrease in volume, the Company significantly
reduced its production schedule in the first quarter. Maxtor will
eliminate approximately 900 positions at its Singapore
manufacturing facility over the next several weeks. As a result,
the Company expects to take an approximately $6 million reserve in
the first quarter for severance-related expenses from the
reduction in force.
Unamortized Debt Charges
The Company's first quarter financial results will also reflect a
charge for unamortized debt issuance costs related to its 2.375%
Convertible Senior Notes due 2012.
Under the terms of the Indenture governing the Senior Notes, the
Senior Notes are convertible, at the option of the holders, at any
time during a fiscal quarter if during the last 30 trading days of
the immediately preceding quarter, the Company's common stock
trades at a price in excess of 110% of the conversion price for 20
consecutive trading days. This conversion condition was met when
the closing price of Maxtor's common stock exceeded $7.18 per
share for 20 trading days within the last 30 days of trading ended
April 1, 2006.
As a result, the Company will classify the $326 million of Senior
Notes as short-term debt on its April 1, 2006 balance sheet. In
addition, Maxtor will expense approximately $7.4 million in
unamortized debt issuance costs. The Company believes that the
likelihood that any holder of the Senior Notes will exercise its
conversion right is remote.
With these factors, Maxtor's revised guidance for the first
quarter of 2006:
-- Revenue between $875 and $885 million;
-- Gross profit margin of approximately 2%;
-- a net loss of between $100 million $104 million; and
-- Cash balance in excess of $500 million.
The Company is working through its normal close process and
expects to announce first quarter 2006 financial results on
Wednesday, April 26, 2006. The Company will not hold an investor
conference call relative to its first quarter results. The
Company is also discontinuing its prior practice of providing
guidance on its financial performance for any future quarters,
including the second quarter ending July 1, 2006.
About Maxtor
Maxtor Corporation -- http://www.maxtor.com/-- is one of the
world's leading suppliers of hard disk drives and consumer storage
solutions. The Company has an expansive line of storage products
for desktop computers, storage systems, high-performance Intel-
based servers, and consumer electronics. Maxtor has a reputation
as a proven market leader, built by consistently providing high-
quality products, services and support for its customers.
* * *
As reported in the Troubled Company Reporter on Dec. 23, 2005,
Moody's Investors Service placed the ratings of Maxtor Corporation
under review for a possible upgrade. Moody's review of Maxtor's
ratings for a possible upgrade will consider the stronger credit
profile of Seagate and assess whether Seagate intends to legally
guarantee Maxtor's debt.
Maxtor's ratings placed on review for possible upgrade include:
1) B2 rating to Maxtor's remaining $135 million of the
$230 million 6.8% convertible senior notes, due 2010
2) Caa1 rating to Maxtor Corporation's $60 million
5-3/4% convertible subordinated debentures, due 2012
3) B2 Corporate Family Rating to Maxtor
MERIDIAN AUTOMOTIVE: Ct. OKs First Industrial Sale-Leaseback Deal
-----------------------------------------------------------------
As reported in the Troubled Company Reporter on Mar. 22, 2006,
Meridian Automotive Systems, Inc., and its debtor-affiliates
sought authority from the U.S. Bankruptcy Court for the District
of Delaware to:
(a) consummate the sale of the Facility to First Industrial
Acquisitions for an aggregate purchase price of
$18,263,000; and
(b) simultaneously enter into a lease with First Industrial
Acquisitions, as landlord, for the Facility.
Walbridge Objects
Walbridge Aldinger Company and the Debtors are parties to a
Design-Build Agreement dated Nov. 1, 2005, pursuant to which
the Debtors contracted Walbridge to construct a facility in
Fowlerville, Michigan. Construction services and goods that
Walbridge provided under the Agreement are secured by the
Facility, Jeffrey R. Waxman, Esq., at Cozen O'Connor, in
Wilmington, Delaware, tells the Court.
Walbridge presently holds claims totaling $479,000, against the
Debtors that are secured by the Facility, Mr. Waxman says.
Mr. Waxman relates that the terms of the Sale Agreement of the
Fowlerville Facility do not provide for Walbridge's Claims to
attach to the net proceeds of that transaction. Section 363(f)
of the Bankruptcy Code would not permit the Court to authorize a
sale of the Fowlerville Facility, free and clear of Walbridge's
lien, Mr. Waxman contends.
Walbridge asks the Court to:
a. condition its approval of the Sale Agreement on Walbridge's
Claims attaching to the net proceeds of the Transaction in
the order of priority provided for in the Final Financing
Order; and
b. direct the Debtors to remit payment to Walbridge without
further delay.
* * *
Walbridge subsequently withdrew its objection after its claims
and lien on the Debtors' Fowlerville, Michigan facility have been
satisfied.
Judge Walrath approves the Sale Agreement and the Lease and the
transaction contemplated in all respects. All objections that
have not been withdrawn, waived or settled are overruled on the
merits, with prejudice.
The Court authorizes the Debtors to sell the Fowlerville Facility
to First Industrial Acquisitions, Inc., free and clear of all
liens, claims, and encumbrance, with all the liens, claims,
and encumbrances to attach to the net proceeds of the Transaction
in order of their priority, with the same validity, force, and
effect, which they now have as against the Property, subject to
any claims and defenses the Debtors may possess with respect to
the Property.
The Court forever bars, estops, and permanently enjoins all
persons and entities holding liens, claims, or encumbrances
against or in the Debtors or the Property, from asserting those
liens and claims against the Debtors, Industrial Acquisitions or
the Property.
Judge Walrath clarifies that the Order or the Sale Agreement does
not nullify or enjoin the enforcement of any duties to a
governmental unit under police and regulatory statutes or
regulations that any entity would be subject to as the owner or
operator of the Property.
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).
MESABA AVIATION: Final DIP Hearing Adjourned to April 25
--------------------------------------------------------
The United States Bankruptcy Court for the District of Minnesota
rescheduled the final hearing of Mesaba Aviation, Inc.'s
postpetition financing agreement with MAIR Holdings to Apr. 25,
2006, at 1:30 p.m. Responses must be filed and delivered not
later than April 20, 2006.
As reported in the Troubled Company Reporter on Oct. 18, 2005, the
DIP Credit Facility consists of:
(1) a $15,000,000 Tranche A revolving credit facility
(with a $6,000,000 sublimit to back standby letters
of credit); and
(2) a $20,000,000 Tranche B revolving facility.
An outline of the terms and conditions for the parties' DIP
Credit Facility is available at no charge at:
http://ResearchArchives.com/t/s?5f0
Objections
(A) BAE Systems
British Aerospace Holdings, Inc., and its affiliates, including
BAE Systems Regional Aircraft, Inc., and the Debtor are parties
to numerous agreements pursuant to which the BAE Systems
companies has provided, or provides, the Debtor with goods and
services in connection with the maintenance of the Debtor's
aircraft.
Patricia St. Peter, Esq., at Zelle, Hofmann, Voelbel, Mason &
Gette LLP, in Minneapolis, Minnesota, relates that under the BAE
Agreements, BAE Systems maintains certain inventory, equipment
and other property in various locations on the Debtor's premises
or in the Debtor's possession and control. Those property is BAE
System's property and not the Debtor's property. Thus, BAE
System's property cannot be used to secure the Debtor's
obligations under the DIP facility.
Accordingly, BAE Systems objects to the Debtor's proposed DIP
Order to the extent that it purports to confer in the DIP Lender
any interest in the BAE Property.
(B) Wayne County Airport Authority
Wayne County Airport Authority is the owner and operator of the
Detroit Metropolitan Wayne County Airport, one of the many
airport facilities where the Debtor operates as a regional air
carrier providing scheduled passenger service.
The Debtors and the Authority are parties to two lease
agreements:
1. Special Facilities Lease dated August 1, 1990, under which
the Debtor leases an aircraft maintenance hangar and ramp;
and
2. Ground Lease dated May 18, 1990, under which the Debtor
leases the land where the Hangar and the Ramp are
constructed.
The Leases provide that the Debtor may encumber as collateral or
security its leasehold estate and fixed improvements on the
premises "by mortgage or conditional assignment", but only:
-- the Authority's prior written approval; and
-- if the indebtedness secured is due before the expiration of
the primary term of the Facilities Lease.
The Debtor purports to include the Leases and its rights to those
Leases in the collateral being pledged to MAIR Holdings for the
DIP Financing Agreement.
The Authority objects to the Debtor's proposed encumbrance of its
interests under the Leases.
David B. Galle, Esq., at Oppenheimer Wolff & Donnelly LLP, in
Minneapolis, Minnesota, asserts that the Ground Lease cannot, by
its terms, be encumbered. Moreover, the DIP Financing Agreement
violates the Ground Lease by including the Debtor's interests
under it in the pledge of collateral.
Mesaba Aviation, Inc., d/b/a Mesaba Airlines --
http://www.mesaba.com/-- operates as a Northwest Airlink
affiliate under code-sharing agreements with Northwest Airlines.
The Company filed for chapter 11 protection on Oct. 13, 2005
(Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at
Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in
its restructuring efforts. Craig D. Hansen, Esq., at
Squire Sanders & Dempsey, L.L.P., represents the Official
Committee of Unsecured Creditors. When the Debtor filed for
protection from its creditors, it listed total assets of
$108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy
News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-
7000).
METROMEDIA INTERNATIONAL: Delays Filing of 2005 Annual Report
-------------------------------------------------------------
Metromedia International Group, Inc. (PINK SHEETS: MTRM) (PINK
SHEETS: MTRMP) is unable to timely file its Annual Report on
Form 10-K for the fiscal year ended Dec. 31, 2005.
The prerequisite for filing the company's 2005 Form 10-K are:
-- the 2004 Form 10-K;
-- the 2005 Quarterly Report on Form 10-Q for the fiscal
quarters ended March 31, June 30, and Sept. 30, 2005, and
-- the Company's completion of its work effort for compliance
with Section 404, "Management Assessment of Internal
Controls" of the Sarbanes-Oxley Act of 2002 for corporate
headquarters.
At present, the company cannot say when it will file these
reports:
-- the 2004 Form 10-K;
-- the 2005 Quarterly Reports; and
-- the 2005 Form 10-K.
Headquartered in Charlotte, North Carolina, Metromedia
International Group -- http://www.metromedia-group.com/-- through
its subsidiary, Metromedia International Telecommunications, owns
interests in telecom and cable TV operations in Russia, Georgia,
and elsewhere in Eastern Europe.
Since the first quarter of 2003, the Company has focused its
principal attentions on the continued development of its core
telephony businesses, and has substantially completed a program of
gradual divestiture of its non-core cable television and radio
broadcast businesses. The Company's core businesses includes
Magticom, Ltd., the leading mobile telephony operator in Tbilisi,
Georgia, and Telecom Georgia, a well-positioned Georgian long
distance telephony operator.
* * *
Moody's Investors Service has placed Metromedia's subordinated
debt rating at B3 and junior subordinated debt rating at B2.
MICROVISION INC: PwC Expresses Going Concern Doubt Opinion
----------------------------------------------------------
PricewaterhouseCoopers LLP in Seattle, Washington, raised
substantial doubt about Microvision, Inc.'s ability to continue as
a going concern after auditing the company's consolidated
financial statements and its internal control over financial
reporting as of Dec. 31, 2005. The auditor pointed to the
company's losses since inception, accumulated deficit, and need
for additional financial resources to fund its operations at least
through Dec. 31, 2006.
The company reported a $30,284,000 net loss on $14,746,000 of
total revenues for the year ended Dec. 31, 2005.
At Dec. 31, 2005, the company's balance sheet showed $23,363,000
in total assets and $22,706,000 in total liabilities, resulting in
a $3,509,000 stockholders' deficit.
The company's Dec. 31 balance sheet also showed strained liquidity
with $13,571,000 in total current assets available to pay
$18,294,000 in total current liabilities coming due within the
next 12 months.
2005 Highlights
The company:
-- ended a two year annual revenue slide and delivered
$14.7 million in revenue for 2005 up 29% over 2004;
-- developed new sales channels and solid pipeline for Flic
product in the second half of the year, which resulted in
record sales numbers in the fourth quarter;
-- had strong commercial contract revenue performance fueled by
Ethicon Endo Surgery contract;
-- sold 165 Nomad systems to the military in a large volume
sale;
-- delivered on key government programs;
-- made demonstrable progress toward accelerating the
development of the automotive head-up display;
-- developed and successfully demonstrated the first working
demonstration prototype of the personal projection display
(TM) in the fourth quarter of last year; and
-- defined new business roadmap, technology production strategy
and organizational blueprint to commence company turnaround
in 2006.
"We are pleased with the Company's overall top line performance
for the full year as we reversed a two-year trend of declining
annual revenues," Alexander Tokman, Microvision's President and
CEO, commented.
"However, the types of contract and sales activities pursued in
2005 did not fully establish a revenue ramp consistent with
sustained long term growth."
"Consequently, after we defined the new business and
organizational strategy late last year, we have put in place, over
the last few months, initiatives and measures to build a
foundation for longer term sustained growth."
"These initiatives support key elements of our turnaround strategy
and 2006 operating plan announced last month. We are in a
rebuilding mode, and we're enthusiastic about the future and
confident in our ability to deliver value to our customers and
shareholders."
2006 Operating Plan Implementation
The highlights of the company's 2006 Plan are:
-- Flic Bar Code Scanner. Building a solid sales pipeline for
the year. Completing phase 1 product quality improvements
targeted on improving reliability and reducing the cost of
quality on Flic scanner;
-- Nomad. Conducting an in depth evaluation of the potential
for Nomad in its current configuration in four major
application areas: inspection, situational awareness,
troubleshooting and diagnostics for primary markets that
include transportation, industrial and healthcare;
-- Funded product quality improvement programs to reduce cost
of quality and implemented pricing and discounting rigor;
-- Integrated Photonics Module (IPM). Defining the company's
modular embedded light scanning engine architecture to
enable high resolution, high-volume display products for a
variety of consumer, industrial, automotive and military
applications;
-- PicoP and Automotive Head-Up Display. Advancing discussions
with potential development and distribution partners for HUD
and personal projection display products, collecting
requirements and defining product specifications;
-- Completed the realignment and restructuring of the Company.
Reduced the overall workforce by approximately 10%; expected
reduction in overall SG&A costs by approximately 25% in 2006
versus 2005. Reduced the number of executive positions by
30% through reduction and consolidation;
-- New organizational leadership. Hired Ian Brown who will be
driving synergies across the company's new sales and
marketing organization, strengthening the company's customer
focus and positioning the company for future growth into new
market segments; and
-- Board changes. Together with the Board, initiated a process
of better aligning the skills and experience of the
directors to the business and operating objectives of the
company. The first step was the addition of Marc Onetto.
Mr. Onetto brings extensive experience, knowledge and
leadership in establishing and managing global supply chain
operations directly supports our business objectives for
2006 and beyond in proliferating high volume consumer and
automotive products.
"Obviously, we would have preferred to not have a qualified audit
opinion on our 2005 financial results," Tokman said. "However, it
does not represent any change in the viability of our business.
"We expect to raise additional funds over the coming months. We
have made the choice not to pursue a complicated short-term
financing at this point simply for purposes of avoiding a
qualified opinion; we have chosen instead to pursue a financing
strategy that we believe better aligns our capital structure to
our new business fundamentals and outlook. We have recently
engaged an investment banker to assist us with this strategy."
"We are rebuilding the company with a new identity and new
strategy. I am very excited about the pace of change and the path
that we are on to grow the company."
Lumera Corporation
Lumera Corporation was a subsidiary of Microvision. In July 2004,
Lumera completed an initial public offering of its common stock.
As a result of the change in ownership, Lumera ceased to be
consolidated in Microvision's financial statements.
Microvision uses the equity method of investment in recording its
interest in Lumera. Microvision has a 28% equity interest in
Lumera Corporation.
Microvision's financial statements are amended to include
reference to the Lumera Corporation financial statements.
Full-text copies of Microvision, Inc.'s Annual Reports are
available for free at:
Annual Report http://ResearchArchives.com/t/s?768
Amended Annual Report http://ResearchArchives.com/t/s?769
About Microvision, Inc.
Headquartered in Redmond, Washington, Microvision, Inc. --
http://www.microvision.com/-- develops high-resolution displays
and imaging systems based on proprietary silicon micro-mirror
technology. The company's technology enables solutions and
products in a broad range of industrial, consumer, military, and
medical applications.
At Dec. 31, 2005, the company's balance sheet showed a $3,509,000
stockholders' deficit compared to $7,190,000 of positive
stockholders' equity at Dec. 31, 2004.
MIRANT CORPORATION: Incurs $1.3 Billion Net Loss in 2005
--------------------------------------------------------
Mirant Corporation (NYSE: MIR) reported a $1.3 billion net loss
for the year ended December 31, 2005. This loss reflects the
recognition in 2005 of $1.4 billion of interest expense on
liabilities subject to compromise for the period from the
company's bankruptcy filing on July 14, 2003 through December 31,
2005. The loss also includes other significant impacts of the
company's Plan of Reorganization, which was confirmed by the U.S.
Bankruptcy Court on December 9, 2005. Mirant emerged from
bankruptcy on January 3, 2006.
Adjusted EBITDA for the period was $779 million. Adjusted EBITDA
excludes non-recurring charges, such as bankruptcy restructuring
charges and unrealized gains and losses associated with the
company's hedging activities.
Cash from operations for 2005 was $33 million, reflecting strong
results from business operations. These results were offset by
significant uses of cash for collateral postings of $305 million
and payments of $171 million for professional fees and other
expenses related to bankruptcy.
As of March 3, 2006, the company's total liquidity (defined as
unrestricted cash and cash equivalents plus credit facility
availability) was approximately $2.1 billion, an increase of
$597 million since December 31, 2005. The company's total debt
balance is currently $4.2 billion, net of term loan cash
collateral account of $200 million.
"Mirant emerged from bankruptcy with one of the strongest balance
sheets and liquidity positions in its sector," said Edward R.
Muller, Mirant's chairman and chief executive officer. "The
company's strong financial position, strategic assets in certain
markets and its execution capabilities, coupled with the recently
completed strategic hedge transaction, position us well."
A full-text copy of Mirant Corp. and its affiliates' Annual
Report on Form 10-K filed with the Securities and Exchange
Commission is available for free at:
http://ResearchArchives.com/t/s?699
Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- is a competitive energy company that
produces and sells electricity in North America, the Caribbean,
and the Philippines. Mirant owns or leases more than 18,000
megawatts of electric generating capacity globally. Mirant
Corporation filed for chapter 11 protection on July 14, 2003
(Bankr. N.D. Tex. 03-46590), and emerged under the terms of a
confirmed Second Amended Plan on January 3, 2006. Thomas E.
Lauria, Esq., at White & Case LLP, represented the Debtors in
their successful restructuring. When the Debtors filed for
protection from their creditors, they listed $20,574,000,000 in
assets and $11,401,000,000 in debts. (Mirant Bankruptcy News,
Issue No. 94; Bankruptcy Creditors' Service, Inc., 215/945-7000)
* * *
As reported in the Troubled Company Reporter on Dec. 8, 2005,
Standard & Poor's Ratings Services assigned its 'B+' corporate
credit rating to power generator and developer Mirant Corp. and
said the outlook is stable. That rating reflected the credit
profile of Mirant, based on the structure the company expects to
have on emergence from bankruptcy at or around year-end 2005, S&P
said.
MMCA AUTO: Moody's Upgrades Ba3 Class B Securities Rating to Baa3
-----------------------------------------------------------------
Moody's Investors Service upgraded 68 securities from 44 auto loan
backed securitizations and confirmed one tranche from one auto
loan backed securitization. The rating action reflects a
strengthening in the credit profile of the securities, based upon
the actual performance of the transactions and the build up of
credit enhancement relative to expected future losses in the
underlying receivables pools.
The build up of credit enhancement as a percent of the current
outstanding principal balance of the pools has been the result of
different factors such as the inclusion of nondeclining
enhancements as well as the initial trapping of excess spread
within transactions. In addition to the higher credit enhancement
levels, some of the auto loan pools are performing in line with,
or slightly better than, Moody's initial expectations.
The current upgrades are a product of Moody's ongoing monitoring
process of the sector. In the auto loan sector, where the loss
curve is reasonably predictable, deals generally have 12 months of
performance data before securities are considered for upgrade. In
addition, deals with a pool factor under approximately 15% are
excluded from the review process.
