/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060508.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, May 8, 2006, Vol. 10, No. 108 Headlines AGRICORE: DBRS Lifts BB(low) Rating on Senior Debt to BB AIRBASE SERVICES: Court Names Dennis Faulkner as Ch. 11 Trustee ALLIED WASTE: Moody's Rates Proposed $600 Mil. Senior Notes at B2 ALLIED WASTE: S&P Assigns BB- Rating to $600 Million Senior Notes ALLIED WASTE: Fitch Expects to Rate Proposed $600 Mil. Notes at B+ AMERICAN AXLE: S&P Lowers Corporate Credit Rating to BB from BBB- AMERISTAR INC: Moody's Revises Outlook on Ba3 Corp. Rating to Pos. ANCHOR GLASS: Wants Court to Abate Proceedings on Panel Objection ANCHOR GLASS: Court Approves General Chemical Agreement ATA AIRLINES: Settles Dispute Over FINOVA's $11.2 Million Claim ATLAS PIPELINE: Prices $35 Mil. Private Placement of Senior Notes AZTAR CORPORATION: Pinnacle Increases Offer to $2.58 Billion AZTAR CORPORATION: Board Says Columbia Offer is Still Better BROOKS SAND: Court Approves Appointment of Chapter 11 Trustee BUFFALO COAL: Voluntary Chapter 11 Case Summary CALPINE CORP: Wants Court to Approve Dynegy Settlement Agreement CALPINE CORP: Court Extends Plan-Filing Deadline to December 31 CATHOLIC CHURCH: Spokane Wants Tort Claim Sharing Rules Amended CBRL GROUP: S&P Downgrades Unsecured Notes' Rating to B+ CC & R Inc: Case Summary & 7 Largest Unsecured Creditors CHARLES GRIFFIN: Case Summary & 2 Largest Unsecured Creditors COMVERSE TECH: N.Y. Attorney's Office Investigates Option Grants CONSECO INC: S&P Affirms BB- Counterparty Credit Rating CREDIT SUISSE: Moody's Cuts Rating on $9.2MM Class L Certs. to C DANA CORP: Panel Taps FTI Consulting as Restructuring Advisors DANA CORP: Committee Selects UBS Securities as Investment Bankers DANA CORP: Seeks Court Okay to Pay $35 Million Tooling Claims DELPHI CORP: U.S. Trustee Appoints 7-Member Equity Holders' Panel DELPHI CORP: Fails to Convince GM to Defer Price Reductions DIRECTV GROUP: Earns $235 Million of Net Income in First Quarter DMX MUSIC: Files Chap. 11 Liquidation Plan & Disclosure Statement E.SPIRE COMMS: Ch. 11 Trustee Wants Cases Converted to Ch. 7 EASY GARDENER: Gets Interim Access to $30 Mil. DIP Loan Facility ENTERGY NEW: BNY & FGIC Voice Quarterly Dividend Payment Concerns ENTERGY NEW ORLEANS: Hires Gordon Arata as Special Counsel FAIRMONT GENERAL: Moody's Affirms Rating on 1994 Bonds at Ba2 FOAMEX INTERNATIONAL: Court Approves Paul Weiss as Lead Counsel FOAMEX INT'L: Committee Taps Synergetics as Business Consultant GALLERY CAPITAL: Moodys Rates $150 Mil. Senior Notes at (P)Caa1 GOODING'S SUPERMARKETS: Lessor Wants Lease Decision Period Moved GOODYEAR TIRE: Net Income Up by 9% to $74 Million in First Quarter HANGER ORTHOPEDIC: S&P Rates Proposed $190 Million Notes at CCC+ HAWKEYE RENEWABLES: S&P Puts $185 Million Loan's B Rating on Watch HEXION SPECIALTY: Receives Required Consents for Senior Notes HIGHWOODS PROPERTIES: Obtains New $350 Million Credit Facility HILITE INT'L: S&P Lowers Corporate Credit Rating to B- from BB- HOUGHTON MIFFLIN: Moody's Junks Rating on Proposed $300MM Notes IMAGE INNOVATIONS: Fails to Announce Default Under H.E. Loan Pact INNOVATIVE GROUP: Case Summary & 20 Largest Unsecured Creditors INTEGRATED DISABILITY: Wants to Walk Away from Bloomfield Leases INTERNATIONAL PAPER: Incurs $1.2 Billion Net Loss in First Quarter JOBSON MEDICAL: S&P Rates Proposed $147 Mil. Credit Facility at B- KMART CORP: Ct. Signs Agreed Orders Lifting Stay for 16 Claimants KULLMAN INDUSTRIES: Has Until May 31 to File Chapter 11 Plan LONDON FOG: Court Okays Perkins Coie as Bankruptcy Counsel LORBER INDUSTRIES: Hires Elgort Textile as Liquidator MARSH SUPERMARKETS: Sun Merger Cues Moody's to Review Ratings MERIDIAN AUTOMOTIVE: Judge Walrath Disqualifies Milbank as Counsel MMRENTALSPRO LLC: Wants to Hire Patrick Beard as Special Counsel MONEY CENTERS: Sherb & Co. Raises Going Concern Doubt MUSICLAND HOLDING: Court Extends Removal Period to July 12 NAVISTAR INT'L: Inks $3 Million Loan Deal with CapSource Fin'l ONEIDA LTD: Court Directs U.S. Trustee to Appoint Equity Committee PIER 1 IMPORTS: S&P Holds Low-B Ratings on Negative CreditWatch PINNACLE ENTERTAINMENT: Ups Offer to Buy Aztar to $2.58 Billion POPE & TALBOT: KPMG LLP Raises Going Concern Doubt PORTA SYSTEMS: BDO Seidman Raises Going Concern Doubt PORTA SYSTEMS: Kornfeld Replaces Carney as Chief Executive Officer PREMIUM PAPERS: Hires Young Conaway as Bankruptcy Counsel PREMIUM PAPERS: Committee Wants Lowenstein Sandler as Counsel QUANTUM CORP: Moody's Reviews Low-B Ratings and May Downgrade RAPSOD TRADE: Moody's Rates Corporate Family Rating at (P)Caa1 REPUBLIC STORAGE: Court Okays Calfee Halter as Bankruptcy Counsel REPUBLIC STORAGE: Files Schedules of Assets and Liabilities SDY GROUP: Case Summary & 3 Largest Unsecured Creditors SERACARE LIFE: Hires Winthrop Couchot as Insolvency Counsel SERACARE LIFE: Taps O'Melveny & Myers as Special Corporate Counsel STRATUS SERVICES: Amends Annual Report for Fiscal Year 2005 SYLVEST FARMS: Creditors' Proofs of Claims Due by August 21 SYLVEST FARMS: Taps Mancuso & Franco as Special Counsel TENFOLD CORP: Tanner LC Raises Going Concern Doubt TEX STAR: Wants Lawrence J. Maun as Bankruptcy Counsel TEX STAR: Files Schedules of Assets and Liabilities TRUCS SERIES: Will Terminate and Liquidate Assets TRUMP ENT: 17 Former Shareholders Appeal Judge Wizmur's Decision UAP HOLDING: Launches $328.5 Million Senior Notes Offering UAP HOLDING: Moody's Rates $175 Million Senior Sec. Loan at Ba3 UNIFRAX CORP: AEA Merger Prompts S&P to Lower Rating to B from B+ UNITED RENTAL: Files 2 Annual Reports & 3 Quarterly Financials USA COMMERCIAL: Wants to Hire Schwartzer as Bankruptcy Counsel USA COMMERCIAL: Court Okays BMC Group as Claims & Noticing Agent VILLAGES AT SARATOGA: Court Okays Ray Quinney as Special Counsel W.S. LEE: Court Schedules Claims Filing Bar Date on August 23 WASHINGTON MUTUAL: Moody's Puts Low-B Ratings on 4 Class Certs. WCI STEEL: Noteholders Take Over Reorganized Steel Company WILLIAMS COS: S&P Upgrades Corp. Credit Rating to BB- from B+ * Peter Antoszyk Joins American Bankruptcy Institute's Board * James Chadwick Joins Sheppard Mullin in San Francisco * SEC Proposes Amendments to the Tender Offer Best-Price Rule * SEC Proposes Amendments to Executive Pay Disclosure Requirements * BOND PRICING: For the week of May 1 - May 5, 2006 ********* AGRICORE: DBRS Lifts BB(low) Rating on Senior Debt to BB -------------------------------------------------------- Dominion Bond Rating Service upgraded the ratings of Agricore United's Senior Debt to BB from BB (low), Long-Term Debt, Senior A, B Notes to BB (low) from B (high), and Series A Convertible Preferred Shares to Pfd-4 from Pfd-5 (high). The trends are all Stable. The upgrade reflects Agricore's ability to survive the "hell or high water" environment that existed over the past five years- three years of drought and two years of floods, frost, and low- quality grain. During this period, the Company also rationalized its extensive elevator network, and integrated two cultures into one viable entity. Agricore now operates a much more efficient and relatively low- cost elevator network, benefiting from its size and leading market position. The Company also benefits from good product diversification as it is also involved in marketing fertilizers, pesticides, insecticides, seeds, and feeds, in addition to grain handling. Agricore's balance sheet is also improving and will benefit further from low future capex requirements. DBRS estimates the Company has the ability to generate Cdn$25 million to Cdn$50 million in free cash flow, which could be used to repay debt. In addition, Cdn$105 million in convertible debt could potentially be converted to equity by December 2006, which would further improve the financial profile. Agricore is in a good position to take advantage of growth in livestock as it operates a successful feed division throughout western Canada. Finally, the industry is maturing, and in DBRS's opinion is becoming more disciplined while remaining competitive. These positive factors enable Agricore to better withstand the volatility of the weather-sensitive grain handling business going forward. AIRBASE SERVICES: Court Names Dennis Faulkner as Ch. 11 Trustee --------------------------------------------------------------- The Honorable Michael D. Lynn of the U.S. Bankruptcy Court for the Northern District of Texas appointed Dennis Faulkner as Chapter 11 Trustee in Airbase Services, Inc.'s bankruptcy case. William T. Neary, the U.S. Trustee for Region 6, recommended Mr. Faulkner's appointment after consulting with several parties- in-interest, including an unnamed potential bidder for the Debtor's assets. The Debtor sought for the appointment of a chapter 11 trustee to place a neutral party to analyze its reorganization options, including a sale of its assets. According to the Debtor, the Chapter 11 Trustee's participation will remove any appearance of self-dealing in the case. Mark Xavier Mullin, Esq., at Haynes & Boone, LLP, pointed out that entities controlled by or affiliated with Tom McKeown, Airbase Services' chief executive officer and sole director, own all of the Debtor's common stock. Mr. Mullin said that if a sale of the Debtor's assets goes forward, Mr. McKeown and the entities he control may have an interest in pursuing a bid on certain or substantially all of the Debtor's assets. If a Chapter 11 Trustee is not appointed, Mr. McKeown would be placed in the untenable position of assessing the reasonableness of his own bid or a bid placed by an entity that he controls. Alternatively, Mr. McKeown could be placed in the position of analyzing the impact of a plan of reorganization on his interests, both as a creditor and as a stockholder. Headquartered in Grand Prairie, Texas, Airbase Services, Inc. -- http://www.airbaseservices.com/-- maintains and repairs a wide range of cargo equipment and cabin interior designs for commercial airlines, and provides maintenance and management services for the airline industry. Due to bankruptcies filed by several of its airline customers, the Company filed for bankruptcy protection on May 1, 2006 (Bankr. N.D. Tex. Case. No. 06-41231). Mark Xavier Mullin, Esq., at Haynes & Boone, LLP, represent the Debtor. When the Debtors filed for bankruptcy, the Company reported assets and debts amounting to $10 million to $50 million. ALLIED WASTE: Moody's Rates Proposed $600 Mil. Senior Notes at B2 ----------------------------------------------------------------- Moody's Investors Service assigned B2 ratings to Allied Waste North America, Inc.'s $600 million senior secured notes due 2016 and affirmed other long-term debt ratings of Allied Waste North America and its wholly-owned subsidiary, Browning-Ferris Industries, Inc., and its parent company Allied Waste Industries, Inc. Concurrently, Moody's affirmed Allied Waste's Corporate Family Rating of B2. The outlook for the ratings is stable. The proposed $600 million senior secured notes due 2016 are intended to refinance the $600 million of 8.875% senior secured notes due 2008. Concurrent with the proposed offering, Allied Waste NA announced a cash tender offer for the 2008 notes, which expires on May 31, 2006. The consummation of the tender offer is conditional upon completion of the proposed financing. The stable ratings outlook reflects the expectation of positive free cash flow to debt ratios, albeit at low single digit levels. The stable outlook also takes into account Allied's substantial revolver commitment, adequate cushions under financial covenant tests and reduced refinancing and interest rate risk through the refinancing in the first quarter of 2005, the repricing of the company's senior credit facilities in April 2006, the conversion to equity of $345 million of mandatory convertible preferred stock also in April 2006 and, also, the proposed refinancing itself. Sustainable improvements in adjusted free cash flow to debt ratios in the high single digits could lead to an upgrade. Negative free cash flows, debt-financed acquisitions or additional indebtedness could lead to downward pressure on the ratings. Allied Waste North America, Inc., a wholly owned operating subsidiary of Allied Waste Industries, Inc., is based in Scottsdale, Arizona. Allied is a vertically integrated, non- hazardous solid waste management company providing collection, transfer, and recycling and disposal services for residential, commercial and industrial customers. As of December 31, 2005, the company operated 310 collection companies, 166 transfer stations, 169 active landfills and 57 recycling facilities in 37 states and Puerto Rico. The company had 2005 revenues of approximately $5.735 billion. Moody's took these rating actions: (1) Allied Waste North America, Inc. * Assigned a B2 rating to the proposed $600 million senior secured notes due 2016 of Allied Waste North America, Inc. * Affirmed, subject to withdrawal upon completion of the tender offer, the B2 rating on $600 million issue of 8.875% guaranteed senior secured notes due 2008. * Affirmed the B1 rating on $1.575 billion guaranteed senior secured revolving credit facility due 2010. * Affirmed the B1 rating on $1.275 billion guaranteed senior secured term loan due 2012. * Affirmed the B1 rating on $495 million guaranteed senior secured Tranche A Letter of Credit Facility due 2012. * Affirmed the B2 rating on $750 million issue of 8.5% guaranteed senior secured notes due 2008. * Affirmed the B2 rating on $350 million issue of 6.5% guaranteed senior secured notes due 2010. * Affirmed the B2 rating on $400 million issue of 5.75% guaranteed senior secured notes due 2011. * Affirmed the B2 rating on $275 million issue of 6.375% guaranteed senior secured notes due 2011. * Affirmed the B2 rating on $251 million issue of 9.25% guaranteed senior secured notes due 2012. * Affirmed the B2 rating on $450 million issue of 7.875% guaranteed senior secured notes due 2013. * Affirmed the B2 rating on $425 million issue of 6.125% guaranteed senior secured notes due 2014. * Affirmed the B2 rating on $600 million issue of guaranteed senior secured notes due 2015. * Affirmed the Caa1 rating on $400 million issue of 7.375% guaranteed senior unsecured notes due 2014; (2) Allied Waste Industries, Inc. * Affirmed the B2 Corporate Family Rating. * Affirmed the Caa2 rating on $230 million issue of 4.25% guaranteed senior subordinated convertible bonds due 2034. * Affirmed the Caa3 rating on $600 million issue of 6.25% senior mandatory convertible preferred stock -- conversion date of March 2008. * Affirmed the SGL-2 Speculative Grade Liquidity Rating. (3) Browning-Ferris Industries, Inc * Affirmed the B2 rating on $155 million issue of 6.375% senior secured notes due 2008. * Affirmed the B2 rating on $96 million issue of 9.25% secured debentures due 2021. * Affirmed the B2 rating on $292 million issue of 7.4% secured debentures due 2035. * Affirmed the Caa1 rating on approximately $281 million of industrial revenue bonds. The outlook for the ratings is stable. ALLIED WASTE: S&P Assigns BB- Rating to $600 Million Senior Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned ratings to Allied Waste North America Inc.'s $600 million senior notes due 2016, offered under Rule 144A with registration rights. AWNA is a wholly owned subsidiary of Scottsdale, Arizona-based Allied Waste Industries Inc. The notes were rated 'BB-' (one notch lower than the 'BB' corporate credit rating on Allied Waste) with a recovery rating of '4', indicating the expectation for marginal (25%-50%) recovery of principal in the event of a payment default. Proceeds of the notes will be used to fund a tender offer for AWNA's outstanding $600 million of 8.875% senior notes due 2008. The notes are guaranteed by Allied Waste and subsidiaries of AWNA. "The ratings on the notes reflect the disadvantaged position of the note holders relative to the secured bank lenders, the sizable amount of secured claims on the specific assets pledged as collateral, and the sharing of this collateral with the bank lenders," explained Standard & Poor's credit analyst Roman Szuper. The collateral and covenants of the new notes are the same as those of the notes to be redeemed. The corporate credit rating on Allied Waste is 'BB'. The rating outlook is stable. About $7.2 billion of debt was outstanding as of March 31, 2006. The rating reflects a highly leveraged financial profile, which outweighs the company's fairly strong competitive business position. Ratings List: Allied Waste Industries Inc.: * Corporate credit rating -- BB/Stable/-- Rating Assigned: Allied Waste North America Inc.: * $600 mil senior notes due 2016 -- BB- (Recovery rtg:4) ALLIED WASTE: Fitch Expects to Rate Proposed $600 Mil. Notes at B+ ------------------------------------------------------------------ Fitch expects to assign a 'B+/RR3' to Allied Waste Industries' (NYSE: AW) proposed $600 million offering of 10-year senior secured notes maturing in 2016. The new notes will be issued by Allied Waste North America, and will be guaranteed by AW and substantially all of AW's subsidiaries, and be secured by the stock and assets of some of AW's subsidiaries. AW expects to use proceeds from the offering to redeem its 8-7/8% $600 million senior secured notes due April 2008. The Issuer Default Rating for AW is 'B'. The Rating Outlook is Stable. The Rating Outlook was recently revised to Stable from Negative, reflecting: * improved pricing and volume trends; * AW's ongoing cost reduction and asset rationalization programs; * lower interest costs; and * few near-term debt maturities. The revision also incorporates Fitch's expectation for improvement in free cash flow generation and stabilization of operating margins. Some actions in 2005 (the completion of the CEO search and the execution of the refinancing plan) also contributed to the Outlook revision. The rating is supported by: * AW's solid market positions; * the relatively low volatility of the waste industry; and * the value of AW's landfill assets. Concerns include: * the company's high debt levels; * limited free cash flow; * margin deterioration; * rising fuel prices; and * high capital expenditures. Another concern is the potential for future IRS payments related to the $900 million capital loss recorded by Browning-Ferris Industries, Inc., in 1999, which could further pressure free cash flow and/or increase debt, and could lead to a review on ratings and/or the Outlook. AW's proposed refinancing will allow the company to extend its debt maturities and potentially reduce its annual interest payments. In 2008, AW has approximately $1.5 billion in debt maturities, including the 8-7/8% $600 million senior secured notes it plans to refinance. At Dec. 31, 2005, the company had cash of $56 million and $1.17 billion of availability under its $1.575 billion revolving facility. Debt/EBITDA at Dec. 31, 2005 was 4.8x, compared with 5.4x at the end of 2004. Free cash flow in 2005 was negative, due largely to higher capital expenditures, but Fitch expects it to improve and debt to decline modestly in 2006. AMERICAN AXLE: S&P Lowers Corporate Credit Rating to BB from BBB- ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on American Axle & Manufacturing Holdings Inc. and its operating unit American Axle & Manufacturing Inc., including its corporate credit rating to 'BB' from BBB-'. All ratings on the Detroit, Michigan-based driveline products supplier were removed from CreditWatch with negative implications where they were placed on March 29, 2006. The outlook is negative. The company's total outstanding debt at March 31, 2006, stood at about $575 million. "The downgrades reflect erosion of American Axle's business and financial profiles due to the ongoing competitive challenges facing its main customer, General Motor's Corp.," said Standard & Poor's credit analyst Daniel DiSenso. Production volumes for the vehicles American Axle serves declined by 10% in 2005, and Standard & Poor's believes production will continue to decline in 2006; American Axle estimates a 5% decline. As one of the nation's most efficient auto suppliers, the company has remained profitable, although earnings measures declined dramatically in 2005, and the firm will be challenged to materially improve earnings over the next couple of years, given expected continued difficult industry fundamentals. Moreover, the shift away from SUVs could accelerate if gasoline prices continue to rise, thwarting American Axle's efforts to improve profitability. Consumers have been buying more fuel-efficient crossover utility vehicles (sales have been increasing at double- digit rates), but American Axle is just starting to penetrate this market segment. The ratings reflect: * the risks associated with American Axle's heavy dependence on GM's SUVs and pickup trucks; * current relatively narrow product range; * its exposure to cyclical and competitive markets; and * the potential for labor disruptions that could disrupt GM production. These factors are tempered by: * American Axle's solid market positions; * high value added product portfolio; and * good R&D capabilities. AMERISTAR INC: Moody's Revises Outlook on Ba3 Corp. Rating to Pos. ------------------------------------------------------------------ Moody's Investors Service revised the ratings outlook of Ameristar Casinos, Inc.'s Ba3 corporate family rating to positive from developing following the company's announcement that it has no intention to pursue an acquisition of Aztar at this time. Prior to Ameristar's bid announcement, the company had a positive ratings outlook that was assigned in Aug. 2005. The positive ratings outlook reflects continued improvement in Ameristar's overall operating results and expectation that re- branding efforts in Colorado will be successful. These factors, coupled with a continuation of the company's conservative financial policy, could result in a ratings upgrade over the intermediate term. Ratings could be negatively impacted by a large scale debt financed acquisition, although any rating decision related to this type of acquisition would consider the positive effects of a possible increase in size diversification relative to any increase in leverage. Moody's previous rating action on Ameristar took place on Apr. 3, 2006 when the company's ratings outlook was revised to developing from positive following Ameristar's announcement that it made an unsolicited cash bid to acquire Aztar Corp. Ameristar Casinos, Inc. owns and operates seven hotel/casinos in six markets. The company's portfolio of casinos consists of: * Ameristar St. Charles; * Ameristar Kansas City; * Ameristar Council Bluffs; * Ameristar Vicksburg; * Mountain High Casino; and * Cactus Petes and the Horseshu in Jackpot, Nevada. ANCHOR GLASS: Wants Court to Abate Proceedings on Panel Objection ----------------------------------------------------------------- Anchor Glass Container Corporation, its Official Committee of Unsecured Creditors, and Encore Glass, Inc., ask the U.S. Bankruptcy Court for the Middle District of Florida to: (a) abate proceedings on the Committee's objection to a claim filed by Encore until the District Court has decided on the appeal; and (b) provide for the automatic substitution of Samuel M. Stricklin, as Alpha Resolution Trustee, for the Committee on the Effective Date of the Anchor Glass' Plan. As reported in the Troubled Company Reporter on Feb. 3, 2006, Encore Glass, Inc., filed a claim, which was later amended, in the prior Chapter 11 case of Anchor Glass in 2002. Encore's amended claim in the Anchor Glass 2002 bankruptcy case was disallowed in January 2005 by Judge Thomas E. Baynes, Jr., and is now on appeal to the United States District Court for the Middle District of Florida. Based on the same facts and events underlying Encore's claim in the Anchor Glass 2002 case, Encore filed Claim No. 45 for $6,102,913, in Anchor Glass' current bankruptcy case. Encore later filed an amended Claim No. 730 for the same claim amount. Anchor Glass, the Creditors Committee and Encore agreed that: (a) Claim No. 45 is disallowed as superseded by Claim No. 730 for $6,102,913; (b) Anchor Glass and the Committee will file an objection to Claim No. 730; (c) until the District Court rules, Claim No. 730 will be treated as, and will be deemed to be, a Disputed Class 5 Claim as to which the Alpha Resolution Trustee will maintain an appropriate pro rata reserve as set forth in Anchor Glass' Plan of Reorganization; (d) if the District Court affirms the orders from Anchor Glass' 2002 bankruptcy case, then Claim No. 730 will be disallowed in the current Anchor Glass Chapter 11 case. If Encore file a further appeal of that District Court order, the Alpha Resolution Trustee will not be required to maintain any reserve on account of Claim No. 730 without an order staying the effect of the District Court order; (e) if the District Court reverses the orders from Anchor Glass' 2002 bankruptcy case, then Claim No. 730 will remain a Disputed Claim, and will be subject to further judicial proceedings in Anchor Glass' current bankruptcy case; (f) Claim No. 730 will be treated as a Class 5 general unsecured claim to the extent it is allowed and will, if allowed, share pro rata with the Claims of other Holders of Class 5 Claims. Encore will not be entitled to any payment as administrative or priority claim holder; and (g) Encore's objection to the confirmation of the Plan is overruled, with prejudice. Judge Paskay approved the parties' agreement. Committee Objects to Claim No. 730 The Creditors Committee asserts that Claim No. 730 must be disallowed because of the preclusive and binding effect of the earlier Bankruptcy Court orders, disallowing Encore's identical claims in the Anchor Glass 2002 bankruptcy case, applying principals of law including res judicata, collateral estoppel, and law of the case. The Committee also objects to the Claim due to impossibility of performance. Encore's Claim arises from the termination of its Purchase Agreement with Anchor Glass and Consumers Packaging, Inc. The Agreement provides that Anchor Glass will supply wine bottles to Encore. These wine bottles are produced at CPI's Lavington, British Columbia, plant. Don M. Stichter, Esq., at Stichter Riedel Blain & Posser, PA, in Tampa, Florida, asserts that Anchor Glass is not obligated to supply glass bottles to Encore since the Agreement was not an enforceable requirements contract. The Agreement was terminated subsequently after CPI sought protection under the Canada Companies Creditors Arrangement Act. The Lavington plant was sold to a third party who refused to continue the terms of the Agreement. To the extent Anchor Glass was required to provide glass bottles to Encore, Mr. Stichter points out that Encore's damage calculation is inaccurate. The Agreement provided that the volume of glass bottles supplies will increase by 10% every year. However, in Encore's summary chart, it included yearly increases of the volume of bottle supply of more than 10%. Mr. Stichter points out that the average price per gross of glass for 2001 was $53, not $55 per gross, as asserted by Encore. Furthermore, the Committee objects to Encore's assertion of a 5% increase in the price of bottles. Mr. Stickler says Anchor Glass only asserted a 2% price increase per year. Encore also failed to provide Anchor Glass credit for any rebates in 2002, Mr. Stitcher adds. Accordingly, the Committee asks the Court to disallow Claim No. 730, or in the alternative, reduce the claim amount. The Committee reserves the right to supplement its objection after completion of discovery. About Anchor Glass Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) ANCHOR GLASS: Court Approves General Chemical Agreement ------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida authorized Anchor Glass Container Corporation to enter into an Amended Agreement with General Chemical Industrial Products. Judge Paskay directs Anchor Glass to pay $24,908, to General Chemical on or before May 21, 2006. As reported in the Troubled Company Reporter on March 29, 2006, Anchor Glass Container Corporation and General Chemical Industrial Products are parties to an agreement wherein Anchor Glass purchases bulk dense soda ash from General Chemical. General Chemical has a prepetition claim for $35,553, net of any setoffs, credits or discounts. As part of the Debtor's reorganization process, Anchor Glass and General Chemical agreed to compromise the prepetition claim and enter into an Amended Agreement. Pursuant to the Amended Agreement, Anchor Glass will pay $24,908 to General Chemical in full satisfaction of the claim. The parties also agreed to extend the term of the Amended Agreement until December 31, 2006. About Anchor Glass Headquartered in Tampa, Florida, Anchor Glass Container Corporation is the third-largest manufacturer of glass containers in the United States. Anchor manufactures a diverse line of flint (clear), amber, green and other colored glass containers for the beer, beverage, food, liquor and flavored alcoholic beverage markets. The Company filed for chapter 11 protection on Aug. 8, 2005 (Bankr. M.D. Fla. Case No. 05-15606). Robert A. Soriano, Esq., at Carlton Fields PA, represents the Debtor in its restructuring efforts. Edward J. Peterson, III, Esq., at Bracewell & Guiliani, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $661.5 million in assets and $666.6 million in debts. (Anchor Glass Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: Settles Dispute Over FINOVA's $11.2 Million Claim --------------------------------------------------------------- ATA Airlines, Inc., its debtor-affiliates and FINOVA Capital Corporation want to resolve all non-priority unsecured claims of FINOVA related to or connected in any way with the Equipment, the Aircraft Agreements, the Aircraft Claims and the Trusts. The parties stipulate and agree that: (1) In full satisfaction of the Non-Priority Unsecured Claims, Claim No. 1270 will be amended allowed against the estate of ATA Airlines for $11,236,549 as a general unsecured non-priority claim; (2) The allowance of the Allowed FINOVA Claim fully and finally resolves all of the Non-Priority Unsecured Claims against the Debtors; and (3) Except for the Allowed FINOVA Claim, all claims for the Non-Priority Unsecured Claims against the Debtors and their successors and assigns are released, and Claim Nos. 1271, 1272, and 1273 will be disallowed in their entirety. Pursuant to a Lease Agreement, dated as of December 4, 1995, between ATA Airlines and First Security Bank of Utah, National Association, as owner trustee and lessor, ATA Airlines leased from a trust a Boeing 757-23N aircraft bearing registration number N516AT, two Rolls Royce Model RB211-535E4 engines, and various other parts, equipment and documents. The Debtors, FINOVA Capital Corporation and certain other parties entered into a number of other documents in connection with the N516 Lease, including: * a Participation Agreement among First Security Bank of Utah, National Association, as owner trustee, FINOVA, as owner participant, First Fidelity Bank, as indenture trustee, certain loan participants and ATA Airlines as lessee; * a Tax Indemnity Agreement between ATA Airlines, as lessee, and FINOVA, as owner participant; and * a Guaranty made by ATA Holdings Corp., for the benefit of First Security Bank of Utah, as owner trustee, FINOVA, as owner participant, First Fidelity Bank and certain loan participants. Under a Lease Agreement, dated as of December 30, 1996, between ATA Airlines and First Security Bank, National Association, as owner trustee and lessor, ATA Airlines leased from a trust a Rolls Royce Model RB211-535E4 engine and various other parts, equipment and documents -- the 31449 Lease. Likewise, the Debtors, FINOVA and certain other parties entered into a number of other documents in connection with the 31449 Lease, including: * a Participation Agreement among First Security Bank, National Association, as owner trustee, FINOVA, as owner participant, First Union Bank of Connecticut, as indenture trustee, certain loan participants and ATA Airlines as lessee; and * a Guaranty made by ATA Holdings for the benefit of First Security Bank, as owner trustee, FINOVA, as owner participant, First Union Bank of Connecticut and certain loan participants. On the Petition Date, FINOVA owned 100% of the beneficial interests in both of the Trusts, subject only to security interests in favor of Wachovia Bank, National Association -- successor to both First Fidelity Bank and First Union Bank of Connecticut -- as the indenture trustee under each of the Trusts. The Debtors have rejected the Aircraft Agreements. Wachovia filed Claim Nos. 1270, 1271, 1272 and 1273 for alleged damages suffered as a result of the rejection of the Aircraft Agreements and for administrative expense claims arising out of the postpetition use of the Equipment. Subsequent to the Petition Date, FINOVA secured the release of the security interests in favor of Wachovia, and FINOVA acquired all rights, title and interests in and to the Equipment and the Aircraft Claims, free and clear of all liens and encumbrances, and FINOVA is now the sole holder of the Aircraft Claims. