/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060524.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, May 24, 2006, Vol. 10, No. 122 Headlines 2001 STATE: Case Summary & 2 Largest Unsecured Creditors AFFILIATED COMPUTER: S.N.Y. Dist. Court Joins Options Grant Probe AFFILIATED COMPUTER: Inks Pact to Purchase E&Y's Intellinex Unit AIRBASE SERVICES: Ch. 11 Trustee Taps Lain Faulker as Accountants ALLEGHENY ENERGY: Secures New 5-Year $579 Million Credit Facility AM COMMUNICATIONS: Ct. OKs RSI as Ch. 7 Trustee's Collection Agent AMERICAN AXLE: Moody's Lowers Corporate Family Rating to Ba3 APHTON CORP: Files for Voluntary Chapter 11 Protection APHTON CORP: Case Summary & 20 Largest Unsecured Creditors ARMSTRONG WORLD: Plan Confirmation Pre-Trial Briefs Filed ARMSTRONG WORLD: Prof. Brickman's Expert Testimony Excluded ARVINMERITOR INC: Replacing $900 Mil. Revolving Facility due 2008 ARVINMERITOR INC: S&P Puts BB Sr. Unsecured Rating on Neg. Watch ATLANTIC PARK: Case Summary & 19 Largest Unsecured Creditors BAUSCH & LOMB: Obtains Waivers Under $775MM Bank Credit Facilities BOMBARDIER: Moody's Puts Rating on C$880 Mil. Sr. Sec. Loan at B1 BROOKS SAND: Kenneth Henry & Bruce Miller Okayed as Ch. 11 Trustee BROOKS SAND: Trustee Wants Bruce Miller Law Group as Counsel CALPINE CORP: Dec. 31 Balance Sheet Upside-Down by $5.5 Billion CALPINE CORP: Panel Hires Morgenstern Jacobs as Conflicts Counsel CATHOLIC CHURCH: Tort Panel & FCR File Chapter 11 Plan for Spokane CATHOLIC CHURCH: Spokane Classes of Claims Under TCC & FCR Plan CNET NETWORKS: Conducts Internal Probe on Stock Options Grant CNET NETWORKS: Posts $1.1 Million Net Loss in First Quarter CONTINENTAL AIR: Moody's Assigns B3 Corporate Family Rating COPA CASINO: Moody's Rates Proposed $230MM Debt Facility at B3 CSK AUTO: Lenders Extend Filing of Financial Results Until July 2 CUMULUS MEDIA: Moody's Rates $850M Sr. Sec. Facilities at Ba3 CURATIVE HEALTH: Judge Bernstein Confirms Prepackaged Ch. 11 Plan CYBER DEFENSE: Working Capital Deficits Spur Going Concern Doubt DANA CORP: American Axle Wants Stay Lifted on Patent Litigation DANA CORP: Committee Wants to Examine Prepetition Lenders' Liens DELPHI CORP: Trade Claimants Comment on Proposed CBA Rejection DELPHI CORP: Recruits Booz Allen for Design Phase of SG&A Program DELPHI CORP: Inks License Pact with Denso Corporation DYNEGY HOLDING: Moody's Affirms $2.9 Bil. Sr. Notes Rating at B2 EURO-PRO: Involuntary Chapter 11 Case Summary EUROFRESH INC: S&P Places B Corporate Credit Rating on Neg. Watch EXCO RESOURCES: Earns $92.2 Million in First Quarter 2006 EXCO RESOURCES: Moody's Lowers Corp. Family Rating to B2 FDL INC: Creditors' Committee Calls for CEO's Pay Cut FDL INC: Court Okays Elliott Levin as Committee's Counsel FDL INC: Court Approves LS Associates as Financial Consultant FEDDERS CORP: Michael Giordano Named as CEO Elect FOAMEX INTERNATIONAL: D.E. Shaw Wants Equity Committee Appointed FOAMEX INTERNATIONAL: Court Approves Equity Trading Protocol FRANKLIN PIERCE: Moody's Downgrades Debt Rating from Ba1 to Ba3 FREMONT HOME: DBRS Puts Low-B Rating on $7.6 Million NIM Notes GUITAR CENTER: To Acquire Assets of Hermes Trading HEALTH SCIENCES: Accumulated Deficit Prompts Going Concern Doubt HEALTHSOUTH CORP: Settles Multi-Billion Fraud Case for $3 Million HEALTHTRONICS INC: Will Hold Annual Stockholder Meeting on June 8 HIGH VOLTAGE: Files Amended Plan of Liquidation in Massachusetts INFOR: Moody's Reviews Junk Rating on $315M Loan & May Downgrade INGRAM MICRO: Fitch Withdraws BB+ Sr. Subordinated Notes' Rating J.L. FRENCH: Inks $255MM Goldman Sachs & Morgan Stanley Exit Pact JLG INDUSTRIES: Moody's Ups Low-B Rating on Corp. Family & Notes JORGE FERREIRA: Case Summary & 11 Largest Unsecured Creditors JP MORGAN: Moody's Places Low-B Rating on 2 Cert. Classes JUNIPER NETWORKS: E.N.Y. Atty. Investigates Stock Options Grant JUNIPER NETWORKS: S&P Puts BB Corp. Credit Rating on Neg. Watch LEVITZ HOME: Rejects Eleven Store Subleases LONG BEACH: Moody's Puts Low-B Rating on 2 Certificate Classes MARMION INDUSTRIES: Recurring Losses Prompt Going Concern Doubt MAULDIN-DORFMEIER: Court Confirms Second Amended Chapter 11 Plan MAXTOR CORP: Completes $1.9 Bil. Asset Sale to Seagate Technology MCCLATCHY CO: To Sell Philadelphia Newspapers, Inc. for $562 Mil. MERILL LYNCH: Moody's Puts Rating on Class B-4 Certs. at Ba1 NUTRAQUEST INC: Files Modified Disclosure Statement in New Jersey PERFORMANCE TRANSPORTATION: Court Clarifies Feb. Insurance Order PERFORMANCE TRANSPORTATION: Wants More Time to Decide on Leases PERFORMANCE TRANSPORTATION: May Remove Civil Actions Until Aug. 4 PERINI CORP: Plans to Offer $100 Million of Senior Notes due 2013 PERINI CORP: Moody's Rates $100 Million Sr. Unsec. Notes at B2 PERINI CORP: S&P Rates Proposed $100 Million Senior Notes at BB- PIER 1: Will Hold Annual Stockholders Meeting on June 22 PINNACLE ENTERTAINMENT: S&P Revises Watch Implication to Positive POMFRET PLANTATION: Case Summary & 14 Largest Unsecured Creditors PRINCETON OMEGA: Case Summary & 3 Largest Unsecured Creditors RENT-A-CENTER: Moody's Lifts Rating on $330 Million Notes to Ba3 REYNOLDS AMERICAN: Fitch Rates Guaranteed Secured Notes at BB+ ROGER GUZMAN: Case Summary & 14 Largest Unsecured Creditors SAINT VINCENTS: NAL Tenders $17 Million Bid for St. Mary's SAINT VINCENTS: Bayonne Proposes to Buy Staten Island Hospital SAINT VINCENTS: U.S. Trustee Names 5-Member Creditors' Panel SEAGATE TECHNOLOGY: Completes Maxtor Acquisition for $1.9 Billion SERACARE LIFE: Creditors' Panel Says No to Equity Panel Formation SHADOWROCK LLC: Case Summary & 2 Largest Unsecured Creditors SILGANS HOLDING: Moody's Raises Corp. Family Rating 1 Notch to Ba2 SILICON GRAPHICS: Lampe Conway Responds to DIP Financing Request SILICON GRAPHICS: Will Pay Prepetition Foreign Vendor Claims SPECTRUM BRANDS: Posts $563,000 Net Loss in 2006 2nd Fiscal Qtr. SPECTRUM BRANDS: Enters into Third Amendment under Credit Pact STRUCTURED ASSETS: Moody's Assigns Ba1 Rating to Class B1 Certs. TRITON CDO: Moody's Puts $26.7 Mil. of B1 Rated Notes on Watch UNITY VIRGINIA: Can Pay $17 Million Debts Says Prospect Energy WELLSFORD REAL: Annual Stockholders' Meeting Set for June 12 WEST SHEPHERDSVILLE: Case Summary & 7 Largest Unsecured Creditors WHITE RIVER: Case Summary & 30 Largest Unsecured Creditors WICKSTROM MATERIALS: Voluntary Chapter 11 Case Summary WINN-DIXIE: Florida Tax Collectors Want to be Adequately Protected WINN-DIXIE: Ct. OKs Jenner as Special Insurance Litigation Counsel WINN-DIXIE: Judge Funk Approves PwC's Retention Supplement * Upcoming Meetings, Conferences and Seminars ********* 2001 STATE: Case Summary & 2 Largest Unsecured Creditors -------------------------------------------------------- Debtor: 2001 State Street LLC 2001 South State Street Chicago, Illinois 60616 Bankruptcy Case No.: 06-05925 Chapter 11 Petition Date: May 23, 2006 Court: Northern District of Illinois (Chicago) Judge: Susan Pierson Sonderby Debtor's Counsel: Robert M. Fishman, Esq. Shaw Gussis Fishman Glantz Wolfson & Towbin LLC 321 North Clark Street, Suite 800 Chicago, Illinois 60610 Tel: (312) 666-2842 Fax: (312) 275-0567 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ David T. Laas $145,085 2001 South State Street Chicago, IL 60616 Blue Star Auto Parts, Inc. $61,280 c/o David T. Laas 2001 South State Street Chicago, IL 60616 AFFILIATED COMPUTER: S.N.Y. Dist. Court Joins Options Grant Probe ----------------------------------------------------------------- Affiliated Computer Services, Inc., received a grand jury document subpoena from the U.S. District Court for the Southern District of New York asking the Company to produce documents relating to the granting of stock options since 1998. A shareholder derivative lawsuit was filed in the U.S. District Court for the District of Delaware, on May 16, 2006, naming Affiliated Computer as a nominal defendant and Mark King, the Company's current Chief Executive Officer and a director, and Jeff Rich, its former Chief Executive Officer and a former director, as defendants. The lawsuit alleges breaches of the "short swing profit rules" of Section 16(b) of the Securities and Exchange Act of 1934 in connection with stock option granted by the Company to Mr. King and Mr. Rich in 2000 and 2002 and sales of the Company's common stock by these officers during those years. The Company says the claims in this lawsuit do not have merit and intends to vigorously defend the lawsuit. As reported in the Troubled Company Reporter on May 15, 2006, the Securities and Exchange Commission has begun an informal investigation into the Company's stock option grants made from October 1998 through March 2005. In response to the informal SEC investigation, Affiliated Computer began an internal investigation, through its regular outside counsel, into its historical stock option practices, including a review of its underlying option grant documentation and procedures. The Company, historically, grants stock options with effective dates prior to the date when they were granted. The Company preliminarily determined that it will record a cumulative prior period non-cash stock-based compensation expense charge not to exceed approximately $40 million. The charge relates to option grants covering approximately 24 million common shares subsequent to the Company's initial public offering in 1994 and through Dec. 31, 2005. About Affiliated Computer Headquartered in Dallas, Texas, Affiliated Computer Services, Inc., (NYSE: ACS) -- http://www.acs-inc.com/-- provides business process outsourcing and information technology solutions to commercial and government clients. * * * As reported in the Troubled Company Reporter on Feb. 16, 2006, Moody's Investors Service downgraded Affiliated Computer's existing notes rating to Ba2 from Baa3 and assigned a Ba2 corporate family rating and Ba2 ratings to the company's $5 billion bank credit facilities. Moody's also confirmed the Company's Baa3 senior unsecured bank credit facility rating and will withdraw the rating upon the consummation of the proposed financing package. As reported in the Troubled Company Reporter on Feb. 16, 2006, Standard & Poor's Ratings Services held its ratings for Affiliated Computer on CreditWatch, where they were placed with negative implications, on Jan. 27, 2006. Standard & Poor's said it will lower its corporate credit rating on the company to 'BB-' from 'BB+', if ACS materially completes the repurchase of $3.5 billion of the company's shares. The outlook will be stable. AFFILIATED COMPUTER: Inks Pact to Purchase E&Y's Intellinex Unit ---------------------------------------------------------------- Affiliated Computer Services, Inc., signed an agreement to acquire Intellinex, LLC, an Ernst & Young LLP enterprise. The transaction is expected to close within 30 days and is subject to Hart-Scott- Rodino approval as well as other customary closing conditions. "We expect all of ACS and Intellinex's customers, including Ernst & Young, will benefit from their combined knowledge and expertise," said Mike Hamilton, Americas Chief Learning and Development Officer for Ernst & Young LLP. "Ernst & Young was recently ranked third in Training magazine's Training Top 100, and we believe this transaction will allow us to focus even more of our efforts on the development and implementation of world-class learning content and programs for our people." "Intellinex has demonstrated its value to our global organization through the services and technologies it offers," said Pierre Hurstel, Ernst & Young Global Managing Partner - People. "Through its affiliation with ACS, I believe Intellinex will become even more effective in the delivery and implementation of our learning programs. I look forward to a continued relationship and am confident that the innovation and commitment Ernst & Young has received from Intellinex can only strengthen." Ernst & Young LLP has entered into a multi-year learning services agreement with ACS/Intellinex to use its technology and administrative training support, as well as its learning design, to facilitate the delivery of the training content developed by Ernst & Young to its people. "Intellinex's proven technology content delivery platform and methodology is used by some of the largest companies in the world, including Ernst & Young, one of the world's most respected professional services firms," said Mark King, ACS President and Chief Executive Officer. "We are honored by this important new relationship with Ernst & Young and are fully committed to providing world-class learning services that contribute to Ernst & Young's continued success and competitive differentiation." With this acquisition, ACS will further expand its already extensive menu of human resource outsourcing BPO capabilities. The learning solutions ACS gains through Intellinex include more than 50,000 hours of learning content and curriculums developed for 200 corporate clients and government agencies in North America and Europe, including such companies as Cisco Systems, Canon USA, Ernst & Young, and Turner Construction. "This acquisition enables ACS to offer the HRO marketplace a scalable, reliable, and secure learning technology platform; custom content development and content management capabilities; and a range of managed services that focus on aligning learning to business goals and objectives," said Ann Vezina, Group President of ACS Commercial Solutions. Vezina pointed to increasing knowledge levels of skilled labor, accelerating adoption of changes in the workplace, and an overall shift to a services-based economy as factors driving the rising need among multi-national business and government organizations for outsourced knowledge creation and exchange. ACS will become one of the only HRO providers delivering fully integrated enterprise learning capabilities, including management of the entire learning infrastructure. The company will gain access to existing Intellinex clients, including some of the most recognized names in business, with cross-sell opportunities for its wide range of additional BPO services. Established in 2000 by Ernst & Young LLP, Intellinex has been recognized in the Leader Quadrant by the Gartner Group, most recently in its 2005 Learning Management System Magic Quadrant. More than 300 Intellinex employees at its headquarters in Cleveland, Ohio, and at locations in Irving, Texas, Lakewood, Colorado, and Europe, will become part of ACS when the transaction closes. About Ernst & Young Ernst & Young -- http://www.ey.com/-- a global leader in professional services, is committed to restoring the public's trust in professional services firms and in the quality of financial reporting. Its 107,000 people in 140 countries pursue the highest levels of integrity, quality, and professionalism in providing a range of sophisticated services centered on our core competencies of auditing, accounting, tax, and transactions. About Affiliated Computer Headquartered in Dallas, Texas, Affiliated Computer Services, Inc., (NYSE: ACS) -- http://www.acs-inc.com/-- provides business process outsourcing and information technology solutions to commercial and government clients. * * * As reported in the Troubled Company Reporter on Feb. 16, 2006, Moody's Investors Service downgraded Affiliated Computer's existing notes rating to Ba2 from Baa3 and assigned a Ba2 corporate family rating and Ba2 ratings to the company's $5 billion bank credit facilities. Moody's also confirmed the Company's Baa3 senior unsecured bank credit facility rating and will withdraw the rating upon the consummation of the proposed financing package. As reported in the Troubled Company Reporter on Feb. 16, 2006, Standard & Poor's Ratings Services held its ratings for Affiliated Computer on CreditWatch, where they were placed with negative implications, on Jan. 27, 2006. Standard & Poor's said it will lower its corporate credit rating on the company to 'BB-' from 'BB+', if ACS materially completes the repurchase of $3.5 billion of the company's shares. The outlook will be stable. AIRBASE SERVICES: Ch. 11 Trustee Taps Lain Faulker as Accountants ----------------------------------------------------------------- Dennis Faulker, Chapter 11 Trustee for Airbase Services, Inc., asks permission from the U.S. Bankruptcy Court for the Northern District of Texas to employ Lain, Faulker & Co., P.C., as his accountants and financial advisors. Lain Faulker will: a) assist the Chapter 11 Trustee in the analysis of the Debtor's financial position, assets, and liabilities; b) assist the Chapter 11 Trustee in the preparation of the Debtor's Schedules and Statement of Financial Affairs; c) assist the Chapter 11 Trustee in the examination of proofs of claim filed against the Debtor to determine whether any asserted claims are objectionable or otherwise improper; d) assist the Chapter 11 Trustee in the accounting of all receipts and disbursements from the estate and the preparation of all necessary reports in relation thereto; e) assist the Chapter 11 Trustee in the development of the Plan of Reorganization or Liquidation and in the preparation of an accompanying Disclosure Statement, any amendments to the Plan or Disclosure Statement, and any related agreements and documents; f) assist the Chapter Trustee in the preparation of a final report and final accounting of the administration of the estate; g) advise the Chapter 11 Trustee in connection with any potential sale of assets; h) assist the Chapter 11 Trustee in the analysis of tax and taxation issues and in the filing of any necessary information regarding taxes as is required by Section 1106(a)(6) of the U.S. Bankruptcy Code; i) testify at hearings and trials as to one or more of the matters set forth above as determined to be necessary and appropriate; and j) perform all other accounting services and provide all other financial advice to the Chapter 11 Trustee in connection with this Chapter 11 case as may be required or necessary. Mr. Faulker discloses that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Shareholders $305 - $345 Senior Accountants $200 - $240 Staff Accountants $120 - $185 Accounting Clerk $55 - $75 D. Keith Enger, an accountant and business advisor at Lain Faulker, assures the Court that the firm does not hold or represent any interest adverse to the Debtors' estates and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code and does not hold or represent any interest adverse to the Debtors' estates. 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). The Court approved the appointment of Dennis Faulkner as trustee in the Debtor's chapter 11 case on May 3, 2006. Mark J. Petrocchi, Esq., at Goodrich Postnikoff Albertson & Petrocchi, LLP, represents the Trustee. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for bankruptcy, the Company reported assets and debts amounting to $10 million to $50 million. ALLEGHENY ENERGY: Secures New 5-Year $579 Million Credit Facility ----------------------------------------------------------------- Allegheny Energy, Inc., obtained a new $579 million credit facility. Proceeds were used to refinance its existing $579 million credit facility, which matures in June 2010. The new $400 million senior unsecured revolving credit facility and $179 million senior unsecured term loan both have five-year maturities. Both the revolving credit facility and the term loan will carry an initial interest rate equal to the London Interbank Offered Rate plus 100 basis points, with decreases in the rate possible if the company's credit ratings improve from current levels. The existing credit facility being refinanced had an interest rate of LIBOR plus 150 basis points. Joint lead arrangers for the refinancing were Citigroup Global Markets Inc. and Credit Suisse. Allegheny Energy Based in Greensburg, Pennsylvania, Allegheny Energy, Inc. -- http://www.alleghenyenergy.com/-- is an investor-owned utility consisting of two major businesses. Allegheny Energy Supply owns and operates electric generating facilities, and Allegheny Power delivers low-cost, reliable electric service to customers in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. * * * As reported in the Troubled Company Reporter on Jan. 20, 2006, Standard & Poor's Ratings Services raised its corporate credit ratings on diversified energy company Allegheny Energy Inc. and its subsidiaries to 'BB+' from 'BB-'. S&P said the outlook is positive. As reported in the Troubled Company Reporter on June 15, 2005, Moody's Investors Service assigned a Senior Implied rating of Ba1 and a Speculative Grade Liquidity Rating of SGL-2 to Allegheny Energy, Inc. This was the first time that Moody's assigned both such ratings to AYE. The company's other ratings, including the Ba2 senior unsecured rating, remained unaffected. AM COMMUNICATIONS: Ct. OKs RSI as Ch. 7 Trustee's Collection Agent ------------------------------------------------------------------ The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware allowed Alfred T. Giuliano, the Chapter 7 Trustee for the estates of AM Communications, Inc., and its debtor-affiliates, to hire Recovery Services Inc. as his collection agent. As reported in the Troubled Company Reporter on March 2, 2006, RSI will assist Mr. Giuliano in collecting unpaid judgments arising from avoidance actions filed by the Trustee against the Debtor's creditors. The Trustee has commenced and prosecuted approximately 37 lawsuits seeking recovery of more than $5 million. Several of the Preference Complaints have proceeded to judgment, and the Trustee anticipates that additional avoidance actions will also be reduced to judgment. RSI will charge a 30% contingency fee based on a percentage of the collected funds, plus reimbursement of costs. AM Communications, Inc. -- http://www.amcomm.com/-- located in Quakertown, Pennsylvania, is a leading supplier of software-driven network reliability solutions for HFC broadband network enterprises. The Company and its debtor-affiliates filed for chapter 11 protection on Aug. 28, 2003. (Bankr. D. Del. Case No.: 03-12689). Anthony M. Saccullo, Esq., and Christopher A. Ward, Esq., at The Bayard Firm, represents the Debtors. Dmitry Pilipis, Esq., and Frederick B. Rosner, Esq., provides the Official Committee of Unsecured Creditors with legal advice. On March 23, 2004, the Court entered an order converting the chapter 11 cases to chapter 7 cases. AMERICAN AXLE: Moody's Lowers Corporate Family Rating to Ba3 ------------------------------------------------------------ Moody's Investors Service downgraded American Axle & Manufacturing, Inc.'s Corporate Family and Senior Unsecured ratings to Ba3 from Ba2. At the same time, the company's Speculative Grade Liquidity rating was lowered to SGL-3, representing adequate liquidity over the next twelve months. Actions on the long-term ratings flow from reduced expectations of the company's performance over the intermediate term and resultant deterioration in key financial metrics. Moreover, potential for some portion of the company's convertible notes to be put back to the company during a sensitive period for the North American automotive industry, could at least temporarily weaken the company's liquidity profile, resulting in the adjustment to the Speculative Grade Liquidity Rating. American Axle faces certain business challenges due to trends in consumer vehicle preferences away from certain light trucks and SUVs where it has enjoyed significant product content, as well as its historic customer concentration with General Motors Corporation. While recent new GM model introductions are helping to mitigate some of these challenges, American Axle's level of free cash flow generation has also been pressured as the company has invested in its expansion strategy which should ultimately diversify its customer base. Over time, the company's order book will improve its geographic, product and customer diversification, but this will emerge slowly. In the interim, American Axle's results will continue to be strongly correlated with light truck & SUV production by its principal customer, GM and more dependent upon the success of GM's new full-sized SUV and pick-up trucks since demand for mid-size product supplied by American Axle has declined. The outlook remains negative. Ratings lowered: American Axle & Manufacturing, Inc. * Corporate Family, Ba3 from Ba2 * Senior Unsecured Notes, Ba3 from Ba2 * Speculative Grade Liquidity, SGL-3 from SGL-2 American Axle & Manufacturing Holdings, Inc. * Senior Unsecured Convertible Notes, Ba3 from Ba2 American Axle & Manufacturing, Inc. guarantees the notes of American Axle & Manufacturing Holdings, Inc. and vice versa. The last rating action was on December 14, 2005 at which time the Corporate Family rating was lowered to Ba2. American Axle's Corporate Family rating of Ba3 reflects relatively weaker scores under the Auto Supplier Methodology for elevated leverage, customer & segment concentration and recent deterioration in its debt coverage ratios. Interest coverage could decline further should significant amounts of the parent's low coupon convertible notes be refinanced with higher cost variable rate bank debt. Scores on those metrics are partially mitigated by stronger scores from the company's sound balance sheet, operating efficiencies, and long-term nature of its business awards. Over time, the company's strategy will gradually lead to improved product, customer and geographic diversification. Moody's views the company's progress in expanding its business with non-US auto makers favorably. However, ramp up of such new business will only occur over a period of time, and in the intermediate term, exposure to GM will be a significant driver of results. Free cash flow in 2006 is expected to remain modest as the company continues to invest in organic growth to support the launch of new business awards and expand its geographic footprint. The Ba3 rating also emphasizes volatility in the company's cash flows arising from its ongoing customer, geographic and platform concentration. American Axle has a capital intensive business model which requires ongoing capital expenditure related to new product launches and is currently limiting free cash flow for debt reduction. Those traits tend to compound its exposure to challenges faced by its largest customer, GM, and are evidenced by the impact on its recent results from the closure of GM's Oklahoma City assembly plant. Introductions of full-size models based on the new GMT-900 platform have been well received. While the number of vehicle launches based on this platform will increase over 2006 and 2007, demand for mid-size vehicles supported by American Axle production has fallen. The confluence of these trends will produce mixed results over the next few quarters. But, dependency on the ultimate success of the full-size SUV and pick-up truck models will increase until new business awards from non-GM customers can begin to make significant contributions. The change in ratings incorporates this elevated variability from the potential success or failure of any particular platform. The negative outlook reflects the company's continued concentration with GM, whose Corporate Family rating is B3, the mix of vehicles it supports, and uncertainty on what build rates consumer demand may ultimately support for models supported by American Axle production. The rating agency would expect American Axle to remain profitable during the intermediate term. However, during this period it remains vulnerable to potential downside developments arising from any disruptions of U.S auto production. The SGL-3 Speculative Grade Liquidity rating anticipates the company will maintain an adequate liquidity profile over the next year. American Axle should continue to generate internal funds sufficient to meet operational needs. While the company maintains only minimal balance sheet cash, it has access to a $600 million unsecured revolving credit facility with a commitment expiration date in April 2010. At the end of March, $100 million had been borrowed under the facility and approximately $25 million of letters of credit had been issued under the commitment. This would leave roughly $475 million available. This availability could be significantly reduced as a result of a ratings trigger under the unsecured convertible notes of the company's parent. Up to $150 million of notes are currently able to be put back to the issuer under the terms of that trigger. Consequently, external sources of funding could be materially reduced during a period when potential for disruption in North American auto production, particularly at GM, could pose further challenges to the company. Moody's anticipates that the company has the capacity to pursue financing alternatives that would accommodate any put of the convertible notes, and will reassess the SGL rating as new developments occur American Axle & Manufacturing, Inc., headquartered in Detroit, Michigan, is a world leader in the manufacture, design, engineering and validation of driveline systems and related components and modules, chassis systems, and metal formed products for light truck, SUVs and passenger cars. The company has manufacturing locations in the U.S.A., Mexico, the United Kingdom and Brazil. The company reported revenues of $3.4 billion in 2005 and has approximately 10,900 employees. APHTON CORP: Files for Voluntary Chapter 11 Protection ------------------------------------------------------ Aphton Corporation filed, on May 23, 2006, a voluntary chapter 11 petition under the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. The Company is seeking offers to purchase its assets out of bankruptcy. Any sale will be subject to Bankruptcy Court approval. "We regret that circumstances have forced the company to file for chapter 11 bankruptcy protection," stated Patrick Mooney, MD, Chairman and Chief Executive Officer of Aphton. "However, we appreciate the support we have received over the years from our employees, vendors, investors and collaborative partners." About Aphton Headquartered in Philadelphia, Pennsylvania, Aphton Corporation -- http://www.aphton.com/-- is a clinical stage biopharmaceutical company focused on developing targeted immunotherapies for cancer. Aphton's products seek to empower the body's own immune system to fight disease. APHTON CORP: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Aphton Corporation 8 Penn Center P.O. Box 59419 1628 JFK Boulevard, Suite 501 Philadelphia, Pennsylvania 19103 Tel: (215) 218-4340 Fax: (215) 218-4357 Bankruptcy Case No.: 06-10510 Type of Business: The Debtor is a biopharmaceutical company focused on developing targeted immunotherapies for cancer. See http://www.aphton.com/ Chapter 11 Petition Date: May 23, 2006 Court: District of Delaware (Delaware) Debtor's Counsel: Michael G. Busenkell, Esq. Eckert Seamans Cherin & Mellot, LLC 300 Delaware Avenue, Suite 1360 Wilmington, Delaware 19801 Tel: (302) 425-0430 Fax: (302) 425-0432 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ XOMA (US) LLC Trade $438,013 2910 7th Street Berkeley, CA 94710 University of Nottingham Trade $318,181 Finance Department University Park Nottingham NG7 2RD White & Case Professional Fees $229,034 1155 Avenue of the Americas P.O. Box 11467 New York, NY 10286 Kendle UK Ltd. Trade $212,080 University of London Trade $198,167 Akerman Senterfitt Professional Fees $150,000 Phillip Gevas Former Officer $122,700 Ernst & Young Professional Fees $84,675 Kendle Trade $69,966 Robert Scibienski Compensation $67,043 Cato Research Trade $47,654 UMC UTRECHT Trade $44,654 Dov Michaeli Trade $41,667 TS Communication Group, LLC Trade $37,943 Demosthenes Pappagianis Trade $37,500 Solomon Edwards Trade $28,685 Sue Hagan Compensation $25,981 Kendle International Trade $25,165 Compliance Res. Trade $25,000 R.R. Donnelley Receivables Inc. Trade $23,351 ARMSTRONG WORLD: Plan Confirmation Pre-Trial Briefs Filed --------------------------------------------------------- Armstrong World Industries, Inc., the Official Committee of Asbestos Claimants and Dean M. Trafelet, as the legal representative for the Debtors' future asbestos personal injury claimants, and the Official Committee of Unsecured Creditors delivered to the U.S. District Court for the District of Delaware pre-trial briefs regarding their position on the confirmation of AWI's fourth amended plan of reorganization, as modified, dated February 21, 2006. The Plan Confirmation Hearing commenced May 23, 2006, before Judge Eduardo Robreno in District Court. On AWI's behalf, Jason Madron, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that the Modified Plan eliminates the distribution of warrants to AWI's stockholders, thus, remedying what the District Court found to be the primary impediment to the Plan confirmation and AWI's emergence from Chapter 11 as a successfully reorganized business enterprise. Mr. Madron points out that the one discrete issue that remains to be determined by the District Court at the confirmation hearing is whether the Modified Plan unfairly discriminates in favor of the asbestos personal injury claimants in Class 7 and against the commercial unsecured claim holders in Class 6 pursuant to Section 1129(b) of the Bankruptcy Code. In this regard, Mr. Madron contends that the Creditors Committee, representing the interests of Class 6 Claimholders, has the burden to prove that the $3,100,000,000 implied liability for Asbestos PI Claims on which the Modified Plan is premised is unreasonably overstated, taking into account the totality of circumstances, including: (i) the history of AWI's asbestos liability; (ii) the number of pending claims on the Petition Date; (iii) the substantially greater percentage distribution that Class 6 creditors are receiving on their claims compared to Asbestos Personal Injury Claimholders in Class 7; (iv) the manner in which distributions are to be made under the Modified Plan to Asbestos PI Claimholders; and (v) the significant expenses and risks to be borne exclusively by those claimants. Mr. Madron alleges that the Creditors' Committee cannot sustain that burden. $3.1-Bil Implied Asbestos Liability Mr. Madron informs the Court that the Modified Plan is premised on the same $3,100,000,000 implied liability for present and future asbestos personal injury liabilities under AWI's original plan. Mr. Madron also notes that the Creditors' Committee used to endorse the prior plan, even recommending to its constituency that it vote accept the prior plan. It was solely the misguided belief of the Creditors' Committee that passage of the Fairness in Asbestos Injury Act was imminent that led the Creditors' Committee to reverse its position at the eleventh hour and oppose confirmation of the prior plan in November 2003. Mr. Madron tells Judge Robreno that the $3,100,000,000 asbestos liability estimate under the Modified Plan plainly demonstrate that it is well within a range of reasonable estimates: Creditor Constituency Asbestos Liability Estimate --------------------- --------------------------- Creditors' Committee $1,950,000,000 Futures 4,500,000,000 ACC 6,040,000,000 Plan Does Not Discriminate Class 6 In considering the issue of unfair discrimination, Mr. Madron notes that each unsecured creditor in Class 6 will receive a distribution under the Modified Plan equal to approximately 59.5% of its claim. However, because of the additional risks and financial burdens imposed on the PI Claimholders, they will only receive a distribution equal to 20% of their claims. Specifically, the Asbestos PI Trust to which all present and future PI Claims will be channeled will be required to unilaterally bear all of the costs and expenses of administering the Asbestos PI Trust and adjudicating and resolving the hundreds of thousands of claims to be filed against it. Moreover, the PI Claimholders will unilaterally bear the risk that the estimate of AWI's asbestos liability has been understated, as has been the case in virtually every other asbestos claims trust that has been established, thus, eroding the actual distribution the claimants will receive on their claims. Mr. Madron notes that the Unsecured Claimholders in Class 6 bear none of those risks and their 59.5% distribution is essentially guaranteed. Under those circumstances alone, Mr. Madron contends that the Creditors' Committee cannot sustain its burden of proving unfair discrimination, without even taking into account the obvious flaws in the liability estimate prepared by its expert, Dr. Leticia Chambers. These flaws, which principally stem from assumptions that have no basis in fact, result in an estimate of AWI's asbestos liability that is not rooted in reality. Mr. Madron insists that it is abundantly clear that, as to Class 6, the Modified Plan does not discriminate at all -- much less unfairly discriminate. Accordingly, AWI asks Judge Robreno to overrule the Creditors' Committee's objections and confirm the Modified Plan. A full-text copy of AWI's memorandum of law in support of confirmation of its Modified Plan of Reorganization is available at no charge at http://ResearchArchives.com/t/s?9b5 ACC and Futures Rep Support Plan Confirmation The ACC and the Futures Representative agree that the Modified Plan does not discriminate unfairly against the unsecured commercial creditors in Class 6. Based on the reports and testimony of their experts, the ACC and the Futures Representative believe that the reasonable estimate of the Asbestos PI Claims is in the range of $4,000,000,000 to $6,038,000,000, present value. Nonetheless, they agree that if AWI's aggregate asbestos personal injury liability is at least $3,100,000,000 present value, then the treatment of all unsecured creditors will be fair. Marla Rosoff Eskin, Esq., at Campbell & Levine, LLC, in Wilmington, Delaware, states that since the stream of liability obligations would extend over many years, the ACC and the Futures Representative agree that it is necessary to reduce the nominal value of the asbestos claims, which will accrue over time to a present value so that it can be compared with the present value of the other creditors' claims. The ACC and the Futures Representative further agree on the use of a risk-free discount rate of 5.55% to arrive at present value. At the confirmation hearing, the ACC and the Futures Representative will present fact, medical, and estimation expert witnesses to establish evidence showing that the aggregate amount that AWI would have had to pay over the coming decades for both pending and future asbestos PI claims substantially exceeds $3,100,000,000. A full-text copy of the ACC and the Futures Representative's joint pre-hearing brief in support of Plan confirmation is available for free at http://bankrupt.com/misc/awiaccfuturesrepbrief.pdf Creditors Committee Insists Plan is Unconfirmable The Creditors Committee contends that to determine the recovery for the PI Claimants, AWI must use a fraction whose numerator equals the asbestos claimants' recovery pursuant to the Modified Plan and whose denominator equals the best estimate of AWI's total pending and expected future legitimate asbestos PI liability. The Creditors Committee maintains that putting the correct estimate of AWI's present and future asbestos PI liabilities into that fraction -- $1,960,000,000 -- produces a percentage recovery of 91.3%, more than 50% higher than the 59.5% recovery that the commercial creditors will receive. "That differential amounts to unfair discrimination against the commercial creditors and renders the Plan unconfirmable," Mark Felger, Esq., at Cozen O'Connor, in Wilmington, Delaware, tells Judge Robreno. The Creditors Committee wants the District Court to adopt without qualification Dr. Chamber's estimate, which leads to the conclusion that AWI cannot meet its burden of showing that the Plan does not unfairly discriminate against the Class 6 Claimholders. Mr. Felger asserts that only Dr. Chambers' estimate faithfully applies the methodology endorsed in Owens Corning v. Credit Suisse First Boston, 322 B.R. 719 (D. Del.2005). Moreover, the Creditors Committee proposes that the District Court must consider AWI's historical asbestos litigation experience in context so as to estimate its asbestos PI liability accurately. Testimony will establish that the 1990s was a heyday for plaintiffs pursuing asbestos personal injury litigation, Mr. Felger says. "Plaintiffs' attorneys actively recruited potential litigants and based claims on dubious medical diagnoses. They unleashed armies of litigants to overwhelm the courts and defendants with claims, many of dubious validity," Mr. Felger asserts. AWI, Mr. Felger says, resorted to a survival strategy of settling claims -- often without real regard to the underlying merits. Mr. Felger also notes that AWI was not a "bad actor" unlike Johns Manville and Turner & Newall; AWI did not hide asbestos' harm from the public and its employees. Hence, AWI presented an easy target for entrepreneurial plaintiffs' counsel. A full-text copy of the Creditors' Committee's brief opposing confirmation of AWI's Modified Plan is available at no charge at http://bankrupt.com/misc/awicreditorscommitteebrief.pdf Trial Protocol At the confirmation trial, 18 hours will be allocated for presentation of evidence, Judge Robreno said in a time management order issued on May 19. Plan proponents and objecting parties have seven hours each for all testimony and examination regarding expert witnesses and another two hours each to examine live factual witnesses. Each side has 10 minutes for its opening statement. Post-trial briefs, if any, are due June 8, 2006. Responses to the post-trial briefs are due June 19. Closing arguments will be held on July 11. About Armstrong World Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Debtors tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARMSTRONG WORLD: Prof. Brickman's Expert Testimony Excluded ----------------------------------------------------------- The Official Committee of Asbestos Claimants and Dean M. Trafelet, as the legal representative for future asbestos personal injury claimants in Armstrong World Industries, Inc., and its debtor- affiliates, ask Judge Robreno to exclude the testimony of Lester Brickman, a law professor who asserts that he is an expert on "the history of asbestos litigation," in connection with the confirmation hearing of Armstrong World Industries, Inc.'s modified plan of reorganization. Marla Rosoff Eskin, Esq., at Campbell & Levine, LLC, in Wilmington, Delaware, tells Judge Robreno that Prof. Brickman's testimony is "inadmissible" because it is, in essence, a partisan account of asbestos law. Ms. Eskin relates that the report contains an extensive discussion of recent changes in substantive law, procedural rules, and state tort reform legislation, including interpretations of state statutes and other case law. Prof. Brickman's Testimony Prof. Brickman is a law professor at the Benjamin N. Cardozo School of Law. He is retained by counsel for the Official Committee of Unsecured Creditors to prepare an expert report and provide expert testimony in connection with AWI's Chapter 11 proceedings. He is paid $825 an hour for his work. Prof. Brickman in his 111-page expert report says he has been qualified by a number of courts as an expert on the history of asbestos litigation, asbestos claim settlement practices, asbestos bankruptcy trusts and the effects of changes in trust distribution procedures on asbestos claiming activity. He has researched, written extensively and taught courses