Upgrades:
* AmeriCredit Automobile Receivables Trust 2004-1; Class B,
Upgraded from Aa2 to Aa1
* AmeriCredit Automobile Receivables Trust 2004-1; Class C,
Upgraded from A1 to Aa2
* AmeriCredit Automobile Receivables Trust 2004-1; Class D,
Upgraded from Baa2 to A2
* AmeriCredit Canada Automobile Receivables Trust, Series
C2002-1, Class B, Upgraded from A1 to Aa1
* Bank One Auto Securitization Trust 2003-1; Class B, Upgraded
from Aa3 to Aa1
* BMW Vehicle Owner Trust 2003-A; Class B, Upgraded from A1
to Aa2
* Capital Auto Receivables Asset Trust 2003-2, Class B,
Upgraded from Aa3 to Aa2
* Capital Auto Receivables Asset Trust 2004-2, Class B,
Upgraded from A2 to A1
* Capital Auto Receivables Asset Trust 2004-2, Class C,
Upgraded from Baa3 to Baa2
* Capital One Prime Auto Receivables Trust 2004-2, Class B,
Upgraded from A3 to A1
* Capital One Prime Auto Receivables Trust 2004-3, Class B,
Upgraded from A3 to A2
* CarMax Auto Owner Trust 2003-1, Class C, Upgraded from
A3 to A2
* CarMax Auto Owner Trust 2004-1, Class C, Upgraded from
A1 to Aa3
* CarMax Auto Owner Trust 2004-1, Class D, Upgraded from
Baa3 to Baa2
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-1, Upgraded from A1 to Aa3
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-2, Upgraded from Baa3 to Baa2
* Chase Manhattan Auto Owner Trust 2003-A, Certificates,
Upgraded from Aa3 to Aa1
* Chase Manhattan Auto Owner Trust 2003-C, Certificates,
Upgraded from A1 to Aa3
* Ford Credit Auto Owner Trust 2003-B, Class C, Upgraded
from Aa3 to Aa1
* Ford Credit Auto Owner Trust 2004-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-2, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class C, Upgraded
from Baa2 to A2
* Ford Credit Auto Owner Trust 2005-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class C, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class C, Upgraded
from Aa3 to Aa2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class D, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class E, Upgraded
from Ba3 to Baa3
* GS Auto Loan Trust 2003-1, Class D, Upgraded from Ba1
to Baa3
* GS Auto Loan Trust 2004-1, Class D, Upgraded from Ba3 to Ba1
* MMCA Auto Owner Trust 2002-2, Class A-4, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-2, Class B, Upgraded from Ba3
to Baa3
* MMCA Auto Owner Trust 2002-3, Class B, Upgraded from A1
to Aa1
* MMCA Auto Owner Trust 2002-3, Class C, Upgraded from Baa1
to A1
* MMCA Auto Owner Trust 2002-4, Class B, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-4, Class C, Upgraded from A2
to Aa2
* MMCA Auto Owner Trust 2002-5, Class B, Upgraded from Aa2
to Aa1
* MMCA Auto Owner Trust 2002-5, Class C, Upgraded from A2
to Aa2
* Regions Auto Receivables Trust 2002-1, Class B, Upgraded
from Aa3 to Aa1
* Regions Auto Receivables Trust 2002-1, Class C, Upgraded
from Baa2 to A2
* Regions Auto Receivables Trust 2003-1, Class B, Upgraded
from A1 to Aa3
* Regions Auto Receivables Trust 2003-1, Class C, Upgraded
from Baa2 to A3
* USAA Auto Owner Trust 2003-1, Class B, Upgraded from Aa3
to Aa2
* USAA Auto Owner Trust 2004-1, Class B, Upgraded from A3
to A2
* USAA Auto Owner Trust 2004-2, Class B, Upgraded from Baa3
to Baa1
* USAA Auto Owner Trust 2004-3, Class B, Upgraded from Baa3
to Baa2
* Wachovia Auto Owner Trust 2004-A, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class C, Upgraded from
Baa3 to A3
* WFS Financial 2003-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2003-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-1 Owner Trust, Class C, Upgraded from Aa3
to Aa2
* WFS Financial 2004-2 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-2 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-2 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-3 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-3 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-3 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-4 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2005-1 Owner Trust, Class C, Upgraded from A2
to A1
* WFS Financial 2005-1 Owner Trust, Class D, Upgraded from
Baa2 to Baa1
* Whole Auto Loan Trust 2003-1, Class D, Upgraded from Baa3
to A3
* Whole Auto Loan Trust 2004-1, Class C, Upgraded from Baa1
to A3
* Whole Auto Loan Trust 2004-1, Class D, Upgraded from Ba3
to Baa3
* World Omni Auto Receivables Trust 2003-A, Class B, Upgraded
from A2 to Aa2
Confirm:
* Regions Auto Receivables Trust 2003-2, Class C, confirm
rating at Ba3
MORTON HOLDINGS: Howard Cohen Has Until May 3 to Object to Claims
-----------------------------------------------------------------
Howard S. Cohen, the Liquidating Trustee of the Liquidating Trust
of Morton Holdings, LLC, and its debtor-affiliates formed under
their confirmed First Amended Plan of Liquidation sought and
obtained an extension from the Honorable Peter J. Walsh of the
U.S. Bankruptcy Court for the District of Delaware.
The Liquidating Trustee has until May 3, 2006, to object to
claims.
The Liquidating Trustee has completed an analysis of the Debtors'
pertinent business records and proofs of claim filed by creditors.
The Liquidating Trustee already filed six omnibus objections to
claims. He wanted to make sure that no further objections are
warranted.
The Liquidating Trustee is analyzing claims made by creditors
asserting tax liens and mechanics liens. Subject to the terms of
the settlement with GECC, the confirmed Plan, and the confirmation
order, GECC may be responsible for 95% of any valid third party
liens against assets sold to Wilbert, Inc.
Some creditors asserted liens by filing a proof of claim. The
Liquidating Trustee has been conducting a comprehensive analysis
of these liens to determine whether the estate has any substantive
obligation and whether he needs to file appropriate motions with
the Bankruptcy Court for the determination of those liens as Third
Party Liens.
Morton Holdings, LLC and its debtor-affiliates were in the
contract manufacturing business, specifically in connection with
highly-engineered plastic components and sub-assemblies for
industrial, agricultural and recreational vehicle original
equipment manufacturers. The Company filed for chapter 11
protection on Nov. 1, 2002 (Bankr. Del. Case No. 02-13224).
Jeremy W. Ryan, Esq., and Norman L. Pernick, Esq., at Saul Ewing
LLP represents the Debtors. When the Debtors filed for protection
from their creditors, they listed estimated debts and assets of
over $10 million. The Bankruptcy Court confirmed the Debtors'
First Amended Plan of Liquidation on June 23, 2003.
NELLSON NUTRACEUTICAL: Panel Wants to Hire Reed Smith as Counsel
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in Nellson
Nutraceutical, Inc., and its debtor-affiliates' chapter 11 cases,
asks the U.S. Bankruptcy Court for the District of Delaware for
permission to employ Reed Smith LLP as its counsel.
Reed Smith will:
a) consult with the Trustee or Debtors concerning the
administration of these cases;
b) investigate the acts, conduct, assets, liabilities, and
financial condition of the Debtors, the operation of the
Debtors' business and the desirability or the continuance of
businesses, and any other matter relevant to the cases or to
the formulation of one or more plans;
c) evaluate with the Debtors any offers to purchase the assets
or the Debtors' businesses and participate in the sale
process;
d) participate in the formulation of one or more plans, advise
those represented by committee of any committee's
determinations as to any plan formulated, and collect and
file with the Court acceptances or rejections of any plan;
e) request the appointment of one or more trustees or examiners
under the Section 1104 of the Bankruptcy Code;
f) assert claims and causes of action on behalf of the
Committee and the Debtors, if the Debtors fail to assert any
claims; and
g) perform other services as are in interest of the Debtors'
creditors.
Kurt F. Gwynne, Esq., a Reed Smith partner, discloses the Firm's
professionals bill:
Professional Designation Hourly Rate
------------ ----------- -----------
Claudia Z. Springer Partner $535
Kurt F. Gwynne Partner $490
Matthew Tashman Partner $470
Kimberly E.C. Lawson Associate $360
Thomas J. Francella, Jr. Associate $300
J. Cory Falgowski Associate $250
John B. Lord Paralegal $200
Lisa Lankford Paralegal $105
Mr. Gwynne assures the Court that the Firm is "disinterested" as
that term is defined is Section 101(14) of the Bankruptcy Code
About Nellson Nutraceutical
Headquartered in Irwindale, California, Nellson Nutraceutical,
Inc., formulate, make and sell bars and powders for the nutrition
supplement industry. The Debtors filed for chapter 11 protection
on Jan. 28, 2006 (Bankr. D. Del. Case No. 06-10072). Laura Davis
Jones, Esq., Rachel Lowy Werkheiser, Esq., Richard M. Pachulski,
Esq., Brad R. Godshall, Esq., and Maxim B. Litvak, Esq., at
Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C. represent
the Debtors in their restructuring efforts. Lawyers at Young,
Conaway, Stargatt & Taylor, LLP, represent an informal committee
of which General Electric Capital Corporation and Barclays Bank
PLC are members. When the Debtors filed for protection from their
creditors, they estimated more than $100 million in assets and
debts.
NOBEX CORPORATION: Panel Wants Court to Void Biocon Agreements
--------------------------------------------------------------
The Official Committee of Unsecured Creditors appointed in Nobex
Corporation's bankruptcy case asks the Honorable Christopher S.
Sontchi of the U.S. Bankruptcy Court for the District of Delaware
for permission to declare:
-- Biocon Limited as an insider of the Debtor;
-- that the First Amendment to Oral Insulin Joint Product
Development Agreement Transfers constitute fraudulent
transfers, which should be avoided under Section 548 of the
Bankruptcy Code;
-- that the Second Amendment to Oral Insulin JPDA Transfers
constitute fraudulent transfers, which should be avoided
under Section 548 of the Bankruptcy Code;
-- that the Oral Brain Natriuretic Peptide JPDA Transfers
constitute fraudulent transfers, which should be avoided
under Section 548 of the Bankruptcy Code;
-- that Section 365(n) of the Bankruptcy Code and its
protections are not available to Biocon in connection with
its asserted license rights under the Biocon Documents;
-- that the conditional commercialization license rights
granted to Biocon are subject to rejection under Section
365(a) of the Bankruptcy Code, and that law does not protect
or apply to those license rights in that context;
-- that upon the rejection of the Biocon Documents, Biocon's
license rights in the Foreign IP are terminated;
-- that the Biocon Documents evidence a contract to extend debt
financing, which do not create licensure interests in the
Debtor's intellectual property;
-- that the Biocon funding contributions are properly
characterized as equity contributions or are subordinate to
unsecured claims.
Oral Insulin Joint Product Development Agreement
On Oct. 20, 2004, Nobex and Biocon entered into the Oral Insulin
Joint Product Development Agreement, a collaboration for the
development and commercialization of an Oral Insulin product under
a proof of concept program in India.
Under the Agreement, Biocon and Nobex may mutually agree to
commercialize the Oral Insulin product and technology through
manufacture and sale. Neither Biocon nor Nobex have the right to
do so independently.
Also on that date, Nobex and Biocon entered into the Nobex
Corporation Investment Agreement. Biocon agreed to provide Nobex:
-- $1 million for 2 million shares of Nobex' common stock, and
-- $2 million, on the occurrences of certain milestones, for
$2 million of convertible notes.
The Oral Insulin Milestone Convertible Notes are subordinate to
the payment obligations of Nobex to Elan Pharma International
Limited.
Oral Insulin JPDA First Amendment
Biocon requested that Nobex enter into the Amendment to the Oral
Insulin JPDA Agreement and on April 4, 2005, Nobex signed the
Amendment. The amendment:
-- removed the required mutuality regarding third party
licensing and other commercialization arrangement;
-- allowed Biocon to bind Nobex without its consent;
-- provided that in the event of change in control of Nobex,
Biocon has the ability to seize exclusive control of the
Proof Of Concept Program and the decision to enter into
Commercial Development Program.
JPDA Second Amendment & License Agreement
Biocon requested that Nobex enter into the Second Amendment to the
Oral Insulin JPDA Agreement, and the License Agreement. Although
the Second Amendment and the License Agreement were fully executed
until Nov. 11, 2005, the documents were dated Oct. 1, 2005.
The second amendment:
-- removed the existing grants of licenses to Biocon. Those
licenses were being superseded by the License Agreement;
-- provided Biocon with greater control over the Commercial
Development Program by indicating that the chairperson of
the CDP committee be one of Biocon's employee; and
-- revised a mutuality provision. Biocon may finalize third
party licenses and can bind Nobex with those agreements
without the Debtor's approval.
Under the License Agreement, Nobex granted Biocon an exclusive
license to the Licensed Technology -- the Debtor's most valuable
assets. Biocon only paid $300,000 to the Debtor. That payment
was only enough to fund two weeks of the Debtor's operations.
The License Agreement restricted Nobex from using its own
technology in the field of Oral Insulin development and
commercialization other than to complete the milestone under the
Oral Insulin JPDA.
Basal Insulin Addendum
On April 4, 2005, Nobex and Biocon entered into the Basal Insulin
Addendum. This expands the Oral Insulin JPDA to include the
development and commercialization of a second product -- Basal
Insulin Product through a Phase II Proof of Concept in India.
Unlike the Oral Insulin JPDA, Biocon is not require to invest any
upfront money for equity or any milestone payments for convertible
notes. Biocon is only required to pay actual expenses and pre-
approved internal expenses.
Oral BNP JPDA
The Committe said that by April 2005, Biocon insisted that Nobex
enter into the Oral BNP JPDA, implicitly threatening the
continuation of the Oral Insulin partnership if Oral BNP was not
developed jointly. So, on April 25, 2005, Nobex signed the
agreement.
Under the Oral BNP Agreement, Biocon invested $3.15 million for
$1.3 million convertible notes, and a series of warrants to
purchase up to 4.4 million shares of common stock.
About Biocon Limited
Headquartered in Bangalore, India, Biocon Limited --
http://www.biocon.com/-- is an integrated biotechnology
enterprise focused on the development of biopharmaceuticals.
About Nobex Corporation
Headquartered in Durham, North Carolina, Nobex Corporation --
http://www.nobexcorp.com/-- is a drug delivery company developing
modified drug molecules to improve medications for chronic
diseases. The Company filed for chapter 11 protection on
Dec. 1, 2005 (Bankr. D. Del. 05-20050). Ben Hawfield, Esq., at
Moore & Van Allen PLLC, represents Nobex. J. Scott Victor at SSG
Capital Advisors, L.P., is providing Nobex with investment banking
services. Michael B. Schaedle, Esq., and David W. Carickhoff,
Esq., at Blank Rome LLP, represent the Official Committee of
Unsecured Creditors in Nobex's chapter 11 case, and John Bambach,
Jr., and Ted Gavin at NachmanHaysBrownstein, Inc., provide the
Committee with financial advisory services. When the Debtor filed
for protection from its creditors, it estimated between $1 million
to $10 million in assets and $10 million to $50 million in
liabilities.
NTL INVESTMENT: Virgin Deal Cues DBRS to Confirm BB and B Ratings
-----------------------------------------------------------------
Dominion Bond Rating Service confirmed the ratings of NTL
Investment Holdings Ltd., and NTL Cable PLC with Stable trends,
following the announcement that NTL has reached an agreement to
acquire Virgin Mobile Holdings (UK) plc.
Complete rating action:
* NTL Investment Holdings Ltd. Secured Bank Facility
-- Confirmed BB (low)
* NTL Investment Holdings Ltd. Issuer Rating
-- Confirmed B (high)
* NTL Cable PLC Senior Unsecured Notes
-- Confirmed B
This follows DBRS's press release on Dec. 5, 2005, and the Rating
Report on Mar. 27, 2006, both of which commented on the potential
transaction based on the preliminary discussions between NTL and
Virgin. The announcement is largely as expected and hence has
already taken into consideration to the existing ratings.
The notable differences between the announcement and previous
expectations are that the value of the transaction has increased
to GBP962 million and the assumption of debt from Virgin.
However, the assumption of debt does not materially impact the
financial profile of NTL and therefore does not affect the
ratings.
Under the terms of the agreement, NTL will purchase Virgin for
GBP962 million in a combination of cash and shares and the
assumption of debt. This equates to a total enterprise value of
GBP1,155, which represents 11.5 times EBITDA, which DBRS believes
is fair.
NTL is offering Virgin shareholders cash, shares, or a combination
of cash and shares. Under the terms of the agreement, the maximum
cash component is not expected to exceed GBP414 million. The cash
component is expected to be financed with cash on hand and debt.
As a result, the acquisition could increase gross debt up to
GBP607 million, hence weakening the balance sheet. However, this
is mitigated by the significant equity component.
DBRS notes that synergies are expected to be modest in the short-
term as Virgin will be run on a relatively stand-alone basis until
the integration of NTL and Telewest is largely complete. However,
DBRS also notes that the acquisition will position NTL as the only
"quadruple play" operator in the United Kingdom, able to provide
video, telephony, broadband, and mobile. This should help
increase revenue through cross-selling efforts and reduce customer
churn. Furthermore, as part of the transaction, NTL will enter
into a 30-year exclusive license to use the "Virgin" brand. The
Virgin brand is particularly strong in the U.K. and would enhance
NTL's appeal to customers. Hence, the acquisition is expected to
be accretive to cash flow and earnings.
The acquisition remains subject to shareholder consent, regulatory
approvals, and other customary closing conditions.
NUTRAQUEST INC: Wants Until Oct. 9 to Remove Civil Actions
----------------------------------------------------------
Nutraquest, Inc., asks the U.S. Bankruptcy Court for the District
of New Jersey to further extend until October 9, 2006, the period
within which it can remove prepetition civil actions pending in
various state and federal courts to the District of New Jersey for
continued litigation and resolution.
The Debtor tells the Court that the extension is necessary to
provide the Debtor more time to preserve its statutory removal
rights and will assure that the it does not forfeit these valuable
rights under 28 U.S.C. Sec. 1452.
Headquartered in Manasquan, New Jersey, Nutraquest, Inc., is the
marketer of the ephedra-based weight loss supplement, Xenadrine
RFA-1. The Company filed for chapter 11 protection on October 16,
2003 (Bankr. N.J. Case No. 03-44147). Andrea Dobin, Esq., and
Simon Kimmelman, Esq., at Sterns & Weinroth, P.C. represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed estimated assets of
$10 million to $50 million and estimated debts of $50 million to
$100 million.
NVIDIA CORP: S&P Puts B+ Corporate Credit Rating on Positive Watch
------------------------------------------------------------------
Standard & Poor's Ratings Services placed its 'B+' corporate
credit rating on Santa Clara, California-based Nvidia Corp. on
CreditWatch with positive implications, reflecting continued
strong operating performance coupled with strong liquidity.
"Nvidia's revenues for the quarter ended Jan. 29, 2006, improved
12% from the year-earlier period, and improved 18% for fiscal 2006
compared with fiscal 2005," said Standard & Poor's credit analyst
Lucy Patricola.
Solid sales growth has been driven by market acceptance of its
leading-edge graphics products, and good success in integrating
its chips with Intel and with original equipment manufacturers in
the computing market. EBITDA margins climbed to 22% this quarter,
despite the absence of high-margin consumer product business,
because of good product acceptance in its integration efforts,
allowing for solid pricing.
Strong operating results are coupled with good liquidity. Cash
and cash equivalents were $950 million at Jan. 29, 2006, and
working-capital increases and capital spending have been
adequately funded from internally generated cash flow.
Standard & Poor's will review prospects for continued strong
operating performance, in light of competitive conditions in its
niche market of graphics processing, and financial policies to
accommodate growth and shareholder value in order to determine the
final outcome of the rating.
OCA INC: Has Until October 10 to Make Lease-Related Decisions
-------------------------------------------------------------
The U.S. Bankruptcy Court for the Eastern District of Louisiana
gave OCA, Inc., and its debtor-affiliates until Oct. 10, 2006, to
decide whether to assume, assume and assign, or reject unexpired
nonresidential real property leases.
The Debtors asked the Court to extend their statutory 120-day
lease decision period for an additional 90 days citing:
a) the leases are important estate assets;
b) their chapter 11 cases are large and complex;
c) they are continuing to pay rent on the leases; and
d) the 120-day period will not provide them with sufficient
time to appraise each lease's value to a plan of
reorganization.