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. Daniel H. Golden, Esq., Lisa G. Beckerman, Esq., and John S. Strickland, Esq., at Akin Gump Strauss Hauer & Feld, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATLAS PIPELINE: Prices $35 Mil. Private Placement of Senior Notes ----------------------------------------------------------------- Atlas Pipeline Partners L.P. prices $35 million of additional senior unsecured notes due 2015 in a private placement at 103% of par, with an effective yield of 7.6%. The additional notes will be treated as a single class with the existing senior notes that were originally issued in a private placement on Dec. 20, 2005, under the indenture governing the existing senior notes. The Partnership intends to use the net proceeds from the private placement to partially repay borrowings under its credit facility made in connection with the recent acquisition of the remaining 25% interest in NOARK Pipeline System, Limited Partnership, previously owned by Southwestern Energy Company. The NOARK interest acquisition is reported in the Troubled Company Reporter on May 4, 2006. The securities have not been registered under the Securities Act of 1933, as amended, or any state securities laws, and unless so registered, the securities may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. About Atlas Pipeline Partners Headquartered in Moon Township, Pennsylvania, Atlas Pipeline Partners, L.P. (NYSE:APL) -- http://www.atlaspipelinepartners.com/ -- is active in the transmission, gathering and processing segments of the midstream natural gas industry. In the Mid- Continent region of Oklahoma, Arkansas, northern Texas and the Texas panhandle, the Partnership owns and operates approximately 2,565 miles of intrastate gas gathering pipeline and a 565-mile interstate natural gas pipeline. The Partnership also operates two gas processing plants and a treating facility in Velma, Elk City and Prentiss, Oklahoma where natural gas liquids and impurities are removed. In Appalachia, it owns and operates approximately 1,500 miles of natural gas gathering pipelines in western Pennsylvania, western New York and eastern Ohio. Atlas America, Inc. -- http://www.atlasamerica.com/-- the parent company of Atlas Pipeline Partners, L.P.'s general partner and owner of 1,641,026 units of limited partner interest of APL, is an energy company engaged primarily in the development and production of natural gas in the Appalachian Basin for its own account and for its investors through the offering of tax advantaged investment programs. * * * Atlas Pipeline Partners L.P.'s 8-1/8% Senior Unsecured Notes due 2015 carry Moody's Investors Service's and Standard & Poor's single-B rating. AZTAR CORPORATION: Pinnacle Increases Offer to $2.58 Billion ------------------------------------------------------------ Pinnacle Entertainment, Inc.'s (NYSE: PNK) board of directors unanimously approved an increase in the per-share price under the Company's merger agreement with Aztar Corporation to $51 per share in cash and stock, subject to adjustment. The consideration consists of $47 per share in cash and $4 per share of Pinnacle common stock, subject to a collar provision. The purchase price for each share of Aztar Series B preferred stock has been increased to $497.09 in cash and $42.31 in Pinnacle common stock, subject to a collar provision. The fully financed transaction is valued at $2.58 billion, including approximately $1.97 billion in equity on a fully diluted basis and approximately $677 million of indebtedness. All other aspects of the merger agreement remain unchanged, except for the termination fee, which has been increased to $52.16 million, plus reimbursement of expenses up to $25.84 million. As reported in the Troubled Company Reporter on Mar. 15, 2006, Pinnacle Entertainment and Aztar Corp.'s Boards of Directors unanimously approved a definitive merger agreement under which Pinnacle will acquire all of the outstanding shares of Aztar for $38.00 per share in cash. This represents a premium of approximately 24% over Aztar's closing stock price on Mar. 10, 2006. The fully financed transaction is valued at approximately $2.1 billion, including approximately $1.45 billion of equity on a fully diluted basis and approximately $723 million in indebtedness. Offer Expires Pinnacle Entertainment disclosed that at 4 p.m., on May 4, 2006, it responded to Aztar Corp.'s presentation of a 72-hour notice of termination provided under the merger agreement between Pinnacle and Aztar. Under the terms of that agreement, Pinnacle had until May 4, 2006, to respond to the higher offer provided by a competing bidder. Pinnacle said that its offer expired at 11 p.m. on May 4, 2006, and Aztar did not respond by that time. About Pinnacle Entertainment Headquartered in Las Vegas, Nevada, Pinnacle Entertainment, Inc. -- http://www.pnkinc.com/-- owns and operates casinos in Nevada, Louisiana, Indiana and Argentina, owns a hotel in Missouri, receives lease income from two card club casinos in the Los Angeles metropolitan area, has been licensed to operate a small casino in the Bahamas, and owns a casino site and has significant insurance claims related to a hurricane-damaged casino previously operated in Biloxi, Mississippi. Pinnacle opened a major casino resort in Lake Charles, Louisiana in May 2005 and a new replacement casino in Neuquen, Argentina in July 2005. About Aztar Corporation Aztar Corporation (NYSE: AZR) -- http://www.aztarcorp.com/-- is a publicly traded company that operates Tropicana Casino and Resort in Atlantic City, New Jersey, Tropicana Resort and Casino in Las Vegas, Nevada, Ramada Express Hotel and Casino in Laughlin, Nevada, Casino Aztar in Caruthersville, Missouri, and Casino Aztar in Evansville, Indiana. * * * As reported in the Troubled Company Reporter on March 15, 2006, Standard & Poor's Ratings Services' BB rating on Aztar Corp. remained on CreditWatch with negative implications, where they were placed on Feb. 16, 2006. The CreditWatch update followed the announcement by Pinnacle that it signed a definitive merger agreement to acquire the outstanding shares of Aztar. AZTAR CORPORATION: Board Says Columbia Offer is Still Better ------------------------------------------------------------ Aztar Corporation (NYSE: AZR) disclosed on Friday, May 5, 2006, that its Board of Directors determined that a definitive offer received on May 1, 2006 from Wimar Tahoe Corporation dba Columbia Entertainment, the gaming affiliate of Columbia Sussex Corporation, to acquire Aztar remains a superior proposal when compared to the terms of Aztar's current merger agreement with Pinnacle Entertainment, Inc. Upon this determination by Aztar's Board, the three business day waiting period under the merger agreement with Pinnacle has ended. Columbia Entertainment's offer is to acquire Aztar in a merger transaction in which the holders of Aztar common stock would receive $50 per share in cash and the holders of Aztar's Series B preferred stock would receive $528.82 per share in cash. Columbia Entertainment's offer remained open until 5:00 p.m. on May 5, 2006. Pinnacle's Amended Offer Aztar also disclosed that it received an amended offer from Pinnacle Entertainment, Inc. after 8:00 p.m. (New York City time) on May 4, 2006 to increase the purchase price to $47.00 in cash per share of Aztar common stock and a fraction of a share in Pinnacle common stock equal to $4.00 divided by the trading price of a share of Pinnacle common stock over a specified trading period, but no more than 0.16584 shares and no fewer than 0.11056 shares. The amended offer provided for an increase in the termination fee to $52.16 million and termination expenses to up to $25.84 million and amended the collar provision. Pinnacle stated in its amended offer that its offer would expire at 11:00 p.m. (Las Vegas time) on May 4, 2005. Aztar stated that the time frame available for acceptance was insufficient for Aztar's Board to make a decision consistent with the Board's fiduciary duties. Aztar's advisors had previously informed Pinnacle's advisors that Aztar's Board had a meeting scheduled for 10:00 a.m. (New York City time), on May 5, 2006. Aztar is still party to its merger agreement with Pinnacle. Aztar's Board is not making any recommendation at this time with respect to the Columbia Entertainment offer, and there can be no assurance that Aztar's Board will approve a termination of the merger agreement with Pinnacle or that any transaction with Columbia Entertainment will result. About Aztar Corporation Aztar is a publicly traded company that operates Tropicana Casino and Resort in Atlantic City, New Jersey, Tropicana Resort and Casino in Las Vegas, Nevada, Ramada Express Hotel and Casino in Laughlin, Nevada, Casino Aztar in Caruthersville, Missouri, and Casino Aztar in Evansville, Indiana. * * * As reported in the Troubled Company Reporter on March 15, 2006, Standard & Poor's Ratings Services' BB rating on Aztar Corp. remained on CreditWatch with negative implications, where they were placed on Feb. 16, 2006. The CreditWatch update followed the announcement by Pinnacle that it signed a definitive merger agreement to acquire the outstanding shares of Aztar. BROOKS SAND: Court Approves Appointment of Chapter 11 Trustee ------------------------------------------------------------- At the request of Cobalt Ventures, LLC, and Cobalt Mining, LLC, the Honorable Joan L. Cooper of the U.S. Bankruptcy Court for the Western District of Kentucky in Louisville directed the U.S Trustee for Region 8 to appoint a trustee in Brooks Sand and Gravel LLC and Smith Mining and Materials LLC's chapter 11 cases. Cobalt Mining, LLC, is a member and Cobalt Ventures, LLC, is a creditor of the Debtors' Limited Liability Company. Cobalt Ventures said the Debtors owe it approximately $48,167. Cobalt sought for the immediate appointment of a trustee to oversee the Debtors' case because of unexplained "expenditure or disposition of millions of dollars since Sept. 15, 2005". Cobalt also asserted gross mismanagement of the Debtors' affairs by its president, Hollis Smith, prior to the Debtors' bankruptcy filing. Since the Debtors are not currently operating entities, their general liability and workers compensation insurance either have lapsed or will do so in the immediate future, Cobalt added. Cobalt said without proper supervision, the health, welfare, and safety of any remaining employees is at jeopardy and, being in a mining operation, the safety of the public at large is at issue. Bank of America, NA, also filed a motion supporting Cobalt's call for the appointment of a chapter 11 trustee in the Debtor's case. According to BoFA, the rift among the Debtors' directors may result in a deadlock of the Debtors' functions, hence, a trustee is needed to facilitate the case in order to preserve the value of the estate. BoFA is the Debtors' primary secured creditor and said that it is owed more than $16 million as of Feb. 9, 2006. Headquartered in Louisville, Kentucky, Brooks Sand and Gravel LLC leases an 184-acre sand reserve and processing plant in Bethlehem, Indiana, in Clark County and employs about 15 people. Smith Mining and Materials LLC owns a 226-acre limestone quarry in Brooks, Kentucky, in Bullitt County and employs about 25 people. Brooks Sand and Smith Mining filed for chapter 11 protection on Feb. 9, 2006 (Bankr. W.D. Ky. Case No. 06-30259). Dean A. Langdon, Esq., and Laura Day DelCotto, Esq., at Wise DelCotto PLLC represent the Debtors in their restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million to $50 million. BUFFALO COAL: Voluntary Chapter 11 Case Summary ----------------------------------------------- Debtor: Buffalo Coal Company, Inc. 32 Enterprise Drive Oakland, Maryland 21550 Tel: (301) 533-0933 Bankruptcy Case No.: 06-00366 Type of Business: The Debtor is engaged in coal mining and processing services. Chapter 11 Petition Date: May 5, 2006 Court: Northern District of West Virginia (Elkins) Debtor's Counsel: David A. Hoyer, Esq. Hoyer, Hoyer & Smith, PLLC 22 Capitol Street Charleston, West Virginia 25301 Tel: (304) 344-9821 Fax: (304) 344-9519 Estimated Assets: $119,323,183 Estimated Debts: $105,887,321 A full-text copy of the Debtor's 20-page list of its largest unsecured creditors is available for free at: http://bankrupt.com/misc/BuffaloCoal_ScheduleF.pdf CALPINE CORP: Wants Court to Approve Dynegy Settlement Agreement ---------------------------------------------------------------- Nissequogue Cogen Partners, a wholly owned subsidiary of Calpine Corporation, asks the U.S. Bankruptcy Court for the Southern District of New York to approve a settlement agreement with Dynegy Marketing and Trade, as successor-in-interest to Chevron U.S.A. Inc. Debtor Nissequogue and Dynegy are parties to a Gas Sales Agreement dated as of May 21, 1993. Dynegy supplies natural gas to Nissequogue. The term of the Contract continues until May 1, 2010. Dynegy invoiced Nissequogue for prepetition deliveries of natural gas during November 2005 and during the 20 days immediately preceding the Petition Date: Period Invoiced Amount ------ --------------- November $5,008,183 December $2,880,766 Nissequogue has not paid the November Amount nor the December Administrative Amount. Dynegy has continued to supply natural gas pursuant to the Contract on a postpetition basis. However, Dynegy has expressed its intent to exercise its contractual right to terminate the Contract. Nissequogue believes that it may be able to obtain natural gas supplies in the future at terms more favorable than those under the Dynegy Contract. After good faith, arm's-length negotiations, the Debtors and Dynegy agree that: -- effective May 1, 2006, Dynegy will have no obligation to deliver natural gas pursuant to the Contract; -- the December Administrative Amount will be an allowed administrative expense pursuant to Section 503(b)(9) of the Bankruptcy Code; -- in exchange for payment of the November Amount and December Administrative Amount, Dynegy will waive all claims under the Contract including any rejection damages claim; -- Nissequogue will pay for deliveries of natural gas received after the Petition Date in the ordinary course of business, pursuant to the terms of the Contract; -- Nissequogue will pay to Dynegy the November Amount and the December Administrative Amount; -- the Contract will be terminated upon Court approval of the settlement agreement. The parties also agree to a broad, mutual release of claims under the Contract. The Debtors assert that the agreement with Dynegy is fair and equitable, falls well within the range of reasonableness, and enables the parties to avoid the costs of additional negotiation or litigation. Dynegy is represented in the Debtors' cases by Patricia Williams Prewitt, Esq., at Locke Liddell & Sapp LLP, in Houston, Texas. About Dynegy Based in Houston, Texas, Dynegy Inc. -- http://www.dynegy.com/-- started as a natural gas wholesaler that with deregulation, has become an all-around energy company dealing in power generation, trading, marketing, transmission and distribution of both natural gas and electricity. It operates in the U.S., Canada and Europe. Chevron plays a major role in the company, with 29% ownership. CEO Chuck Watson owns 6%. The company's power plants can generate 14,000 MW of electricity and through its subsidiary, Dynegy Marketing and Trade, enters into agreements with regional utilities in order to be a player in the retail electricity market. The subsidiary also markets natural gas and coal. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) CALPINE CORP: Court Extends Plan-Filing Deadline to December 31 --------------------------------------------------------------- Calpine Corporation obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to further extend its exclusive periods to: (a) file a plan of reorganization through Dec. 31, 2006; and (b) file and solicit acceptances of that plan through March 31, 2007. As reported in the Troubled Company Reporter on April 5, 2006, Matthew A. Cantor, Esq., at Kirkland & Ellis LLP, in New York, related that since the Dec. 20, 2005, the Debtors have taken many steps toward emerging from Chapter 11, including: (a) proposing, negotiating, amending and finalizing the terms of their $2,000,000,000 DIP Financing; (b) proposing, negotiating, amending and finalizing the terms of the final order authorizing the Debtors' use of cash collateral of all the Debtors' parent company and project- level lenders; (c) preparing for and defending against litigation arising in connection with the Debtors' rejection of certain power purchase agreements, including litigation at the District Court and the expedited appeal to the Court of Appeals; (d) determining whether and how each of the Debtors' numerous projects should be restructured. Specifically, the Debtors have identified certain under-performing projects as the Designated Projects which may be sold, turned over to creditors, idled or restructured; (e) commencing review of thousands of executory contracts and leases; (f) implementing the relief authorized by the Court on the Petition Date to preserve the Debtors' relationships with their employees, customers, suppliers, lenders, lessors and others; (g) gathering the information required to complete the Debtors' schedules and statements; (h) stabilizing relationships with key energy trading partners, including negotiation of a final safe harbor trading order and the assumption of approximately 250 trading contracts and the negotiation of various new trading contracts; and (i) negotiating the final form of the utilities order and negotiating utility deposits with many utility providers. Mr. Cantor said that much work remains to be done before the Debtors can develop a business plan and propose a viable plan of Reorganization, given the scale and complexity of their restructuring. Mr. Cantor told the Court that the Debtors do not seek extension to delay administration of the cases or to pressure creditors to accept an unsatisfactory plan. Rather, he said an extension is intended to facilitate an orderly, efficient and cost-effective plan process for the benefit of all creditors. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Wants Tort Claim Sharing Rules Amended --------------------------------------------------------------- The Diocese of Spokane asks the U.S. Bankruptcy Court for the Eastern District of Washington's permission to amend the Proof of Claim Sharing Protocol. The Diocese proposes to add new provisions that: (a) give the counsel of any Catholic religious order or institution, or individual, who: * is named in a proof of claim as responsible for sex abuse sustained by a claimant; or * could be responsible for the wrongful acts of an alleged abuser, through negligent supervision or otherwise, the right to view those proofs of claim which contain sex abuse allegations against that religious order or institution, or person; and (b) define the term "Carrier Parties," as including the insurance carriers for any Catholic religious order or institution, or individual, who is named in a proof of claim as responsible for: * sex abuse sustained by a claimant, or * wrongful acts of an alleged abuser, through negligent supervision or otherwise. (c) entitle the Carrier Parties to view those particular proofs of claim which contain sex abuse allegations against the religious order or institution, or person for whom a Carrier Party has issued insurance policies. Mr. Paukert tells Judge Williams that the Tort Claimants Committee's counsel asked the Diocese to allow a paralegal at Riddell Williams P.S., to view the unredacted "Confidential Proofs of Claim for Sexual Abuse," to assist in the compilation of information associated with the claim. Hence, the Diocese also seeks permission to include the Riddell Williams paralegal in the POC Sharing Protocol. The Paralegal will be required to execute compliance declaration and be bound by the terms of the POC Sharing Protocol. As previously reported, the Court established a deadline to file proofs of claim against the Diocese of Spokane and a protocol for sharing confidential proofs of claim for sexual abuse. As of Mar. 10, 2006, 185 confidential proofs of claim for sexual abuse were filed. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller LLP, in Spokane, Washington, relates that 25 of those confidential proofs of claim contain allegations against: * priests or clergy who were or are members of religious orders, which could be responsible, in whole or in part, for any abuse sustained by the person filing the proof of claim; and * certain individuals who could be legally responsible for the alleged abuse. As a result, the Diocese finds it necessary to: -- contact those religious orders and individuals to advise them of the allegations against them; -- be able to appropriately investigate and process the allegations of sexual abuse described in the proofs of claim; and -- tender the defense and indemnity for one or more of the sexual abuse claims described in the confidential proofs of claim over to the religious orders, institutions or individuals identified in the proofs of claim. The Diocese anticipates that the religious orders or institutions, and individuals named in the confidential proofs of claim will make claims on insurance policies. Thus, Mr. Paukert says, it is also necessary to share the proofs of claim with the insurance carriers for those religious orders or institutions, or individuals. Objections (a) CNA Parties The CNA insurance companies tell Judge Williams that the Amendment, which purports to grant to certain insurers access to confidential proofs of claim, is "confusing" and could be interpreted "to retract or rescind provisions currently existing in the Protocol." The CNA parties are: (1) American Casualty of Reading, Pennsylvania; (2) Continental Casualty Company; (3) Continental Insurance Company; (4) Pacific Insurance Company; and (5) The Glen Falls Insurance Company. Charles R. Ekberg, Esq., at Lane Powell PC, in Seattle, Washington, notes that the Carrier Parties are, in fact, parties to the declaratory judgment action currently pending in the U.S. District Court for the Eastern District of Washington, Case No. 05-CV-0075 (JLQ). Mr. Ekberg says the Amendment could be read as restricting the ability of a Carrier Party in the current declaratory judgment action to receive only proofs of claim filed against a party or institution for whom the Carrier Party is alleged to have issued an insurance policy. The CNA Parties believe that, as long as any insurance carrier is willing to agree to the terms provided in the original Protocol, no restriction should be made on the ability of a Carrier Party to review any confidential proofs of claim. Any order approving the amended Protocol should provide that it does not restrict, modify or supersede any discovery orders or protocols, which may have been entered in the declaratory judgment action. (b) Cowles Publishing Cowles Publishing Company, publisher of The Spokesman-Review newspaper, argues that a procedure should be put in place to permit public access to court records. Christopher G. Varallo, Esq., at Witherspoon, Kelley, Davenport & Toole, P.S., in Spokane, Washington, points out that the claims submitted to the Diocese have already been redacted to protect the identities of claimants and exist in the files of the Diocese's counsel. 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. 57; Bankruptcy Creditors' Service, Inc., 215/945-7000) CBRL GROUP: S&P Downgrades Unsecured Notes' Rating to B+ -------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Lebanon, Tennessee-based restaurant operator CBRL Group Inc. to 'BB' from 'BB+'. The unsecured notes rating was lowered to 'B+', two notches below the corporate credit rating, reflecting the relatively large amount of secured debt in the capital structure. The rating on the $1.25 billion secured credit facility was lowered to 'BB' from 'BB+' and taken off CreditWatch, where it had been placed with negative implications on April 4, 2006. All other ratings are removed from CreditWatch, where they were placed on Jan. 25, 2006, with negative implications. The outlook is negative. The rating actions follow CBRL's announcement that it has drawn approximately $725 million under its $1.25 billion secured credit facility to repurchase 16.75 million shares tendered in its modified "Dutch" auction. "The debt-financed share repurchase represents a more aggressive financial policy," said Standard & Poor's credit analyst Diane Shand. "Moreover, the transaction increases leverage and weakens cash flow protection measures." Pro forma for the share repurchase, total debt to trailing 12-month EBITDA (ended Jan. 31, 2006) increases to about 4.4x from an actual 1.9x. The ratings on CBRL reflect: * the company's more aggressive financial policy; * leveraged balance sheet; and * participation in a highly competitive restaurant industry. These risks are somewhat mitigated by CBRL's generally good levels of profitability and its solid position in the family dining sector of the restaurant industry. CC & R Inc: Case Summary & 7 Largest Unsecured Creditors -------------------------------------------------------- Debtor: CC & R Inc. 143 Triunfo Canyon Road, Suite #100 Westlake Village, California 91361 Bankruptcy Case No.: 06-10651 Type of Business: The Debtor is a full service professional corporation integrating civil engineering, land planning and surveying. See http://www.ccandrinc.com/ Chapter 11 Petition Date: May 5, 2006 Court: Central District Of California (San Fernando Valley) Judge: Geraldine Mund Debtor's Counsel: Chris Gautschi, Esq. 148 Via Trieste Newport Beach, California 92663 Tel: (949) 294-5497 Total Assets: $1,226,850 Total Debts: $521,193 Debtor's 7 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Operating Engineers Pension $222,714 Pension Trustee Contributions P.O. Box 7064 Pasadena, CA 91109 Santa Barbara Bank Loan $200,000 P.O. Box 60654 Santa Barbara, CA 91360 Telesis CCU Loan $40,000 9301 Winnetka Avenue Chatsworth, CA 91311 Morris Polich Purdy LLP Legal Fees $19,419 Design Consultants Consultation $8,113 Toth Properties Rent $6,050 Western Financial Bank Unknown CHARLES GRIFFIN: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Charles L. Griffin 28 Meadow Ridge Lane Old Brookville, New York 11545 Bankruptcy Case No.: 06-41411 Type of Business: The Debtor is the sole owner of Federal Metal & Glass Corp., which filed for chapter 11 protection on April 21, 2005 (Bankr. E.D. N.Y., Case No. 05-16228). Chapter 11 Petition Date: May 5, 2006 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: Gabriel Del Virginia, Esq. 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 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ CitGold Advantage $11,218 P.O. Box 6062 Sioux Falls, SD 57117 United States Department of Treasury $6,293 Internal Revenue Service P.O. Box 145585 - Stop 8420G Cincinnati, OH 45250-5585 COMVERSE TECH: N.Y. Attorney's Office Investigates Option Grants ---------------------------------------------------------------- Comverse Technology, Inc., received a subpoena from the U.S. Attorney's Office for the Eastern District of New York in connection with the issuance of stock option grants from 1995 to the present, widening the investigation on the Company's options practices. The SEC has started investigating whether grants were granted ahead of favorable news to give recipients a better chance of profiting from the exercise of the options. Options give their holders the right to buy shares at a fixed, or exercise, price. Holders can profit by buying shares at the exercise price and selling them when the stock-market price exceeds it. The Company said it intends to fully cooperate with the United States Attorney in responding to this subpoena. As reported in the Troubled Company Reporter on May 3, 2006, the Company's Chairman and Chief Executive Officer, Kobi Alexander, and its Chief Financial Officer, David Kreinberg, resigned from their positions in the Company. William F. Sorin also resigned as director, Senior General Counsel, and Corporate Secretary. From 1995 through Jan. 31, 2005, Mr. Alexander realized $135 million in gains from exercising options, according to SEC filings. At the end of that period, he had an additional $50 million in unrealized gains. The Company appointed a special committee to investigate the options grants. The Special Committee reached a preliminary conclusion that the actual dates of measurement for certain past stock option grants for accounting purposes differed from the recorded grant dates for those awards. Based on the Special Committee's preliminary conclusion, the Company says it will need to restate its historical financial statements for each of the fiscal years ended Jan. 31, 2005, 2004, 2003, 2002, and 2001 and for the first three quarters of the fiscal year ended Jan. 31, 2006. Due to the delay in filing its Form 10-K for the year ended Jan. 31, 2006, the Company received a Staff Determination letter from The NASDAQ Stock Market indicating that the Company's securities will be delisted from The NASDAQ Stock Market. About Comverse Comverse, a unit of Comverse Technology, Inc. (NASDAQ: CMVT) -- http://www.comverse.com/-- provides software and systems that enable network-based multimedia enhanced communication and billing services. Over 450 communication and content service providers in more than 120 countries use Comverse products to generate revenues, strengthen customer loyalty and improve operational efficiency. * * * As reported in the Troubled Company Reporter on May 4, 2006, Standard & Poor's Ratings Services held its ratings on Comverse Technology Inc. on CreditWatch with negative implications, where they were placed on March 15, 2006, on the disclosure that the board of directors at Comverse had created a special committee to review matters relating to the company's stock option grants and the likely need to restate prior-period financial results. As reported in the Troubled Company Reporter on March 17, 2006, Standard & Poor's placed its corporate credit and senior unsecured debt ratings on Comverse Technology on CreditWatch with negative implications. The company has S&P's 'BB-' corporate credit and senior unsecured debt ratings. CONSECO INC: S&P Affirms BB- Counterparty Credit Rating ------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB+' counterparty credit and financial strength ratings on Conseco Inc.'s (NYSE:CNO) core insurance companies and its 'BB-' counterparty credit rating on Conseco Inc. Standard & Poor's also said that the outlook on Conseco Inc. is stable, and the outlook on the operating companies is positive. The affirmations follow the announcement of Conseco CEO William S. Kirsch's resignation. Standard & Poor's had a discussion with the Chairman of Conseco's board of directors, R. Glenn Hilliard, and the company's new interim CEO, James E. Hohmann. "We believe that the transition will be executed in an orderly manner and that the strategic direction of the company will not change to the detriment of its risk profile," said Standard & Poor's credit analyst Jon Reichert. During Kirsch's tenure as CEO, which began in August 2004, the company made significant progress in recasting itself as a viable insurance entity, which included a revitalization of its independent agent channel. At their current noninvestment-grade level, all of the Conseco ratings incorporate an expectation for some degree of variability in operating and financial results. CREDIT SUISSE: Moody's Cuts Rating on $9.2MM Class L Certs. to C ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of four classes, downgraded the rating of one class and affirmed the ratings of three classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 1999- C1:: * Class A-2, $658,244,370, Fixed, affirmed at Aaa * Class A-X, Notional, affirmed at Aaa * Class B, $52,600,000, Fixed, upgraded to Aaa from Aa2 * Class C, $58,500,000, WAC, upgraded to Aa3 from A2 * Class D, $14,700,000, WAC, upgraded to A1 from A3 * Class E, $40,900,000, WAC, upgraded to Baa1 from Baa2 * Class F, $20,500,000, WAC, affirmed at Baa3 * Class L, $9,219,800, WAC, downgraded to C from Ca As of the April 17, 2005 distribution date, the transaction's aggregate principal balance has decreased by approximately 20.2% to $933.7 million from $1.17 billion at securitization. The Certificates are collateralized by 128 loans ranging in size from less than 1.0% to 5.8% of the pool, with the top ten loans representing 36.0% of the pool. The pool includes a credit tenant lease component which comprises 3.8% of the pool. Eighteen loans, representing 22.7% of the pool, have defeased and are collateralized by U.S. Government securities. The largest defeased loans include the Exchange Apartments Loan and the Selig -- Third and Broad Loan. Fourteen loans were liquidated from the pool, resulting in realized losses of approximately $34.8 million. Two loans representing less than 1.0% of the pool are in special servicing. Moody's is projecting aggregate losses of approximately $1.0 million for the specially serviced loans. Thirteen loans, representing 19.3% of the pool, are on the master servicer's watchlist. Moody's was provided with year-end 2004 and partial or full year 2005 operating results for 98.8% and 84.0% of the performing loans, respectively. Moody's loan to value ratio is 85.4% compared to 88.5% at Moody's last full review in May 2005 and compared to 84.3% at securitization. The upgrade of Classes B, C, D and E is due to a high percentage of defeased loans and overall stable pool performance. The downgrade of Class L is due to realized and projected losses. Classes M, N and O have been eliminated entirely due to losses and Class L has experienced aggregate losses of approximately $6.6 million. The top three conduit loans represent 12.5% of the outstanding pool balance. The largest conduit loan is the Tallahassee Mall Loan, which is secured by a 974,000 square foot mall located in Tallahassee, Florida. The mall is anchored by Dillard's, Goody's, and Parisian. In-line occupancy has declined to 81.0% from 88.0% at last review. The loan was assumed by new owners in mid 2005 and the property is currently being renovated, which has caused a disruption in property performance. The loan is on the master servicer's watchlist due to low debt service coverage. Moody's LTV is 93.4% compared to 90.2% at last review. The second largest conduit loan is the Hato Rey Tower Loan, which is secured by a 350,000 square foot office building located in downtown San Juan, Puerto Rico. The property is 76.0% occupied as of December 2005, the same as at last review. The property's performance has been impacted by lease rollover. The loan is on the master servicer's watchlist due to low debt service coverage. Moody's LTV is 97.0% compared to 90.0% at last review. The third largest conduit loan is the L'Enfant Plaza Participation Loan, which represents a 50.0% participation interest in a $69.2 million mortgage loan. The loan is secured by a mixed use complex which consists of 750,000 square feet of office space, 140,000 square feet of retail space and a 370-room Loew's hotel. Performance has improved since last review. The property is also encumbered by a $45.4 million B Note which is held outside the trust. Moody's LTV is 81.0% compared to 86.4% at last review. The CTL component consists of two cross-collateralized loans to a single credit tenant, ACCOR, S.A. The loans are secured by eleven limited service hotels totaling 1,224 rooms operating under the Motel 6 flag. The properties are located in five states. The pool's collateral is a mix of office, U.S. Government securities, retail, multifamily, lodging, industrial and self storage, mixed useand CTL. The collateral properties are located in 30 states plus the Commonwealth of Puerto Rico and the District of Columbia. The highest concentrations are California, New York, Florida, Colorado and Puerto Rico. All of the loans are fixed rate. DANA CORP: Panel Taps FTI Consulting as Restructuring Advisors -------------------------------------------------------------- The Official Committee of Unsecured Creditors in Dana Corporation and its debtor-affiliates' chapter 11 cases seeks permission from the U.S. Bankruptcy Court for the Southern District of New York to retain FTI Consulting, Inc., as its restructuring advisors, effective March 14, 2006. Peter Faulkner, co-chairperson of the Creditors Committee, relates that FTI will help the Committee assess and monitor the efforts of the Debtors and their professional advisors to maximize the value of their estates and to reorganize successfully. He adds that FTI is well qualified and able to represent the Committee in a cost-effective, efficient and timely manner. FTI will: (1) assist the Creditors Committee in the review of financial related disclosures required by the Court, including the Schedules of Assets and Liabilities, the Statement of Financial Affairs and Monthly Operating Reports; (2) assist the Committee with the review of the Debtors' short-term cash management procedures and monitoring of cash flow; (3) assist the Committee with the review of the Debtors' employee benefit programs, including key employee retention, incentive, pension and other post-retirement benefit plans; (4) assist and advise the Committee with respect to the Debtors' management of their supply chain, including critical and foreign vendors; (5) assist the Committee with the review of the Debtors' performance of cost/benefit evaluations with respect to the affirmation or rejection of various executory contracts involving vendors and customers; (6) assist in the evaluation of the Debtors' operations and identification of areas of potential cost savings, including overhead and operating expense reductions and efficiency improvements; (7) assist in the review of financial information distributed by the Debtors, including, but not limited to, cash flow projections and budgets, cash receipts and disbursement analyses, analyses of various asset and liability accounts, intercompany transactions, and operating results; (8) assist the Committee with information and analyses, as it relates to other services described herein, required pursuant to any DIP financing including, but not limited to review of borrowing base calculations and financial covenants; (9) attend meetings and assist in discussions with the Debtors, potential investors, banks, other secured lenders, the Committee and any other official committees organized in the Debtors' Chapter 11 proceedings, the U.S. Trustee, other parties-in-interest and professionals hired by the same, as requested; (10) assist in the review or preparation of information and analysis, as it relates to other services, necessary for the confirmation of a plan in the Chapter 11 proceedings; (11) assist in the review of potential claims levels and the Debtors' reconciliation/estimation process; (12) assist with various tax matters including, but not limited to, the impact of the Debtors' claims and equity trading and tax issues related to a plan of reorganization; (13) provide litigation advisory services with respect to accounting and restatement matters, along with expert witness testimony on case related issues as required by the Committee; and (14) render other general business consulting or other assistance as the Committee or its counsel may deem necessary that are consistent with the role of a financial advisor and not duplicative of services provided by other professionals in this proceeding. FTI will be paid: (i) a $225,000 per month fixed allowance for the first three months and $200,000 per month for each additional month thereafter; (ii) a $1,000,000 completion fee, which will be considered earned and payable, subject to the Court's approval, on the earliest occurrence of: (a) the confirmation of a plan of reorganization or a plan of liquidation; (b) the sale or liquidation of all or substantially all of the company's assets; and (c) the conversion of the case to a case under Chapter 7; (iii) reimbursement of actual and necessary expenses. Michael Eisenband, senior managing director at FTI, discloses that FTI and its affiliates have had engagements involving certain Debtor entities in matters unrelated to the Debtors' Chapter 11 proceedings: (a) FTI performed due diligence services on behalf of Citibank, N.A., Dana's bank lender, in regard to the securitization of accounts receivable. All work in regard to this assignment was completed in February 2005; (b) FTI performed certain due diligence procedures for Bank One as it pertained to the financing of the sale of the Dana Automotive Aftermarket Group to Cypress. All work in regard to this assignment was completed in October 2004. (c) FTI provides graphic design services to DuPont in the legal proceeding, captioned as Theriot v. Mobil Oil, et al. Dana and DuPont are two of many co-defendants in the case. FTI does not provide any services to Dana in the proceedings. (d) FTI provides graphic design services to Caterpillar Corp. in their legal proceeding, captioned as Villanueva v. Caterpillar, et al. Dana is one of many co-defendants with Caterpillar. FTI does not provide any services to Dana in the proceedings. Further, as part of its diverse practice, FTI appears in numerous cases, proceedings and transactions that involve many different professionals, including attorneys, accountants and financial consultants, who may represent claimants and parties-in-interest in the Debtors' cases. George P. Stamas, Esq., a partner of Kirkland & Ellis, is currently a member of the Board of Directors of FTI. K&E is retained as a professional for the Ad Hoc Committee of Noteholders of Dana Credit Corp. Mr. Stamas is in no way involved with the K&E team in the Debtors' proceedings, nor does he have any professional involvement in this matter in any capacity, Mr. Eisenband assures the Honorable Burton R. Lifland. FTI has in the past, may currently and will likely in the future be working with or against other professionals involved in matters unrelated to the Debtors and their Chapter 11 cases. About Dana Corporation 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. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). 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. The Official Committee of Unsecured Creditors has selected Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, as its counsel. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945- 7000). DANA CORP: Committee Selects UBS Securities as Investment Bankers ----------------------------------------------------------------- The Official Committee of Unsecured Creditors in Dana Corporation and its debtor-affiliates' chapter 11 cases seeks the U.S. Bankruptcy Court for the Southern District of New York's authority to retain UBS Securities LLC as its investment bankers. Peter Faulkner, co-chairperson of the Creditors Committee, tells the Honorable Burton R. Lifland that UBS is well suited to provide investment banking services to the Committee. UBS and its professionals have extensive experience working with financially troubled companies in complex financial restructurings out of court and in Chapter 11 cases, including Adelphia Communications, Trump Hotels and Casino Resorts, Inc., CornerStone Propane, L.P., Petroleum Geo-Services ASA, Pacific Gas and Electric Company, and Breed Technologies, Inc. Mr. Faulkner adds that UBS is a leading M&A advisor in the U.S. and was ranked sixth in U.S. M&A by Thompson Financial in 2005. UBS advised on over $191 billion in M&A transactions with an average deal size over $1.7 billion. Pursuant to an engagement letter dated March 14, 2006, UBS will: (a) advise and assist the Creditors Committee in its analysis of the liquidity position, assets and liabilities, and financial condition of the Debtors; (b) advise and assist the Committee in the Committee's review and analysis of the Debtors' business plan; (c) advise the Committee in its analysis of the Debtors' debt capacity in light of their projected cash flows; (d) advise and assist the Committee in its review and analysis of any proposed capital structure for the Debtors; (e) assist the Committee in its analysis of any valuation of the Debtors or their separate businesses; (f) attend Committee meetings as well as due diligence meetings with the Debtors or other third parties as appropriate; (g) advise and assist the Committee in its analysis of the Debtors' financing alternatives; (h) advise and assist in the Committee's assessment of the financial issues and options concerning the sale of any assets of the Debtors in analyzing strategic alternatives available to the Debtors; (i) advise and assist the Committee in its review and analysis of all Plans; (j) advise and assist the Committee in its review and analysis of any new securities, other consideration or other inducements to be offered or issued under any Plan; (k) assist the Committee or participate in negotiations with the Debtors and other parties-in-interest; (l) provide testimony in Court on behalf of the Committee, if necessary, with respect to the financial aspects of any Plan; and (m) provide other financial advisory services in the Reorganization Cases reasonably or as may be agreed to be performed by UBS. UBS will be paid: (i) a $175,000 monthly cash advisory fee; provided that 50% of the fee will be credited, to the extent actually paid, against the restructuring transaction fee. (ii) a $2,250,000 restructuring transaction fee, payable upon the consummation of any Restructuring Transaction, including, without limitation on the effective date of any Chapter 11 plan of reorganization. UBS will also be reimbursed for reasonable out-of-pocket expenses, and other fees and expenses, including reasonable expenses of counsel, if any. The Debtors will be obligated to indemnify and hold UBS and certain related persons and entities harmless and to provide contribution against liabilities arising out of or in connection with the retention of UBS by the Committee except in certain circumstances where liabilities resulted from the gross negligence or willful misconduct of UBS. The Creditors Committee requests that UBS' retention be effective on March 14, 2006. Since that time, the firm, according to Mr. Faulkner, has been providing critical services to the Committee, including, without limitation: (i) reviewing operating and financial information and conducting general due diligence on the Debtors' business and case matters; (ii) meeting with the Debtors' management, advisors and other professionals involved in the cases; (iii) participating in meetings with the Committee; and (iv) responding to inquiries from creditors. Andrew L. Kramer, managing director at UBS, discloses that potential parties-in-interest currently employ or formerly employed UBS in matters unrelated to the Debtors or their chapter 11 cases. None of these entities generated more than 1% of UBS's revenue in 2004 and 2005. In addition, before May 2, 2006, UBS's trading desk held for its own account certain debt obligations of the Debtors. UBS was among the "Market Maker Objectors" who filed a preliminary objection to the Debtors' Trading Procedures. The decision to participate in the Objection was made by the trading desk as a separate business unit of UBS, and upon the advise of its investment banking unit, the trading desk has withdrawn the Objection. UBS' trading desk has sold all obligations and the sales have closed in accordance with customary settlement procedures. Moreover, UBS is an active participant in the derivatives market, including the market for credit default swaps. Before the Debtors' bankruptcy filing, UBS entered into a number of credit default swaps with various counterparties related to various obligations of the Debtors. As a global securities trading firm, UBS may be involved in transactions with respect to securities of potential parties-in- interest. None of these relationships constitute interests materially adverse to the Debtors in matters upon which UBS is to be employed, Mr. Kramer assures the Court. UBS is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code and holds no interest adverse to the Debtors and their estates for the matters for which it is to be employed. About Dana Corporation 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. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). 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. The Official Committee of Unsecured Creditors has selected Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, as its counsel. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945- 7000). DANA CORP: Seeks Court Okay to Pay $35 Million Tooling Claims ------------------------------------------------------------- Dana Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York for permission to pay, in the ordinary course of their businesses, the claims of certain suppliers of tooling, machinery or other equipment. The Debtors supply modules, systems and components for original equipment manufacturers and service customers in the light, commercial and off-highway vehicle markets. The Debtors regularly purchase machinery, equipment, tooling and other personal property for use in the manufacturing process to meet specialized customer orders. According to Corinne Ball, Esq., at Jones Day, in New York, in light of the dynamic nature of the automobile and truck markets, OEMs develop new vehicles on a continuous basis and have a number of new platform launches each year. This nearly constant updating of the vehicles being manufactured by the OEMs leads to a corresponding turnover in the parts being purchased by the OEMs. Thus, the Debtors must make capital equipment purchases on a regular basis to fulfill their ever-changing obligations to customers for the business awarded to them related to new vehicle models. In each of 2004 and 2005, the Debtors purchased more than $250 million in machinery, jigs, dies, gauges, molds, patterns, equipment, tooling and other personal property dedicated and tailored to a particular OEM's vehicle product. The Debtors have budgeted to purchase a similar amount of Tooling during 2006. For many of their major projects, the Debtors must initiate preparations to supply new parts to an OEM as many as 18 months before the first part is actually manufactured and sold to the OEM. Sometimes the manufacturing process calls for the Debtors to manufacture parts directly for sale to the OEMs. Other times, the manufacturing process calls for the Debtors to designate and utilize a number of sub-suppliers -- the "Tier 2" suppliers to the OEMs -- who make and sell parts to the Debtors for integration by the Debtors -- the "Tier 1" supplier to the OEMs -- into the systems and parts sold by the Debtors to the OEMs. The OEMs, Ms. Ball relates, seek to operate as much as possible on a just-in-time basis to minimize their inventory costs. Hence, a small disruption in the manufacturing process of one of an OEM's suppliers can quickly shut down the OEM's own assembly lines. Recognizing this, and to minimize the potential for disruptions, many of the OEMs require that they own important Tooling so that they can control the Tooling in the event of a business disruption at one of their suppliers, as well as protect their trade secrets and other intellectual property rights. Customer Paid Tooling Consistent with this approach, at the start of a new project, the OEMs often designate that certain or all of the OEM-specific Tooling being purchased by a Tier 1 supplier, like the Debtors, be sold to the OEMs. Typically, this arrangement is embodied in the Debtors' agreements with their OEM customers, which require the Debtors to identify and contract with the Tooling Suppliers for the acquisition of Customer Paid Tooling. When the production of the Customer Paid Tooling is completed, it is either: (a) delivered by the Tooling Supplier to the Debtors for use by the Debtors in the manufacturing process (In-House Tooling); (b) retained by the Tooling Supplier itself for use in producing parts for sale to the Debtors (Supplier- Developed Tooling); or (c) delivered by the Tooling Supplier to a "Tier 2" supplier for its use in the development of parts for sale to the Debtors. Ownership of the Tooling passes from the Tooling Suppliers to the Debtors and then to the OEM pursuant to the terms of the Customer Contracts. Sometimes ownership of the Tooling passes immediately through the applicable Debtor to the OEM customer. Other times, the contract provides that ownership of the Tooling resides at the Debtor for a period of time and transfers to the OEM at a later date. Because of the relationship between the parties, Customer Paid Tooling costs are a simple pass-through for the Debtors. The Debtors take funds from the OEMs and pass them through to the Tooling Suppliers and take the Tooling from the Tooling Suppliers and pass ownership of it through to the OEMs. Tooling Claims At this time, the Debtors are nearing the completion of Tooling purchases for a number of key projects and are approaching or in the midst of the testing phase that immediately precedes the start of production. Projects at this stage include systems for the manufacture of frames for the Toyota Tundra light truck and Toyota Sequoia sport-utility vehicle, as well as for a number of Ford vehicles, including the F-series pickup. In addition, the Debtors have a number of smaller projects requiring customer- specific frames, light axles and driveshafts for various vehicle programs with DaimlerChrysler, Ford, BMW and other OEMs. The Debtors also are in the process of soliciting bids and identifying suppliers for similar projects with the same customer base for future vehicle platforms. Accordingly, the Debtors have a number of projects in process for some of their most important customers, who are key to the continued viability and successful reorganization of the Debtors' business operations. The Debtors intend to pay the claims of the Tooling Suppliers for Customer Paid Tooling that was sold to the Debtors and has been resold prepetition or will be resold postpetition to the Debtors' customers. The Debtors expect to pay approximately $35,000,000 of Tooling Claims, comprised of approximately $15,600,000 relating to In- House Tooling and $19,200,000 relating to Buy-Outside Tooling. Ms. Ball asserts that payment of Tooling Claims will facilitate the success of the Debtors' business operations without any significant costs to their estates. With respect to the In-House Tooling, the Debtors have determined that they obtained title to the Tooling before their bankrupty filing, under the terms of the Customer Contracts. Accordingly, In-House Tooling Claims are prepetition claims. The status of the Buy-Outside Tooling Claims is less clear. With respect to most of the Tooling, the agreement between the Debtors and the Tooling Supplier is a simple purchase order, which may or may not specifically identify when ownership or title to the Tooling transfers. This purchasing arrangement is particularly common with respect to Supplier-Developed Tooling. Because the manufacturer will maintain possession of the Supplier-Developed Tooling, there is no physical "delivery" of the Tooling to the Debtors, which is normally the key point under applicable state law that serves to demarcate when ownership to the Tooling transfers. For other forms of Buy-Outside Tooling, where the tooling is delivered to a third party, the ownership analysis may be complicated by various other factors. Based on their own analyses, the Debtors believe that they likely did not have ownership of much of the Buy-Outside Tooling on the date of their bankruptcy filing, and therefore the majority of the $19,200,000 in Buy-Outside Tooling Claims may represent postpetition obligations that can be paid in the ordinary course of the Debtors' businesses. Nonetheless, out of an abundance of caution, the Debtors seek the Court's consent to pay Buy-Outside Tooling sClaims. Pass-Through Nature of Tooling Claims The OEM tooling programs effectively operate as a pass-through transaction, with the OEMs -- and not the Debtors -- bearing the cost of the Tooling. The Debtors arrange for the purchase of Tooling for the OEMs, but never take long-term ownership of the Tooling, as title to the Tooling passes from the Tooling Supplier to the Debtors and then ultimately to the OEMs. Likewise, while the Debtors front certain of the costs for the Customer Paid Tooling, they ultimately are reimbursed by the OEMs for the Tooling costs with amounts that the OEMs consider to be earmarked for payment of Tooling Claims. The Debtors, thus, serve as middlemen, consistent with the practices used throughout the automotive industry. In recent weeks, many of the OEM customers have voiced concerns that there be no interruption in the Customer Paid Tooling programs and the supply projects they support, Ms. Ball tells the Honorable Burton R. Lifland. If the Debtors do not commit to use OEM funds, which the OEMs consider earmarked for tooling payments, to make the payments, the Debtors anticipate that they will suffer serious harm to their critical customer relationships. Many of the Tooling Claims Are Secured According to the Debtors, under applicable state law, many of the Tooling Suppliers have liens, or the ability to assert liens, on the Customer Paid Tooling if the Tooling Claims are not paid. In some instances, the Debtors may have affirmatively granted the Tooling Supplier a security interest in the Tooling through the prepetition execution of a security agreement, and the Tooling Supplier has perfected the interest by making the appropriate filings pursuant to the Uniform Commercial Code. In other instances, applicable state law grants the Tooling Supplier the right to assert a lien in the Tooling. Thus, absent payment of the Tooling Claims, it is likely that certain of these Tooling Suppliers will assert their liens, causing disruptions to the Debtors' customer relationships, Ms. Ball avers. Moreover, Ms. Ball asserts that additional factors warrant the payment of the Tooling Claims: (1) The payment of the Tooling Claims is necessary to reach agreement with the Tooling Suppliers to assist the Debtors on new business projects or to complete other pending projects; (2) Certain of the Tooling Suppliers have advised the Debtors that they will not continue to deliver or transfer ownership of in-process Tooling to the Debtors unless and until the Debtors pay for the Tooling already delivered by the supplier; (3) Tooling Suppliers may refuse to perform services, delaying the test runs being performed by the Debtors for certain new products. To complete the tests successfully and to initiate the manufacture and delivery of new parts to customers, certain of the Customer Paid Tooling must be installed, modified, reprogrammed, hardened or have other work performed on it by the Tooling Supplier; (4) The community of Tooling Suppliers is relatively small and close-knit. The Debtors have developed a stable of suppliers with whom they have had successful working relationships, which would be harmed if the Debtors were to fail to pay the Tooling Claims; and (5) Many of the Tooling Suppliers have small operations that may be unable to survive the nonpayment of the Tooling Claims by the Debtors. Tooling Claim Schedule A schedule identifying the Tooling Suppliers and the Tooling Claims potentially to be paid is available for free at http://researcharchives.com/t/s?8ac To the extent that the Debtors discover additional claims for Tooling that, if paid, are to be reimbursed by the Debtors' customers, the Debtors reserve their rights to add the claims to the Tooling Claim Schedule. Payment Conditions The Debtors want to ensure that the prompt payment of the Tooling Claims provides the Debtors with the maximum benefit to their estates. The Debtors propose that each holder of a Tooling Claim may receive payment on account of the claim if it: -- confirms that it will comply with the delivery schedules for the Customer Paid Tooling set forth in the underlying agreements on a postpetition basis, or -- agrees to other terms that the Debtors determine are acceptable, even if the previously agreed deadlines required the delivery of Tooling to the Debtors prior to approval of the Tooling Claims Motion. In addition, each recipient of a payment of a Claim Payment will be required, to the extent applicable, to: (a) continue to accept and fulfill purchase orders issued by the Debtors for Tooling or other machinery or equipment; (b) continue to extend normalized trade credit and provide other business terms on a postpetition basis, including with respect to any applicable credit limits, the pricing of goods and services and the provision of equivalent levels of service, on terms at least as favorable as those extended prepetition or on other terms that are acceptable to the Debtors in their business judgment, until they emerge from Chapter 11; (c) not file of record in any jurisdiction, or otherwise assert against the Debtors, their Chapter 11 estates, their customers or against any of their property, a lien or security interest relating in any manner to the Tooling Claims satisfied through the Claim Payment; (d) if liens or security interests have already been asserted in the Tooling, take steps to withdraw the liens or security interests within 10 business days of receipt of the Claim Payment and to provide the Debtors and the relevant customer with written notice of the withdrawal of the liens and security interests; and (e) for Buy-Outside Tooling, release to the Debtors or the customers, as requested by the Debtors or the Customers, the Customer Paid Tooling in the Tooling Supplier's possession. The Debtors may require a Tooling Supplier to execute an agreement prior to its receipt of a Claim Payment that, among others, confirms that the Tooling Supplier agrees to be bound by the Trade Terms. The Debtors may impose additional requirements of any nature, in their sole discretion, for payment of the Tooling Claims. About Dana Corporation 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. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). 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. The Official Committee of Unsecured Creditors has selected Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, as its counsel. 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. 8; Bankruptcy Creditors' Service, Inc., 215/945- 7000). DELPHI CORP: U.S. Trustee Appoints 7-Member Equity Holders' Panel ----------------------------------------------------------------- Diana G. Adams, the United States Trustee for Region 2, appoints seven equity security holders to serve on the Official Committee of Equity Security Holders in Delphi Corporation and its debtor- affiliates' Chapter 11 cases: 1. Brandes Investment Partners, L.P. 11988 El Camino Real, Suite 500 San Diego, California 92103 2. Luqman Yacub P. O. Box 1026 Hartville, Ohio 44632 3. James E. Bishop, Sr. 502 Shiloh Dr. # 9 Laredo, Texas 78045 4. D.C. Capital Partners, L.P. 800 Third Avenue 40th Floor New York, NY 10022 5. James N. Koury, trustee of the Koury Family Trust 410 Reposado Dr. La Habra Heights, California 90631 6. James H. Kelly P. O. Box 4426 Boulder, Colorado 80306 7. Dr. Betty Anne Jacoby 18 Fox Hill Drive Little Silver, New Jersey Appaloosa Wants to Join Equity Committee Conspicuously missing from the roster of Equity Committee members is Appaloosa Management L.P. and certain other shareholders, each of which submitted timely its application for membership, Frank L. Eaton, Esq., at White & Case LLP, in Miami, Florida, tells the Court. Appaloosa, Wexford Capital LLC, Pardus Capital Management L.P., and Lampe Conway & Co., LLC, in the aggregate own nearly 20% of the issued and outstanding common stock of Delphi. Mr. Eaton points out that Appaloosa, Delphi's largest shareholder, single-handedly prosecuted the request for the appointment of an equity committee over the objection of the Debtors, the Official Committee of Unsecured Creditors, the Debtors' prepetition lenders, and the U.S. Trustee. In prosecuting that request and conducting extensive discovery, Appaloosa expended a significant amount of resources through the retention of counsel and experts. "In what we believe to be a first in the annals of bankruptcy history, a party that (i) requested the appointment of a committee, (ii) successfully obtained an order directing the appointment of such committee, (iii) has otherwise been active in the case protecting the interests of the constituency to be represented by such committee, and (iv) applied to be a member of such committee, was subsequently not offered the opportunity to be a member," Mr. Eaton says. Mr. Eaton adds that the U.S. Trustee's failure to even make an inquiry to Appaloosa and the other Shareholders regarding their request to serve on the Equity Committee is troubling given the size of their holdings, their willingness to serve, and the clear direction under Section 1102(b)(2) of the Bankruptcy Code that an equity committee should "ordinarily consist of the persons, willing to serve, that hold the seven largest amounts of equity securities." Rather than promptly forming an equity committee from Delphi's largest shareholders, the U.S. Trustee adopted a procedure of soliciting all of Delphi's over 300,000 shareholders for committee membership. Mr. Eaton relates that as a result of this bizarre process, not until April 28, 2006 -- 28 days after the issuance of the Court's order directing the appointment of an equity committee -- did the U.S. Trustee actually appoint the Equity Committee, which consists of two institutional investors and five individuals. The Shareholders believe that the U.S. Trustee's failure to appoint some or all of them to the Equity Committee is a clear abuse of discretion. The Shareholders ask the Court to direct the U.S. Trustee to enlarge the Equity Committee, by including them. About Delphi Corp Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Fails to Convince GM to Defer Price Reductions ----------------------------------------------------------- In a report to the Securities and Exchange Commission, Delphi Corporation said that it was unsuccessful in its bid to convince General Motors Corporation to continue foregoing previously agreed-to 2006 contractual price reductions on components provided by Delphi. GM had agreed in November 2005 to temporarily forego the price reductions and had done so through the first quarter of 2006. On March 31, 2006, Delphi outlined a transformation plan that included the filing of requests to reject collective bargaining agreements and certain unprofitable GM contracts. Delphi continues discussions with its U.S. unions and GM towards a consensual agreement to transform to a competitive U.S. labor cost structure. The company expects that financial support from GM will be part of an overall agreement. Beginning, April 1, 2006, Delphi's net sales will reflect the previously agreed-to contractual price reductions. About Delphi Corp Headquartered in Troy, Michigan, Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIRECTV GROUP: Earns $235 Million of Net Income in First Quarter ---------------------------------------------------------------- The DIRECTV Group, Inc., reported that first quarter revenues increased 8% to $3.39 billion and operating profit before depreciation and amortization more than tripled to $605 million compared to last year's first quarter. The DIRECTV Group reported first quarter 2006 operating profit of $392 million and net income of $235 million compared with an operating loss of $54 million and a net loss of $41 million in the same period last year. "DIRECTV U.S. had a strong first quarter highlighted by revenue growth of 14% to $3.19 billion, operating profit before depreciation and amortization more than doubling to $545 million and cash flow before interest and taxes of $211 million," said Chase Carey, president and CEO of The DIRECTV Group, Inc. "Similar to recent quarters, this solid growth was driven by our large and growing subscriber base, strong ARPU growth and higher operating margins due mostly to the significant scale and operating leverage of our business." Mr. Carey continued, "In addition to the strong financial performance, first quarter results also reflect the benefits gained from our strategy to attain higher quality subscribers. DIRECTV's stricter credit policies and revised dealer incentives implemented over the past several quarters have impacted both our gross and net subscriber growth. DIRECTV U.S. gross additions of 919,000 were down 19% compared to last year but more importantly, the number of high-quality subscribers added in the period actually increased more than 13% over the prior year. The continued improvement in the quality of our subscriber base contributed to the first year-over-year improvement in churn in nearly two years as average monthly churn fell to 1.45% in the quarter. The lower gross additions combined with the improved churn rate resulted in net additions of 255,000 subscribers in the quarter." Mr. Carey concluded, "Looking ahead, the introduction of new high definition programming will play an increasingly important role in DIRECTV's competitive strength and future growth. Just two weeks ago, we launched local HD channels in 8 new cities bringing our total coverage to 20 markets representing about 40% of U.S. TV households. We will continue launching new markets over the coming months and by the end of the year, we expect to have HD local channels available to approximately three-quarters of all households. And after the launch of our two remaining HD satellites next year, we expect to have the most comprehensive and compelling offering of HD programming for nearly every home in America." Consolidated Balance Sheet and Cash Flow The DIRECTV Group's consolidated cash and short term investment balance of $2.50 billion declined by $1.89 billion in the quarter mostly due to a share repurchase program announced on Feb. 8, 2006. During the quarter, The DIRECTV Group repurchased and retired 116 million shares of DIRECTV common stock (including 100 million shares of common stock purchased from General Motors employee pension and benefit trusts) for approximately $1.8 billion at an average price of $15.52 per share. Also impacting the quarter's cash was a $373 million payment related to the DIRECTV Latin America transactions, $110 million received for the sale of the remaining interest in HNS, as well as free cash flow in the period of $170 million. Free cash flow was driven by cash flow from operations of $440 million partially offset by cash paid for satellites and property and equipment of $270 million. Total debt remained essentially unchanged at $3.41 billion. About DIRECTV Headquartered in El Segundo, California, The DIRECTV Group, Inc. (NYSE:DTV), formerly Hughes Electronics Corporation, provides multi-channel television entertainment, and broadband satellite networks and services. The DIRECTV Group, Inc., is 34% owned by Fox Entertainment Group, Inc., which is owned by News Corporation. DIRECTV is currently available in Latin American countries: Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Puerto Rico, Trinidad & Tobago, Uruguay, Venezuela and several Caribbean island nations. * * * Standard & Poor's Rating Services placed a BB credit rating on DIRECTV Group and said the outlook is stable. DMX MUSIC: Files Chap. 11 Liquidation Plan & Disclosure Statement ----------------------------------------------------------------- Maxide Acquisition, Inc., dba DMX MUSIC, Inc., and its debtor- affiliates delivered to the U.S. Bankruptcy Court for the District of Delaware its chapter 11 liquidation plan and a disclosure statement explaining that Plan. Under the Plan, holders of these claims will be paid in full: 1) Administrative Claims 2) Priority Tax Claims 3) Priority Claims Against Maxide 4) Priority Claims Against Consolidated Debtors 5) Other Secured Claims Against the Consolidated Debtors 6) Professional Fee Claims Professional fees and expenses not exceeding $100,000 will be paid and reimbursed, provided that, without the prior written consent of Royal Bank of Canada as the lenders' agent, the Liquidating Debtors may not use: 1) more than $15,000 of the $100,000 to pay any fees or reimburse any expenses accrued or incurred by any professionals in connection with the investigation of any avoidance actions; and 2) any portion of the $100,000 to pay any fees and reimburse any expenses accrued or incurred by any professionals in connections with the prosecution or collection of any avoidance actions. The Lender Group's Secured Claims Against Maxide are entitled to a 75% pro rata share from the distribution while General Unsecured Claims Against the Consolidated Debtors will get 20%. Holders of General Unsecured Maxide Claims, Equity Interests in Maxide, and Lender Group Secured Claims Against Consolidated Debtors will receive nothing under the Plan. All Intercompany Claims and all Equity Interests in Consolidated Debtors will be cancelled on the effective date of the Plan. Headquartered in Los Angeles, California, Maxide Acquisition, Inc., dba DMX MUSIC, Inc. -- http://www.dmxmusic.com/-- is majority-owned by Liberty Digital, a subsidiary of Liberty Media Corporation, with operations in more than 100 countries. DMX MUSIC distributes its music and visual services worldwide to more than 11 million homes, 180,000 businesses, and 30 airlines with a worldwide daily listening audience of more than 100 million people. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 14, 2005 (Bankr. D. Del. Case No. 05-10431). The case is jointly administered with Maxide Acquisition, Inc. (Bankr. D. Del. Case No. 05-10429). Curtis A. Hehn, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represent the Debtors in their restructuring efforts. Andrew J. Flame, Esq., and Andrew C. Kassner, Esq., at Drinker Biddle & Reath LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. E.SPIRE COMMS: Ch. 11 Trustee Wants Cases Converted to Ch. 7 ------------------------------------------------------------ Gary F. Seitz, Esq., the Chapter 11 trustee appointed in the Chapter 11 cases of e.Spire Communications, Inc., and its debtor-affiliates, asks the U.S. Bankruptcy Court for the District of Delaware to convert the Debtors' cases to liquidation proceedings under Chapter 7 of the Bankruptcy Code. John D. McLaughlin, Jr., Esq., at Young Conaway Stargatt & Taylor, LLP, tells the Court that after the sale of substantially all of the Debtors' assets to Xspedius Management, Co., LLC, and Thermo Telecom Partners, LLC, the Debtors have become administratively insolvent. Xspedius and Thermo Telecom assumed some of the Debtors' debts pursuant to the terms of the sale. Mr. McLaughlin said that the Debtors no longer have enough money to pay postpetition obligations incurred in the ordinary course of business. Unfunded administrative expenses amount to around $14 million. Mr. McLaughlin adds the Debtors' businesses could no longer be rehabilitated. Headquartered in Columbia, Maryland, e.Spire Communications is a facilities-based integrated communications provider, offering traditional local and long distance Internet access throughout the United States. The Company and its debtor-affiliates filed for chapter 11 protection on March 22, 2001 (Bankr. Del. Case No. 01-00974). Chad Joseph Toms, Esq., and Domenic E. Pacitti, Esq., at Saul Ewing LLP, and James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young & Jones, represent the Debtors in their chapter 11 proceedings. Francis A. Monaco Jr., Esq., and Joseph J. Bodnar, Esq., at Monzack and Monaco, P.A., represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $911.2 million in total assets and $1.4 billion in total debts. Gary F. Seitz, Esq., is the Court-appointed Chapter 11 Trustee in the Debtors' bankruptcy proceedings. Daniel K. Astin, Esq., and Anthony M. Saccullo, Esq., at The Bayard Firm; Erin Edwards, Esq., at Young Conaway Stargatt & Taylor LLP; and Deirdre M. Richards, Esq., at Obermayer Rebmann Maxwell & Hippel LLP, represent Mr. Seitz. EASY GARDENER: Gets Interim Access to $30 Mil. DIP Loan Facility ---------------------------------------------------------------- The Hon. Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware allowed Easy Gardener Products, Ltd., and its debtor- affiliates, on an interim basis, to obtain postpetition secured loans of up to $30 million from LaSalle Business Credit LLC and LaSalle Bank National Association. The Debtors will use the proceeds of the LaSalle loans to: * pay their vendors and employees; * buy materials; and * maintain their business operations without interruption. Use of Cash Collateral Pursuant to the Court's interim order, the Debtors are also authorized to use cash collateral securing repayment of their prepetition obligations to LaSalle and CapitalSource Finance LLC. The Debtors will use cash collateral according to a 13-week budget. A copy of this budget is available for free at: http://researcharchives.com/t/s?8a9 CapitalSource holds a $18.6 million secured claim against the Debtors' assets pursuant to a Term Loan and Security Agreement signed on Oct. 29, 2003. To the extent that there is a diminution in the value of CapitalSource's prepetition term loan collateral, including, but not limited to the Term Loan Lender's cash collateral, resulting from any loss in market value, the Debtors grant CapitalSource: i) replacement liens and security interests on all of thier assets; and ii) a superpriority administrative expense claim, provided that all liens, security interest and superpriority administrative expense claims granted to CapitalSource are junior and subordinate to LaSalle's liens and rights. As adequate protection of its interests, the Debtors grant LaSalle a fully perfected first priority priming lien and security interest, senior to any and all liens or interests, on all of their assets. Easy Gardener Products, Ltd. -- http://www.easygardener.com/-- manufactures and markets a broad range of consumer lawn and garden products, including weed preventative landscape fabrics, fertilizer spikes, decorative landscape edging, shade cloth and root feeders, which are sold under various recognized brand names including Easy Gardener, Weedblock, Jobe's, Emerald Edge, and Ross. The Company and four of its affiliates filed for bankruptcy on April 19, 2006 (Bankr. D. Del. Case Nos. 06-10393 to 06-10397). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP represent the Debtors in their restructuring efforts. When the Debtors filed for bankruptcy, they reported assets amounting to $103,454,000 and debts totaling $107,516,000. ENTERGY NEW: BNY & FGIC Voice Quarterly Dividend Payment Concerns ----------------------------------------------------------------- The Bank of New York, as Successor Trustee, and Financial Guaranty Insurance Company are skeptical on Entergy New Orleans, Inc.'s request to pay the deferred dividend based on, among other things: -- their concern on the direction of ENOI's Chapter 11 case in general; -- ENOI's reliance on Entergy Corp. and its management; and -- the fact that the value of the net operating loss could be reduced if Entergy stops its support of ENOI and ENOI is no longer part of the Entergy Consolidated Group or of the Tax Sharing Agreement. To resolve these concerns, FGIC and BNY entered into discussions with Entergy and ENOI. Accordingly, FGIC and BNY asks the U.S. Bankruptcy Court for the Eastern District of Louisiana to allow ENOI to pay the quarterly dividend, subject to these conditions: (a) The authority granted to ENOI to pay the preferred dividend on July 1, 2006, and all subsequent quarterly dividends must be subject to BNY and FGIC's rights to object to any dividend payment. BNY and FGIC will give ENOI a written notice of their objection not less than 45 days before the payment is due. If an objection is timely raised, ENOI will not pay that dividend without further Court order. (b) Under the Middle South Utilities, Inc. and Subsidiary Companies Intercompany Tax Allocation Agreement dated April 28, 1988, Entergy will promptly pay all tax refunds owing allocable to ENOI. (c) Entergy will pay ENOI in connection with the Tax Sharing Agreement on a quarterly basis, after Entergy's payments of estimated taxes owing to ENOI for the current tax year. Any "true up" of those amounts will be made after the filing of the Entergy consolidated Unites States federal income tax return for that tax year. About Entergy New Orleans 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: Hires Gordon Arata as Special Counsel ---------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Louisiana gave Entergy New Orleans, Inc., permission to employ Gordon, Arata, McCollam, Duplantis & Eagan LLP, to represent the Company in two lawsuits filed by the Gordon Plaintiffs. The Reverend C. S. Gordon, Jr., on behalf of New Zion Baptist Church, J. Michael Malec, Darryl Malek-Wiley, Willie Webb, Jr., and Maison St. Charles, L.L.C., d/b/a Quality Inn Maison St. Charles -- filed two actions, one with the Council of the City of New Orleans, and another in the Civil District Court for the Parish of Orleans, against Entergy New Orleans, Inc., and other Entergy entities. The Gordon Suit asserts restitution of ascertainable losses of money and damages for violations of Louisiana antitrust laws arising from ENOI's manipulation and abuse of its fuel adjustment charges. As previously reported, GAMDE is expected to: (a) advise the Debtor with respect to its litigation strategy in the Gordon Matters; (b) defend the Debtor in the Gordon Matters; (c) participate in negotiations concerning the Gordon Matters; (d) prepare all motions, conduct pre-trial and trial activities in the Gordon Matters, and prosecute or defend any appeal taken in the proceedings; (e) take any steps necessary to protect the Debtor's interests in the Gordon Matters; and (f) perform all other necessary legal services and provide all other necessary legal advice to the Debtor as may be requested in connection with the Gordon Matters. The firm's current hourly rates are: Professionals Hourly Rates ------------- ------------ Ewell E. Eagan $250 Martin E. Landrieu $215 Marcy V. Massengale $190 Wendy Hickok Robinson $190 Other Partners $150 Other Associates $150 Other Paralegals $85 Ewell E. Eagan, Jr., Esq., a partner at Gordon, Arata, McCollam, Duplantis & Eagan, LLP, assured the Court that the firm does not represent any adverse interest to the Debtor or its estate, and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Entergy New Orleans 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. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) FAIRMONT GENERAL: Moody's Affirms Rating on 1994 Bonds at Ba2 ------------------------------------------------------------- Moody's Investors Service affirmed the Ba2 rating on Fairmont General Hospital's Series 1994 Bonds. The outlook remains negative, largely reflecting a deterioration in liquidity and uncertainty surrounding future debt plans and capital investment. Legal Security: The bonds are secured by a pledge of gross revenues of FGH. Interest Rate Derivatives: None. Strengths: * Fairmont General Hospital is the only acute care hospital in Marion County, enjoying a 72% market share position in its Primary service area. * After four consecutive years of decreasing inpatient volumes, admissions have flattened, with a 0.5% increase in FY 2005, reflecting stabilization in the physician staff. * Improved volume trends driven by physician recruiting as well as implementation of cost reduction strategies resulted in a financial rebound and FGH's first operating profit since 2001. FGH generated $6.1 million in total cash flow. Challenges: * Despite the operating turnaround in FY 2005, liquidity and balance sheet indicators remain thin, with cash levels of $5.4 million, or 26.9 days cash on hand reflecting a decline from 32.1 days cash on hand in FY 2004. * FGH has pursued aggressive debt repayment in recent years and as a result has seen an improvement in leverage indicators from FYE 2004 to FYE 2005 of 4.11 cash to debt to 1.87, and from 44.7% cash to debt to a better 50%. However, additional debt plans of $9 million would effectively double the debt burden. * Increased competitive pressures stemming from West Virginia University Hospital, United Hospital and Monongalia General Hospital located in the secondary service area. Combined with FGH's recent history of deferred maintenance, these developments could challenge FGH's market position. Results and Developments In the aftermath of the departure of a group of emergency department primary care physicians resulted in four consecutive years of volume declines, management has focused on implementing an aggressive recruiting strategy. FGH has rebuilt the ED group, yielding a 15.7% increase in ED visits in FY 2005. In addition, management also reports the successful recruitment of several other key physicians and initiated a hospitalist program in the fourth quarter of 2005, resulting in fortified referral flow. FGH was successful in translating increased volumes into improved operating performance, with robust revenue growth of 12.4% in FY 2005. Management attributes revenue growth to volumes and favorable out-patient contracts. In addition, FGH was recently designated by CMS as a sole community provider, which should provide an additional $2.5 million in revenues in FY 2006. Expense growth was also limited in FY 2005, due to favorably low wage increases for nurses and the divestiture of the skilled nursing facility, which was running at a $250 thousand operating deficit. As a result of these operating improvements, FGH reported the first operating profit since 2001, generating an operating cash flow of $6.1 million, yielding an operating margin of 3.0% and 7.7% operating cash flow margin in FY 2005. Management reports strengthened operating performance in the first quarter of 2006 as evidenced by $2.1 million in operating cash flow and 5.8% operating margin. In spite of the operating turnaround, the competitive environment continues to heighten in Marion County. United Hospital Center was recently awarded a certificate of need for a replacement hospital, which will be constructed five miles from Marion County, between Bridgeport and Fairmont. Since the facility is not due to open until late 2009, this development has not been incorporated into the rating at this time. However, increased competitive pressures will require FGH to invest heavily given three consecutive years of capital spending below levels of depreciation. As a result, FGH has recently filed a CON for an out-patient facility to bolster its presence in South Fairmont, with plans to open towards the end of 2007. Management reports plans to borrow approximately $9 million to finance the facility, which would potentially represent a doubling of total debt outstanding. This financing would result in an increase in debt to cash flow from 1.87 to 3.52, and cash to debt from an already modest 49.7% to an unfavorable 29.8%. After paying off their line of credit, a real estate acquisition, and an aggressive amortization schedule due to rapid repayment of the 1997, 2000, and 2002 notes, unrestricted cash has fallen from $5.9 million in 2004 to $5.4 million in 2005, or 26.8 days cash on hand, which does not compare favorably with the Ba median of 57.3 days cash on hand. Furthermore, FGH plans on funding $5.2 million in capital expenditures in FY 2006 via cash flow, which will further stunt balance sheet growth in the near future. FGH has a thin financial cushion to weather future challenges. Outlook The negative outlook reflects the decrease in liquidity and days cash on hand, and the difficulties of strengthening the balance sheet in the face of challenges related to deferred maintenance and heavy capital investment. What could change the rating -- UP Strengthened balance sheet position, sustained growth in volumes and operating income, and an improvement in leverage indicators What could change the rating -- DOWN A return to weak operating performance, further deterioration of balance sheet and liquidity indicators, or intensified competitive threats Key Indicators: Based on financial statements for Fairmont General Hospital -- First number reflects audit year ended December 31, 2004 -- Second number reflects audit year ended December 31, 2005 -- Investment income of $0.31 million and $0.47 million in FY's 2004 and 2005, respectively. -- Investment returns smoothed at 6% unless otherwise noted -- Inpatient admissions: 6,265; 6,299 -- Total operating revenues: $69.5 million; $78.1 million -- Moody's-adjusted net revenue available for debt service: $4.0 million; $6.4 million -- Total debt outstanding: $13.1 million; $10.8 million -- Maximum annual debt service: $3.1 million; $3.1 million -- MADS Coverage with reported investment income: 1.2 times; 2.1 times -- Moody's-adjusted MADS Coverage with normalized investment income: 1.8 times; 2.0 times -- Debt-to-cash flow: 4.1 times; 1.9 times -- Days cash on hand: 32.1 days; 26.9 days -- Cash-to-debt: 44.8%; 49.7% -- Operating margin: -0.4%; 3.0% -- Operating cash flow margin: 5.1%; 7.7% Rated Debt: Series 1997: $0.9 MM Series 1994: $5.1 MM FOAMEX INTERNATIONAL: Court Approves Paul Weiss as Lead Counsel --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Foamex International Inc. and its debtor-affiliates permission to employ Paul Weiss Rifkind Wharton & Garrison LLP to serve as their general bankruptcy counsel, nunc pro tunc to Sept. 19, 2005. As previously reported, Paul Weiss will: (a) advise the Debtors of their powers and duties in the continued management and operation of their business and properties; (b) attend meetings and negotiate with creditors and other interested parties and advise and consult on the conduct of the Debtors' cases, including all of the legal and administrative requirement of operating in Chapter 11; (c) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions commenced under the Bankruptcy Code, and objections to claims filed against the estates; (d) prepare all the Debtors' motions, applications, answers, orders, reports and papers necessary to the administration of the estates; (e) negotiate and prepare the Debtors' Chapter 11 plans, disclosure statements and all related agreements and documents and take necessary action to obtain confirmation of the plans; (f) advise the Debtors with respect to any sale of assets and negotiate and prepare all related agreements; (g) appear in Court and any appellate courts, and protecting the interests of the Debtors' estates; and (h) perform all other legal services in connection with the Debtors' Chapter 11 cases. The Debtors will pay Paul Weiss in accordance with its ordinary and customary rates, and reimburse all costs and expenses the firm incurred in connection with the Debtors' cases. The firm's current hourly rates are: Professional Hourly Rates ------------ ------------ Partners $585 - $785 Counsel $545 - $575 Associates $310 - $505 Para-professionals $155 - $205 The professionals at Paul Weiss who will have lead roles in the Debtors' Chapter 11 cases and their hourly rates are: Attorneys Hourly Rates --------- ------------ Alan W. Kornberg $830 Brian S. Hermann $640 Justin G. Brass $485 Ross B. Rosenfelt $405 Paul Weiss received $300,000 from the Debtors for services to be rendered up to and through the Petition Date. Alan W. Kornberg, Esq., a partner at Paul Weiss, assured the Court that the firm and its professionals: -- do not have any connection with any of the Debtors, their affiliates, their creditors or any other interested parties; -- are "disinterested persons" as defined in Section 101(14) of the Bankruptcy Code; and -- do not hold or represent any interest adverse to the Debtors or their estates. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INT'L: Committee Taps Synergetics as Business Consultant --------------------------------------------------------------- The Official Committee of Unsecured Creditors of Foamex International Inc. and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Delaware's authority to retain Synergetics Installations Worldwide, Inc., as its business operations consultant. Donald J. Detweiler, Esq., at Saul Ewing LLP, in Wilmington, Delaware, tells the Court that the Debtors and the Committee need to evaluate the impact of the Debtors' recent and unexpected improved financial results. The Committee believes that an independent assessment of the Debtors' operations is necessary and is in the interest of all creditors. As a business operations consultant, Synergetics will provide, among others, these services: (a) Organizational and business review; identification of specific opportunities for improving operations, planning, inventory and operational efficiency; identification of financial benefits to be gained from implementation of opportunities; (b) Evaluation of manufacturing and distribution efficiency; identification of "bottlenecks" and opportunities for increased effectiveness; (c) Evaluation of management operating systems, including forecasting/planning, data management, logistics management, sales force, project management and financial management; and (d) Review of the Debtors' business plan and performance. According to Mr. Detweiler, Synergetics' work will focus on validating for the Committee the work of Alvarez & Marsal Business Consulting LLC in assessing improvement opportunities and qualifying savings across the Debtors' businesses, as well as identifying additional opportunities. Synergetics' services will be completed in five weeks. It is anticipated that between seven and nine Synergetics professionals will participate in the engagement. The Debtors will pay Synergetics: -- a $200,000 flat fee for work performed within the first five weeks; and -- $175 per hour, subject to a $100,000 cap, for additional work after the first five weeks. James O'Neill, president and chief operating officer of Synergetics, assures the Court that the firm does not hold or represent an interest adverse to the Debtors' estates. Thus, Synergetics is a "disinterested person," as the term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) GALLERY CAPITAL: Moodys Rates $150 Mil. Senior Notes at (P)Caa1 --------------------------------------------------------------- Moody's Investors Service assigned a first time Corporate Family Rating of (P)Caa1 to Rapsod Trade Ltd. At the same time the rating agency also assigned a (P)Caa1 rating to Gallery Capital S.A.'s $150 million senior secured notes offering. Rapsod Trade Ltd controls through various wholly owned holding companies, the Gallery Group, the second largest outdoor advertising network in Russia. Gallery Capital S.A. is an orphan special purpose vehicle which does not conduct any revenue generating activity and was created in the context of the notes offering. These ratings were assigned: * Corporate family rating of (P) Caa1 to Rapsod Trade Ltd. * $150 million senior secured notes due 2013 at Gallery Capital S.A. rated (P) Caa1. The outlook is stable for both ratings. The Caa1 ratings incorporate the substantial execution risks associated with the rapid roll-out of Gallery's ambitious acquisition strategy to build the company from a relatively small size as well as the company's considerable indebtedness prospectively anticipated as a result of this strategy paired with a considerable level of operating leverage. The ratings also reflect the risk from: i) the limited scale and scope of Gallery's current operations. ii) uncertainties over the possible impact on operating performance as a result of regulatory changes in connection with the ban on tobacco and alcohol advertising. iii) the complexity of Gallery's legal structure. iv) a degree of cyclicality and seasonality in the company's advertising revenue base; v) potential competition from larger and better capitalized operators such as News Outdoor, Clear Channel and JCDecaux. vi) the company's exposure to the economic, regulatory, political, inflationary and currency exchange risks associated with operating in Russia (rated Baa2-Stable). More positively, the Caa1 ratings recognize Gallery's strong position in the Russian outdoor advertising market and its established relationships with municipalities. The ratings also acknowledge: i) the Russian outdoor advertising market's expected growth rate. ii) management's track record in building a profitable and cash-flow positive business in Russia. iii) Gallery's established and diversified customer base. iv) the competitive advantages from the company's attractive advertising sites. v) the support from institutional shareholders, such as the EBRD. The stable outlook indicated for Gallery's ratings reflects the relatively comfortable positioning of the company within the Caa1 rating category which is supported by the initial pro forma liquidity position post refinancing. Gallery intends to use proceeds to repay outstanding debt and to finance capex and acquisitions in the very fragmented Russian outdoor advertising market. The company expects to execute its expansion plan over the next 9 to 12 months. Moody's notes that funds can be used for acquisitions yet to be made in the outdoor market. Pro-forma for the refinancing, leverage will be 2.9x on a net debt adjusted for operating leases to 2005 EBITDAR basis. However, the contemplated financing will bring significant gross debt on balance sheet. As the company spends on balance sheet cash on acquisitions net debt leverage is expected to increase rapidly and the difference between net and gross leverage will decrease correspondingly. Moody's also added that evidence of a successful track record in integrating acquisitions coupled with evidence that the company will be generating meaningful positive free cash flow on a sustainable basis would lead to a ratings upgrade. Proceeds from the notes will be on-lent by way of proceeds loans to Outdoor One LLC and Gallery Service LLC which accounted for approximately 97 percent of the company's 2005 EBITDA on a pro- forma basis taking into account the acquisitions made. The Caa1 rating on the notes, at the same level as the Corporate Family rating, acknowledges that the Notes are secured by a first- priority pledge over the shares of other various holding as well as over the Proceeds Loans and while also benefiting from senior guarantees from those entities. The Notes are effectively subordinated to all obligations of the company's non-guarantor subsidiaries. Moody's understands that these obligations are currently de minimis and the notching does not factor in a material increase in these obligations. Incurrence of additional pari passu indebtedness is bounded by a consolidated coverage ratio of 2.25x. The rating assumes that this leeway will not be utilized in the near-term. The Notes indentures also carves out the ability to secure up to $25 million in additional borrowings. The use of this flexibility for any other use than short term working capital needs could cause Moody's to consider notching from the current Corporate Family Rating in the future. Given the seasonality embedded in outdoor advertising and the consequent significant seasonal working capital swings experienced by the company, Moody's expects Gallery to arrange bank financing in order to support its liquidity needs in the medium-term. Headquartered in Moscow, Russia, Gallery Group currently operates the second largest outdoor advertising network in Russia which encompasses approximately 230 cities. During fiscal year 2005, Gallery Group reported revenues of $33.4 million and EBITDA of $8.4 million. On pro-forma basis, including acquisitions the company has concluded during 2005 as they if had been completed on 1st January 2005, Gallery would have reported revenues of $47.6 million and EBITDA of $16.3 million. GOODING'S SUPERMARKETS: Lessor Wants Lease Decision Period Moved ---------------------------------------------------------------- Water Tower Retail LLC asks the U.S. Bankruptcy Court for the Middle District of Florida to allow Gooding's Supermarkets, Inc., until July 28, 2006, to decide on an amended and restated ground lease with Water Tower. Water Tower leased to the Debtor a portion of its real property in Osceola County, Florida, commonly known as the "Water Tower Place at Celebration" under an Amended and Restated Ground Lease dated June 12, 2002, where the Debtor built one of its grocery stores. In March 2006, the Debtor entered into a settlement agreement with First National Bank of Central Florida to make adequate protection payments on a loan secured in part by the Debtor's store located in Water Tower's property. The Debtor acknowledged the Settlement Agreement as a move to preclude FNB from foreclosing on its Ground Lease with Water Tower. Water Tower agrees to extend the Debtor's decision period on the Ground Lease provided the Debtor cures its unpaid postpetition rents and pay all future rents when due. Headquartered in Orlando, Florida, Gooding's Supermarkets, Inc., dba Gooding's, offers catering services and operates a chain of supermarkets in Central Florida. The Company filed for chapter 11 protection on Dec. 30, 2005 (Bankr. M.D. Fla. Case No. 05-17769). R. Scott Shuker, Esq., at Gronek & Latham LLP represents the Debtor. W. Glenn Jensen, Esq., at Akerman Senterfitt represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets of $1 million to $10 million and debts of $10 million to $50 million. GOODYEAR TIRE: Net Income Up by 9% to $74 Million in First Quarter ------------------------------------------------------------------ The Goodyear Tire & Rubber Company reported record first quarter sales of $4.9 billion, reflecting a 2% increase compared to the 2005 period. Sales increased due to higher pricing and a more-favorable product mix, largely in the company's North American Tire business. The impact of currency translation reduced sales by approximately $74 million. The year-ago quarter included approximately $79 million in sales from businesses divested during 2005. Goodyear reported net income of $74 million, a 9% increase compared to $68 million in the first quarter of 2005. "Sales increases were driven by strong revenue per tire growth of 7% as we focus our efforts on the high performance, profitable segments of the tire market," said Robert J. Keegan, chairman and chief executive officer. "The execution of our key strategies is delivering solid results despite a more difficult environment and a tough year-ago comparison," he added. The 2006 quarter benefited from after-tax items including favorable settlements with certain raw material suppliers of $32 million, a pension plan change in Latin America of $13 million, and income of $10 million from a Latin American legal settlement. Negatively impacting the quarter was an after-tax charge of $30 million for restructuring. In addition, Goodyear recognized total after-tax expenses of $6 million for stock options and grants of other stock based incentive awards during the first quarter. The prior-year quarter included net income of $9 million from businesses divested during 2005. Business Segments Total segment operating income was $311 million, a 7% increase compared to $292 million in the 2005 period. Segment operating income benefited from higher selling prices and improved product mix of $166 million, as well as favorable settlements with certain suppliers and a pension plan change in Latin America. Higher raw material costs of approximately $185 million had a negative impact on the quarter. Three of Goodyear's business units achieved record first quarter sales. North American Tire sales were a first quarter record and 5% higher than 2005, driven primarily by favorable pricing and product mix and growth in other tire related businesses. These factors offset softer volume, especially in the private label replacement market. Segment operating income was positive for the eighth consecutive quarter. Pricing and product mix of $84 million and strong results from other tire-related businesses, along with favorable supplier settlements of $21 million, offset rising raw material costs, which were $74 million higher than the 2005 quarter. The 2005 results included approximately $79 million in sales and $11 million in segment operating income from the businesses sold during the year. Sales declined 5% in the European Union Tire business compared to the first quarter of 2005, which was the strongest first quarter in the unit's history. Price and product mix improvements were not enough to offset unfavorable currency translation of approximately $98 million and lower volume in the consumer replacement market. European Union Tire segment operating income declined as continued pricing and product mix improvements of $33 million did not fully offset higher raw material costs of approximately $42 million. The business received $6 million from favorable supplier settlements, but was also negatively affected by factors including higher manufacturing costs, lower volume and approximately $5 million of currency translation. Eastern Europe, Middle East and Africa Tire's sales decreased slightly from 2005. Price and mix improved due to continued growth in high performance tires and premium brands, but this was countered by lower volume, primarily in replacement markets, and unfavorable currency translation of approximately $6 million. Segment operating income was down 9$ in the quarter as higher raw material costs of approximately $13 million exceeded pricing and mix improvements of $8 million. Latin American Tire's sales were a first quarter record and increased 14% over 2005 as a result of higher original equipment volume and the favorable effect of currency translation of about $32 million. Segment operating income increased 17% compared to the year-ago period due to positive currency translation of approximately $23 million, a gain from a pension plan change of $17 million and higher volume. Raw material costs increased by about $28 million compared to the 2005 quarter. Asia Pacific Tire sales were a first quarter record, and 4% higher than the 2005 period due to improved pricing, product mix and volume, which offset unfavorable currency translation of approximately $12 million. Segment operating income was a first quarter record, increasing 16% compared to 2005. Pricing and product mix improvements of $24 million offset approximately $17 million in higher raw material costs, as well as higher manufacturing costs. The business received $2 million from favorable settlements with certain suppliers. Engineered Products' sales in 2006's first quarter decreased mainly as a result of expected volume reductions in the military channel, which offset higher sales in the industrial and replacement channels. Favorable price and product mix, as well as currency translation of approximately $4 million, had a positive impact on sales. Segment operating income increased 38 percent compared to the 2005 period with price and product mix improvements of $11 million and $2 million in other income, including a pension plan change in Latin America. The business received $6 million from settlements with certain suppliers. Raw material costs increased about $11 million compared to the year-ago period. Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company (NYSE: GT) -- http://www.goodyear.com/-- is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs more than 80,000 people worldwide. * * * Goodyear's 9% Senior Notes due 2015 carry Moody's Investor Service's B3 rating, Standard & Poor's B- rating, and Fitch Ratings' CCC+ rating. HANGER ORTHOPEDIC: S&P Rates Proposed $190 Million Notes at CCC+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' senior secured bank loan rating to Hanger Orthopedic Group Inc.'s (B/Negative/--) proposed $75 million revolving credit facility due in 2011 and $230 million term loan B due in 2013. A recovery rating of '2' also was assigned to the secured loan, indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. At the same time, Standard & Poor's assigned its 'CCC+' senior unsecured debt rating to the company's proposed $190 million of senior unsecured notes due in 2014. The rating agency also affirmed its 'B' corporate credit rating. The rating outlook remains negative. Hanger plans to use the proceeds from the term loan, unsecured notes, and $50 million of additional equity to refinance approximately $444 million of existing debt and preferred stock, and pay $23 million in related premiums and fees. While the total amount of debt will increase to $429 million from $390 million, the company will extend its debt maturities and lower its overall interest expense. Hanger will also retire about $64 million of 10% preferred stock. The company's new $50 million of equity is in the form of 3.33% perpetual preferred stock that will pay a cash dividend or be paid in kind at Hanger's discretion. The new preferred stock was treated as mostly equity-like by Standard & Poor's given that it is perpetual and carries a low interest rate that is optional for cash pay. The outlook is negative. Hanger remains highly leveraged and its liquidity is still relatively weak; thus the company has little financial cushion for operating shortfalls. A reduction in reimbursement rates or excessive cost inflation could lead to a downgrade in the near to medium term. A meaningful improvement in the company's financial profile or its core operating margins, or significant revenue gains from the company's Linkia program could result in an outlook revision to stable within the next couple of years. HAWKEYE RENEWABLES: S&P Puts $185 Million Loan's B Rating on Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B' rating on Hawkeye Renewables LLC's $185 million senior secured term loan due 2012 on CreditWatch with positive implications. Hawkeye Renewables is the project financing for two dry-mill ethanol plants in Iowa. "The rating action follows Hawkeye's strong first full year of operations, its nearing completion of construction of the new 100 million gallon per year Faribank, Iowa facility on budget and on schedule, and expected deleveraging due to the debt structure," said Standard & Poor's credit analyst Elif Acar. With over 70% of ethanol production contracted in 2006, as well as over 80% of corn purchases contracted for the same period, Hawkeye's debt structure allows for significant deleveraging by the end of 2006. Standard & Poor's is in the process of reevaluating the ethanol forecast. Standard & Poor's expects to resolve the CreditWatch positive upon the completion of the construction of the new facility, the availability, if any, of excess cash from construction period, and expected cash flow from contracted margins in the future. HEXION SPECIALTY: Receives Required Consents for Senior Notes ------------------------------------------------------------- Hexion Specialty Chemicals, Inc., had received tenders and consents from holders of: (i) 88.7%, of the outstanding principal amount of 13-1/2% Senior Subordinated Notes due 2010; (ii) 99.9%, of the outstanding principal amount of 9-1/2% Senior Second Secured Notes due 2010; and (iii) 100%, of the outstanding principal amount of 8% Senior Secured Notes due 2009. These are in connection with the cash tender offers and consent solicitations for such Notes, issued by Hexion and HSC Capital Corporation. Hexion also will pay the consent payment to all holders of Notes who validly tender their Notes prior to midnight, New York City time, on the evening of May 17, 2006, which is the currently scheduled Expiration Date. As a result of the receipt of the requisite consents Hexion intends to enter into supplemental indentures effecting the proposed amendments, substantially as described in the Offer to Purchase and Consent Solicitation Statement dated April 20, 2006 and the related Consent and Letter of Transmittal, with each trustee under each respective indenture. The proposed amendments, which will eliminate most of the restrictive covenants and certain events of default contained in the indentures, will become effective when Hexion accepts for purchase the Notes validly tendered pursuant to the terms of the Offer Documents. In addition, Hexion intends to terminate the security interests securing obligations under the 9-1/2% Notes and the 8% Notes. In accordance with the terms of the Offer Documents, tendered Notes may no longer be withdrawn and delivered consents may no longer be revoked, unless the tender offers and the consent solicitations are terminated without any Notes being purchased or the Company is required by law to permit withdrawal or revocation. Holders who have not yet tendered their Notes may tender until midnight, New York City time, on the evening of May 17, 2006, unless extended or earlier terminated by Hexion. The purchase price for any such tendered Notes is described in the Offer Documents. Hexion's Tender Offers are subject to the conditions set forth in the Offer Documents including, among other things, Hexion obtaining the financing necessary to pay for the Notes and consents in accordance with the terms of the tender offers and consent solicitations. Hexion has retained Credit Suisse Securities (USA) LLC to act as Dealer Manager in connection with the tender offers and consent solicitations. Questions about the tender offers and consent solicitations may be directed to: Credit Suisse Securities (USA) LLC Telephone (212) 538-0652 (collect) Toll Free (800) 820-1653 Copies of the Offer Documents and other related documents may be obtained from the information agent for the tender offers and consent solicitations at: D.F. King & Co., Inc. Telephone (212) 269-5550 (collect) Toll Free (800) 290-6426 About Hexion Specialty Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. -- http://hexionchem.com/-- combines the former Borden Chemical, Bakelite, Resolution Performance Products and Resolution Specialty Materials companies into the global leader in thermoset resins. With 86 manufacturing and distribution facilities in 18 countries, Hexion serves the global wood and industrial markets through a broad range of thermoset technologies, specialty products and technical support for customers in a diverse range of applications and industries. Hexion Specialty Chemicals is owned by an affiliate of Apollo Management, L.P. * * * As reported in the Troubled Company Reporter on May 4, 2006, Standard & Poor's Ratings Services assigned its 'B+' rating and its recovery rating of '3' to Columbus, Ohio-based Hexion Specialty Chemicals Inc.'s proposed $1.675 billion senior secured term loan and synthetic letter of credit facilities, based on preliminary terms and conditions. The rating on the proposed