and seminars on legal ethics and the legal profession for 40 years, including a seminar on the ethics of legal fees and the impact of contingency fee financing of tort litigation on the tort system. Entrepreneurial Asbestos Litigation Model Prof. Brickman relates that for the past 15 years, he has been studying the rise of asbestos claims generated by mass "screenings" and the processes by which medical evidence has been created in support of the hundreds of thousands of nonmalignant claims generated by the screenings, and the judicial treatment of the claims. "My studies have led me to the conclusion that, from a systemic perspective, asbestos litigation is undoubtedly distinctive," Prof. Brickman says. He explains that state court asbestos litigation has distinct characteristics because of the volume of claims improperly generated by plaintiff law firms at relatively low cost per claim against scores of different defendants generally named by these claimants and because of the judicial responses to mass filings of claims. Prof. Brickman has identified an entrepreneurial asbestos litigation model that began to emerge in the mid to late 1980s. The elements of this model include: (a) the recruitment of hundreds of thousands of litigants who are first X-rayed by screening enterprises hired by plaintiffs' law firms; (b) the use of a comparative handful of B Readers and doctors selected by these law firms who read the X-rays in contravention of published guidelines and established protocols; (c) the administration of pulmonary function tests usually by screening enterprises, to generate tens of thousands of findings of lung impairment which qualify the litigant for higher settlement values, but which tests frequently fail to comply with American Thoracic Society standards and, for that reason, have been shown by several studies to be invalid; (d) the use of witness preparation techniques to implant memories with regard to product identification as a means of constantly renewing the supply of solvent defendants to replace and supplement those that have entered bankruptcy; (e) the mass filings of the claims in a small number of jurisdictions to: (1) overwhelm state court dockets, causing courts to adopt procedural strategies which have perversely served to reward mass recruitment efforts; and (2) overwhelm defendants by imposing upon them the enormous litigation costs required to prove the absence of disease and the lack of exposure to their products; and (f) the resultant adoption of settlement strategies by defendants that are less a function of the merits of claims and more a function of the massing of claims. Prof. Brickman says the claims filed against Armstrong follow the same patterns and are consistent with the results of the entrepreneurial model. He explains that the percent of Armstrong's pending claims that are nonmalignant -- 91% -- closely aligns with the percentage of nonmalignant claims that are the product of the entrepreneurial model. In addition, 57.6% of Armstrong's pending claims were filed in five states -- Mississippi, Texas, West Virginia, Ohio and Florida -- which is consistent with the high percentages of entrepreneurially generated claims filed in these "magnet" jurisdictions. Approximately 85% of Armstrong's pending claims also match up with claims filed with the Johns Manville Trust. The significance of this high matching rate, according to Prof. Brickman, is that studies by the Manville Trust of the characteristics of claims in their database can be considered as also applying to Armstrong's pending claims. These characteristics include the identities of the comparative handful of B Readers and diagnosing doctors who provided medical reports for a substantial percentage of all of the entrepreneurially generated claims filed with the Trust. Prof. Brickman even points out that a number of the doctors on the Manville Trust lists are the same doctors whom Judge Janis Jack of the U.S. District Court for the Southern District of Texas in In re Silica Products Liability Litigation, 398 F.Supp.2d 563 (S.D. Tex., 2005), determined were part of the "scheme . . . to manufacture [diagnoses] for money." Based on the evidence reviewed, the entrepreneurial model characterizes Armstrong's claims experience in the tort system, Prof. Brickman says. If Armstrong were still in the tort system, Prof. Brickman believes it would be experiencing a decline in nonmalignant claim filings of a similar magnitude. Moreover, projections of future claims and claim values which are based on the assumption of a continuation of historical nonmalignant claims filing and settlement patterns, and which do not take these judicial, legislative and trust distribution procedure changes into account, are likely to substantially overstate the extent of a company's future liability for the claims. He also notes that prepetition settlements of asbestos related claims entered into by Armstrong may not be a valid basis for projecting the number and value of future claims in a bankruptcy proceeding if they, too, were the product of a "scheme to manufacture." A full-text copy of Prof. Brickman's Report is available for free at http://ResearchArchives.com/t/s?9b6 Prof. Brickman is a Paid Expert The Official Committee of Unsecured Creditors could write its trial brief based on the material in Mr. Brickman's report, without any need for his testimony, Ms. Eskin tells Judge Robreno. As the court held in "In re Rezulin Prod. Liab. Litig., 309 F. Supp. 2d 531, 551 (S.D.N.Y. 2004)," a "historical commentary" by a paid expert based on one party's allegations, including inferences drawn from uncomplicated facts that serve only to buttress that party's theory of the case, is neither required nor admissible because the trier of fact can construct its own history from the evidence in the record and the counsel's arguments. Ms. Eskin adds that it is well established that American courts neither require nor accept experts on American law. "[T]he judge is the expert," she says. Furthermore, Ms. Eskin argues that Prof. Brickman is not qualified to be an expert in AWI's case. Much of his alleged expertise derives from activities conducted as a paid advocate for asbestos defendants or their allies, as well as amicus briefs he has written in asbestos cases on behalf of the American Tort Reform Association. "Although he styles himself a 'historian of asbestos litigation,' it is clear that he has done very little hands-on work in the field," Ms. Eskin tells Judge Robreno. "Prof. Brickman's knowledge of asbestos matters is derived primarily from reviewing and summarizing statements about asbestos matters written in court cases, defendants' briefs or newspaper articles." In any event, Ms. Eskin asserts, many of Prof. Brickman's opinions are not within any area of expertise that he claims to have. Moreover, much of the Brickman Report simply parrots testimony that will be provided by other experts in AWI's case whose testimony is not within Prof. Brickman's area of expertise, making his report "cumulative and improper." Ms. Eskin contends that Prof. Brickman's testimony is neither relevant nor reliable, and, therefore, is inadmissible under "Daubert v. Merrell Dow Pharm. Inc., 509 U.S. 579 (1993)." Ms. Eskin maintains that the Brickman Report does not "fit" AWI's case because, among other things: (a) Prof. Brickman has virtually no knowledge of AWI's asbestos litigation history; and (b) Prof. Brickman's conclusions are not based on any discernable methodology and he relies heavily on anecdotal hearsay, including newspaper accounts and statements in asbestos defendants' briefs, rather than true research, experience or training. Ms. Eskin insists that the Court should approve the ACC and the Futures Representative's request pursuant to Rules 16(f), 26(a)(2)(B), and 37(c)(1) of the Federal Rules of Civil Procedure and Rules 702 and 703 of the Federal Rules of Evidence. Alternatively, the ACC and the Futures Representative propose that the Court should rule that Prof. Brickman may not testify about judicial decision, the meaning of any statute or legislative history, and any medical issues concerning AWI's claims database. Creditors Committee Objects The Creditors Committee wants the ACC and the Futures Representative's request denied in its entirety because it is "an attempt to prevent [the] Court from gaining a true and complete picture of the historical data from which they ask [the] Court to extrapolate [AWI's] estimated asbestos liability." According to Jeffrey Waxman, Esq., at Cozen O'Connor, in Wilmington, Delaware, the ACC and the Futures Representative sought to keep from the Court an evidence tending to demonstrate that AWI historically made payment on scores of "illegitimate" asbestos claims and that, in the absence of significant adjustments, AWI's past settlement and verdict history is, therefore, an inappropriate basis on which to estimate AWI's current and future asbestos liability. Mr. Waxman insists that Prof. Brickman's testimony will confirm that AWI historically made payment on thousands of "illegitimate" asbestos claims. Prof. Brickman's testimony will also offer: (i) insightful explanations why AWI and other asbestos defendants historically paid thousands of meritless claims; and (ii) compelling evidence that a similar result need not be duplicated, and has in fact been avoided, by well- administered bankruptcy trusts. "Obviously, [Prof.] Brickman's testimony threatens to fatally undermine [the ACC and the Futures Representative's] methodology for estimating AWI's liability and the wildly inflated number that [the] methodology yields," Mr. Waxman says. It is no surprise then that the ACC and the Futures Representative wish to keep Prof. Brickman's compelling testimony from the Court, Mr. Waxman says. However, the ACC and the Futures Representative fail to offer any legitimate basis on which to exclude Prof. Brickman's work and testimony. Prof. Brickman is Qualified to Offer Expert Opinion Mr. Waxman relates that Prof. Brickman taught at the Benjamin N. Cardozo School of Law, where he served for two years as acting dean. During his nearly 40-year tenure as a professor of law, Prof. Brickman has taught courses and seminars in legal ethics, the legal profession, and the impact of contingency fee financing on tort litigation and the tort system, generally. Prof. Brickman began his research on asbestos litigation in 1991, while working for Keene Corporation to help devise a system to reduce defense costs by creating a software package to standardize billing by defense counsel. He was also asked to offer informal observations and analyses on issues relating to the ethical and legal issues raised by asbestos litigation. As part of his consultancy with Keene, Prof. Brickman attended meetings with Keene's attorneys and dozens of other asbestos lawyers involved in asbestos litigation, and was provided with unprecedented and unfettered access to information regarding asbestos claims and litigation. After gaining a unique insight and expertise into asbestos litigation and the effects of lawyers' fee arrangements, Prof. Brickman was tapped in 1991 by the Administrative Conference of the United States to organize a colloquium dealing with potential administrative solutions to the asbestos litigation crisis. He was also later invited to testify before a subcommittee of the Judiciary Committee of the House of Representatives on the effects of asbestos litigation on federal and state courts. As an outgrowth of his work for the Administrative Conference of the United States, Prof. Brickman published in 1992, two articles dealing with asbestos claims and litigation. Since then, Prof. Brickman has published four more pieces on those topics, and is currently working on a seventh. By virtue of his academic training, unique experience, and prolific works, Prof. Brickman has become widely recognized as a leading expert in the areas of attorney ethics, the effects of contingency fee structures in mass tort litigation, and asbestos litigation. Mr. Waxman maintains that the matters on which Prof. Brickman proposes to testify are undeniably matters "beyond common knowledge." In any event, Prof. Brickman's testimony will undoubtedly aid the Bankruptcy Court in determining the ultimate issue at stake in the Debtors' estimation hearing. Committee Insists Brickman Report is Reliable Mr. Waxman states that there is simply no question that Prof. Brickman's report and proposed testimony more than meet the Daubert standard for "reliability" based on "Daubert, 509 U.S. at 589 (1993)." Prof. Brickman's report is based on years of independent study and analysis, all of which was conducted long before Prof. Brickman was engaged as an expert for the Creditors Committee. For most of that time, he was not retained by any asbestos defendant at all. As Rules 702 and 703 of the Federal Rules of Evidence make clear, experts need not rely on statistical or other technical or "scientific" methodologies for their conclusions to be admissible. Rather, experts may rely on surveys of relevant literature and experiential or other "anecdotal" research. Mr. Waxman notes that the ACC and the FCR's own experts admittedly rely on that very same type of data and research. About Armstrong World Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior floor coverings and ceiling systems, around the world. The Company and its debtor-affiliates filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. The Debtors tapped the Feinberg Group for analysis, evaluation, and treatment of personal injury asbestos claims. Mark Felger, Esq. and David Carickhoff, Esq., at Cozen and O'Connor, and Robert Drain, Esq., Andrew Rosenberg, Esq., and Alexander Rohan, Esq., at Paul, Weiss, Rifkind, Wharton & Garrison, represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Houlihan Lokey for financial and investment advice. The Official Committee of Asbestos Personal Injury Claimant hired Ashby & Geddes as counsel. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 93; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARVINMERITOR INC: Replacing $900 Mil. Revolving Facility due 2008 ----------------------------------------------------------------- ArvinMeritor, Inc., selected JP Morgan Securities Inc. and Citigroup Global Markets Inc. to arrange new senior secured credit facilities to replace its existing revolving credit facility. Bank Revolving Credit Facility The company has a $900 million revolving credit facility that expires in 2008. Under the facility, borrowings are subject to interest based on quoted LIBOR rates plus a margin, and a facility fee, both of which are based upon the company's credit rating. At March 31, 2006, the margin over the LIBOR rate was 150 basis points, and the facility fee was 37.5 basis points. Certain of the company's domestic subsidiaries irrevocably and unconditionally guarantee amounts outstanding under the credit facility. The revolving credit facility includes a $150 million limit on the issuance of letters of credit. At March 31, 2006, and Sept. 30, 2005, approximately $24 million and $23 million letters of credit, respectively, were issued. The facilities are expected to consist of a new revolving credit facility and a term loan B. Details of the planned facilities will be provided to potential participants in the facilities at a bank meeting, today, May 24, 2006, in New York City. Headquartered in Troy, Michigan, ArvinMeritor, Inc. -- http://www.arvinmeritor.com/-- is a premier $8.8 billion global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and certain aftermarkets. ArvinMeritor employs approximately 29,000 people at more than 120 manufacturing facilities in 25 countries. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. * * * As reported in the Troubled Company Reporter on April 7, 2006, Moody's Investors Service affirmed ArvinMeritor's Corporate Family Rating at Ba2, and changed the rating outlook to negative from stable. Moody's said the company's core Light Vehicle Systems segment continues to under-perform and debt protection measures are somewhat weak for the rating category. Moody's also affirmed the Ba2 rating of the Company's senior unsecured notes and senior unsecured shelf. ARVINMERITOR INC: S&P Puts BB Sr. Unsecured Rating on Neg. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' senior unsecured and 'B-1' short-term corporate credit ratings on ArvinMeritor Inc. on CreditWatch with negative implications. At the same time, Standard & Poor's affirmed its 'BB' long-term corporate credit rating on the Troy, Michigan-based auto supplier. These actions stem from ArvinMeritor's announcement that it will replace its unsecured bank facility with new senior secured credit facilities. The facilities are expected to consist of a new revolving credit facility and a term loan B. Standard & Poor's will review the effect of contractual subordination on the unsecured debt, and depending on the level of security granted, the unsecured debt rating could be lowered. The rating agency will also evaluate the impact on the company's liquidity and short-term rating as a result of the new facilities. Standard & Poor's would expect to withdraw the rating on ArvinMeritor's existing bank facility upon completion of the proposed transaction. Currently, the rating on ArvinMeritor's existing $900 million senior unsecured revolving credit facility, maturing in July 2008, is the same as the corporate credit rating, because Standard & Poor's expects that lenders will fare the same as other senior creditors in the event of a default. ATLANTIC PARK: Case Summary & 19 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Atlantic Park, LLC 130 South Street Northborough, Massachusetts 01532 Tel: (508) 393-2870 Bankruptcy Case No.: 06-20198 Chapter 11 Petition Date: May 22, 2006 Court: District of Maine (Portland) Debtor's Counsel: Jonathan R. Doolittle, Esq. Verrill Dana, LLP One Portland Square, P.O. Box 586 Portland, Maine 04112-0586 Tel: (207) 774-4000 Fax: (207) 774-7499 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ LBM Financial, LLC Mortgage $965,000 c/o Michael J. Norris, Esq. P.O. Box 41 Marlborough, MA 01752-1854 Marcello Mallegni Mortgage $300,000 c/o Michael J. Norris, Esq. P.O. Box 41 Marlborough, MA 01752-1854 JSD Building Co., Inc. Contractor $248,000 130 South Street Northborough, MA 01532 Reali Realty, LLC Lien $231,000 Kevin's Electric, Inc. Lien $68,671 Coldwell Banker Services $66,496 Residential Brokerage Steenbeke & Sones Materials $53,496 Cary Seamans Lien $30,254 Jane E. Reilly Attachment $21,363 A-Plus Insulation, Inc. $17,970 Jerry's Plumbing $15,658 Old Orchard Beach Tax Liens & Fees $15,000 Michael Ames $14,668 Quinn's Installations, Inc. Materials & Services $11,530 Noralba Estrada $10,000 Fashion Floors $6,380 Christine M. Gemme $5,000 JC Turner & Associates, Inc. $5,000 PSV Bassett Heating $4,500 BAUSCH & LOMB: Obtains Waivers Under $775MM Bank Credit Facilities ------------------------------------------------------------------ Bausch & Lomb Inc. reported that pursuant to its consent solicitations, holders of a majority of outstanding principal amount of the four issues of the Company's debt and convertible debt for which the consent deadline has passed have delivered consents to proposed amendments to the note indentures and the waiver of specified defaults. Bausch & Lomb indicated that approximately $37 million aggregate principal amount of the Company's senior notes have been tendered to date in its tender offers, which will expire June 2, 2006. On May 3, 2006, the Company reported its intention to commence cash tender offers and consent solicitations for three issues of outstanding debt securities totaling approximately $384 million and consent solicitations with respect to two issues of outstanding convertible debt totaling approximately $160 million. The consent solicitations offered holders a fee in exchange for their consent to proposed amendments to the indenture for each issue of notes that would, among other things, extend to Oct. 2, 2006, for purposes of the indentures, the Company's deadlines to file periodic reports with the Securities and Exchange Commission and to deliver compliance certificates to the Trustee under each indenture. The proposed waivers waive all defaults relating to the failure to properly comply with these obligations prior to the effectiveness of the proposed amendments and extending until Oct. 2, 2006. The consent deadline for all issues was originally established as May 17, 2006. The Company subsequently extended to May 24, 2006, the consent deadline for its 7.125% debentures due 2028. As of May 17, 2006, consents have been received and accepted in the percentages indicated for these issues: Percent Outstanding Consents CUSIP No. Principal Amount Title of Security Delivered --------- ---------------- ----------------- --------- 071707AH6 $150,000,000 6.95% Notes 90% due 2007 071707AL7 $50,000,000 5.9% Notes 100% due 2008 Each holder tendering Securities in the tender offer is required to consent to the proposed amendments and waiver, and those are included in the total percentage of consents delivered indicated above. Tenders of Securities delivered as of May 17, 2006, are now irrevocable. Holders of Securities have until June 2, 2006, to decide whether to tender the Securities for purchase. However, those holders that did not deliver their consents by the applicable consent deadline will not be entitled to receive the consent payment. As of May 17, 2006, holders of these issues of convertible debt had delivered consents with respect to the proposed amendments to the note indentures and a waiver of the specified defaults in the percentages indicated: Percent Outstanding Consents CUSIP No. Principal Amount Title of Security Delivered --------- ---------------- ----------------- --------- 071707AK9 $4,098,000 Floating Rate 100% Convertible Senior Notes due 2023 071707AM5 $155,902,000 Senior 82% Convertible Securities due 2023 In accordance with the terms of the bondholder waivers and consents, Bausch & Lomb intends to complete supplemental indentures with the trustee for each such issue of notes, debentures, senior convertible securities and convertible senior notes to effect the proposed amendments. Waivers Obtained In addition, on May 19, 2006, Bausch & Lomb filed a Form 8-K with the SEC indicating it has obtained letter waivers under its $400 million five-year revolving credit agreement dated July 26, 2005 and its five-year $375 million term loan agreement dated Nov. 29, 2005. The letters waive, among other things, through Oct. 2, 2006, (i) any breach of representation or covenant under certain provisions of both agreements that may arise from events and (ii) the Company's failure to file financial statements with the SEC. As of the date of the letter waivers, there were no outstanding borrowings under the revolving credit agreement, and there were $375 million of borrowings outstanding under the term loan agreement. "We are grateful for the continued confidence shown by our lenders, who unanimously supported the granting of these waivers, and by our bond holders," Bausch & Lomb Senior Vice President and Chief Financial Officer Stephen C. McCluski said. "We are diligently working to resolve the outstanding issues that have caused us to delay our SEC filings, so those filings can be made as soon as practicable." Headquartered in Rochester, New York, Bausch & Lomb Inc. -- http://www.bausch.com/-- is the eye health company, dedicated to perfecting vision and enhancing life for consumers around the world. Founded in 1853, the Company's core businesses include soft and rigid gas permeable contact lenses and lens care products, and ophthalmic surgical and pharmaceutical products. Bausch & Lomb's 2004 revenues were $2.2 billion; it employs approximately 13,700 people worldwide and its products are available in more than 100 countries. BOMBARDIER: Moody's Puts Rating on C$880 Mil. Sr. Sec. Loan at B1 ----------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to Bombardier Recreational Products' C$250 million senior secured revolver and a B1 rating to BRP's C$880 million senior secured term loan. At the same time, Moody's affirmed BRP's B1 corporate family rating and revised the ratings outlook to negative from stable. The ratings assigned are subject to the receipt of final documentation with no material changes to the terms as originally reviewed by Moody's. The change in ratings outlook to negative reflects Moody's concern over the company's reduced financial flexibility to withstand a cyclical downturn in the recreational sports industry following its planned leverage recapitalization, which would increase adjusted leverage to 4.8x from 2.1x. In addition, the outlook reflects Moody's view that the recapitalization marks a departure from management's historically conservative financial posture at a time when there are increased uncertainties around consumer spending and high oil prices. The CFR affirmation and new rating assignments reflect BRP's consistent strong operating performance and cash flow generation, which it has historically used to repay debt, despite operating in a highly cyclical industry. The affirmation also reflects BRP's diverse product offerings, geographic diversification, brand recognition and strong market share in addition to its concentration in the marine industry, foreign exchange fluctuations and operating in a highly seasonal/cyclical industry. Because of the cyclicality of its business, Moody's expects BRP to steadily reduce its debt and to maintain higher credit metrics for its rating category. BRP is contemplating issuing roughly C$900 million of debt through a term loan to repurchase shares and issue a dividend aggregating roughly C$600 million and to refinance C$230 million of subordinated notes. The undrawn senior secured revolver and term loan will be issued by BRP, will be guaranteed by substantially all North American operating subsidiaries and will be pari passu with each other in all respects except for security. The revolver has a first priority interest in accounts receivable and inventory and a second priority interest in all other tangible and intangible assets of the company and its subsidiaries; the term loan has a first priority interest in all other tangible and intangible assets of the company and its subsidiaries and a second priority interest in accounts receivable and inventory. The Ba2 rating of the revolver is rated two notches above the B1 CFR because of its senior position in the capital structure and its modest amount relative to overall funded debt. The B1 rating on the term loan is at the same level as the corporate family rating principally due to the preponderance of the loan in the capital structure and reasonable asset coverage based on a distressed enterprise value analysis. If the recapitalization is completed as proposed, Moody's will withdraw its ratings on BRP's existing subordinated notes rated B3 and revolver rated Ba3. For additional information, please refer to our Credit Opinion of BRP dated May 22, 2006 published on Moodys.com. Ratings assigned: * C$250 million senior secured revolver, due 2011, at Ba2; * C$880 million senior secured term loan, due 2013, at B1; Rating affirmed: * Corporate family rating at B1. Rating withdrawn: * $50 million senior secured term loan at Ba3 With corporate headquarters in Valcourt, Quebec, Bombardier Recreational Products Inc. is a leading designer, manufacturer, and distributor of motorized recreational products worldwide. Net sales for the twelve-month period ended January 2006 were approximately C$2.4 billion. BROOKS SAND: Kenneth Henry & Bruce Miller Okayed as Ch. 11 Trustee ------------------------------------------------------------------ Richard F. Clippard, the U.S. Trustee for Region 8, asked the Honorable Joan L. Cooper of the U.S. Bankruptcy Court for the Western District of Kentucky in Louisville to approve the appointment of: -- Kenneth C. Henry as the Chapter 11 Trustee of Brooks Sand & Gravel, LLC (Case No. 06-30259); and -- J. Bruce Miller as the Chapter 11 Trustee of Smith Mining & Materials, LLC (Case No. 06-30260). Judge Cooper approved the appointment of J. Bruce Miller as Chapter 11 Trustee of Brooks Sand & Gravel, LLC, but denied the appointment of Kenneth C. Henry. Judge Cooper said that the appointment of a Chapter 11 Trustee in Smith Mining's case because "the parties have not filed a motion in said case." Mr. Miller subsequently rejected his appointment as Brooks Sand's Trustee. As a result of Mr. Miller's rejection, Judge Cooper appointed Mr. Henry as the Chapter 11 Trustee of Brooks Sand. Judge Cooper also approved the appointment of Mr. Miller as the Chapter 11 Trustee of Smith Mining. 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. Judge Cooper approved the appointment of J. Bruce Miller as the Chapter 11 Trustee of Brooks Sand. BROOKS SAND: Trustee Wants Bruce Miller Law Group as Counsel ------------------------------------------------------------ Kenneth C. Henry, the Chapter 11 Trustee of Brooks Sand & Gravel, LLC, asks the Honorable Joan L. Cooper of the U.S. Bankruptcy Court for the Western District of Kentucky in Louisville for permission to employ J. Bruce Miller, Esq., and his firm, J. Bruce Miller Law Group as his legal bankruptcy counsel, nunc pro tunc to April 24, 2006. The Trustee selected JBMLG as his legal counsel because of the firm's extensive general experience and knowledge in litigation matters, including bankruptcy proceedings. The Trustee believes that JBMLG is well qualified and uniquely able to advise him in this Chapter 11 case in a most efficient and timely manner. JBMLG will: -- assist the Chapter 11 Trustee in connection with the management of litigation involving the Debtor; -- negotiate, analyze and address issues relative to the operation and liquidation of the Debtor's business; and -- perform those legal services that will be necessary in the Debtor's bankruptcy case. J. Bruce Miller, Esq., discloses that the Firm's professionals bill: Designation Hourly Rate ----------- ----------- Members and Associates $250 to $295 Paralegals and Administrative Personnel $50 to $75 The Firm has not received any retainer from the Trustee in connection with this case. To the best of the Trustee's knowledge, the attorneys of JBMLG do not have any connection with the Trustee, the Debtor, its creditors, or any party-in-interest. 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. Judge Cooper approved the appointment of J. Bruce Miller as the Chapter 11 Trustee of Brooks Sand. CALPINE CORP: Dec. 31 Balance Sheet Upside-Down by $5.5 Billion --------------------------------------------------------------- Calpine Corporation and its subsidiaries filed their consolidated financial statements for the year ended Dec. 31, 2005, on Form 10-K, with the Securities and Exchange Commission on May 19, 2006. The Calpine entities reported a $9,939,208,000 net loss on $10,112,658,000 of revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $20,544,797,000 in total assets and $26,052,882,000 in total liabilities, resulting in a $5,508,085,000 stockholders' deficit. The Company's Dec. 31 balance sheet also showed strained liquidity with $3,428,037,000 in total current assets available to pay $7,142,412,000 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?99e 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. Miller Buckfire & Co. serves as the Debtors' financial advisor. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC serves as the Committee's financial advisor. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. CALPINE CORP: Panel Hires Morgenstern Jacobs as Conflicts Counsel ----------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Calpine Corp. and its debtor-affiliates' chapter 11 cases obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to retain Morgenstern Jacobs & Blue, LLC, as its special conflicts counsel, nunc pro tunc to March 3, 2006. As reported in the Troubled Company Reporter on April 24, 2006, MJB is expected to advise and represent the Committee in connection with matters related to the Debtors' dealings with Rosetta Resources Inc. and claims of the Debtors against Solutia, Inc. and its affiliates that are also debtors in Chapter 11 proceedings. Peter D. Morgenstern, Esq., a member of Morgenstern Jacobs & Blue, LLC, in New York, disclosed that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners & Counsel $440 - $660 Associates $320 - $380 Paralegals $100 - $165 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. Miller Buckfire & Co. serves as the Debtors' financial advisor. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. Lazard Freres & Co. LLC serves as the Committee's financial advisor. 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: Tort Panel & FCR File Chapter 11 Plan for Spokane ------------------------------------------------------------------ The Future Claimants Representative and the Official Committee of Tort Claimants delivered a joint plan of reorganization for the Diocese of Spokane with the U.S. Bankruptcy Court for the Eastern District of Washington on May 15, 2006. The FCR and Tort Claimants did not file a disclosure statement. They did not say when a disclosure statement would be delivered to the Bankruptcy Court. Tort Committee's attorney, Joseph E. Shickich, Jr., Esq., at Riddell Williams P.S., in Seattle, Washington, tells the Court that the Plan contemplates that on or before the Effective Date: * certain real and personal property and the contributions from Catholic entities -- Trust Property -- will be transferred from the Diocese to a Plan Trust; * certain real and personal property in which the Diocese has an interest that is not Trust Property or Parish Property will be re-vested in the reorganized Diocese; * each of the Parishes will form a separate non-profit corporation or corporation sole to hold title to its assets and for other purposes; and * with the consent of the Parishes, a judgment adjudicating that all Parish properties are property of the estate, and that, other than the interests of the Parish corporations created under the Plan, the Parishes have no interest in the Parish Properties, will be entered in the Section 541 Litigation, and all appeals relating to the Section 541 Litigation will be dismissed. A full-text copy of the Joint Plan of Reorganization for Spokane Diocese is available for free at http://researcharchives.com/t/s?9af Plan Trust Upon the transfer, the Trust Property will be vested in the Plan Trust free and clear of all claims, liens, encumbrances, charges and other interests. The Plan Trust will hold, use, manage, liquidate, dispose or otherwise deal with the Trust Property pursuant to the terms of the Plan Trust. The Plan Trust will serve as the Diocese's estate representative. Transfer of Parish Property to Parishes On the Effective Date, certain parcel of real property and all personal property used by a parish will be transferred through a quitclaim deed and bill of sale to the Parish Corporation as consideration for the payment to the Plan Trust. Certain parishes will be required to contribute an amount equal to 65% of the fair market appraised value of their Parish Property. Small parishes and those in the rural will contribute the lesser of $100,000 or 65% of the appraised fair marked value of the real property. The Parish Corporation will execute, deliver to the Plan Trustee, and cause to be recorded and filed with the appropriate county auditor or recorder and the Washington Department of Licensing, a Note, a Deed of Trust and Security Agreement, Lender's Policies of Title Insurance and UCC searches satisfactory to the Plan Trustee, and other documents and instruments to evidence and secure payment of the Consideration. The Note will be non-recourse, will not bear interest prior to an Event of Default, and will not require principal payments prior to the maturity date. Conditions to Effective Date There must be a final Confirmation Order, which is satisfactory in form and substance for the Effective Date to occur, Mr. Shickich notes. In addition, all actions, documents, and agreements necessary to implement the Plan must have been effected or executed. 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. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Classes of Claims Under TCC & FCR Plan --------------------------------------------------------------- The Plan of Reorganization filed by the Future Claimants Representative and the Official Committee of Tort Claimants classifies the claims asserted against the Diocese of Spokane into 10 classes: Class Description ----- ----------- N/A Administrative Claims N/A Priority Tax Claims 1 Priority Employee Unsecured Claims 2 Priority Unsecured Claims 3 Secured Tax Claims 4 General Unsecured Convenience Claims 5 Parish and Catholic Entity Unsecured Claims 6 General Unsecured Claims 7 Tort Claims 8 Priest Retirement Claims Classes 5, 6 and 7 are impaired and are entitled to vote for the acceptance or rejection of the Plan. Classes 1, 2, 3, 4, and 8 are unimpaired and deemed to accept the Plan. Accordingly, these Classes are not allowed to vote. The projected recoveries for the holders of Allowed Claims under the Plan are: Estimated Class Distribution Recovery ----- ------------ --------- 1 Holder will be in full in Cash in 100% accordance with the policies and procedures regarding each item comprising the Claim 2 Holder will be paid in full in Cash by the Reorganized Diocese on the Claim Payment Date 100% 3 Holder will be paid in full in Cash by the Reorganized Diocese within 30 days after the Claim Payment Date 100% 4 Holder will be paid in full in Cash by the Reorganized Diocese within 30 days after the Claim Payment Date 100% 5 Holder will be paid in full after the date on which Parish Funding Termination occurs 100% 6 Holder will be paid in full in Cash by the Reorganized Diocese in two equal installments, plus 5% annual interest. The first installment will be paid six months after the Claim Payment Date. The second installment will be paid 12 months after the Claim Payment Date 100% 7 Each holder, except the FCR and Future Tort Claimants -- Class 7(d) FCR Tort Claim -- will be paid according to the subclass elected: (1) Class 7(a) Tort Convenience Claim, (2) Class 7(b) Matrix Tort Claim, and (3) Class 7(c) Litigation Tort Claim. Holder of an Allowed Tort Convenience Claim will be paid $61,000 in cash by the Plan Trust after the later of the Claim Payment Date or the date on which a portion of the Tort Claim Fund is allocated to the Convenience Fund. Holder of an Allowed Matrix Tort Claim will be paid in Cash by the Plan Trust with the holder's pro rata share of the Matrix Fund after the later of the date on which all Matrix Tort Claims have been determined or the amount of the Matrix Fund has been determined by a Final Bankruptcy Court Order. Holder of a Litigation Tort Claim will be paid in Cash by the Plan Trust with the holder's pro rata share of the Litigation Fund after the later of the date on which all Litigation Tort Claims have been finally determined or the amount of the Litigation Fund has been determined by a Final Bankruptcy Court Order. Holder of an Allowed Future Tort Claim will be paid in Cash by the Plan Trust a share of the FCR Fund equal to the arithmetic mean of the pro rata shares paid to holders of Matrix Tort Claims and Litigations Tort Claims from the Matrix Fund and the Litigation Fund, after the later of the date on which the Future Tort Claim is finally determined or the date on which the amount of the FCR Fund has been determined by a Final Bankruptcy Court Order. N/A 8 Holder will be paid in full in Cash by the Reorganized Diocese in accordance with the Priest Retirement Plan on the later of Claim Payment Date or the date on which the Claim would have become matured and liquidated but for the filing of the Petition. 100% Class 7 Tort Claims Any holder of a Tort Claim, except the FCR and Future Tort Claimants, who does not make an election on the holder's Ballot to be treated as the holder of a Claim in one of the three Subclasses, or does not return a Ballot, will be deemed to have irrevocably elected to be treated as a holder of a Class 7(b) Matrix Tort Claim. Tort Claim Fund Joseph E. Shickich, Jr., Esq., at Riddell Williams P.S., in Seattle, Washington, says that the Tort Claim Fund will consist of the Trust Property. After the Effective Date, the Plan Trustee will: -- determine the fair market value of the Trust Property net of a reserve for costs and expenses of administration of the Plan Trust and reasonable contingencies; and -- allocate a portion of the Plan Trust Value equal to all Allowed Tort Convenience Claims, plus $61,000 in reserve multiplied by the number of Tort Convenience Claims that have not been finally determined, to a fund for the aggregate Allowed Tort Convenience Claims. The balance of the Plan Trust Value will be allocated pro rata to a fund for the Allowed Matrix Tort Claims, Allowed Litigation Tort Claims, and Allowed FCR Tort Claim on the earlier of: (a) the date on which a distribution is first payable to holders of Allowed Matrix Tort Claims; (b) the date on which a distribution is first payable to holders of Allowed Litigation Tort Claims; or (c) the date on which the FCR Tort Claim becomes an allowed Claim. If on the Allocation Date, all Matrix Tort Claims, Litigation Tort Claims, or the FCR Tort Claims have not been finally determined: (i) the Bankruptcy Court will estimate the aggregate amount of the Matrix Tort Claims and the amount of the FCR Tort Claim; and (ii) the District Court will estimate the aggregate amount of the Litigation Tort Claims under Section 502(c) of the Bankruptcy Code. The balance of the Plan Trust Value will be finally and conclusively allocated pro rata to the Matrix Fund, to the Litigation Fund, and to the FCR Fund based on those estimations. All Class 7 Tort Claims except Future Tort Claims will be temporarily allowed for $1 for purposes of voting to accept or reject the Plan. In addition, the Tort Committee and the FCR's Plan provides for a Matrix for Compensation of Sexual Abuse Claims, which categorizes sexual abuse in five tiers and provides the dollar range in which a claim for the abuse may be allowed. A full-text copy of the Matrix for Compensation of Sexual Abuse Claims is available for free at: http://researcharchives.com/t/s?9a3 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. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) CNET NETWORKS: Conducts Internal Probe on Stock Options Grant ------------------------------------------------------------- The Center for Financial Research and Analysis issued an analysis of stock option exercise prices relative to stock price ranges for certain companies during the period 1997 to 2002. The report identified CNET Networks, Inc., as having granted stock options on four occasions between 1998 and 2001 with exercise prices that matched or were close to a 40-day low for its stock price. CNET Networks' Board of Directors has appointed a special committee of independent directors to conduct an internal investigation relating to past option grants, the timing of such grants and related accounting matters. The Special Committee is being assisted by and independent legal counsel. About CFRA Center for Financial Research and Analysis is the leading provider of forensic accounting research and risk management services. Its team of 20+highly experienced research analysts, organized by industry sector, uses a rigorous, proprietary methodology to analyze and assess the quality of over 4,000 North American and European companies' reported financial and operational results. Specifically, through the Company's forensic accounting lens, it can identify indicators of deterioration in a company's operational health; and evidence of unusual and aggressive accounting and corporate governance improprieties. About CNET Networks CNET Networks, Inc., (Nasdaq: CNET) is a global media company. The company's brands -- CNET, GameSpot, TV.com, MP3.com, Webshots, BNET and ZDNet -- serve the technology, games and entertainment, business, and community categories. CNET Networks was founded in 1993 and has always been "a different kind of media company" creating engaging media experiences through a combination of world-class content and technology infrastructure. * * * As reported in the Troubled Company Reporter on Feb. 27, 2006, Standard & Poor's Ratings Services raised its ratings on Internet publisher CNET Networks Inc., including raising the corporate credit rating to 'B' from 'B-'. The outlook is positive. CNET NETWORKS: Posts $1.1 Million Net Loss in First Quarter ----------------------------------------------------------- CNET Networks, Inc.'s total revenues for the first quarter ended March 31, 2006, equaled $83.4 million, a 17% increase compared to revenues of $71.2 million for the same period of 2005. "As we start off 2006, we are pleased with the overall health of the business and believe that our long-term prospects only continue to improve," said Shelby Bonnie, chairman and chief executive officer of CNET Networks. "Although we are seeing more impact from transitions in our endemic categories in the first half of the year than we originally expected, our ability to grow our core brands and add new ones sets us up well as we continue to expand our audience and customer base ahead of the growing opportunity in Internet advertising." Operating income before depreciation, amortization and stock compensation expense was $9.2 million, a 47% increase compared to $6.2 million during the first quarter of 2005. The profit margin of operating income before depreciation, amortization and stock compensation expense increased to 11% from 9% during the first quarter of 2005. Excluding stock compensation expense in the first quarter of 2006, operating income equaled $1.7 million compared to $233,000 for the same period of 2005. On a reported basis, which includes $4.7 million of stock compensation expense in the first quarter of 2006, operating loss equaled $3.0 million during the quarter. Net cash provided by operating activities for the first quarter of 2006 was $28.3 million, up from $9.5 million in the first quarter of 2005. Free cash flow for the first quarter of 2006 was $20.0 million compared to $4.4 million in the year ago quarter. Free cash flow is defined as net cash provided by operating activities less capital expenditures. Excluding stock compensation expense and $1.3 million of gains on discontinued operations and investments, net income for the first quarter of 2006 was $2.3 million compared to a net loss of $365,000 during the same period of 2005. On a reported basis, net loss for the first quarter of 2006 was $1.1 million. This compares with net income of $383,000 during the first quarter of 2005. Business Review CNET Networks' global network of Internet properties reached an average of 116.8 million unique monthly users during the first quarter of 20061, an increase of 10% from the first quarter of 2005. Average daily page views increased to over 98.7 million during the first quarter, up 4% from the year-ago quarter. As part of its effort to expand into new content categories with brands that engage passionate audiences, CNET Networks has recently added assets in the food category. The company acquired Chowhound, a thriving online community focused on the food and dining category. In addition, the company acquired the assets of Instant Comma, Inc., operators of Chow Magazine. CNET Networks will leverage the magazine's editorial expertise, including recipes, how-to's, and other food-related content to create an online destination for food enthusiasts, which will replace the magazine. The combination of Chowhound's passionate community and Chow's editorial expertise creates a strong platform from which CNET Networks can build a presence in the food and dining category in the coming months. CNET Networks announced several new partnerships this quarter that bring its original video programming to television viewers nationwide. The deals illustrate the growing demand for original video programming that has already shown proven successful online, and underscore CNET and GameSpot's positions as the category- defining brands in personal technology and gaming. CNET recently announced plans to launch "CNET TV," a new video-on- demand (VOD) offering that packages a selection of CNET's popular video content for distribution on television and online. CNET TV will launch initially on TV in early June through partnerships with Cox Communications, TiVo, Inc., and TVN Entertainment, who will each offer the content through their own on-demand offerings. Online, CNET TV will launch in the second half of the year and will provide users a single destination where they can access all of CNET's original video content. The new destination will also take advantage of the interactive nature of the Web, giving users the ability to program the content based on topics of interest, engage with CNET's editorial personalities, build custom play lists they can share with friends, and click to buy products or read full reviews. In March, GameSpot announced that it would produce two original series for Gameplay HD, the new gaming channel from VOOM HD Networks. The programming includes GameSpotting, a half-hour series of news, reviews and previews, and CinemAddicts, an hourly series featuring video games in a cohesive cinematic story. Webshots launched "Webshots CollegeLive," a feature that provides students from 4,100 colleges and universities in the US, UK and Canada a place to plan parties and events, share and comment on photos after the events, and connect with others. Webshots members with a .edu email address have access to a special Webshots-created section dedicated to their college, where students can share and view photos from students on their campus. Each college section can only be accessed with a .edu email address from that school, thereby allowing each college homepage to reflect the true spirit of its student body. CNET Networks continues to focus on adding a broader segment of advertisers to the networks. During the first quarter, the company continued to expand its customer base and add new advertiser segments across the network, such as Sara Lee, BMW, and Victoria's Secret. In addition, approximately 80 percent of the general consumer advertisers that did business with CNET Networks during 2005 continued to advertise with the company thus far in 2006. Business Outlook For the second quarter of 2006, management anticipates total revenues of $88.5 million to $92 million. Including $5 million to $5.5 million in stock compensation expense, management estimates operating income between $900,000 and $4.4 million during the second quarter. Management expects operating income before depreciation, amortization and stock compensation expense of between $14 million and $18 million for the quarter. For the full-year 2006, management is revising its expectations. Management is now estimating total revenues to be in the range of $386 million and $403 million. Including $22 million to $24 million in stock compensation expense, management estimates operating income between $30.5 million and $38.5 million during 2006. Management expects operating income before depreciation, amortization and stock compensation expense to be between $86 million and $96 million. About CNET Networks CNET Networks, Inc., (Nasdaq: CNET) is a global media company. The company's brands -- CNET, GameSpot, TV.com, MP3.com, Webshots, BNET and ZDNet -- serve the technology, games and entertainment, business, and community categories. CNET Networks was founded in 1993 and has always been "a different kind of media company" creating engaging media experiences through a combination of world-class content and technology infrastructure. * * * As reported in the Troubled Company Reporter on Feb. 27, 2006, Standard & Poor's Ratings Services raised its ratings on Internet publisher CNET Networks Inc., including raising the corporate credit rating to 'B' from 'B-'. The outlook is positive. CONTINENTAL AIR: Moody's Assigns B3 Corporate Family Rating ----------------------------------------------------------- Moody's Investors Service upgraded the Speculative Grade Liquidity rating of Continental Airlines Inc. to SGL-2 from SGL-3. Moody's also affirmed Continental's long term debt ratings. The outlook is stable. The upgrade of the SGL reflects a combination of strong unrestricted cash and short-term investment balances, better than expected operating cash flow, and the expectation that the company's improved cash flow generation should maintain its balance sheet liquidity while covering a meaningful portion of expected cash demands. Cash balances have been bolstered by a combination of non-fuel cost control, access to capital markets and a stronger revenue environment driven by both volume as well as better yield. However, cost containment measures have been somewhat offset by record level fuel costs. Since only a limited portion of the company's jet fuel needs are hedged, sustained high fuel expenses could put pressure on the company's cash flows and profitability. The SGL-2 rating also considers that Continental has few remaining assets that could be monetized. Should operating cash flows decline, the company has limited options for raising cash as substantially all of its assets were encumbered as of March 31, 2006, and it has no lines of credit available. The company could sell its remaining stakes in Copa Airlines Inc. and ExpressJet Holdings, Inc.; however, sale proceeds would produce only a minor amount. Moody's expects that Continental will remain in compliance with its financial covenants over the next twelve months related to both its credit card processing agreement and its $350 million loan secured by the assets of Continental Micronesia, Inc. The company's sizeable balance sheet cash liquidity is a major factor for the long term debt ratings, and the SGL-2 rating. Given Continental's debt maturities, pension contribution requirements, capital expenditures and possibly rising fuel costs, the ratings could come under pressure if balance sheet liquidity or cash flow were to significantly decline from anticipated levels. Improving the SGL rating will be dependent on the company's ability to continue to increase cash flow generation and balance sheet cash liquidity, continue to reduce costs and achieve steady profitability. Continental's B3 Corporate Family Rating and stable outlook reflects Moody's expectation of continued improvements in operating performance, financial credit metrics and continued reduction of non-fuel costs. Moody's anticipates further growth in the company's cash flows in FY 2006 which should be sufficient to meet all cash demands without meaningfully increasing its debt. Continental Airlines, Inc. is headquartered in Houston, Texas. COPA CASINO: Moody's Rates Proposed $230MM Debt Facility at B3 -------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to first time issuer Copa Casino of Mississippi, LLC's proposed $230 million credit facilities consisting of a $185 million senior secured term loan due 2012 and a $45 million senior secured revolver due 2011, and a B3 corporate family rating. The ratings outlook is stable. Proceeds from the term loan, cash equity, cash flow generated from the initial expansion, and revolver borrowings will be used to fund the entire refurbishment, re-branding and expansion of the former Grand Casino Gulfport into the Gulfport Oasis Casino Resort. The initial refurbishment is expected to be completed by September 2006, while an expansion is slated for completion in March 2007. The B3 corporate family rating considers: (1) development and ramp-up risk related to the issuer's plan to refurbish and expand the former Grand Casino Gulfport property; (2) reliance on cash flow generated from the opening of Phase 1 to support completion of Phase 2 and the risk that if projected returns from Phase 1 fall short of expectations, the project's liquidity position could weaken; (3) management's limited experience developing and operating a hotel and casino property of this size; (4) the uncertainty regarding the future growth of the Mississippi Gulf Coast market in the aftermath of hurricane Katrina; and (5) similar to other gaming projects, high leverage during the first two years of operations. Positive ratings consideration is given to Moody's expectation that the Mississippi Gulf Coast market will recover, adequate liquidity for the project which includes a funded interest reserve through April 2007, a 15% budget contingency, and availability under the proposed $45 million senior secured revolving credit facility. The stable rating outlook reflects Moody's view that the Mississippi Gulf Coast market will recover to at least historic levels so that the cash flow generated from the opening of Phase 1 together with availability under the revolver will provide adequate liquidity to complete Phase 2. Copa Casino of Mississippi, LLC is a 75% owner of, through a subsidiary company called Gulfside Casino Partnership, the former Grand Casino Gulfport in Gulfport, Mississippi. The other 25% owner of Gulfside is Gulfside Casino, Inc. Both GCI and Copa have mutual owners. Currently, Copa is in the process of refurbishing the existing property and re-branding it as the Gulfport Oasis Casino Resort, which will have 1,020 slot machines, 14 table games and a 564 room hotel. Concurrent with the construction of the initial refurbishment, the company will undergo an expansion of the footprint and create a casino property with an additional 1,280 slot machines and 36 table games with an expected opening in April 2007. CSK AUTO: Lenders Extend Filing of Financial Results Until July 2 ----------------------------------------------------------------- CSK Auto Corporation's wholly owned subsidiary, CSK Auto, Inc., entered into a temporary waiver for a stated time period with the lenders under its Second Amended and Restated Credit Agreement with respect to the stated time period under the Credit Agreement to deliver the Company's financial statements for its fiscal year 2005 and first quarter of fiscal 2006. The Company, which previously reported the delay of its filing with the SEC of its annual report on Form 10-K for the fiscal year 2005, requested the Waiver to provide additional time to complete its fiscal 2005 financial statements and required assessment of internal control over financial reporting and its first quarter fiscal 2006 financial statements in light of the ongoing investigation by the Audit Committee of the Company's Board of Directors into certain accounting errors and irregularities as reported in the Troubled Company Reporter on March 30, 2006. Terms of the Waiver The Waiver provides for the Company's continued access to borrowings under its revolving Credit Agreement, as well as a waiver of any default or event of default under the Credit Agreement that might arise as a result of any necessary restatement of prior financial statements provided such restatements are within the scope of the matters. The Company incurred no fees in connection with the Waiver. The Company has previously stated that it expects that its financial results for each of the two fiscal years 2003 and 2004, selected consolidated financial data for each of the five fiscal years 2001 through 2005 and interim financial information for each of its quarters in fiscal year 2004 and for the first three quarters of fiscal 2005 will need to be restated in order to account properly for the matters identified in connection with the investigation. In addition to the Credit Agreement, the indentures governing certain of CSK Auto, Inc.'s other outstanding indebtedness contain SEC filing obligations with respect to the Company's annual and quarterly financial information. The Company has received notices of default under these indentures. More specifically, the Company has received notices of default under the indentures covering $100 million principal amount of 4-5/8% exchangeable notes and $125 million principal amount of 3-3/8% exchangeable notes. The holders of these exchangeable notes will have the right to accelerate payment of their notes if the Company does not file its fiscal 2005 financial statements by July 2, 2006. The Company also received a notice from the trustee under the indenture covering $225 million principal amount of its 7% senior notes alleging a default under such indenture, but has advised the trustee that the 7% indenture does not provide for a default due to a delay in filing financial statements with the SEC or the trustee. In view of these developments and the fact that, based on the present status of the investigation, it now appears unlikely that the Company will file its financial statements with the SEC prior to July 2, 2006, the Company is in discussions for alternative financing arrangements in the event any of its outstanding indebtedness is accelerated. Based on discussions to date and in light of the Company's strong balance sheet and cash flow, the Company believes that alternative financing will be available, if necessary. The Company has obtained a "highly confident" letter from a major investment banking firm indicating a high degree of confidence that the Company can secure alternative financing arrangements, if necessary. No fees were incurred by the Company in connection with obtaining this letter. Preliminary Financial Results Due to the aforementioned investigation, the Company will continue to defer the release of its financial results for the fourth quarter and full year fiscal 2005 and expects to defer release of its financial results for the first quarter of 2006 ended April 30, 2006. However, based on preliminary information, the Company currently expects to report free cash flow of approximately $121 million for fiscal 2005 relative to the Company's prior projected free cash flow estimate of approximately $85 million. Pretax income for fiscal 2005 is expected to be in the range of $60 million to $72 million, reflecting our current estimate of the effect the accounting errors and irregularities noted in the investigation to date will have on our fiscal 2005 results, none of which will impact cash flow information described above. The Company also reports these preliminary net sales results for the first quarter of fiscal 2006 ended April 30, 2006. Total sales for the first quarter of fiscal 2006 were $454.1 million compared to $397.2 million for the first quarter of fiscal 2005. As of May 16, 2006, CSK Auto, Inc. had approximately $132 million of availability under its Credit Agreement with $66 million in borrowings under the revolving credit facility and $32 million in letters of credit outstanding under its Credit Agreement. Status of Audit Committee Investigation As reported in the Troubled Company Reporter on March 30, 2006, the Company's Audit Committee, with the assistance of independent counsel and a separate accounting firm, is conducting an investigation of accounting errors and irregularities that must be completed before the Company's financial statements and reports can be finalized and issued. Results of the investigation to date, which are not yet final, indicate that the probable maximum overstatements relative to the Company's previously filed October 31, 2005 balance sheet are: a) In-transit Inventory - $28 million, b) Other Inventory Accounts - $40 million, and c) Vendor Allowances - $12 million. In addition, the Company has identified in the course of its year- end close process an estimated overstatement of between $3 million and $7 million of store surplus fixtures and supplies, the majority of which appears to have accumulated in periods prior to fiscal 2003. Engagement of Evercore Financial Advisors The Company also engaged Evercore Financial Advisors L.L.C. as an advisor to assist the Company in its dealings with its debt holders and related matters. About CSK Auto Headquartered in Phoenix, Arizona, CSK Auto Corporation -- http://www.cskauto.com/-- is the parent company of CSK Auto, Inc., a specialty retailer in the automotive aftermarket. As of Jan. 29, 2006, the Company operated 1,273 stores in 22 states under the brand names Checker Auto Parts, Schuck's Auto Supply, Kragen Auto Parts and Murray's Discount Auto Parts. * * * As reported in Troubled Company Reporter on April 18, 2006, Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Phoenix, Arizona-based CSK Auto Inc. to 'CCC+' from 'B+'. The subordinate debt rating was lowered to 'CCC-' from 'B-'. The ratings are now on CreditWatch with developing implications. Prior to the downgrade, the ratings had been on CreditWatch with negative implications since March 27, 2006. The downgrade and CreditWatch listing follow the company's announcement it was delaying the filing of its annual report on Form 10-K for the fiscal year ended Jan. 29, 2006, and that this could lead holders of its outstanding notes to file notices of default. CUMULUS MEDIA: Moody's Rates $850M Sr. Sec. Facilities at Ba3 ------------------------------------------------------------- Moody's Investors Service downgraded Cumulus Media, Inc.'s corporate family rating to a Ba3 from a Ba2. Additionally, Moody's assigned Ba3 ratings to the company's $850 million in amended senior secured credit facilities. Proceeds from the transaction will be used to complete Cumulus' recently announced share repurchase and refinance the company's existing senior secured credit facilities. This concludes the review for downgrade that Moody's initiated on May 12, 2006. The one notch downgrade of the corporate family rating reflects the high leverage and increasing financial risk of the company as Cumulus finances the recently announced repurchase of up to $200 million of common stock with additional debt. The one notch downgrade also reflects that while leverage will increase to about 7.8 times from 6.0 times for the TTM period ending March 31, 2006, as measured as Adjusted Debt to Adjusted EBITDA per Moody's Standard Adjustments, the Ba3 rating and stable outlook are supported by Cumulus' strong free cash generation, and our expectation that the company will apply excess free cash flow to quickly reduce the leverage taken on to finance the share repurchase. The ratings continue to reflect Cumulus' dominant market presence, mid-market focus, high proportion of stable local advertising revenues, and enhanced strategic position through its management of the Susquehanna radio assets. The ratings remain constrained by Cumulus' continued distribution of cash to shareholders and willingness to increase leverage to complete these share repurchases, as well as, our increasing concerns on the long term growth prospects of terrestrial radio. Moody's assigned the following ratings: i) Ba3 to the $50 million senior secured revolving credit facility due 2012 ii) Ba3 to the $800 million senior secured term loan due 2013 Moody's lowered the following rating: i) Corporate Family Rating to Ba3 from Ba2 The outlook is stable. Additionally, Moody's withdrew the Ba2 ratings on Cumulus' existing senior secured credit facilities. Cumulus Media, Inc., operating 345 radio stations in 67 markets, is the second largest radio broadcaster in the U.S. based on station count. CURATIVE HEALTH: Judge Bernstein Confirms Prepackaged Ch. 11 Plan ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York confirmed, on May 23, 2006, Curative Health Services, Inc.'s prepackaged plan of reorganization that will eliminate the Company's $185 million debt obligation under its 10.75% senior notes due 2011. Exit financing commitments in the amount of a $30 million term loan and $40 million revolving credit facility have been received from a secured lender to provide the Company with strong liquidity following its emergence from Chapter 11. The Company expects to emerge from Chapter 11 within a matter of weeks after completing the steps set forth in the plan of reorganization. "We are pleased to be making a quick exit from the Chapter 11 proceedings," Paul F. McConnell, President and Chief Executive Officer of Curative, said. "Our operations have continued to run smoothly during this process, and our customers and suppliers have been very supportive of our efforts to eliminate the Company's long-term debt. We look forward to completing the process shortly, after which I believe the Company will be poised for even greater success and growth." Key terms of the Plan are: -- Administrative Expense Claims and Priority Tax Claims will be unimpaired; -- Secured Bank Claims will be paid in full from the proceeds of the DIP Financing; -- Curative Other Secured Claims, Apex Other Secured Claims and eBioCare Other Secured Claims are unimpaired and will be reinstated; -- Curative Other Priority Claims, Apex Other Priority Claims and eBioCare Other Priority Claims will be unimpaired; -- Senior Note Claims will allowed in an amount of not less than $201,407,000. Each holder of a Senior Note Claim will receive a cash payment of approximately 54.9% of its Senior Note Claim. A holder of a Senior Note Claim, who is an accredited investor or qualified institutional buyer, can elect to receive its Pro Rata Share of New CURE Stock and Cash Consideration, the value of which will not exceed approximately 54.9% of their Senior Note Claim; -- each holder of a Curative General Unsecured Claim, Apex General Unsecured Claim and eBioCare General Unsecured Claim will receive a promissory note on the later of 30 days after general unsecured claim is allowed, the Effective Date, or, if specifically designated by a Holder, a Discounted Cash Payment. The Discounted Cash Payment means a Cash payment equal to 50% of the face amount of each respective eBioCare Unsecured Note. -- Intercompany Claims will be extinguished or cancelled by setoff, contribution or other method determined by the Debtors; -- Equity Interests will be cancelled; -- 100% of the New CURE Stock will be held by Electing Senior Noteholders and certain Rights Holders; and -- Executory contracts and unexpired leases will be assumed. A copy of the Debtor's Modified Prepackaged Joint Plan of Reorganization is available for free at: http://bankrupt.com/misc/CurativePlan.pdf Headquartered in Nashua, New Hampshire, Curative Health Services, Inc. -- http://www.curative.com/-- provides Specialty Infusion and Wound Care Management services. The company and 14 of its affiliates filed for chapter 11 protection on Mar. 27, 2006 (Bankr. S.D.N.Y. Case No. 06-10552). Brian E. Greer, Esq., and Martin N. Flics, Esq., at Linklaters, represent the Debtors in their restructuring efforts. No Committee of Unsecured Creditors has been appointed in the Debtors' chapter 11 cases. The Debtors financial condition as of Sept. 30, 2005 showed $155,000,000 in total assets and $255,592,000 in total debts. CYBER DEFENSE: Working Capital Deficits Spur Going Concern Doubt ---------------------------------------------------------------- Hansen, Barnett & Maxwell, in Salt Lake City, Utah, expressed substantial doubt about Cyber Defense Systems, 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 auditing firm pointed to the Company's working capital deficits and losses from operations. The Company reported a $15,579,024 net loss on $461,244 of revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $16,276,638 in total assets and $18,050,596 in total liabilities, resulting in a $1,773,958 in stockholders' deficit. The Company's Dec. 31 balance sheet also showed strained liquidity with $733,878 in total current assets available to pay $17,177,913 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?998 Headquartered in St. Petersburg, Florida, Cyber Defense Systems, Inc. (OTCBB:CYDF) -- http://www.cyberdefensesystems.com/-- offers security solutions for the military, government, and the private sector. Cyber Defense manufactures new generation airships for surveillance and communication. DANA CORP: American Axle Wants Stay Lifted on Patent Litigation --------------------------------------------------------------- American Axle & Manufacturing, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to lift the automatic stay to allow it to: -- continue asserting counterclaims in a patent infringement lawsuit that Dana Corporation is pursuing against American Axle in the U.S. District Court for the Eastern District of Michigan; and -- request for a reexamination of patents issued by the United States Patent and Trademark Office. Fredric Sosnick, Esq., at Shearman & Sterling LLP, in New York, explains that neither action could give rise to a monetary claim against Dana or any of the other Debtors. In mid-1997, the PTO issued two patents to Dana: Patent No. Title ---------- ----- 5,637,042 Drive Line Assembly With Reducing Tube Yoke 5,643,093 Aluminum Driveshaft Having Reduced Diameter End Portion Since the start of the Patent Litigation on October 16, 1998, the District Court twice has entered summary judgment in favor of American Axle: -- the first time on the basis that the Patents are invalid; and -- the second, on a finding of non-infringement. Both of the summary judgment orders subsequently were vacated and remanded on appeal. On January 10, 2006, following the second remand, and less than two months before the Petition Date, the District Court entered an order scheduling the trial for July 11, 2006. As of April 6, 2006, fact discovery in connection with the Patent Litigation is closed and supplemental expert discovery is underway. Mr. Sosnick relates that Dana recently indicated in a letter to the District Court that despite the commencement of the Debtors' Chapter 11 cases, it wishes to proceed to trial on the Patent Litigation and, therefore, would support a lifting of the automatic stay to allow American Axle to continue asserting the Counterclaims. He adds that Dana has proceeded with discovery in connection with the Patent Litigation. On March 22, 2006, Dana sought to expand the scope of the lawsuit by serving a supplemental interrogatory response, which asserted, for the first time, that another one of American Axle's product lines infringes the Patents. Despite its decision to resume the prosecution of the Patent Litigation and also to expand the scope of its allegations, Dana has declined to support the lifting of the stay to allow American Axle to submit the Reexamination Request to the PTO, Mr. Sosnick relates. Mr. Sosnick explains that certain of the Counterclaims seek declaratory relief that the Patents were not validly issued by the PTO. Therefore, if American Axle were to prevail on those Counterclaims, there would be no patent rights for Dana to assert against American Axle in the Patent Litigation. A reexamination of the Patents would lead to the same result if the PTO were to declare that the Patents had been issued improperly, Mr. Sosnick clarifies. In that sense, the Reexamination Request seeks, through the administrative channel, the same ultimate relief as the invalidity Counterclaims seek. Allowing American Axle to retain the flexibility to challenge the validity of the Patents before the PTO would help ensure that there is a complete resolution of the disputes raised in the Patent Litigation, Mr. Sosnick maintains. American Axle asserts that, if Dana chooses to proceed with the prosecution of the Patent Litigation including the newly asserted infringement allegations, it should not be permitted to hide behind the automatic stay as a means to prevent American Axle from fully defending itself. Debtors Respond The Debtors do not object to lifting the stay for the limited purposes of allowing American Axle to assert counterclaims in the Patent Litigation. On the other hand, the Debtors do not consent to lifting the stay to allow American Axle's request for a reexamination of the Patents by the PTO. Corinne Ball, Esq., at Jones Day, in Cleveland, Ohio, asserts that the Reexamination Request, at its essence, is a needless duplication of the Counterclaims. Ms. Ball notes that American Axle can achieve the same result from the District Court as it can from the PTO and, thus, can obtain complete relief through the Patent Litigation alone. Moreover, exclusively pursuing the Patent Litigation -- which is scheduled for trial in early July -- is without doubt the quicker and more direct avenue to resolution, Ms. Ball asserts. She adds that American Axle has failed to justify its alleged need to make the Reexamination Request now, when trial is at hand and Dana is in bankruptcy, despite having been free to make the Reexamination Request at any other time throughout the preceding eight years of the Patent Litigation. "From the Debtors' perspective, it appears clear that the Reexamination Request is little more than a last-minute attempt to initiate a new proceeding against the Debtors, which would undermine or delay the Debtors' ability to pursue its Infringement Claims in the Patent Litigation," Ms. Ball contends. 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. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. 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. 9; Bankruptcy Creditors' Service, Inc., 215/945-7000). DANA CORP: Committee Wants to Examine Prepetition Lenders' Liens ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in Dana Corporation and its debtor-affiliates asks the U.S. Bankruptcy Court for the Southern District of New York's permission, pursuant to Rules 2004 and 9016 of the Federal Rules of Bankruptcy Procedure, to conduct examinations of and obtain documents from: 1. the lenders under the Debtors' $400,000,000 revolving credit facility, effective as of March 5, 2005; 2. the agents under an amended and restated receivables purchase agreement dated April 15, 2005. According to Robert D. Raicht, Esq., at Halperin, Battaglia, Raicht, LLP, in New York, the Committee needs information to comply with a June 19, 2006 deadline by which to commence adversary proceedings contesting the validity of the Prepetition Lenders' and Receivables Facility Agents' liens in the Debtors' assets. Prior to their bankruptcy filing, the Debtors financed their operations, in part, through the five-year revolving credit facility between Dana Corporation and: * Citicorp USA, Inc., as administrative agent; * Deutsche Bank Securities, Inc., as co-syndication agent; * Bank of America, N.A., as co-syndication agent; * JP Morgan Chase Bank, N.A., as documentation agent; * SunTrust Bank, as documentation agent; and * Citigroup Global Markets, Inc., lead arranger and book manager. The Debtors entered into a Security Agreement dated November 18, 2005, by which they granted the Prepetition Lenders a security interest in their equipment, inventory, accounts and certain other assets. The Debtors sold certain of their receivables to Dana Asset Funding LLC, a non-debtor affiliate, under an Amended and Restated Purchase and Contribution Agreement dated April 15, 2005. DAF then sold the Receivables Portfolio under the Receivables Purchase Agreement among: * Dana Corp., as collection agent; * Variable Funding Capital Company, LLC, as conduit purchaser; * JPMorgan, as committed purchaser and agent of Falcon Asset Securitization Corp. and program agent; and * Wachovia Bank National Association, as committed purchaser and agent of Variable Funding Capital. Pursuant to an Intercreditor Agreement dated November 18, 2005, JPMorgan and Wachovia Bank permitted the pledge of the DAF stock to Citicorp. In exchange, Citicorp agreed that its lien on the Receivables Portfolio would not attach until the Receivables Facility terminated and all outstanding amounts owed to the receivable purchasers were repaid. Mr. Raicht relates that as of the Petition Date, the Debtors owed over $700,000,000 to the Prepetition Lenders and the Receivables Facility Agents. The Court authorized the Debtors to satisfy their obligations under the prepetition financing facilities pursuant to the terms of the DIP financing facility, subject to disgorgement in accordance with the Final DIP Order. Among the Committee's mandates is to confirm: 1. the validity, enforceability, priority or extent of the liens asserted by the Prepetition Lenders and the Receivables Facility Agents; 2. the Debtors' assertion that those obligations were fully secured as of the Petition Date; and 3. the status of avoidance actions or other claims, counterclaims or causes of actions. Mr. Raicht tells Judge Lifland that the Committee needs to understand, among other things, the circumstances surrounding the Debtors' decision to grant liens and security interests to the Prepetition Lenders. Those circumstances require thorough and unfettered review by the creditors' statutory representative of the Prepetition Lenders, their employees and agents, and the documents in their custody, in order to analyze the totality of the circumstances behind the granting of those liens and the timing of the Chapter 11 cases. The documents the Committee seeks to examine include: * all correspondence between the Prepetition Lenders and the Debtors; * all internal notes, communications, memoranda, reports, writings and work papers of the Prepetition Lenders that refer to their relationship with the Debtors; * the administration of the transactions between the Prepetition Lenders and the Debtors; and * any direct or indirect acts or omissions by the Prepetition Lenders. Mr. Raicht asserts that the examination of the Prepetition Lenders and the Receivables Facility Agents falls squarely within the parameters of Bankruptcy Rule 2004. The Committee has carefully tailored its request to minimize the Prepetition Lenders' and the Receivables Agents' burden in complying. 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. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. 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. DELPHI CORP: Trade Claimants Comment on Proposed CBA Rejection -------------------------------------------------------------- The Ad Hoc Committee of Trade Claimants and International Truck and Engine Corporation airs their side on Delphi Corporation and its debtor-affiliates' recent move to reject their collective bargaining agreements with unions. (1) Ad Hoc Trade Committee The Ad Hoc Committee of Trade Claimants consists of a number of holders of trade claims, and was recently formed to protect the rights of trade claimants throughout the Debtors' Chapter 11 cases. The Ad Hoc Trade Committee points out that the objections filed by Wilmington Trust Company and Appaloosa Management, LP, et al., urge the Court to prematurely quantify claims by requiring the Debtors to estimate with some degree of precision the distribution to be recovered by their creditors. Wilmington Trust and Appaloosa's objections further urge the Debtors to explain whether these other creditors and claimants will experience a reduction of their recovery under a plan of reorganization if the contracts are rejected. The Ad Hoc Trade Committee notes that what the Objections seek is essentially beyond that which is sought in the Debtors' request to reject their collective bargaining agreements. Furthermore, the Ad Hoc Trade Committee contends that the Objections want to impose a more rigid standard of rejection than that required under Sections 1113 and 1114 of the Bankruptcy Code for determining whether the proposed modifications assure that all affected parties are treated fairly and equitably. In this regard, the Ad Hoc Trade Committee asks the Court to overrule the Objections. However, to the extent the Court accepts Wilmington Trust and Appaloosa's arguments, and determines to include within the scope of the Debtors' request a consideration of the impact that a rejection of the CBAs would have on the Debtors and the recoveries to their creditors, the Ad Hoc Trade Committee asserts that it should be allowed to participate in any hearing on those additional issues. (2) International Truck International Truck and Engine Corporation is the principal operating subsidiary of Navistar International Corporation, which manufactures and sells trucks, buses and diesel engines. ITEC is a party to numerous contracts with the Debtors and purchases $46,000,000 worth of parts from them each year. The parts are purchased for just-in-time production schedules and are an integral part of ITEC's business -- like many other OEMs. Therefore, ITEC asserts that any shutdown of the Debtors' operations resulting in their inability to supply parts to ITEC would cause great hardship to ITEC, its employees and its customers. Cessation of deliveries would also constitute a breach of contract, exposing the Debtors to substantial liability. A shutdown would also cause great hardship to other OEMs, further increasing the impact of the Debtors' actions and the Debtors' exposure to breach of contract claims, ITEC notes. ITEC is confident that the Court is aware of the negative and far reaching effect work stoppages and strikes would have on ITEC, other OEMs, other customers, consumers, and the U.S. and global economies as a whole. ITEC asks Judge Drain to include its concerns in the record as well as consider its concerns as part of the Court's decision process. Keep on Negotiating, Judge Drain Says "I would strongly urge you all to continue talking," Judge Drain told the Debtors and unions in Court during the third day of hearing on the Debtors' request to reject their collective bargaining agreements, Bloomberg News reports. "I don't think you want to look in the eye all those people that are affected by this and tell them that you failed," Judge Drain said. The Section 1113-1114 proceedings began May 9, 2006, with opening statements by Delphi, the UAW, other objecting unions -- IUE-CWA, USW, IAM, IBEW and IUOE -- the Official Committee of Unsecured Creditors and others. Delphi then presented its case. Witnesses in support of the company's case include Delphi's financial advisors, benefits consultants and members of its human resources staff. The remainder of the May 9 hearing and subsequent hearings held the following day and on May 12, continued testimony from Delphi's witnesses and cross-examination by the unions. Once Delphi has completed the presentation of its witnesses, the UAW and the other unions will present their case and witnesses in support of their request that the Court deny Delphi's request. The Section 1113-1114 proceedings will resume on May 24. The Court has set aside May 26 as trial date. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Recruits Booz Allen for Design Phase of SG&A Program ----------------------------------------------------------------- Delphi Corporation and its debtor-affiliates seek the U.S. Bankruptcy Court for the Southern District of New York's approval to enter into an agreement with Booz Allen for the design phase of the Debtors' Selling, General and Administrative expensed program. As part of its organizational restructuring, Delphi Corporation expects to reduce its global salaried workforce by 8,500 employees. The reduction will be a result of initiatives adopted following an analysis of selling, general, and administration cost-saving opportunities. Delphi believes that it should realize savings of $450,000,000 per year once its SG&A program is fully implemented. Before filing for Bankruptcy, Delphi engaged Booz Allen to assist in evaluating potential SG&A savings. Delphi and Booz Allen contemplated that the SG&A program would be executed in a phased approach. During phase one of the program, which has been completed, Booz Allen and Delphi: * evaluated, quantified, and agreed to overall SG&A savings of $450,000,000 with additional potential savings of $90,000,000 the exit from certain businesses; * evaluated, quantified, and targeted savings by function; * identified the primary axis of the company's organization and simplified its structure to achieve transparency and accountability for each business; * created working teams to achieve change throughout the business; and * structured an overall program of changes, which would achieve most of the projected savings by the end of 2007. The second phase of the SG&A restructuring program will build on what Booz Allen and Delphi developed during phase one. During the second phase of the program, Booz Allen will develop and design a plan to realize the targeted SG&A savings. Realizing the savings and transforming Delphi's SG&A will involve these main activities: * The creation of a finance, human resources, and sales back-office shared service organization; * The streamlining of divisional/product business units' SG&A in finance, human resources, and customer interaction processes; * The streamlining of the corporate core of the organization; * The transformation of information technologies, including the creation of information technologies shared services and exploration of other opportunities to reduce costs; * The implementation of new product organization; and * The streamlining of the global supply management organization. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates that the Debtors' SG&A transformation is believed to be one of the largest transformations undertaken in the global automotive supply industry. The transformation program will likely run through 2007 and into 2008 before all phases are complete. At the conclusion of phase two in September 2006, the Debtors anticipate that the implementation phase will commence immediately. Currently, the Debtors estimate that the implementation phase of the SG&A restructuring program will last at least through the first quarter of 2007. Subsequent phases may follow. Booz Allen and Delphi began work on the second phase of the program on April 3, 2006, and anticipate completion by September 2006, before the start of the 2007 fiscal year planning and budgeting process. With Booz Allen's assistance, the Debtors should have $340,000,000 of SG&A savings factored into their line budgets for the 2007 fiscal year. Implementing these cost saving measures will begin in 2006, with the objective of achieving significant savings in the first quarter of 2007. Booz Allen and the Debtors estimate that the second phase of the SG&A transformation program will cost $13,000,000 in fees. In addition, Delphi will pay Booz Allen's expenses, currently estimated to be 18% of the fees. Booz Allen has agreed to provide to the Debtors a discount beginning with the second phase. Fees of more than $10,000,000 up to $20,000,000 will be discounted by 3% and fees greater than $20,000,000 will be discounted by 5%. Booz Allen has also agreed that as much as $1,000,000 of its fees will not be payable by Delphi if specified, pre-determined targets are not met. Conversely, Booz Allen will receive up to $1,000,000 in additional fees if agreed-upon progress toward the detailed targeted savings is exceeded. The "at risk" fees will be withheld by Delphi in five equal amounts of $200,000 from the fees otherwise due to Booz Allen under the Booz Allen Agreement. The Debtors and Booz Allen will meet in December 2006, and jointly review Delphi's budgets and the SG&A savings reflected, and will determine whether or not Booz Allen is entitled to receive either or both of the withheld fees and the additional fees. Implementation Phase Delphi may enter into an agreement with Booz Allen for the third phase of the SG&A program. Although the terms of this agreement have not been fully negotiated, the Debtors want to enter into this agreement without further Court approval after giving notice to parties-in-interest. This third phase of the program will focus on implementing the changes designed in phase two of the program and achieving the remaining $110,000,000 of targeted savings identified during phase two. Based on the parties' current concept of the more limited role that Booz Allen will perform in the implementation phase, the parties estimate that Booz Allen's fees for the portion of the implementation phase, which should be completed through March 2007, will be $10,000,000. All fees incurred by Booz Allen in the implementation phase will be subject to the fee discount. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELPHI CORP: Inks License Pact with Denso Corporation ----------------------------------------------------- Delphi Corporation and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to enter into a license agreement with Denso Corporation, which settles a patent infringement lawsuit between Denso and Delphi Corporation and Delphi Automotive Systems LLC. In March 2002, Denso, a Japanese corporation, alleged that Delphi was infringing several of Denso's patents relating to gasoline management system based on Delphi's manufacture and sale of certain gasoline engine control units. Delphi and Denso have conducted negotiations over the past four years to resolve the dispute. However, on July 11, 2005, Denso filed a patent infringement complaint against Delphi and DAS LLC in the United States District Court for the District of Delaware. Delphi and Denso continued to engage in negotiations and during the past several months, have negotiated the terms of a License Agreement to resolve the dispute. Under the License Agreement, Delphi obtains a license under 21 Denso Gasoline EMS U.S. patents as well as an option to designate two additional existing Denso Gasoline EMS patents for inclusion under the License Agreement, for Delphi's use in its future pursuit of business. Denso obtains a license for up to seven existing Delphi Gasoline EMS patents. In addition, Delphi will pay Denso a settlement amount, the specific amount of which was not publicly disclosed. John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, points out that due to the substantial cost of patent litigation, if Denso were to pursue the Denso Action, Delphi's litigation costs could approach the Settlement Amount. Both Delphi and Denso have agreed to a five-year moratorium on any future charges of infringement of existing Gasoline EMS patents that are not the subject of the settlement. Delphi believes it would be prudent to make the Settlement payment and to end the long-standing dispute with Denso, which if allowed to continue, could further impede the Debtors' reorganization efforts. 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. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) DYNEGY HOLDING: Moody's Affirms $2.9 Bil. Sr. Notes Rating at B2 ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to Dynegy Holdings Inc.'s proposed $150 million senior secured term loan facility. In addition, Moody's affirmed the ratings on the $3.6 billon of outstanding recourse debt of DHI, including its $470 million revolving and $200 million synthetic letter of credit facilities, which are currently undrawn. The rating outlook is stable. The term loan will be secured pari passu with DHI's existing credit facilities under its Fourth Amended and Restated Credit Agreement. The facilities are secured by a first priority lien on substantially all of the company's assets, including the stock in its subsidiaries. The facility also benefits from a guarantee from parent company, Dynegy Inc. and from the majority of its subsidiaries. Upon receipt of the term loan proceeds, DHI will dividend $50 million to DYN, which will use these funds together with cash on hand and the proceeds of a planned equity issuance expected to total approximately $150 million to redeem its $400 million of Series C preferred stock. The equity issuance and term loan are scheduled to close simultaneously and each is conditional upon the other. Dynegy plans to sell its 830 MW Rockingham peaking facility to Duke Power for $195 million and to use a portion of the proceeds to repay the term loan, which will mature five days after the sale closes. While DYN's consolidated unrestricted cash will drop by approximately $60 million as a result of these transactions, cash at DHI, which is subject to dividend restrictions, will increase by $145 million. Moody's does not believe the sale of the Rockingham facility will have a significant negative impact on cash flows over the next two to three years. Dynegy Holdings' B1 corporate family rating is similar to the ratings assigned to other independent power producers Mirant and Reliant. In addition to the company's power generation business concentration risk, the rating is constrained both by leverage that remains high relative to earnings and a commodity-cyclical business strategy of not hedging, leaving Dynegy exposed to a drop in gas prices. While Dynegy's pro forma financial metrics (based on its 2005 operating performance) are low for a B1 rated company with Dynegy's fundamental risk profile, the CFR is supported by the company's diversified electrical generation asset base, which should benefit from an expected recovery in the power market, and the flexibility offered by the company's debt structure that has no near-term maturities. Moody's notes that Dynegy reported a material weakness in its 10-Q for the first quarter of 2006 relating to risk management assets and liabilities in addition to one relating to income taxes in both its 2005 and 2004 10-Ks. While Moody's believes that such material weaknesses generally relate to isolated problems, the fact that these control issues were not remediated is considered a credit negative. Moody's will continue to monitor Dynegy's progress in remediating these material weaknesses. The rating and stable outlook reflect Moody's expectation of DHI's continued operating performance improvement as the power markets recover. DHI's ratings could improve through a combination of improving operational performance, consistent positive free cash flow, and cash flow coverage above 10%. The ratings could experience negative pressure as a result of further deterioration in operating or financial performance relative to plan, a leveraging acquisition, or further reduction in liquidity. Moody's notes that with its business concentrated in a market characterized by unpredictable fluctuations in commodity prices, DHI's ratings could be subject to increased ratings volatility. Following an extensive restructuring of its business, Dynegy is now focused on merchant generation. Headquartered in Houston, Texas, the company's 12,769 MW portfolio of assets is diversified by geographic region as well as dispatch type and fuel source. Ratings affirmed include: Dynegy Holdings Inc. * Corporate Family Rating, B1 * Senior Secured Revolving Credit Facility, rated Ba3, $475 million * Senior Secured Synthetic Letter of Credit Facility, rated Ba3, $200 million * Second Priority Senior Secured Notes, rated B1, $86 million outstanding * Senior Notes, rated B2, $2.9 billon outstanding * Shelf (Senior Unsecured/Subordinated/Preferred), rated (P)B2/(P)B3/(P)Caa1 respectively Dynegy Inc. -- * Shelf (Senior Unsecured/Subordinated/Preferred), rated (P)Caa1/(P)Caa2/(P)Caa3 Dynegy Roseton, L.L.C. and Dynegy Danskammer, L.L.C. * Pass-Through Certificates, rated B2, $800 million outstanding Dynegy Capital Trust II * Shelf rated (P)B3 Dynegy Capital Trust III * Shelf rated (P)Caa1 NGC Corporation Capital Trust I * Trust Securities, rated B3, $200 million outstanding EURO-PRO: Involuntary Chapter 11 Case Summary --------------------------------------------- Alleged Debtors Case No. -------------- -------- Euro-Pro Holdings LLC 06-40842 1210 Washington Street Newton, Massachusetts 02465 Euro-Pro Operating LLC 06-40841 1210 Washington Street Newton, Massachusetts 02465 Euro-Pro Management Company 06-40843 1210 Washington Street Newton, Massachusetts 02465 Involuntary Petition Date: May 23, 2006 Chapter: 11 Court: District of Massachusetts (Worcester) Petitioners' Counsel: Douglas R. Gooding, Esq. Choate, Hall & Stewart, LLP Two International Place Boston, Massachusetts 02110 Tel: (617) 248-5000 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Massachusetts Mutual Life Subordinated Notes $14,500,000 Insurance Company plus unpaid 1500 Main Street, Suite 2800 interest Springfield, MA 01115 Unionbancal Equities, Inc. Subordinated Notes $9,000,000 400 California Street plus unpaid 8th Floor interest San Francisco, CA 94104 John Hancock Life Subordinated Notes $5,750,000 Insurance Company plus unpaid 197 Clarendon Street, C-2 interest Boston, MA 02116 Phoenix Life Subordinated Notes $5,000,000 Insurance Company plus unpaid 56 Prospect Street interest Hartford, CT 06115 Hancock Mezzanine Subordinated Notes $2,500,000 Partners II L.P. plus unpaid 197 Clarendon Street, C-2 interest Boston, MA 02116 John Hancock Variable Life Subordinated Notes $1,500,000 Insurance Company plus unpaid 197 Clarendon Street, C-2 interest Boston, MA 02116 Manulife Insurance Company Subordinated Notes $250,000 Fka Investors Partner Life plus unpaid Insurance Company interest 197 Clarendon Street, C-2 Boston, MA 02116 EUROFRESH INC: S&P Places B Corporate Credit Rating on Neg. Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit and other ratings on Willcox, Arizona-based EuroFresh Inc. on CreditWatch with negative implications, meaning that the ratings could be lowered or affirmed following the completion of the rating agency's review. EuroFresh is a year-round producer and marketer of fresh greenhouse-grown tomatoes in the U.S. Total debt outstanding at the company was about $251 million as of March 31, 2006. "The CreditWatch placement follows materially weaker-than-expected financial performance in the first fiscal quarter," explained Standard & Poor's credit analyst Alison Sullivan. "The first quarter typically represents a substantial portion of cash flow for the company, as tomato prices improve in the winter months due to the lower supply of field-grown tomatoes." Performance was affected by increased energy costs, resulting in: * higher natural gas expenses to heat the greenhouses; * higher costs for transportation and packaging materials; and * production issues. Consequently, lease-adjusted total debt to EBITDA was higher than expected, at about 6.7x for the 12 months ended March 31, 2006 (or 8.2x when preferred stock is treated as 100% debt-like). Standard & Poor's believes that EuroFresh will be challenged to meet prior expectations of leverage (including preferred stock) close to 6x in fiscal 2006. Standard & Poor's will review EuroFresh's operating and financial plans with management before resolving the CreditWatch listing. EXCO RESOURCES: Earns $92.2 Million in First Quarter 2006 --------------------------------------------------------- EXCO Resources, Inc., reported its financial and operating results for the quarter ended March 31, 2006. For the quarter, EXCO reported income from continuing operations and net income of $37.2 million on oil and natural gas revenues before commodity price risk management activities of $70.3 million, and net cash provided by operating activities of $62.9 million. For the quarter ended March 31, 2005, EXCO had a loss from continuing operations of $28.7 million (which excludes Addison Energy Inc.) and net income of $92.2 million on oil and natural gas revenues before commodity price risk management activities of $38.9 million, and net cash used in operating activities of $115.0 million. In February 2005, EXCO sold its Canadian subsidiary, Addison Energy Inc., for $443.4 million and recognized income from discontinued operations of $120.9 million as a result. Also, the results for 2005 and the first 44 days of 2006 do not include the acquisition of producing oil and natural gas properties from ONEOK Energy completed by TXOK Acquisition, Inc., an affiliate of EXCO, on Sept. 27, 2005, and subsequently acquired by EXCO on Feb. 14, 2006. The first quarter 2006 results include $43.6 million of non-cash pre-tax mark to market income resulting from changes in the fair value of our derivative financial instruments. The first quarter 2005 results were impacted by a hedge termination charge of $52.6 million and $1.1 million of non-cash pre-tax mark to market expense resulting from changes in the fair value of our derivative financial instruments. Production for the quarter ended March 31, 2006, was approximately 148 Mbbls of oil and 7.2 Bcf of natural gas, or 8.1 Bcfe, as compared to production for the quarter ended 2005 of approximately 126 Mbbls of oil and 5.2 Bcf of natural gas, or 5.9 Bcfe. The average oil price per Bbl, before cash settlements of derivative financial instruments, received during the quarter ended March 31, 2006, was $60.76 versus $47.09 for the quarter ended March 31, 2005, a $13.67 per Bbl or 29% increase. The average natural gas price per Mcf, before cash settlements of derivative financial instruments, received during the current quarter was $8.51 versus $6.40 for the prior quarter, a $2.11 per Mcf or 33% increase. On Oct. 3, 2005, EXCO Holdings Inc., or EXCO Holdings, the company's former parent company was acquired by and merged with EXCO Holdings II, Inc., with EXCO Holdings remaining as the survivor. On Feb. 14, 2006, in conjunction with our initial public offering, EXCO Holdings merged with EXCO Holdings II, Inc., with EXCO Holdings remaining as the survivor. On Feb. 14, 2006, in conjunction with our initial public offering, EXCO Holdings merged with and into EXCO Resources, Inc. In the IPO, the company sold 53,615,200 shares of our common stock for aggregate net proceeds to EXCO Resources of $662.1 million after underwriters' discount. The net proceeds from the IPO, together with cash on hand and additional borrowings under EXCO's credit agreement, were used to repay debt issued in connection with the Equity Buyout and debt and preferred stock issued by TXOK Acquisition to purchase oil and natural gas properties from ONEOK Energy. The redemption of the preferred stock resulted in TXOK Acquisition becoming a wholly owned subsidiary of EXCO. The acquisition of TXOK Acquisition by EXCO Resources on Feb. 14, 2006, for $642.9 million ($633.0 million after contractual adjustments) added approximately 223.7 Bcfe of estimated proved reserves to EXCO as of Dec. 31, 2005. Daily net production in March 2006, attributable to these properties, was approximately 47.1 Mmcfe per day, a substantial addition to EXCO's historical production. The estimated PV-10 of the oil and natural gas properties acquired was $908.6 million at Dec. 31, 2005, and the Standardized Measure at that date was $690.8 million. EXCO sold 2 properties during the first quarter of 2006 for proceeds of $500,000. Headquartered in Dallas, Texas, EXCO Resources, Inc. (NYSE: XCO) - - http://www.excoresources.com/-- is a public oil and natural gas acquisition, exploitation, development and production company with principal operations in Texas, Colorado, Ohio, Oklahoma, Pennsylvania, and West Virginia. * * * As reported in the Troubled Company Reporter on April 25, 2006, Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on EXCO Resources and revised the company's outlook to stable from developing. In addition, Standard & Poor's lowered its ratings on EXCO's senior unsecured notes to 'B-' from 'B'. EXCO RESOURCES: Moody's Lowers Corp. Family Rating to B2 -------------------------------------------------------- Moody's Investors Service downgraded EXCO Resources, Inc.'s ratings, moving its Corporate Family Rating from B1 to B2 and its senior unsecured note rating from B2 to B3. The rating outlook is stable. This concludes a review for downgrade begun on August 29, 2005 when, after having sold its Canadian reserves at for a peak price and continuing its ongoing evaluation of strategic alternatives, EXCO formally announced a long series of strategic moves that Moody's expected to wind up in the B2 or B1 corporate family rating range. EXCO continues to evaluate frequent acquisition packages and the formation of a master limited partnership with certain of its reserves. Now that EXCO has presented its actual and pro-forma reserve data and first quarter 2006 numbers, it is clear that it will remain much too leveraged and much too active to warrant a B1 corporate family rating. The stable rating outlook could be quickly affected to the downside if leverage escalates with acquisitions to levels not compatible with the rating and if sequential quarter operating results do not reasonably conform to EXCO's expectations. Moody's will track overall sequential quarter operating results and management's ability to grow at costs, margins, and leverage suitable to the ratings. The outlook could also be negatively affected if EXCO spun-off assets into an MLP and used proceeds buyback stock in proportions incompatible with the ratings. The outlook could firm if performance meets expectations. To firm the ratings, EXCO's performance will need to reasonably meet expectations while leverage would need to rise only moderately through potential leveraged acquisitions. In the last 16 months, EXCO sold its Canadian reserves, executed a management-led buyout of its former private equity group, executed a highly leveraged acquisition, built a still larger business base with several smaller acquisitions, and executed its initial public offering this year. It emerges with high leverage on proven developed reserves, an aggressive acquisition posture, the intention to fund acquisitions with bank debt until its current large undrawn bank borrowing base is fully borrowed and therefore driving leverage still higher, a potential further restructure by spinning off its Appalachian reserves into an MLP within the next twelve months, and considerable uncertainty about the underlying performance of its large proportion of newly acquired properties, paid for at up- cycle prices. Nevertheless, Moody's believes EXCO management, while aggressive and always strategically active, is seasoned and likely to navigate such waters in a manner that will weigh the risks of cyclical oil and natural gas prices, over-paying and over- leveraging acquisitions, and running too long with a heavy capital structure reliance on comparatively volatile bank borrowing base debt. In October 2005, management conducted a $699.3 million equity buyout funded by a $350 million interim bank loan, $183.1 million of new private equity financing, and the exchange by management and other stockholders of EXCO Holdings capital stock for $166.9 of the new Holdings II common stock. Holdings II was subsequently merged into EXCO Holdings. In late September prior to the buyout, an affiliate of EXCO, TXOK completed the acquisition of ONEOK Energy for $642.9 million funded through $20 million in private debt financing, the issuance of $150 million of TXOK preferred stock to BP EXCO Holdings LP, $308 million of borrowings under the TXOK Credit facility and $200 million of borrowings under a TXOK term loan. EXCO recently completed a $662 million IPO with proceeds used to repay the $350 million interim bank loan, fund the $150 million redemption of TXOK preferred stock, and repay part of the TXOK credit facility and the entire TXOK term loan. Immediately prior to the IPO, EXCO Holdings was merged into EXCO Resources. With the completion of the IPO and the redemption of the $150 million of TXOK preferred stock, EXCO Holdings was merged into EXCO Resources and TXOK became a wholly-owned subsidiary of EXCO Resources. Per Moody's global ratings methodology for independent exploration and production firms, on historic pro-forma estimates, EXCO's operating, financial, and strategy profile maps to a weak B1 corporate family rating. However, it achieved the B1 mapping solely due to the effect of very high but cyclical natural gas prices that have subsequently fallen substantially. Otherwise, its production scale, diversification, leverage, and full-cycle cost structure combine to map to a B2 corporate family rating. Furthermore, uncertainty on true underlying production and reinvestment results plus our forward view on its performance, higher leverage, acquisition activity, and oil and natural gas prices also warrant a B2 rating. We also expect 2006 drillbit F&D to remain high, if not higher than 2005 levels. EXCO has reduced leverage with proceeds from its successful initial public offering but its leverage remains full for the rating and will rise with leveraged acquisitions after the recent largely debt-financed West Texas and Appalachian Basin acquisitions. Overall, EXCO also faces the task of demonstrating that operating performance from its property base is supportive of a B1 rating. EXCO's reserve scale and diversification largely map EXCO to a higher rating than the methodology's overall B2 rating as does a reasonable track recording of reserve replacement costs. Production remains very small at approximately 127 mmcfe/day based on current run-rate production, mapping to the Caa category. Leverage metrics map to the high end of the B category. Overall returns map to the A range but this is partially a result of a previous large cash outflow related to the termination of underwater hedges. Critical elements of the cost structure including finding and development and full cycle costs map to the Ba, B, and Caa ranges. The ratings are supported by improved leverage from prior to the IPO, fairly durable production; a very strong price environment; good management team; and by EXCO's scale along with some onshore diversification, and a large lower risk drilling inventory. The ratings are constrained by (i) uncertainty concerning full- cycle unit economics performance, (ii) the company's future operating performance given its ownership of the ONEOK assets, and (iii) a small production base. EXCO Resources, Inc. is headquartered in Dallas, Texas. FDL INC: Creditors' Committee Calls for CEO's Pay Cut ----------------------------------------------------- Stephen Striebel, Chairman of the Board, President and sole shareholder of FDL, Inc., could face an $8,000 per week pay cut if the Official Committee of Unsecured Creditors succeeds in its move to reduce his salary. The Committee wants the U.S. Bankruptcy Court for the Southern District of Indiana in Indianapolis to reduce Mr. Striebel's weekly salary to $2,000 from the $10,000 he allegedly currently receives per week. The Committee says CEOs of major corporations, which operate at a profit, do not earn the sums that Mr. Striebel makes. The Committee said that Mr. Striebel's salary should be limited to the normal salary of a CEO of a company of similar business with similar sales, less a recognition that the company is in a bankruptcy proceeding. Elliott D. Levin, Esq., at Rubin & Levin, P.C., sums up the Committee's views " to pay the individual who brought down this ship $10,000 per week to oversee his failures, makes no sense, sends the wrong message to unsecured creditors, is not within the spirit of the Bankruptcy Code, and is sheer lunacy." Headquartered in Kokomo, Indiana, FDL, Inc., manufactures office and fast food metal furniture. The company filed for Chapter 11 protection on March 24, 2006 (Bankr. S.D. Ind. Case No. 06-01222). Deborah Caruso, Esq., and Erick P. Knoblock, Esq., at Dale & Eke, P.C., represent the Debtor. Elliott D. Levin, Esq., at Rubin & Levin, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it did not state its assets but estimated debts between $10 Million and $50 Million. FDL INC: Court Okays Elliott Levin as Committee's Counsel --------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana in Indianapolis authorized the Official Committee of Unsecured Creditors appointed in FDL, Inc.'s chapter 11 case to employ Elliott D. Levin, Esq., of Rubin & Levin, P.C., as its bankruptcy counsel. As reported in the Troubled Company Reporter on April 13, 2006, Mr. Levin will: a. give the Committee legal advice with respect to its duties and powers in connection with the continued operation of the business and management of the property of the Debtor; b. examine the conduct of the Debtor's affairs and the causes of its inability to pay its debts as they mature; c. conduct an examination of officers and employees of the Debtor and of other witnesses in order to determine whether the Debtor has made preferential transfers of its property; d. assist the Committee in negotiating with the Debtor concerning the terms of a proposed Plan; and e. perform all other legal services for the Committee which may be necessary. Documents submitted to the Court did not say how much Mr. Levin's rates are. Headquartered in Kokomo, Indiana, FDL, Inc., manufactures office and fast food metal furniture. The company filed for Chapter 11 protection on March 24, 2006 (Bankr. S.D. Ind. Case No. 06-01222). Deborah Caruso, Esq., and Erick P. Knoblock, Esq., at Dale & Eke, P.C., represent the Debtor. Elliott D. Levin, Esq., at Rubin & Levin, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it did not state its assets but estimated debts between $10 Million and $50 Million. FDL INC: Court Approves LS Associates as Financial Consultant ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Indiana granted the request of FDL Inc. to employ LS Associates, LLC, as its financial consultant. LS is expected to: (a) monitor and review all the Client's disbursements to ensure that they are in accordance with the budget approved in the Bankruptcy Case; (b) monitor and review the debts, payables and other obligations incurred by the Clients during the Bankruptcy Case; (c) monitor and review the Budget; (d) monitor and review the Client's purchase orders to ensure compliance with the Budget; (e) monitor and review the Client's shipments of inventory to ensure compliance with the Budget; and (f) other tasks as may be requested by the Client. Under to an Engagement Agreement between the Debtor and the Firm, LS Associates will be paid $7,500 per week. To the best of the Debtor's knowledge, the Firm has no connection with any party in interest and holds no interest adverse to the Debtor or its estate. Headquartered in Kokomo, Indiana, FDL, Inc., manufactures office and fast food metal furniture. The company filed for Chapter 11 protection on March 24, 2006 (Bankr. S.D. Ind. Case No. 06-01222). Deborah Caruso, Esq., and Erick P. Knoblock, Esq., at Dale & Eke, P.C., represent the Debtor. Elliott D. Levin, Esq., at Rubin & Levin, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it did not state its assets but estimated debts between $10 Million and $50 Million. FEDDERS CORP: Michael Giordano Named as CEO Elect ------------------------------------------------- Fedders Corporation's Board of Directors elected the Company's president, Michael Giordano, as chief executive officer elect, effective immediately and until Oct. 1, 2006, when he will become president and chief executive officer. Sal Giordano, Jr., the company's current chief executive officer has announced that he will step down effective Oct. 1, 2006 and will continue as executive chairman. With the Company since 1990, Michael Giordano has held numerous U.S.-based and international positions and has been involved in all aspects of the company's transformation from a North American manufacturer and marketer of appliance- type room air conditioners to a global company focused on the much larger, growing and more profitable central residential, commercial and industrial markets for air treatment products, primarily in North America, China and India. Since becoming president in November 2004, Mr. Giordano has assumed operating responsibility for Fedders International, Fedders Residential HVAC and Fedders Commercial/Industrial Products, as well as the company's global engineering, sourcing, product planning and sales and marketing activities. Prior to becoming president, Mr. Giordano was executive vice president, finance and administration and chief financial officer since 1999. In 1996, Mr. Giordano relocated to Singapore as managing director of Fedders Asia and has since been instrumental in establishing and managing the company's strategic operations around the globe. Michael Giordano is the son of Sal Giordano, Jr., the current Chairman of the Company's board of directors. About Fedders Headquartered in Liberty Corner, New Jersey, Fedders Corporation, -- http://www.fedders.com/-- is a leading global manufacturer and marketer of air treatment products, including air conditioners, air cleaners, dehumidifiers, and humidifiers. The company has production facilities in the United States in Illinois, North Carolina, New Mexico, and Texas and international production facilities in China, India and the Philippines. All products are manufactured to Fedders' one worldwide standard of quality. The Company's balance sheet at Dec. 31, 2005, showed $331,050,000 in total assets and $331,110,000 in total liabilities, resulting in a de minimis stockholders' deficit. * * * As reported in the Troubled Company Reporter on July 5, 2005, Standard & Poor's Ratings Services lowered its corporate credit ratings on air treatment products manufacturer Fedders Corp. and Fedders North America Inc. to 'CC' from 'CCC'. At the same time, Fedders North America's senior unsecured debt rating was lowered to 'C' from 'CC'. S&P said the outlook remains negative. FOAMEX INTERNATIONAL: D.E. Shaw Wants Equity Committee Appointed ---------------------------------------------------------------- D.E. Shaw Laminar Portfolios, LLC, asks the U.S. Bankruptcy Court for the District of Delaware to compel the U.S. Trustee to appoint an official equity committee. D.E. Shaw is a beneficial owner of Foamex International, Inc.'s common and preferred stock. It owns 3,388,426 shares of common stock and 15,000 shares of Series B Preferred Stock, convertible to 1,500,000 shares of common stock. In April 2006, D.E. Shaw asked the U.S. Trustee to appoint an official committee of equity security holders. The U.S. Trustee declined. L. Jason Cornell, Esq., at Fox Rothschild LLP, in Wilmington, Delaware, notes that the Debtors have recently experienced improved business conditions. The Debtors report that they need to update their business plan before recommencing negotiations for a revised plan of reorganization. The improved business condition also demonstrates that equity holders are poised to realize significant value in the Debtors' Chapter 11 cases, Mr. Cornell says. As the Debtors finalize a revised business plan and resume negotiations regarding a new plan of reorganization, Mr. Cornell asserts that equity holders are entitled to a seat at the bargaining table. It is thus imperative that equity holders be afforded adequate representation to protect and advance their interests at this critical stage in the Chapter 11 process, Mr. Cornell adds. Mr. Cornell contends that principles of fundamental fairness dictate that equity holders should have the opportunity to meaningfully participate in the process of revising and commenting on the business plan. There is currently no other constituency that can adequately represent shareholder interests, Mr. Cornell says. Although the Debtors' Board of Directors and management have fiduciary duties to their shareholders, this does not ensure that they will selflessly advocate for those shareholders. The current Plan provides that 90% of new equity would be distributed to senior secured noteholders, and the remaining 10% would be reserved for the management incentive plan and KERP. Given that the Debtors' management was poised to enjoy a significant equity stake, perhaps a concession by secured creditors to ensure management's support of the Plan, management's ability to impartially consider the interests of more junior stakeholders could very well have been compromised, Mr. Cornell remarks. D.E. Shaw is mindful of the additional expenses that the Debtors might incur in relation to the appointment of an equity committee. However, Mr. Cornell points out that the expenses that the equity committee might incur weigh lesser than the need for the public shareholders to be represented. Mr. Cornell adds that the equity committee will also have significant interest in minimizing not only its own administrative expenses, but all administrative expenses as well, as more administrative expenses would reduce the shareholders' ultimate recovery. Mr. Cornell further asserts that an equity committee needs to be appointed immediately so that it can participate in the Debtors' process of revising their business plan. The revised business plan will form the basis of the Debtors' valuation, and ultimately, the distributions to be made pursuant to an amended Plan. If there is no input from an equity committee in the formulation of a business plan, that implies there is no value for equity, Mr. Cornell notes. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INTERNATIONAL: Court Approves Equity Trading Protocol ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware rules that any purchase, sale or transfer of Foamex International's equity securities in violation of the equity securities trading procedures will be null and void ab initio, and will confer no rights on the transferee. After receipt of a Notice of Proposed Transfer, the Debtors will have 20 days to file with the Court and serve to the Substantial Equityholder an objection. In their objection, the Debtors will ask the Court to hear the objection on a shortened notice, and rule that the transaction will not be effective unless approved by final and nonappealable Court order. If the Debtors do not object within the 20-day period, that transaction may proceed in an amount not exceeding the amount proposed in the Notice of Proposed Transfer. Any transaction is void ab initio unless: (a) there is express permission from the Debtors allowing the transaction; (b) the 20 day-period expires without an objection from the Debtors; or (c) that transaction is approved by final and nonappealable Court order. In view of their recent Schedule 13-D and Schedule 13-G filings with the Securities and Exchange Commission, D.E. Shaw Laminar Portfolios, LLC, Sigma Capital Management, LLC, and The Goldman Sachs Group, Inc., are not required to file a notice of their status with the Court. Any sale or purchase of Foamex International's stock by these recent Substantial Equityholders may proceed without filing a Notice of Transfer if the disposition is: -- to any recent Substantial Equityholder, -- to anyone who is, or will not, be a Substantial Equityholder, or -- in open market transactions. Beneficial ownership by any recent Substantial Equityholder will be determined solely in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, and the written representations given to the Debtors from each of the Recent Substantial Equityholder. No party, including the Debtors, will have the right to limit any of the transfers giving rise to the beneficial ownership of the recent Substantial Equityholders as their ownership is reflected in their 13-D and 13-G filings with the Securities and Exchange Commission. The Court rules that the sole and exclusive remedy available against any of the recent Substantial Equityholder: (a) with respect to any equity interests transfer not reflected in their 13-D and 13-G SEC filings will be limited to the treatment of that transfer as void ab initio, and (b) with respect to the breach of any written representations made to the Debtors, the treatment of those transfers as void ab initio as may be necessary to make that representation true as of the date made; provided that the recent Substantial Equityholder will have the right to contest that treatment. The Court directs the Debtors to instruct their transfer agent for the equity interests in Foamex International to take all steps necessary, including, without limit, issuing new share certificates, to register the transfers of the equity interests acquired by each of Goldman Sachs, DE Shaw and Sigma reflected in their 13-D and 13-G filings with the SEC. 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. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) FRANKLIN PIERCE: Moody's Downgrades Debt Rating from Ba1 to Ba3 --------------------------------------------------------------- Moody's Investors Service downgraded Franklin Pierce College's debt rating to Ba3 from Ba1. The rating action affects $48.4 million of rated debt, including the College's Series 1994, 1998, and 2004 bonds issued through the New Hampshire Higher Education and Health Facilities Authority. The Series 1998 and 2004 bonds, totaling $44 million of outstanding debt, are insured by ACA Financial Guaranty Corporation. Moody's does not rate ACA Financial Guaranty Corporation. The rating action reflects the College's currently limited financial flexibility within a highly competitive student market environment. The rating outlook is stable at the lower rating level. Payment of the Series 1994 bonds is a general obligation of the College, further secured by a first security interest in Gross Receipts, a security interest in all Equipment, and a mortgage lien on the Facility. Payment of the Series 1998 and Series 2004 bonds is a general obligation of the College, further secured by a first security interest in Gross Receipts, a security interest in all Equipment, a mortgage lien on the Facility, as well as debt service reserve funds. Debt-Related Rate Derivatives: none Strengths * Growing full-time equivalent enrollment at the College's main Rindge campus in fall 2005 and moderately improved freshmen selectivity. * Consistently increasing net tuition per student and total tuition revenue, a critical credit factor as the College relies on student charges for nearly 93% of its operating base. * Capital investment of nearly $25 million in the Rindge campus from 2002 to 2007, which should enhance the attractiveness of campus and ability to attract students. * Expected support from the State of New Hampshire for financial aid endowment, and capital campaign expected to be launched soon. Challenges * Limited financial reserves provide little financial flexibility and drive need to consistently generate positive operating cash flow; debt service coverage thin but adequate at 1.3 times. * Highly competitive market for students both at the main campus and in adult education programs; overall enrollment has declined due to drops in continuing education and degree-completion programs offered at the College's satellite campuses. * Moderate amount of private gift flow, with $1.5 million of average gift revenue over the past three years, in part due to the College's young alumni body; this number excludes over $1million of annual federal grant revenue. * High degree of leverage and need to grow operating cash flow to support increasing debt service; reliance on bank line of credit for cash needs adds a risk element. Recent Developments and Results: The primary driver of the rating downgrade is the College's limited financial flexibility as it continues to implement strategic initiatives to stabilize overall enrollment in a highly competitive market. While enrollment at the main campus in Rindge, NH has been growing, the College has experienced enrollment challenges in degree-completion and continuing education programs offered at satellite campuses. As a result, total enrollment declined to 2,254 full-time equivalent students in fall 2005. Management is focused on further growing higher profitability graduate programs including a new Doctor of Arts program starting in fall 2006 and a proposed nursing program working in conjunction with a New Hampshire hospital. Some of these programs have already shown increases. The College's ability to stabilize enrollment levels, grow net tuition per student, and improve annual operating cash flow would be positive credit factors. The College's very thin balance sheet leaves it with fairly limited flexibility given this competitive environment and relatively high debt load, with $56 million of outstanding direct debt. Franklin Pierce is in the early stages of a capital campaign which will have a component geared toward endowment growth; however, the College's fundraising has historically been modest. The College expects that the State will make a contribution to the endowment to be used for financial aid for New Hampshire residents. The College's operating performance has weakened moderately over the past two years, in large part due to expense increase, including a 9% jump in FY 2005, which management attributes largely to increased utility, healthcare, and depreciation expenses. An operating cash flow margin of 9.8% in FY2005 provided thin but adequate actual debt service coverage of 1.3 times. However, additional growth in cash flow will be necessary to absorb maximum debt service. Principal payments on the Series 1998 bonds are postponed until 2008, and the Series 2004 bonds do not begin to amortize until 2030. Management is expected a tight operating year again in FY2006. Favorably, the College has been able to consistently grow total tuition revenue, a key indicator as 93% of the College's revenues are derived from student charges. The College relies on a $5 million line of credit and draws from the quasi-endowment to meet seasonal cash flow needs. If a default occurs under the line of credit, the bank may accelerate the maturity of the line of credit, making it immediately due and payable. The line is secured by the College's accounts held at the bank, which do not include the quasi-endowment. Outlook The stable outlook reflects our expectation that the College will generate positive cash flow in the near-term and that operating cash flow will adequately cover debt service over the next two years. Balance sheet deterioration or weakening of annual debt service coverage could place further pressure on the College's debt rating longer-term. What could change the rating-UP * Successful execution of strategic enrollment plans leading to stronger operating performance and debt service support What could change the rating-DOWN * Financial resource deterioration; additional borrowing; tightening of operating cash flow and debt service coverage Key Indicators * Total Full-Time Equivalent Enrollment: 2,254 FTE enrollment * Total Financial Resources: $4.6 million * Direct Debt: $55.9 million * Expendable Financial Resources-to-Debt: 0.05 times * Expendable Financial Resources-to-Operations: 0.07 times * Average Operating Margin: -1.6% * Average Debt Service Coverage: 1.6 times * Reliance on Student Charges: 92.6% Rated Debt: * Series 1994: Ba3 * Series 1998: Ba3 (insured by ACA) * Series 2004: Ba3 (insured by ACA) FREMONT HOME: DBRS Puts Low-B Rating on $7.6 Million NIM Notes -------------------------------------------------------------- Dominion Bond Rating Service assigned new ratings of A (low), BBB (low), BB, and B to these NIM Notes issued by Fremont CI-7. * $23.1 million, NIM Notes, Series 2006-2, Class N1 New Rating A (low) * $4.1 million, NIM Notes, Series 2006-2, Class N2 New Rating BBB (low) * $3.7 million, NIM Notes, Series 2006-2, Class N3 New Rating BB * $3.9 million, NIM Notes, Series 2006-2, Class N4 New Rating B The NIM Notes are backed by a 100% interest in the Class C and Class P Certificates issued by Fremont Home Loan Trust 2006-2. The Class C Certificates will be entitled to all excess interest in the Underlying Trust, and the Class P certificates will be entitled to all prepayment premiums or charges received in respect of the mortgage loans. The NIM notes will also be entitled to the benefits of the underlying interest rate swap agreement and an interest rate cap agreement with The Bank of New York. Payments on the NIM Notes will be made on the 25th of each month commencing in May 2006. The interest payment amount will be distributed sequentially to the holders of Class N1 through N4 Notes, followed by the principal payment amount to the holders of Class N1 through N4 Notes, sequentially, until the note balance of such class has been reduced to zero. Any remaining amounts will be distributed to the Issuer, the Indenture Trustee, and holders of Preference Shares. The mortgage loans in the Underlying Trust were all originated or acquired by Fremont Investment & Loan. GUITAR CENTER: To Acquire Assets of Hermes Trading -------------------------------------------------- Guitar Center, Inc. signed a definitive agreement to acquire certain of the assets of Hermes Trading Company, Inc., a Texas- based musical instruments distributor and retailer. The acquisition includes four retail locations in Texas, in San Antonio, McAllen, Laredo and Brownsville. As part of the transaction, Guitar Center will purchase the existing inventory of musical instruments and equipment for the four locations. The stores will be remodeled and rebranded into Guitar Center format stores. Financial terms were not disclosed. The transaction will be funded through Guitar Center's available cash and credit facility. The acquisition is subject to customary terms and conditions and may be adjusted based on the final determined inventory value. The closing is expected to occur in the second quarter. It is expected that the stores acquired in this acquisition will offset other Guitar Center store openings for 2006. "We are excited about the acquisition of these four Hermes Music stores, which cater largely to the Hispanic market," Marty Albertson, Chairman and Chief Executive Officer of Guitar Center, said. "This transaction will enable us to strengthen our service to this important customer base. We currently have 12 Guitar Center stores in Texas, including our El Paso store, which we opened last year, and the conversion of these stores to the Guitar Center brand will expand our presence across the state. In particular, we will introduce the Guitar Center brand in San Antonio, one of the top retail markets in Texas." Hermes Music has been a musical instruments distributor and retailer since 1982, with sales in the United States, Mexico and South America. Following the transaction, Hermes Music will continue to operate its distribution business and sales to customers outside the United States. Alberto Kreimerman, founder of Hermes Music, will focus his time and efforts helping support underprivileged children in the United States Hispanic and Republic of Mexico communities through the Hermes Music Foundation, Proyecto de Amor, and the television program that supports both projects. Guitar Center anticipates assisting Mr. Kreimerman in these efforts. About Guitar Center Headquartered in Westlake Village, California, Guitar Center Inc. -- http://www.guitarcenter.com/-- is the leading United States retailer of guitars, amplifiers, percussion instruments, keyboards and pro-audio and recording equipment. The Company's retail store subsidiary presently operates 176 Guitar Center stores across the United States, with 131 stores in primary markets, 43 stores in secondary markets and 2 stores in tertiary markets. In addition, its Music & Arts division operates 89 stores specializing in band instruments for sale and rental, serving teachers, band directors, college professors and students. The Company is also the largest direct response retailer of musical instruments in the United States through our wholly owned subsidiary, Musician's Friend, Inc., and its catalog and web site, http://www.musiciansfriend.com/ The Company's 4% Senior Convertible Notes carry Moody's Investors Service's B1 rating and Standard & Poor's BB rating. HEALTH SCIENCES: Accumulated Deficit Prompts Going Concern Doubt ---------------------------------------------------------------- Stonefield Josephson, Inc., in Santa Monica, California, raised substantial doubt about Health Sciences Group, 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 accumulated deficit of approximately $28,676,000, a working capital deficit of approximately $4,898,000 at Dec. 31, 2005, and recurring operating losses. The Company reported a $5,750,359 net loss on $60,142 of sales for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $4,155,552 in total assets and $9,066,679 in total liabilities, resulting in a $4,911,127 in stockholders' deficit. The Company's Dec. 31 balance sheet also showed strained liquidity with $131,241 in total current assets available to pay $5,028,856 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?9a2/ Headquartered in Los Angeles, California, Health Sciences Group, Inc. (OTCBB:HESG) -- http://www.healthsciencesgroup.com./-- is an integrated provider of innovative products and services in the nutraceutical, pharmaceutical, and cosmeceutical industries. Health Sciences offers value-added ingredients, bioactive formulations, and proprietary technologies used in nutritional supplements, functional foods and beverages, and skin care products. HEALTHSOUTH CORP: Settles Multi-Billion Fraud Case for $3 Million ----------------------------------------------------------------- HealthSouth Corporation (OTC Pink Sheets: HLSH) has reached a non-prosecution agreement with the Department of Justice negotiated through the Office of the United States Attorney for the Northern District of Alabama for $3 million. The non-prosecution agreement removes the threat of an indictment of HealthSouth by the United States government for the accounting fraud committed against the company by members of its former management. According to recent company estimates, the fraud's impact was greater than $4 billion. The $3 million payment will go to the U.S. Postal Inspection Services Consumer Fraud Fund, Bloomberg reports. The company settled a fraud case with the U.S. Securities and Exchange Commission last year for $100 million and another case with investors in March for $445 million. "We are extremely pleased and grateful to have reached this non-prosecution agreement with the Department of Justice," said Jon F. Hanson, HealthSouth Chairman of the Board. "With the removal of the threat of an indictment, HealthSouth takes a giant leap forward in recovering from the effects of the massive accounting fraud perpetrated against the company and its investors by members of the company's former management. We are delighted to put this chapter behind us, and I am particularly happy with the extensive efforts by our new management team to put in place the policies, procedures and controls necessary to ensure our systems and results are sound and reliable going forward." "The new HealthSouth is a transformed company in terms of our corporate culture, governance and compliance, and we will remain vigilant to safeguard and protect our reputation for integrity, honesty and fair dealing -- for the benefit of our shareholders, customers and employees," said Jay Grinney, HealthSouth President and Chief Executive Officer. "The fundamentals are in place at numerous levels of HealthSouth for renewed success. On behalf of the 37,000 dedicated HealthSouth employees, I can say that we are delighted as an organization to be getting back to what we do best -- providing outstanding rehabilitation, diagnostic and ambulatory surgical care throughout the nation." The agreement was negotiated by Alice Martin, the United States Attorney for the Northern District of Alabama, and Robert S. Bennett and Charles F. Walker, outside counsel for HealthSouth at Skadden, Arps, Slate, Meagher & Flom LLP. Mr. Bennett noted, "We are pleased we were able to resolve this matter and that the government recognized the extensive cooperation provided by Gregory L. Doody, HealthSouth General Counsel, and other members of the company's new management team." About HealthSouth Headquartered in Birmingham, Alabama, HealthSouth Corporation -- http://www.healthsouth.com/-- provides outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide. * * * Moody's assigned HealthSouth's debt and corporate family ratings at B2 and B3 respectively. The ratings were placed on April 18, 2006, with a stable outlook. On April 11, 2006, Standard & Poor's placed the company's long term local and foreign issuer credit ratings at B with a stable outlook. HEALTHTRONICS INC: Will Hold Annual Stockholder Meeting on June 8 ----------------------------------------------------------------- HealthTronics, Inc., will hold its annual stockholders meeting at 8:00 a.m. on June 8, 2006, at 1301 Capital of Texas Highway, Atrium of Suite B-200 in Austin, Texas. HealthTronics's stockholders will be asked to: (a) elect 10 directors to serve on the Company's board of directors; and (b) consider and vote upon a proposal to amend the Company's 2004 Equity Incentive Plan to increase by 2,000,000 shares the number of shares available for issuance (from 950,000 shares to 2,950,000 shares). The Company's Board of Directors has fixed the close of business on April 27, 2006, as the record date for the determination of shareholders entitled to receive notice of, and to vote at, the meeting. Full-text copies of these regulatory filings are available for free at: Proxy Statements http://ResearchArchives.com/t/s?994 Proxy Voting Instructions http://ResearchArchives.com/t/s?995 Headquartered in Austin, Texas, HealthTronics, Inc. -- http://www.healthtronics.com/-- provides healthcare services primarily to the Urology community, and manufactures and distributes medical devices. The Company also manufactures specialty vehicles used for the transport of high technology medical devices, broadcast & communications equipment and the Homeland Security marketplace. * * * As reported in the Troubled Company Reporter on April 7, 2006, Moody's Investors Service placed HealthTronics, Inc.'s ratings under review for possible downgrade following the company's announcement on March 31, 2006, that its financial statements should be restated. Moody's rates HealthTronic's corporate family rating at Ba3; $50 million senior secured revolving credit facility due 2010 at Ba3; and $125 million senior secured term loan B due 2011 at Ba3. HIGH VOLTAGE: Files Amended Plan of Liquidation in Massachusetts ---------------------------------------------------------------- Stephen S. Gray, the chapter 11 trustee appointed in the bankruptcy cases of High Voltage Engineering Corporation and its debtor-affiliates, filed with the U.S. Bankruptcy Court for the District of Massachusetts a First Amended Plan of Liquidation and its accompanying First Amended Disclosure Statement on May 17, 2006. The Plan is a liquidating plan, and provides for the substantive consolidation of the Debtors' estates into a single consolidated estate. On a consolidated basis, the value of the Debtors' assets exceeds their liabilities and the consolidated estate will be solvent. Accordingly, the Plan provides for the payment of all allowed claims against the Debtors in full, including interest, if any, due on account of those claims, and distributing the Debtors' surplus funds to the equity holders on account of their equity interests. Assets for Distribution The Chapter 11 Trustee has sold the Debtors' businesses and in so doing has liquidated substantially all of their assets. The Debtors have no other known assets of any material value, other than potential causes of action and other miscellaneous assets, including: -- insurance refunds, -- some share of ReVera Incorporated's stock owned by the Debtors, -- cash collateral securing the letter of credit issued by Citizens Bank of Massachusetts; and -- receivable from the sale of ASIRobicon S.p.A., an affiliate. Proceeds realized on the sale of the ReVera Stock and net recoveries, if any, on Causes of Action and miscellaneous assets may increase the total value of the Debtors' assets available for distribution to Equity Holders. Based on the Debtors' schedules of liabilities, their books and records, and the claims filed against the Debtors, the Chapter 11 Trustee estimates that remaining Allowed Claims against the Debtors ultimately will total approximately $46.8 million, including estimated interest to be paid on account of certain Claims. In determining this amount, the Chapter 11 Trustee, with the assistance of counsel, his business advisors and Trumbull, analyzed claims that have been and might be asserted against the Debtors. However, there is no way of predicting the final amount of Allowed Claims with certainty. The Chapter 11 Trustee currently has on hand approximately $114 million in cash. Certain amounts of this cash will be reserved as disputed claims reserve, the post-confirmation administrative reserve and the trust administrative reserve. As the amount of proceeds on hand exceeds the Disclosure Statement Estimated Claims Amount, the Trustee expects that there will be sufficient funds remaining for distribution to Equity Holders, which amount may be increased if there are recoveries on the Debtors' unliquidated assets, including Causes of Action. Liquidating Supervisor The Plan provides for the appointment of Stephen S. Gray as the Liquidating Supervisor for each of the Debtors. The Liquidating Supervisor will be responsible for, among other things, administering the Post-Confirmation Estate until a final transfer date and preparing, filing and resolving the Debtors' final tax returns on and after the Final Transfer Date. The Plan further provides for the establishment of the Liquidating Trust. On the Effective Date, the Trustee will transfer all of the Debtors' Causes of Action to the Liquidating Trust and the Beneficiaries of the Liquidating Trust will be deemed to have transferred all of the Beneficiary Claims to the Liquidating Trust. On the Effective Date, the Liquidating Supervisor will transfer the Available Cash to the Liquidating Trust. On the Final Transfer Date, the Liquidating Supervisor will: (a) transfer all of the Debtors' remaining assets, whether liquidated or unliquidated, to the Liquidating Trust; and (b) cause each of the Debtors to be dissolved. At this time, the Liquidating Trustee will be responsible for, among other things, making distributions to holders of as-yet satisfied Allowed Claims, if any, in accordance with the Plan, investigating and potentially pursuing Causes of Action, objecting to Disputed Claims asserted against the Debtors, and winding up the Liquidating Trust. The Plan further provides for the establishment of the: (1) the Plan Committee, the members of which will be: * Ravi Chachra, * Nicholas Walsh, and * Dixon Yee; and (2) the Liquidating Trust Committee, the members of which will be: * Ravi Chachra, * Nicholas Walsh, and * Dixon Yee. The Plan Committee will advise the Liquidating Supervisor with respect to his duties under the Plan. The Liquidating Trust Committee will advise the Liquidating Trustee with respect to his duties under the Plan and Liquidating Trust. A full-text copy of the Amended Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060523224131 About High Voltage Headquartered in Wakefield, Massachusetts, High Voltage Engineering Corporation -- http://www.asirobicon.com/-- owns and operates a group of three industrial and technology based manufacturing and services businesses. HVE's businesses focus on designing and manufacturing high quality applications and engineered products, which are designed to address specific customer needs. The Debtor filed its first chapter 11 petition on March 1, 2004 (Bankr. Mass. Case No. 04-11586). Its Third Amended Joint Chapter 11 Plan of Reorganization was confirmed on July 21, 2004, allowing the Company to emerge on Aug. 10, 2004. High Voltage and its debtor-affiliates filed their second chapter 11 petition on Feb. 8, 2005 (Bankr. Mass. Case No. 05-10787). S. Margie Venus, Esq., at Akin, Gump, Strauss, Hauer & Feld LLP, and Douglas B. Rosner, Esq., at Goulston & Storrs, represent the Debtors. In the Company's second bankruptcy filing, it listed $457,970,00 in total assets and $360,124,000 in total debts. Stephen S. Gray was appointed chapter 11 Trustee in February 2005. John F. Ventola, Esq., and Lisa E. Herrington, Esq., at Choate, Hall & Stewart LLP represent the chapter 11 Trustee. Ira M. Levee, Esq., at Lowenstein Sandler PC and Steven B. Levine, Esq., at Brown Rudnick Berlack Israels LLP represent the Official Committee of Unsecured Creditors. INFOR: Moody's Reviews Junk Rating on $315M Loan & May Downgrade ---------------------------------------------------------------- Moody's Investors Service place the ratings of Infor Global Solutions and SSA Global Technologies on review for possible downgrade following the recent announcement that Infor has signed a definitive agreement to acquire SSA Global. The review reflects the integration risk of the relatively large acquisition and the possibility of increased leverage at Infor. Moody's recognizes that the existing debt facilities may be refinanced as part of the transaction upon which time their ratings would be withdrawn. These Infor ratings have been place under review for downgrade: * Corporate Family Rating -- B3 * $50 million revolving credit facility due 2010 -- B2 * $605 million senior secured first lien term loan due 2011 -- B2 * $315 million senior secured second lien term loan due 2012 -- Caa2 These SSA Global ratings have been place under review for downgrade: * Corporate Family Rating -- B2 * $25 million revolving credit facility due 2010 -- B2 * $200 million senior secured first lien term loan due 2011 -- B2 On May 15, 2006 Infor reached an agreement to acquire SSA Global Technologies for approximately $1.4 billion or $19.50 per share. The combined company will have approximately $1.6 billion of annual revenues making it the third largest enterprise software provider. The details of the financing, capital structure and integration strategies of the proposed transaction have not been disclosed at this time. The review will focus on the debt levels in the new capital structure, the integration plan for the two companies and potential synergies to be gained from the combination. Infor Global Solutions Topco Ltd., headquartered in Alpharetta, Georgia and a Cayman Islands exempted company, is a global provider of enterprise applications software for the manufacturing and distribution sectors. Infor is privately held by Golden Gate Capital, Summit Partners and company management. Pro forma for the transaction, Infor generated revenues $775 million for the LTM period ending November 30, 2005. Headquartered in Chicago, Illinois, SSA Global Technologies Inc.'s enterprise software applications are designed to improve various core enterprise resource planning functions, including accounting, human resource, inventory management, manufacturing, payroll, and purchase and sales processing. It also provides applications that are integrated extensions to its core ERP products. These include corporate performance, customer relationship, product lifecycle, supplier relationship, and supply chain management products. INGRAM MICRO: Fitch Withdraws BB+ Sr. Subordinated Notes' Rating ---------------------------------------------------------------- Fitch affirmed Ingram Micro Inc.'s 'BBB-' Issuer Default Rating. Fitch also assigned a 'BBB-' rating to IM's senior unsecured credit facility. The company's 'BB+' rating on the senior subordinated notes which were redeemed is withdrawn. The Rating Outlook is Stable. The ratings and Outlook reflect: * Ingram Micro's leading market position in each of its operating regions; * significant customer and product portfolio diversification (no customer represents more than 5% of revenues); and * increasing geographic diversification. They also reflect IM's ability to grow revenues by up to 10% without utilizing cash to support operations, as well as the wholesale information technology distributors' proven ability to generate significant cash from operations in a declining sales environment, and solid revenue growth prospects for the small- to medium-size business market, which is anticipated to continue to rely significantly on the 2-tier distribution channel. Total adjusted leverage (considering rent expense and accounts receivables [A/R] taken off balance) strengthened to approximately 2.6x for the latest 12 months ended April 1, 2006, from almost 4x two years ago. Over the same time period, interest coverage (EBITDA to interest expense) also strengthened to more than 9.0x from approximately 7.2x. Ratings concerns continue to center on: * the relatively thin margins associated with the wholesale technology distribution model, which Fitch believes will remain between 1.0% and 1.5% over the longer term; * modest and less consistent than anticipated annual free cash flow; * vendor concentration to Hewlett-Packard (HP; rated 'A/F1' by Fitch with a Positive Outlook), which represents more than 20% of revenues; * expectations for smaller acquisitions, potentially debt- financed; and * limited pricing power due to expectations for continued vendor consolidation of their distribution partners and ongoing competition with the direct model. The Stable Rating Outlook reflects Fitch's belief that IM's profitability and free cash flow will be more consistent through the IT cycle, driven by moderate revenue growth expectations. Lower fixed costs due to past restructuring and recent outsourcing initiatives, and increased geographic and product diversification should also contribute to greater operating consistency. While IM's EBIT margins increased to approximately 1.4% for the LTM ended April 1, 2006 from approximately 0.9% three years ago, Fitch continues to believe IM will be challenged to sustain EBIT margins meaningfully above 1.5% over the longer term. The majority of incremental revenue growth is expected from the Asia-Pacific region, which represented almost 20% of 2005 revenues versus approximately 10% in 2004 and 2003 (due to the company's acquisition of Tech Pacific) and is a region characterized by lower margins and a comparatively less rational pricing environment. IM's IT distribution industry-leading cash conversion cycle, which is expected to remain near 22 days, resulted in modest cash flow from operations for 2005 despite sales growing more than 13% for the year. Fitch estimates IM can grow revenues up to 10% without using cash from operations, which compares favorably to its primary competitor, Tech Data Corp. (Tech Data; rated 'BB+' with a Stable outlook by Fitch). Fitch estimates Tech Data's CCC adjusted for A/R taken off balance sheet is more than 10 days higher than that of IM, due primarily to IM's significant footprint in APAC (faster inventory turns), which limits Tech Data's revenue growth without using cash from operations to the mid- to high-single digits. Both distributors are expected to unwind inventory positions and generate significant cash from operations in a declining sales environment, as occurred during the IT downturn in 2001-2002. Given expectations for mid- to high-single digit organic revenue growth, Fitch estimates IM's annual free cash flow will be more consistent going forward and be $50 million-$150 million in each of the next two years. While the company has historically pursued a primarily organic growth strategy, Fitch believes the company is likely to use a portion of free cash flow to make strategic acquisitions, aimed at gaining capabilities that support growth opportunities in consumer and point of sale markets or provide significant share in growing geographic markets. While acquisitions are expected to be small, Fitch believes IM's potential use of debt to fund larger acquisitions could result in negative rating actions. Liquidity as of April 1, 2006 was solid and consisted of: * approximately $326 million of cash and cash equivalents; * an undrawn $175 million senior unsecured revolving credit facility expiring December 2008, the availability under which was reduced by $20.7 million for outstanding letters of credit (L/Cs); * an AUD100 million (approximately $72 million as of April 1, 2006) senior unsecured credit facility related to the Tech Pacific acquisition, under which $6.8 million was outstanding at April 1, 2006; * $1.1 billion of various on-balance-sheet trade A/R facilities, of which approximately $527 million was outstanding at April 1, 2006; and * an undrawn $213 million off-balance-sheet facility related to European A/Rs expiring in 2007. IM also has various other L/Cs and overdraft facilities, primarily uncommitted, totaling $602 million of capacity, against which $110.4 million was outstanding and approximately $36 million of L/Cs had been issued at April 1, 2006. Total debt at April 1, 2006 was approximately $644 million and consisted entirely of borrowings related to various A/R and other credit facilities, which expire from 2007 to 2009. J.L. FRENCH: Inks $255MM Goldman Sachs & Morgan Stanley Exit Pact ----------------------------------------------------------------- J.L. French Automotive Castings, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to approve a $255 million exit financing to be provided by Goldman Sachs Credit Partners, L.P., and Morgan Stanley Senior Funding, Inc. Scotta E. McFarland, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP in Wilmington, Delaware, tells the Court the exit lenders offered the most favorable terms, including the lowest overall interest rate. These terms, coupled with Goldman Sachs' familiarity with the Debtors as second lien agent, formed the basis for the Debtors' decision. The senior secured bank financing includes: (a) $150 million senior secured first lien term loan; (b) $55 million senior secured second lien term loan; (c) $50 million senior secured revolving credit facility. The proceeds of the term facilities will be used to fund, in part, the recapitalization contemplated by the Debtors' Second Amended Plan. Amounts available under the revolving facility will be used to provide for the Debtors' ongoing working capital requirements. Goldman Sachs has agreed to provide: -- 60% of the term facilities; and -- 50% of the revolving facility. Morgan Stanley has agreed to provide: -- 40% of the term facilities; and -- 50% of the revolving facility. Fees to be paid to the exit lenders were not disclosed to the public. The Debtors ask the Court for permission to file under seal copies of the commitment letter and fee agreement. Rating Agency Agreements In connection with the exit financing, the Debtors entered rating agency agreements with Moody's Investors Services and Standard & Poor's Rating Agency. The Debtors will pay Moody's $50,000 for its services in rating the exit facility. S&P will be paid $52,500. Headquartered in Sheboygan, Wisconsin, J.L. French Automotive Castings, Inc. -- http://www.jlfrench.com/-- is one of the world's leading global suppliers of die cast aluminum components and assemblies. There are currently nine manufacturing locations around the world including plants in the United States, United Kingdom, Spain, and Mexico. The company has fourteen engineering/customer service offices to globally support our customers near their regional engineering and manufacturing locations. The Company and its debtor-affiliates filed for chapter 11 protection on Feb. 10, 2006 (Bankr. D. Del. Case No. 06-10119 to 06-06-10127). James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G.M. Selzer, Esq., at Pachulski Stang Ziehl Young & Jones, and Marc Kiesolstein, P.C., at Kirkland & Ellis LLP, represent the Debtors in their restructuring efforts. Ricardo Palacio, Esq., and William Pierce Bowden, Esq., at Ashby & Geddes, PA, represents the Official Committee Of Unsecured Creditors. When the Debtor filed for chapter 11 protection, it estimated assets and debts of more than $100 million. JLG INDUSTRIES: Moody's Ups Low-B Rating on Corp. Family & Notes ----------------------------------------------------------------- Moody's Investors Service upgraded the debt ratings of JLG Industries, Inc. -- Corporate Family Rating to Ba3 from B1, Senior Unsecured Notes to B1 from B2, and Senior Subordinate Notes to B2 from B3. The outlook is changed to stable from positive. Moody's said that JLG's Ba3 corporate family rating reflects the company's strong competitive position in the global aerial work platform industry and the telehandler industry, and the continued improvement in the company's credit metrics. This improvement has been driven by the success of JLG's cost reduction initiatives, the strong rebound in North American economy, and the replacement and expansion of rental fleets as a result of a robust non-residential construction market. Credit metrics of 6.5x interest coverage and 1.8x leverage through the last twelve months ended January 2006 solidly position JLG within the Ba3 rating category. These strengths, however, are balanced against the ongoing cyclicality of the non-residential construction market and the potential for JLG to pursue further growth initiatives which could require incremental capital investment. The company's current strong liquidity profile, with balance sheet cash exceeding $183 million as of January 29, 2006, should enable the company to fund growth without incurring significant additional financial leverage. Consequently, even in consideration of a modest cyclical downturn in business trends, Moody's anticipates that JLG will maintain appropriate financial metrics for the Ba3 rating. JLG industries, Inc., headquartered in McConnellsburg, Pennsylvania, with executive offices in Hagerstown, Maryland, is a leading manufacturer of aerial work platforms and telehandlers. JORGE FERREIRA: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Jorge Enrique Ferreira 1278 Vernon Court Chula Vista, California 91913 Bankruptcy Case No.: 06-01176 Chapter 11 Petition Date: May 22, 2006 Court: Southern District of California (San Diego) Judge: James W. Meyers Debtor's Counsel: Thomas B. Gorrill, Esq. 401 West "A" Street, Suite 1770 San Diego, California 92101 Tel: (619) 237-8889 Total Assets: $1,751,335 Total Debts: $1,507,801 Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ MMCA/C1 $20,928 6150 Omni Park Drive Mobile, AL 36609 Sallie Mae 3rd Party LSC Student Loan $11,760 1002 Arthur Drive Lynn Haven, FL 32444 Pt Loma Fed CR Union Automobile Loan $9,749 9420 Farnham Street San Diego, CA 92123 GEMB/At Home With Bass Credit Line $6,998 MCYDSNB Credit Card $3,535 CBUSASEARS Credit Card $1,022 Union Bank Draft Protection $968 Chase/CC Credit Card $962 GEMB/MERVYNS Credit Card $859 GEM/MENS Credit Card $204 PIER 1/NB Credit Card $185 JP MORGAN: Moody's Places Low-B Rating on 2 Cert. Classes --------------------------------------------------------- Moody's Investors Service has assigned a Aaa rating to the senior notes issued by J.P. Morgan Mortgage Acquisition Trust 2006-NC1, and ratings ranging from Aa1 to Ba2 to the subordinate notes in the deal. The securitization is backed by New Century Mortgage Corporation originated, adjustable-rate and fixed-rate, subprime mortgage loans acquired by J.P. Morgan Mortgage Acquisition Corp. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, excess spread, and overcollateralization. The ratings also benefit from an interest- rate swap agreement provided by JPMorgan Chase Bank, National Association. Moody's expects collateral losses to range from 4.35% to 4.85%. JPMorgan Chase Bank, National Association will service the loans. The Complete Rating Actions: J.P. Morgan Mortgage Acquisition Trust 2006-NC1 Asset-Backed Pass-Through Certificates, Series 2006-NC1 * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. A-4, Assigned Aaa * Cl. A-5, Assigned Aaa * Cl. M-1, Assigned Aa1 * Cl. M-2, Assigned Aa2 * Cl. M-3, Assigned Aa3 * Cl. M-4, Assigned A1 * Cl. M-5, Assigned A2 * Cl. M-6, Assigned A3 * Cl. M-7, Assigned Baa1 * Cl. M-8, Assigned Baa2 * Cl. M-9, Assigned Baa3 * Cl. M-10, Assigned Ba1 * Cl. M-11, Assigned Ba2 JUNIPER NETWORKS: E.N.Y. Atty. Investigates Stock Options Grant --------------------------------------------------------------- Juniper Networks, Inc. (Nasdaq:JNPR), received a request for information from the office of the United States Attorney for the Eastern District of New York relating to the Company's granting of stock options. In addition, the Board's audit committee is reviewing the Company's historical stock option granting practices. The audit committee will be assisted by independent counsel and advisers. According to Juniper Chairman and CEO Scott Kriens, "Juniper is a quality company whose success is the byproduct of an unwavering commitment to customers, employees, partners and shareholders. This will not change. We will remain focused on our business objectives while we respond to these inquiries." About Juniper Networks Juniper Networks, Inc. -- http://www.juniper.net/-- is the leader in enabling secure and assured communications over a single IP network. The company's purpose-built, high performance IP platforms enable customers to support many different services and applications at scale. Service providers, enterprises, governments and research and education institutions worldwide rely on Juniper Networks to deliver products for building networks that are tailored to the specific needs of their users, services and applications. Juniper Networks' portfolio of proven networking and security solutions supports the complex scale, security and performance requirements of the world's most demanding networks. * * * Standard & Poor's Ratings Services raised its corporate credit rating on Mountain View, California-based Juniper Networks Inc. to 'BB' from 'B+' in June 2005. S&P said the outlook is stable. JUNIPER NETWORKS: S&P Puts BB Corp. Credit Rating on Neg. Watch --------------------------------------------------------------- Standard & Poor's Rating Services placed its ratings on Juniper Networks Inc., including its 'BB' long-term and 'B-1' short-term corporate credit ratings, on CreditWatch with negative implications. The action follows Juniper's announcement that it had received a request for information from the office of the United States Attorney for the Eastern District of New York relating to the company's granting of stock options. Juniper is fully cooperating with the inquiry. The audit committee of the company's board of directors is also reviewing the company's stock option granting practices, assisted by independent counsel and advisers. While it is too early to assess the outcome of the investigations, Juniper's substantial liquidity (cash and financial assets totaled $2.0 billion at March 30, 2006, compared to $400 million rated debt) should cushion the downside risk to the rating. Standard & Poor's will monitor events to assess what impact, if any, these developments may have on the ratings on Juniper. LEVITZ HOME: Rejects Eleven Store Subleases ------------------------------------------- Nicholas M. Miller, Esq., at Jones Day, in New York, notifies the U.S. Bankruptcy Court for the Southern District of New York that Levitz Home Furnishings, Inc., and its debtor-affiliates rejected 11 Store Subleases, effective as of May 4, 2006, and abandoned their interest in any personal property located at the Premises -- all located at River Edge, New Jersey. The Tenants of the 11 Store Subleases are: * River Edge Diamond Deli; * Hairport; * Brackett Cleaners; * Pills, Inc., doing-business-as Manor Pharmacy; * River Edge Pizza; * River Edge Hardware; * Babylon Restaurant; * Howard Chung & Hirokazu; * KEPA III, Inc.; * H&R Block Eastern Tax Services, Inc.; and * Nicholas Porreca, Susan Haemmerle, & Mary Ellen Iazzetti, doing business as Hair Biz About Levitz Home Headquartered in Woodbury, New York, Levitz Home Furnishings, Inc. -- http://www.levitz.com/-- is a leading specialty retailer of furniture in the United States with 121 locations in major metropolitan areas principally the Northeast and on the West Coast of the United States. The Company and its 12 affiliates filed for chapter 11 protection on Oct. 11, 2005 (Bank. S.D.N.Y. Lead Case No. 05-45189). David G. Heiman, Esq., and Richard Engman, Esq., at Jones Day, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $245 million in assets and $456 million in debts. Jay R. Indyke, Esq., at Kronish Lieb Weiner & Hellman LLP represents the Official Committee of Unsecured Creditors. Levitz sold substantially all of its assets to Prentice Capital on Dec. 19, 2005. (Levitz Bankruptcy News, Issue No. 13 Bankruptcy Creditors' Service, Inc., 215/945-7000) LONG BEACH: Moody's Puts Low-B Rating on 2 Certificate Classes -------------------------------------------------------------- Moody's Investors Service assigned a rating of Aaa to the senior certificates issued by Long Beach Mortgage Loan Trust 2006-A, and ratings ranging from Aa2 to Ba2 to the subordinate certificates in the deal. The securitization is backed by Long Beach Mortgage Company originated second lien fixed-rate mortgages. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, overcollateralization, and excess spread. Moody's expects collateral losses to range from 10.00% to 11.00%. Long Beach Mortgage Company will act as master servicer and Washington Mutual Bank will act as a servicer. Moody's has assigned Washington Mutual its servicer quality rating as a primary servicer of subprime loans. The Complete Rating Actions: Issuer: Long Beach Mortgage Loan Trust 2006-A * Cl. A-1, Assigned Aaa * Cl. A-2, Assigned Aaa * Cl. A-3, Assigned Aaa * Cl. M-1, Assigned Aa2 * Cl. M-2, Assigned Aa3 * Cl. M-3, Assigned A2 * Cl. M-4, Assigned A3 * Cl. M-5, Assigned Baa1 * Cl. M-6, Assigned Baa2 * Cl. M-7, Assigned Baa3 * Cl. B-1, Assigned Ba1 * Cl. B-2, Assigned Ba2 MARMION INDUSTRIES: Recurring Losses Prompt Going Concern Doubt --------------------------------------------------------------- Sherb & Co., LLP, in New York, New York, raised substantial doubt about Marmion Industries Corp.'