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.
OMEGA HEALTHCARE: Closes New $200 Million Credit Facility
---------------------------------------------------------
Omega Healthcare Investors, Inc. (NYSE:OHI) closed on a new
$200 million revolving senior secured credit facility on
March 31, 2006.
The New Credit Facility is being provided by:
* Bank of America, N.A., as Administrative Agent,
* Deutsche Bank Trust Company Americas,
* UBS Securities LLC,
* General Electric Capital Corporation,
* LaSalle Bank N.A., and
* Citicorp North America, Inc.
Proceeds of the Credit Facility will be used for acquisitions and
general corporate purposes.
The New Credit Facility replaces Omega's previous $200 million
senior secured credit facility, which has been terminated. Omega
will realize a 125 basis point savings on LIBOR-based loans under
the New Credit Facility, as compared to LIBOR-based loans under
its prior credit facility. The New Credit Facility matures in
four years, on March 31, 2010, and includes an "accordion feature"
that permits Omega to expand its borrowing capacity to $300
million during its first two years.
For the three-month period ending March 31, 2006, Omega will
record a one-time, non-cash charge of approximately $2.7 million
relating to the write-off of deferred financing costs associated
with the termination of its prior credit facility. At March 31,
2006, Omega had $4.5 million of borrowings outstanding under the
New Credit Facility.
About Omega Healthcare
Headquartered in Timonium, Maryland, Omega HealthCare Investors,
Inc. -- http://www.omegahealthcare.com/-- is a real estate
investment trust investing in and providing financing to the
long-term care industry. At September 30, 2005, the Company owned
or held mortgages on 216 skilled nursing and assisted living
facilities with approximately 22,407 beds located in 28 states and
operated by 38 third-party healthcare operating companies.
* * *
As reported in the Troubled Company Reporter on Feb. 1, 2006,
Standard & Poor's Ratings Services raised its corporate credit
rating on Omega Healthcare Investors Inc. to 'BB' from 'BB-'.
In addition, ratings are raised on the company's senior unsecured
debt and preferred stock, impacting $603.5 million in securities.
S&P said the outlook is stable.
As reported in the Troubled Company Reporter on Jan. 24, 2006,
Moody's Investors Service raised the ratings of Omega Healthcare
Investors, Inc. (senior unsecured debt to Ba3, from B1). Moody's
said the rating outlook is stable.
OPTEUM MORTGAGE: Moody's Places Class M-10 Certs. Rating at Ba1
---------------------------------------------------------------
Moody's Investors Service assigned Aaa rating to the senior
certificates issued by Opteum Mortgage Acceptance Corporation,
Asset-Backed Pass-Through Certificates, Series 2006-1 and ratings
ranging from Aa1 to Ba1 to subordinate certificates in the deal.
The securitization is backed by Opteum Financial Services, LLC and
various other originators, none of which originated more than 10%
of the mortgage loans, originated adjustable-rate and fixed-rate,
Alt-A mortgage loans acquired by Opteum Financial Services, LLC.
The ratings are based primarily on the credit quality of the
loans, and on the protection from subordination,
overcollateralization, excess spread, and an interest rate swap
agreement with HSBC Bank, USA. Moody's expects collateral losses
to range from 1.3% to 1.5%.
Opteum Financial Services, LLC and Cenlar FSB will service the
loans. Wells Fargo Bank NA will act as master servicer.
The complete rating actions are:
Opteum Mortgage Acceptance Corporation
Asset-Backed Pass-Through Certificates, Series 2006-1
* Class I-APT, Assigned Aaa
* Class I-A1A, Assigned Aaa
* Class I-A1B, Assigned Aaa
* Class I-A1C1, Assigned Aaa
* Class I-A1C2, Assigned Aaa
* Class II-APT, Assigned Aaa
* Class II-A1, Assigned Aaa
* Class II-A2, Assigned Aaa
* Class M-1, Assigned Aa1
* Class M-2, Assigned Aa2
* Class M-3, Assigned Aa3
* Class M-4, Assigned A1
* Class M-5, Assigned A2
* Class M-6, Assigned A3
* Class M-7, Assigned Baa1
* Class M-8, Assigned Baa2
* Class M-9, Assigned Baa3
* Class M-10, Assigned Ba1
OWENS & MINOR: Prices $200 Million of 6.35% Senior Notes Due 2016
-----------------------------------------------------------------
Owens & Minor, Inc. priced a new public offering of $200 million
in aggregate principal amount of 6.35% Senior Notes due 2016.
The Company intends to use the proceeds of the offering to fund
the purchase of its outstanding $200 million of 8-1/2% Senior
Subordinated Notes due 2011, pursuant to the Company's tender
offer and consent solicitation for any and all of the Existing
Notes. The terms and conditions of the tender offer and consent
solicitation are found in the Company's Offer to Purchase and
Consent Solicitation Statement, dated March 21, 2006.
Pricing of New Notes
The New Notes will bear interest at an annual rate of 6.35% and be
offered to the public at a price of $999.39 per $1,000 note, under
a registration statement filed with the Securities and Exchange
Commission on April 3, 2006. The New Notes are general senior
unsecured obligations of the Company, will pay interest semi-
annually and will be guaranteed on a senior unsecured basis by the
Company's subsidiaries that incur or guarantee debt under the
Company's revolving credit facility. The Company intends to use
the proceeds of the proposed offering to fund the purchase of the
Existing Notes validly tendered and accepted for purchase in the
tender offer and consent solicitation. To the extent that all of
the Existing Notes are not tendered in the tender offer and
consent solicitation, the Company intends to use any remaining net
proceeds from the public offering of the New Notes, together with
cash on hand, to redeem or defease the Existing Notes under the
terms of the indenture governing the Existing Notes.
Pricing of Tender Offer and Consent Solicitation
The total consideration, excluding accrued and unpaid interest,
for each $1,000 principal amount of Existing Notes validly
tendered (and not validly withdrawn) on or prior to 5:00 p.m., New
York City time, on April 3, 2006, is $1,050.23, which includes a
$30.00 consent payment. The total consideration for the Existing
Notes was determined using standard market practice of pricing to
the first call date at a fixed spread of 50 basis points over the
bid side yield on the 7.00% U.S. Treasury Note due July 15, 2006,
determined at 2:00 p.m., New York City time, on April 4, 2006, as
reported by the Bloomberg Government Pricing Monitor. The Company
currently expects that all Existing Notes tendered by the Consent
Date will be settled on April 7, 2006.
Holders who properly tender after the Consent Date and on or prior
to 11:59 p.m., New York City time, on April 17, 2006, will be
eligible to receive the tender consideration, which equals
$1,020.23. The tender consideration is the total consideration
minus the $30.00 consent payment.
Receipt of Requisite Consents
The tender offer for the Existing Notes also includes a consent
solicitation to proposed amendments to eliminate substantially all
of the covenants and certain events of default in the indenture
relating to the Existing Notes. As of the Consent Date, tenders
and consents were received with respect to $199,980,000 aggregate
principal amount of the Existing Notes (99.99% of the total
outstanding principal amount of the Existing Notes), which will
permit the Company to execute the Fourth Supplemental Indenture
with certain of its subsidiaries, as guarantors, and SunTrust
Bank, as trustee, effectuating the proposed amendments to the
indenture. The Fourth Supplemental Indenture will become
operative upon the initial acceptance date of the tender offer and
consent solicitation.
In addition to acquiring the requisite number of consents, the
consummation of the tender offer and consent solicitation is
conditioned upon the receipt of gross proceeds of $200 million
from the public offering by the Company of the New Notes and
customary closing conditions. If any of the conditions are not
satisfied or waived by the Company in its sole discretion, the
Company is not obligated to accept for payment, purchase or pay
for, or may delay the acceptance for payment of, any tendered
Existing Notes, and may terminate the tender offer and consent
solicitation. The exact terms and conditions of the tender offer
and consent solicitation are specified in, and qualified in their
entirety by, the Offer to Purchase.
Lehman Brothers Inc. is acting as exclusive dealer manager and
solicitation agent for the tender offer and the consent
solicitation. The information agent for the tender offer and
consent solicitation is Georgeson Shareholder Communications, Inc.
The depositary for the tender offer and consent solicitation is
SunTrust Bank.
Questions regarding the tender offer and consent solicitation may
be directed to:
Lehman Brothers Inc.
Telephone (212) 528-7581 (call collect)
Toll Free (800) 438-3242
Requests for copies of the Offer to Purchase and related documents
may be directed to:
Georgeson Shareholder Communications, Inc.
Telephone (212) 440-9800 (banks and brokerage firms)
Toll Free (800) 868-1351
Lehman Brothers is the sole book-running manager for the public
offering of the New Notes. Banc of America Securities LLC,
Citigroup and SunTrust Robinson Humphrey are senior co-managers
for the public offering of the New Notes. In addition, JP Morgan,
KeyBanc Capital Markets and Wachovia Securities are co-managers
for the public offering of the New Notes. A registration
statement relating to the New Notes was filed and declared
effective on April 3, 2006. The public offering of the New Notes
is being made only by means of a prospectus.
Copies of the prospectus can be obtained from:
Lehman Brothers
745 7th Avenue
New York, NY 10019
Toll Free 1-888-603-5847
A full-text copy of the Preliminary Prospectus for the New Notes
is available at no charge at http://ResearchArchives.com/t/s?77a
About Owens & Minor
Headquartered in Richmond, Virginia, Owens & Minor, Inc. --
http://www.owens-minor.com/-- is the leading distributor of
national name-brand medical and surgical supplies and a healthcare
supply chain management company. With a diverse product and
service offering and distribution centers throughout the United
States, the Company serves hospitals, integrated healthcare
systems, alternate care locations, group purchasing organizations,
the federal government and consumers. A FORTUNE 500 company,
Owens & Minor provides technology and consulting programs that
enable healthcare providers to maximize efficiency and cost-
effectiveness in materials purchasing, improve inventory
management and streamline logistics across the entire medical
supply chain -- from origin of product to patient bedside. The
Company also has established itself as a leader in the development
and use of technology.
Owen & Minor's 8-1/2% Senior Subordinated Notes due 2011 carry
Moody's Investors Service's Ba3 rating.
OWENS CORNING: Files Fifth Amended Plan & Disclosure Statement
--------------------------------------------------------------
Owens Corning and its debtor-affiliates, the Official Committee of
Asbestos Claimants and the Legal Representative for Future
Claimants delivered a revised Fifth Amended Joint Plan of
Reorganization and an accompanying Disclosure Statement to the
Court on March 29, 2006.
The Revised Fifth Amended Plan and Disclosure Statement report
recent developments in the Debtors' Chapter 11 cases since the
filing of the Fifth Amended Plan in December.
The Revised Plan and Disclosure Statement also reflect additional
terms, which clarify or supplement certain provisions in the
Disclosure Statement, to address the concerns raised by the
official representatives of the bondholders and trade creditors.
In a regulatory filing with the Securities and Exchange
Commission, Stephen K. Krull, Owens Corning's senior vice
president and general counsel, discloses that Owens Corning
previously recorded expenses with respect to its primary
prepetition bank credit facility for the period from the Petition
Date through December 31, 2005, relating to postpetition interest
and certain other postpetition fees on a basis consistent with
the Fifth Amended Plan.
With respect to postpetition interest and other fees payable
under the Prepetition Credit Facility, Mr. Krull says the Revised
Fifth Amended Plan provides that, if the holders of debt under
the Prepetition Credit Facility are deemed unimpaired, or are
deemed to be impaired and the class of the holders accepts the
Revised Fifth Amended Plan -- and the Revised Fifth Amended Plan
is confirmed and becomes effective -- then the holders of debt
under the Prepetition Credit Facility will be paid:
a. interest accrued through the date of delivery of the
initial distribution under the Revised Fifth Amended Plan
to holders of claims under the Prepetition Credit Facility
-- the Initial Bank Holders' Distribution -- on the
principal amount outstanding under the Prepetition Credit
Facility as of the Petition Date, when calculated at the
floating Base Rate plus 2% on a compounding basis; and
b. any accrued and unpaid postpetition fees payable under the
Prepetition Credit Facility through the date of delivery of
the Initial Bank Holders' Distribution, plus accrued
interest pursuant to the Prepetition Credit Facility
calculated on a compounding basis.
In light of the terms of the Revised Fifth Amended Plan, and
absent developments that alter the Debtors' view of the
likelihood of amounts that may be paid under the Revised Fifth
Amended Plan to holders of debt under the Prepetition Credit
Facility, Owens Corning anticipates:
* recording, for the period ended March 31, 2006, additional
expenses -- currently estimated to be in the range of
$10,000,000 to $15,000,000 -- with respect to the
Prepetition Credit Facility for the period from the
Petition Date through December 31, 2005; and
* accruing for the first quarter of 2006, and future periods
prior to the Plan effective date, additional expenses that
reflect the treatment provided in the Revised Fifth Amended
Plan with respect to postpetition interest and other fees
payable under the Prepetition Credit Facility.
A full-text copy of the Revised Fifth Amended Plan is available
for free at http://ResearchArchives.com/t/s?783
A full-text copy of the Revised Fifth Amended Disclosure
Statement is available at http://ResearchArchives.com/t/s?784at
no extra charge.
Mr. Krull notes that the Revised Amended Disclosure Statement has
been prepared in accordance with Section 1125 of the Bankruptcy
Code and Rule 3016 of the Federal Rules of Bankruptcy Procedure
and not in accordance with federal or state securities laws or
other non-bankruptcy laws or regulations.
Owens Corning -- http://www.owenscorning.com/-- manufactures
fiberglass insulation, roofing materials, vinyl windows and
siding, patio doors, rain gutters and downspouts. Headquartered
in Toledo, Ohio, the Company filed for chapter 11 protection on
October 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L.
Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu
Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the
Official Committee of Asbestos Creditors. James J. McMonagle
serves as the Legal Representative for Future Claimants and is
represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP.
(Owens Corning Bankruptcy News, Issue No. 128; Bankruptcy
Creditors' Service, Inc., 215/945-7000)
PACIFIC LUMBER: Might Seek Protection Under The Bankruptcy Code
---------------------------------------------------------------
The Pacific Lumber Company 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 under the Bankruptcy Code.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 5, 2006,
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.
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.
About The Pacific Lumber Company
The Pacific Lumber Company, an indirect subsidiary of MAXXAM Inc.,
engages in forest products operations. Palco grows and harvests
redwood and Douglas-fir timber, mills logs into lumber products,
and certain related operations for over 130 years. Palco owns and
manages approximately 217,000 acres of virtually contiguous
commercial timberlands located in Humboldt County along the
northern California coast. Palco's conifers consist (by volume)
of approximately 66% redwood, 30% Douglas-fir, and 4% other
conifer timber.
PLIANT CORP: Hiring Mesirow Financial as Financial Advisor
----------------------------------------------------------
Pliant Corporation and its debtor-affiliates seek the authority of
the U.S. Bankruptcy Court for the District of Delaware to employ
Mesirow Financial Consulting, LLC, as their financial advisors
nunc pro tunc to February 20, 2006.
The Debtors need assistance in collecting and analyzing financial
and other information, as well as assistance in fulfilling their
reporting and disclosure requirements, Plaint Corp. VP and
General Counsel Stephen T. Auburn, says. The Debtors believe
that MFC has considerable experience with rendering those
services to debtors and other parties in numerous Chapter 11
cases.
As the Debtors' financial advisors, MFC will:
a. assist in the preparation of or review of reports or
filings as required by the Court or the Office of the
United States Trustee, including, schedules of assets and
liabilities, statements of financial affairs and monthly
operating reports;
b. assist in the preparation of or review of the Debtors'
financial information, including analyses of cash receipts
and disbursements, and other financial statement items;
c. assist with the analysis, tracking and reporting regarding
debtor-in-possession financing arrangements;
d. analyze assumption and rejection issues regarding executory
contracts and leases, as may be requested by the Debtors;
e. assist in preparing documents and analyses necessary for
confirmation, as may be requested by the Debtors;
f. assist with the claims resolution procedures, including
analyses of creditors' claims by type and entity;
g. provide litigation consulting services and expert witness
testimony regarding avoidance actions or other similar
matters, as may be requested by the Debtors; and
h. perform other functions as requested by the Debtors to
assist them in their Chapter 11 cases.
As previously reported, the Debtors are seeking to employ
Jefferies & Company, Inc., as their financial advisor. The
Debtors assure Judge Walrath that MFC's services will not be
duplicative of those provided by Jefferies.
The Debtors will pay MFC for professional services rendered at
its normal and customary hourly rates. In the normal course of
business, the firm revises its hourly rates on April 1 of each
year. The firm's rates are:
Effective
Current 04/10/06
----------- ------------
Senior Managing Directors or
Managing Directors $590 - $650 $620 - $690
Senior Vice Presidents $480 - $570 $530 - $590
Vice Presidents $390 - $450 $430 - $490
Senior Associates $300 - $360 $330 - $390
Associates $190 - $270 $190 - $290
Para-professionals $140 $150
MFC Managing Director Kevin A. Krakora, asserts that the firm:
-- is a "disinterested person" as that term is defined in
Section 101(14) of the Bankruptcy Code as modified by
Section 1107(b); and
-- does not hold or represent an interest adverse to the
estate in accordance with Section 327.
MFC is a professional services firm that provides financial
advisory and related professional consulting services. It is a
wholly owned subsidiary of Mesirow Financial Holdings, Inc., a
diversified financial services firm.
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. 8; Bankruptcy Creditors' Service, Inc.,
215/945-7000)
REGIONS AUTO: Moody's Confirms Ba3 Rating on Class C Securities
---------------------------------------------------------------
Moody's Investors Service upgraded 68 securities from 44 auto loan
backed securitizations and confirmed one tranche from one auto
loan backed securitization. The rating action reflects a
strengthening in the credit profile of the securities, based upon
the actual performance of the transactions and the build up of
credit enhancement relative to expected future losses in the
underlying receivables pools.
The build up of credit enhancement as a percent of the current
outstanding principal balance of the pools has been the result of
different factors such as the inclusion of nondeclining
enhancements as well as the initial trapping of excess spread
within transactions. In addition to the higher credit enhancement
levels, some of the auto loan pools are performing in line with,
or slightly better than, Moody's initial expectations.
The current upgrades are a product of Moody's ongoing monitoring
process of the sector. In the auto loan sector, where the loss
curve is reasonably predictable, deals generally have 12 months of
performance data before securities are considered for upgrade. In
addition, deals with a pool factor under approximately 15% are
excluded from the review process.