credit facilities is the same as the corporate credit rating; this and the recovery rating of '3' indicate that bank lenders can expect meaningful (50% to 80%) recovery of principal in the event of a payment default. The rating on the existing $225 million revolving credit facility was lowered to 'B+' with a recovery rating of '3', from 'BB-' with a recovery rating of '1', to reflect the similar security package as the new term loan and synthetic letter of credit facility. The ratings on the existing senior second secured notes were raised to 'B', with a recovery rating of '3', from 'B-' with a recovery rating of '5'. The ratings on the senior second secured notes reflect the amount of priority claims of the revolving facility and the first-lien term loan lenders. At the same time, Standard & Poor's affirmed its 'B+' corporate credit rating on Hexion and revised the outlook to stable from negative. HIGHWOODS PROPERTIES: Obtains New $350 Million Credit Facility -------------------------------------------------------------- Highwoods Properties, Inc., obtained a new, $350 million, three- year unsecured revolving credit facility from Bank of America, N.A. The new facility replaces the Company's previous $250 million unsecured revolving credit facility that was scheduled to expire in July 2006. The Company used proceeds from this new facility, together with available cash, to pay off the remaining outstanding balance of $178 million under the previous revolving credit facility and a $100 million bank term loan also expiring in July 2006. In connection with these payoffs, the Company expects to write off approximately $500,000 in unamortized deferred financing costs in the second quarter of 2006 as a loss on debt extinguishment. "We are pleased to have obtained a new credit facility which offers a lower spread to LIBOR, increased financial flexibility and sufficient borrowing capacity to execute our business plan," Ed Fritsch, President and CEO of Highwoods Properties, said. "Bank of America has shown their confidence in our business and the transaction confirms Highwoods' ongoing ability to access the capital markets. We will use a portion of this revolving credit facility, along with other existing available loans and proceeds from our on-going disposition program to fund our growing development pipeline." The new revolving credit facility is initially scheduled to mature on May 1, 2009. Assuming no default exists, the Company has the option to extend the maturity date by one additional year and, at any time prior to May 1, 2008, may request increases in the borrowing availability under the credit facility by up to an additional $100 million. The interest rate has been reduced from LIBOR plus 105 basis points to LIBOR plus 80 basis points and the annual base facility fee has been reduced from 25 basis points to 20 basis points. The Company and Bank of America plan to syndicate the credit facility later this year. There is currently $271 million outstanding under the new revolving credit facility. About Highwoods Properties Based in Raleigh, North Carolina, Highwoods Properties, Inc. (NYSE: HIW) -- http://www.highwoods.com/-- a member of the S&P MidCap 400 Index, is a fully integrated, self-administered real estate investment trust that provides leasing, management, development, construction and other customer-related services for its properties and for third parties. As of March 31, 2005, the company owned or had an interest in 504 in-service office, industrial and retail properties encompassing approximately 39.5 million square feet. Highwoods also owns 1,115 acres of development land. Highwoods' properties and development land are located in Florida, Georgia, Iowa, Kansas, Maryland, Missouri, North Carolina, South Carolina, Tennessee and Virginia. * * * Highwoods Properties, Inc.'s 7.5% Senior Notes due 2018 carry Moody's Investors Service's Ba1 rating. HILITE INT'L: S&P Lowers Corporate Credit Rating to B- from BB- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Hilite International Inc., including its corporate credit rating to 'B-' from 'BB-', and removed them from CreditWatch, where they were placed with negative implications on Dec. 20, 2005. Subsequent to the ratings actions, Standard & Poor's withdrew its corporate credit and debt ratings on Hilite at the company's request. The ratings actions on Cleveland, Ohio-based Hilite reflected: * the company's weak financial performance in 2005; * aggressive credit protection measures expected for 2006; and * tight liquidity. Financial results for 2005 were depressed because of: * reduced original equipment manufacturer production volumes; * price concessions; * unfavorable product mix; and * high raw material costs. In the near term, the company will be challenged by these same difficulties that are continuing in 2006. HOUGHTON MIFFLIN: Moody's Junks Rating on Proposed $300MM Notes --------------------------------------------------------------- Moody's Investors Service assigned a Caa2 rating to Houghton Mifflin LLC and co-issuer, Houghton Mifflin Finance, Inc.'s proposed $300 million senior notes. All other ratings of Houghton Mifflin have been affirmed. Details of the rating action: Ratings assigned: * Houghton Mifflin LLC and Houghton Mifflin Finance, Inc.'s Proposed $300 million floating rate senior PIK notes, due 2011 -- Caa2 Ratings affirmed: Houghton Mifflin Company's * $250 million senior secured revolving credit facility, due 2008 -- B1 * $141 million 7.2% senior secured notes, due 2011 -- B1 * $600 million 8.25% senior unsecured notes, due 2011 -- B3 * $398 million 9.875% senior subordinated notes, due 2013 -- Caa1 HM Publishing Corporation's * $194 million 11.5% senior discount notes, due 2013 -Caa2 * Corporate Family rating - B2 Rating upgraded: * Liquidity rating - SGL - 2 from SGL - 3 The rating outlook is stable. The ratings affirmation reflects recent improvements in Houghton Mifflin's revenues and EBITDA, partially offset by a decline in free cash flow generation in fiscal 2005 and the prospective worsening of leverage to approximately 9.6 times pro forma for the proposed debt issuance from 7.9 times at the end of December 2005. Moody's definition of EBITDA includes pre-publication expenses that are capitalized by the company. Proceeds from the proposed debt issuance will be used to provide a special dividend to Houghton Mifflin's shareholders, including funds associated with Bain Capital LLC, Thomas H. Lee Partners, LP, and the Blackstone Group LP. Moody's considers that this financing could presage further action on the part of Houghton Mifflin's shareholders to monetize their investment in Houghton Mifflin. While the interest rate step-up feature of the proposed notes provides an incentive for Houghton Mifflin to redeem the notes prior to maturity, such redemption would provide no relief to Houghton Mifflin's high cash interest expense, and would therefore likely result in no direct ratings lift. The ratings are supported by the dependable pattern of educational text spending and the company's ability to maintain strong market share against better capitalized competitors. Moody's recognizes the company's valuable brand name, its long- standing customer relationships and the scale of its operations which facilitate its strong presence in the basal textbook market. Houghton Mifflin's competition in the basal textbook market is effectively limited to a small number of competitors, including Harcourt, McGraw Hill, and Pearson. The stable rating outlook incorporates the recent improvement in state spending for basal texts, the long-term sustainability of the educational publishing business, and the fundamental value of Houghton Mifflin's properties. Debt-to-EBITDA based on Moody's standard analytic adjustments will increase to 9.5 times pro forma for the new debt issuance from 8.0 times at the end of fiscal 2005. Moody's expects a steady decrease in leverage through fiscal 2006. The proposed notes are rated three notches below the Corporate Family rating, reflecting the effective subordination of noteholders' interests behind approximately $1.6 billion of higher-ranked debt facilities at Houghton Mifflin Co. and HM Publishing Corp. The Caa2 rating incorporates Moody's view that bondholders' interests would be compromised in a distress scenario. The proposed notes are rated at parity with the rating of the existing HM Publishing Corp.'s senior discount notes, reflecting Moody's view that the recovery prospects between the two debt issues is not meaningfully different, despite the structural subordination to the senior discount holders. The co-issuers for the proposed PIK notes will be Houghton Mifflin LLC and Houghton Mifflin Finance, Inc. Houghton Mifflin LLC is a newly created super-holding company. Houghton Mifflin Finance, Inc., is a single purpose company, whose sole purpose is to co- issue the notes. At the end of December 2005, the company recorded liquidity of $452 million comprising $227 million in cash and $225 million of availability under its $250 million revolving credit facility. The upgrade in Houghton Mifflin's liquidity rating to SGL-2 reflects Moody's view of the company's good liquidity, which should be sufficient to meet all of its obligations through the end of 2006, with a seasonal reliance on its revolving credit facility to fund working capital needs, with a complete clean-up by year end. Moody's projects a modest improvement in free cash flow generation over the next twelve months ending March 2007, stemming from higher EBITDA generation. Houghton Mifflin operates a number of separate publishing groups and titles, any one of which could be sold to provide for some "back- door" liquidity. However, Moody's believes that these assets, with the possible exception of the trade and reference publishing division, represent core assets, the sale of which would detract from the company's overall value. Headquartered in Boston, Massachusetts, Houghton Mifflin LLC, a leading provider of integrated advertising products and marketing services, recorded 2005 revenues of $1.3 billion. IMAGE INNOVATIONS: Fails to Announce Default Under H.E. Loan Pact ----------------------------------------------------------------- H.E. Capital S.A., a creditor of Image Innovations Holdings Inc. (OTCBB:IMGVE.OB), disclosed that they have previously demanded repayment of the secured loans made to Image Innovations and that the Company has defaulted under its obligations to repay the balance. Further, the Company has failed to cooperate with H.E. Capital's requests to produce required information regarding the status of the Company and the collateral that was pledged to secure the loans. HE Capital notes that the Company has failed to make any of the required disclosure filings with the Securities and Exchange Commission regarding its default under the relevant agreements. Accordingly, HE Capital has elected to notify interested parties of the Company's failure to make the required filing disclosing its default. H.E. Capital's Financing On Image Innovations' Form 10-QSB filed with the U.S. Securities and Exchange Commission on Nov. 14, 2005, it acknowledged relying on loans granted by H.E. Capital to keep its business operating. On Jan. 14, 2003, Image Innovations and H.E. Capital entered into an agreement which provided for loans totaling US$5 million. Under the terms of the agreement, the loans accrued interest at 9% per annum and are repayable upon demand. The loans were secured by a general security agreement on all of the company's assets. The security interest is subordinated to the Coach Capital loan. As of Sept. 20, 2005, the Company's balance sheet showed a US$2,053,714 indebtedness to H.E. Capital. The Coach Loan On April 27, 2004, Image Innovations issued a promissory note for US$800,000 to Coach Capital LLC. The note bears a monthly interest rate of 18%. At Sept. 30, 2005, the company defaulted on the US$700,000 balance under the promissory note. The note is secured by a first lien on all of the Company's assets. About H.E. Capital Headquartered in Sosua, Dominican Republic, H.E. Capital S.A. is an innovative financial services firm built on the diverse expertise of our professionals. The company offers global clientele specialized Financial, Stockbroking and Asset Management services, structuring their affairs to maximize security and privacy. The growing loss of privacy to governments and others, demands that investments be safe, properly managed and protected. About the Image Innovations Headquartered in New York, Image Innovations Holdings Inc. -- http://www.imageiisportsent.com/-- originates, markets and sells sports-, entertainment- and cause-related artwork and collectibles to high-end consumer audiences through diverse channels, including land- and sea-based auctions, art galleries, sports art resellers, direct internet sales, home shopping television networks and other outlets. Through its operating subsidiary, Image Innovations Sports and Entertainment, Inc., it contracts with major sports and entertainment celebrities and leading artists to create limited edition portraits and prints, and it markets these, and other inscribed and authenticated collectibles, to consumers at home and abroad. At Sept. 30, 2005, the Company had $ 6,438,224 in total assets and 4,281,191 in total liabilities. INNOVATIVE GROUP: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Innovative Group Global, Inc. aka Richardson Sales and Consulting aka Richardson Development Company aka Refabco Screw Products aka Beaver Industries 37900 Mound Road Sterling Heights, Michigan 48310 Tel: (586) 939-9030 Fax: (586) 939-8043 Bankruptcy Case No.: 06-45662 Type of Business: The Debtor manufactures screw machine products, pipes and fittings, metal cutting machine tools and other precision-turned metal products. Chapter 11 Petition Date: May 5, 2006 Court: Eastern District of Michigan (Detroit) Judge: Thomas J. Tucker Debtor's Counsel: Richard A. Roble, Esq. Sullivan, Ward, Asher & Patton, P.C. 25800 Northwestern Highway, Suite 1000 Southfield, Michigan 48075-1000 Tel: (248) 746-2799 Fax: (248) 746-2760 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Rochester Tube $164,846 51366 Fischer Park Drive Shelby Township, MI 48316 DTE Energy $101,335 P.O. Box 2859 Detroit, MI 48260 Capri Tube $48,613 24075 Gibson Drive Warren, MI 48089 TI Automotive $43,164 Allegiance Staffing $38,668 Fed Ex $34,682 Howard Finishing $28,820 Lucerne International $27,650 Blue Care Network $27,497 Shanghai Richhood International $27,000 Plymouth Brazing Company $26,006 Tube Co. Inc. $25,775 Compliance Managers $22,895 Metal Matics, Inc. $22,502 Apeco $22,460 Fort Howard Steel $21,651 Indiana Tube $19,782 CTX $19,006 Blue Cross Blue Shield of Michigan $18,809 BP $18,782 INTEGRATED DISABILITY: Wants to Walk Away from Bloomfield Leases ---------------------------------------------------------------- Integrated DisAbility Resources, Inc., asks the U.S. Bankruptcy Court for the Northern District of Texas for permission to reject unexpired nonresidential real property leases located in Bloomfield, Connecticut. At the time of its bankruptcy filing, the Debtor had operations in Bloomfield, Connecticut and Portland, Maine. The Debtor has sold the Portland operations to Reliance Standard Life Insurance Company. The Debtor say that the Bloomfield leases no longer provide any benefit and are burdensome to its estate. The Debtor adds that the leases are unnecessary and must be rejected to avoid administrative operating expenses and postpetition obligations under the leases. Headquartered in Irving, Texas, Integrated DisAbility Resources, Inc. -- http://www.myidr.com/-- provides disability plans and ongoing health and productivity services to claimants and employees. The Debtor filed for chapter 11 protection on Feb. 10, 2006 (Bankr. N.D. Tex. Case No. 06-30575). Cynthia Williams Cole, Esq., and Vincent P. Slusher, Esq., at Godwin Pappas Langley Ronquillo LLP, represent the Debtor in its restructuring efforts. The United States Trustee for Region 6 was not able to form an Official Committee of Unsecured Creditors due to lack of interest and lack of attendance during the creditors' meeting on March 21, 2006. When the Debtor filed for protection from its creditors, it estimated $1 million to $10 million in assets and $10 million to $50 million in debts. INTERNATIONAL PAPER: Incurs $1.2 Billion Net Loss in First Quarter ------------------------------------------------------------------ International Paper Co. reported a preliminary first-quarter 2006 net loss of $1.2 billion compared with a net loss of $77 million in the fourth quarter of 2005 and net earnings of $77 million in the 2005 first quarter. Earnings from continuing operations and before special items in the first quarter of 2006 were $91 million, compared with $43 million in the fourth quarter of 2005 and $165 million in the first quarter of 2005. First-quarter 2006 net sales of $5.7 billion were level with fourth quarter 2005. Sales in the first quarter of 2005 were $5.6 billion. Operating profits of $456 million for the 2006 first quarter were higher than fourth-quarter 2005 operating profits of $371 million, because of higher price realizations, stronger volumes, lower manufacturing costs, sales mix improvements, and a drop in some raw material costs, primarily energy and wood. "Higher price realizations, particularly in containerboard, boxes and uncoated papers, and strong mill performance and cost control are the biggest drivers of our earnings improvement from last quarter," said IP Chairman and Chief Executive Officer John Faraci. "We also experienced far less market downtime in the quarter than in last quarter. Energy and raw material costs declined some, but are still about $0.13 per share higher than at this time last year." "I'm also pleased with the progress of IP's transformation strategy. We recently announced sale agreements for 5.7 million acres of U.S. forestland for approximately $6.6 billion, the second significant step in the plan. We now estimate that total after-tax proceeds from the transformation could exceed $11 billion. We are maintaining our focus on improving our key platform operations, and our strategic alternatives reviews are also on track," he said. Commenting on the second quarter of 2006, Mr. Faraci said, "We expect the second quarter to be somewhat seasonally stronger than the first quarter, with average prices improving. We also anticipate continued progress in operations, as we move forward with our transformation strategy. Input costs remain high, especially for oil and transportation." Discontinued Operations During the 2006 first quarter, in connection with the evaluation of strategic options for certain businesses under the company's previously announced transformation plan, management determined that the future sales of the Coated and Supercalendered Papers and Kraft Papers businesses were in the best interests of the company's shareowners. Accordingly, a pre-tax charge of $1.4 billion ($1.3 billion after taxes) was recorded to reduce the carrying value of the net assets of these businesses, including goodwill, to their estimated fair values based on estimated sales values less costs to sell. As a result, this 2006 first quarter charge and the operating results of these businesses for all periods are presented as discontinued operations. Segment Information First-quarter operating profits for Printing Papers were $120 million compared with fourth-quarter operating profits of $60 million, bolstered by higher average price realizations for uncoated papers and pulp, as well as volume increases in U.S. and European uncoated papers. Industrial Packaging operating profits for the first quarter were $38 million compared with fourth-quarter operating profits of $5 million. Decreases in containberboard volumes were more than offset by much higher average price realizations in both containerboard and U.S. container businesses. Consumer Packaging operating profits were $35 million in the first quarter, up from $29 million in the fourth quarter, influenced by increased volume and higher price realizations in coated paperboard. The company's distribution business, xpedx, reported operating profits of $27 million for the first quarter compared with operating profits in the fourth quarter of $25 million, due to higher margins. First-quarter Forest Products operating profits declined to $226 million from fourth-quarter earnings of $257 million principally as a result of lower forestland sales. Earnings from forestland and real estate sales were $151 million in first quarter 2006 versus $182 million in the prior quarter. Net corporate expenses totaled $174 million for the quarter, up from $165 million in the 2005 fourth quarter because of higher pension expense in 2006, partially offset by lower inventory- related costs. Effective Tax Rate The effective tax rate from continuing operations and before special items for the first quarter of 2006 was 30%, compared with a tax rate of 14% in the 2005 fourth quarter and 19 percent in the first quarter of 2005. The 2006 first-quarter rate included $5 million of credits related to state tax audit settlements and non-U.S. tax credits. Effects of Special Items Special items in the first quarter of 2006 consisted of a pre-tax charge of $46 million ($28 million after taxes) for restructuring and other charges, including a pre-tax charge of $18 million ($11 million after taxes) charge for adjustments to legal reserves; a pre-tax credit of $19 million ($12 million after taxes) for insurance recoveries related to the hardboard siding and roofing litigation; a $3 million pre-tax charge ($2 million after taxes) to adjust losses of businesses held for sale; and a charge of $6 million related to tax adjustments. Special items in the fourth quarter included a pretax charge of $230 million ($141 million after taxes) for restructuring charges and other charges, a pretax charge of $46 million ($30 million after taxes) for adjustments of estimated losses on businesses sold or held for sale, a $35 million pretax credit ($21 million after taxes) for insurance recoveries related to the hardboard siding and roofing litigation, and a $1 million credit for changes to previously provided reserves. In addition, an $11 million net income tax benefit was recorded in the quarter, reflecting a $74 million favorable adjustment from the finalization of the company's 1997 through 2000 U.S. federal income tax audit, a $43 million provision for deferred taxes related to earnings being repatriated under the American Jobs Creation Act of 2004, and $20 million of other tax charges. The net after-tax effect of all of these special items was a charge of $0.28 per share. Special items in the first quarter of 2005 included a charge of $79 million ($52 million after taxes) for estimated losses on businesses held for sale, reflecting charges to reduce the net assets of the Industrial Papers and Fine Papers businesses to their estimated realizable value, and a $24 million charge ($15 million after taxes) for losses on early extinguishment of high-cost debt. About International Paper International Paper Inc. (NYSE: IP) -- 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. JOBSON MEDICAL: S&P Rates Proposed $147 Mil. Credit Facility at B- ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Jobson Medical Information LLC. At the same time, Standard & Poor's assigned a 'B-' rating and a recovery rating of '3' to Jobson's proposed $147 million senior secured bank credit facility, indicating expectations of a meaningful (50%-80%) recovery of principal in a payment default scenario. The outlook is negative. A portion of the proceeds from the facility will be used to: * refinance Jobson's existing first-lien facilities; * partially refinance the company's holding company and second- lien facilities; and * retire debt of a continuing medical education (CME) company, Medical Education Consultants LLC, which Jobson will be acquiring as part of this transaction. The company is rated on a consolidated basis with its parent company, Jobson Medical Information Holdings LLC. At closing, the New York-based health care information publishing and CME company will have $140.3 million in debt, including capital and operating leases. "The ratings reflect Jobson's high debt leverage, its small earnings and cash flow base, and its potential for tightening liquidity," said Standard & Poor's credit analyst Tulip Lim. The ratings also reflect: * Jobson's earnings sensitivity to the timing of drug launches and grants provided by pharmaceutical companies; * the highly fragmented structure of health care information industry; and * the company's exposure to potential regulatory or competitive changes in the pharmaceutical company-funded CME industry. Negative rating factors are only partially mitigated by: * Jobson's business diversity beyond CME; * its growing target marketing business; * its steady subscription-based eyeglass database business; and * the potential need for medical information as a result of confusion created by Medicare Part D. Jobson's products include: * trade journal publishing, * direct marketing services, * database resources, * CME, and * electronic information directed toward health care providers and patients. KMART CORP: Ct. Signs Agreed Orders Lifting Stay for 16 Claimants ----------------------------------------------------------------- The Hon. Susan Pierson Sonderby of the U.S. Bankruptcy Court for the Northern District of Illinois signs separate agreed orders between Kmart Corporation and six personal injury claimants, lifting the automatic stay and injunction provision under Kmart's Plan of Reorganization to permit the litigation initiated by the claimants to proceed and continue to a final judgment or settlement: Claimant Date of Injury Location -------- --------------- ------------------ Barbara Wisor April 27, 2002 Kmart Store # 3673 3205 A South Cobb Drive, Smyrna, Georgia 30080 Cheryl Girometta November 30, 2002 Kmart Store # 3721 5845 Eastex Freeway, Beaumont, Texas 77706 John and February 14, 2002 Kmart Store # 4415 Debbie Schaser 1300 International Speedway Boulevard W. Daytona Beach, Florida 32114 Mary Knight June 23, 2002 Kmart Store # 3944 550 Molly Lane, Woodstock, Georgia 30189 Pamela Henry December 6, 2002 Kmart Store # 7749 250 West 34th Street, 1 Penn Plaza J, New Jersey, New York Robin White September 5, 1998 Ukiah, California Judge Sonderby also signs 10 agreed orders between Kmart and these PI claimants under the same terms: * Donna McDonald, * Darryl Littlefield, * Eugene and Romie Glover, * Helen Edgerton, * Laverne Manella, * Lester Jackson, * Lydia Tamburini, * Miguel Mundo, * Blair and Heidi Pansano, and * Rosalinda Ringkivst 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. 109; Bankruptcy Creditors' Service, Inc., 215/945-7000) KULLMAN INDUSTRIES: Has Until May 31 to File Chapter 11 Plan ------------------------------------------------------------ The Hon. Kathryn C. Ferguson of the U.S. Bankruptcy Court for the District of New Jersey required Kullman Industries, Inc., to file a chapter 11 plan and disclosure statement by May 31, 2006. As reported in the Troubled Company Reporter on Feb. 27, 2006, the Court denied the Debtor's request to extend its exclusive periods. James N. Lawlor, Esq., at Wollmuth Maher & Deutsche LLP, in Newark, New Jersey, told the Bankruptcy Court that the Debtor was working closely with the Official Committee of Unsecured Creditors to develop an exit strategy for its reorganization. Mr. Taylor said that the Debtor had been unable to formulate a plan because it has focused on the sale of its assets, and engaged in activities to insure a smooth transition into chapter 11. Headquartered in Lebanon, New Jersey, Kullman Industries, Inc. -- http://www.kullman.com/-- is a modular construction builder. The company filed for chapter 11 protection on Oct. 17, 2005 (Bankr. D. N.J. Case No. 05-60002). James N. Lawlor, Esq., at Wollmuth, Maher & Duetsch, LLP represents the Debtor in its restructuring efforts. Bruce D. Buechler, Esq., Peter J. D'Auria, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets between $1 million and $10 million and debts between $10 million to $50 million. LONDON FOG: Court Okays Perkins Coie as Bankruptcy Counsel ---------------------------------------------------------- London Fog Group, Inc., and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Nevada to employ Perkins Coie, LLP, as its bankruptcy counsel. Perkins Coie is expected to: a. take all actions necessary to protect and preserve the Debtors' bankruptcy estates, including the prosecution of actions on the Debtors' behalf, the defense of any actions commenced against the Debtor, negotiations concerning all litigation in which Debtors are involved, objections to claims filed against the Debtors in their bankruptcy case, and the compromise or settlement of claims; b. prepare the necessary applications, motions, memoranda, responses, complaints, answers, orders, notices, reports, and other papers required from the Debtors as debtors and debtors-in-possession in connection with the Debtors' chapter 11 cases; c. negotiate with creditors concerning a plan of reorganization, to prepare a plan of reorganization, disclosure statement and related documents, and to take the steps necessary to confirm and implement the plan of reorganization, including, if needed, negotiations for financing the plan; d. represent the Debtors in all other aspects of the chapter 11 cases; and e. provide other legal advice or services as may be required in connection with the Debtors' chapter 11 cases or the general operation and management of Debtors' business. Alan D. Smith, Esq., at Perkins Coie, tells the Court that the firm holds a $117,000 retainer. Mr. Smith assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Seattle, Washington, London Fog Group, Inc. -- http://londonfog.com/-- designs and retails the latest styles in jackets and other professional apparel. The company and six of its affiliates filed for chapter 11 protection on March 20, 2006 (Bankr. D. Nev. Case No. 06-50146). Stephen R. Harris, Esq., at Belding, Harris & Petroni, Ltd., represents the Debtors in their restructuring efforts. Avalon Group, Ltd., serves as the Debtors' financial advisor. Kaaran E. Thomas, Esq., serves as the Official Committee of Unsecured Creditors' bankruptcy counsel. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million to $100 million. LORBER INDUSTRIES: Hires Elgort Textile as Liquidator ----------------------------------------------------- Lorber Industries of California obtained permission from the U.S. Bankruptcy Court for the Central District of California in Los Angeles to employ Elgort Textile Associates, Inc., as its liquidator of surplus machinery and equipment. As previously reported, Elgort Textile is expected to: a. provide the Debtor with a detailed inventory of all assets to be liquidated with lot numbers; b. provide the asking price, high price and low price for each item; and c. collect all monies from the sale before release of any items from the Debtor's premises. Alan Elgort, president of Elgort Textile, told the Court that his firm will receive a 7.5% commission from the proceeds of the sale. Mr. Elgort assured the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Gardena, California, Lorber Industries of California -- http://www.lorberind.com/-- manufactures texturized and knitted fabrics. The company filed for chapter 11 protection on Feb. 10, 2006 (Bankr. C.D. Calif. Case No. 06-10399). Joseph P. Eisenberg, Esq., at Jeffer, Mangels, Butler & Marmaro LLP, represents the Debtor in its restructuring efforts. Reem J. Bello, Esq., at Weiland, Golden, Smiley, Wang, Ekvall & Strok, LLP, represents the Official Committee of Unsecured Creditors. The Debtor's schedules show $25,580,387 in assets and $24,740,726 in liabilities. MARSH SUPERMARKETS: Sun Merger Cues Moody's to Review Ratings ------------------------------------------------------------- Moody's Investors Service placed the ratings of Marsh Supermarkets, Inc., including the Corporate Family Rating of B3, on review-direction uncertain. Ratings on review-direction uncertain: * Corporate Family Rating at B3 * 8.875% senior subordinated notes due in 2007, guaranteed by operating subsidiaries, at Caa2 The key driver of the rating review is uncertainty about the company's future capital structure and operating strategy following the announcement that it has entered into a definitive merger agreement to be acquired by an affiliate of Sun Capital Partners, Inc., in an all cash transaction. Moody's review will focus on Sun Capital's plans: (1) to boost Marsh's operating profit margins (2) to build Marsh's market share in its small geographic region (3) for Marsh's post-acquisition capital structure and liquidity. At the conclusion of the review, ratings will be lowered if debt to EBITDA is likely to be sustained at 6.5 times or more, or if unused availability under committed bank credit agreements falls significantly below the $51.7 million level of Jan. 7, 2006. Ratings could also be lowered if Marsh is unlikely to generate positive non-fuel comparable store sales increases or a reported EBIT margin of at least 1%. Conversely, ratings could be raised if Sun Capital plans to inject equity, or if Marsh is likely to achieve debt to EBITDA well below 6.5 times, a reported EBIT margin of at least 2% and positive non-fuel comparable store sales increases while maintaining unused availability of at least $50 million under committed bank credit facilities. Headquartered in Indianapolis, Marsh Supermarkets, Inc., operates 117 supermarkets, 154 convenience stores and a catering company. Sales for the fiscal year ended April 2, 2005 exceeded $1.7 billion. MERIDIAN AUTOMOTIVE: Judge Walrath Disqualifies Milbank as Counsel ------------------------------------------------------------------ The Hon. Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware has no difficulty concluding that Milbank, Tweed, Hadley & McCloy LLP's violation of Model Rule 1.9 and dogged refusal to acknowledge this violation, warrant disqualification from its further representation of the First Lien Committee in Meridian Automotive Systems, Inc., and its debtor- affiliates' bankruptcy cases. For these reasons, the Court grants Stanfield Capital Partners, LLC's request to disqualify Milbank from further representation of the First Lien Committee. A full-text copy of the Court's 20-page Opinion is available for free at http://ResearchArchives.com/t/s?89f According to Judge Walrath, the Model Rules of Professional Conduct of the American Bar Association govern the practice of law before the United States Bankruptcy Court for the District of Delaware. For conduct inconsistent with the Model Rules, an attorney may be reprimanded or subjected to other disciplinary action as the circumstances may warrant. Concurrent Conflict of Interest Stanfield Capital Partners, LLC, argued that Milbank's representation of the Informal Committee of First Lien Secured Lenders is prohibited by Model Rule 1.7(a), which provides that "a lawyer shall not represent a client if the representation of . . . [that] client will be directly adverse to another client." The Court finds that Stanfield terminated the attorney-client relationship with Milbank before Milbank undertook the First Lien Committee representation. Consequently, the Court concludes that Model Rule 1.7 is not implicated. Duties to Former Clients Stanfield also argued that Milbank violated a duty owed to Stanfield as a former client under Model Rule 1.9(a), which provides that: "A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing." Judge Walrath says that the duty of confidentiality "applies not only to matters communicated in confidence by the client but also to all information relating to the representation, whatever its source," citing Model R. Prof'l Conduct 1.6, cmt. [3]. The Court concludes that even if the Stanfield and First Lien Committee matters are not "the same," they are "substantially related" under Model Rule 1.9(a). Moreover, Judge Walrath notes, to represent the First Lien Committee, Milbank needed Stanfield's informed consent, confirmed in writing, as required by Model R. Professional Conduct 1.9(a). The Court finds that Stanfield did not consent to Milbank's representation of the First Lien Committee. Because that representation was adverse to Stanfield in a matter in which Milbank had represented Stanfield, the Court concludes that Milbank violated Model Rule 1.9. Waiver Milbank argued that Stanfield waived any right to seek disqualification by waiting to file its motion eight months after learning that Milbank refused to withdraw. The Court notes that Stanfield complained to Milbank of the law firm's representation of the First Lien Committee. When its efforts did not result in Milbank withdrawing, Stanfield hired counsel who made similar efforts to resolve the issue. Only when those efforts were unsuccessful did Stanfield file its Disqualification Motion. Given Stanfield's continued insistence that there was a conflict, Milbank could not have believed that Stanfield waived the Conflict, Judge Walrath says. Milbank's Appeal Milbank has taken an appeal to the United States District Court for the District of Delaware from Judge Walrath's order granting Stanfield Capital's motion to disqualify Milbank as counsel to the Committee of First Lien Secured Lenders. About Meridian 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. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000). MMRENTALSPRO LLC: Wants to Hire Patrick Beard as Special Counsel ---------------------------------------------------------------- MMRentalsPro, LLC, asks the U.S. Bankruptcy Court for the Eastern District of Tennessee for permission to employ Patrick, Beard, Schulman & Jacoway, P.C., as its special counsel, nunc pro tunc to June 17, 2005. Patrick Beard is expected to assist C. Kenneth Still, the Liquidating Trustee overseeing the Debtor's Chapter 7 case, pursuant to Section 327 of the Bankruptcy Code. Mr. Still discloses that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners $190 - $250 Associates $150 - $170 Para-professionals $50 - 100 Headquartered in Chattanooga, Tennessee, MMRentalsPro, LLC, and its owner, Roy Michael Malone, Sr., filed for chapter 11 protection on June 17, 2005 (Bankr. E.D. Tenn. Case No 05-13814). Richard C. Kennedy, Esq., at Kennedy, Fulton & Koontz, represents the Debtors. When the Debtors filed for protection from their creditors, they estimated less than $50,000 in assets and between $10 million to $50 million in debts. The Debtor's chapter 11 case was converted to a chapter 7 liquidation on Feb. 17, 2006. MONEY CENTERS: Sherb & Co. Raises Going Concern Doubt ----------------------------------------------------- Sherb & Co., LLP, in Boca Raton, Florida, raised substantial doubt about Money Centers of America, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations, working capital, and stockholders' equity and accumulated deficiencies. Money Centers of America, Inc., filed its consolidated financial statements for the year ended Dec. 31, 2005, with the Securities and Exchange Commission on April 14, 2006. The Company reported a $1,666,167 net loss on $19,409,238 of revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the company's balance sheet showed $8,886,425 in total assets and $13,922,012 in total liabilities, resulting in a $5,035,587 stockholders' equity deficit. The Company's Dec. 31 balance sheet also strained liquidity with $6,848,854 in total current assets available to pay $13,745,282 in total current liabilities coming due within the next 12 months. "2005 was very much a transition year for Money Centers of America," Chris Wolfington, Chairman and CEO of the Company, said. "We made great strides to position the company for profitable growth by eliminating unprofitable contracts, resolving outstanding litigation related to our 2004 acquisition of Available Money, and implementing strong internal financial controls. "In addition, we laid the groundwork for the exciting new products that were introduced in early 2006, including The Omni Network(TM) and ONSwitch(TM)." "In 2006 we can now turn our focus outward and begin capitalizing on the great growth opportunities in the gaming industry today," Mr. Wolfington commented on the company's outlook. "With our recent efforts to expand our sales and marketing efforts, our pipeline of new opportunities has exploded. We are very confident that Money Centers of America can grow new sales in 2006 ahead of our historical performance, although revenue growth will be back-end loaded as we continue to eliminate unprofitable legacy contracts throughout the first half of the year." "Our newly-introduced ONSwitch(TM) product, which enables large casinos to insource their cash access and merchant processing activities from third party vendors, is generating a great deal of excitement in the industry," Wolfington concluded. "We believe that we will announce our first live implementation of ONSwitch(TM) during the second quarter, and that we can implement a minimum of three casinos on the platform during 2006." A full-text copy of the Company's 2005 Annual Report is available for free at http://ResearchArchives.com/t/s?89b Money Centers of America, Inc. -- http://www.moneycenters.com/-- provides cash access and Transaction Management Systems for the gaming industry, utilizing a customer-centric approach that is aimed at leveraging technology, generating value, and creating measurable results in profitability, customer satisfaction and loyalty. MUSICLAND HOLDING: Court Extends Removal Period to July 12 ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York extended the time within which Musicland Holding Corp. and its debtor-affiliates may file notices of removal under Bankruptcy Rule 9027(a)(2)(A) to the later of: (a) July 12, 2006; (b) 30 days after the entry of an order lifting the automatic stay with respect to the particular action sought to be removed; or (c) with respect to postpetition actions, the time periods given in Bankruptcy Rule 9027(a)(3). David A. Agay, Esq., at Kirkland Ellis LLP, in New York, asserts that extending the removal period will give the Debtors an opportunity to make fully informed decisions about the potential removal of all Actions and will assure that the Debtors do not forfeit valuable rights under Section 1452. The rights of the Debtors' adversaries will not be prejudiced by an extension because in the event that a matter is removed, the other parties to an Action may seek to have that action remanded pursuant to Section 1452(b), Mr. Agay points out. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) NAVISTAR INT'L: Inks $3 Million Loan Deal with CapSource Fin'l -------------------------------------------------------------- Navistar Financial Corporation of Schaumburg, Illinois, reached an agreement with CapSource Financial, Inc. (OTC BB: CPSO) for wholesale floor plan financing in conjunction with CapSource Prime Time Trailers sales operation in Fontana, California. The approximate amount of the credit facility is $3 million. "With the Navistar credit facility in place, we have all the tools necessary to expand our share of the new and used trailer market in California and the Southwest U.S," Fred Boethling, President and CEO of CapSource, said. CapSource recently reported a $2 million equity investment from Whitebox Advisors, LLC a Minneapolis-based hedge fund. Whitebox currently owns approximately 30% of the outstanding common stock CapSource. About CapSource Financial Headquartered in Boulder, Colorado, CapSource Financial, Inc. owns and manages a lease/rental fleet of over-the-road truck trailers and related equipment through its REMEX subsidiary and sells trailers, parts and service through it RESALTA subsidiary, both based in Mexico City. CapSource, through its subsidiary Capsource Equipment Company, Inc., also owns and operates Prime Time Trailers of Fontana California, the authorized Hyundai trailer dealer for California. CapSource's common stock trades on the electronic bulletin board under the symbol CPSO. About Navistar Headquartered in Warrenville, Illinois, Navistar International Corporation -- http://www.nav-international.com/-- is the parent company of Navistar Financial Corp. and International Truck and Engine Corp. The company produces International(R) brand commercial trucks, mid-range diesel engines and IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company is also a provider of truck and diesel engine parts and service sold under the International(R) brand. A wholly owned subsidiary offers financing services. * * * As reported in the Troubled Company Reporter on Feb 14, 2006, Fitch downgraded the ratings of Navistar International Corp. and its subsidiary, Navistar Financial Corp. as: Navistar International Corp.: -- Issuer default rating to 'BB-' from 'BB' -- Senior unsecured debt to 'BB-' from 'BB' -- Subordinated debt to 'B' from 'B+' Navistar Financial Corp. -- Senior unsecured bank lines to 'BB-' from 'BB' -- Senior unsecured debt to 'BB-' from 'BB' Fitch also assigned an indicative rating of 'BB-' to Navistar's prospective $1.5 billion credit facility. The ratings remain on Rating Watch Negative. Resolution of the Watch status will be contingent on the filing of audited financial statements and resolution of Navistar's debt structure. ONEIDA LTD: Court Directs U.S. Trustee to Appoint Equity Committee ------------------------------------------------------------------ The Honorable Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York directed the U.S. Trustee for Region 2 to appoint an Official Committee of Equity Holders in the Chapter 11 cases of Oneida Ltd. and its debtor-affiliates. An ad hoc committee of equity security holders asked the Court's intervention after the U.S. Trustee denied confirmation for an equity committee. The U.S. Trustee doubted the likelihood that shareholders can get any recovery. The U.S. Trustee also said an equity committee is not necessary to represent the shareholders' interest. Judge Groper pointed out that the U.S. Trustee's standard for appointing an equity committee is higher than what Section 1102(a)(2) of the Bankruptcy Code requires. Judge Groper said that the committee's "necessity" is not required for an equity committee to have an official appointment. "Usefulness" is all that's needed to be proven to warrant an appointment. Judge Groper noted that although there is an Official Committee of Unsecured Creditors, there is no allowed unsecured claim yet. All purported unsecured claims remain disputed. Judge Groper also wanted to dispel any implication that a group of creditors took control of the Debtors' Board of Directors during the first stage of the Debtors' two-stage restructuring, neutralized the general unsecured creditors and then took for itself the value of the remaining equity. Judge Groper emphasized the need for check and balances. The Debtors restructured their debt in 2004 by converting a portion of their secured debt into 62% of the common stock and structuring the remainder of the debt in the form of a revolving loan and two tranches of secured debt, collateralized by substantially all of their assets. When the Debtors filed for bankruptcy protection, they filed a plan of reorganization proposing that: (1) the senior tranche of secured debt will be paid in full from exit financing that is already in place (the revolver has already been paid out of a DIP financing authorized by the Court); (2) the junior tranche of secured debt in the principal amount of $80 million as of the filing date will be converted to equity; (3) the Pension Benefit Guaranty Corporation will receive a note for its claim; (4) general unsecured claims will be paid in full; and (5) the old equity will be eliminated. Based in Oneida, New York, Oneida Ltd. -- http://www.oneida.com/ -- is the world's largest manufacturer of stainless steel and silverplated flatware for both the Consumer and Foodservice industries, and the largest supplier of dinnerware to the foodservice industry. Oneida is also a leading supplier of a variety of crystal, glassware and metal serveware for the tabletop industries. The Company and its 8 debtor-affiliates filed for Chapter 11 protection on March 19, 2006 (Bankr. S.D. N.Y. Case Nos. 06-10489 through 06-10496). Douglas P. Bartner, Esq., at Shearman & Sterling LLP represents the Debtors. Credit Suisse Securities (USA) LLC is the Debtors' financial advisor. As of May 4, 2006, the Official Committee of Unsecured Creditors has not sought for appointment of its counsel. When the Debtors filed for protection from their creditors, they listed $305,329,000 in total assets and $332,227,000 in total debts. PIER 1 IMPORTS: S&P Holds Low-B Ratings on Negative CreditWatch --------------------------------------------------------------- Standard & Poor's Ratings Services' 'B' corporate credit and 'B-' unsecured debt ratings on Fort Worth, Texas-based Pier 1 Imports Inc. remained on CreditWatch with negative implications. The ratings were lowered and listed on CreditWatch Feb. 7, 2006, due to substantially weaker operating results for the fiscal year ended Feb. 25, 2006. The company recently announced that it had hired an investment bank to assist in seeking strategic alternatives to enhance shareholder value. "We will monitor developments associated with this process in order to assess the implications for the ratings," said Standard & Poor's credit analyst Ana Lai. PINNACLE ENTERTAINMENT: Ups Offer to Buy Aztar to $2.58 Billion --------------------------------------------------------------- Pinnacle Entertainment, Inc.'s (NYSE: PNK) board of directors unanimously approved an increase in the per-share price under the Company's merger agreement with Aztar Corporation to $51 per share in cash and stock, subject to adjustment. The consideration consists of $47 per share in cash and $4 per share of Pinnacle common stock, subject to a collar provision. The purchase price for each share of Aztar Series B preferred stock has been increased to $497.09 in cash and $42.31 in Pinnacle common stock, subject to a collar provision. The fully financed transaction is valued at $2.58 billion, including approximately $1.97 billion in equity on a fully diluted basis and approximately $677 million of indebtedness. All other aspects of the merger agreement remain unchanged, except for the termination fee, which has been increased to $52.16 million, plus reimbursement of expenses up to $25.84 million. As reported in the Troubled Company Reporter on Mar. 15, 2006, Pinnacle Entertainment and Aztar Corp.'s Boards of Directors unanimously approved a definitive merger agreement under which Pinnacle will acquire all of the outstanding shares of Aztar for $38.00 per share in cash. This represents a premium of approximately 24% over Aztar's closing stock price on Mar. 10, 2006. The fully financed transaction is valued at approximately $2.1 billion, including approximately $1.45 billion of equity on a fully diluted basis and approximately $723 million in indebtedness. Offer Expires Pinnacle Entertainment disclosed that at 4 p.m., on May 4, 2006, it responded to Aztar Corp.'s presentation of a 72-hour notice of termination provided under the merger agreement between Pinnacle and Aztar. Under the terms of that agreement, Pinnacle had until May 4, 2006, to respond to the higher offer provided by a competing bidder. Pinnacle said that its offer expired at 11 p.m. on May 4, 2006, and Aztar did not respond by that time. About Aztar Corporation Aztar Corporation (NYSE: AZR) -- http://www.aztarcorp.com/-- is a publicly traded company that operates Tropicana Casino and Resort in Atlantic City, New Jersey, Tropicana Resort and Casino in Las Vegas, Nevada, Ramada Express Hotel and Casino in Laughlin, Nevada, Casino Aztar in Caruthersville, Missouri, and Casino Aztar in Evansville, Indiana. About Pinnacle Entertainment Headquartered in Las Vegas, Nevada, Pinnacle Entertainment, Inc. -- http://www.pnkinc.com/-- owns and operates casinos in Nevada, Louisiana, Indiana and Argentina, owns a hotel in Missouri, receives lease income from two card club casinos in the Los Angeles metropolitan area, has been licensed to operate a small casino in the Bahamas, and owns a casino site and has significant insurance claims related to a hurricane-damaged casino previously operated in Biloxi, Mississippi. Pinnacle opened a major casino resort in Lake Charles, Louisiana in May 2005 and a new replacement casino in Neuquen, Argentina in July 2005. * * * As reported in the Troubled Company Reporter on March 20, 2006, Moody's Investors Service placed the ratings of Pinnacle Entertainment, Inc. on review for possible upgrade following the company's announcement that it entered into a definitive merger agreement under which Pinnacle will acquire all of the outstanding shares of Aztar Corporation for $38 per share in cash, or about $1.45 billion. Including Aztar's $723 million of debt, the transaction is valued at almost $2.2 billion. Pinnacle ratings affected include its B2 corporate family rating, B1 senior secured bank loan rating, and Caa1 senior subordinated debt rating. POPE & TALBOT: KPMG LLP Raises Going Concern Doubt -------------------------------------------------- KPMG LLP in Portland, Oregon, raised substantial doubt about Pope & Talbot, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31, 2004, and 2005. The auditor pointed to the Company's recurring losses; inability to comply with financial covenants; inability to refinance or renew maturing debt and comply with financial covenants in future periods. Pope & Talbot, Inc., filed its consolidated financials statements for the year ended Dec. 31, 2005, with the Securities and Exchange Commission on March 31, 2006. The Company reported a $50,009,000 net loss on $848,845,000 of total revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $630,653,000 in total assets, $518,621,000 in total liabilities, and $112,032,000 in total stockholders' equity. "While I continue to be pleased with ongoing operational improvements at the Company's pulp and lumber mills, the financial results for 2005 are disappointing," Michael Flannery, Chairman and Chief Executive Officer, stated. "Over the last year, the company has diversified its customer base, reduced costs in several areas and improved productivity. Recent strengthening in the NBSK pulp market is also encouraging." Liquidity and Capitalization Lenders waived compliance of financial covenants regarding its Halsey pulp mill leases on Dec. 28, 2005. The Company sought the amendments because it expected to be out of compliance with the Halsey lease minimum net worth and maximum leverage ratio covenants as of Dec. 31, 2005, which required: (i) adjusted net worth (stockholders' equity less cumulative translation adjustment) of at least $139.5 million (actual at Dec. 31, 2005 was $90.8 million), and (ii) a maximum leverage ratio (total debt as a percentage of the sum of total debt plus Adjusted Net Worth) of 62.5% (actual at Dec. 31, 2005 was 78.5%). The Halsey leases include early repurchase options pursuant to which the Company may repurchase the Halsey mill on Jan. 2, 2007, for an aggregate repurchase price of $59.1 million. Under the lease amendments signed on Dec. 28, 2005, the covenant waivers expire as of Sept. 30, 2006, if the Company hasn't given irrevocable notice of exercise of the early repurchase options by that date. Accordingly, the Company faces likely defaults if it does not refinance the $59.1 million repurchase price by Jan. 2, 2007. The lease amendments also impose a new liquidity covenant under which the Company must have cash balances plus borrowing availability under credit facilities of at least $15 million as of the end of each quarter. To meet this liquidity requirement at March 31, 2006, the Company expects to rely on borrowing availability under its revolving credit agreement with a U.S. lender. Borrowing availability under that credit agreement is dependent on compliance with quarterly maximum leverage ratio and net worth covenants. The Company did not expect to be in compliance with these covenants at March 31, 2006, and, therefore has obtained a waiver of these covenants from the lender. In addition, the Company and the lender agreed to modify these covenants so that on June 30, 2006, and, future quarterly compliance dates, the Company will be required to have a maximum ratio of total debt to total capitalization of 77.5% and a minimum consolidated stockholders' equity of $95.0 million. On Dec. 31, 2005, the Company had cash balances plus borrowing availability under credit facilities of $31.4 million and consolidated stockholders' equity of $112.0 million. The Company's Canadian revolving credit agreement requires, among other things, that the Company's Canadian subsidiaries maintain a ratio of adjusted EBITDA to interest expense of at least 2-to-1 measured at the end of each quarter for the four quarter period then ended. For the year ended Dec. 31, 2005, this ratio for the Canadian subsidiaries was 2.01-to-1, and the Company did not expect to satisfy this covenant requirement for the period ending March 31, 2006. The Company has obtained a waiver of this covenant as of March 31, 2006, from its Canadian banks. The waiver was conditioned on the Company's agreement to pledge its unencumbered Canadian sawmills as additional security. In addition, the Canadian revolving credit facility expires on July 29, 2006, and, if not renewed or repaid, outstanding borrowings at that time will convert into two term loans payable in one year. To address its refinancing and existing covenant compliance issues, the Company is in negotiations with certain institutional lenders to refinance its Halsey pulp mill leases and existing Canadian and U.S. revolving credit facilities. The Company expects that the new credit facility will not include net worth or leverage covenants, but will include minimum EBITDA covenants. Material Weakness During the course of the Company's 2005 audit, it was determined that the Company could no longer conclude as of Dec. 31, 2005, that tax planning strategies would continue to be viable and prudent in light of year end losses and preliminary indications of first quarter 2006 results. Accordingly, the Company recorded a $24 million valuation allowance against its U.S. deferred tax assets. Due to this material adjustment resulting from the audit process, the Company has determined that it has an internal control deficiency that constitutes material weakness. Because of this material weakness, management has concluded that the Company's internal control over financial reporting was not effective as of Dec. 31, 2005. A full-text copy of the Company's 2005 Annual Report is available for free at http://ResearchArchives.com/t/s?8ab Based in Portland, Oregon, Pope & Talbot, Inc. (NYSE: POP) -- http://www.poptal.com/-- is a North American forest products company. Pope & Talbot was founded in 1849 and produces pulp and softwood lumber in the U.S. and Canada. Markets for the Company's products include: the U.S.; Europe; Canada; South America; Japan; and other Pacific Rim countries. * * * As reported in the Troubled Company Reporter on March 29, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on pulp and lumber producer Pope & Talbot Inc. to 'B' from 'B+' and its senior unsecured debt rating to 'CCC+' from 'B-'. S&P says the outlook is negative. As reported in the Troubled Company Reporter on March 23, 2006, Moody's Investors Service downgraded Pope & Talbot Inc.'s corporate family rating to B3 and senior unsecured debt rating to Caa1. PORTA SYSTEMS: BDO Seidman Raises Going Concern Doubt ----------------------------------------------------- BDO Seidman, LLP, raised substantial doubt about Porta Systems Corp.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31, 2004, and 2005. The auditor pointed to the Company's: * substantial losses from operations; * working capital deficiency; * stockholders' equity deficiency; and * dependence on the continued agreement of SHF IX LLC, the holder of its senior debt, to defer the maturity date of these debts. SHF IX LLC is an affiliate of Stonehill Financial, LLC. SHF purchased the Company's senior debt from Wells Fargo Foothill, Inc., during the third quarter of 2004. As of Dec. 31, 2005, the Company's debts, include: (a) $24,675,000 of senior debt, including principal and interest, as a result of a Feb. 24, 2006, extension, due May 1, 2006; (b) $6,144,000 principal amount of subordinated debt, which matured on July 3, 2001; and (c) $385,000 of 6% Debentures which matured on July 2, 2002. The Company was unable to pay: -- $6,144,000 in principal or $5,053,000 in accrued interest on the subordinated notes; and -- $385,000 in principal or $127,000 in interest on the 6% Debentures. Likely Default & Bankruptcy Filing In addition, the Company cannot give any assurance that SHF will extend the loan beyond May 1, 2006. If SHF does not extend the maturity date of the obligations or demands payment of all or a significant portion of the obligations due to the holder of the senior debt, the Company will not be able to continue its business. If the agreement is not extended beyond May 1, 2006, or if SHF demands payment of all or a significant portion of the loan when due, the Company will not be able to continue its business, and it is likely that the Company will seek protection under the Bankruptcy Code. Further, if the Company finds a buyer for its business on terms acceptable to SHF, a sale of the Company's business may involve reorganization under the Bankruptcy Code. Financials Porta Systems Corp. filed its consolidated financial statements for the year ended Dec. 31, 2005, with the Securities and Exchange Commission on March 30, 2006. The Company reported $410,000 of net income on $28,604,000 of sales for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $14,661,000 in total assets and $44,846,000 in total liabilities, resulting in a $30,185,000 stockholders' equity deficit. The Company's Dec. 31 balance sheet also showed strained liquidity with $10,241,000 in total current assets available to pay $44,019,000 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's 2005 Annual Report is available for free at http://ResearchArchives.com/t/s?899 Porta Systems Corp. -- http://www.portasystems.com/-- designs, manufactures, and markets products for the connection, protection, testing, administration and management of public and private telecommunications lines and networks. Serving a global market base of 31 countries, Porta Systems owns over 100 patents for copper and software products and systems. PORTA SYSTEMS: Kornfeld Replaces Carney as Chief Executive Officer ------------------------------------------------------------------ William V. Carney resigned as chief executive officer of Porta Systems Corp. on Mar. 23, 2006. Mr. Carney continues to serve as chairman of the board and a consultant to the Company. Edward B. Kornfeld was elected as chief executive officer. He will continue to serve as chief financial officer. In connection with his election as chief executive officer, Mr. Kornfeld resigned from the positions of president and chief operating officer. Those positions are currently vacant. Mr. Kornfeld has been an executive officer of the Company since 1995. Porta Systems Corp. -- http://www.portasystems.com/-- designs, manufactures, and markets products for the connection, protection, testing, administration and management of public and private telecommunications lines and networks. Serving a global market base of 31 countries, Porta Systems owns over 100 patents for copper and software products and systems. PREMIUM PAPERS: Hires Young Conaway as Bankruptcy Counsel --------------------------------------------------------- Premium Papers Holdco, LLC, and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Young Conaway Stargatt & Taylor, LLP, as their counsel. As reported in the Troubled Company Reporter on Apr. 11, 2006, Young Conaway is expected to: a. provide legal advice with respect to the Debtors' powers and duties as Debtors in possession in the continued operation of their businesses and management of their properties; b. prepare and pursue confirmation of a plan and approval of a disclosure statement; c. prepare on behalf of the Debtors necessary applications, motions, answers, orders, reports and other legal papers; d. appear in Court and to protect the interests of the Debtors before the Court; and e. perform all other legal services for the Debtors which may be necessary and proper in these proceedings. Robert S. Brady, Esq., a partner at Young Conaway, told the Court that the Firm's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Robert S. Brady, Esq. Attorney $500 Joseph A. Malfitano, Esq. Attorney $340 Sean T. Greecher, Esq. Attorney $255 Donald J. Bowman, Jr., Esq. Attorney $255 Ian S. Fredericks, Esq. Attorney $240 Thomas Hartzell Paralegal $175 Mr. Brady assured the Court that the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Hamilton, Ohio, Premium Papers Holdco, LLC -- http://www.smartpapers.com-- manufactures and markets a wide variety of premium coated and uncoated printing papers, such as Kromekote, Knightkote, and Carnival. The Company and two of its affiliates filed for chapter 11 protection on March 21, 2006 (Bankr. D. Del. Case No. 06-10269). Ian S. Fredericks, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they did not disclose their total assets but estimated debts between $10 million and $50 million. PREMIUM PAPERS: Committee Wants Lowenstein Sandler as Counsel ------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Premium Papers Holdco, LLC, and its debtor-affiliates' chapter 11 cases asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Lowenstein Sandler PC as its bankruptcy counsel. Lowenstein Sandler will: a. provide legal advice as necessary with respect to the Committee's powers and duties as an official committee appointed under Section 1102 of the Bankruptcy Code. b. assist the Committee in investigating the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' business, potential claims, and any other matters relevant to the cases or to the formulation of a plan of reorganization; c. participate in the formulation of a plan of reorganization; d. provide legal advice as necessary with respect to any Disclosure Statement and Plan or reorganization filed in the Debtors' chapter 11 case and the process for approving or disapproving disclosure statements and confirming or denying confirmation of a Plan; e. prepare on behalf of the Committee, as necessary, applications, motions, complaints, answers, orders, agreements and other legal papers; f. appear in Court to present necessary motions, applications, and pleadings, and otherwise protect the interests of those represented by the Committee; g. assist the Committee in requesting the appointment of a trustee or examiner, should such action be necessary; and h. perform such other legal services as may be required an in the best interests of the Committee and creditors. Kenneth A. Rosen, Esq., a member at Lowenstein Sandler, tells the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners $320 - $595 Counsel $265 - $425 Associates $165 - $300 Legal Assistants $75 - $150 Mr. Rosen assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Hamilton, Ohio, Premium Papers Holdco, LLC -- http://www.smartpapers.com-- manufactures and markets a wide variety of premium coated and uncoated printing papers, such as Kromekote, Knightkote, and Carnival. The Company and two of its affiliates filed for chapter 11 protection on March 21, 2006 (Bankr. D. Del. Case No. 06-10269). Ian S. Fredericks, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they did not disclose their total assets but estimated debts between $10 million and $50 million. QUANTUM CORP: Moody's Reviews Low-B Ratings and May Downgrade ------------------------------------------------------------- Moody's Investors Service placed the ratings of Quantum Corporation on review for possible downgrade. The review is prompted by the company's announcement that it has signed a definitive agreement to acquire Advanced Digital Information Corp., a provider of storage solutions for the open systems marketplace, for approximately $770 million of cash. ADIC had a cash balance of $262 million as of January 1, 2006. Moody's estimates that proforma leverage will increase as a result of the transaction. Key areas of focus of Moody's review will include Quantum's integration plan, revenue attrition, profitability impact as a result of the acquisition, and longer term capital structure plans to reduce acquisition debt. These ratings are placed under review: * B3 rating on $160 million convertible subordinate notes, due 2010 * B1 Corporate Family Rating Quantum Corporation, headquartered in San Jose, California, provides its business customers with enterprise-wide storage solutions and services. ADIC is headquartered in Washington providing open systems storage solutions to enterprises with a strong presence in the government and data management end-markets. RAPSOD TRADE: Moody's Rates Corporate Family Rating at (P)Caa1 -------------------------------------------------------------- Moody's Investors Service assigned a first time Corporate Family Rating of (P)Caa1 to Rapsod Trade Ltd. At the same time the rating agency also assigned a (P)Caa1 rating to Gallery Capital S.A.'s $150.0 million senior secured notes offering. Rapsod Trade Ltd controls through various wholly owned holding companies, the Gallery Group, the second largest outdoor advertising network in Russia. Gallery Capital S.A. is an orphan special purpose vehicle which does not conduct any revenue generating activity and was created in the context of the notes offering. These ratings were assigned: * Corporate family rating of (P) Caa1 to Rapsod Trade Ltd. * $150 million senior secured notes due 2013 at Gallery Capital S.A. rated (P) Caa1. The outlook is stable for both ratings. The Caa1 ratings incorporate the substantial execution risks associated with the rapid roll-out of Gallery's ambitious acquisition strategy to build the company from a relatively small size as well as the company's considerable indebtedness prospectively anticipated as a result of this strategy paired with a considerable level of operating leverage. The ratings also reflect the risk from: i) the limited scale and scope of Gallery's current operations. ii) uncertainties over the possible impact on operating performance as a result of regulatory changes in connection with the ban on tobacco and alcohol advertising. iii) the complexity of Gallery's legal structure. iv) a degree of cyclicality and seasonality in the company's advertising revenue base; v) potential competition from larger and better capitalized operators such as News Outdoor, Clear Channel and JCDecaux. v) the company's exposure to the economic, regulatory, political, inflationary and currency exchange risks associated with operating in Russia (rated Baa2-Stable). More positively, the Caa1 ratings recognize Gallery's strong position in the Russian outdoor advertising market and its established relationships with municipalities. The ratings also acknowledge: i) the Russian outdoor advertising market's expected growth rate. ii) management's track record in building a profitable and cash-flow positive business in Russia. iii) Gallery's established and diversified customer base. iv) the competitive advantages from the company's attractive advertising sites. v) the support from institutional shareholders, such as the EBRD. The stable outlook indicated for Gallery's ratings reflects the relatively comfortable positioning of the company within the Caa1 rating category which is supported by the initial pro forma liquidity position post refinancing. Gallery intends to use proceeds to repay outstanding debt and to finance capex and acquisitions in the very fragmented Russian outdoor advertising market. The company expects to execute its expansion plan over the next 9 to 12 months. Moody's notes that funds can be used for acquisitions yet to be made in the outdoor market. Pro-forma for the refinancing, leverage will be 2.9x on a net debt adjusted for operating leases to 2005 EBITDAR basis. However, the contemplated financing will bring significant gross debt on balance sheet. As the company spends on balance sheet cash on acquisitions net debt leverage is expected to increase rapidly and the difference between net and gross leverage will decrease correspondingly. Moody's also added that evidence of a successful track record in integrating acquisitions coupled with evidence that the company will be generating meaningful positive free cash flow on a sustainable basis would lead to a ratings upgrade. Proceeds from the notes will be on-lent by way of proceeds loans to Outdoor One LLC and Gallery Service LLC which accounted for approximately 97 percent of the company's 2005 EBITDA on a pro- forma basis taking into account the acquisitions made. The Caa1 rating on the notes, at the same level as the Corporate Family rating, acknowledges that the Notes are secured by a first- priority pledge over the shares of other various holding as well as over the Proceeds Loans and while also benefiting from senior guarantees from those entities. The Notes are effectively subordinated to all obligations of the company's non-guarantor subsidiaries. Moody's understands that these obligations are currently de minimis and the notching does not factor in a material increase in these obligations. Incurrence of additional pari passu indebtedness is bounded by a consolidated coverage ratio of 2.25x. The rating assumes that this leeway will not be utilized in the near-term. The Notes indentures also carves out the ability to secure up to $25 million in additional borrowings. The use of this flexibility