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 and working capital deficit. The Company reported a $2,276,487 net loss on $2,491,736 of revenues for the year ended Dec. 31, 2005. At Dec. 31, 2005, the Company's balance sheet showed $771,341 in total assets and $1,303,083 in total liabilities, resulting in a $531,742 in stockholders' deficit. The Company's Dec. 31 balance sheet also showed strained liquidity with $646,647 in total current assets available to pay $1,259,796 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?99b Headquartered in Houston, Texas, Marmion Industries Corp. (OTCBB:MMIO) -- http://www.marmionair.com/-- manufactures and markets explosion-proof air conditioners, refrigeration systems, chemical filtration systems, and building pressurizers. MAULDIN-DORFMEIER: Court Confirms Second Amended Chapter 11 Plan ---------------------------------------------------------------- The Hon. Whitney Rimel of the U.S. Bankruptcy Court for the Eastern District of California confirmed the Second Amended Plan of Reorganization filed by Mauldin-Dorfmeier Construction, Inc. The Court determined that the Plan satisfies the 13 standards for confirmation under Section 1129(a) of the Bankruptcy Code. Summary of Second Amended Plan Under the Plan, the Debtor will liquidate and reduce to cash all of its remaining assets in a manner consistent with the realization of fair value for those assets. The assets not liquidated and reduced to cash will be abandoned. Any planned abandonment of assets will not take place until after notice by the Debtor to creditors and other parties-in-interest and an opportunity for those parties to object to the abandonment pursuant to the relevant provisions of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure. A post-confirmation Committee of Unsecured Creditors will be formed on the effective date of the Plan to supervise the Debtor's progress in the liquidation of assets. If in the view of the Committee the Debtor is not acting in the estates' best interest, the Committee has the right and power to seek appointment of a liquidating agent or conversion of the case to chapter 7. Payment to Creditors Under the Plan, an initial distribution will be made after the Plan's confirmation for all allowed administrative and priority claims at $500,000, of which $250,000, will be paid to administrative convenience class of unsecured creditors. All allowed general unsecured and surety claims will receive a pro rata share of the remaining available cash within 90 days of the effective date. Subsequent distributions of available cash will be made every six months provided the Debtor will not be obligated to make a subsequent distribution until the available cash exceeds $200,000. A full-text copy of the Second Amended Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=060523224817 Headquartered in Fresno, Calif., Mauldin-Dorfmeier Construction, Inc., provides construction services. The Company is owned 50% each by Patrick Mauldin and Alan Dorfmeier, who are president and vice president, respectively. The Company filed for chapter 11 protection on Feb. 29, 2005 (Bankr. E.D. Calif. Case No. 05-11402). Riley C. Walter, Esq., at Walter Law Group, represents the Debtors in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated between $10 million to $50 million in assets and debts. MAXTOR CORP: Completes $1.9 Bil. Asset Sale to Seagate Technology ----------------------------------------------------------------- Maxtor Corporation completed its sale of assets to Seagate Technology. The combined company retains the Seagate name and continues to be listed on the New York Stock Exchange as "STX." Maxtor common stock has ceased to trade on the New York Stock Exchange. According to Maureen Dowd of Reuters, Seagate plans to cut 6,000 jobs as part of its $1.9 billion acquisition of the Maxtor. The integration of former Maxtor operations into Seagate is expected to be substantially completed by early calendar 2007, with an earnings per share accretion target of 10-20% after the first year of combined operations. "This is an exciting time for Seagate and for our industry," Bill Watkins, Seagate president and CEO, said. "The demand for storage is at record levels globally and is continuing to grow. The past twenty years was about digitizing the workplace; the next decade will be focused on digitizing your lifestyle. As a result of this acquisition, we believe Seagate has the enhanced scale and capacity to better drive technology advances and accelerate delivery of a wide range of differentiated products and cost- effective solutions to a growing customer base." "Our integration teams have made excellent progress on addressing customer requirements, continuity of supply, the optimization of manufacturing and production capacity, and workforce planning," Dave Wickersham, executive vice president and COO, said. "As a result we have an opportunity to substantially complete our integration plan in six to nine months." "We are encouraged by the dialogue we've had with customers and are confident that the combined company will deliver more compelling products and services more efficiently to them," Brian Dexheimer, executive vice president, Global Sales and Marketing, said. "Our integration plan is designed to ensure revenue retention by executing a seamless transition to Seagate products for Maxtor customers and by continuing to meet the product, supply, quality and cost demands of our total combined customer base." Seagate estimates that approximately 50% of Maxtor's worldwide employees will be offered positions with the combined company moving forward, with the vast majority of those located in Asia Pacific manufacturing operations. Adding to Seagate's own line of branded products, Seagate will retain a full range of Maxtor branded retail solutions. Maxtor is the leading brand name in the retail space and it will significantly strengthen Seagate's overall position in this burgeoning market. The combination of the two brands and the associated product lines represents the widest, most differentiated storage offering available to consumers. About Seagate Headquartered in Scotts Valley, California, Seagate Technology -- http://www.seagate.com/-- is the worldwide leader in the design, manufacturing and marketing of hard disc drives, providing products for a wide-range of Enterprise, Desktop, Mobile Computing, and Consumer Electronics applications. Seagate's business model leverages technology leadership and world-class manufacturing to deliver industry-leading innovation and quality to its global customers, and to be the low cost producer in all markets in which it participates. The company is committed to providing award-winning products, customer support and reliability to meet the world's growing demand for information storage. About Maxtor Headquartered in Milpitas, California, Maxtor Corporation -- http://www.maxtor.com/-- is one of the world's leading suppliers of hard disk drives and consumer storage solutions. The Company has an expansive line of storage products for desktop computers, storage systems, high-performance Intel-based servers, and consumer electronics. Maxtor has a reputation as a proven market leader, built by consistently providing high-quality products, services and support for its customers. * * * As reported in the Troubled Company Reporter on Dec. 23, 2005, Moody's Investors Service placed the ratings of Maxtor Corporation under review for a possible upgrade. Moody's review of Maxtor's ratings for a possible upgrade will consider the stronger credit profile of Seagate and assess whether Seagate intends to legally guarantee Maxtor's debt. Maxtor's ratings placed on review for possible upgrade include B2 rating to Maxtor's remaining $135 million of the $230 million 6.8% convertible senior notes, due 2010; Caa1 rating to Maxtor Corp.'s $60 million 5-3/4% convertible subordinated debentures, due 2012; and B2 Corporate Family Rating to Maxtor. MCCLATCHY CO: To Sell Philadelphia Newspapers, Inc. for $562 Mil. ----------------------------------------------------------------- The McClatchy Company (NYSE: MNI) signed a definitive agreement to ell Philadelphia Newspapers, Inc. to Philadelphia Media Holdings LLC in a transaction valued at $562 million. The purchase covers the Philadelphia Inquirer and Philadelphia Daily News, both daily newspapers, and related media assets including philly.com. Philadelphia Media Holdings was formed by a group of local investors headed by advertising executive Brian Tierney for the purpose of acquiring these assets. The two newspapers are currently owned by Knight-Ridder, Inc., which McClatchy has agreed to acquire. The parties intend to close the transaction within roughly the same time frame as the close of McClatchy's Knight Ridder acquisition, which is expected this summer. "This agreement represents a classic win-win deal -- good for McClatchy, good for the buyers and good for Philadelphia," Gary Pruitt, Chief Executive Officer of McClatchy, said. "We are delighted to receive a full, fair price consistent with our projections, and further gratified about the buyer's commitment to the community, to good journalism and to the heritage of both these fine newspapers. We couldn't be more pleased with this result." "On behalf of the dedicated local investors who have joined together to purchase the Philadelphia Inquirer, Daily News and philly.com, this is a day of immense pride and heartfelt excitement," said Mr. Tierney. "The next great era of Philadelphia journalism begins today with this announcement. We intend to be long-term owners committed to serving this region with the vigorous, high- quality journalism we all expect of the Philadelphia Inquirer, Daily News and philly.com, and we intend to preserve both papers and their unique and valuable contributions. Our plan is to invest in and grow both papers, not allow them to erode, and we know the employees are eager to join us and get started doing just that." Knight Ridder CEO Tony Ridder called the deal "a great outcome" and said, "One of the most important considerations in selling these newspapers was to respect and secure their proud heritage of top journalism and community service. We are gratified to have been able to work with McClatchy and these new owners to see that happen." Releasing the sale's multiple in this transaction would have the effect of disclosing the profitability of a single business peration, which is contrary to McClatchy's practice and against the buyer's wishes. "Yet while we cannot supply a multiple, it's important to note that the price is right in line with our expectations and with our broader projections for the proceeds to be raised in our previously announced divestiture process," Mr. Pruitt said. McClatchy will receive $515 million in cash proceeds, and PMH will assume $47 million in pension liabilities. "We now have agreements to sell six of the 12 papers to be divested, and we are confident the remaining six will sell for prices that will put total receipts above $2 billion, as we projected." Mr. Pruitt noted that the transaction also demonstrates McClatchy's commitment to consider a wide range of criteria in addition to price when selling the papers. "It's important to note that despite fears expressed about who might buy the Philadelphia newspapers and what their intentions might be, we have secured an agreement that keeps both of them in business and promises principled ownership for the future," Mr. Pruitt said. McClatchy has consistently said that in addition to price, it would place great emphasis on speed and certainty of closing, as well as the interests of stakeholders including readers, employees and the communities served. "That has been our practice in transactions thus far, and we will apply the same tests going forward," Mr. Pruitt said. Mr. Pruitt predicted when announcing McClatchy's deal to buy Knight Ridder in March that the 12 papers to be divested would bring a substantial return. "To buyers whose strategy is a good fit, all of these papers represent outstanding opportunities that come around only rarely in our industry. The emergence of such an impressive group of dedicated local investors to buy these Philadelphia newspapers is dramatic proof of that," Mr. Pruitt said. He expressed confidence that the remaining papers to be divested will likewise be sold quickly. Those deals will be announced as they are signed in the coming weeks, he said. The company intends to close all remaining transactions as rapidly as possible, and as close as possible to the closure of its Knight Ridder purchase, which is expected this summer. Knight Ridder Acquisition On March 13, 2006, McClatchy reported an agreement to acquire Knight Ridder and its 32 daily newspapers and related assets in a transaction valued at approximately $6.5 billion based upon McClatchy's closing stock price on March 10, including $2 billion in assumed debt. The multiple on the acquisition was an estimated 9.5 times 2005 Knight Ridder EBITDA. As part of that report, McClatchy said it planned to sell 11 of the acquired newspapers that do not fit with the company's longstanding operating strategies and acquisition criteria, and to sell the St. Paul Pioneer Press due to anticipated anti-trust concerns involving McClatchy's (Minneapolis) Star Tribune. McClatchy continues to market six remaining papers it plans to divest and has received significant interest in all of the publications from potential bidders around the country. The papers are the Akron Beacon Journal (Ohio); Aberdeen American News (South Dakota); Duluth News Tribune (Minnesota); The Fort-Wayne News-Sentinel (Indiana); Grand Forks Herald (North Dakota); and The Wilkes-Barre Times Leader (Pennsylvania). After McClatchy's planned divestitures and the close of the Knight Ridder acquisition, The McClatchy Company will become the nation's second-largest newspaper company measured by daily circulation (approximately 3.2 million), with 32 daily newspapers and approximately 50 non-dailies. The expanded McClatchy will own leading newspapers in many of the fastest- growing markets nationwide, with an enhanced portfolio of Internet assets. Credit Suisse Securities (USA) LLC served as financial advisor to McClatchy in this transaction. Wilson Sonsini Goodrich & Rosati served as legal counsel to McClatchy, and Dilworth Paxson LLP served as legal counsel to Philadelphia Media Holdings. About Philadelphia Media Holdings LLC Philadelphia Media Holdings, LLC, a private investment group led by Brian P. Tierney, was formed in 2006 for the purpose of acquiring the Philadelphia Inquirer, Daily News, philly.com and related online assets. The diverse group includes civic, labor and corporate leaders, entrepreneurs and private investors who share a commitment to high quality, locally owned journalism. About The McClatchy Company Headquartered in Sacramento, California, The McClatchy Company -- http://www.mcclatchy.com/-- is a leading newspaper and Internet publisher. It publishes 12 daily and 16 non-daily newspapers located in western coastal states, North and South Carolina, and the Twin Cities of Minneapolis/St. Paul. McClatchy has daily circulation of 1.4 million and Sunday circulation of 1.8 million. McClatchy's newspapers include, among others, the Star Tribune in Minneapolis, The Sacramento Bee, The Fresno Bee and The Modesto Bee in California, The News & Observer (Raleigh, N.C.), The News Tribune (Tacoma, Wash.), the Anchorage Daily News and Vida en el Valle, a bilingual Spanish weekly newspaper distributed throughout California's Central Valley. McClatchy also operates leading local websites in each of its daily newspaper markets, offering readers information, comprehensive news, advertising, e-commerce and other services, and owns and operates McClatchy Interactive, an interactive operation that provides websites with content, publishing tools and software development. * * * As reported in the Troubled Company Reporter on April 24, 2006, Moody's Investors Service assigned a Ba1 Corporate Family Rating to The McClatchy Company and a Ba1 rating to McClatchy's proposed $3.75 billion senior unsecured bank credit facility, and lowered its commercial paper rating to Not Prime from Prime-3. The rating actions conclude the review for downgrade initiated on March 13, 2006 in connection with the company's announced $6.5 billion acquisition of Knight-Ridder. The rating outlook is stable. MERILL LYNCH: Moody's Puts Rating on Class B-4 Certs. at Ba1 ------------------------------------------------------------ Moody's Investors Service assigned a Aaa rating to the senior certificates issued by Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-AR1, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by Argent Mortgage Company, L.L.C. originated adjustable-rate and fixed-rate subprime mortgage loans acquired by Merrill Lynch Mortgage Lending Inc. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, excess spread, overcollateralization, and an interest rate swap agreement. Moody's expects collateral loses to range from 4.75% to 5.25%. Wilshire Credit Corporation will service the loans. Moody's assigned Wilshire Credit Corporation its servicer quality rating SQ2+ as a primary servicer of subprime loans. The Complete Rating Actions: Merrill Lynch Mortgage Investors Trust, Mortgage Loan Asset-Backed Certificates, Series 2006-AR1 * Cl. A-1, Assigned Aaa * Cl. A-2A, Assigned Aaa * Cl. A-2B, Assigned Aaa * Cl. A-2C, Assigned Aaa * Cl. A-2D, Assigned Aaa * Cl. M-1, Assigned Aa1 * Cl. M-2, Assigned Aa2 * Cl. M-3, Assigned Aa3 * Cl. M-4, Assigned A1 * Cl. M-5, Assigned A2 * Cl. M-6, Assigned A3 * Cl. B-1, Assigned Baa1 * Cl. B-2, Assigned Baa2 * Cl. B-3, Assigned Baa3 * Cl. B-4, Assigned Ba1 NUTRAQUEST INC: Files Modified Disclosure Statement in New Jersey ----------------------------------------------------------------- Nutraquest, Inc., delivered their Modified Disclosure Statement explaining their Plan of Reorganization to the U.S. Bankruptcy Court for the District of New Jersey. Plan Funding The Plan will be financed through the Funding Agreement, the Ephedra PI Settlement Agreement and the Debtor's cash on hand. The Funding Agreement includes: -- an amount of $11.1 million under Ephedra PI Settlement Agreement; -- an aggregate amount of $17.25 million under Park Settlement Agreement and the Markowitz Settlement Agreements; -- $500,000 under the NAPA claim. Markowitz Settlement Agreement The Debtor and the Markowitz Class Representatives have agreed to settle the class claim and action pursuant to a settlement agreement. The Markowitz Settlement Agreement provides settlement of two classes: a) the RFA Class -- consists of persons who purchased Xenadrine(R) RFA-1 in the U.S., its territories, and the Commonwealth of Puerto Rico during the period from April 21, 1997, to April 1, 2003, excluding, however, those persons who purchased in the State of California during the period from April 21, 1997, to June 4, 2001; and b) the EFX Class -- consists of persons who purchased Xenadrine(R) EFX in the U.S., its territories, and the Commonwealth of Puerto Rico during the period from Feb. 1, 2002, to May 22, 2006, inclusive. The Markowitz Settlement Agreement and the Plan provide that the Debtor will pay up to $3 million for the notice cost, administration costs and Class Representative Awards, as well as all Allpwed Individual Markowitz Class Member Claims asserted by the members of the RFA Class, and will also pay the Awarded Attorney's Fees and Costs. Park Settlement Agreement The Debtor and the Park Class Representative have agreed to settle the Park Class Claim, the Park Appeal and the Park adversary proceeding, pursuant to Settlement Agreement. The Park Settlement Agreement provides that the Debtor will pay up to the maximum sum of $8 million for the notice and administration costs incurred in connection with the implementation and consummation of the Park Settlement Agreement, the Class Representative Award payable to the Park Class Representative, as well as the Allowed Individual Park Class Member Claims. In addition, the Debtor will pay $4,500,000 in full satisfaction of any and all attorneys' fees and costs awarded to or claimed by any counsel for the Park Class. NAPA Action On March 2003, the NAPA Action was commenced in the Superior Court of the State of California, County of Napa, by eight district attorneys and one city attorney against the Debtor, alleging false and misleading advertising pursuant to the California Business & Professions Code and seeking civil penalties, injunctive relief and restitution. In an effort to resolve this litigation, the Superior Court of California conducted an all-day mediation session on April 2005. The mediation succeeded in narrowing the differences between two sides but it was unsuccessful in obtaining a settlement. Although the mediation of the NAPA Action is ongoing and without a resolution of that litigation acceptable to the Plan Funders, the Debtor wants to move to estimate the NAPA claim. Overview of the Plan Under the Plan, Administrative Expense Claims, Priority Tax Claims and Nontax Priority Claims are entitled to full payment in cash. Class 3 Settled Ephedra PI Claims will also be paid in full but will be treated according to the Ephedra PI Settlement Agreement. Holders of Class 2 General Unsecured Claims will share, pro rata, a $50,000 pot funded entirely from the Debtor's cash on hand. On the effective date of the Plan, the Park Class Claim and all Individual Park Class Member Claims will be automatically assumed by the Park Claims Resolution Facility. Each Individual Park Class Member Claim will be treated in accordance with the Park Settlement Agreement. Only Allowed Individual Park Class Member Claims will receive monetary distributions under the Plan and the Park Settlement Agreement. Similarly, the Markowitz Class Claim and all Individual Markowitz Class Member Claims will be assumed by the Markowitz Claims Resolution Facility on the Effective Date. Each Individual Markowitz Class Member Claim will be treated in accordance with the Markowitz Settlement Agreement. Only Allowed Individual Markowitz Class Member Claims will receive monetary distributions under the Plan and the Markowitz Settlement Agreement. Each holder of an Allowed Class 6 Claim will be paid in full and final satisfaction on the Effective Date, of all claims, rights and causes of action that have been asserted or could have been against the Defendants in the NAPA Action. The current interests holders will retain their Interests under the Plan. A full-text copy of Nutraquest's Modified Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060522040552 Headquartered in Manasquan, New Jersey, Nutraquest, Inc., is the marketer of the ephedra-based weight loss supplement, Xenadrine RFA-1. The Company filed for chapter 11 protection on October 16, 2003 (Bankr. N.J. Case No. 03-44147). Andrea Dobin, Esq., and Simon Kimmelman, Esq., at Sterns & Weinroth, P.C. represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. PERFORMANCE TRANSPORTATION: Court Clarifies Feb. Insurance Order ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York grants Performance Transportation Services, Inc., and its debtor- affiliates' request to clarify a February 2006 Insurance Order. As reported in the Troubled Company Reporter on April 26, 2006, the Court authorized the Debtors to: a. maintain postpetition financing of insurance premiums and its renewals; and b. pay prepetition premiums necessary to maintain insurance coverage in current effect. The Debtors believed the February 26 Insurance Order authorized th em to enter into the New PFAs and provides AFCO with appropriate assurances of the enforceability of the customary terms. However, AFCO required the Debtors to obtain an order clarifying the Insurance Order. Specifically, AFCO wanted a Clarification Order explicitly providing that: * AFCO is granted a first and only priority security interest in: (i) any and all unearned premiums and dividends which may become payable under the financed insurance policies for whatever reason; and (ii) loss payments that reduce the unearned premiums, subject to any mortgagee or loss payee interests. * The Debtors are directed to pay AFCO all sums due pursuant to the New PFAs. * The full rights of AFCO pursuant to the New PFAs and controlling state law are fully preserved and protected, and are and will remain unimpaired by the pendency of the Debtors' Chapter 11 cases or any subsequent conversion to Chapter 7 or any subsequent appointment of a trustee. * In the event that the Debtors default on the terms of the New PFAs, AFCO may exercise rights as it may otherwise have under state law, but for the pendency of the Debtors' Chapter 11 cases and, without the necessity of further application to the Court, cancel all insurance policies listed on the New PFAs, and receive and apply all unearned insurance premiums to the account of the Debtors. In the event that, after the application of unearned premiums, any sums still remain due to AFCO pursuant to the New PFAs, the deficiency will be deemed an administrative expense of the estate. Court's Clarification Among others, the Court makes it clear that AFCO Credit Corporation is granted a first and only priority security interest in: -- any unearned premiums and dividends that may become payable under the financial insurance policies for whatever reason; and -- loss payments which reduce the unearned premiums, subject to any mortgagee or loss payee interests. The Court directs the Debtors to pay AFCO all sums due pursuant to the New Premium Financing Agreements. Debtors Seek Another Clarification Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, informs Judge Kaplan that upon entry of the clarifying order, the premiums due under the AIG Insurance Program were funded and the Insurance Program was established subject to certain documentation requirements that the Debtors are in the process of completing. The Insurance Program will allow the Debtors to continue to operate in accordance with state law and will result in approximately $1,300,000 in annualized savings when compared to the Debtors' other insurance options. While the Insurance Program allows the Debtors to operate in compliance with the laws of most states, Mr. Graber reports that the state of Ohio has particular requirements relating to workers' compensation. In particular, employers in Ohio must obtain workers' compensation insurance from compulsory state funds or qualify as a self-insurer. The Debtors have previously been qualified as a self-insurer. The Debtors had a $1,000,000 bond posted with the state of Ohio, which expired in March 2005. Ohio is now requiring the Debtors to provide a new bond in light of the increase in the Debtors' workers' compensation claims exposure over the past year. Mr. Graber says certain affiliates of AIG have agreed to provide the Debtors with a $2,488,000 surety bond to maintain the Debtors' self-insured status. According to Mr. Graber, the Debtors must establish an escrow account to be funded by the Debtors for the benefit of the Surety in an amount that is 105% of the face value of the surety bond. This amount is contemplated in the Debtors' budget under their postpetition financing. The Debtors also must execute an indemnity agreement with the Surety to hold the Surety harmless and indemnify it for any loss and expenses incurred in connection with the Surety Program. Without the Surety Program, the Debtors would be compelled to enter into Ohio's state workers' compensation insurance pool. If the Debtors were forced to enter into the state pool, they would incur additional estimated costs ranging from $5,000,000 to $6,000,000 annually. Mr. Graber notes that the Insurance Order provides the Debtors with the general authority to enter into both the Insurance Program and the Surety Program. Out of an abundance of caution, however, AIG has asked the Debtors to seek clarification whether the Surety Program falls within the ambit of the Insurance Order and for AIG's specific rights under the Insurance Program. As previously reported, the Debtors entered into new insurance policies with AIG's Nation Union Fire Insurance Company of Pittsburgh, PA, pursuant to the Insurance Order. In connection with establishing the Insurance Program, the Debtors amended their postpetition credit agreement to allow for the issuance of a $10,500,424 letter of credit. The Debtors believe that the Insurance Order provides them with the general authority to enter into both the Insurance Program and the Surety Program. At the Debtors' request, the Court clarifies that the Insurance Order authorizes them to enter into the Surety Program and the Insurance Program. The Clarification Order also provides for these terms: a. The Debtors are authorized and directed to pay their obligations under the Insurance Program and the Surety Program in the ordinary course of business, in accordance with the terms of the Programs without further Court order. b. In the event of the Debtors' default under the Programs, the Insurer or the Surety may exercise all contractual rights in accordance with the Programs without further Court order, including their rights to: (i) cancel the Programs; (ii) foreclose on any collateral in which they have a security interest and which may be subject to the automatic stay; and (iii) receive and apply the unearned or returned premiums to the Debtors' outstanding obligations to the Insurer or Surety. c. The reimbursement obligations and other obligations under the Programs will be administrative obligations entitled to priority under Section 503(b) of the Bankruptcy Code. Inasmuch as the Debtors are to meet their obligations under the Programs without further Court authorization, no additional proof of claim or request for payment of administrative expenses need be filed by the Insurer or Surety. The Insurer or Surety will be exempt from any bar date that may be issued for the filing of any proof of claim relating to administrative expenses. d. All collateral or security held at this time by the Insurer and the Surety and all prior payments to them under the Programs are approved, and they are authorized to retain and use the collateral or security in accordance with its terms. e. The Insurer and Surety may adjust, settle and pay insured claims, utilize funds provided for that purpose, and otherwise carry out the terms and conditions of the Programs, without further Court approval. f. The Programs may not be altered by any plan of reorganization filed in the Debtors' Chapter 11 cases and will survive any plan. Nothing in any confirmed plan of will impair the interests of the Insurer and Surety in the collateral that they hold or in any collateral that they may receive in accordance with the Clarification Order. About Performance Transportation Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) PERFORMANCE TRANSPORTATION: Wants More Time to Decide on Leases --------------------------------------------------------------- As of May 3, 2006, Performance Transportation Services, Inc., and its debtor-affiliates are parties to over 30 unexpired nonresidential real property leases, Sven T. Nylen, Esq., at Kirkland & Ellis LLP, at Chicago, Illinois, relates. Among others, the Debtors' headquarters and substantially all of their terminals are located on leased property. At the terminals, the Debtors receive and respond to customer orders. The terminals, Mr. Nylen asserts, represent a critical component of the Debtors' operations. Mr. Nylen tells the U.S. Bankruptcy Court for the Western District of New York that the Debtors' ultimate business plan, on which the reorganization will also focus, will determine which terminals must be retained. To develop a framework for the design of a new business plan, the Debtors must complete negotiations with their customers and labor unions. Until they determine how these negotiations might affect their financial outlook, the Debtors cannot determine the profitability of the Unexpired Leases on an individual basis. Section 365(d)(4) of the Bankruptcy Code, as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which became effective on October 17, 2005, provides, in pertinent part, that an unexpired nonresidential real property lease will be deemed rejected "if the trustee does not assume or reject the unexpired lease by the earlier of -- (i) the date that is 120 days after the [Petition Date]; or (ii) the date of the entry of an order confirming a plan." Under Section 365(d)(4)(B)(i), the court may extend the Lease Decision Period, prior to the expiration of the 120-day period, for 90 days on the request of the trustee or lessor for cause. If the court grants an extension, Section 365(d)(4)(B)(ii) says the court may grant a subsequent extension only upon prior written consent of the lessor in each instance. Against this backdrop, the Debtors ask Judge Kaplan to extend the time within which they must assume or reject the Unexpired Leases to and including August 23, 2006. Mr. Nylen explains that premature assumption of the Leases may harm the Debtors' estate. By rejecting the Unexpired Leases, the Debtors may lose one or more of the Leases that may be essential to the their business operations and reorganization. On the other hand, premature assumption could require the Debtors to cure prepetition claims, therefore paying unsecured claims or locking into large administrative priority obligations, before an informed decision can be made. About Performance Transportation Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) PERFORMANCE TRANSPORTATION: May Remove Civil Actions Until Aug. 4 ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of New York extends the period within which Performance Transportation Services, Inc., and its debtor-affiliates may file notices of removal with respect to any actions that are subject to removal under Section 1452 of the Judiciary Code. The Debtors' Removal Period is extended to and including the later to occur of: a. August 4, 2006; or b. the day that is 30 days after the entry of an order terminating the automatic stay with respect to the particular action sought to be removed. The Debtors are party to several legal actions pending in various tribunals, Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New York, told Judge Kaplan. Going forward, the Debtors believed additional actions may be filed against them. According to Mr. Graber, the Debtors have been working diligently on a number of critical matters since the Petition Date. Among others, the Debtors and their professionals have been focusing on: -- the numerous issues that arise while assuring that the Debtors' transition into Chapter 11 does not disrupt their business operations; -- preparing and filing their schedules of assets and liabilities and statements of financial affairs; and -- responding to the Official Committee of Unsecured Creditors' requests for information and the production of documents. More importantly, Mr. Graber added, the Debtors have been concentrating on analyzing and evaluating current operations, with an eye toward developing a viable exit strategy and blueprint for future success. Thus, the Debtors have not completed a thorough analysis of the Actions or developed a strategy. The Debtors asserted that the extension will afford them an opportunity to make fully informed decisions concerning the potential removal of all Actions and will assure that they do not forfeit valuable rights. Mr. Graber assured the Court that the rights of the Debtors' adversaries will not be prejudiced by the extension because, in the event that a matter is removed, the other parties to the Actions may seek to have the action remanded. About Performance Transportation Headquartered in Wayne, Michigan, Performance Transportation Services, Inc. -- http://www.pts-inc.biz/-- is the second largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. The Company provides transit stability, cargo damage elimination and proactive customer relations that are second to none in the finished vehicle market segment. The company's chapter 11 case is administered jointly under Leaseway Motorcar Transport Company. Headquartered in Niagara Falls, New York, Leaseway Motorcar Transport Company Debtor and 13 affiliates filed for chapter 11 protection on Jan. 25, 2006 (Bankr. W.D.N.Y. Case No. 06-00107). James A. Stempel, Esq., James W. Kapp, III, Esq., and Jocelyn A. Hirsch, Esq., at Kirkland & Ellis, LLP, and Garry M. Graber, Esq., at Hodgson Russ LLP represent the Debtors in their restructuring efforts. David Neier, Esq., at Winston & Strawn LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and more than $100 million in debts. (Performance Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) PERINI CORP: Plans to Offer $100 Million of Senior Notes due 2013 ----------------------------------------------------------------- Perini Corporation intends to offer, subject to market and other conditions, $100 million of Senior Notes due 2013. The Notes will be guaranteed by certain of Perini Corporation's subsidiaries. The proceeds from the sale of the Notes will be used to repay the term loan outstanding under Perini Corporation's existing credit facility and for general corporate purposes. The Notes will be issued in a private placement and are expected to be resold by the initial purchaser to qualified institutional buyers under Rule 144A under the Securities Act of 1933, as amended, to persons outside of the United States under Regulation S under the Securities Act and to certain institutional accredited investors within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act. The Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Headquartered in Framingham, Massachusetts, Perini Corporation -- http://www.perini.com/-- provides general contracting, including building and civil construction, and construction management and design/build services to private clients and public agencies in the U.S. and selected overseas locations. Founded 110 years ago as a small, civil works contractor, Perini is known today for its hospitality and gaming projects, and for its corrections, health care, sports, entertainment and educational expertise. The Company consistently reports annual revenues in excess of $1 billion with a current construction backlog of approximately $1.29 billion. Civil infrastructure continues to be a focus of the company, which is continually engaged in large and complex civil construction projects. Perini Management Services, Inc delivers the full breadth of the Company's resources and expertise to international assignments. PERINI CORP: Moody's Rates $100 Million Sr. Unsec. Notes at B2 -------------------------------------------------------------- Moody's assigned a B1 corporate family rating to Perini and rated the company's $100 million senior unsecured notes due 2013 B2. Moody's also assigned a SGL-3 speculative grade liquidity rating to the company. The ratings reflect Moody's belief that the company's recent financial performance and capitalization is in line with a B1 ratings and that the outlook for the company is promising given its significant backlog. Moody's notes that several of the company's financial ratios are strong for the ratings category including its free cash flow to total debt and its leverage ratios. The key rating factors currently influencing Perini's ratings: * high revenue volatility; * significant revenue concentration; strong financial free cash flow and leverage metrics for the ratings category offset somewhat by light book capitalization relative to its size; * significant history of lawsuits. The ratings outlook is stable to reflect the company's large backlog and recent years' solid growth. Moody's previous ratings action on Perini was in December 29, 1999, when the company's ratings related to its preferred stock were withdrawn. Headquartered in Framingham, Massachusetts is a general contractor and construction design company that operates three segments: Building, Civil, and Management Services. Total revenues for the year ended December 31, 2005 were approximately $1.7 billion. PERINI CORP: S&P Rates Proposed $100 Million Senior Notes at BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Framingham, Massachusetts-based engineering and construction provider Perini Corp. At the same time, Standard & Poor's assigned its 'BB-' senior unsecured rating to the company's proposed $100 million senior notes due 2013. The outlook is stable. Pro forma total adjusted debt at March 31, 2006, was about $152 million. Proceeds will be used to repay a portion of the firm's indebtedness and for general corporate purposes. The senior unsecured notes are rated the same as the corporate credit rating since Perini's secured debt and other priority liabilities are not collectively sufficient to warrant notching down. "The speculative-grade ratings on the company reflect our weak business risk profile assessment, with Perini holding defensible market positions in niche markets of the highly cyclical and fragmented E&C sector, its acquisition-oriented business strategy, and thin operating margins, which leave limited room for project execution challenges," said Standard & Poor's credit analyst Daniel DiSenso. Standard & Poor's ratings assessment also incorporates Perini's aggressive financial risk profile characterized by: * fair liquidity, * modest free cash flow generation, and * limited use of debt leverage. With 2005 revenues of approximately $1.7 billion, Perini is the 24th largest domestic contractor, according to Engineering News Record. The company has well-established leading positions within the hotel and casino (number one) and sports entertainment (number three) markets, but much smaller market presence in the civil, general industrial, and government service markets. PIER 1: Will Hold Annual Stockholders Meeting on June 22 -------------------------------------------------------- Pier 1 Imports, Inc., will hold its annual stockholders meeting at 10:00 a.m. on June 22, 2006, at the Fort Worth Club, Trinity Room, 306 West 7th Street in Fort Worth, Texas. Pier 1 stockholders will be asked to: (1) elect seven directors to hold office until the next annual meeting of shareholders; (2) vote on a proposal to approve the Pier 1 Imports 2006 Stock Incentive Plan; and (3) transact any other business as may properly come before the annual meeting. The Board of Directors of Pier 1 has established the close of business on April 24, 2006, as the record date for the determination of shareholders entitled to vote at the annual meeting. A full-text copy of the Company's proxy statement is available for free at http://ResearchArchives.com/t/s?9a1 Pier 1 Imports, Inc. -- http://www.pier1.com/-- is North America's largest specialty retailer of imported decorative home furnishings and gifts with Pier 1 Imports(R) stores in 49 states, Puerto Rico, Canada, and Mexico and Pier 1 Kids(R) stores in the United States. * * * As reported in the Troubled Company Reporter on May 8, 2006, 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. PINNACLE ENTERTAINMENT: S&P Revises Watch Implication to Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch implications on Las Vegas-based casino owner and operator Pinnacle Entertainment Inc. to positive from negative. The CreditWatch revision follows the company's announcement that its offer to acquire Aztar Corp. for $51.00 per share had been terminated. As a result, the company has received an approximately $78 million break-up fee, a portion of which will be utilized for transaction-related expenses, which is in accordance with its previous merger agreement with Aztar. In resolving its CreditWatch listing, Standard & Poor's will meet with Pinnacle's management to review its financial policies and future operating strategies. If an upgrade were the ultimate outcome of Standard & Poor's analysis, it would be limited to a one notch to 'BB-'. At March 31, 2006, Pinnacle had about $637 million of debt outstanding. POMFRET PLANTATION: Case