Upgrades:
* AmeriCredit Automobile Receivables Trust 2004-1; Class B,
Upgraded from Aa2 to Aa1
* AmeriCredit Automobile Receivables Trust 2004-1; Class C,
Upgraded from A1 to Aa2
* AmeriCredit Automobile Receivables Trust 2004-1; Class D,
Upgraded from Baa2 to A2
* AmeriCredit Canada Automobile Receivables Trust, Series
C2002-1, Class B, Upgraded from A1 to Aa1
* Bank One Auto Securitization Trust 2003-1; Class B, Upgraded
from Aa3 to Aa1
* BMW Vehicle Owner Trust 2003-A; Class B, Upgraded from A1
to Aa2
* Capital Auto Receivables Asset Trust 2003-2, Class B,
Upgraded from Aa3 to Aa2
* Capital Auto Receivables Asset Trust 2004-2, Class B,
Upgraded from A2 to A1
* Capital Auto Receivables Asset Trust 2004-2, Class C,
Upgraded from Baa3 to Baa2
* Capital One Prime Auto Receivables Trust 2004-2, Class B,
Upgraded from A3 to A1
* Capital One Prime Auto Receivables Trust 2004-3, Class B,
Upgraded from A3 to A2
* CarMax Auto Owner Trust 2003-1, Class C, Upgraded from
A3 to A2
* CarMax Auto Owner Trust 2004-1, Class C, Upgraded from
A1 to Aa3
* CarMax Auto Owner Trust 2004-1, Class D, Upgraded from
Baa3 to Baa2
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-1, Upgraded from A1 to Aa3
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-2, Upgraded from Baa3 to Baa2
* Chase Manhattan Auto Owner Trust 2003-A, Certificates,
Upgraded from Aa3 to Aa1
* Chase Manhattan Auto Owner Trust 2003-C, Certificates,
Upgraded from A1 to Aa3
* Ford Credit Auto Owner Trust 2003-B, Class C, Upgraded
from Aa3 to Aa1
* Ford Credit Auto Owner Trust 2004-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-2, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class C, Upgraded
from Baa2 to A2
* Ford Credit Auto Owner Trust 2005-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class C, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class C, Upgraded
from Aa3 to Aa2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class D, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class E, Upgraded
from Ba3 to Baa3
* GS Auto Loan Trust 2003-1, Class D, Upgraded from Ba1
to Baa3
* GS Auto Loan Trust 2004-1, Class D, Upgraded from Ba3 to Ba1
* MMCA Auto Owner Trust 2002-2, Class A-4, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-2, Class B, Upgraded from Ba3
to Baa3
* MMCA Auto Owner Trust 2002-3, Class B, Upgraded from A1
to Aa1
* MMCA Auto Owner Trust 2002-3, Class C, Upgraded from Baa1
to A1
* MMCA Auto Owner Trust 2002-4, Class B, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-4, Class C, Upgraded from A2
to Aa2
* MMCA Auto Owner Trust 2002-5, Class B, Upgraded from Aa2
to Aa1
* MMCA Auto Owner Trust 2002-5, Class C, Upgraded from A2
to Aa2
* Regions Auto Receivables Trust 2002-1, Class B, Upgraded
from Aa3 to Aa1
* Regions Auto Receivables Trust 2002-1, Class C, Upgraded
from Baa2 to A2
* Regions Auto Receivables Trust 2003-1, Class B, Upgraded
from A1 to Aa3
* Regions Auto Receivables Trust 2003-1, Class C, Upgraded
from Baa2 to A3
* USAA Auto Owner Trust 2003-1, Class B, Upgraded from Aa3
to Aa2
* USAA Auto Owner Trust 2004-1, Class B, Upgraded from A3
to A2
* USAA Auto Owner Trust 2004-2, Class B, Upgraded from Baa3
to Baa1
* USAA Auto Owner Trust 2004-3, Class B, Upgraded from Baa3
to Baa2
* Wachovia Auto Owner Trust 2004-A, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class C, Upgraded from
Baa3 to A3
* WFS Financial 2003-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2003-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-1 Owner Trust, Class C, Upgraded from Aa3
to Aa2
* WFS Financial 2004-2 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-2 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-2 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-3 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-3 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-3 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-4 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2005-1 Owner Trust, Class C, Upgraded from A2
to A1
* WFS Financial 2005-1 Owner Trust, Class D, Upgraded from
Baa2 to Baa1
* Whole Auto Loan Trust 2003-1, Class D, Upgraded from Baa3
to A3
* Whole Auto Loan Trust 2004-1, Class C, Upgraded from Baa1
to A3
* Whole Auto Loan Trust 2004-1, Class D, Upgraded from Ba3
to Baa3
* World Omni Auto Receivables Trust 2003-A, Class B, Upgraded
from A2 to Aa2
Confirm:
* Regions Auto Receivables Trust 2003-2, Class C, confirm
rating at Ba3
SAINT VINCENTS: Court Continues Stay of 21 Malpractice Suits
------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
sustained Saint Vincents Catholic Medical Centers of New York and
its debtor-affiliates' objection to the request of certain
claimants to lift the automatic stay.
These claimants alleging medical malpractice claims against the
Debtors asked the Court to lift the automatic stay to permit
them to proceed with their State Court actions:
(1) Theresa Chapman,
(2) Marco and Olga Baca,
(3) Michael and Ava Thaw,
(4) Edmund Paredes,
(5) Bhaj Singh and Jaddiesh Kaur,
(6) Carmen Lydia Mendez-Brady and Michael Brady,
(7) Lauren Raynor,
(8) Peter Spinelli,
(9) Edeline Dodard,
(10) Barry M. Goldstein,
(11) Anna Rodriguez,
(12) Jean and Robert Stockhausen,
(13) Martina Seidman,
(14) Edward Castillo,
(15) Michael Jeremiah Dorney,
(16) Jane Doe,
(17) Mary Doe,
(18) Joseph N. Carlucci,
(19) Sally Doe,
(20) Leslie Muniz, and
(21) Ashley Medora.
The Claimants sought to liquidate their claims and pursue recovery
from the Debtors' applicable insurance policies and carriers.
Debtors Object
Andrew M. Troop, Esq., at Weil, Gotshal & Manges LLP, in New
York, argued that each of the 21 Claimants' request do not present
facts similar to the exceptional cases in which the Debtors have
agreed to, or the Court has ordered, the modification of the
automatic stay to permit at least some further action in state
court.
The Debtors asked the Court to:
(a) defer consideration of the requests, and continue the
automatic stay in place with respect to the claims pending
the outcome of the status conference scheduled on Mar. 29,
2006; and
(b) depending on the outcome of the Status Conference, provide
them with a further opportunity to respond to the merits
of the requests if appropriate before scheduling a further
hearing on the medical malpractice motions.
Headquartered in New York, New York, Saint Vincents Catholic
Medical Centers of New York -- http://www.svcmc.org/-- the
largest Catholic healthcare providers in New York State, operate
hospitals, health centers, nursing homes and a home health agency.
The hospital group consists of seven hospitals located throughout
Brooklyn, Queens, Manhattan, and Staten Island, along with four
nursing homes and a home health care agency. The Company and six
of its affiliates filed for chapter 11 protection on July 5, 2005
(Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary
Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will &
Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12,
2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took
over representing the Debtors in their restructuring efforts.
Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the
Official Committee of Unsecured Creditors. As of Apr. 30, 2005,
the Debtors listed $972 million in total assets and $1 billion in
total debts. (Saint Vincent Bankruptcy News, Issue No. 22;
Bankruptcy Creditors' Service, Inc., 215/945-7000)
SANLUIS CORP: Fitch Affirms $133 Million Debts' CCC+ Ratings
------------------------------------------------------------
Fitch Ratings affirmed the ratings of 'B-' to the foreign
currency and local currency senior secured debt obligations
of SANLUIS Corporacion, S.A. de C.V. and 'CCC+' to the foreign
currency and local currency senior unsecured debt obligations
of SANLUIS. The senior secured rating of 'B-' applies to $196
million of secured bank loans held by SANLUIS' operating
subsidiaries.
The senior unsecured rating of 'CCC+' applies to the:
* $58 million 8% senior notes due 2010; and
* $75 million 7% mandatory convertible debentures due 2011
issued by SANLUIS Co-Inter S.A. (SISA), an intermediary
holding company.
The Rating Outlook for all ratings is Stable.
The ratings are based on SANLUIS' solid business position as
leading producer and supplier of leaf springs to the North
American Free Trade Agreement (NAFTA) market, with a market share
of approximately 90% for the:
* United States,
* Canada, and
* Mexico, combined.
The ratings are also supported by the company's hard currency
generation, with more than 70% of revenues earned from exports to
the United States and Canada.
The ratings are constrained by:
* SANLUIS' default in 2001;
* high financial leverage;
* cost pressures; and
* industry cyclicality.
The company's business is critically dependent on the performance
of North America's automobile market and original equipment
manufacturers (OEMs), which in turn are highly exposed to general
economic conditions.
SANLUIS targets an automobile market segment that has experienced
robust growth and market share gains over the past 15 years. The
proportion of light trucks within total automobile sales in the
United States increased from 33% in 1991 to 53% in 2005. Strong
cost competitive advantages and relationships with OEMs have
allowed the company to grow its market share of suspension
components in NAFTA to 90% in 2005 from 60% in 2003.
Sales are concentrated on North America's Big Three (General
Motors, Ford and DaimlerChrysler), which together accounted for
more than 75% of SANLUIS' total revenues in 2005. In recent
years, these companies have lost market share to foreign
automobile manufacturers. In addition, sales of SUVs in North
America have been affected by high fuel prices. These challenges
could create pressures on the company's revenues in the medium to
long term.
During 2005, total revenues declined slightly. Sales of
suspension components grew by 13%, but were offset by a 17%
decline in sales of brake components due to maturing platforms
that have not been replaced yet. Importantly, during 2005 the
company reached agreements with its Big Three OEM customers to
recover $32 million of incremental costs related to steel,
effectively passing on to customers the increase in the cost of
steel for the year. However, high energy costs and discounts to
OEMs on mature platforms continued to pressure margins and EBITDA.
The company's consolidated leverage remains high, with the ratio
of total debt (including off-balance-sheet debt) to EBITDA at 5.8x
at Dec. 31, 2005. EBITDA coverage of interest expense was 1.9x.
EBITDA is expected to remain flat in 2006, as growth in suspension
revenues is expected to be off-set by a weaker performance in the
brakes division. This should translate into flat to slightly
better credit protection measures at the end of 2006.
At Dec. 31, 2005, total consolidated debt was $365 million, a
decline from $385 million at Dec. 31, 2004, as the company repaid
debt with free cash flow during 2005. The debt was composed of:
* $196 million of secured bank loans at the suspension
subsidiary level;
* $58 million of senior notes at the SANLUIS Co-Inter S.A.
(SISA) intermediary holding company level due 2010;
* $19 million bank loans due 2009 at the brake subsidiary
level;
* $3 million of bank debt at the Brazil subsidiary;
* $14 million of non-restructured debt at the SANLUIS holding
company level; and
* $75 million of convertible debentures issued by SISA, which
are treated as debt by Fitch Ratings.
The company only pays cash interest on its bank subsidiary debt.
The maturity schedule of the secured bank debt is well spread out
from 2006 to 2010 and short term debt commitments of $35 million
are proportional to the company's balance of cash and marketable
securities of $30 million at Dec. 31, 2005.
SANLUIS manufactures:
* suspension components (leaf springs, coil springs,
torsion bars,
* bushings and stabilizer bars), and
* brake components (drums and rotors)
for:
* pickup trucks,
* SUVs,
* Minivans, and
* automobiles (light vehicles).
The company is the leading producer of leaf springs (used in the
suspensions of light trucks) in the NAFTA market and worldwide.
In 2005, SANLUIS earned $635 million of revenues and $65 million
of EBITDA.
SCOTIA PACIFIC: Might Seek Protection Under The Bankruptcy Code
---------------------------------------------------------------
The California North Coast Regional Water Quality Control Board
did not release for harvest a number of Scotia Pacific Company
LLC's Timber Harvesting Plans. ScoPac says the non-release
adversely affected its cash flow for forest products operations.
Timber Collateralized Notes
Substantially all of ScoPac's assets are pledged as security for
its:
-- 6.55% Series B Class A-1 Timber Collateralized Notes,
-- 7.11% Series B Class A-2 Timber Collateralized Notes, and
-- 7.71% Series B Class A-3 Timber Collateralized Notes.
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 under the Bankruptcy Code.
Going Concern Doubt
As reported in the Troubled Company Reporter on April 5, 2006,
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.
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.
About Scotia Pacific Company LLC
Scotia Pacific Company LLC, an indirect subsidiary of MAXXAM Inc.,
engages in forest products operations. ScoPac approximately owns
204,000 acres of timberlands and has the exclusive right to
harvest approximately 12,200 acres of timberlands owned by Pacific
Lumber Company and its subsidiary, Salmon Creek LLC. Under a
master purchase agreement between Scopac and Palco, Palco harvests
and purchases from ScoPac virtually all of the logs harvested from
the ScoPac Timber.
SHURGARD STORAGE: Posts $494,000 Net Loss in Year Ended Dec. 31
---------------------------------------------------------------
Shurgard Storage Centers, Inc. (NYSE:SHU) reported its financial
results for the fourth quarter and fiscal year ended Dec. 31,
2005.
The Company reported net income to common shareholders of
$2.5 million for the fourth quarter of 2005, compared to
$3.6 million for the fourth quarter of 2004.
For the year ended Dec. 31, 2005, the Company reported a net loss
to common shareholders of $494,000, compared to net income to
common shareholders of $33.1 million for the year ended Dec. 31,
2004.
Results for 2005 were helped by a 26% improvement in income from
operations over the previous year, but this was more than offset
by higher interest expense, foreign currency exchange losses and
costs related to the Company's exploration of strategic
alternatives.
"Clearly our net income for the year does not reflect the
substantial progress on many fronts that the Company has made in
2005," David K. Grant, President and Chief Executive Officer
commented.
"Our store portfolios in both the US and Europe turned in very
strong growth performance over 2004. But more importantly, we
have seen a building of momentum throughout the year in our
revenue growth, which has continued into the first quarter of
2006.
"Our overhead cost cutting initiatives announced last summer are
beginning to take hold as we have seen significant cost reductions
in Europe.
"Finally, our people who worked tirelessly last year to restore
our internal control systems have remediated the material
weaknesses noted in 2004 and the Company received an unqualified
opinion on management's assessment of internal control over
financial reporting. This accomplishment will help us to
significantly reduce our audit and consulting costs going
forward."
Operating Results
Compared to the fourth quarter in 2004 and at constant exchange
rates, combined U.S. and Europe Same Store revenue for the fourth
quarter 2005 increased by $8.7 million to $109.4 million from
$100.8 million, and net operating income after indirect and
leasehold expenses increased by $7.5 million to $63 million from
$55.5 million.
For the year ended Dec. 31, 2005, combined Same Store revenue
increased by $31.1 million to $430.8 million from $399.7 million,
and combined Same Store NOI after indirect and leasehold expenses
increased by $18.7 million to $240.9 million from $222.1 million
during the previous year.
Due primarily to a 5.2% increase in average rental rate, the
Company's domestic Same Store segment generated a 7.1% increase in
revenue and a 7.8% increase in NOI after leasehold and indirect
expenses in the fourth quarter of 2005, compared to the fourth
quarter of 2004.
For 2005 annual domestic Same Store revenue and NOI after
leasehold and indirect expenses increased 6.4% and 5.0%
respectively, compared to 2004.
At constant exchange rates, the European Same Store segment in the
fourth quarter of 2005 generated a 14% increase in revenue and a
41.9% increase in NOI after leasehold and indirect expenses,
compared to the same quarter in 2004.
For 2005, annual revenue and NOI after leasehold and indirect
expenses grew 12.5% and 26.6%, respectively, compared to 2004.
Average Same Store occupancy in the fourth quarter of 2005
increased to 83% from 74% in the comparable quarter in 2004, with
significant gains in all markets, but especially in the
Netherlands, Sweden and Denmark.
Portfolio
As of Dec. 31, 2005, Shurgard operated an international network of
646 operating properties containing approximately 40.5 million net
rentable square feet.
The total includes 484 owned, partially owned or leased storage
centers in operation in the United States, 13 storage centers in
the United States managed for third parties and 149 owned or
partially owned storage centers in Europe.
In the fourth quarter of 2005, the Company opened nine storage
centers; one in Florida, adding 60,000 net rentable square feet
at a total cost of $5.2 million and eight in Europe (four in
France, three in the Netherlands and one in Belgium) adding a
total of 430,000 net rentable square feet for a total cost of
$48.2 million.
During 2005, 27 storage centers were added to the network; three
storage centers were developed in the United States, adding
156,000 net rentable square feet for a total cost of $10.8
million; the Company acquired ten storage centers in the United
States adding 751,000 net rentable square feet for a total cost of
$45.1 million and in Europe the Company developed 14 storage
centers, adding 708,000 net rentable square feet for a total cost
of $92.5 million.
In the fourth quarter of 2005 the Company's investment in New
Stores increased to $604 million, or 19% of the total portfolio,
representing 4% of the Company's NOI after indirect and leasehold
expenses in the same period.
There were no sales of storage centers in the fourth quarter,
although during 2005, the Company completed the sale of five
storage centers: one in Arizona, one in California and three in
Washington, for aggregate proceeds of approximately $24.8 million
resulting in the realization of aggregate gains of $11.8 million.
As of Dec. 31, 2005, the Company had 15 new storage centers under
construction or pending construction (10 in the United States and
five in Europe) for an estimated total cost to completion of
$107.9 million and two major re-development projects underway in
the United States for an estimated total cost of $6 million.
Sarbanes-Oxley Section 404 Compliance
The Company has completed its assessment of internal control over
financial reporting for 2005.
The Company received an unqualified opinion on its 2005 audit and
management's assessment and operating effectiveness of internal
control over financial reporting for 2005.
Box Avenue Acquisition
In January 2006, Shurgard's European joint venture Second Shurgard
SPRL acquired 3S Self-Storage Systems in France, a high-quality
self-storage service provider operating under the Box Avenue brand
name, for a total consideration, including acquisition costs, of
approximately $46 million.
The acquisition added nine Box Avenue self-storage facilities and
343,000 net rentable square feet to the 39 Shurgard storage
centers already operating in France, bringing the total number of
Shurgard storage centers in Europe to 158.
The acquisition reinforces Shurgard's position as the French self-
storage market leader, offering its customers an unmatched network
of high-quality sites and services in Paris, Bordeaux, Lille,
Lyon, Marseille and the French Riviera.
"The acquisition provides a perfect fit for Shurgard's existing
network in France," Steven De Tollenaere, Shurgard Europe Managing
Director, said.
About Shurgard Storage Centers, Inc.
Shurgard Storage Centers, Inc. (NYSE: SHU) --
http://www.shurgard.com/-- is a self-storage real estate
investment trust (REIT) based in Seattle, Washington. At March
31, 2005, Shurgard had interests in over 634 properties in the USA
and Europe totaling 40 million net rentable square feet, assets of
$2.9 billion and equity of $879 million.
* * *
As reported in the Troubled Company Reporter on Mar. 13, 2006,
Fitch Ratings affirmed Shurgard Storage Centers, Inc.'s Senior
unsecured debt rating at BBB-; and Preferred stock rating at BB+.
As reported in the Troubled Company Reporter on Mar. 10, 2006,
Standard & Poor's Ratings Services placed its ratings on Shurgard
Storage Centers Inc. (Shurgard; 'BBB-') on CreditWatch with
positive implications. The rating action affected approximately
$450 million in rated debt.
SOLO CUP: Posts $8.1 Million Net Loss in Year Ended January 1
-------------------------------------------------------------
Solo Cup Company reported its 2005 annual financial results.
For the fiscal year ended Jan. 1, 2006, the Company reported net
sales of $2,437.7 million, an increase of $321.3 million, or
15.2%, compared to $2,116.4 million for the fiscal year ended
December 31, 2004.
This includes an increase of $185.8 million representing two
additional months of SF Holdings' sales in 2005 versus 2004.
Solo Cup acquired SF Holdings on Feb. 27, 2004. The remaining
increase in net sales of $135.5 million, or 6.4%, reflects a 6.0%
increase in average realized sales price and a 0.4% increase in
sales volume as compared to the prior year.
The increase in average realized sales price reflects the impact
of price increases implemented in response to higher raw material
costs.
Gross profit was $327.1 million for the fiscal year ended Jan. 1,
2006, an increase of $23.9 million, or 7.9% over the prior year.
This includes a $21.4 million increase resulting from the SF
Holdings acquisition. Excluding the effect of the SF Holdings
acquisition, gross profit increased $2.5 million.
Selling, general and administrative expenses were $265.2 million,
including $25.2 million of expenses related to the integration of
SF Holdings. Depreciation and amortization was $104.1 million and
interest expense was $72.5 million for the fiscal year ended
Jan. 1, 2006.
Adjusted EBITDA for the fiscal year ended Jan. 1, 2006, was
$196.9 million versus a pro forma adjusted EBITDA for the fiscal
year ended Dec. 31, 2004 of $204.9 million.
Capital expenditures for the fiscal year ended Jan. 1, 2006,
totaled $53.1 million. Total debt as of Jan. 1, 2006 was
$1,043.3 million. Total cash and cash equivalents, and cash in
escrow, was $27.1 million as of Jan. 1, 2006.
"2005 was a challenging year given a backdrop of rising raw
material prices and energy costs," Ronald L. Whaley, President and
Chief Operating Officer on the fiscal year results commented.
"We did implement a number of price increases to offset these
factors, but timing and competitive pressures did not allow us to
fully recover these cost increases.
"With the majority of our integration activities now completed, we
expect to focus in 2006 on providing increased service to our
customers, while continuing to streamline logistic processes and
positioning ourselves to be able to respond quickly to emerging
competitive challenges."
Secured Second Lien Term Loan
The Company has obtained a commitment for a $75.0 million senior
secured second lien term loan facility and expects to amend its
senior credit facility to accommodate the Second Lien Facility by
the end of March 2006.
The proceeds of the Second Lien Facility will be used to reduce
borrowings under the Company's domestic revolving credit facility.