for any other use than short term working capital needs could cause Moody's to consider notching from the current Corporate Family Rating in the future. Given the seasonality embedded in outdoor advertising and the consequent significant seasonal working capital swings experienced by the company, Moody's expects Gallery to arrange bank financing in order to support its liquidity needs in the medium-term. Headquartered in Moscow, Russia, Gallery Group currently operates the second largest outdoor advertising network in Russia which encompasses approximately 230 cities. During fiscal year 2005, Gallery Group reported revenues of $33.4 million and EBITDA of $8.4 million. On pro-forma basis, including acquisitions the company has concluded during 2005 as they if had been completed on 1st January 2005, Gallery would have reported revenues of $47.6 million and EBITDA of $16.3 million. REPUBLIC STORAGE: Court Okays Calfee Halter as Bankruptcy Counsel ----------------------------------------------------------------- Republic Storage Systems Company, Inc., obtained authority from the U.S. Bankruptcy Court for the Northern District of Ohio to employ Calfee Halter & Griswold L.L.P. as its bankruptcy counsel. As reported in the Troubled Company Reporter on Apr. 5, 2006, Calfee Halter is expected to: (a) advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued management and operation of its business and properties, including the rights and remedies of the Debtor with respect to its assets and with respect to the claims of creditors; (b) attend meetings and negotiate with representatives of creditors and other parties in interest and advise and consult on the conduct of these chapter 11 cases, including all of the legal and administrative requirements of operating in chapter 11; (c) assist the Debtor with the preparation of its Schedules of Assets and Liabilities and Statements of Financial Affairs; (d) advise the Debtor in connection with any contemplated sales of assets or business combinations, including negotiating agreements, formulating and implementing appropriate procedures with respect to the closing of any such transactions, and counseling the Debtor in connection with such transactions; (e) advise the Debtor in connection with any necessary post- petition financing arrangements and negotiate and draft documents relating thereto; (f) advise the Debtor on matters relating to the evaluation of the assumption, rejection or assignment of unexpired leases and executory contracts; (g) advise the Debtor with respect to legal issues arising in or relating to the Debtor's ordinary course of business, including attending senior management meetings, meetings with the Debtor's financial and turnaround advisors and meetings of the board of directors; (h) take all necessary action to protect and preserve the Debtor's estates, including the prosecution of actions on its behalf, the defense of actions commenced against it, negotiations concerning all litigation in which the Debtor is involved and objecting to claims filed against the Debtor's estates; (i) prepare all motions, applications, answers, orders, reports and papers necessary to the administration of the estate; (j) negotiate and prepare a plan or plans of reorganization, disclosure statement and all related agreements and/or documents and taking any necessary action on behalf of the Debtor to obtain confirmation of such plan or plans, as required; (k) attend meetings with third parties and participate in negotiations with respect to the above matters; (l) appear before this Court, any appellate courts and protect the interests of the Debtor's estates before such courts; (m) perform all other necessary legal services and providing all other necessary legal advice to the Debtor in connection with this chapter 11 case, including but not limited to environmental, labor, pension/employee benefits, tax, corporate and intellectual property matters; and (n) perform all other necessary legal services and providing all other necessary legal advice as requested by the Debtor including but not limited to environmental, labor, pension/employee benefits, tax, corporate and intellectual property matters. James M. Lawniczak, Esq., a member of Calfee Halter, told the Court that the Firm's associates bill between $155 to $260 per hour and its partners bill between $260 and $480 per hour. Mr. Lawniczak assured the Court that the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Lawniczak can be reached at: James M. Lawniczak, Esq. Calfee Halter & Griswold L.L.P. 1400 McDonald Investment Center 800 Superior Avenue Cleveland, Ohio 44114-2688 Tel: (216) 622-8200 Fax: (216) 241-0816 http://www.calfee.com/ Headquartered in Canton, Ohio, Republic Storage Systems Company, Inc. -- http://www.republicstorage.com/-- an employee-owned firm, manufactures industrial and commercial shelving, storage rack, mezzanine systems and shop equipment. The Company filed for Chapter 11 protection on March 14, 2006, (Bankr. N.D. Ohio Case No. 06-60316). James Michael Lawniczak, Esq., at Calfee, Halter & Griswold, LLP, represents the Debtor in its restructuring efforts. Dov Frankel, Esq., at Buckley King, LPA, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. REPUBLIC STORAGE: Files Schedules of Assets and Liabilities ----------------------------------------------------------- Republic Storage Systems Company, Inc., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Northern District of Ohio, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $950,000 B. Personal Property $20,612,718 C. Property Claimed as Exempt D. Creditors Holding $12,067,380 Secured Claims E. Creditors Holding $14,764 Unsecured Priority Claims F. Creditors Holding $5,116,426 Unsecured Nonpriority Claims ----------- ----------- Total $21,562,718 $17,198,570 Headquartered in Canton, Ohio, Republic Storage Systems Company, Inc. -- http://www.republicstorage.com/-- an employee-owned firm, manufactures industrial and commercial shelving, storage rack, mezzanine systems and shop equipment. The Company filed for Chapter 11 protection on March 14, 2006, (Bankr. N.D. Ohio Case No. 06-60316). James Michael Lawniczak, Esq., at Calfee, Halter & Griswold, LLP, represents the Debtor in its restructuring efforts. Dov Frankel, Esq., at Buckley King, LPA, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. SDY GROUP: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------- Debtor: SDY Group, Inc. dba North Druid Hills Car Wash and Auto Care 3775 North Druid Hills Road Decatur, Georgia 30033 Bankruptcy Case No.: 06-65054 Type of Business: The Debtor offers car washing and polishing services. Chapter 11 Petition Date: May 2, 2006 Court: Northern District of Georgia (Atlanta) Judge: James Massey Debtor's Counsel: Paul Reece Marr, Esq. Paul Reece Marr, P.C. 300 Galleria Parkway, Northwest, Suite 960 Atlanta, Georgia 30339 Tel: (770) 984-2255 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Halco Supplier Debt $9,032 P.O. Box 262 Norcross, GA 30091-0262 DeKalb County Tax Real Property Tax $6,400 Commissioner P.O. Box 100004 Decatur, GA 30031-7004 DeKalb County Government Sanitation Fees $3,199 P.O. Box 1027 Decatur, GA 30031-1027 SERACARE LIFE: Hires Winthrop Couchot as Insolvency Counsel ----------------------------------------------------------- The Hon. Louise DeCarl Adler of the U.S. Bankruptcy Court for the Southern District of California authorized SeraCare Life Sciences, Inc., to retain Winthrop Couchot Professional Corporation as its general insolvency counsel, nunc pro tunc to March 22, 2006. Winthrop Couchot is expected to: a) advise and assist the Debtor with respect to compliance with the requirements of the Office of the United States Trustee; b) advise the Debtor regarding matters of bankruptcy law, including the rights and remedies of the Debtor with respect to its assets and with respect to the claims of creditors; c) represent the Debtor in any proceedings or hearings before this Court related to bankruptcy law issues; d) conduct examinations of witnesses, claimants, or adverse parties and to prepare and assist in the preparation of reports, accounts and pleadings related to the Debtor's Chapter 11 case; e) advise the Debtor regarding its legal rights and responsibilities under the Bankruptcy Code and the Bankruptcy Rules; f) assist the Debtor in the negotiation, preparation and consummation of a Chapter 11 plan of reorganization; and g) take other actions and perform other services as the Debtor may require in connection with its Chapter 11 case. Paul J. Couchot, Esq., at Winthrop Couchot, informs the Court that his firm's professionals and their hourly rates are: Professionals Hourly Rates ------------- ------------ Marc J. Winthrop, Esq. $565 Robert E. Opera, Esq. $550 Sean A. O'Keefe, Esq. $550 Paul J. Couchot, Esq. $525 Richard H. Golubow, Esq. $395 Peter W. Lianides, Esq. $395 Garrick A. Hollander, Esq. $375 William J. Wall, Esq. $295 P.J. Marksbury, Legal Assistant $190 Joan Ann Murphy, Legal Assistant $190 Legal Assistant Associates $80 - $150 Mr. Couchot assures the Bankruptcy Court that his firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About SeraCare Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. SERACARE LIFE: Taps O'Melveny & Myers as Special Corporate Counsel ------------------------------------------------------------------ SeraCare Life Sciences, Inc., asks the U.S. Bankruptcy Court for the Southern District of California for authority to retain O'Melveny & Myers LLP as its special corporate and litigation counsel, nunc pro tunc to March 22, 2006. Before the Debtor's bankruptcy filing, OMM represented the Debtor as its general outside corporate and litigation counsel. The firm also assisted and represented the Debtor in connection with restructuring matters and its potential bankruptcy filing. In this engagement, OMM is expected to: a) serve as corporate counsel and assist, advise and represent the Debtor in general corporate, intellectual property and securities law matters, including financing matters, Securities and Exchange Commission compliance matters, corporate governance matters, contract review and preparation of corporate documentation, and transactional and corporate law assistance with respect to asset dispositions and negotiation; provided that all bankruptcy court pleadings and appearances shall be handled by the Debtor's general insolvency counsel, Winthrop Couchot Professional Corporation; b. serve as litigation counsel and assist, advise and represent the Debtor in non-bankruptcy litigation matters, including in pending shareholder derivative actions, securities class actions and investigations by the United States Attorney and Securities and Exchange Commission, and specific labor and employee benefit issues that arise in connection with litigation related matters and the termination of certain of the Debtor's officers, and to assist and supplement, but not duplicate, the efforts of Winthrop Couchot in bankruptcy and non-bankruptcy litigation matters as the Debtor may request and which OMM agrees to undertake; c. assist the Debtor and Winthrop Couchot during the initial and stages of the bankruptcy case to efficiently transition representation of the Debtor to Winthrop Couchot as insolvency counsel; and d. provide assistance with other general corporate and litigation matters as the Debtor may request and which OMM agrees to undertake. Brian M. Metcalf, Esq., an associate at OMM, tells the Court that the hourly rates for his Firm's professionals are: Transaction Partners Hourly Rates -------------------- ------------ Suzzane Uhland, Esq. $675 Andor Terner, Esq. $525 David Krinsky, Esq. $735 Transaction Counsel & Associates Hourly Rates -------------------------------- ------------ Brian Metcalf, Esq. $485 Megan Gess, Esq. $450 Adversarial Partners Hourly Rates -------------------- ------------ James Asperger, Esq. $735 Amy Longo, Esq. $535 Eric Amdursky, Esq. $535 Meredith Landy, Esq. $705 Adversarial Counsel & Associates Hourly Rates -------------------------------- ------------ Thorey Bauer, Esq. $340 Steve Goorvitch, Esq. $495 Lori Romley, Esq. $510 Alex Stemkovsky, Esq. $240 Brooke Nelson, Esq. $390 Dale Edmondson, Esq. $505 David Booher, Esq. $340 Gerald Krimen, Esq. $240 Kristina Hersey, Esq. $390 Nuritsa Ksachikyan, Esq. $210 Roberta Harding, Esq. $340 Sara Folchi, Esq. $340 Sarah Dreschelre, Esq. $420 Tristan Sorah-Reyes, Esq. $340 Mr. Metcalf assures the Court that his firm does not hold or represent any interest adverse to the Debtor's estate. About SeraCare Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). Paul J. Couchot, Esq., at Winthrop Couchot Professional Corporation, serves as the Debtor's counsel. The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. STRATUS SERVICES: Amends Annual Report for Fiscal Year 2005 ----------------------------------------------------------- Stratus Services Group Inc. submitted amended financial statements for the year ended Sept. 30, 2005, to the Securities and Exchange Commission on Mar. 31, 2006. The amendment is filed to: i) delete the report of Amper Politziner & Mattia, P.C., the company's former auditor, on the Company's financial statements as of and for the years ending Sept. 30, 2004 and 2003 and to designate these financial statements as unaudited; and ii) amend Item 6 -- Selected Financial Data, Item 7 - Management's Discussion and Analysis of financial Condition and Results of Operations and Item 9A - Disclosure Controls and Procedures to reflect certain revisions made in connection with the deletion of the 2003-2004 audit report and the designation of the fiscal 2003 and 2004 financial statements as unaudited. The Company's balance sheet at Sept. 30, 2005, showed $18.8 million in total assets and liabilities of $27.0 million resulting to a $9.9 million stockholder's deficit. A full-text copy of the Stratus Services' Amended Annual Report on Form 10-K/A is available at no charge at: http://researcharchives.com/t/s?898 Headquartered in Manalapan, New Jersey, Stratus Services Group Inc. -- http://www.stratusservices.com/-- provides a wide range of staffing and productivity consulting services nationally through a network of offices located throughout the United States. * * * Going Concern Doubt E. Randall Gruber, CPA, PC, expressed substantial doubt about Stratus Services' ability to continue as a going concern after it audited the Company's financial statements for the year ended Sept. 30, 2005. The auditing firm pointed to the Company's recurring losses from operations, and has working capital deficit of $12.0 million at Sept. 30, 2005. SYLVEST FARMS: Creditors' Proofs of Claims Due by August 21 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Alabama, Southern Division, set Aug. 21, 2006, as the deadline for all creditors owed money by Sylvest Farms, Inc., and its debtor- affiliates to file formal written proofs of claim on account of claims arising prior to April 18, 2006. Creditors must submit their claim forms either by mail, by hand, courier or overnight service to: Eligah Dane Clark Clerk of the Bankruptcy Court Northern District of Alabama, Southern Division 1800 5th Avenue North, Room 120 Birmingham, Alabama 35203 Tel: 205-714-4000 About Sylvest Farms Headquartered in Montgomery, Alabama, Sylvest Farms, Inc. -- http://sylvestcompanies.com/-- produces, processes and markets poultry products. The Debtors employ approximately 1,500 workers. The Company and two debtor-affiliates filed for chapter 11 protection on April 18, 2006 (Bankr. N.D. Ala. Case No. 06-40525). The Debtors selected Richard A. Robinson, Esq., and Eric S. Golden, Esq., at Baker & Hostetler LLP as their bankruptcy counsel. When the Debtors filed for protection from their creditors, they estimated their total assets and debts at $50 million to $100 million. SYLVEST FARMS: Taps Mancuso & Franco as Special Counsel ------------------------------------------------------- Sylvest Farms, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Alabama, Southern Division, for permission to retain Mancuso & Franco, PC, as their special counsel. The Debtors tell the Court that Mancuso & Franco is intimately familiar with the complex issues in connection with their corporate and debt structures, federal and state tax issues and ongoing business operations. Mancuso & Franco will handle: a) general corporate, real estate, environmental, federal and state tax matters and customers supply and distribution agreements; b) non-bankruptcy commercial matters, including contract and supply agreement issues; c) the negotiations related to sale of all or substantially all of the Debtors assets; d) federal and state tax matters including but not limited to tax compliance, review of tax returns including sales and use tax compliance and tax issues relating to net operating loss carryovers and suspense accounts; e) matters, including but not limited to, reviewing forbearance agreements, demand promissory notes, amendments to credit agreements, security agreements and related corporate matters involving the Debtors' borrowing relationship with Wachovia Bank, National Association and Federal Land Bank Association of South Alabama; and f) matters in which Baker & Hostetler LLP, the Debtors' general bankruptcy counsel, have a conflict of interest. Thomas G. Mancuso, Esq., the president of Mancuso & Franco, tells the court that he charges $325 per hour for his services. Mark A. Franco, Esq., bills at $250 per hour. The firm's legal assistants charge $55 per hour for their services. Mancuso & Franco received a $50,000 retainer in connection with its proposed representation of the Debtors. The firm holds a $3,437 claim against the Debtors for prepetition fees and legal expenses. Mr. Mancuso assures the Court that his firm does not hold any interest adverse to the Debtors' estate About Sylvest Farms Headquartered in Montgomery, Alabama, Sylvest Farms, Inc. -- http://sylvestcompanies.com/-- produces, processes and markets poultry products. The Debtors employ approximately 1,500 workers. The Company and two debtor-affiliates filed for chapter 11 protection on April 18, 2006 (Bankr. N.D. Ala. Case No. 06-40525). The Debtors selected Richard A. Robinson, Esq., and Eric S. Golden, Esq., at Baker & Hostetler LLP as their bankruptcy counsel. When the Debtors filed for protection from their creditors, they estimated their total assets and debts at $50 million to $100 million. TENFOLD CORP: Tanner LC Raises Going Concern Doubt -------------------------------------------------- Tanner LC expressed substantial doubt about TenFold Corporation's ability to continue as a going concern after it audited the Company's financial statements for the year ended Dec. 31, 2005. The auditing firm points to the Company's reliance on significant balances of its cash for its operating activities and the likelihood that the Company will not have sufficient resources to meet operating needs based on its present levels of cash consumption. As of Dec. 31, 2005, the company's principal source of liquidity was its cash and cash equivalents of $1.3 million. On March 30, 2006, the company completed a capital raising transaction for gross proceeds of approximately $6.3 million (before expenses and repayment of $1.1 million of interim financing obligations). The company believes that with the proceeds of this capital transaction, and new sales that the company can close during 2006, the company will have sufficient liquidity for its operations during 2006. However, significant challenges and risks remain: * the company has not been able to generate positive cash flow from operations for the three years ended Dec. 31, 2005. The company's net cash used in operating activities was $4.5 million for the year ended Dec. 31, 2005. * For the last several years, the company has derived a significant portion of its cash inflows from time-and- materials consulting services performed for a limited number of large customers for whom the company was completing enterprise applications development projects. These parties initially became customers of TenFold under the company's prior business model in earlier years. As these customers completed their initial projects and became self-sufficient, they reduced their purchases of time-and-materials consulting services (although most continue to purchase support from us and other services from time to time). These reductions have materially reduced the company's cash inflows. The last of these large time-and-materials consulting engagements was substantially completed during the quarter ended March 31, 2005. * the company has experienced difficulty closing substantial new sales, and it is unclear when or if the company can expect to predictably close significant sales to new or existing customers, and to achieve and sustain positive cash flow from operations. Under the leadership of the company's new Chief Executive Officer, Robert W. Felton, the company has recently changed its business model to focus on selling larger consulting projects, instead of the smaller prototype application projects that we primarily sold in 2005. Although the company expects to be more successful with this new model, the company has limited experience with the new model as the company has introduced it only recently, and have not yet closed any sales under this model. If the company does not close significant sales in 2006, the funds from the company's recent capital raising will not be sufficient to fund its operations through all of 2006. For the year ended Dec. 31, 2005, the company reported a $5.4 million net loss on $5.7 million of net revenues compared to $3.4 million of net income on $17.6 million of net revenues in 2004. As of Dec. 31, 2005, the company's balance sheet showed total assets of $2.1 million and total debts of $5.0 million resulting in a stockholder's deficit of $2.9 million. A full-text copy of TenFold Corporation's Annual Report for the year ended Dec. 31, 2005, is available for free at http://researcharchives.com/t/s?8b3 TenFold Corporation (OTC Bulletin Board: TENF) -- http://www.tenfold.com/-- licenses its patented technology for applications development, EnterpriseTenFold(TM), to organizations that face the daunting task of replacing obsolete applications or building complex applications systems. Unlike traditional approaches, where business and technology requirements create difficult IT bottlenecks, EnterpriseTenFold technology lets a small, team of business people and IT professionals design, build, deploy, maintain, and upgrade new or replacement applications with extraordinary speed, superior applications quality and power features. TEX STAR: Wants Lawrence J. Maun as Bankruptcy Counsel ------------------------------------------------------ Tex Star Can, LLC, asks the U.S. Bankruptcy Court for the Southern District of Texas for permission to employ Lawrence J. Maun, Esq., and his firm, Lawrence J. Maun, P.C., as its bankruptcy counsel. Mr. Maun will: (a) give the Debtor legal advice with respect to its powers and duties as debtor-in-possession in the continued operation of its business and management of its property; (b) prepare on behalf of the Debtor, as debtor-in-possession, necessary applications, answers, orders, reports and other legal papers; (c) file all claims which Debtor has against any and all individuals, partnerships or corporations and any other entities of any nature; (d) defend all claims filed by creditors of the Debtor against the Debtor and to assure the validity thereof; (e) attend necessary court hearings, and administrative agency hearings; (f) perform all other legal services for the Debtor as debtor- in-possession which may be necessary; and (g) aid the Debtor in the determination of the assumption or rejection of executory contracts and the filing of appropriate pleadings with the Court. The Debtor tells the Court that Mr. Maun will bill $325 per hour for this engagement. The Debtor discloses that Associate Attorneys at Mr. Maun's firm bill $200 per hour while paralegals bill $75 per hour. Mr. Maun assures the Court that his firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in College Station, Texas, Tex Star Can, LLC, filed for chapter 11 protection on Apr. 3, 2006 (Bankr. S.D. Tex. Case No. 06-31395). Lawrence J. Maun, Esq., at Lawrence J. Maun, P.C., represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets between $10 million and $50 million and estimated debts between $1 million and $10 million. TEX STAR: Files Schedules of Assets and Liabilities --------------------------------------------------- Tex Star Can, LLC, delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Southern District of Texas, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $13,693,000 B. Personal Property $10,354 C. Property Claimed as Exempt D. Creditors Holding $8,300,000 Secured Claims E. Creditors Holding $33,724 Unsecured Priority Claims F. Creditors Holding $157,405 Unsecured Nonpriority Claims ----------- ---------- Total $13,703,354 $8,191,129 Headquartered in College Station, Texas, Tex Star Can, LLC, filed for chapter 11 protection on Apr. 3, 2006 (Bankr. S.D. Tex. Case No. 06-31395). Lawrence J. Maun, Esq., at Lawrence J. Maun, P.C., represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets between $10 million and $50 million and estimated debts between $1 million and $10 million. TRUCS SERIES: Will Terminate and Liquidate Assets ------------------------------------------------- TRUCs Series 2001-1 Trust, the issuer of $25,000,000 7.45% Trust Certificates Series 2001-1 (NYSE: TZE) will liquidate its assets and terminate the Trust. AT&T Corp., the issuer of the Trust, has ceased reporting under the Securities Exchange Act of 1934. AT&T Corp., after its merger with SBC Communications Inc., has terminated its reporting obligations under the Exchange Act and will not to provide financial reporting information with respect to AT&T Corp. As a result, the Trust cannot meet its disclosure obligations under the Exchange Act and must terminate. A liquidation distribution is expected to be made on the 7.45% Trust Certificates Series 2001-1 on the date of settlement following liquidation of the Trust. TRUMP ENT: 17 Former Shareholders Appeal Judge Wizmur's Decision ---------------------------------------------------------------- Seventeen former owners of shares in Trump Hotels & Casino Resorts, Inc.'s common stock notify the U.S. Bankruptcy Court for the District of New Jersey that they will take an appeal from Judge Wizmur's opinion and order denying their motion to enforce the plan record distribution date of Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc., to the United States District Court for the District of New Jersey. The 17 Former Shareholders are: 1. Evan Karathanasis 2. Anna Maria T. Ciminello 3. Alan C. Pilla 4. Daniel A. Amicucci 5. Dominick D'Apice 6. Emanuel Ciminello, III 7. Emanuel Ciminello, Jr. 8. Maryanne Carotenuto 9. Salvatore Ciminello 10. Thomas Ciminello 11. Joel Freidburg 12. Joel H. Friedman 13. IME Partnership Plan 14. Sebastian Pignatello 15. Chris Reslock 16. Phillip & Doris Sternberg 17. Michael & Andrea D. Yacyk, Jr. The Former Shareholders want the District Court to review these four issues: 1. Did the Bankruptcy Court err in denying the Appellants' Motion, by failing to enforce the terms and provisions of the confirmed Chapter 11 Plan, the settlement contained in the Plan negotiated among the Equity Committee, the Debtors, Donald J. Trump and certain creditors of the Debtors, the Order of Confirmation and the Amended Order of Confirmation? 2. Did the Bankruptcy Court err in denying the Appellants' Motion, by concluding that the manner of distribution by the Debtors of the distributions in question, was proper and in conformance with the Record Date and the provisions of the confirmed Chapter 11 Plan? 3. Did the Bankruptcy Court err in denying the Appellants' Motion, by determining that the Appellants' voluntary entry into the securities marketplace subjected them to the rules of that marketplace, causing the sale not only of their stock, but also the distribution package otherwise attaching to the stock? 4. Did the Bankruptcy Court err in denying the Appellants' Motion, by failing, as a court of equity, to weigh and consider the equities, concerning the issue of the right to the distribution package, between the parties, i.e., the Appellants and the Debtors? The Former Shareholders designated 92 items to be included in the record on appeal. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their successful chapter 11 restructuring. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005, and the plan took effect on May 20, 2005. (Trump Hotels Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000). * * * As reported in the Troubled Company Reporter on Nov. 10, 2005, Moody's Investors Service affirmed the ratings of Trump Entertainment Resorts, Inc.'s $200 million senior secured revolver due 2010 at B2; $150 million senior secured term loan due 2012 at B2; $150 million senior secured delayed draw term loan due 2012 at B2; $1.25 billion second lien senior secured notes due 2015 at Caa1; Speculative grade liquidity rating at SGL-3; and Corporate family rating at B3. Moody's says the rating outlook is stable. UAP HOLDING: Launches $328.5 Million Senior Notes Offering ---------------------------------------------------------- UAP Holding Corp. is offering to purchase for cash any and all of its outstanding $125 million principal amount at maturity of 10- 3/4% Senior Discount Notes due 2012, and United Agri Products, Inc. is offering to purchase for cash any and all of its outstanding $203.5 million principal amount of 8-1/4% Senior Notes due 2011, in each case, on the terms and subject to the conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated May 3, 2006 and the accompanying Letter of Transmittal and Consent. UAP Holdings and United Agri Products are also soliciting consents to eliminate most of the restrictive covenants in the indentures under which the Notes were issued. The total consideration to be paid for tendered and accepted 10-3/4% Discount Notes is equal to the present value of future payments on the 10-3/4% Discount Notes up to and including Jan. 15, 2008 (the first date on which the 10-3/4% Discount Notes may be redeemed at the Company's option), based on the assumption that the 10-3/4% Discount Notes will be redeemed in full at $1,053.75 per $1,000 principal amount at maturity on such date, discounted at a rate equal to 87.5 basis points over the yield to maturity on the 4.375% U.S. Treasury Note due Dec. 31, 2007, of which $20 will be a consent payment payable only to holders who validly tender their 10-3/4% Discount Notes and deliver consents by May 16, 2006, unless extended. The total consideration to be paid for tendered and accepted 8-1/4% Notes is equal to the present value of future payments on the 8-1/4% Notes up to and including Dec. 15, 2007 (the first date on which the 8-1/4% Notes may be redeemed at the Company's option), based on the assumption that the 8-1/4% Notes will be redeemed in full at $1,041.25 per $1,000 principal amount on such date, discounted at a rate equal to 75 basis points over the yield to maturity on the 4.25% U.S. Treasury Note due Nov. 30, 2007. The total consideration to be paid for tendered 8-1/4% Notes will also include accrued but unpaid interest on the 8-1/4% Notes to, but not including, the payment date. Of this total consideration, $20 will be a consent payment payable only to holders who validly tender the 8-1/4% Notes and deliver consents by the Consent Payment Deadline. The offer by each Company will expire at 9:00 a.m., New York City time, on June 1, 2006, unless extended or earlier terminated. Holders who tender Notes are required to consent to the proposed amendments to the indentures. To receive the $20 consent payment, holders must validly tender their Notes and deliver consents by the Consent Payment Deadline. Tenders of Notes prior to the Consent Payment Deadline may be validly withdrawn and consents may be validly revoked at any time prior to 5:00 p.m., New York City time, on the Consent Payment Deadline, but not thereafter unless the tender offers and the consent solicitations are terminated without any Notes being purchased. Each Company reserves the right to terminate, withdraw or amend its offer at any time subject to applicable law. Each Company expects to pay for any of its Notes purchased pursuant to its tender offer and consent solicitation in same-day funds on a date promptly following the expiration of its tender offer and consent solicitation. Each Company's tender offer is conditioned on: * receipt of valid and unrevoked consents of the holders of at least a majority of the outstanding principal amount at maturity of the 10-3/4% Discount Notes (excluding any 10-3/4% Discount Notes then owned by the Companies and their affiliates) and of the holders of at least a majority of the outstanding principal amount of the 8-1/4% Notes (excluding any 8-1/4% Notes then owned by the Companies and their affiliates) prior to the Consent Payment Deadline; and, accordingly, consummation of the other Company's tender offer; * United Agri Products replacing its existing $500 million revolving credit facility with a $675 million facility and entering into a new senior secured term loan facility for $175 million with borrowings thereunder to be used to pay the consideration for the Notes purchased in the tender offers; and * certain other general conditions described in the Offer Documents. The Companies have retained Credit Suisse Securities (USA) LLC to act as Dealer Manager and Consent Solicitation Agent in connection with the tender offers and consent solicitations. Questions about the tender offers may be directed to: Credit Suisse Securities (USA) LLC Telephone (212) 325-7596 (collect) Toll Free (800) 820-1653 or the information agent for the tender offers and consent solicitations at: MacKenzie Partners, Inc. Telephone (212) 929-5500 (collect) Toll Free (800) 322-2885 Copies of the Offer Documents and other related documents may be obtained from the information agent. About UAP Holding UAP Holding Corp. (Nasdaq: UAPH) -- http://www.uap.com/-- is the holding company of United Agri Products, Inc., the largest independent distributor of agricultural and non-crop inputs in the United States and Canada. United Agri Products markets a comprehensive line of products, including crop protection chemicals, seeds and fertilizers, to growers and regional dealers. United Agri Products also provides a broad array of value-added services, including crop management, biotechnology advisory services, custom blending, inventory management and custom applications of crop inputs. United Agri Products maintains a comprehensive network of approximately 330 distribution and storage facilities and three formulation and blending plants, strategically located throughout the United States and Canada. UAP HOLDING: Moody's Rates $175 Million Senior Sec. Loan at Ba3 --------------------------------------------------------------- Moody's Investors Service upgraded UAP Holding Corp.'s corporate family rating to Ba3 from B1. Moody's also assigned a Ba2 rating to United Agri Products, Inc.'s proposed senior secured $675 million revolving credit due 2011. UAP's proposed $175 million senior secured term loan due 2012 was assigned a Ba3 rating. The outstanding ratings on debt at UAPH and UAP were affirmed, but will be withdrawn upon the closing of the transaction. Proceeds from the new revolver and term loan at UAP are to be used to refinance UAPH's 10.75% senior discount notes due 2012 as well as UAP's existing guaranteed senior unsecured notes due 2011. UAPH is the parent holding company for UAP, and UAPH will guarantee the new credit facilities of UAP. The rating outlook is stable. The upgrade in the corporate family rating to Ba3 reflects management's demonstrated ability to improve margins and retained cash flow. The upgrade is also supported by the continuation of the former LBO sponsor's exit strategy, via an additional secondary offering of the sponsor's equity in March 2006, such that some 80% of UAPH shares are now widely held. In addition Moody's believes that management has been effective in 2005 and 2006 in a number of initiatives including rationalizing operations and improving working capital management. The notching of UAP's new senior secured credit facility at the level above the new Ba3 corporate family rating and the new senior secured term loan at a level of the new corporate family rating reflects the differing security packages made available to the respective lenders. These new ratings are subject to a full review of the final executed documentation and agreements of the credit facility. Moody's previous rating action on UAP and UAPH was the upgrade to B1 from B3 of the corporate family rating along with other rating improvements on the 24th of November 2004. Upgrades: Issuer: UAP Holding Corp * Corporate Family Rating, Upgraded