Summary & 14 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: Pomfret Plantation LLC P.O. Box C Marion Station, Maryland 21838 Bankruptcy Case No.: 06-12930 Type of Business: The Debtor operates a Federal-style lodging house. See http://www.pomfretplantation.com Chapter 11 Petition Date: May 22, 2006 Court: District of Maryland (Baltimore) Judge: E. Stephen Derby Debtor's Counsel: Stephen M. Hearne, Esq. 105 West Main Street, 2nd Floor Salisbury, Maryland 21801 Tel: (410) 860-6606 Fax: (410) 749-6390 Total Assets: $6,535,100 Total Debts: $6,423,370 Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Bruce Flemming Business Loan $400,000 739 Governor Bridge Road Davidsonville, MD 21035 Tammie Lewis Business Loan $350,000 Revocable Trust 6721 Oak Ridge Drive Hebron, MD 21830 Gordon & Company Ltd. Trade Debt $143,825 201 Fourth Street Pocomoke City, MD 21851 John Winans Business Loan $100,000 Jessie Flemming Business Loan $100,000 William Wilkinson Business Loan $75,000 Fredricka Harrington Business Loan $50,000 Kathy Gordon Trade Debt $24,943 Tammy Simpson Trade Debt $20,840 Earthdata Trade Debt $6,000 PG Development Trade Debt $4,862 Coates Trust Trade Debt $4,000 Becker Morgan Trade Debt $2,500 McCrone, Inc. Trade Debt $1,400 PRINCETON OMEGA: Case Summary & 3 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Princeton Omega Holding Corp. 3900 Neptune Avenue Brooklyn, New York 11224 Bankruptcy Case No.: 06-41677 Chapter 11 Petition Date: May 23, 2006 Court: Eastern District of New York (Brooklyn) Debtor's Counsel: Rachel S. Blumenfeld, Esq. 395 Pearl Street, 2nd Floor Brooklyn, New York 11201 Tel: (718) 338-4114 Fax: (718) 338-9699 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 ------ --------------- ------------ Larry Grunfeld Business Loan $600,000 4115 Quentin Road Brooklyn, NY 11201 PPL Electric Utilities Electric Utilities $1,931 2 North 9th Street RPC - GENN Allentown, PA 18101-1175 City of Lock Haven Water Bill $176 Water Department 20 East Church Street Lock Haven, PA 17748-2599 RENT-A-CENTER: Moody's Lifts Rating on $330 Million Notes to Ba3 ---------------------------------------------------------------- Moody's Investors Service upgraded the senior subordinated notes of Rent-A-Center, Inc to Ba3 and affirmed all other ratings. The upgrade of the senior subordinated notes is prompted by Moody's notching policy for subordinated debt relative to the corporate family rating. The continuation of the positive outlook reflects Moody's opinion that ratings could be upgraded over the medium-term once the company establishes a lengthier track record of sales improvement and Moody's becomes more comfortable with the company's financial policy. These rating is upgraded: * $300 million 7.5% senior subordinated notes to Ba3 from B1. The following additional ratings are affirmed: * $600 million secured bank loan at Ba2, * Corporate family rating at Ba2. Although some of Rent-A-Center's key rating drivers are consistent with a low investment grade profile, the company's corporate family rating remains Ba2 primarily due to Moody's concern regarding the historic use of most free cash flow for share repurchases, the company's position as a consolidator within the rent-to-own industry, the unproven success of initiatives designed to stimulate average unit volume growth, and the challenges in expanding the personal loan business beyond the test stage. While leverage is moderate, there has been little net debt repayment over the previous several years. Moody's also believes that the company could take advantage of an opportunity to increase its market presence if a sizable chain or several smaller chains of rent-to-own retailers were to become available. Partially offsetting these risks are the lower cyclicality and seasonality of rent-to-own stores compared to many other retailing segments and Rent-A-Center's consumer credit efficiency, geographic diversity, and strong market position. The continued positive outlook recognizes that an upgrade remains possible within the medium-term. The potential upgrade assumes that comparable store sales growth will not become negative, that the business line expansion into financial services is profitable, and that the company remains measured with its uses of discretionary free cash flow. Over the next several quarters, ratings could move upward if the company establishes a lengthier track record of sales stability and margin improvement, if financial flexibility were to strengthen such that EBIT covers interest expense by more than 3 times, leverage stays below 2.5 times, and Free Cash to Debt can be sustained above 12%, and if possible incremental acquisitions do not meaningfully impact credit metrics. Given the positive outlook, Moody's believes that a downgrade is unlikely. However, the outlook could be revised to stable as a result of financial policy decisions such as material leverage increases, share repurchases, or capital expenditures or for operating reasons that prevent the company from improving operating margin. A stable outlook would result if comparable store sales become negative, free cash flow to debt does not improve from the current level of 4%, or Debt to EBITDA approaches 3 times. Rent-A-Center, Inc, with headquarters in Plano, Texas operates the largest chain of consumer rent to own stores in the U.S. with 2,751 company operated stores located in the U.S., Canada, and Puerto Rico. The company also franchises 297 rent to own stores that operate under the "ColorTyme" and "Rent-A-Center" banners. Revenue for the twelve months ending March 31, 2006 was about $2.3 billion. REYNOLDS AMERICAN: Fitch Rates Guaranteed Secured Notes at BB+ -------------------------------------------------------------- Fitch assigned these ratings to Reynolds American Inc.'s debt offerings. RAI: -- Proposed guaranteed secured bank credit facility 'BBB-' -- Guaranteed secured notes 'BB+' Fitch also affirmed these Issuer Default Ratings: RAI: -- Issuer Default Rating 'BB' R.J. Reynolds Tobacco Holdings, Inc.: -- Issuer Default Rating 'BB' Additionally, these ratings have been downgraded: RJR: -- Guaranteed Notes to 'BB' from 'BB+' (also placed on Rating Watch Negative); -- Senior Unsecured Notes to 'BB-' from 'BB'. The Rating Watch Negative on RJR's guaranteed notes indicates that if sufficient consents are obtained to amend the indentures, and the notes are not exchanged, the RJR notes will become unsecured. The Rating Outlook for RAI and RJR is Stable. Pro-forma for the Conwood Acquisition, approximately $4.7 billion of debt is affected by the rating actions. RAI issued $1.65 billion of new senior secured notes in three tranches: * $625 million at 7 1/4% due 2013; * $775 million at 7 5/8% due 2016; and * $250 million at 7 3/4% due 2018. The net proceeds from the notes offering and borrowings from the company's proposed $1.55 billion six year senior secured term loan facility is expected to be used to finance the $3.5 billion Conwood acquisition. Additionally, the company has a commitment for a new $500 million five-year senior secured revolving credit facility to be used for post-closing working capital needs. This facility will replace the existing revolving credit facility at RJR. The guarantors of the new credit facilities include Conwood Holdings and its material subsidiaries, RJR and its subsidiaries (other than RJR Packaging, LLC) that guarantee the existing bank facility of RJR, Santa Fe Natural Tobacco Company, Inc. and Lane Limited. The security includes substantially all the assets of the guarantors. The $1.65 billion senior secured notes have the same guarantors as the new senior secured credit facilities, other than RJR. However, RJR may guarantee the notes at a future date. These notes will be secured by the principal property of RAI, Conwood Holdings and its material subsidiaries that secure the new credit facility, subsidiaries of RJR that secure the new credit facilities and by assignment of RAI's security interest in RJR Tobacco stock. RAI has commenced an exchange offer whereby holders of $1.45 billion of RJR guaranteed secured notes (RJR notes) are offered RAI exchange notes with guarantees and collateral identical to the new $1.65 billion notes issuance. The RAI exchange notes will have identical interest rates and maturities. The downgrade of the RJR notes reflects that they will have fewer guarantors than the proposed RAI notes. The RJR notes are placed on Rating Watch Negative indicating that if sufficient consents are obtained to amend the indentures, and the notes are not exchanged, the RJR notes will become unsecured. Fitch downgraded the $89 million of senior unsecured notes reflecting the increase in secured debt in the company's capital structure, placing the senior unsecured debt in a more junior position. The Stable Outlook reflects Fitch's view that industry fundamentals have improved considerably. The major tobacco companies have regained pricing power, which has led to material improvements in operating earnings. The risk of a substantial payout due to an adverse legal decision has diminished with several favorable decisions for the domestic tobacco industry at the appellate level. Negative pressures on the industry include extensive smoking bans and rising excise taxes, which contribute to overall consumption declines. Fitch will continue to analyze the impact of these factors and may review the ratings if accelerated declines in operating earnings and cash flows occur. The ratings continue to rely heavily upon maintenance of significant liquidity to manage the remaining tobacco-related litigation risk. RAI currently has sufficient liquidity, including cash and short- term investments of $1.6 billion pro-forma for the acquisition as of March 31, 2006. However, Fitch remains concerned that RAI's 75% dividend payout constrains financial flexibility. ROGER GUZMAN: Case Summary & 14 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Roger Michael Guzman 5071 Highway 73 Evergreen, Colorado 80439 Bankruptcy Case No.: 06-12926 Chapter 11 Petition Date: May 22, 2006 Court: District of Colorado (Denver) Judge: Michael E. Romero Debtor's Counsel: Duncan E. Barber, Esq. Bieging Shapiro & Burrus LLP 4582 South Ulster Street Parkway, Suite 1650 Denver, Colorado 80237 Tel: (720) 488-0220 Fax: (720) 488-7711 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Wells Fargo $49,096 P.O. Box 54349 Los Angeles, CA 90054-0349 American Express Vehicle $12,240 P.O. Box 650448 Dallas, TX 75265 Capital One $3,668 P.O. Box 650010 Dallas, TX 75265-0010 Wells Fargo Financial Leasing Trade Debt $1,825 Adams County Treasurer Unknown ADT Security Systems Unknown Allen Schultz Unknown Alpine Waste Unknown American Family Insurance Unknown Berjac Unknown Berkely Water Unknown Boyd Coffee Unknown Carlena Ibanez Unknown Carrie Guzman Unknown SAINT VINCENTS: NAL Tenders $17 Million Bid for St. Mary's ---------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to sell St. Mary's Hospital Complex located at Section 5, Block 1362, Lot 1, Kings County, New York, free and clear of all liens, claims, encumbrances, and other interests, to NAL of N.Y. Corp., subject to higher or better bids. Massey Knakal Realty Services, Inc., as the Debtors' broker for the sale and marketing of St. Mary's, contacted 6,500 potential buyers and followed-up with personal contacts to 825 potential buyers. Eighteen parties made non-binding offers to purchase St. Mary's. Purchase Agreement The Debtors and NAL of N.Y. Corp. entered into a Contract of Sale dated May 15, 2006, pursuant to which, NAL is the "stalking horse" for the sale of St. Mary's, for a purchase price of $17,000,000 in cash. Pursuant to the Purchase Agreement, NAL will pay to Saint Vincents Catholic Medical Centers of New York: -- $500,000 upon execution of the Purchase Agreement; -- an additional $1,200,000 within seven business days upon its receipt of all the Required Approvals; and -- the remaining $15,300,000 at the closing of title to the St. Mary's Premises, subject to adjustments. The Purchase Agreement provides for the allocation of transfer taxes in varying proportions between the parties. The Debtors do not believe that there are any regulatory approvals required for the sale of the St. Mary's Premises. However, to the extent regulatory approval is required, the Debtors will obtain any approval before the Sale. George A. Davis, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts that the Purchase Agreement satisfies Section 363(d) of the Bankruptcy Code because it complies with all applicable not-for-profit laws, including the not-for-profit laws of the state of New York, and applicable federal law. Mr. Davis further asserts that the Purchase Agreement satisfies Section 363(f)(5) of the Bankruptcy Code because: (a) any entity holding a Lien on the St. Mary's Premises not included in the Permitted Exceptions could be compelled to accept a monetary satisfaction of its Lien; and (b) the Debtors propose that any Lien on the St. Mary's Premises, which is not included in the Permitted Exceptions, will attach to the net proceeds of the Sale, subject to any claims and defenses the Debtors may possess. NAL is a "good-faith" purchaser within the meaning of Section 363(m) of the Bankruptcy Code and should be entitled to protection, Mr. Davis says. Accordingly, the Debtors ask the Court to make a finding that NAL is entitled to the protections of Section 363(m). Mr. Davis notes that to the extent NAL will not prevail as the Successful Bidder, the Debtors will also seek a finding from the Court at the Sale Hearing that the Successful Bidder is a good- faith purchaser. About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: Bayonne Proposes to Buy Staten Island Hospital -------------------------------------------------------------- Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to: (a) sell St. Vincent's Hospital, Staten Island and related assets, free and clear of all liens, claims, encumbrances, and other interests to Castleton Acquisition Corporation, an affiliate of Bayonne Medical Center Bayonne, subject to higher or better offers; and (b) assume and assign related executory contracts and leases. The Hospital is a 440-bed general acute care facility, which provides a broad array of services, including ambulatory care, behavioral health, cancer care, cardiovascular care, chemical and alcohol care, endoscopy, HIV/AIDS treatment, orthopedics, pediatrics, and rehabilitation care. The Hospital is also a participant in The Heart Institute, a provider of open-heart surgeries and related services. George A. Davis, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court that the Debtors maintain facilities and programs related to the Hospital, including: (a) inpatient and outpatient programs for behavioral health and endoscopy services; (b) the Debtors' interest in The Heart Institute; and (c) other clinics, programs and units. Mr. Davis notes that to the extent a potential bidder for the Staten Island Assets expresses an interest in other facilities and programs related to the Hospital, these additional facilities and programs may be included as part of the Sale. Cain Brothers and Company LLC assisted the Debtors in their marketing efforts for the Hospital. Eight potential purchasers signed nondisclosure agreements and conducted due diligence on the Hospital. Four of the potential purchasers conducted site visits and attended presentations regarding the management, operation, and financial condition of the Hospital. After analyzing the bids received for the Hospital, the Debtors chose the bid submitted by Bayonne Medical Center Bayonne. Purchase Agreement The Debtors entered into a Purchase Agreement with Bayonne, pursuant to which Bayonne agreed to purchase, through its affiliate Castleton Acquisition Corporation, the Staten Island Assets for a combination of cash and assumption of certain liabilities, subject to higher and better offers. The material terms of the Purchase Agreement are: (a) Consideration: -- $15,000,000 in cash less the $1,000,000 Deposit -- assumption of certain liabilities -- payment of cure amounts (b) The Purchased Assets include: -- the Hospital and all related facilities; -- inpatient and outpatient programs related to behavioral health and endoscopy services located at Beyley Seton Hospital, as well as other programs and clinics related to Bayley Seton; -- research programs; -- the Debtors' interest in The Heart Institute; -- the Hospital's Medicare and Medicaid provider numbers and related provider agreements; and -- related contracts. (c) The Assumed Liabilities include: -- liabilities related to the Business, up to a maximum of $10,000,000 less Cure Amounts payable or reserved by Castleton; -- $2,500,000 in postpetition accounts payable existing on the Closing Date that were incurred in the ordinary course of business, and not paid by the Debtors in the ordinary course of business as of the Closing Date; -- all liabilities related to the Hospital's Medicare and Medicaid provider numbers or related provider agreements, subject to agreements with the Department of Health and Human Services; -- liabilities and obligations related to a resolution agreement with the New York State Attorney General's Office; -- 50% of transfer taxes, if any, related to the Sale; -- liabilities accruing from and after the Closing Date with respect to the Assumed Contracts and Leases; and -- employee-related liabilities. The Debtors will retain all liabilities that are not assumed in the Purchase Agreement. (d) Castleton will pay for all Cure Amounts related to the Assumed Contracts and Leases up to a maximum aggregate amount of 110% of the total Cure Amounts. The total Cure Amounts is currently estimated at $2,714,516. Any Cure Amounts paid by Castleton will count towards the $10,000,000 maximum amount of the Assumed Liabilities. (e) The Debtors will provide services to Castleton for a period of six months after the closing date of the Sale on a cost reimbursement basis. Castleton will have the option to extend its use of the services for an additional six months. Castleton will also pay the Debtors for services rendered and medicine, drugs, and supplies provided on or before the Closing Date, to patients who are discharged after the Closing Date. (f) The Debtors will pay to Castleton the proceeds from the first $17,500,000 of accounts receivable existing on the Closing Date. (g) Castleton will place $1,000,000 in escrow within two business days after execution of the Purchase Agreement. The Debtors will be entitled to keep the Deposit should they terminate the Purchase Agreement due to a material breach by Castleton. (h) The Debtors agree that, for five years after the Closing Date, they will not own or operate any hospital or healthcare facility in Staten Island that is required to be licensed under the New York Public Health Law or the New York Mental Hygiene Law, or sponsor any controlled professional corporation in Richmond County, except for their existing operations and private practices operated by their staff and affiliated physicians. The Debtors also agree not to solicit any of Castleton's employees for three years after the Closing Date. (i) After the Closing Date, all representations and warranties made by the parties related to the Purchase Agreement will survive for a period of six months. The Debtors' representations and warranties related to: -- compliance with medical reimbursement program laws will survive for 12 months; and -- employees and environmental matters will survive for 15 months. All indemnification claims are subject to an aggregate limit of $2,500,000 and an aggregate deductible amount of $250,000. (j) The Purchase Agreement may be terminated: -- upon dismissal of the Debtors' bankruptcy cases, conversion of the cases to a Chapter 7 bankruptcy case, or the appointment of a Chapter 11 trustee; or -- by either Castleton or the Debtors. A full-text copy of the Debtors' Purchase Agreement with Castleton is available for free at: http://bankrupt.com/misc/SVCMC_StatenHospital_APA.pdf About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) SAINT VINCENTS: U.S. Trustee Names 5-Member Creditors' Panel ------------------------------------------------------------ Diana G. Adams, the Acting U.S. Trustee for Region 2, appoints five claimants from 100 of the largest holders of medical malpractice claims to the Official Committee of Tort Claimants: (1) Ms. Elizabeth Evans 3226 Heritage Circle, Apt. 12 Augusta, Georgia 30909 Mark McCord 867 East 91st Street Brooklyn, New York 11236 Co-Guardians ad Litem for Michell McCord c/o Annemarie Bondi-Stoddard, Esq. Pagalis & Erickson, LLC 1 Hollow Lane, Suite 107 Lake Success, New York 11042 Tel: (516) 684-2900 Fax: (516) 684-2939 (2) Ms. Barbara Vaccaro 105 Teen Challenge Road Womelsdorf, Pennsylvania 19567 c/o Charles H. Burger, Esq. 32 Court Street, Suite 1407 Brooklyn, New York 11201 Tel: (718) 522-1910 Fax: (718) 522-6624 (3) Resham Singh, by his attorney-in-fact, Parminder Kaur and Parminder Kaur individually v. Parminder Kaur 96 Underhill Avenue Hicksville, New York 11801 c/o Joan Lieberman, Esq. The Jacob Fuchsberg Law Firm, LLP 500 Fifth Avenue New York, New York 10110 Tel: (212) 869-3500 Fax: (212) 398-1532 (4) Mr. Alberto Cruz c/o Trolman, Glaser & Lichtman, P.C. 777 Third Avenue New York, New York 10017 Attn: Jeffrey A. Lichtman, Esq. Tel: (212) 750-1200 Fax: (212) 980-4011 (5) Ms. Edeline Dodard 90-20 170th Street, Apt. 2a Jamaica, New York 11432 c/o Ellen Werther, Esq. Ressler & Ressler, Attorneys at law 48 Wall Street New York, New York 10005 Tel: (212) 695-6446 Fax: (212) 268-0287 About Saint Vincents Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) SEAGATE TECHNOLOGY: Completes Maxtor Acquisition for $1.9 Billion ----------------------------------------------------------------- Seagate Technology (NYSE: STX) completed its acquisition of Maxtor Corporation. The combined company retains the Seagate name and continues to be listed on the New York Stock Exchange as "STX." Maxtor common stock has ceased to trade on the New York Stock Exchange. According to Maureen Dowd of Reuters, Seagate plans to cut 6,000 jobs as part of its $1.9 billion acquisition of the Maxtor. The integration of former Maxtor operations into Seagate is expected to be substantially completed by early calendar 2007, with an earnings per share accretion target of 10-20% after the first year of combined operations. "This is an exciting time for Seagate and for our industry," Bill Watkins, Seagate president and CEO, said. "The demand for storage is at record levels globally and is continuing to grow. The past twenty years was about digitizing the workplace; the next decade will be focused on digitizing your lifestyle. As a result of this acquisition, we believe Seagate has the enhanced scale and capacity to better drive technology advances and accelerate delivery of a wide range of differentiated products and cost- effective solutions to a growing customer base." "Our integration teams have made excellent progress on addressing customer requirements, continuity of supply, the optimization of manufacturing and production capacity, and workforce planning," Dave Wickersham, executive vice president and COO, said. "As a result we have an opportunity to substantially complete our integration plan in six to nine months." "We are encouraged by the dialogue we've had with customers and are confident that the combined company will deliver more compelling products and services more efficiently to them," Brian Dexheimer, executive vice president, Global Sales and Marketing, said. "Our integration plan is designed to ensure revenue retention by executing a seamless transition to Seagate products for Maxtor customers and by continuing to meet the product, supply, quality and cost demands of our total combined customer base." Seagate estimates that approximately 50% of Maxtor's worldwide employees will be offered positions with the combined company moving forward, with the vast majority of those located in Asia Pacific manufacturing operations. Adding to Seagate's own line of branded products, Seagate will retain a full range of Maxtor branded retail solutions. Maxtor is the leading brand name in the retail space and it will significantly strengthen Seagate's overall position in this burgeoning market. The combination of the two brands and the associated product lines represents the widest, most differentiated storage offering available to consumers. About Maxtor Headquartered in Milpitas, California, Maxtor Corporation -- http://www.maxtor.com/-- is one of the world's leading suppliers of hard disk drives and consumer storage solutions. The Company has an expansive line of storage products for desktop computers, storage systems, high-performance Intel-based servers, and consumer electronics. Maxtor has a reputation as a proven market leader, built by consistently providing high-quality products, services and support for its customers. About Seagate Headquartered in Scotts Valley, California, Seagate Technology -- http://www.seagate.com/-- is the worldwide leader in the design, manufacturing and marketing of hard disc drives, providing products for a wide-range of Enterprise, Desktop, Mobile Computing, and Consumer Electronics applications. Seagate's business model leverages technology leadership and world-class manufacturing to deliver industry-leading innovation and quality to its global customers, and to be the low cost producer in all markets in which it participates. The company is committed to providing award-winning products, customer support and reliability to meet the world's growing demand for information storage. * * * As reported in the Troubled Company Reporter on Dec. 23, 2005, Moody's Investors Service placed the ratings of Seagate Technology HDD Holdings on review for possible downgrade. The review is prompted by the company's announcement of its intention to acquire Maxtor Corporation in an all-stock transaction for approximately $1.9 billion. Concurrently, Moody's is also placing the ratings for Maxtor under review for a possible upgrade. The acquisition, which has been approved by both boards of directors, is expected to close by the end of June 2006 and is subject to customary approvals and consents. Ratings under review for possible downgrade are Ba1 rating to Seagate's $150 million guaranteed senior secured revolving credit facility, due 2007; Ba2 rating to Seagate's $400 million senior notes 8%, due 2009; Ba1 Corporate Family Rating to Seagate; and SGL -- I liquidity rating to Seagate. SERACARE LIFE: Creditors' Panel Says No to Equity Panel Formation ----------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in SeraCare Life Sciences, Inc.'s bankruptcy case opposes a recent move to install an Official Committee of Equityholders in the Debtor's chapter 11 proceedings. The Creditors' Committee tells the U.S. Bankruptcy Court for the Southern District of California that it is unclear what benefits the Debtor's estate will gain from an official equity committee. The Creditors' Committee points out that equity is currently well represented in SeraCare's case and all constituents expect to see the Debtor repay its creditors in full and emerge from bankruptcy as an ongoing business, with its existing shareholders unaffected. As reported in the Troubled Company Reporter on May 5, 2006, the Ad Hoc Committee of Equityholders asked for the appointment of an Equity Committee because of the likelihood of a meaningful distribution to equity holders and the presence of substantial questions regarding the authenticity of the Debtor's bankruptcy filing. The Ad Hoc Committee claimed that the circumstances of the Debtor's bankruptcy filing are highly suspect and expressed their reservations over the leadership of Robert J. Cresci, who currently chairs the Debtor's Board of Directors. Creditors' Committee Questions Motive Henry C. Kevane, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, clarified that the Creditors' Committee does not oppose the right of the Ad Hoc Committee to appear on matters affecting shareholder interests in the Debtor's bankruptcy case. However, Mr. Kevane says that the Ad Hoc Committee appears mostly concerned with control over the Debtor and not on the inadequate representation of the shareholder class. He says that disaffected equity holders can address corporate governance without an official committee. An official appointment, according to Mr. Kevane, will only force the Debtor to bear the cost of the shareholders' grievances. He said that the Debtor's focus at this stage of its case should be on conserving liquidity, reducing expenditures and stabilizing the business. A hearing to consider the Ad Hoc Equity Committee's request for an official appointment is scheduled today, May 24, 2006, at 2:00 p.m. 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. SHADOWROCK LLC: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Shadowrock, LLC P.O. Box 476 Forsyth, Missouri 65653 Bankruptcy Case No.: 06-60401 Chapter 11 Petition Date: May 22, 2006 Court: Western District of Missouri (Springfield) Judge: Arthur B. Federman Debtor's Counsel: J. Kevin Checkett, Esq. Checkett & Pauly, P.C. P.O. Box 409 Carthage, Missouri 64836 Tel: (417) 358-4049 Fax: (417) 358-6341 Total Assets: $1,182,565 Total Debts: $728,965 Debtor's 2 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Billy Thurman $19,257 265 Walker Road Chadwick, MO 65629 Sondra James $6,000 265 Walker Road Chadwick, MO 65629 SILGANS HOLDING: Moody's Raises Corp. Family Rating 1 Notch to Ba2 ------------------------------------------------------------------ Moody's Investors Service raised the Corporate Family Rating for Silgan Holdings Inc. and ratings on Silgan's senior secured first lien credit facilities from Ba3 to Ba2 and changed the outlook from positive to stable. Silgan recently announced that it is entering into a EUR 200 million term loan under its existing first lien credit facility in order to facilitate the purchase from Australia-based Amcor Limited -- the White Cap closures business in Europe, Southeast Asia, and South America. Silgan previously amended its credit facility to include a CAD 45 million Canadian borrower, Silgan Plastics Canada Inc. Moody's took these rating actions: * Corporate family rating, raised to Ba2 from Ba3 * $450 million senior secured first lien revolver maturing June 30, 2011, raised to Ba2 from Ba3 * $375 million senior secured first lien term loan A due June 30, 2011, raised to Ba2 from Ba3 * $84 million senior secured first lien term loan B due June 30, 2012, raised to Ba2 from Ba3 * $39 million Canadian term loan due Dec. 22, 2012, assigned Ba2 * ?200 million proposed senior secured first lien term loan, assigned Ba2 * $200 million 6.75% senior subordinated notes due Nov. 15, 2013, affirmed at B1 Key ratings factors for packaging companies include: 1) financial leverage and interest coverage, 2) operating profile as reflected in operating profitability and asset efficiency, and 3) competitive position as reflected in revenue size, the value-added nature of the company's products, ability of customers to switch to other suppliers, and substrate diversity. Moody's analysis of the above factors indicates a Ba2 rating for Silgan. Moody's estimates that pro forma for the planned White Cap acquisition total debt to EBITDA, adjusted for the effects of operating leases and underfunded pension liabilities, would be about 2.9 times, with EBIT interest coverage of over 3.0 times and free cash flow to debt of over 12.0%. Silgan's operating profile includes EBIT operating margin below 10% and EBIT to fiscal year end gross property, plant and equipment above 10%. Silgan's competitive position is reflected in its $2.4 billion in 2005 revenue and integrated operations with customers that raise barriers to customers switching suppliers. The ratings outlook is stable. Moody's anticipates that Silgan will continue to undertake acquisitions in a manner consistent with the current ratings and operate with adjusted total debt to EBITDA in a range of 2.5 to 3.5 times. Moody's expects that Silgan's acquisition expertise and experience will enable it to integrate the White Cap acquisition without disruption to its existing business. The Ba2 rating on Silgan's first lien credit facilities reflects their senior position in the capital structure and expected enterprise value coverage in a distressed scenario. The dominance of the first lien facilities in the capital structure prevents notching the first lien facilities above the corporate family rating. The ratings or outlook could come under pressure if Silgan undertakes an acquisition, encounters operational difficulties, or changes its operational or financial policies that result in an increase in financial leverage, with adjusted debt to EBITDA rising to above 3.5 times and free cash flow to debt falling below 10% on a sustained basis. Evidence of sustainable improvement in free cash generation relative to debt over the next several quarters with adjusted total debt to EBITDA moving toward 2.0 times and adjusted free cash flow to debt rising above 20% on a sustained basis could result in upward pressure on the ratings. The B1 rating on the $200 million of subordinated notes reflects the contractual subordination to the senior liabilities at Silgan and the structural subordination to all existing and future liabilities and trade payables at Silgan's operating subsidiaries. Moody's expects Silgan's substantial enterprise value to support full recovery for noteholders under the current capital structure in a distressed scenario. Headquartered in Stamford, Connecticut, Silgan Holdings Inc. is a North American manufacturer of metal and plastic consumer goods packaging products used in numerous industries including food, personal care, healthcare, pharmaceutical, automotive, and agricultural and chemical products. For the twelve months ended March 31, 2006, Silgan's consolidated net revenue was approximately $2.5 billion. SILICON GRAPHICS: Lampe Conway Responds to DIP Financing Request ---------------------------------------------------------------- On an interim basis, the Hon. Allan Gropper permitted Silicon Graphics, Inc., and its debtor-affiliates to borrow up to $23,000,000 under the DIP Loan Documents. The Court granted the DIP Lenders superpriority claims, and first and senior priority liens and security interests in the Collateral. A full-text copy of the Interim DIP Order is available for free at http://researcharchives.com/t/s?9a4 The Court will convene the Final DIP Hearing on May 31, 2006, at 10:00 a.m. Objections must be filed and served no later than May 26, 2006, on: (i) counsel to the Debtors Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Attn: Gary Holtzer, Esq., (ii) counsel to the Ad Hoc Committee Goodwin Procter LLP 599 Lexington Avenue New York, New York 10022 Attn: Allan S. Brilliant, Esq.; (iii) counsel to Wells Fargo Foothill Inc. Jeffer, Mangels, Butler & Marmaro LLP Two Embarcadero Center, Fifth Floor San Francisco, California 94111-3824 Attn: Nicolas De Lancie, Esq. and Robert B. Kaplan, Esq. Pryor Cashman Sherman & Flynn LLP 410 Park Avenue, 10th Floor New York, New York 10022 Attn: Richard Levy, Jr., Esq. -- and -- (iv) counsel to Ableco Finance LLC Paul, Hastings, Janofsky & Walker LLP 600 Peachtree Street, N.E. Atlanta, Georgia 30308 Attn: Jesse H. Austin III, Esq., 75 E. 55th Street New York, New York 10022 Attn: Kristine M. Shryock, Esq. The DIP Lenders can be reached at: Quadrangle Master Funding Ltd. c/o Quadrangle Group LLC 375 Park Avenue, 14th Fl New York, NY 10152 Attn: Michael Gillin Fax No.: (866) 741-3564 Watershed Technology Holdings, LLC c/o Watershed Asset Management, L.L.C. One Maritime Plaza, Suite 1525 San Francisco, CA 94111 Fax No.: (415) 391-3919 Encore Fund, L.P. c/o Symphony Asset Management LLC 555 California Street, Suite 2975 San Francisco, CA 94104-1503 Attn: Chief Operating Officer Fax No.: (415) 676-2480 Lampe Conway Responds Susheel Kirpalani, Esq., at Milbank, Tweed, Hadley & McCloy LLP, in New York, on behalf of Lampe Conway & Co., LLC, argues that the Debtors' request is objectionable for several reasons, including: (a) the Debtors' acquiescence to the desires of bondholders with a collateral package, an inter-creditor agreement, and subordination provisions to misuse the Chapter 11 process, enhancing their rights beyond what existed pre- bankruptcy, at the expense of the Debtors' unsecured creditors; (b) the unlawfulness of a postpetition financing facility that ties the Debtors to a non-consensual Chapter 11 plan and which, by its approval, will dictate the terms of any distributions in the form of a plan sub rosa; (c) the Debtors' failure to adequately explore postpetition financing from other sources or to justify the amounts of the required borrowings; (d) the Debtors' neglect of their fiduciary duties to unsecured creditors by refusing to consider DIP financing; and (e) a provision for the payment, as adequate protection, of the professional fees incurred by a group of creditors that is contrary to the statutory mandate. Lampe Conway is a holder of 6-1/8% Convertible Subordinated Debentures due 2001 issued by Cray Research, Inc., pursuant to the Indenture dated as of February 1, 1986, for which Silicon Graphics, Inc., is the obligor. About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) SILICON GRAPHICS: Will Pay Prepetition Foreign Vendor Claims ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York allowed Silicon Graphics, Inc., and its debtor-affiliates to pay their prepetition obligations owed to foreign vendors, suppliers, service providers, and other entities in various jurisdictions outside of the United States in the ordinary course of business. The Debtors purchase goods and services needed for the assembly of their products from vendors located outside the United States. In addition, the Debtors, along with their foreign non-debtor subsidiaries, provide goods and services to a wide array of customers throughout the world. Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts that the goods and services provided by the Foreign Creditors are integral to the operation of the Debtors' businesses. By way of example, certain of the Foreign Creditors provide materials and components -- for example, sheet metal, wiring, projectors, and monitors -- that are essential for assembly of the Debtors' products. The Debtors estimate that, as of the Petition Date, they have approximately $2,100,000 in outstanding obligations to Foreign Creditors for goods and services received. Mr. Holtzer asserts that the failure to satisfy obligations to certain Foreign Creditors could be disruptive to the Debtors' businesses and could have an extremely adverse effect on the Debtors' efforts to reorganize. "Without the support of the Foreign Creditors, the interests of all creditors will suffer immeasurably as the value of the Debtors' estates is likely to suffer significant diminution in value." The Debtors pay the Foreign Creditors with funds drawn by checks or by means of electronic fund transfers. To the extent any Check or Electronic Transfer has not cleared their banks as of the Petition Date, the Debtors ask the Court to authorize the banks, in the Debtors' sole discretion, to receive, process, honor, and pay the Checks or Electronic Transfers. If the Foreign Creditors have not received payment for amount owed, the Debtors seek the Court's permission to issue replacement Checks, re-issue Electronic Transfers, or otherwise make payment to the Foreign Creditors. About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPECTRUM BRANDS: Posts $563,000 Net Loss in 2006 2nd Fiscal Qtr. ---------------------------------------------------------------- Spectrum Brands, Inc., filed its second quarter financial statements for the three months ended April 2, 2006, with the Securities and Exchange Commission on May 12, 2006. The Company reported a $563,000 net loss on $625,121,000 of net sales for the three months ended April 2, 2006. At April 2, 2006, the Company's balance sheet showed $4,007,531,000 in total assets, $3,147,235,000 in total liabilities, and $860,296,000 in total stockholders' equity. "We are disappointed by the results from our North American and European battery businesses this quarter, where a decrease in sales volume and high raw material costs, particularly zinc, resulted in significant underperformance to our expectations," Dave Jones, Spectrum Brands Chairman and CEO said. "However, we are encouraged by this quarter's good performance from our specialty pet and Remington product portfolios. Our lawn and garden business is poised for a solid performance in the upcoming selling season with consumer purchases at retail up 10%, although inventory management initiatives by some of our largest retail customers had a negative impact on second quarter lawn and garden sales." "With a challenging second quarter behind us, we are now moving forward with a renewed focus on organic sales growth, aggressive cost management and debt reduction. Through the various restructuring activities . . ., we are committed to aggressively pursuing cost management initiatives throughout our organization designed to achieve $150 million in annual cost savings by the end of fiscal 2007. "At the same time, we are increasing our focus on sales growth and investing in our brands through new product development and increased advertising." Full-text copies of the Company's financial statements for the three months ended April 2, 2006, are available for free at http://ResearchArchives.com/t/s?99d Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- is a global consumer products company with a diverse portfolio of world-class brands, including Rayovac, Varta and Remington. The Company manufactures and sells batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insecticides, personal care products and portable lighting. The Company's manufacturing and product development facilities are located in the United States, Europe, China and Latin America. * * * As reported in the Troubled Company Reporter on April 10, 2006, Standard & Poor's Ratings Services lowered its ratings on Spectrum Brands Inc., including its corporate credit rating to 'B-' from 'B'. At the same time, the Company's ratings were placed on CreditWatch with negative implications. As reported in the Troubled Company Reporter on Feb. 2, 2006, Moody's Investors Service downgraded Spectrum Brands, Inc.'s corporate family rating, to B2 from B1; $700 million 7-3/8% senior subordinated notes due 2015, to Caa1 from B3; and $350 million 8.5% senior subordinated notes due 2013, to Caa1 from B3. Moody's also confirmed the Company's $300 million senior secured revolving credit facilities, at B1; and $1.2 billion senior secured term loan facilities, at B1. SPECTRUM BRANDS: Enters into Third Amendment under Credit Pact -------------------------------------------------------------- Spectrum Brands, Inc. entered on May 9, 2006, into Amendment No. 3 to the Fourth Amended and Restated Credit Agreement dated as of Feb. 7, 2005. The Borrowers are: -- Spectrum Brands, Inc., fka Rayovac Corporation, -- Varta Consumer Batteries GmbH & Co. KGaA, a German partnership limited by shares, and -- Rayovac Europe Limited, The Lenders are: -- Citicorp North America, Inc., as Syndication Agent, -- Merrill Lynch Capital Corporation, as Co-Documentation Agent and Managing Agent, -- LaSalle Bank National Association, as Co-Documentation Agent, and -- Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer. Under Amendment No. 3: (1) the maximum consolidated leverage ratio was raised and minimum consolidated interest coverage ratio was lowered for the period ended April 2, 2006, and subsequent periods; (2) the interest rate on the Company's Euro term loan under the Credit Agreement increased by 25 basis points; (3) the interest rates on the U.S. Dollar, Canadian Dollar and Euro Tranche B term loans under the Credit Agreement increased by 50 basis points; and (4) the interest rate on the revolver under the Credit Agreement increased by 75 basis points. A full-text copy of the Fourth Amended and Restated Credit Agreement dated as of Feb. 7, 2005, is available for free at http://ResearchArchives.com/t/s?99f Spectrum Brands, Inc. -- http://www.spectrumbrands.com/-- is a global consumer products company with a diverse portfolio of world-class brands, including Rayovac, Varta and Remington. The Company manufactures and sells batteries, lawn and garden care products, specialty pet supplies, shaving and grooming products, household insecticides, personal care products and portable lighting. The Company's manufacturing and product development facilities are located in the United States, Europe, China and Latin America. * * * As reported in the Troubled Company Reporter on April 10, 2006, Standard & Poor's Ratings Services lowered its ratings on Spectrum Brands Inc., including its corporate credit rating to 'B-' from 'B'. At the same time, the Company's ratings were placed on CreditWatch with negative implications. As reported in the Troubled Company Reporter on Feb. 2, 2006, Moody's Investors Service downgraded Spectrum Brands, Inc.'s corporate family rating, to B2 from B1; $700 million 7-3/8% senior subordinated notes due 2015, to Caa1 from B3; and $350 million 8.5% senior subordinated notes due 2013, to Caa1 from B3. Moody's also confirmed the Company's $300 million senior secured revolving credit facilities, at B1; and $1.2 billion senior secured term loan facilities, at B1. STRUCTURED ASSETS: Moody's Assigns Ba1 Rating to Class B1 Certs. ---------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by Structured Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 2006-BC1, and ratings from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed Aegis Mortgage Corporation, People's Choice Home Loan, Inc., and Finance America, LLC, and various other originated adjustable-rate and fixed-rate subprime mortgage loans acquired by Lehman Brothers Holdings Inc. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination, excess spread, overcollateralization, lender-paid mortgage insurance, an interest rate swap agreement. After taking into account the benefit from the lender-paid mortgage insurance, Moody's expects collateral losses to range from 4.50% to 5.00%. Wells Fargo Bank, N.A. will service the majority of the loans and Aurora Loan Services LLC will act as master servicer. The Complete Rating Actions: Structured Asset Securities Corporation, Mortgage Pass-Through Certificates, Series 2006-BC1: * Cl. A1, Assigned Aaa * Cl. A2, Assigned Aaa * Cl. A3, Assigned Aaa * Cl. A4, Assigned Aaa * Cl. A5, Assigned Aaa * Cl. A6, Assigned Aaa * Cl. M1, Assigned Aa1 * Cl. M2, Assigned Aa2 * Cl. M3, Assigned Aa3 * Cl. M4, Assigned A1 * Cl. M5, Assigned A2 * Cl. M6, Assigned A3 * Cl. M7, Assigned Baa1 * Cl. M8, Assigned Baa2 * Cl. M9, Assigned Baa3 * Cl. B1, Assigned Ba1 TRITON CDO: Moody's Puts $26.7 Mil. of B1 Rated Notes on Watch -------------------------------------------------------------- Moody's Investors Service placed on watch for possible upgrade the rating of the following notes issued in 1999 by Triton CDO IV, Limited, a high yield collateral bond obligation issuer: * $169,000,000 Class A First Priority Senior Floating Rate Notes Due 2010 Prior Rating: A1 Current Rating: A1, on watch for possible upgrade Moody's also placed on watch for possible downgrade the rating of the following notes issued by Triton CDO IV, Limited: * $26,750,000 Class B Second Priority Senior Floating Rate Notes Due 2010 Prior Rating: B1 Current Rating: B1, on watch for possible downgrade The rating action with respect to the Class A notes reflects the significant delevering of the transaction which more than offset the unfavorable aspects of the transaction's performance, according to Moody's. As of the last trustee report, the Class A has delevered $165,473,714. Only 2.09% of the original balance remains outstanding. The rating action with respect to the Class B Notes reflects the deterioration in the credit quality of the transaction's underlying collateral portfolio and the continued failure of certain collateral and structural tests, according to Moody's. As reported in the April 2006 trustee report, the weighted average rating factor of the portfolio was 4590, significantly higher than the transaction's trigger level of 2755, the overcollateralization ratios for the Class A Notes, Class B Notes, Class C Notes and Class D Notes were 94.3%, 59.79% and 47.94% respectively, well below the transaction's trigger levels of 121.0%, 115.5% and 105.5%. The interest coverage tests with respect to the Class A Notes, Class B Notes, Class C Notes and Class D Notes were also far below their trigger levels. Class A/B IC test was 34.6%, compared to a trigger level of 140.0%, Class C IC test was 3.9%, compared to a trigger level of 125.0% and the Class D IC test was 1.9%, compared to a trigger level of 115.0%. UNITY VIRGINIA: Can Pay $17 Million Debts Says Prospect Energy -------------------------------------------------------------- Unity Virginia Holdings, LLC and affiliates filed voluntarily for reorganization under Chapter 11 of Title 11 of the United States Code on May 10, 2006. Unity plans to continue its operations while a restructuring plan is finalized toward an eventual sale of the business. Unity has produced more than 225,000 tons of metallurgical and steam quality coal and has processed more than 215,000 tons of third-party coal during the past twelve months. Prospect Energy Corporation holds $3.58 million of second lien secured debt, representing approximately 3% of Prospect's asset base. PlainsCapital Bank has provided $4.11 million of senior bank debt, which benefits from personal guarantees from Karl Singer and Keller Smith of Unity Platform LP, a Dallas investment firm, as well as Coalline, an affiliate of the Bass family. Platform and Coalline have provided more than $8 million of equity capital to Unity. "With a recent appraisal of $22 million for the properties, our lien on more than $17 million invested in the rampup of Unity's coal mining operations since January 2005, our lien on nearly 12 million tons of third-party engineered recoverable metallurgical and steam coal, our lien on a fully functional 450 tons per hour preparation plant and loadout facility on the Norfolk & Southern Railway, and our lien on Platform's nearby Unity Pound River LLC reserves, I am confident that these assets will enable Unity to pay Prospect full principal and interest," Jim Flores, a senior investment professional with Prospect, said. About Prospect Energy Headquartered in New York City, Prospect Energy Corporation -- http://www.prospectenergy.com/-- is a closed-end investment company that lends to and invests in energy-related businesses. Prospect Energy's investment objective is to generate both current income and capital appreciation through debt and equity investments. About Unity Virginia Headquartered in Dallas, Texas, Unity Virginia Holding LLC is a coal mining company. The Company and its debtor-affiliates filed for chapter 11 protection on May 10, 2006 (Bankr. N.D. Tex. Case No. 06-31937). James C. Jarrett, Esq., and Arnaldo N. Cavazos, Jr., Esq., at Cavazos, Hendricks & Poirot, P.C. represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and liabilities between $10 million and $50 million. WELLSFORD REAL: Annual Stockholders' Meeting Set for June 12 ------------------------------------------------------------ Wellsford Real Properties, Inc., will hold its 2006 Annual Meeting of Stockholders at the offices of Bryan Cave LLP, 1290 Avenue of the Americas, 35th floor in New York City at 10:00 a.m. on June 12, 2006. During the meeting, stockholders will be asked to: a) elect two directors to terms expiring at the 2009 annual meeting of stockholders and upon the election and qualification of their successors; and b) ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for the fiscal year ending Dec. 31, 2006. The Company's Board of Directors fixed the close of business on April 27, 2006 as the record date for determining the stockholders entitled to receive notice of and to vote at the meeting. A full-text copy of the proxy statement for the 2006 stockholders' meeting is available for free at: http://researcharchives.com/t/s?9a5 About Wellsford Wellsford Real Properties, Inc., was a real estate merchant banking that acquired, developed, financed and operated real properties, constructed for-sale single family home and condominium developments and organized and invested in private and public real estate companies. The Company in liquidation. At Dec. 31, 2005, the Company's remaining primary operating activities are the development, construction and sale of three residential projects. WEST SHEPHERDSVILLE: Case Summary & 7 Largest Unsecured Creditors ----------------------------------------------------------------- Debtor: West Shepherdsville Development Group, LLC 200 South Buckman Street Shepherdsville, Kentucky 40165 Tel: (502) 419-9084 Bankruptcy Case No.: 06-31241 Chapter 11 Petition Date: May 22, 2006 Court: Western District of Kentucky (Louisville) Debtor's Counsel: Michael A. Valenti, Esq. One Riverfront Plaza, Suite 1950 401 West Main Street Louisville, Kentucky 40202 Tel: (502) 568-2100 Fax: (502) 568-2101 Total Assets: $1,373,500 Total Debts: $1,247,759 Debtor's 7 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Mindel, Scott and Trade Debt $6,703 Associates, Inc. 4345 Bishop Lane, Suite 200 Louisville, KY 40218 Prudential Heating and Trade Debt $4,571 Air Conditioning 3302 Gilmore Industrial Boulevard Louisville, KY 40213-2173 Bullitt Country KY Property Tax $1,982 City of Shepherdsville P.O. Box 400 170 Frank E. Simon Avenue Shepherdsville, KY 40165 Thomas B. Givhan LLC Distribution $0 Ohio Casualty Insurance Co. Trade Debt $0 Louisville Water Company Trade Debt $0 LG&E Trade Debt $0 WHITE RIVER: Case Summary & 30 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: White River Coal, Inc. 6642 North Thompson Road Hazleton, Indiana 47640 Tel: (812) 385-8485 Bankruptcy Case No.: 06-70375 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Bronco Holdings I, Inc. 06-70376 Hazleton Mining, LLC 06-70377 Bronco Hazelton Co. 06-70378 Hazleton Wash Plant, LLC 06-70379 Type of Business: The Debtors are mining companies and contractors, and offers geological services. Chapter 11 Petition Date: May 22, 2006 Court: Southern District of Indiana (Evansville) Debtors' Counsel: C.R. Bowles, Jr., Esq. Greenbaum Doll & McDonald PLLC 101 South 5th Street Louisville, Kentucky 40202 Tel: (502) 589-4200 Fax: (502) 587-3695 Total Assets: $2,000,000 Total Debts: $35,000,000 Debtors' Consolidated List of their 30 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Blankenberger Brothers, Inc. Trade Debt $1,400,000 11700 Water Tank Road Cynthiana, IN 47612 NARCO, Inc. Trade Debt $1,190,661 P.O. Box 549 Smithers, WV 25186 Prosperity Mine, LLC Trade Debt $600,000 20 Northwest Fourth Street Evansville, IN 47708 Joy Technologies Trade Debt $384,056 177 Thorn Hill Road Warrendale, PA 15086 COGAR Mine Supply Trade Debt $276,818 P.O. Box 532 Beckley, WV 25801 Gooding Rubber Co. Trade Debt $213,747 Fairmont Supply Company Trade Debt $188,067 Special Mine Services, Inc. Trade Debt $176,891 AICCO Inc. Trade Debt $144,000 Ashby Electric Co., Inc. Trade Debt $135,363 Rudd Equipment Company Trade Debt $125,079 BB Mining, Inc. Trade Debt $112,752 Power Technologies Trade Debt $106,055 A&B Contracting Trade Debt $87,094 Marion Mining Bolts Corp. Trade Debt $67,179 ConocoPhillips Company Trade Debt $63,338 CSX Transportation Trade Debt $60,000 WIN Energy Trade Debt $59,660 Custom Engineering, Inc. Trade Debt $53,491 ONYETT Fabricators, Inc. Trade Debt $45,857 NYHART Trade Debt $44,418 Kimball Midwest Trade Debt $38,513 Dubois County Tire & Supply Trade Debt $38,153 Hibbs Electric Inc. Trade Debt $37,380 Clifton Gunderson Solutions Trade Debt $30,657 Buchanan Ingersoll, P.C. Trade Debt $29,111 Motion Industries, Inc. Trade Debt $28,991 Minesafe Electronics, Inc. Trade Debt $28,644 LAN Services, Inc. Trade Debt $28,500 Saminco Inc. Trade Debt $27,338 WICKSTROM MATERIALS: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Debtor: Wickstrom Materials Corp. dba Harwich Concrete Block 544 Main Street, Route 130 Mashpee, Massachusetts 02649 Tel: (508) 477-4600 Bankruptcy Case No.: 06-11513 Chapter 11 Petition Date: May 22, 2006 Court: District of Massachusetts (Boston) Judge: William C. Hillman Debtor's Counsel: John M. McAuliffe, Esq. McAuliffe & Associates, P.C. 430 Lexington Street Newton, Massachusetts 02466 Tel: (617) 558-6889 Fax: (617) 558-6882 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file the list of its 20 largest unsecured creditors. WINN-DIXIE: Florida Tax Collectors Want to be Adequately Protected ------------------------------------------------------------------ The Florida Tax Collectors ask the U.S. Bankruptcy Court for the Middle District of Florida to recognize the continued provision of necessary services to Winn-Dixie Stores, Inc., and its debtor- affiliates and their locations, and ensure that taxing authorities will be refunded the full amount of the ad valorem taxes owed the Florida Tax Collectors. Furthermore, the Florida Tax Collectors ask the Court to: (a) provide that all tangible personal property and real estate taxes will be paid in full in accordance with standard commercial sales practices; or (b) in the alternative, order that: * all ad valorem tax liens will attach to the proceeds and that 2006 postpetition taxes will be paid before delinquency in accordance with Florida law; and * sufficient provision be made to separate and escrow into an account identified to their benefit for payment of the full amount of taxes plus monthly accrued interest and attorneys' fees as allowed by Florida statutes. The Florida Tax Collectors assert that the Debtors' amended request seeks to essentially liquidate, either through sale or lease rejection procedures, the Debtors' remaining interests in the listed stores, 28 of which are located within the state of Florida. Brian T. FitzGerald, Esq., counsel for the Florida Tax Collectors, notes that in accordance with Florida law: (a) the Debtors have agreed in previous pleadings that any sale or transfer of assets securing Florida Tax Collectors taxes would be subject to Florida Tax Collectors' liens attaching to the proceeds as a first lien; and (b) the 2006 postpetition tax amounts should be estimated and placed in a separate account with a provision that they be paid with the 4% statutory discount. Mr. FitzGerald asserts that adequate protection of the administrative tax obligations incurred by the Debtors is appropriate. The Florida Tax Collectors have been stayed from collecting their taxes and, only recently, the Debtors indicated their intention to contest the Florida Tax Collectors' taxes pursuant to Section 505 of the Bankruptcy Code. Currently, statutory interest is accruing on the outstanding, delinquent 2005 tangible personal property taxes at the rate of $100,000 per month. The statutory interest on the remaining, unpaid 2005 delinquent real estate taxes is also accruing at the same rate, Mr. FitzGerald tells the Court. Notwithstanding the non-payment of taxes, taxing authorities throughout the state of Florida must still provide needed services to the Debtors including police, fire, and other emergency services. Landlords Object to Assumption of Leases At the conclusion of the May 9, 2006, auction, the Debtors announced the successful bidders for: (a) Store No. 2357 as Treasure Coast Plaza Development Joint Venture; and (b) Store No. 372 as Westgate Square, LLC. The Landlords' bids provide for the termination of the Lease for: * Store No. 2357 in exchange for $525,000; and * Store No. 372 in exchange for $1,400,000 The Landlords tell the Court that on at least one other occasion in the Debtors' bankruptcy cases, it approved the assumption and assignment of a lease to an entity other than the entity designated by the Debtors as the highest and best bidder at an auction. Accordingly, the Landlords object to the Debtors' proposed assumption and assignment of the Leases to another entity or person. In the event the Court were to determine that it is appropriate to authorize the assumption and assignment of the Leases to any entity or person other than them, the Landlords seek more time to conduct discovery to determine the proposed assignees' good faith and if they are able to provide adequate assurance of future performance under the Leases. Accordingly, the Landlords ask the Court authorize the termination of the Leases in accordance with each of their bids at the Auction. Gator Seek Adjournment of Hearing Gator Jacaranda, Ltd., and Gator Carriage Partners, Ltd., ask the Court to adjourn the hearing to approve the Debtors' request with respect to Store Nos. 211 and 339, to allow them to conduct discovery with respect to the financial condition and operating history of the proposed assignees of the Gator Leases. Kyle R. Grubbs, Esq., at Holland & Knight LLP, in Jacksonville, Florida, asserts that adjourning the Sale Hearing is necessary and appropriate because the Debtors and the proposed assignees have failed or otherwise refused information to Gator and the Court regarding their adequate assurance of future performance under the Gator Leases. Mr. Grubbs relates that on May 10, 2006, the Debtors advised Gator that Sunrise Properties, Inc., was the "successful bidder" and that the proposed new tenants under the Gator Leases would be Summit Holdings, LLC, for Store No. 211 and Legacy Group, LLC, for Store No. 339. The Debtors also indicated, but did not definitively state, that Esmail Mobarak, a principal of Summit and Legacy, would guaranty the obligations of Summit and Legacy under the Gator Leases. Gator advised the Debtors that the information they have provided with respect to adequate assurance of future performance was wholly inadequate. Given the Debtors and proposed assignees' complete lack of disclosure, it is impossible for the Court and Gator to evaluate the financial means or operating history of the proposed assignees, Mr. Grubbs contends. Gator also asks the Court to deny the Debtors' request to the extent it seeks to authorize them to assume and assign the Leases to Summit, Legacy, Mr. Mobarak, or Sunrise. Background As reported in the Troubled Company Reporter on April 19, 2006, Winn-Dixie Stores, Inc., and its debtor-affiliates sought authority from the U.S. Bankruptcy Court for the Middle District of Florida to: (a) sell their leasehold interests in 35 additional stores and the equipment located in those stories, free and clear of claims, liens and interests, (b) assume and assign leases in connection with the sales or, if no sale is consummated, reject those leases effective the later of (i) May 18, 2006, or (ii) the date the Debtors vacate and surrender possession of the premises, and establish a claims bar date for any rejection damage claims at 30 days after the Rejection Date; (c) determine any requisite cure for leases being assumed and assigned. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Ct. OKs Jenner as Special Insurance Litigation Counsel ------------------------------------------------------------------ Judge Funk of the U.S. Bankruptcy Court for the Middle District of Florida gave Winn-Dixie Stores, Inc., and its debtor-affiliates authority to employ Jenner & Block LLP as their special insurance litigation counsel. Before the Debtors filed for bankruptcy, Jenner has advised them with respect to a variety of insurance-related matters. Jenner has served as the Debtors' counsel in a breach of contract lawsuit seeking payment of more than $8,900,000 owed by XL Insurance America, Inc., or, in the alternative, Marsh USA Inc., in connection with hurricane damage incurred by the Debtors in 2004, D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, relates. As a result of increased activity in the Litigation and the likelihood that it will proceed to trial, the Debtors anticipate that the cost of services they will require from Jenner going forward will exceed the monthly and case caps provided in the OCP Order, Mr. Baker tells the Court. Jenner's hourly rates are: Professional Hourly Rate ------------ ----------- John H. Mathias, Jr. $670 Christopher C. Dickinson 485 John P. Wolfsmith 420 Joseph F. Arias 325 Rebecca L. Miller 160 Project Assistants 120 John H. Mathias, Jr., Esq., a partner at Jenner, discloses that during the 90 days prior to the petition date, the Debtors paid the firm in the ordinary course prepetition legal fees and expenses: Date of Payment Amount --------------- ------ 11/29/2004 $1,920 01/17/2005 1,125 01/16/2005 1,541 02/18/2005 12,560 There remain unpaid prepetition fees and expenses totaling $1,700, to which Jenner waives any claim, Mr. Mathias tells the Court. To the best of the Debtors' knowledge: (a) Jenner neither holds nor represents any interest adverse to their estates with respect to the services for which it will be employed; and (b) Jenner has had no affiliation with the Debtors, their creditors or any party-in-interest, or their attorneys and accountants, the United States Trustee, any person employed in the office of the United States Trustee, or the Bankruptcy Judge presiding over the Debtors' cases. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Judge Funk Approves PwC's Retention Supplement ---------------------------------------------------------- Judge Funk of the U.S. Bankruptcy Court for the Middle District of Florida approves Winn-Dixie Stores, Inc., and its debtor- affiliates' supplement to PricewaterhouseCoopers LLP's retention. The Debtors advise the Court that they need the services of PwC to ensure that the security of their information technology remains at the highest possible level. Although PwC has previously been retained to provide services to the Debtors, the current terms of PwC's approved retention do not encompass services related to the enhancement of the Debtors' information technology security, D. J. Baker, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in New York, explains. Accordingly, the Debtors propose to supplement the terms of PwC's retention to include, effective as of April 14, 2006: (1) IT Security Strategy Development -- PwC will work with the Debtors to: (a) confirm the current state of security; (b) determine the relevant business objectives, risks, and regulatory and legal drivers for security; (c) establish a desired future state; and (d) create a maturity model to assist with the prioritization and implementation of security initiatives over the next 12 to 24 months. To that end, PwC will focus on these areas of security: * Governance -- Defining the purpose and scope of the information technology security governance program; * Policies, Procedures, and Standards -- Determining the structure around security policy management and defining a framework within which to develop new policies, procedures, and standards; * Awareness & Training -- Defining current security awareness initiatives and identifying new programs to support the strategy; * Risk Identification -- Defining the desired components of a program to identify risks to information security assets; * Information Management -- Defining the desired components of a program to analyze security events and escalate those that present a risk to the business; * Remediation -- Defining the desired actions for a program to mitigate and resolve security incidents; * Change Control -- Establishing a framework for security to leverage and interact with current change control processes; * Asset Management -- Defining the integration points with existing or proposed asset management processes to leverage asset data and increase the value and effectiveness of the IT security strategy; and * Reporting -- Defining the desired scope of security reporting and determining the appropriate integration with existing reporting capabilities and developing a framework to allow future security initiatives to support that scope. (2) Capability Development -- PwC will work with the Debtors to establish a sustainable IT Governance Program by: (a) developing the charter; (b) defining team composition; (c) defining the organizational structure; (d) establishing sponsorship; (e) defining roles and responsibilities; (f) defining decision processes; and (g) defining accountabilities. PwC will also work with the Debtors to develop an information classification model to allow the Debtors to prioritize security efforts, allocate appropriate security resources, and align security control initiatives to business objectives and the security strategy by: (i) identifying the scope of information assets; (ii) identifying the relevant business risks; (iii) establishing a classification scheme; and (iv) classifying a sample of information assets. Mr. Baker notes that PwC has indicated its willingness to provide the services. In a letter agreement between the Debtors and PwC dated March 28, 2006, PwC indicated that its engagement is estimated to take eight weeks to complete, beginning May 1, 2006. Except as supplemented, the parties have agreed that the terms of PwC's retention in the Debtors' Chapter 11 cases will remain the same, Mr. Baker assures the Court. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000). * Upcoming Meetings, Conferences and Seminars --------------------------------------------- May 25, 2006 TURNAROUND MANAGEMENT ASSOCIATION Doctor Heal Thyself - Health Care Turnaround Portland, Oregon Contact: http://www.turnaround.org/ May 30, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Speaker Session TBA, Vancouver, British Columbia Contact: 403-294-4954 or http://www.turnaround.org/ May 30, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, Florida Contact: 561-882-1331 or http://www.turnaround.org/ June 1, 2006 TURNAROUND MANAGEMENT ASSOCIATION Commercial Lenders Breakfast Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ June 1-2, 2006 TURNAROUND MANAGEMENT ASSOCIATION Southeast Regional Conference Amelia Island, Florida Contact: 410-347-7391 or http://www.turnaround.org/ June 5, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA NY Golf & Tennis Outing - MEMBERS & SPONSORSHIP REGISTRATION Fresh Meadow Country Club, Lake Success, New York Contact: 646-932-5532 or http://www.turnaround.org/ June 7-10, 2006 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 22nd Annual Bankruptcy & Restructuring Conference Grand Hyatt, Seattle, Washington Contact: http://www.airacira.org/ June 8, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Speaker Series #2 Ernst & Young Tower, Calgary, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ June 8, 2006 TURNAROUND MANAGEMENT ASSOCIATION Hedge Fund / Private Equity Round Table CityPlace Center, Dallas, Texas Contact: http://www.turnaround.org/ June 8-9, 2006 MEALEYS PUBLICATION Asbestos Bankruptcy Conference Ritz-Carlton Hotel, Chicago, Illinois Contact: http://www.mealeys.com/ June 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION How Are the Old Clients Doing? Duquesne Club, Pittsburgh, Pennsylvania Contact: http://www.turnaround.org/ June 14, 2006 BEARD AUDIO CONFERENCES Homestead Exemptions under BAPCPA Audio Conference Contact: 240-629-3300; http://www.beardaudioconferences.com June 14, 2006 TURNAROUND MANAGEMENT ASSOCIATION Annual Charity Golf Outing Harborside Golf Course, Chicago, Illinois Contact: 815-469-2935 or http://www.turnaround.org/ June 14, 2006 TURNAROUND MANAGEMENT ASSOCIATION Golf Outing / Spouse Social Portland, Oregon Contact: 503-223-6222 or http://www.turnaround.org/ June 14, 2006 TURNAROUND MANAGEMENT ASSOCIATION Signature Luncheon, Charity Event Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ June 14, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriot Tyson's Corner, Vienna, Virginia Contact: 703-912-3309 or http://www.turnaround.org/ June 14, 2006 (tentative) TURNAROUND MANAGEMENT ASSOCIATION LI TMA Texas Hold'em for Charity Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ June 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION Afghanistan - The Ultimate Turnaround Challenge Oak Hill Country Club, Rochester, New York Contact: http://www.turnaround.org/ June 15-18, 2006 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ June 20, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast TBA, Morristown, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ June 21-23, 2006 TURNAROUND MANAGEMENT ASSOCIATION Global Educational Symposium Hyatt Regency, Chicago, Illinois Contact: http://www.turnaround.org/ June 22-23, 2006 BEARD GROUP & RENAISSANCE AMERICAN CONFERENCES Ninth Annual Conference on Corporate Reorganizations Successful Strategies for Restructuring Troubled Companies The Millennium Knickerbocker Hotel, Chicago, Illinois Contact: 903-595-3800; 1-800-726-2524; http://www.renaissanceamerican.com/ June 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ June 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION What to Do When Internal Crime Strikes Your Company New Jersey Contact: http://www.turnaround.org/ June 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION 5th Annual Lenders Panel - Arizona Chapter National Bank of Arizona Conference Center, Phoenix, AZ Contact: http://www.turnaround.org/ June 29 - July 2, 2006 NORTON INSTITUTES ON BANKRUPTCY LAW Bankruptcy Law Institute Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 770-535-7722 or http://www2.nortoninstitutes.org/ July 11, 2006 TURNAROUND MANAGEMENT ASSOCIATION The New Bankruptcy Code Nine Months Later Rivers Club, Pittsburgh, Pennsylvania Contact: http://www.turnaround.org/ July 12, 2006 BEARD AUDIO CONFERENCES Clash of the Titans -- Bankruptcy vs. IP Rights Audio Conference Contact: 240-629-3300; http://www.beardaudioconferences.com July 12, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Function Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ July 12, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Center Club, Baltimore, Maryland Contact: 703-912-3309 or http://www.turnaround.org/ July 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Women's Event TBA, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ July 13-16, 2006 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Newport Marriott, Newport, Rhode Island Contact: 1-703-739-0800; http://www.abiworld.org/ July 18, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast Marriott, Red Bank, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ July 18-19, 2006 TURNAROUND MANAGEMENT ASSOCIATION Distressed & Turnaround Investing Congress Swiss"tel The Drake, New York, New York Contact: http://www.turnaround.org/ July 19, 2006 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner South Florida Contact: 561-882-1331 or http://www.turnaround.org/ July 25, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, Florida Contact: 561-882-1331 or http://www.turnaround.org/ July 26-29, 2006 AMERICAN BANKRUPTCY INSTITUTE Southeast Bankruptcy Workshop The Ritz Carlton Amelia Island, Amelia Island, Florida Contact: 1-703-739-0800; http://www.abiworld.org/ July 31, 2006 TURNAROUND MANAGEMENT ASSOCIATION Annual Golf & Tennis Outing Raritan Valley Country Club, Bridgewater, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ July 31, 2006 TURNAROUND MANAGEMENT ASSOCIATION Summer Social BBQ Colonial Springs Country Club, Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ August 3, 2006 TURNAROUND MANAGEMENT ASSOCIATION Commercial Lenders Breakfast Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ August 3-5, 2006 AMERICAN BANKRUPTCY INSTITUTE Mid-Atlantic Bankruptcy Workshop Hyatt Regency Chesapeake Bay, Cambridge, Maryland Contact: 1-703-739-0800; http://www.abiworld.org/ August 9, 2006 TURNAROUND MANAGEMENT ASSOCIATION Professional Development Meeting Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ August 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION DIP Panel Discussion Kansas City, Missouri Contact: http://www.turnaround.org/ August 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Family Night Baseball with the NJ Jackals (Yogi Berra Autograph Night) Jackals Stadium, Montclair, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ August 25, 2006 TURNAROUND MANAGEMENT ASSOCIATION Annual Fishing Trip Point Pleasant, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ August 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ September 6, 2006 TURNAROUND MANAGEMENT ASSOCIATION 4th Annual Alberta Golf Tournament Kananaskis Country Golf Course, Kananaskis, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ September 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Business Mixer TBA, Seattle, Washington Contact: 503-223-6222 or http://www.turnaround.org/ September 7-8, 2006 TURNAROUND MANAGEMENT ASSOCIATION Saratoga Regional Conference Gideon Putnam Hotel, Saratoga Springs, New York Contact: http://www.turnaround.org/ September 7-9, 2006 AMERICAN BANKRUPTCY INSTITUTE Southwest Bankruptcy Conference Wynn Las Vegas, Las Vegas, Nevada Contact: 1-703-739-0800; http://www.abiworld.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Tyson's Corner, Vienna, Virginia Contact: 703-912-3309 or http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast TBA, Secaucus, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI Turnaround Formal Event Long Island, New York Contact: http://www.turnaround.org/ September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Function Sydney, Australia Contact: 0438 653 179 or www.turnaround.org September 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Formal Event - Major Speaker to be Announced Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ September 17-24, 2006 NATIONAL ASSOCIATION OF BANKRUPTCY TRUSTEES Optional Alaska Cruise Seattle, Washington Contact: 800-929-3598 or http://www.nabt.com/ September 20, 2006 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Bankers Club, Miami, Florida Contact: 561-882-1331 or http://www.turnaround.org/ September 24, 2006 TURNAROUND MANAGEMENT ASSOCIATION Restructuring the Troubled High Tech Company Arizona Contact: http://www.turnaround.org/ September 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, Florida Contact: 561-882-1331 or http://www.turnaround.org/ September 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION Joint Education Program with NYIC Joint Reception CFA/RMA/IWIRC Woodbridge Hilton, Iselin, NJ Contact: http://www.turnaround.org/ September 27, 2006 TURNAROUND MANAGEMENT ASSOCIATION 7th Annual Cross Border Business Restructuring and Turnaround Conference Banff, Alberta Contact: http://www.turnaround.org/ October 5, 2006 TURNAROUND MANAGEMENT ASSOCIATION Commercial Lenders Breakfast Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ October 10, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Center Club, Baltimore, Maryland Contact: 703-912-3309 or http://www.turnaround.org/ October 11, 2006 TURNAROUND MANAGEMENT ASSOCIATION Professional Development Meeting Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ October 11-14, 2006 TURNAROUND MANAGEMENT ASSOCIATION 2006 Annual Conference Milleridge Cottage, Long Island, New York Contact: 312-578-6900; http://www.turnaround.org/ October 17, 2006 TURNAROUND MANAGEMENT ASSOCIATION Updates on the New Bankruptcy Law Kansas City, Missouri Contact: http://www.turnaround.org/ October 19, 2006 TURNAROUND MANAGEMENT ASSOCIATION Billards Networking Night - Young Professionals TBA, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ October 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Speaker Series #3 TBA, Calgary, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ October 26, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Speaker Series #3 TBA, Calgary, Alberta Contact: 403-294-4954 or http://www.turnaround.org/ October 31, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ October 31 - November 1, 2006 INTERNATIONAL WOMEN'S INSOLVENCY & RESTRUCTURING CONFEDERATION IWIRC Annual Conference San Francisco, California Contact: http://www.iwirc.com/ November 1, 2006 TURNAROUND MANAGEMENT ASSOCIATION Halloween Isn't Over! - Ghosts of turnarounds past who remind you about what you should have done differently Portland, Oregon Contact: http://www.turnaround.org/ November 1-4, 2006 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges San Francisco, California Contact: http://www.ncbj.org/ November 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast Marriott, Bridgewater, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ November 8, 2006 TURNAROUND MANAGEMENT ASSOCIATION Breakfast Meeting Marriott Tyson's Corner, Vienna, Virginia Contact: 703-912-3309 or http://www.turnaround.org/ November 8, 2006 TURNAROUND MANAGEMENT ASSOCIATION TMA Australia National Conference Sydney, Australia Contact: http://www.turnaround.org/ November 14, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Program St. Louis, Missouri Contact: 815-469-2935 or http://www.turnaround.org/ November 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION Joint Reception with NYIC/NYTMA TBA, New York Contact: 908-575-7333 or http://www.turnaround.org/ November 15, 2006 LI TMA Formal Event TMA Australia National Conference Long Island, New York Contact: http://www.turnaround.org/ November 15, 2006 TURNAROUND MANAGEMENT ASSOCIATION South Florida Dinner Citrus Club, Orlando, Florida Contact: 561-882-1331 or http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Bankruptcy Judges Panel Duquesne Club, Pittsburgh, Pennsylvania Contact: http://www.turnaround.org/ November 16, 2006 TURNAROUND MANAGEMENT ASSOCIATION Dinner Program TBA, Seattle, Washington Contact: 503-223-6222 or http://www.turnaround.org/ November 23, 2006 TURNAROUND MANAGEMENT ASSOCIATION Martini Party Vancouver, British Columbia Contact: 403-294-4954 or http://www.turnaround.org/ November 28, 2006 TURNAROUND MANAGEMENT ASSOCIATION Luncheon Centre Club, Tampa, FL Contact: 561-882-1331 or http://www.turnaround.org/ November 29, 2006 TURNAROUND MANAGEMENT ASSOCIATION Special Program TBA, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ November 30-December 2, 2006 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Hyatt Regency at Gainey Ranch, Scottsdale, Arizona Contact: 1-703-739-0800; http://www.abiworld.org/ December 6, 2006 TURNAROUND MANAGEMENT ASSOCIATION Holiday Dinner Portland, Oregon Contact: 503-223-6222 or http://www.turnaround.org/ December 7, 2006 TURNAROUND MANAGEMENT ASSOCIATION Networking Breakfast The Newark Club, Newark, New Jersey Contact: 908-575-7333 or http://www.turnaround.org/ December 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION LI TMA Holiday Party TBA, Long Island, New York Contact: 631-251-6296 or http://www.turnaround.org/ December 13, 2006 TURNAROUND MANAGEMENT ASSOCIATION Christmas Function GE Commercial Finance, Sydney, Australia Contact: 0438 653 179 or http://www.turnaround.org/ February 2007 AMERICAN BANKRUPTCY INSTITUTE International Insolvency Symposium San Juan, Puerto Rico Contact: 1-703-739-0800; http://www.abiworld.org/ April 11-15, 2007 AMERICAN BANKRUPTCY INSTITUTE ABI Annual Spring Meeting J.W. Marriott, Washington, DC Contact: 1-703-739-0800; http://www.abiworld.org/ March 27-31, 2007 TURNAROUND MANAGEMENT ASSOCIATION Spring Conference Four Seasons Las Colinas, Dallas, Texas Contact: http://www.turnaround.org/ March 29-31, 2007 ALI-ABA Chapter 11 Business Reorganizations Scottsdale, Arizona Contact: 1-800-CLE-NEWS; http://www.ali-aba.org/ June 6-9, 2007 ASSOCIATION OF INSOLVENCY & RESTRUCTURING ADVISORS 23rd Annual Bankruptcy & Restructuring Conference Westin River North, Chicago, Illinois Contact: http://www.airacira.org/ June 14-17, 2007 AMERICAN BANKRUPTCY INSTITUTE Central States Bankruptcy Workshop Grand Traverse Resort, Traverse City, Michigan Contact: 1-703-739-0800; http://www.abiworld.org/ July 12-15, 2007 AMERICAN BANKRUPTCY INSTITUTE Northeast Bankruptcy Conference Marriott, Newport, RI Contact: 1-703-739-0800; http://www.abiworld.org/ October 10-13, 2007 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Orlando, Florida Contact: http://www.ncbj.org/ October 16-19, 2007 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ December 6-8, 2007 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Westin Mission Hills Resort, Rancho Mirage, California Contact: 1-703-739-0800; http://www.abiworld.org/ March 25-29, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Spring Conference Ritz Carlton Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ September 24-27, 2008 NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Scottsdale, Arizona Contact: http://www.ncbj.org/ October 28-31, 2008 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Copley Place, Boston, Massachusetts Contact: 312-578-6900; http://www.turnaround.org/ October 5-9, 2009 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention Marriott Desert Ridge, Phoenix, Arizona Contact: 312-578-6900; http://www.turnaround.org/ 2009 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges Las Vegas, Nevada Contact: http://www.ncbj.org/ October 4-8, 2010 TURNAROUND MANAGEMENT ASSOCIATION TMA Annual Convention JW Marriott Grande Lakes, Orlando, Florida Contact: http://www.turnaround.org/ 2010 (TBA) NATIONAL CONFERENCE OF BANKRUPTCY JUDGES National Conference of Bankruptcy Judges New Orleans, Louisiana Contact: http://www.ncbj.org/ BEARD AUDIO CONFERENCES Coming Changes in Small Business Bankruptcy Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Distressed Real Estate under BAPCPA Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES High-Yield Opportunities in Distressed Investing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Fundamentals of Corporate Bankruptcy and Restructuring Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Reverse Mergers - the New IPO? Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Dana's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Employee Benefits and Executive Compensation under the New Code Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Validating Distressed Security Portfolios: Year-End Price Validation and Risk Assessment Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changing Roles & Responsibilities of Creditors' Committees Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Calpine's Chapter 11 Filing Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Healthcare Bankruptcy Reforms Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES Changes to Cross-Border Insolvencies Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com/ BEARD AUDIO CONFERENCES The Emerging Role of Corporate Compliance Panels Audio Conference Recording Contact: 240-629-3300; http://www.beardaudioconferences.com The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ 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 ***