A full-text copy of Solo Cup Company's 2005 Annual Report is
available for free at http://ResearchArchives.com/t/s?775
About Solo Cup Company
Headquartered in Highland Park, Illinois, Solo Cup Company --
http://www.solocup.com/-- is a $2.4 billion company exclusively
focused on the manufacture of disposable foodservice products for
the consumer and retail, foodservice, packaging, and international
markets. Solo Cup has broad expertise in plastic, paper, and foam
disposables and creates brand name products under the Solo,
Sweetheart, Fonda, and Hoffmaster names. The Company was
established in 1936 and has a global presence with facilities in
Asia, Canada, Europe, Mexico, Panama and the United States.
* * *
As reported in the Troubled Company Reporter on Apr. 4, 2006,
Moody's Investors Service aassigned ratings on Solo Cup Company's
$80 million senior secured second lien term loan due 2012 at B3;
$150 million senior secured revolving credit facility maturing
Feb. 27, 2010, at B2; $638 million senior secured term loan B due
Feb. 27, 2011, at B2; $325 million 8.5% senior subordinated notes
due Feb. 15, 2014, at Caa1; and Corporate Family Rating at B2.
SOUTHERN STAR: S&P Rates $200 Million Sr. Unsecured Notes at BB+
----------------------------------------------------------------
Standard & Poor's Ratings Services affirmed its 'BBB-' corporate
credit ratings on Southern Star Central Gas Pipeline Inc. and
Southern Star Central Corp.
At the same time, Standard & Poor's assigned its 'BBB-' rating to
Southern Star Pipeline's proposed $230 million privately placed
senior unsecured notes and its 'BB+' rating to Southern Star
Corp.'s proposed $200 million privately placed senior unsecured
notes.
Proceeds would be used to repay existing debt and related fees and
expenses.
Owensboro, Kentucky-based Southern Star is a regulated interstate
natural gas pipeline that transports gas from Rocky Mountain and
Midcontinent regions to major metropolitan areas in Kansas and
Missouri.
The rating on Southern Star Pipeline's proposed $230 million
senior unsecured notes maturing 2016 is 'BBB-', which is the same
as the corporate credit rating.
The rating on Southern Star Corp.'s proposed $200 million senior
unsecured notes maturing 2016 is 'BB+', which is one notch below
the corporate credit rating to reflect a structurally subordinated
position.
The one-notch difference results from an investment grade
corporate credit rating of 'BBB-' and a ratio of priority debt to
assets exceeding 20%.
"The stable outlook on Southern Star reflects the company's
predictable revenues, strong competitive position, healthy
markets, and favorable regulation, somewhat offset by an
intermediate financial profile," said Standard & Poor's credit
analyst Plana Lee.
STANDARD PARKING: Earns $14.7 Million of Net Income in 2005
-----------------------------------------------------------
Standard Parking Corporation (NASDAQ:STAN) disclosed its financial
results for the fourth quarter and full-year 2005. A solid fourth
quarter capped a strong fiscal 2005, the Company says, yielding
full-year net income of $14.7 million compared with $2.6 million
in the prior year. 2005 free cash flow was $26.5 million.
2005 Highlights
-- Revenue (excluding reimbursed management contract expense)
and gross profit growth of 7% and 9%;
-- EPS of $1.39, exceeded guidance of $1.27 to $1.32;
-- Free cash flow of $26.5 million, or $2.51 per share;
-- Total debt reduction of $17.6 million; net debt / EBITDA
reduction from 3.3x to 2.7x; and
-- Share repurchase of $6 million.
2006 Guidance
-- EPS expected to be in a range of $1.50 to $1.60;
-- Pre-tax income expected to increase more than 25% over 2005;
-- Free cash flow expected to be $20 million or higher; and
-- Board authorization to repurchase up to $7.5 million of
common stock.
James A. Wilhelm, President and Chief Executive Officer, said, "We
are pleased to report 2005 earnings per share that exceeded prior
guidance. As we started 2005, we were confident that the
successful IPO and the subsequent momentum from 2004 would carry
us to our best year ever. We achieved this despite two
significant challenges. Over the course of the year, we
recognized a $1.2 million loss related to a contract in Minnesota.
In the second half of the year, we had to rebuild our New Orleans
parking operations in the aftermath of Hurricane Katrina, which
impacted EPS by ($0.16) per share. Despite these challenges, in
our first full year as a public company we achieved earnings per
share of $1.39, compared with $0.42 in the prior year, which
exceeded our most recent guidance range of $1.27 to $1.32. Both
our actual results and our guidance reflect the use of our
substantial NOLs to shield from tax all of our 2005 book income.
Our location retention rate for the year improved to 91% from 88%
a year ago, and we had a net increase of 20 locations.
"During the year, we also entered the last phase of Sarbanes-Oxley
documentation and testing of our internal controls, costing
($0.08) per share, which required our organization's concentrated
focus. We have now completed the assessment of our internal
control as it relates to financial reporting, and we are pleased
to report that the controls were found to be effective and without
material weaknesses. Our independent auditors, Ernst & Young,
LLP, have completed their evaluation and testing of our internal
control over financial reporting and expect to issue an
unqualified opinion."
Fourth Quarter Operating Results
Gross profit for the fourth quarter increased by 12% to
$18.9 million from $16.9 million a year ago. Excluding the
$0.9 million impact of Hurricane Katrina and $1.6 million in
favorable insurance loss experience relating to previous quarters
in the current year, gross profit in the fourth quarter increased
by 8%, driven by strong same location revenue increases at both
lease and management locations.
General and administrative expenses increased by $2.2 million or
26% over the 2004 fourth quarter. General and administrative
expenses in the fourth quarter of 2005 included $0.5 million for
expenses related to the Sound Parking acquisition and termination
of the planned acquisition of System Parking, and $0.2 million for
outside consultants and auditors related to Sarbanes-Oxley
compliance.
Net income for the 2005 fourth quarter was $4.1 million as
compared with $4.3 million a year ago.
Total revenue for the quarter, excluding reimbursement of
management contract expense, was up by 2% to $62.0 million from
$60.6 million a year ago. Reimbursement of management contract
expense is excluded because its timing and amount fluctuate
substantially for reasons unrelated to the Company's parking
services revenue. Strong 15% growth in management contract
revenue was offset by a 5% decrease in lease revenue, primarily
due to lost business in New Orleans. Excluding New Orleans, same
location revenue increased 7% for lease contracts and almost 16%
for management contracts.
Cash and cash equivalents at December 31, 2005, of $10.8 million
were relatively unchanged from a year ago. Net of the change in
cash, free cash flow of $12.0 million was generated during the
quarter, all of which was used to pay down debt. Consequently,
despite an increase in prevailing interest rates, the Company was
able to hold interest expense relatively flat year-to-year.
Recent Developments
During the 2005 fourth quarter, the Company received reimbursement
of Bradley Airport deficiency payments totaling $1.0 million
compared with having made $0.2 million in net deficiency payments
a year ago. For the year, net reimbursement of deficiency
payments totaled $1.5 million compared with the Company's having
made $2.0 million of net deficiency payments during the same
period of 2004, resulting in a positive swing of $3.5 million in
cash flow. In connection with these reimbursements, the Company
recognized $0.8 million in premium and interest income in the
fourth quarter of 2005.
In January 2006, the Company consummated its previously announced
acquisition of the 2 shuttle operations and 55 parking locations
operated by Sound Parking. Provisions in long-term employment
contracts that the Company entered into with Sound's former
principals incentivize them to retain the Company's existing
contracts and to expand the Company's presence in the States of
Washington, Oregon, Idaho and Alaska.
Commenting on the Sound acquisition, Mr. Wilhelm said, "The
acquisition of Sound Parking gives us a solid anchor in the
Pacific Northwest, and adding the principals of Sound Parking will
enhance our understanding of that marketplace. Working together,
Standard Parking can provide the capital, experience and resources
to pursue some of the larger contracts in the region."
The Company's new contract additions during the quarter highlight
the importance of maintaining strong relationships with national
and regional real estate developers and REITs. The Company's
strong track record with major real estate concerns such as
Crescent, Hines, Tishman Speyer and Prime Group Realty Trust has
enabled it to win new contracts or renew existing contracts.
Full Year 2005 Results
Gross profit for the full year 2005 increased 9% to $69.8 million
as compared with $63.9 million for 2004 due to solid growth in
same location profit from both lease and management locations.
General and administrative expenses for the year increased by 16%
over the same period last year due primarily to the additional
costs of being a public company, including $0.8 million related
to Sarbanes-Oxley compliance, as well as $0.6 million in
acquisition-related expenses. More significant from a long term
perspective, during the year the Company invested significant
resources to support growth initiatives.
Operating income for the year was up by almost 20% to
$23.6 million from $19.7 million a year earlier, although the
mid-year 2004 IPO does not permit a clear year over year
comparison.
Total revenue, excluding reimbursed management contract expense,
also increased year over year by almost 7% to $248.0 million in
2005 from $232.5 million in 2004. At the end of 2005, the Company
operated 1,906 locations, a net increase of 20 during the year.
The Company's retention rate for the full year 2005 was 91%,
compared with 88% in 2004. The retention rate represents the
percentage of locations retained for a twelve-month period.
Capital expenditures totaled $4.8 million in 2005, and the Company
also entered into $2.6 million of new capital lease obligations
intended primarily to fund the purchase of shuttle busses.
Free cash flow of $26.5 million was generated during 2005 of which
$6.0 million was used to repurchase shares and $20.5 million was
used to pay down debt. Approximately $8.6 million of this free
cash flow was due to fluctuations in working capital, long-term
receivables and reserves, resulting in underlying free cash flow
generated by the business of approximately $17.9 million. Net
debt (total debt less cash) of $81.3 million at year-end was below
the range of $85 - $95 million projected at the beginning of the
year.
Mr. Wilhelm concluded, "The Company's results for 2005 reflect
that we are performing as we set forth at the time of the IPO. We
are meeting the key metrics by which we are measured - growth in
gross profit and maintaining or increasing our retention rate. We
are signing new business at a rate that exceeds lost business, and
our new contracts on a per location basis are more profitable than
business we have not renewed. Our performance has resulted in both
EPS and cash flow increases that have exceeded our guidance range.
"Our cash flow performance is particularly noteworthy not only
because it exceeds what we had set forth at the time of the IPO
but because it has enabled us to pay down debt, return value to
shareholders, position ourselves to opportunistically pursue
acquisitions and invest in strategic initiatives for the future to
fuel organic growth.
"These strategic initiatives include the incubation of follow-on
services as a means to increase same location sales in the future.
In the past we have been successful in developing transportation
as an auxiliary business and we're reaping the benefits of that.
We continue to look at other services that will help our clients
control their costs and enable us to solidify our client
relationships across a broader base."
2006 Financial Outlook
The Company expects to record a $2.0 million, or ($0.19) per
share, deferred tax expense resulting from the deduction of
goodwill for tax but not book purposes.
Due to $62.6 million of net operating loss carryforwards as of
December 31, 2005, the Company anticipates that its book tax
provision for 2006 will be less than 15%. However, the timing of
the recognition of tax benefits may result in wide fluctuations in
reported GAAP results. The Company may recognize substantial
reductions in the valuation allowance on its deferred tax asset in
future quarters. The Company expects its cash tax rate to remain
below 5% in 2006.
The Company anticipates capital expenditures of $4 million to
$5 million during 2006.
Free cash flow, after capital expenditures, is expected to be
$20 million or higher in 2006. The Company expects to continue
using free cash flow to:
-- fund additional growth;
-- pay down debt; and
-- return value to shareholders.
After evaluating the $26.5 million of free cash flow that the
Company generated in 2005, the Board has decided to authorize the
Company to expend up to $7.5 million in 2006 to return value to
its shareholders through stock repurchases, subject to lenders'
consent and the Company's compliance with applicable covenants and
tests. Stock repurchases under this program will partially offset
the EPS impact of the charge incurred by reason of the Company's
adoption of FAS 123R.
Six executive vice presidents have notified the Company of their
intention to exercise and sell a collective total of approximately
43,000, or 26%, of their vested stock options for a variety of
estate planning, tax and other personal reasons. All but 3,000 of
these options were originally granted in January 2002 as an
incentive to position the Company for an eventual IPO, vested
fully at the time of the June 2004 IPO, and expire in January
2012.
During 2005, the Company used a portion of its free cash flow to
reduce total debt by $17.6 million, which lowered net debt to
EBITDA from 3.3x to 2.7x. A similar approach to 2006 would result
in a further de-levering of the Company, with the potential that
its net debt to EBITDA ratio could approach or fall below 2.0x by
the end of 2006. Consequently, the Company is beginning to
explore alternatives for refinancing all or a portion of its debt
in 2006. As part of this process, the Company will evaluate its
financial leverage, share repurchase and dividend policies.
Standard Parking Corp -- http://www.standardparking.com/-- is a
leading national provider of parking facility management services.
The Company provides on-site management services at multi-level
and surface parking facilities for all major markets of the
parking industry. The Company manages over 1,900 parking
facilities, containing over one million parking spaces in close
to 300 cities across the United States and Canada, including
parking-related and shuttle bus operations serving more than
60 airports.
* * *
As reported in the Troubled Company Reporter on Mar. 17, 2006,
Standard & Poor's Ratings Services raised its corporate credit
and senior secured debt ratings on Standard Parking Corp. to 'B+'
from 'B' based on the company's improved financial profile.
At the same time, Standard & Poor's raised the senior subordinated
debt rating to 'B-' from 'CCC+'. The senior secured credit
facility is rated the same as the corporate credit rating, with a
recovery rating of '2', indicating that investors could expect
substantial recovery of principal (80%-100%) in the event of
default. S&P said the outlook is stable.
STRESSGEN BIOTECHNOLOGIES: Reports Full-Year Financial Results
--------------------------------------------------------------
Stressgen Biotechnologies Corporation (TSX: SSB) disclosed its
financial results for the year ended Dec. 31, 2005.
For the year ended Dec. 31, 2005, the Company reported a net loss
from continuing operations of $27.1 million compared to a net loss
from continuing operations of $31.8 million for the year ended
December 31, 2004. The Company had cash and short-term
investments of $4.4 million at Dec. 31, 2005. In January 2006,
the Company entered into an agreement to reorganize and receive up
to $9.25 million in non-dilutive funding.
Stressgen Highlights
Corporate and Finance:
-- Appointed Gregory M. McKee as the new President, Chief
Executive Officer and Director.
-- Received approximately $8.72 million from sale of bioreagent
business.
-- Implemented two restructurings to focus corporate resources
on the advancement of HspE7, lowering burn rate and
decreasing operational overhead.
-- Completed equity financings totaling gross proceeds of $3.6
million.
-- Entered into an agreement to reorganize and receive up to
$9.25 million in non-dilutive funding.
Clinical:
-- Showed higher than expected complete responses with HspE7
among women with high grade cervical dysplasia.
Intellectual Property:
-- Granted U.S. patent covering therapeutic products to treat
Hepatitis B virus.
-- Granted U.S. patent covering new methods of manufacturing
HspE7.
-- Defeated Antigenics' challenge to European patent, a
decision that has been subsequently appealed by Antigenics.
Manufacturing:
-- Completed manufacture of commercial grade HspE7.
"We have made substantial progress in re-invigorating the Company
in 2005," commented Gregory M. McKee, President and Chief
Executive Officer at Stressgen. "All of the milestones completed
in 2005 have strengthened the foundation to support the continued
development of HspE7 for human papillomavirus (HPV)-related
indications."
Stressgen Biotechnologies Corporation -- http://www.stressgen.com/
-- sells bioreagent products. The Company's primary focus since
1993 has been the research and development of innovative stress
protein-based fusion products that will stimulate the body's
immune system to combat viral infections and related cancers. The
corporation is publicly traded on the Toronto Stock Exchange under
the symbol SSB.
* * *
Going Concern Doubt
Deloitte & Touche LLP, expressed substantial doubt about the
Company's ability to continue as a going concern, in its March 14,
2005 audit report, pointing to the Company's recurring losses from
operations and difficulty in generating sufficient cash flow to
meet its obligations and sustain its operations.
At June 30, 2005, the Company had cash, cash equivalents and
short-term investments totaling $13,230,000, working capital of
$9,400,000 and accumulated deficit of $222,409,000.
At December 31, 2004, the Company had cash, cash equivalents and
short-term investments totaling $21,578,000, working capital of
$19,335,000 and accumulated deficit of $212,349,000. The Company
incurred a net loss from continuing operations of $17,520,000 for
the six months ended June 30, 2005, and a net loss from continuing
operations of $31,845,000 for the year ended December 31, 2004.
The Company used $16,967,000 of net cash in operations for the six
months ended June 30, 2005.
TANGER FACTORY: Sells Outlet Center for $14.7 Million in Minnesota
------------------------------------------------------------------
Tanger Factory Outlet Centers, Inc. (NYSE: SKT), completed the
sale of its 134,480 square foot outlet center located in North
Branch, Minnesota for a total cash sales price of $14.7 million.
After the deduction of all closing costs, Tanger will receive
net proceeds of approximately $14.2 million and expects to
recognize a net gain on the sale of the property of approximately
$10.4 million. Tanger originally developed and built this
property in 1992.
The center is approximately 100% occupied, and generates average
tenant sales of approximately $229 per square foot compared to
Tanger's portfolio average of approximately $320 per square foot.
The center represents about 1.6% of the company's gross leasable
area and less than 1% of its calendar year 2005 net operating
income, before general and administrative expenses. The sales
price of $14.7 million represents an 8.6% capitalization rate on
estimated 2006 net operating income. Tanger will continue to
manage and lease the property for a fee.
"We felt it was an opportune time to divest ourselves of this
relatively small property in North Branch, Minnesota," Stanley K.
Tanger, Chairman of the Board and Chief Executive Officer stated.
"The proceeds from the sale of this center will generate capital
to invest in our new developments or to reduce outstanding debt.
The sale of this property is an example of our company's
continuing efforts to aggressively manage our assets and to
increase shareholder value."
About Tanger Factory Outlet
Based in Greensboro, NC, Tanger Factory Outlet Centers, Inc. --
http://www.tangeroutlet.com/-- a fully integrated, self-
administered and self-managed publicly traded REIT, presently owns
29 centers in 21 states coast to coast, totaling approximately 8
million square feet of gross leasable area. Tanger also owns a
50% interest in one center containing approximately 402,000 square
feet and manages for a fee three centers totaling approximately
293,000 square feet.
* * *
Moody's Investors Service assigned a Ba1 rating on Tanger
Factory's Preferred Stock on June 2005.
TAUBMAN CENTERS: Fitch Affirms $300 Mil. Pref. Stock's BB- Rating
-----------------------------------------------------------------
Fitch Ratings affirmed the 'BB-' rating on Taubman Centers, Inc.'s
(TCO) $300 million in outstanding preferred stock, as well as the
'BB' rating on The Taubman Realty Group Limited Partnership, the
operating partnership of Taubman Centers, Inc. The Rating Outlook
is Stable.
The ratings reflect TCO's high quality and geographically
diversified portfolio of regional shopping centers and malls.
The productivity of the Taubman malls is among the highest in the
industry as tenant sales topped $500 per square foot in 2005.
TCO has importantly reduced its exposure to floating rate debt,
which was 14% of total debt outstanding as of Dec. 31, 2005.
While still higher than many real estate investment trusts, TCO
has also curtailed its development pipeline as a percentage of
total assets to some extent.
Although TCO has employed an exclusively secured financing
strategy, it now has three unencumbered properties since mortgages
on these assets have recently been paid off. Moreover, TCO also
does possess additional flexibility through its two lines of
credit totaling $390 million, which are secured by two properties
and had no borrowings outstanding of Dec. 31, 2005. Furthermore,
near-term requirements, such as TCO's lease expirations and debt
maturities are reasonably manageable and both average
approximately 6% per annum over the next five years. Tenant
diversity for TCO is also sound as the top five tenants comprise
only 15% of total mall gross leaseable area.
The ratings acknowledge the significant asset concentration
inherent in the portfolio as TCO only has a total of 21
properties. In addition, TCO's largest two properties comprise a
disproportionate 25% of total company net operating income (NOI).
Despite this, the portfolio has relatively strong geographic
diversification with a presence in 19 separate markets and strong
underlying operating performance as same-store NOI growth
increased 6.6% in 2005 and year-end occupancy improved to 90%.