to Ba3 from B1 Ratings Assigned: United Agri Products, Inc. * Guaranteed senior secured revolving credit, $675 million due 2011 -- Ba2 * Guaranteed senior secured term loan, $175 million due 2012 -- Ba3 Ratings Affirmed: UAP Holding Corp. * Senior unsecured discount notes due 2012 -- B3 United Agri Products, Inc. * $500 million guaranteed senior secured revolver due 2008 - Ba3* * Guaranteed senior unsecured notes due 2011 - B1 Ratings will be withdrawn upon execution of the new revolving credit and term loan facilities and the refinancing of debt. Headquartered in Greeley, Colorado, United Agri Products, Inc. operates approximately 340 farm distribution and storage centers in major crop producing areas of the U.S. and Canada. The company's revenues were approximately $2.7 billion for the twelve months ending February, 26 2006. UNIFRAX CORP: AEA Merger Prompts S&P to Lower Rating to B from B+ ----------------------------------------------------------------- Standard & Poor's Rating Services lowered its corporate credit rating on ceramic fiber manufacturer Unifrax Corp. to 'B' from 'B+', removing it from CreditWatch with negative implications, where it was placed March 21, 2006. At the same time, Standard & Poor's assigned its 'B' corporate credit rating to the parent company, Unifrax Holding Co. and affirmed its 'B' senior secured bank loan rating and recovery rating of '2' on Unifrax Holding's $230 million senior secured credit facilities. The '2' recovery rating indicates the rating agency's expectation for a substantial recovery principal by lenders (80%-100%) in the event of a default. The outlook is stable. The rating actions follow Unifrax's acquisition by private equity sponsor AEA Investor LLC from American Security Capital for $452 million. The acquisition was completed on May 2, 2006. The CreditWatch listing had been updated on April 11, 2006, following a review of Unifrax's strategic plans and financial policies. At that time, Standard & Poor's indicated that once the acquisition of Unifrax had been completed, the CreditWatch listing would be resolved, the corporate credit rating of Unifrax would be lowered to 'B' from 'B+', and the new ratings that had been assigned in connection with the financing plan would be affirmed. UNITED RENTAL: Files 2 Annual Reports & 3 Quarterly Financials -------------------------------------------------------------- United Rentals Inc. filed its consolidated financial statements for the years ended Dec. 31, 2004, and 2005, with the Securities and Exchange Commission on March 31, 2006. The Company also filed with the SEC on April 12, 2006, their financial statements for the: -- first quarter ended March 31, 2005; -- second quarter ended June 30, 2005; and -- third quarter ended Sept. 30, 2005. The Company's Statements of Operations showed: For the Period Ended (in millions) ------------------------------------------------ Year Quarter Quarter Quarter Year 12/31/04 03/31/05 06/30/05 09/30/05 12/31/05 -------- -------- -------- -------- -------- Revenues $3,094 $732 $888 $980 $3,563 Net Income (Loss) ($84) $12 $50 $76 $187 The Company's Balance Sheet showed: For the Period Ended (in millions) ------------------------------------------------ Year Quarter Quarter Quarter Year 12/31/04 03/31/05 06/30/05 09/30/05 12/31/05 -------- -------- -------- -------- -------- Total Assets $4,882 $4,901 $5,093 $5,188 $5,274 Total Liabilities $3,856 $3,859 $4,003 $4,007 $4,045 Total Stockholders' Equity $1,026 $1,042 $1,090 $1,181 $1,229 Full-text copies of the financial statements are available for free at: year ended Dec. 31, 2004 http://ResearchArchives.com/t/s?8a4 first quarter ended March 31, 2005 http://ResearchArchives.com/t/s?8a5 second quarter ended June 30, 2005 http://ResearchArchives.com/t/s?8a6 third quarter ended Sept. 30, 2005 http://ResearchArchives.com/t/s?8a7 year ended Dec. 31, 2005 http://ResearchArchives.com/t/s?8a8 About United Rentals Headquartered in Greenwich, Connecticut, United Rentals, Inc. -- http://unitedrentals.com/-- is the largest equipment rental company in the world, with an integrated network of more than 750 rental locations in 48 states, 10 Canadian provinces and Mexico. The company's 13,400 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent more than 20,000 classes of equipment with a total original cost of $3.9 billion. United Rentals is a member of the Standard & Poor's MidCap 400 Index and the Russell 2000 Index(R). * * * As reported in the Troubled Company Reporter on April 18, 2006, Standard & Poor's Ratings Services revised the CreditWatch implications for its ratings on equipment rental company United Rentals (North America) Inc. (United Rentals) and for its parent, United Rentals Inc. (URI), to developing from negative. This includes the 'BB-' corporate credit rating on the company, As reported in the Troubled Company Reporter on April 7, 2006, Moody's Investors Service affirmed the long-term ratings of United Rental (North America) Inc., and its related entities: * Corporate Family Rating -- B2; * Senior secured -- B2; * Senior unsecured -- B3; * Senior subordinate -- Caa1; * Quarterly Income Preferred Securities -- Caa2; and * Speculative grade liquidity rating -- SGL-3. The rating outlook is changed to Developing from Negative. USA COMMERCIAL: Wants to Hire Schwartzer as Bankruptcy Counsel -------------------------------------------------------------- USA Commercial Mortgage Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Nevada for authority to employ Schwartzer & McPherson Law Firm, P.C., as their bankruptcy counsel. Schwartzer & McPherson will: a. advise the Debtor generally concerning the rights, duties and obligations of a Debtor under the Bankruptcy Code and the orders of the Court; and b. render other services that may be necessary to aid the Debtor in restructuring, and if necessary, litigate non- bankruptcy matters. Lenard E. Schwartzer, Esq., a partner at Schwartzer & McPherson, tells the Court that the Firm's professionals bill: Professional Designation Hourly Rate ------------ ----------- ----------- Lenard E. Schwartzer Attorney $425 Jeanette E. McPherson Attorney $325 Jason A. Imes Attorney $225 Linda Daugherty Paralegal $140 Angela Hosey Legal Assistant $100 Lia Dorsey Legal Assistant $100 Mr. Schwartzer assures the Court that the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Schwartzer can be reached at: Lenard E. Schwartzer, Esq. Schwartzer & McPherson Law Firm, P.C. 2850 South Jones Boulevard, Suite 1 Las Vegas, Nevada 89146 Tel: (702) 228-7590 Fax: (702) 892-0122 http://www.lawyers.com/schwartzermcpherson Based in Las Vegas, Nevada, USA Commercial Mortgage Company (dba USA Capital) -- http://www.usacapitalcorp.com/-- provides more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, represents the Debtors. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 miilion and $50 million. USA COMMERCIAL: Court Okays BMC Group as Claims & Noticing Agent ---------------------------------------------------------------- USA Commercial Mortgage Company obtained permission from the U.S. Bankruptcy Court for the District of Nevada to employ BMC Group, Inc., as its claims and noticing agent. BMC Group is expected to: a. serve as the Court's notice agent to mail notices to the estate's creditors and parties in interest; b. provide expertise, consultation and assistance in claim and ballot processing and with other administrative matters with respect to the Debtor's bankruptcy case; c. provide expertise, consultation and assistance with the preparation of schedules, statements of financial affairs and master creditor lists; and d. process, image and docket all proofs of claim filed in the Court's Case Management/Electronic Case Filing (CM/ECF) system through the system's Limited Use Registration to ensure that all claims received are recorded and available for public reference. Tinamarie Feil, vice-president of BMC Group, tells the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Seniors/Principals $180 - $275 Consultants $100 - $175 Case Support $65 - $95 Data Entry/Administrative Support $45 The Debtors assure the Court that BMC Group is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Based in Las Vegas, Nevada, USA Commercial Mortgage Company, dba USA Capital -- http://www.usacapitalcorp.com/-- provides more than $1 billion in short-term and permanent financing to homebuilders, commercial developers, apartment owners and institutions nationwide. The Company and its debtor-affiliates filed for chapter 11 protection on April 13, 2006 (Bankr. D. Nev. Case Nos. 06-10725 to 06-10729). Lenard E. Schwartzer, Esq., at Schwartzer & Mcpherson Law Firm, represents the Debtors. When the Debtors filed for protection from their creditors, they estimated assets of more than $100 million and debts between $10 miilion and $50 million. VILLAGES AT SARATOGA: Court Okays Ray Quinney as Special Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Utah gave The Villages at Saratoga Springs, L.C., authority to employ Ray Quinney & Nebeker P.C. as its special counsel, nunc pro tunc to Aug. 29, 2005. Ray Quinney will: a) advise the Debtor of its rights, powers and duties to the asserted claims of Jerrold Cross; b) represent and advise the Debtor in any investigation of the claim; c) prepare, on behalf of the Debtor, all necessary pleadings and other papers concerning the prosecution of the Debtor's case; d) represent and advise the Debtor in all proceedings relating to the claim of Jerrold Cross; e) advise the Debtor regarding any plan of liquidation as it relates to the claim of Jerrold Cross. The Debtor discloses that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Shareholders $295 - $200 Associates $230 - $150 Paralegals $105 - $100 Ray Quinney assures the Court that it is a "disinterested person" as that term is defined by section 101(14) of the Bankruptcy Code. Headquartered in Spanish Fork, Utah, The Villages at Saratoga Springs, LC, filed for chapter 11 protection on Aug. 29, 2005 (Bankr. D. Utah Case No. 05-33380). Robert Fugal, Esq., at Bird & Fugal, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $26,002,293 in assets and $15,188,610 in debts. W.S. LEE: Court Schedules Claims Filing Bar Date on August 23 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Pennsylvania set Aug. 23, 2006, as the deadline for W.S. Lee & Sons, Inc.'s creditors to file formal written proofs of claims on account of claims arising prior to March 14, 2006. Creditors must deliver their claim forms either by mail or courier to: Office of the Clerk U.S. Bankruptcy Court for the Western District of Pennsylvania 5414 U.S. Steel Tower 600 Grant Street Pittsburgh, PA 15219 Governmental units have until Sept. 11, 2006, to file proofs of claims of interest. Headquartered in Altoona, Pennsylvania, W.S. Lee & Sons, Inc., distributes food and related products to restaurants, delis, schools, hospitals and other institutions in the mid-Atlantic region of the United States utilizing a fleet of multi-temperature tractors and trailers. The Company and its wholly owned subsidiary, Lee Systems Solutions, LLC, filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on March 14, 2006 (Bankr. W.D. Pa. Case No. 06-70148). James R. Walsh, Esq., at Spence Custer Saylor Wolfe & Rose LLC, represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Robert S. Bernstein, Esq., at Bernstein Law Firm, P.C., in Pittsburgh, Pennsylvania. When the Debtors filed for protection from their creditors, they listed less than $50,000 in total assets and $1 million to $10 million in debts. WASHINGTON MUTUAL: Moody's Puts Low-B Ratings on 4 Class Certs. --------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2006-AR3, and ratings ranging from Aa1 to Ba3 to the subordinate certificates in the deal. The securitization is backed by GMAC Mortgage Corporation, Virtual Bank, First Magnus Financial Corporation and various others originated negative amortization Alt-A loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination. Moody's expects collateral losses to range from 1.25 to 1.45 percent. Washington Mutual Bank will service the loans. The complete rating actions: Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2006-AR3 * Cl. A-1A, Assigned Aaa * Cl. A-1B, Assigned Aaa * Cl. A-1C, Assigned Aaa * Cl. X-1, Assigned Aaa * Cl. X-2, Assigned Aaa * Cl. X-3, Assigned Aaa * Cl. R, Assigned Aaa * Cl. PPP-1, Assigned Aaa * Cl. PPP-2, Assigned Aaa * Cl. B-1, Assigned Aa1 * Cl. B-2, Assigned Aa2 * Cl. B-3, Assigned Aa3 * Cl. B-4, Assigned A1 * Cl. B-5, Assigned A2 * Cl. B-6, Assigned A3 * Cl. B-7, Assigned Baa1 * Cl. B-8, Assigned Baa2 * Cl. B-9, Assigned Baa3 * Cl. B-10, Assigned Ba1 * Cl. B-11, Assigned Ba2 * Cl. B-12, Assigned Ba3 WCI STEEL: Noteholders Take Over Reorganized Steel Company ---------------------------------------------------------- Almost three years after WCI Steel, Inc. reported that it would default on $300,000,000 in senior secured notes, and after two and a half years in hotly contested chapter 11 proceedings, 17 Noteholders led by Harbinger Capital Partners Master Fund I, Ltd. on May 1, consummated a plan of reorganization that gave the Noteholders $100,000,000 in new 8% Secured Notes and more than 98% of the equity of the reorganized steel company. WCI Steel exits chapter 11 with a new collective bargaining agreement with the United Steelworkers. Pat Tatom continues as chief executive officer. Harbinger will be the largest shareholder in the reorganized company. WCI Steel, Inc., a 1,200,000 ton per year niche oriented integrated producer of value-added custom steel products, had been owned for 17 years by Renco Group, Inc., the holding company of financier Ira Leon Rennert. Mr. Rennert, who had saved WCI Steel, Inc. from closing when he bought it out of the first LTV Steel chapter 11 case, fought for more than two years to keep WCI Steel. In 2004 and 2005 he proposed plans that would have paid Noteholders approximately 40 and then 50 cents on the dollar. Bids for the secured notes prior to closing reached approximately 100 cents on the dollar. Most unsecured trade creditors with undisputed claims will receive 22 cents on the dollar in cash on May 31, 2006. Mr. Rennert lost control of the chapter 11 case in November 2005, when the United Steelworkers reached an agreement in principle with the Noteholders on a new collective bargaining agreement. This was an historic achievement. The USW had never before negotiated a collective bargaining agreement with creditors over the opposition of management and ownership. The Noteholders' agreement with the USW provided security for the USW's hardship benefits. The USW's membership ratified the new collective bargaining agreement on April 27, 2006. The Noteholders were represented by Kramer Levin Naftalis & Frankel LLP as lead bankruptcy counsel and CIBC World Markets as financial advisor. McDermott Will & Emery LLP, the Noteholders' labor counsel, negotiated the historic agreement with the USW and will continue as corporate counsel to the reorganized WCI Steel, Inc. Questions should be directed to: Thomas Moers Mayer, Esq. Kramer Levin Naftalis & Frankel LLP Telephone (212) 715-9169 About WCI Steel Headquartered in Warren, Ohio, WCI Steel, Inc., is an integrated steelmaker producing more than 185 grades of custom and commodity flat-rolled steel at its Warren, Ohio facility. WCI products are used by steel service centers, convertors and the automotive and construction markets. WCI Steel filed for chapter 11 protection on Sept. 16, 2003 (Bankr. N.D. Ohio Case No. 03-44662). Christine M. Pierpont, Esq., and G. Christopher Meyer, Esq., at Squire, Sanders & Dempsey, L.L.P., represent the Debtor. Amy M. Tonti, Esq., at Reed Smith LLP, represents the Official Committee of Unsecured Creditors. When WCI Steel filed for chapter 11 protection it reported $356,286,000 in total assets and liabilities totaling $620,610,000. WILLIAMS COS: S&P Upgrades Corp. Credit Rating to BB- from B+ ------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on diversified energy company The Williams Cos. Inc. and its subsidiaries: * Northwest Pipeline Corp., * Transcontinental Gas Pipe Line Corp., and * Williams Production RMT Co. to 'BB-' from 'B+'. The outlook is positive. As of Dec. 31, 2005, the Tulsa, Oklahoma-based company had $7.7 billion of debt outstanding. "The upgrade reflects our conclusion that Williams' financial metrics have improved significantly as a result of deveraging and improved operating performance," said Standard & Poor's credit analyst Jeffrey Wolinsky. Standard & Poor's also said that the positive outlook reflects the expectation that Williams' financial ratios will improve as a result of the additional cash from the oil and gas exploration and production segment. "If Williams continues to meet its forecasts, the rating could be raised over the next two years," said Mr. Wolinsky. The ratings on Williams reflect: * the company's highly leveraged financial condition; * the uncertain financial performance of its power subsidiary; and * the consolidated creditworthiness of its own operations and those of its subsidiaries. The risks are partially offset by: * the substantial completion of its stated debt-reduction plan which reduced debt by more than $6 billion; * its improving liquidity; and * the stability of its FERC-regulated natural gas pipeline business. * Peter Antoszyk Joins American Bankruptcy Institute's Board ------------------------------------------------------------ The American Bankruptcy Institute reported that Peter J. Antoszyk of Brown Rudnick Berlack Israels LLP has been elected to ABI's Board of Directors. An active member since 1992, Mr. Antoszyk recently served as co-chair of the Finance and Banking Committee and is currently a member of the Unsecured Trade Creditors, Uniform Commercial Code and International committees. At Brown Rudnick, Mr. Antoszyk focuses his practice on representing bank and non-bank lenders in corporate and asset- based lending transactions, including multi-lender syndicated transactions, transnational transactions, acquisition financing, and specialty lending to retailers, manufacturers, distributors and other industries, often involving highly leveraged or other special situations. Mr. Antoszyk received his J.D. from Boston University in 1985 and received his B.A. from the State University of New York at Albany in 1982. A complete list of directors and officers is available at http://researcharchives.com/t/s?8a1 About Brown Rudnick Brown Rudnick Berlack Israels LLP -- http://www.brownrudnick.com/ -- is a full-service, international law firm with offices in the United States and Europe. The firm's attorneys provide representation across key areas of the law: Bankruptcy & Finance, Corporate & Securities, Real Estate, Intellectual Property, Complex Litigation, Government Law & Strategies, Energy, and Health Care. Combining a dedication to excellence with a commitment to superior client service, Brown Rudnick provides its clients with a breadth and depth of expertise uniquely suited to their legal needs. The Brown Rudnick Center for the Public Interest -- http://www.brownrudnickcenter.com/-- is a measure of the Firm's strong commitment to the community and serves as an umbrella entity encompassing the Firm's pro bono legal work, charitable giving, community involvement and public interest efforts. About ABI The American Bankruptcy Institute -- http://www.abiworld.org/-- is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 11,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals providing a forum for the exchange of ideas and information. * James Chadwick Joins Sheppard Mullin in San Francisco ------------------------------------------------------- James M. Chadwick has joined the San Francisco office of Sheppard, Mullin, Richter & Hampton LLP as a partner in the Business Trial and Entertainment, Media and Communications practice groups. Mr. Chadwick most recently practiced with DLA Piper Rudnick Gray Cary in Palo Alto. Mr. Chadwick focuses on media law and media defense litigation, First Amendment and privacy law, trademark and copyright law, and civil litigation. Mr. Chadwick represented clients in the litigation of a number of cases that resulted in important First Amendment or intellectual property decisions, including: Lissner v. U.S. Customs Service, San Jose Mercury News v. U.S. District Court, Sipple v. Foundation for National Progress; In re Willon; Montana v. San Jose Mercury News, Inc.; Nordyke v. Santa Clara County; James v. San Jose Mercury News, Inc.; Religious Technology Center v. Netcom; among others. Mr. Chadwick also provides ongoing counseling and pre-publication advice to media clients such as the San Jose Mercury News and Mother Jones magazine. He has pursued litigation under state and federal open records and open meetings laws on behalf of both media and individual clients. "James is one of the country's top media defense attorneys and we are thrilled to welcome him to the San Francisco office," Guy Halgren, chairman of the firm, said. "He will play a key role in the ongoing expansion of our national media defense practice, which includes partners Gary Bostwick and Kent Raygor in Century City, Guylyn Cummins in San Diego, Kevin Goering in New York and senior associate Jean-Paul Jassy in Century City." "Sheppard Mullin has an outstanding reputation and a strong entertainment and media practice," Mr. Chadwick said. "I am particularly familiar with the media team, which is deep and highly skilled. I'm looking forward to working with Sheppard Mullin and contributing to the continued success of the dynamic group." "Our objective has been to build the preeminent media defense practice in the country," Co-chair of the firm's Entertainment, Media and Communications group, Marty Katz commented. "With the addition of James in San Francisco, we now have top notch experts in New York and each of the three critical California markets." Mr. Chadwick received his law degree summa cum laude from Santa Clara University School of Law in 1991, and graduated from San Francisco State University with a M.A. in 1985 and from the University of California, Santa Cruz, cum laude, with a B.A. in 1979. About Sheppard, Mullin, Richter & Hampton LLP Sheppard, Mullin, Richter & Hampton LLP is a full service AmLaw 100 firm with more than 480 attorneys in nine offices located throughout California and in New York and Washington, D.C. The firm's California offices are located in Los Angeles, San Francisco, Santa Barbara, Century City, Orange County, Del Mar Heights and San Diego. Sheppard Mullin provides legal expertise and counsel to U.S. and international clients in a wide range of practice areas, including Antitrust, Corporate and Securities; Entertainment, Media and Communications; Finance and Bankruptcy; Government Contracts; Intellectual Property; Labor and Employment; Litigation; Real Estate/Land Use; Tax/Employee Benefits/Trusts & Estates; and White Collar Defense. * SEC Proposes Amendments to the Tender Offer Best-Price Rule ------------------------------------------------------------- The Securities and Exchange Commission is proposing amendments to the tender offer best-price rule to clarify that the rule applies only with respect to the consideration offered and paid for securities tendered in an issuer or third-party tender offer and should not apply to consideration offered and paid according to employment compensation, severance or other employee benefit arrangements entered into with employees or directors of the subject company. The proposed rule will also provide a safe harbor in the context of third-party tender offers that would allow the compensation committee or a committee performing similar functions of the subject company's or bidder's board of directors, depending on whether the subject company or the bidder is the party to the arrangement, to approve an employment compensation, severance or other employee benefit arrangement and thereby deem it to be such an arrangement within the meaning of the proposed exemption. A full-text copy of the proposed amendments is available for free at http://sec.gov/rules/proposed/34-52968.pdf * SEC Proposes Amendments to Executive Pay Disclosure Requirements ------------------------------------------------------------------ The Securities and Exchange Commission is proposing amendments to the disclosure requirements for: -- executive and director compensation, -- related party transactions, -- director independence, -- other corporate governance matters, and -- security ownership of officers and directors. These amendments would apply to disclosure in proxy and information statements, periodic reports, current reports and other filings under the Securities Exchange Act of 1934 and to registration statements under the Exchange Act and the Securities Act of 1933. The SEC also propose to require that disclosure under the amended items generally be provided in plain English. The proposed amendments are intended to make proxy statements, reports and registration statements easier to understand. They are also intended to provide investors with a clearer and more complete picture of the compensation earned by a company's principal executive officer, principal financial officer and highest paid executive officers and members of its board of directors. In addition, they are intended to provide better information about key financial relationships among companies and their executive officers, directors, significant shareholders and their respective immediate family members. A full-text copy of the proposed amendments is available for free at http://sec.gov/rules/proposed/33-8655.pdf * BOND PRICING: For the week of May 1 - May 5, 2006 --------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 01/15/04 0 Acme Metals Inc 10.875% 12/15/07 0 Adelphia Comm. 3.250% 05/01/21 1 Adelphia Comm. 6.000% 02/15/06 1 Adelphia Comm. 7.500% 01/15/04 50 Adelphia Comm. 7.750% 01/15/09 51 Adelphia Comm. 7.875% 05/01/09 48 Adelphia Comm. 8.125% 07/15/03 50 Adelphia Comm. 8.375% 02/01/08 50 Adelphia Comm. 9.250% 10/01/02 50 Adelphia Comm. 9.375% 11/15/09 52 Adelphia Comm. 9.500% 02/15/04 50 Adelphia Comm. 9.875% 03/01/05 47 Adelphia Comm. 9.875% 03/01/07 49 Adelphia Comm. 10.250% 06/15/11 53 Adelphia Comm. 10.250% 11/01/06 49 Adelphia Comm. 10.500% 07/15/04 49 Adelphia Comm. 10.875% 10/01/10 51 Aetna Industries 11.875% 10/01/06 8 Allegiance Tel. 11.750% 02/15/08 44 Allegiance Tel. 12.875% 05/15/08 41 Amer & Forgn Pwr 5.000% 03/01/30 67 Amer Color Graph 10.000% 06/15/10 68 American Airline 9.980% 01/02/13 72 American Airline 9.980% 01/02/13 72 American Airline 9.980% 01/02/13 72 Antigenics 5.250% 02/01/25 57 Anvil Knitwear 10.875% 03/15/07 53 Armstrong World 6.350% 08/15/03 75 Armstrong World 7.450% 05/15/29 74 Armstrong World 9.000% 04/17/01 62 Arvin Capital I 9.500% 02/01/27 70 At Home Corp. 0.525% 12/28/18 2 At Home Corp. 4.750% 12/15/06 4 ATA Holdings 13.000% 02/01/09 1 Atlantic Coast 6.000% 02/15/34 21 Atlas Air Inc 8.010% 01/02/10 67 Atlas Air Inc 9.702% 01/02/08 74 Autocam Corp. 10.875% 06/15/14 61 Aviation Sales 8.125% 02/15/08 44 Avondale Mills 10.250% 07/01/13 64 Banctec Inc 7.500% 06/01/08 73 Bank New England 8.750% 04/01/99 9 BBN Corp 6.000% 04/01/12 0 Big V Supermkts 11.000% 02/15/04 0 Builders Transpt 6.500% 05/01/11 1 Burlington North 3.200% 01/01/45 53 CCH II/CCH II CP 10.250% 01/15/10 69 Cell Therapeutic 5.750% 06/15/08 48 Cell Therapeutic 5.750% 06/15/08 62 Charter Comm Hld 10.000% 05/15/11 62 Charter Comm Hld 11.125% 01/15/11 65 Charter Comm Inc 5.875% 11/16/09 74 Cherokee Int'l 5.250% 11/01/08 70 Chic East Ill RR 5.000% 01/01/54 50 CIH 9.920% 04/01/14 63 CIH 10.000% 05/15/14 61 CIH 11.125% 01/15/14 63 Ciphergen 4.500% 09/01/08 72 Clark Material 10.750% 11/15/06 0 CMI Industries 9.500% 10/01/03 0 Collins & Aikman 10.750% 12/31/11 35 Comcast Corp. 2.000% 10/15/29 40 Concentric Network 12.750% 12/15/07 0 CPNL-Dflt12/05 4.750% 11/15/23 34 CPNL-Dflt12/05 6.000% 09/30/14 25 CPNL-Dflt12/05 7.625% 04/15/06 57 CPNL-Dflt12/05 7.750% 04/15/09 57 CPNL-Dflt12/05 7.750% 06/01/15 24 CPNL-Dflt12/05 7.875% 04/01/08 56 CPNL-Dflt12/05 8.500% 02/15/11 37 CPNL-Dflt12/05 8.625% 08/15/10 36 CPNL-Dflt12/05 8.750% 07/15/07 55 CPNL-Dflt12/05 10.500% 05/15/06 55 Cray Inc. 3.000% 12/01/24 72 Cray Research 6.125% 02/01/11 33 Curagen Corp. 4.000% 02/15/11 71 Curative Health 10.750% 05/01/11 60 Dal-Dflt09/05 9.000% 05/15/16 24 Delco Remy Intl 9.375% 04/15/12 49 Delco Remy Intl 11.000% 05/01/09 52 Delphi Corp 6.500% 08/15/13 69 Delphi Trust II 6.197% 11/15/33 41 Delta Air Lines 2.875% 02/18/24 25 Delta Air Lines 7.541% 10/11/11 69 Delta Air Lines 7.700% 12/15/05 25 Delta Air Lines 7.900% 12/15/09 25 Delta Air Lines 8.000% 06/03/23 25 Delta Air Lines 8.187% 10/11/17 61 Delta Air Lines 8.270% 09/23/07 70 Delta Air Lines 8.300% 12/15/29 27 Delta Air Lines 8.540% 01/02/07 43 Delta Air Lines 8.540% 01/02/07 60 Delta Air Lines 8.950% 01/12/12 70 Delta Air Lines 9.200% 09/23/14 69 Delta Air Lines 9.250% 03/15/22 24 Delta Air Lines 9.300% 01/02/10 75 Delta Air Lines 9.320% 01/02/09 72 Delta Air Lines 9.375% 09/11/07 75 Delta Air Lines 9.480% 06/05/06 58 Delta Air Lines 9.590% 01/12/17 66 Delta Air Lines 9.750% 05/15/21 24 Delta Air Lines 9.950% 06/01/06 69 Delta Air Lines 9.950% 06/01/06 69 Delta Air Lines 10.000% 06/01/07 66 Delta Air Lines 10.000% 06/01/08 66 Delta Air Lines 10.000% 06/01/09 66 Delta Air Lines 10.000% 06/01/10 66 Delta Air Lines 10.000% 06/01/10 67 Delta Air Lines 10.000% 06/01/11 51 Delta Air Lines 10.000% 06/01/12 62 Delta Air Lines 10.000% 06/05/11 59 Delta Air Lines 10.000% 06/05/13 59 Delta Air Lines 10.000% 08/15/08 26 Delta Air Lines 10.060% 01/02/16 70 Delta Air Lines 10.080% 06/16/07 59 Delta Air Lines 10.125% 05/15/10 23 Delta Air Lines 10.125% 06/16/10 60 Delta Air Lines 10.375% 02/01/11 24 Delta Air Lines 10.375% 12/15/22 24 Delta Air Lines 10.500% 04/30/16 75 Diva Systems 12.625% 03/01/08 1 Dov Pharmaceutic 2.500% 01/15/25 73 Dura Operating 9.000% 05/01/09 55 Dura Operating 9.000% 05/01/09 57 DVI Inc 9.875% 02/01/04 13 Dyersburg Corp 9.750% 09/01/07 0 Eagle Family Food 8.750% 01/15/08 75 Eagle-Picher Inc 9.750% 09/01/13 60 Emergent Group 10.750% 09/15/04 0 Encysive Pharmacy 2.500% 03/15/12 72 Epix Medical Inc. 3.000% 06/15/24 70 Exodus Comm. Inc. 5.250% 02/15/08 0 Exodus Comm. Inc. 11.250% 07/01/08 0 Falcon Products 11.375% 06/15/09 3 Federal-Mogul Co. 7.375% 01/15/06 60 Federal-Mogul Co. 7.500% 01/15/09 57 Federal-Mogul Co. 8.160% 03/06/03 51 Federal-Mogul Co. 8.250% 03/03/05 53 Federal-Mogul Co. 8.330% 11/15/01 47 Federal-Mogul Co. 8.370% 11/15/01 38 Federal-Mogul Co. 8.370% 11/15/01 51 Federal-Mogul Co. 8.800% 04/15/07 52 Finova Group 7.500% 11/15/09 35 Ford Motor Co 6.500% 08/01/18 69 Ford Motor Co 6.625% 02/15/28 66 Ford Motor Co 7.125% 11/15/25 69 Ford Motor Co 7.400% 11/01/46 68 Ford Motor Co 7.500% 08/01/26 70 Ford Motor Co 7.700% 05/15/97 68 Ford Motor Co 7.750% 06/15/43 69 Ford Motor Cred 5.650% 01/21/14 73 Ford Motor Cred 5.750% 01/21/14 74 Ford Motor Cred 5.750% 02/20/14 73 Ford Motor Cred 5.750% 02/20/14 73 Ford Motor Cred 5.900% 02/20/14 72 Ford Motor Cred 6.000% 01/20/15 73 Ford Motor Cred 6.000% 02/20/15 73 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 03/20/14 75 Ford Motor Cred 6.000% 03/20/14 75 Ford Motor Cred 6.000% 11/20/14 72 Ford Motor Cred 6.000% 11/20/14 73 Ford Motor Cred 6.000% 11/20/14 73 Ford Motor Cred 6.050% 02/20/14 75 Ford Motor Cred 6.050% 02/20/15 70 Ford Motor Cred 6.050% 03/20/14 74 Ford Motor Cred 6.050% 04/21/14 75 Ford Motor Cred 6.050% 12/22/14 73 Ford Motor Cred 6.050% 12/22/14 73 Ford Motor Cred 6.050% 12/22/14 74 Ford Motor Cred 6.100% 02/20/15 73 Ford Motor Cred 6.150% 01/20/15 74 Ford Motor Cred 6.150% 12/22/14 74 Ford Motor Cred 6.200% 03/20/15 73 Ford Motor Cred 6.250% 01/20/15 74 Ford Motor Cred 6.250% 03/20/15 73 Ford Motor Cred 6.850% 09/20/13 74 Ford Motor Cred 7.250% 07/20/17 75 Ford Motor Cred 7.500% 08/20/32 70 Gateway Inc. 2.000% 12/31/11 71 General Motors 7.400% 09/01/25 68 General Motors 7.700% 04/15/16 73 General Motors 8.250% 07/15/23 73 General Motors 8.375% 07/15/33 74 General Motors 8.800% 03/01/21 73 Glenoit Corp 11.000% 04/15/07 0 Global Health SC 11.000% 05/01/08 2 GMAC 5.350% 01/15/14 75 GMAC 5.900% 01/15/19 73 GMAC 5.900% 01/15/19 74 GMAC 5.900% 02/15/19 73 GMAC 5.900% 10/15/19 73 GMAC 6.000% 02/15/19 74 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 73 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 74 GMAC 6.000% 03/15/19 74 GMAC 6.000% 04/15/19 75 GMAC 6.000% 09/15/19 74 GMAC 6.000% 09/15/19 75 GMAC 6.050% 08/15/19 74 GMAC 6.050% 08/15/19 75 GMAC 6.050% 10/15/19 75 GMAC 6.100% 09/15/19 74 GMAC 6.125% 10/15/19 75 GMAC 6.150% 09/15/19 74 GMAC 6.150% 10/15/19 75 GST Network Fndg 10.500% 05/01/08 0 Gulf Mobile Ohio 5.000% 12/01/56 75 HNG Internorth 9.625% 03/15/06 29 Inland Fiber 9.625% 11/15/07 60 Insight Health 9.875% 11/01/11 49 Iridium LLC/CAP 10.875% 07/15/05 31 Iridium LLC/CAP 11.250% 07/15/05 30 Iridium LLC/CAP 13.000% 07/15/05 29 Iridium LLC/CAP 14.000% 07/15/05 31 Isolagen Inc. 3.500% 11/01/24 55 Isolagen Inc. 3.500% 11/01/24 56 JL French Auto 11.500% 06/01/09 0 Kaiser Aluminum & Chem. 9.875% 02/15/02 49 Kaiser Aluminum & Chem. 10.875% 10/15/06 55 Kaiser Aluminum & Chem. 10.875% 10/15/06 58 Kaiser Aluminum & Chem. 12.750% 02/01/03 10 Kellstrom Inds 5.750% 10/15/02 0 Kevco Inc 10.375% 12/01/07 0 Kmart Corp. 8.540% 01/02/15 16 Kmart Corp. 8.990% 07/05/10 7 Kmart Corp. 9.350% 01/02/20 7 Kmart Funding 8.800% 07/01/10 75 Kmart Funding 9.440% 07/01/18 50 Lehman Bros Hldg 10.000% 10/30/13 73 Liberty Media 3.250% 03/15/31 75 Liberty Media 3.750% 02/15/30 58 Liberty Media 4.000% 11/15/29 63 Lifecare Holding 9.250% 08/15/13 71 Macsaver Financl 7.400% 02/15/02 0 Macsaver Financl 7.600% 08/01/07 3 Macsaver Financl 7.875% 08/01/03 0 Merisant Co 9.500% 07/15/13 66 Metamor WorldWide 2.940% 08/15/04 1 Metricom Inc 13.000% 02/15/10 0 Missouri Pac RR 5.000% 01/01/45 74 Movie Gallery 11.000% 05/01/12 55 MSX Int'l Inc. 11.375% 01/15/08 67 Muzak LLC 9.875% 03/15/09 60 Natl Steel Corp. 8.375% 08/01/06 8 New Orl Grt N RR 5.000% 07/01/32 66 Northern Pacific RY 3.000% 01/01/47 52 Northern Pacific RY 3.000% 01/01/47 52 Northwest Airlines 6.625% 05/15/23 47 Northwest Airlines 7.039% 01/02/06 5 Northwest Airlines 7.625% 11/15/23 46 Northwest Airlines 7.875% 03/15/08 46 Northwest Airlines 8.130% 02/01/14 68 Northwest Airlines 8.700% 03/15/07 43 Northwest Airlines 8.875% 06/01/06 44 Northwest Airlines 8.970% 01/02/15 50 Northwest Airlines 9.875% 03/15/07 48 Northwest Airlines 10.000% 02/01/09 46 Northwest Stl&Wir 9.500% 06/15/01 0 NTK Holdings Inc 10.750% 03/01/14 75 Nutritional Src. 10.125% 08/01/09 65 NWA Trust 11.300% 12/21/12 69 Oakwood Homes 8.125% 03/01/09 10 Oscient Pharm 3.500% 04/15/11 73 Outboard Marine 10.750% 06/01/08 1 Overstock.com 3.750% 12/01/11 71 PCA LLC/PCA Fin 11.875% 08/01/09 20 Pegasus Satellite 9.625% 10/15/49 9 Pegasus Satellite 12.375% 08/01/06 9 Pegasus Satellite 12.500% 08/01/07 10 Phar-Mor Inc 11.720% 09/11/02 1 Piedmont Aviat 9.900% 11/08/06 0 Pixelworks Inc. 1.750% 05/15/24 70 Pliant-DFLT/06 13.000% 06/01/10 49 Pliant-DFLT/06 13.000% 06/01/10 49 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 0 Polaroid Corp. 11.500% 02/15/06 0 Pres Riverboat 13.000% 09/15/01 5 Primedex Health 11.500% 06/30/08 59 Primus Telecom 3.750% 09/15/10 47 Primus Telecom 8.000% 01/15/14 68 Radnor Holdings 11.000% 03/15/10 68 Read-Rite Corp. 6.500% 09/01/04 14 Reliance Group Holdings 9.000% 11/15/00 22 Reliance Group Holdings 9.750% 11/15/03 1 RJ Tower Corp. 12.000% 06/01/13 74 Safety-Kleen Crp 9.250% 06/01/08 0 Salton Inc. 12.250% 04/15/08 68 Silicon Graphics 6.500% 06/01/09 61 Solectron Corp. 0.500% 02/15/34 70 Source Media Inc. 12.000% 11/01/04 0 Spinnaker Inds 10.750% 10/15/06 0 Summit Secs Inc 9.500% 09/15/05 0 Tekni-Plex Inc. 12.750% 06/15/10 69 Tom's Foods Inc 10.500% 11/01/04 9 Transtexas Gas 15.000% 03/15/05 0 Tribune Co 2.000% 05/15/29 70 Trism Inc 12.000% 02/15/05 1 Triton Pcs Inc. 9.375% 02/01/11 75 Tropical SportsW 11.000% 06/15/08 10 Twin Labs Inc 10.250% 05/15/06 2 United Air Lines 7.870% 01/30/19 55 United Air Lines 9.020% 04/19/12 56 United Air Lines 9.350% 04/07/16 30 United Air Lines 10.020% 03/22/14 45 United Air Lines 10.360% 11/13/12 5 Univ Health Svcs 0.426% 06/23/20 58 US Air Inc. 10.250% 01/15/49 6 US Air Inc. 10.250% 01/15/49 6 US Air Inc. 10.300% 01/15/49 1 US Air Inc. 10.550% 01/15/49 1 US Air Inc. 10.610% 06/27/07 0 US Air Inc. 10.680% 06/27/08 1 US Air Inc. 10.850% 01/01/49 48 US Air Inc. 10.900% 01/01/49 6 Venture Hldgs 12.000% 06/01/09 0 Werner Holdings 10.000% 11/15/07 34 Westpoint Steven 7.875% 06/15/05 0 Westpoint Steven 7.875% 06/15/08 0 Wheeling-Pitt St 6.000% 08/01/10 70 Winsloew Furniture 12.750% 08/15/07 15 World Access Inc. 4.500% 10/01/02 4 World Access Inc. 13.250% 01/15/08 4 ********* 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, Joel Anthony Lopez, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin and Peter A. Chapman, Editors. Copyright 2006. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***