The Fixed Charge ratio, defined as recurring earnings before
interest, taxes, depreciation and amortization (EBITDA) less
capital expenditures and straight line rent adjustments to total
interest expense and preferred dividends for TCO was 1.6x for the
twelve months ending Dec. 31, 2005. With respect to leverage,
debt plus preferred stock to undepreciated book capital basis was
78.1% at YE 2005. Both of these measures are consistent with the
'BB' issuer rating and 'BB-' preferred stock rating.
Taubman Centers, Inc. is a self-administered Michigan-based REIT
that:
* acquires,
* develops,
* owns, and
* manages
regional shopping centers.
As of Dec. 31, 2005, TCO had interests in 21 regional and super
regional shopping centers aggregating 23.6 million square feet of
GLA located in ten states. Ten of TCO's properties are wholly
owned, three are also consolidated and 95%, 90% and 50.1% owned,
respectively and eight of the properties are held in joint
ventures.
TCO currently has:
* total assets of approximately $2.8 billion;
* total debt of $2.1 billion; and
* an undepreciated total book capital of $3.1 billion.
TEKELEC: Delay in Filing Annual Reports Might Trigger a Default
---------------------------------------------------------------
Tekelec (NASDAQ: TKLC) filed a Form 12b-25 with the Securities
and Exchange Commission stating that it was unable to file its
Form 10-K for the year ended Dec. 31, 2005, on March 16, 2006.
The Company says it will file its 2005 Form 10-K as soon as
possible.
"We are working diligently to complete all the steps necessary to
file our 2005 Form 10-K and publish full year results for 2005,"
Frank Plastina, president and chief executive officer of Tekelec,
commented on these developments.
"Based on 2005 orders and continuing interest in our products, we
believe that our business fundamentals are solid. Our liquidity
is sound with cash and marketable securities totaling
approximately $226 million on our balance sheet at Dec. 31, 2005.
"We look forward to finishing the remaining work to become current
in all our filings and to reporting our progress towards achieving
that goal when appropriate."
Likely Default
The delay in filing its Annual Reports might result in a potential
acceleration of the redemption of the $125 million 2.25% Senior
Subordinated Convertible Notes due June 2008.
Also, the Company's failure to timely file its 2005 Form 10-K will
likely result in the default with respect to the company's Senior
Subordinated Convertible Notes or the Credit Agreement relating to
a $30 million bank line of credit.
Nasdaq Delisting
The company received, on March 20, 2006, a notice from The Nasdaq
Stock Market indicating that the Company's common stock is subject
to potential delisting from the Nasdaq National Market as a result
of its failure to comply with Marketplace Rule 4310(c)(14).
This listing standard requires the Company to timely file all
reports with the Securities and Exchange Commission, as required
by the Securities Exchange Act of 1934, as amended.
The Company intends to request a hearing before a Nasdaq Listing
Qualifications Panel for review of the delisting determination.
This request will automatically stay the delisting of the
Company's common stock pending the Panel's review and decision.
The Company's common stock will continue to trade on the Nasdaq
National Market until the Panel issues a decision and any
exception granted by the Panel expires.
About Tekelec
Tekelec -- http://www.tekelec.com/-- develops traditional and
next-generation signaling and switching telecommunications
solutions, business intelligence tools and value-added
applications. Tekelec's innovative software are widely deployed
in traditional and next-generation wireline and wireless networks
and contact centers worldwide. Corporate headquarters are located
in Morrisville, N.C., with research and development facilities and
sales offices throughout the world.
TENET HEALTHCARE: Judge Declares Mistrial in San Diego Jury Trial
-----------------------------------------------------------------
Tenet Healthcare Corporation (NYSE: THC) reported Tuesday that a
federal jury in San Diego has deadlocked and was unable to reach a
verdict in the retrial of the case entitled United States of
America v. Barry Weinbaum, Tenet HealthSystem Hospitals Inc. and
Alvarado Hospital Medical Center Inc. Because of the deadlock,
U.S. District Judge M. James Lorenz declared a mistrial. Tenet
HealthSystem Hospitals Inc. is a Tenet subsidiary that owns
Alvarado Hospital Medical Center.
"It is unfortunate that this second jury, like the first, was
unable to reach a verdict in this case after a seven-month trial
and more than 60 days of deliberations over the past four and a
half months," said Peter Urbanowicz, Tenet's general counsel.
"Tenet continues to believe that physician relocation agreements
such as those entered into by Alvarado are a common practice used
by many hospitals to bring needed health care resources to their
communities. This case has amply demonstrated that the law
surrounding physician relocation agreements is complicated and
subject to differing interpretations."
Urbanowicz added, "Like the two juries that have deadlocked in
February 2005 and now April 2006, Tenet and the prosecutors
disagree over whether anyone at Alvarado Hospital Medical Center
intended to break the law when they recruited physicians to the
fast-growing eastern part of San Diego County. Because there is
no reason to believe any other jury would produce a different
result, we earnestly hope that the prosecutors will decide not to
re-try this case a third time. It's time for all of us now to
devote our full energies to resolving the broader issues."
In June 2003, a federal grand jury returned a multi-count
indictment related to payments made by the hospital under
physician relocation agreements that had been entered into over a
period of several years in the 1990s. Federal law permits
hospitals to assist physicians financially in relocating to a new
community if the hospital can demonstrate that there is a need for
the physician's services in the hospital's service area.
About Alvarado Hospital
Alvarado Hospital Medical Center --
http://www.alvaradohospital.com/-- is a 311-bed acute care
hospital in the rapidly growing eastern San Diego County
community. The hospital specializes in cardiac services,
emergency medicine, neuroscience, orthopedics, oncology,
rehabilitation, skull base surgery, surgical services, vascular
services and surgical weight reduction.
About Tenet Healthcare
Tenet Healthcare Corporation -- http://www.tenethealth.com/--
through its subsidiaries, owns and operates acute care hospitals
and related health care services. Tenet's hospitals aim to
provide the best possible care to every patient who comes through
their doors, with a clear focus on quality and service.
* * *
As reported in the Troubled Company Reporter on Jan. 25, 2006,
Moody's Investors Service affirmed B3 ratings on Tenet Healthcare
Corporation following the company's restatement of previously
reported financial statements. The outlook for the ratings
remains negative, Moody's said, as it also affirmed Tenet's
speculative grade liquidity rating at SGL-4.
The affirmation of the ratings reflects Moody's belief that the
announced restatement of prior period financial results does not
materially affect factors considered by Moody's in determining the
rating as considered in Moody's Global For-Profit Hospital
Industry Rating Methodology. More specifically, Moody's expects
the company to maintain metrics, which when aggregated and
weighted in accordance with the methodology, will remain
consistent with its B3 rating.
TENET HEALTHCARE: Fitch Affirms B- Senior Unsecured Bond Rating
---------------------------------------------------------------
Fitch Ratings affirmed Tenet Healthcare Corp.'s ratings. The
Rating Outlook is Negative.
Tenet has approximately $4.8 billion in debt outstanding, mostly
senior unsecured notes with the earliest maturity being the 6 3/8%
senior unsecured notes due 2011. Tenet's unrestricted cash
balance at Dec. 31, 2005, was approximately $1.4 billion.
Ratings affirmed by Fitch include:
-- Issuer Default Rating 'B-'
-- Senior unsecured notes 'B-/RR4'
THC's IDR rating remains appropriate given continued operational
difficulties hindering a financial turnaround and still-pending
legal concerns. In recovery analysis, applying an asset
liquidation value to the debt recovery resulted in approximately
50% recovery and borderline ability to notch-up the unsecured debt
rating from the IDR under Fitch's methodology. However, given the
uncertainty regarding outstanding legal issues, this debt is rated
at the Issue Default Rating.
Coverage and leverage metrics are appropriate for the rating, and
the company's liquidity profile serves to further support the
rating. Fitch anticipates that Tenet will generate enough cash
flow to cover operating costs and interest obligations plus the
majority of capital expenditures, so default prospects are
mitigated unless unexpectedly large litigations settlements arise.
Leverage (total debt/EBITDA) at Dec. 31, 2005, was 7.8x and FFO
(funds from operations) adjusted leverage 4.8x. For 2005 coverage
(EBITDA/interest) was 1.5x with funds from operations interest
coverage of 1.0x. In 2005, Tenet generated $763 million in net
cash flow from operations (NCFFO).
However, cash from discontinued operations contributed $45 million
and Tenet received a tax refund of $537 million. Excluding these
items, NCFFO would have been $226 million. Free cash flow (after
capital expenditures) in 2005, including the tax proceeds, was
$185 million, excluding the tax proceeds free cash flow was
negative $352 million.
Fitch anticipates that THC will burn through approximately $200
million-$300 million in cash in 2006 but liquidity will remain
relatively strong, due to:
* a large cash balance (unrestricted cash at Dec. 31, 2005
was $1.4 billion);
* the expectation that any potential settlement payments will
be manageable; and
* the fact that the company faces no material debt maturities
until 2011.
Finally, Fitch anticipates Tenet will establish a traditional bank
facility once a global settlement with the federal government is
reached to further augment liquidity. Fitch anticipates rating
any new facility in accordance with its established rating and
recovery procedures.
The Negative Outlook reflects continued operational challenges
exacerbated by industry pressures and numerous ongoing
investigations.
Like the balance of the sector, THC continues to struggle with
soft patient volumes and bad debt issues. Tenet's same-store
admissions were down 2.5% in the fourth quarter and 1.7% for the
year. While several operators are experiencing soft volume,
Tenet's volume woes are also attributed to continued difficulties
with 'splitter docs', or physicians who previously admitted to
Tenet facilities but have shifted their patients to competing
hospitals. Additionally, THC operates mostly in competitive urban
markets where doctors have other alternatives to send patients to.
A lack of volume gains is offsetting the company's pricing
momentum and ultimately slowing an operational turnaround. The
company is, however, sustaining its positive momentum regarding
pricing. Specifically, the company continues to make progress
with managed care payors in terms of both the pricing and the
structure of contracts. Overall same-store inpatient pricing (net
revenue per admission) was up 6.7% in Q4 2005 (adjusting for the
company's discount policy, same-store pricing was up 9.5%). In
addition, the company reports that its managed care pricing for
new contracts has mostly achieved parity with its peers in the
mid- to high- single-digit range.
Bad debt exposure continues to be problematic and is hindering any
margin recovery. Fitch expects no material improvement in Tenet's
bad debt exposure in 2006. While most sector participants have
struggled with bad debt, Tenet's exposure is exacerbated by its
markets; the company has significant operations in notoriously
high bad debt states such as Texas and Florida.
Ultimately, Tenet's consolidated EBITDA margin continues to
underperform versus industry averages. In 2005, EBITDA margin was
6.4%. Fitch does expect modest EBITDA margin improvement by year-
end 2006 spurred by improved managed care pricing, assuming some
success in restoring volumes and payor mix and cost savings.
Fitch notes that the company has made some meaningful progress
with regard to some of its legal exposure including a settlement
with shareholders for a relatively modest amount ($91 million net
of insurance and taxes) and agreements with the Florida State's
Attorney.
Should Tenet's operational performance decline versus Fitch
expectations or if the company's various legal challenges result
in fines, penalties, settlements, etc., approaching or in excess
of the company's current unrestricted cash balance, the company's
rating and Outlook would likely be revised downward.
TRANS-INDUSTRIES: Files for Chapter 11 Reorganization
-----------------------------------------------------
On April 5, 2006, Trans-Industries, Inc. (OTC: TRNI) and its
related subsidiaries, including Transmatic Inc., Transign Inc.,
and Vultron Inc., filed a voluntary petition for reorganization
under Chapter 11 of the U.S. Bankruptcy Code with the Eastern
District of Michigan.
Trans-Industries Board of Directors directed the company to take
this action after determining that Chapter 11 reorganization is in
the best interest of the company, its employees, customers,
creditors and other stakeholders. This filing will allow the
Company to address its financial challenges and support its
ongoing efforts to become a more efficient and cost-effective
company. The Company continues to focus on improving
profitability and cash flow by reducing corporate management
expenses and reducing fixed costs through manufacturing plant
consolidations.
Trans-Industries expects to continue normal business operations
throughout the reorganization process.
The Company expects to:
* continue to make our customers our number one priority.
* pay suppliers for goods and services received during the
reorganization process.
* provide employee wages, healthcare coverage, vacation, sick
leave and similar benefits.
This action taken is a necessary and responsible step to insure
the future of Trans-Industries and our commitment to our
customers, creditors and employees.
About Trans-Industries
Headquartered in Auburn Hills, Michigan, Trans-Industries, Inc. --
http://www.transindustries.com/-- provides bus lighting systems,
source extraction systems for the environmental market, and
electronic systems for the display of information. The Company
and its debtor-affiliates filed for chapter 11 protection on
April 5, 2006 (Bankr. E.D. Mich. Case No. 06-43993). Kenneth
Flaska, Esq., at Dawda, Mann, Mulcahy & Sadler, PLC, represents
the Debtors in their restructuring efforts. When the Debtors
filed for protection from their creditors, they listed estimated
assets and debts between $1 million and $10 million.
TRANSCONTINENTAL INC: DBRS Confirms BBB(High) Debentures Rating
---------------------------------------------------------------
Dominion Bond Rating Service confirmed the rating of
Transcontinental Inc. Despite challenging industry conditions,
both in publishing and commercial printing, Transcontinental has
averted credit profile deterioration due primarily to its
financial discipline and diversified niche business mix that
fosters stability.
Rating action:
* Transcontinental Inc. Senior Unsecured Debentures
-- Confirmed BBB (high)
The Company's strong financial profile has provided the necessary
flexibility that enables it to compete more effectively. Using
free cash flow to improve production efficiency and to develop new
service offerings has to some extent mitigated heightened business
risks. In 2005, free cash flow continued to be solid and the
balance sheet remained strong with substantial cash levels and
reasonable leverage. Furthermore, the Company maintained
industry-leading financial ratios.
Several of the Company's product categories have essentially
become commoditized services. However, Transcontinental has
effectively differentiated itself by integrating its services into
its customers' value chain, which has created more of a
collaborative system rather than an adversarial one that focuses
only on price. This is through a broader scope of services that
are value-added or customized and emphasis on cross-selling. A
good example is the Company's shift to include more marketing
services, as the prevailing trend is targeted marketing. Overall,
the Company continues to be large enough to exploit economies of
scale, yet small enough to adapt to a rapidly changing competitive
environment. Its continuous-improvement culture facilitates
organizational change and positions the Company to endure stagnant
pricing conditions.
The caveat is that DBRS does not anticipate adverse industry
conditions to reverse any time soon. Commercial printing will
continue to be hampered by overcapacity as there doesn't appear to
be a catalyst that can improve soft demand or excess supply.
Publishing is contending with media fragmentation as information
is distributed on multiple new platforms. Advertisers are
increasingly exploring more innovative methods of reaching
consumers, at the expense of traditional print media.
Due to moderate overall organic growth prospects and more intense
competition, DBRS notes that the Company's credit profile is
sensitive to acceleration of operating risks and diminished
balance sheet health, either of which, if materialized, could lead
to an adverse change in credit profile.
TRICOM SA: In Talks with Creditors to Restructure Balance Sheet
---------------------------------------------------------------
Tricom, S.A., and certain of its creditors have agreed in
principle to restructure the Company's balance sheet. These
creditors include an ad hoc committee comprised of holders of the
Company's 11-3/8% Senior Notes and other significant creditors, as
well as certain affiliates of GFN Corporation, the Company's
majority shareholder.
Under the agreement, all of the Company's and its subsidiaries
debts will be exchanged for new debt of the reorganized Company
and new equity in a to-be-formed holding company. The
transactions will reduce reorganized Company and its subsidiaries'
debts. The creditors will own all of the reorganized Company's
equity. The restructuring will be done through a reorganization
proceeding in the United States. The agreement in principle is
not intended to affect the ordinary course trade obligations of
the Company or its subsidiaries. All of the Company's existing
equity interests, including the American Depository Shares will be
eliminated.
Hector Castro Noboa, the Company's Chief Executive Officer,
informed the Securities and Exchange Commission that since the
parties are in the process of converting the agreement in
principle into a definitive agreement satisfactory to all parties,
the value and treatment of the Company's existing obligations, as
well as its existing equity interests, is uncertain at this time.
There can be no assurance whether, or if so when, the Company will
ink a pact with its creditors or if or when a successful
restructuring will take effect. The Company's future results and
its ability to continue operations will depend on successful
consummation of a financial restructuring of the Company's balance
sheet, Mr. Noboa added.
Tricom, S.A. -- http://www.tricom.net/-- is a full service
communications services provider in the Dominican Republic. The
Company offer local, long distance, mobile, cable television and
broadband data transmission and Internet services. Through Tricom
USA, the Company is one of the few Latin American based long
distance carriers that is licensed by the U.S. Federal
Communications Commission to own and operate switching facilities
in the United States. Through its subsidiary, TCN Dominicana,
S.A., the Company is the largest cable television operator in the
Dominican Republic based on its number of subscribers and homes
passed. The Company's securities are traded in the United
States.
Moody's Investors Service assigned a Ca issuer and senior
unsecured rating. Moody's said the outlook is stable.
TRM CORP: Incurs $13.7 Million Net Loss in Fourth Quarter
---------------------------------------------------------
TRM Corporation (NASDAQ: TRMM) reported financial results for the
fourth quarter and full year ended December 31, 2005.
During Q4 2005, consolidated gross sales increased 29% to
$54.5 million from $42.3 million in Q4 2004. Consolidated net
sales were $26.8 million, a 1% increase compared to $26.6 million
for the prior year period. The year over year increase in gross
and net sales largely results from a significant increase in ATMs
arising from the acquisition of the Access Cash International ATM
network from eFunds Corporation. While Q4 2005 year-over-year
sales reflect a significantly larger ATM portfolio, the Company's
fourth quarter net sales performance reflects an increase in the
ATM discount rate and a decline in photocopy net sales, as well as
eFunds related fourth quarter unusual items.
Additionally, results in Q4 2005 were affected by several unusual
items which amount to $13.0 million. For Q4 2005, these unusual
items affected financial results:
-- $5.2 million of previously deferred costs related to
acquisitions, primarily charges associated with the proposed
UK Travelex acquisition, were charged to expense;
-- $2.7 million of expenses related to the eFunds acquisition;
-- $4.6 million of other expenses related to Sarbanes Oxley 404
compliance, debt retirement costs, write-down in receivables
and severance payments;
-- $1.6 million in fixed asset write-offs;
-- $1.1 million settlement gain from a vendor relating to a
design flaw in the North American photocopier equipment;
Reflecting these items, Q4 2005 EBITDA declined to ($11.9 million)
from $5.6 million in Q4 2004 and from $7.7 million in Q3 2005.
Adjusted EBITDA was ($6.4 million) in Q4 2005 compared to
$7.6 million in Q4 2004.
In Q4 2005, gross profit was $8.8 million compared to
$11.5 million in the fourth quarter of 2004. Operating loss
was $15.9 million in Q4 2005 compared to operating income of
$2.0 million in Q4 2004.
Fourth quarter net loss included interest expense of $3.0 million
as well as the significant and unusual items. Net loss was
$13.7 million in Q4 2005 compared to net income of $541,000 in Q4
2004. There was an average of 16.7 million diluted shares
outstanding in Q4 2005 compared to 14.1 million in Q4 2004.
For the year ended December 31, 2005, the Company reported gross
sales of $233.9 million, up 86% from $126.0 million in 2004. Net
sales were $124.7 million, up 35% from $92.6 million in 2004.
Gross profit was $53.6 million, up 26% from $42.4 million in 2004,
and operating loss was $5.1 million compared to operating income
of $13.8 million in 2004.
The Company had EBITDA of $16.4 million during 2005, compared to
$24.3 million during 2004. On an adjusted basis, EBITDA was
$22.6 million in 2005 compared to $26.3 million in 2004.
For the year ended December 31, 2005, net loss was $8.9 million
compared to net income of $7.9 million in 2004. There was an
average of 14.5 million diluted shares outstanding in 2005
compared to 10.1 million for the same period in 2004.
Balance Sheet
The Company's long-term debt, consisting of commercial loans and
capital leases, declined to $686,000 driven by the covenant
violations, which resulted in the reclassification of the
outstanding long term portion of the eFunds ATM network
acquisition debt into the current liabilities portion of the
balance sheet. This compares to $121.8 million at the end of
2004. Largely because of the reclassification, TRM's current
liabilities increased to $193.9 million at December 31, 2005,
compared to $41.7 million at December 31, 2004.
Accounts payable declined to $13.2 million at December 31, 2005,
from $20.4 million at December 31, 2004, and inventories declined
to $1.9 million from $7.3 million during the same period.
Shareholders' equity at December 31, 2005 increased to
$139.9 million compared to $111.7 million at the end of 2004.
Recent Events
TRM Corporation is not in compliance with the leverage and fixed
charge ratio covenants in its credit agreement with certain
lenders and Bank of America, N.A., as administrative agent,
primarily because of fourth quarter charges, including those
related to costs incurred in the attempted Travelex ATM Network
acquisition and also including additional charges related to the
ATM business the Company acquired from eFunds Corporation. The
lenders have agreed to grant relief from compliance with these
covenants for a period of 90 days through June 15, 2006, during
which time TRM expects to refinance the credit facility. However
there can be no assurance that TRM will be able to refinance the
credit facility within the time period.
Headquartered in Portland, Oregon, TRM Corporation --
http://www.trm.com/-- is a consumer services company that
provides convenience ATM and photocopying services in high-traffic
consumer environments. TRM's ATM and copier customer base has
grown to over 35,000 retailers throughout the United States and
over 46,200 locations worldwide, including 6,400 locations across
the United Kingdom and over 4,900 locations in Canada. TRM
operates one of the largest multi-national ATM networks in the
world, with over 22,000 locations deployed throughout the United
States, Canada, Great Britain, including Northern Ireland and
Germany.
* * *
As reported in the Troubled Company Reporter on Mar. 23, 2006,
Standard & Poor's Ratings Services lowered its corporate credit
rating on Portland, Oregon-based TRM Corporation to 'CCC' from
'B+' and revised its CreditWatch placement to developing from
negative. The downgrade reflected the weakened status of the
company's loan agreement.
As reported in the Troubled Company Reporter on Mar. 23, 2006,
Moody's Investors Service downgraded the corporate family rating
of TRM Corporation to Caa1 from B2 and assigned a negative
outlook.
U.S. CAN: Company's Request Prompts S&P to Withdraw B Rating
------------------------------------------------------------
Standard & Poor's Ratings Services withdrew its ratings on
U.S. Can Corp., including its 'B' corporate credit rating, at
the request of the company.
Standard & Poor's also removed the ratings from CreditWatch,
where they were placed Feb. 16, 2006. This followed the
completion of the sale of the company's U.S. and Argentinean
operations to Ball Corp. (BB+/Stable/--) and the repayment of
all of U.S. Can's debt.
UAL CORP: Plan Oversight Committee Wants Itself Dissolved
---------------------------------------------------------
The Plan Oversight Committee was formed as the successor-in-
interest to the Official Committee of Unsecured Creditors to
compel Reorganized UAL Corporation and its debtor-affiliates to
make distributions under their Plan of Reorganization, among other
reasons.
The Plan Committee and its professionals have:
-- monitored the distributions of equity in the Reorganized
Debtors;
-- ensured compliance with relevant Plan provisions; and
-- devoted their attention to other material events
post-effective date.
The Plan Committee met regularly with its professionals to remain
informed on the Reorganized Debtors' progress in implementing the
Plan post-effective date. In turn, Plan Committee professionals
met regularly with the Reorganized Debtors' advisors.
Pursuant to the Plan, the Plan Committee will dissolve once 80%
of equity reserved for unsecured creditors has been distributed
or upon the Plan Committee's application.
On March 21, 2006, the Reorganized Debtors, their counsel, and
financial advisors represented to the Plan Committee that
slightly more than 80% of new equity reserved for unsecured
creditors had been distributed to the unsecured creditor body.
The Plan Committee and its professionals analyzed these
representations, and on March 24, 2006, Plan Committee
professionals verified the accuracy of these representations.
In this regard, the Plan Committee asks the Court to:
(a) dissolve the Plan Committee as of March 24, 2006; and
(b) discharge and release the members of the Plan committee
and its professionals as of March 24, 2006.
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. 120; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
UAL CORP: Settling Multi-Mil. Aircraft Dispute with Wells Fargo
---------------------------------------------------------------
United Air Lines, Inc., prior to its bankruptcy filing, financed
its aircraft fleet through the issuance of private and public
debt certificates. United restructured many of its privately
financed transactions throughout the bankruptcy cases and reached
a global settlement and restructuring as to its publicly financed
aircraft, other than the 1997-1 EETC Transaction, shortly before
confirmation of the Plan. The Transaction financed United's
purchase of the 1997-1 EETC Class A Certificates and United's
taking control over the 14 aircraft. Unfortunately, a consensual
restructuring of the Transaction has proven elusive.
The public debt certificates issued under the Transaction are
backed by equipment notes that are secured by mortgages and
leases on the Aircraft. Four tranches of certificates were
issued in the Transactions -- the senior, "A" tranche and the
subordinated "B", "C" and "D" tranches.
Throughout most of United's Chapter 11 cases, the Class B and C
Certificates were owned by one holder not affiliated with the
Class A Certificate Holders. United has held the Class D
Certificates since the inception of the Transaction. In July
2005, United received authority from the Bankruptcy Court to
purchase the Class B and C Certificates for less than face value.
Upon purchasing the Class B and C Certificates, United sought to
exercise the contractual right afforded junior Certificate
Holders under the Transaction to buy out the Class A Certificate
Holders at par.
Purchase of the Class A Certificates allows United to become the
controlling party in the transaction, avoid the possibility of
repossession of aircraft, and refinance the Transaction. Upon
approval of Class A Certificate purchase, United expects to
refinance the Aircraft under its exit financing facility.
In August 2005, United sought and obtained the Bankruptcy Court's
permission to purchase the Class A Certificates for $292,787,446.
United transmitted a notice to Wells Fargo of its intention to
purchase the Class A Certificates. However, Wells Fargo declined
to allow United to consummate the purchase, contending, inter
alia, that the purchase price for the Class A Certificates should
be calculated using a New York statutory judgment rate of 9%
rather than LIBOR plus 22 basis points. Wells Fargo's
calculation of the purchase price at 9% per annum increased the
purchase price by about $65,000,000. Wells Fargo and United also
disagreed on the timing of the application of adequate protection
payments to the Class A Certificate balance that effectively
increased what United believed was required to purchase the Class
A Certificates.
Subsequently, believing it was appropriately exercising remedies
available under the Transaction documents, Wells Fargo notified
United of a purported sale of the Equipment Notes to a newly
formed trust. United sought to nullify the sale of the Equipment
Notes.
Concurrently, United initiated an adversary proceeding to enforce
the Transaction documents, to obtain a declaration as to the
proper Class A Certificate purchase price, and enjoin Wells Fargo
from preventing United from consummating its refinancing of the
Transaction.
On December 27, 2005, the Bankruptcy Court issued proposed
findings of fact and conclusions of law negating Wells Fargo's
purported sale of the Equipment Notes and finding LIBOR plus 22
basis points to be the appropriate rate of interest on the Class
A Certificates rather than the New York statutory judgment rate
asserted by Wells Fargo. The proposed findings of fact and
conclusions of law currently are pending before the District
Court for de novo review.
In addition, Wells Fargo objected to United's Plan of
Reorganization, originally arguing that the Plan failed to
appropriately treat Wells Fargo's claims. Although United added
language to the Plan specifying that Wells Fargo's Class A
Certificate claims would be unimpaired by United's purchase of
the Class A Certificates at par, Wells Fargo argued at the
confirmation hearing that to render Wells Fargo's unimpaired,
United would have to pay the over $400,000,000 purportedly owing
under the Equipment Notes.
The Bankruptcy Court overruled Wells Fargo's objection and
confirmed the Plan. Wells Fargo's appeal of U.S. Bankruptcy Court
for the Western District of Missouri's confirmation order
currently is pending before the District Court.
After the effective date of the Plan, Wells Fargo brought an
emergency motion to enforce the Plan. Wells Fargo again argues
that under the Plan, on the Plan effective date, United had to
pay Wells Fargo the full amounts owing under the Equipment Notes
to render Wells Fargo's claims unimpaired under the Transaction
documents.
Wells Fargo has withdrawn the request as moot, as the parties
enter into a settlement.
Settlement
United and Wells Fargo ask Judge Wedoff to approve a settlement
of their disputes, permitting consummation of United's purchase
of the Class A Certificates and its taking control of the
Aircraft, which will eliminate the possibility of repossessions
and operational disruptions.
That the Settlement is the result of hard bargaining cannot be
doubted, according to Erik W. Chalut, Esq., at Kirkland & Ellis
LLP, in Chicago, Illinois. The Settlement represents a
compromise, after intense litigation, ultimately acceptable to
Wells Fargo and United.
United and Wells Fargo agree that United will purchase the Class
A Certificates pursuant to these terms:
A. On March 15, 2006, United will make its scheduled payment of
$4,000,000 under the Adequate Protection Stipulation.
B. Upon Court approval of the Settlement, in exchange for the
Class A Certificates, United will make cash payment of:
(1) $267,080,686, representing the amount required to purchase
the Class A Certificates at par, after accounting for the
Adequate Protection Stipulation payment, as calculated
based on a rate of LIBOR plus 22 basis points; plus
(2) $10,000,000 in settlement of all remaining litigation
between the parties.
C. Wells Fargo will be allowed a $30,000,000 unsecured deficiency
claim under the Plan, for which United will monetize "New
UAL Common Stock" issued under the Plan so as to yield a
recovery to Wells Fargo of $3,723,990. United will make the
$3,723,990 cash payment to Wells Fargo. Any additional value
on account of Wells Fargo's $30,000,000 unsecured deficiency
claim will revert to the bankruptcy estates.
D. If the closing date extends beyond March 15, 2006, United will
pay an additional agreed upon amount per day, based on an
annual rate of 4.9% and the principal balance of the Class A
Certificates as of March 15, 2006.
The parties will exchange mutual releases.
The aggregate payments to be made by United for the benefit of
the Class A Certificate Holders under the Settlement shall be
$284,804,676 plus a per diem if closing extends beyond March 15,
2006.
Judge Wedoff approves the Debtors' settlement agreement with
Wells Fargo.
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. 120; Bankruptcy Creditors'
Service, Inc., 215/945-7000)
UNITED RENTALS: S&P Holds BB- Corp. Credit Rating on Neg. Watch
---------------------------------------------------------------
Standard & Poor's Ratings Services held its 'BB-' corporate credit
ratings on equipment rental company United Rentals (North America)
Inc. (United Rentals) and its parent United Rentals Inc.(URI) and
other ratings on the two companies on CreditWatch with negative
implications, where they were originally placed on Aug. 30, 2004,
pending any further delay in the filing of quarterly financial
reports for 2005 interim periods. These financial reports were
due by March 31, 2006, according to waivers the company received
on its bond indentures and have been delayed.
"We will continue to review events as further information becomes
available," said Standard & Poor's credit analyst John Sico. "Any
new developments that hurt the company's credit quality or its
liquidity, including its ability to retain access to its bank
facility, could lead to further rating action."
The CreditWatch still reflects the uncertainty about whether the
company can satisfy bondholders' reporting requirements. The
company has said that it expects to file these reports by mid-
April 2006. The failure to file these reports does not
automatically result in an event of default, as the trustee
or holders of at least 25% of the principal amount of the notes
must notify the company of its non-performance. If such a notice
were delivered to the company, URI would have 30 days to cure the
default.
Meanwhile, bank lenders have agreed to extend the deadline for
these reports until April 28, 2006. The waiver allows URI to draw
under the revolving credit facility for funds necessary to run its
operations. If the company fails to file the reports by April 28,
it could lose access to bank lines, and if there is an
acceleration by bondholders, the company could also face a
multiple-notch downgrade.
In addition, the company is still subject to an ongoing SEC
inquiry regarding accounting practices. A special committee
appointed by the company to look into the inquiry previously
issued a report with disclosures of improper accounting and the
alleged misconduct of company personnel. The SEC has not
announced any actions or potential actions. On March 31, 2006,
URI filed its annual audited financial reports for 2005 and 2004
separately on Forms 10-K. The restatements contained in these
filings have not had a meaningful negative effect on the company's
operations or financial condition, nor have these restatements had
any cash impact.
According to the reported financial information, United Rentals is
currently performing well in its equipment rental business (as are
its peers), because of the upturn in the business cycle. URI has
adequate liquidity and has access to its bank facility to support
operations until April 28, 2006.
VECTOR GROUP: Dec. 31 Balance Sheet Shows $33 Mil. Positive Equity
------------------------------------------------------------------
Vector Group Ltd. delivered its financial statements for the year
ended Dec. 31, 2005, to the Securities and Exchange Commission on
Mar. 17, 2006.
Vector Group reported $49,082,000 of net income on $478,427,000 of
total revenues for the year ended Dec. 31, 2005.
At Dec. 31, 2005, the company's balance sheet showed $603,130,000
in total assets, $569,727,000 in total liabilities, and
$33,403,000 in positive stockholders' equity.
Full-text copies of Vector Group Ltd.'s financial statements for
the year ended Dec. 31, 2005, are available for free at
http://ResearchArchives.com/t/s?77d
New Valley Exchange Offer
In December 2005, Vector acquired the remaining 42.3% of the
common shares of New Valley Corporation. As result of these
transactions, New Valley became a wholly owned subsidiary.
Each outstanding New Valley common share was exchanged for 0.54
shares of Vector common stock. A total of 5.05 million of the
company's common shares were issued to New Valley shareholders.
The surviving corporation was subsequently merged into a new
Delaware limited liability company named New Valley LLC, which
conducts the business of the former New Valley Corporation.
About Vector Group
Vector Group Ltd. -- http://www.vectorgroupltd.com/-- is a
holding company that indirectly owns Liggett Group Inc., Vector
Tobacco and a controlling interest in New Valley Corporation.
At Dec. 31, 2005, the company's balance sheet showed $33,403,000
of positive stockholders' equity, compared to an $84,803,000
equity deficit at Dec. 31, 2004.
VENTURE HOLDINGS: Chapter 7 Trustee Taps Clark Hill as Co-Counsel
-----------------------------------------------------------------
Stuart A. Gold, the Chapter 7 Trustee overseeing the liquidation
of Venture Holdings Company, LLC, and its debtor-affiliates, asks
the U.S. Bankruptcy Court for the Eastern District of Michigan for
permission to employ Clark Hill PLC as his co-counsel.
Prior to the Debtors' chapter 7 conversion, Clark Hill served as
the Official Committee of the Unsecured Creditors' co-counsel.
The Trustee wants Clark Hill's services because of its familiarity
with the Debtors' cases and its recognized expertise in business
liquidations and creditors' rights, and specifically its
substantial experience in Chapter 7 cases.
Clark Hill will:
a) advise and consult the Trustee concerning:
i) questions arising from the administration of the
Debtors' bankruptcy estates;
ii) the rights and remedies of the Trustee vis-.-vis the
assets of the Debtors' bankruptcy estates and the
administration of these cases; and
iii) the claims and interests of secured and unsecured
creditors, equity holders, and other parties in
interest in these cases;
b) analyze, appear for, prosecute, defend, and represent the
Trustee's interests in contested matters and adversary
proceedings arising in or related to these cases, including,
but not limited to, Chapter 5 causes of action and the
litigation against Mr. Winget, his affiliates, insiders, and
related parties; and
c) represent the Trustee with respect to these proceedings, and
assist the Trustee as appropriate with respect to the
matters identified in Section 704 of the Bankruptcy Code.
Joel D. Applebaum, Esq., a Clark Hill member, discloses the Firm's
professionals bill:
Professional Hourly Rate
------------ -----------
Joel D. Applebaum $365
Robert D. Gordon $350
Shannon L. Deeby $190
Seth A. Drucker $190
Designation Hourly Rate
------------ -----------
Members $220 - $400
Senior Attorneys $210 - $225
Associates $135 - $215
Legal Assistants $90 - $180
Mr. Applebaum assures the Court that his Firm does not represent
any interest materially adverse to the Debtors and their estates
and is a disinterested person as that term is defined in Section
101(14) of the Bankruptcy Code.
About Venture Holdings
Headquartered in Fraser, Michigan, Venture Holdings Company, LLC,
nka NM Holdings Company, LLC, and its debtor-affiliates filed for
chapter 11 protection (Bankr. E.D. Mich. Case No. 03-48939) on
March 28, 2003. Deluxe Pattern Corporation and its debtor-
affiliates filed for chapter 11 protection on May 24, 2004 (Bankr.
E.D. Mich. Case No. 04-54977). Venture's prepetition lenders
acquired Venture's assets during the chapter 11 proceeding. John
A. Simon, Esq., at Foley & Lardner LLP represents the Debtors.
On Jan. 17, 2006, the Court converted the Debtors' chapter 11
cases to chapter 7 liquidation. Stuart A. Gold was appointed as
the chapter 7 Trustee for the Debtors' estates.
VITRO SA: Sells 51% of Vitrocrisa Stake to Libbey Inc. for $103MM
-----------------------------------------------------------------
Vitro, S.A. de C.V. (NYSE: VTO and BMV: VITROA) reached an
agreement to sell its 51% interest in Vitrocrisa Holdings, S de
R.L. de C.V. and related companies (Vitrocrisa) to Libbey Inc.,
which currently owns 49% of this Mexico based joint venture formed
in 1997.
The equity sale for $80 million plus an additional $23 million of
intercompany payables and account receivables will represent a
total inflow of $103 million to Vitro. In addition, there will be
a real estate swap with Libbey.
As of Dec. 31, 2005 Vitrocrisa had a total debt of $67 million
which will be refinanced by Libbey.
After the transaction is completed, Libbey Inc. will become the
sole owner of this Mexican operation.
"We are very pleased with this important transaction. The sale is
consistent with Vitro's Strategic Plan aimed at reducing the
holding company debt and strengthening our financial position and
operations," Federico Sada, Vitro's CEO, said. "We have had a
strong and solid partnership with Libbey for the past eight years
and I believe that this transaction serves the strategic goals of
both companies."
With annual sales of $192 million in 2005, Vitrocrisa manufactures
and distributes glassware for the retail, food service, and
industrial segments of the glassware industry, and is the largest
manufacturer of glass tableware in Latin America.
The completion of this transaction is subject to approval from
governmental authorities and Vitro's shareholders.
The closing of the acquisition is subject to customary conditions,
including:
* successful completion of the financing,
* receipt by Vitro of the approval of its stockholders and
* regulatory approval by the Mexican Competition and Foreign
Investment commissions.
Closing is expected to occur in the second quarter of 2006.
About Libbey Inc.
Based in Toledo, Ohio, Libbey Inc. operates glass tableware
manufacturing plants in the United States in Louisiana, and Ohio,
in Portugal and in the Netherlands. Its Royal Leerdam subsidiary,
located in Leerdam, Netherlands, is among the world leaders in
producing and selling glass stemware to retail, foodservice and
industrial clients. Its Crisal subsidiary, located in
Portugal, provides an expanded presence in Europe. In addition,
Libbey is a joint venture partner in the largest glass tableware
company in Mexico. Its Syracuse China subsidiary designs,
manufactures and distributes an extensive line of high-quality
ceramic dinnerware, principally for foodservice establishments in
the United States. Its World Tableware subsidiary imports
and sells a full-line of metal flatware and holloware and an
assortment of ceramic dinnerware and other tabletop items
principally for foodservice establishments in the United States.
Its Traex subsidiary, located in Wisconsin, designs, manufactures
and distributes an extensive line of plastic items for the
foodservice industry. In 2005, Libbey Inc.'s net sales totaled
$568.1 million.
About Vitro S.A. de C.V.
Headquartered in Nuevo Leon, Mexico, Vitro, S.A. de C.V. --
http://www.vitro.com/-- (NYSE: VTO; BMV: VITROA), through its
subsidiary companies, is one of the world's leading glass
producers. Vitro is a major participant in three principal
businesses: flat glass, glass containers and glassware. Its
subsidiaries serve multiple product markets, including
construction and automotive glass; food and beverage, wine,
liquor, cosmetics and pharmaceutical glass containers; glassware
for commercial, industrial and retail uses. Vitro also produces
raw materials and equipment and capital goods for industrial use,
which are vertically integrated in the Glass Containers business
unit.
Founded in 1909 in Monterrey, Mexico-based Vitro has joint
ventures with major world-class partners and industry leaders that
provide its subsidiaries with access to international markets,
distribution channels and state-of-the-art technology. Vitro's
subsidiaries have facilities and distribution centers in eight
countries, located in North, Central and South America, and
Europe, and export to more than 70 countries worldwide.
* * *
As reported in the Troubled Company Reporter on Mar. 27, 2006,
Standard & Poor's Ratings Services lowered its long-term local
and foreign currency corporate credit ratings assigned to glass
manufacturer Vitro S.A. de C.V. and its glass containers
subsidiary Vitro Envases Norteamerica S.A. de C.V. (Vena) to 'B-'
from 'B'.
Standard & Poor's also lowered the long-term national scale
corporate credit rating assigned to Vitro to 'mxBB+' from
'mxBBB-'. The outlook is negative.
Standard & Poor's also lowered the rating assigned to Vitro's
notes due 2013 and Servicios y Operaciones Financieras Vitro S.A.
de C.V. notes due 2007 (which are guaranteed by Vitro) to 'CCC'
from 'CCC+'. Standard & Poor's also lowered the rating assigned
to Vena's notes due 2011 to 'B-' from 'B'.
WARRIOR ENERGY: Files Prospectus for $172.5-Mil Stock Offering
--------------------------------------------------------------
Warrior Energy Services Corporation (OTC: WGSV) filed a
preliminary prospectus for an offering of 7,000,000 shares of its
common stock for $172.5 million. Warrior is offering 6,383,697
shares of common stock, while the remaining 616,303 shares are
being offered by selling stockholders. Warrior intends to use the
net proceeds from the offering to simplify its capital structure
by repurchasing outstanding derivative securities and to reduce
debt.
In addition, Warrior has granted the underwriters a 30-day option
to purchase up to an additional 1,050,000 shares of common stock
to cover over-allotments, if any. Raymond James & Associates,
Inc. and Simmons & Company International are acting as lead
underwriters of the offering, and Johnson Rice & Company L.L.C. is
acting as co-manager. Copies of the preliminary prospectus
relating to the offering may be obtained from:
Raymond James & Associates, Inc.
880 Carillon Parkway
St. Petersburg, FL 33716
(800) 248-8863.
A full-text copy of the Preliminary Prospectus is available for
free at http://ResearchArchives.com/t/s?780
Warrior Energy Services Corporation fka Black Warrior Wireline
Corporation is a natural gas and oil well services company that
provides cased-hole wireline and well intervention services to E&P
companies. The Company has applied to list the common stock on
the Nasdaq National Market under the symbol "WARR". The current
trading symbol for the common stock on the over-the-counter market
is "WGSV".
As of December 31, 2005, the Company's equity deficit narrowed to
$15,571,447 from a $25,208,634 deficit at December 31, 2004.
WFS FINANCIAL: Moody's Lifts Ratings on 14 Classes of Securities
----------------------------------------------------------------
Moody's Investors Service upgraded 68 securities from 44 auto loan
backed securitizations and confirmed one tranche from one auto
loan backed securitization. The rating action reflects a
strengthening in the credit profile of the securities, based upon
the actual performance of the transactions and the build up of
credit enhancement relative to expected future losses in the
underlying receivables pools.
The build up of credit enhancement as a percent of the current
outstanding principal balance of the pools has been the result of
different factors such as the inclusion of nondeclining
enhancements as well as the initial trapping of excess spread
within transactions. In addition to the higher credit enhancement
levels, some of the auto loan pools are performing in line with,
or slightly better than, Moody's initial expectations.
The current upgrades are a product of Moody's ongoing monitoring
process of the sector. In the auto loan sector, where the loss
curve is reasonably predictable, deals generally have 12 months of
performance data before securities are considered for upgrade. In
addition, deals with a pool factor under approximately 15% are
excluded from the review process.
Upgrades:
* AmeriCredit Automobile Receivables Trust 2004-1; Class B,
Upgraded from Aa2 to Aa1
* AmeriCredit Automobile Receivables Trust 2004-1; Class C,
Upgraded from A1 to Aa2
* AmeriCredit Automobile Receivables Trust 2004-1; Class D,
Upgraded from Baa2 to A2
* AmeriCredit Canada Automobile Receivables Trust, Series
C2002-1, Class B, Upgraded from A1 to Aa1
* Bank One Auto Securitization Trust 2003-1; Class B, Upgraded
from Aa3 to Aa1
* BMW Vehicle Owner Trust 2003-A; Class B, Upgraded from A1
to Aa2
* Capital Auto Receivables Asset Trust 2003-2, Class B,
Upgraded from Aa3 to Aa2
* Capital Auto Receivables Asset Trust 2004-2, Class B,
Upgraded from A2 to A1
* Capital Auto Receivables Asset Trust 2004-2, Class C,
Upgraded from Baa3 to Baa2
* Capital One Prime Auto Receivables Trust 2004-2, Class B,
Upgraded from A3 to A1
* Capital One Prime Auto Receivables Trust 2004-3, Class B,
Upgraded from A3 to A2
* CarMax Auto Owner Trust 2003-1, Class C, Upgraded from
A3 to A2
* CarMax Auto Owner Trust 2004-1, Class C, Upgraded from
A1 to Aa3
* CarMax Auto Owner Trust 2004-1, Class D, Upgraded from
Baa3 to Baa2
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-1, Upgraded from A1 to Aa3
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-2, Upgraded from Baa3 to Baa2
* Chase Manhattan Auto Owner Trust 2003-A, Certificates,
Upgraded from Aa3 to Aa1
* Chase Manhattan Auto Owner Trust 2003-C, Certificates,
Upgraded from A1 to Aa3
* Ford Credit Auto Owner Trust 2003-B, Class C, Upgraded
from Aa3 to Aa1
* Ford Credit Auto Owner Trust 2004-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-2, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class C, Upgraded
from Baa2 to A2
* Ford Credit Auto Owner Trust 2005-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class C, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class C, Upgraded
from Aa3 to Aa2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class D, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class E, Upgraded
from Ba3 to Baa3
* GS Auto Loan Trust 2003-1, Class D, Upgraded from Ba1
to Baa3
* GS Auto Loan Trust 2004-1, Class D, Upgraded from Ba3 to Ba1
* MMCA Auto Owner Trust 2002-2, Class A-4, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-2, Class B, Upgraded from Ba3
to Baa3
* MMCA Auto Owner Trust 2002-3, Class B, Upgraded from A1
to Aa1
* MMCA Auto Owner Trust 2002-3, Class C, Upgraded from Baa1
to A1
* MMCA Auto Owner Trust 2002-4, Class B, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-4, Class C, Upgraded from A2
to Aa2
* MMCA Auto Owner Trust 2002-5, Class B, Upgraded from Aa2
to Aa1
* MMCA Auto Owner Trust 2002-5, Class C, Upgraded from A2
to Aa2
* Regions Auto Receivables Trust 2002-1, Class B, Upgraded
from Aa3 to Aa1
* Regions Auto Receivables Trust 2002-1, Class C, Upgraded
from Baa2 to A2
* Regions Auto Receivables Trust 2003-1, Class B, Upgraded
from A1 to Aa3
* Regions Auto Receivables Trust 2003-1, Class C, Upgraded
from Baa2 to A3
* USAA Auto Owner Trust 2003-1, Class B, Upgraded from Aa3
to Aa2
* USAA Auto Owner Trust 2004-1, Class B, Upgraded from A3
to A2
* USAA Auto Owner Trust 2004-2, Class B, Upgraded from Baa3
to Baa1
* USAA Auto Owner Trust 2004-3, Class B, Upgraded from Baa3
to Baa2
* Wachovia Auto Owner Trust 2004-A, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class C, Upgraded from
Baa3 to A3
* WFS Financial 2003-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2003-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-1 Owner Trust, Class C, Upgraded from Aa3
to Aa2
* WFS Financial 2004-2 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-2 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-2 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-3 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-3 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-3 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-4 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2005-1 Owner Trust, Class C, Upgraded from A2
to A1
* WFS Financial 2005-1 Owner Trust, Class D, Upgraded from
Baa2 to Baa1
* Whole Auto Loan Trust 2003-1, Class D, Upgraded from Baa3
to A3
* Whole Auto Loan Trust 2004-1, Class C, Upgraded from Baa1
to A3
* Whole Auto Loan Trust 2004-1, Class D, Upgraded from Ba3
to Baa3
* World Omni Auto Receivables Trust 2003-A, Class B, Upgraded
from A2 to Aa2
Confirm:
* Regions Auto Receivables Trust 2003-2, Class C, confirm
rating at Ba3
WHOLE AUTO: Moody's Lifts Ba3 Class D Securities Rating to Baa3
---------------------------------------------------------------
Moody's Investors Service upgraded 68 securities from 44 auto loan
backed securitizations and confirmed one tranche from one auto
loan backed securitization. The rating action reflects a
strengthening in the credit profile of the securities, based upon
the actual performance of the transactions and the build up of
credit enhancement relative to expected future losses in the
underlying receivables pools.
The build up of credit enhancement as a percent of the current
outstanding principal balance of the pools has been the result of
different factors such as the inclusion of nondeclining
enhancements as well as the initial trapping of excess spread
within transactions. In addition to the higher credit enhancement
levels, some of the auto loan pools are performing in line with,
or slightly better than, Moody's initial expectations.
The current upgrades are a product of Moody's ongoing monitoring
process of the sector. In the auto loan sector, where the loss
curve is reasonably predictable, deals generally have 12 months of
performance data before securities are considered for upgrade. In
addition, deals with a pool factor under approximately 15% are
excluded from the review process.
Upgrades:
* AmeriCredit Automobile Receivables Trust 2004-1; Class B,
Upgraded from Aa2 to Aa1
* AmeriCredit Automobile Receivables Trust 2004-1; Class C,
Upgraded from A1 to Aa2
* AmeriCredit Automobile Receivables Trust 2004-1; Class D,
Upgraded from Baa2 to A2
* AmeriCredit Canada Automobile Receivables Trust, Series
C2002-1, Class B, Upgraded from A1 to Aa1
* Bank One Auto Securitization Trust 2003-1; Class B, Upgraded
from Aa3 to Aa1
* BMW Vehicle Owner Trust 2003-A; Class B, Upgraded from A1
to Aa2
* Capital Auto Receivables Asset Trust 2003-2, Class B,
Upgraded from Aa3 to Aa2
* Capital Auto Receivables Asset Trust 2004-2, Class B,
Upgraded from A2 to A1
* Capital Auto Receivables Asset Trust 2004-2, Class C,
Upgraded from Baa3 to Baa2
* Capital One Prime Auto Receivables Trust 2004-2, Class B,
Upgraded from A3 to A1
* Capital One Prime Auto Receivables Trust 2004-3, Class B,
Upgraded from A3 to A2
* CarMax Auto Owner Trust 2003-1, Class C, Upgraded from
A3 to A2
* CarMax Auto Owner Trust 2004-1, Class C, Upgraded from
A1 to Aa3
* CarMax Auto Owner Trust 2004-1, Class D, Upgraded from
Baa3 to Baa2
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-1, Upgraded from A1 to Aa3
* CARSS Finance Limited Partnership 2004-A/CARSS Finance
Corporation 2004-A, Class B-2, Upgraded from Baa3 to Baa2
* Chase Manhattan Auto Owner Trust 2003-A, Certificates,
Upgraded from Aa3 to Aa1
* Chase Manhattan Auto Owner Trust 2003-C, Certificates,
Upgraded from A1 to Aa3
* Ford Credit Auto Owner Trust 2003-B, Class C, Upgraded
from Aa3 to Aa1
* Ford Credit Auto Owner Trust 2004-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-2, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2004-A, Class C, Upgraded
from Baa2 to A2
* Ford Credit Auto Owner Trust 2005-1, Class B, Upgraded
from Aa2 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class B, Upgraded
from A1 to Aa1
* Ford Credit Auto Owner Trust 2005-A, Class C, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class C, Upgraded
from Aa3 to Aa2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class D, Upgraded
from Baa2 to A2
* GEARS, Ltd. 2004-A/ GEARS LLC 2004-A, Class E, Upgraded
from Ba3 to Baa3
* GS Auto Loan Trust 2003-1, Class D, Upgraded from Ba1
to Baa3
* GS Auto Loan Trust 2004-1, Class D, Upgraded from Ba3 to Ba1
* MMCA Auto Owner Trust 2002-2, Class A-4, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-2, Class B, Upgraded from Ba3
to Baa3
* MMCA Auto Owner Trust 2002-3, Class B, Upgraded from A1
to Aa1
* MMCA Auto Owner Trust 2002-3, Class C, Upgraded from Baa1
to A1
* MMCA Auto Owner Trust 2002-4, Class B, Upgraded from Aa3
to Aa1
* MMCA Auto Owner Trust 2002-4, Class C, Upgraded from A2
to Aa2
* MMCA Auto Owner Trust 2002-5, Class B, Upgraded from Aa2
to Aa1
* MMCA Auto Owner Trust 2002-5, Class C, Upgraded from A2
to Aa2
* Regions Auto Receivables Trust 2002-1, Class B, Upgraded
from Aa3 to Aa1
* Regions Auto Receivables Trust 2002-1, Class C, Upgraded
from Baa2 to A2
* Regions Auto Receivables Trust 2003-1, Class B, Upgraded
from A1 to Aa3
* Regions Auto Receivables Trust 2003-1, Class C, Upgraded
from Baa2 to A3
* USAA Auto Owner Trust 2003-1, Class B, Upgraded from Aa3
to Aa2
* USAA Auto Owner Trust 2004-1, Class B, Upgraded from A3
to A2
* USAA Auto Owner Trust 2004-2, Class B, Upgraded from Baa3
to Baa1
* USAA Auto Owner Trust 2004-3, Class B, Upgraded from Baa3
to Baa2
* Wachovia Auto Owner Trust 2004-A, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class B, Upgraded from A1
to Aa2
* Wachovia Auto Owner Trust 2004-B, Class C, Upgraded from
Baa3 to A3
* WFS Financial 2003-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2003-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-1 Owner Trust, Class C, Upgraded from Aa3
to Aa2
* WFS Financial 2004-2 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-2 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-2 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-3 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-3 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-3 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2004-4 Owner Trust, Class B, Upgraded from Aa2
to Aa1
* WFS Financial 2004-4 Owner Trust, Class C, Upgraded from A2
to Aa3
* WFS Financial 2004-4 Owner Trust, Class D, Upgraded from
Baa2 to A3
* WFS Financial 2005-1 Owner Trust, Class C, Upgraded from A2
to A1
* WFS Financial 2005-1 Owner Trust, Class D, Upgraded from
Baa2 to Baa1
* Whole Auto Loan Trust 2003-1, Class D, Upgraded from Baa3
to A3
* Whole Auto Loan Trust 2004-1, Class C, Upgraded from Baa1
to A3
* Whole Auto Loan Trust 2004-1, Class D, Upgraded from Ba3
to Baa3
* World Omni Auto Receivables Trust 2003-A, Class B, Upgraded
from A2 to Aa2
Confirm:
* Regions Auto Receivables Trust 2003-2, Class C, confirm
rating at Ba3
ZIFF DAVIS: S&P Lowers Sub. Debt Rating to CC With Neg. Outlook
---------------------------------------------------------------
Standard & Poor's Ratings Services lowered its corporate credit
and senior secured debt ratings on Ziff Davis Media Inc. to 'CCC'
from 'CCC+'. The subordinated debt rating also was lowered to
'CC' from 'CCC-'. The outlook is negative.
Ziff Davis, a New York-based publisher, had total debt of $357
million as of Dec. 31, 2005.
"The downgrade reflects deteriorating profitability, rising debt
levels, and our concern about the company's near-term earnings
outlook and strained liquidity," said Standard & Poor's credit
analyst Hal Diamond.
The onset of cash interest payments in February 2007 on the
company's $160 million 12% compounding notes due 2009 will
exacerbate its already negative discretionary cash flow and
liquidity, unless profitability improves significantly in the near
term.
These risks are not meaningfully offset by Ziff Davis' established
position in the computer and electronic game magazine publishing
industries. Competition in this niche is fierce; Ziff Davis and
two other publishers account for the bulk of technology magazine
industry revenues.
Revenues fell 11% in the key fourth quarter of 2005, while EBITDA
declined 49%, reflecting:
* declining advertising demand for the company's publications;
* reduced pricing; and
* unabsorbed overhead.
The sudden slowdown in discretionary advertising spending by key
customers is a significant concern because the bulk of Ziff Davis'
revenue comes from advertising sales to:
* computer,
* technology, and
* electronic game companies.
* Andrew J. Torgove joins SSG as a Managing Director in New York
----------------------------------------------------------------
Andrew J. Torgove has joined SSG Capital Advisors, LP, as a
Managing Director in its New York office.
In his new position, Mr. Torgove will be providing an array of
investment banking services for companies facing operational or
financial challenges including mergers and acquisitions, advising
on a variety of financial restructuring solutions, and providing
the private placement of senior debt, subordinated debt and
equity.
Prior to joining SSG, Mr. Torgove spent two years as a Managing
Director at Stairway Capital, a $300 million buyout fund focused
on middle market distressed companies. Prior to Stairway Capital,
he also spent eight years at Houlihan Lokey Howard & Zukin, most
recently as a Director in the Financial Restructuring Group and
co-head of the New York Distressed M&A practice.
Mr. Torgove can be reached at:
Andrew J. Torgove
SSG Capital Advisors, L.P.
445 Park Avenue, Suite 1901
New York, NY 10022
Phone: 212-508-0973
Fax: 212-754-2689
About SSG Capital
With offices in Philadelphia, New York and Cleveland, SSG Capital
Advisors, LP -- http://www.ssgca.com/-- advises middle market
businesses nationwide and in Europe that are undercapitalized or
facing turnaround situations. With more than 100 investment-
banking assignments completed in the last five years, the firm is
recognized for its expertise in mergers and acquisitions; private
placements of debt and equity; complex financial restructurings,
and valuations and fairness opinions. In addition, SSG assists
institutional and individual limited partners, throughout the
country, in selling their private equity fund interests into the
secondary market.
* Chapter 11 Cases with Assets & Liabilities Below $1,000,000
-------------------------------------------------------------
Recent chapter 11 cases filed with assets and liabilities below
$1,000,000:
In re Black Diamond Security and Detective Agency, Inc.
Bankr. S.D. W. Va. Case No. 06-20167
Chapter 11 Petition filed Apr. 3, 2006
See http://bankrupt.com/misc/wvsb06-20167.pdf
In re Diamond Moving and Storage, Inc.
Bankr. N.D. Ohio Case No. 06-11050
Chapter 11 Petition filed Apr. 3, 2006
See http://bankrupt.com/misc/ohnb06-11050.pdf
In re Gough Holding Company
Bankr. N.D. Ga. Case No. 06-63776
Chapter 11 Petition filed Apr. 3, 2006
See http://bankrupt.com/misc/ganb06-63776.pdf
In re HWY. 87 Motel, Ltd.
Bankr. E.D. Tex. Case No. 06-90056
Chapter 11 Petition filed Apr. 3, 2006
See http://bankrupt.com/misc/txeb06-90056.pdf
In re J-Tem Industries, Inc.
Bankr. W.D. Tex. Case No. 06-60237
Chapter 11 Petition filed Apr. 3, 2006
See http://bankrupt.com/misc/txwb06-60237.pdf
In re Summit Crossing Apartments, LLC
Bankr. N.D. Ga. Case No. 06-63745
Chapter 11 Petition filed Apr. 3, 2006
See http://bankrupt.com/misc/ganb06-63745.pdf
In re WW Development Group, Inc.
Bankr. D. Ariz. Case No. 06-00879
Chapter 11 Petition filed Apr. 3, 2006
See http://bankrupt.com/misc/azb06-00879.pdf
In re Jersey Tractor Trailer Training Inc.
Bankr. D. N.J. Case No. 06-12743
Chapter 11 Petition filed Apr. 4, 2006
See http://bankrupt.com/misc/njb06-12743.pdf
In re Walnut Green Galleria, L.L.C.
Bankr. N.D. Tex. Case No. 06-31480
Chapter 11 Petition filed Apr. 4, 2006
See http://bankrupt.com/misc/txnb06-31480.pdf
*********
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/
On Thursdays, the TCR delivers a list of recently filed chapter 11
cases involving less than $1,000,000 in assets and liabilities
delivered to nation's bankruptcy courts. The list includes links
to freely downloadable images of these small-dollar petitions in
Acrobat PDF format.
Each Friday's edition of the TCR includes a review about a book of
interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
Monthly Operating Reports are summarized in every Saturday edition
of the TCR.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published
by Bankruptcy Creditors' Service, Inc., Fairless Hills,
Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland,
USA. 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
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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-
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*** End of Transmission ***