/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060623.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, June 23, 2006, Vol. 10, No. 148 Headlines A PARTNERS: Senior Lienholder Gets Relief from Stay to Foreclose ACCESS WORLDWIDE: Gets Default Confirmation from CapitalSource ACCESS WORLDWIDE: Sells Telemanagement Services for $10.5 Million ACCESS WORLDWIDE: Issues Promissory Note & Warrants for $2 Mil. AIRESURF NETWORKS: Provides Update on Financial Statement Filings AMCAST INDUSTRIAL: Hires Equity Partners as Financial Advisor AMCAST INDUSTRIAL: Employs Keen Realty as Real Estate Consultant AMERICAN MEDIA: Updates Guidance on FY 2006 Debt Covenant Results AMERICAN TECH: April 30 Working Capital Deficit Tops $4.3 Million AMERICAN TECH: Dr. Gary From Replaces Frank Jackson as CFO AMRESCO RESIDENTIAL: S&P Cuts Rating on Class B-1F Certs. to D ARMOR HOLDINGS: S&P Rates Proposed $400 Million Subor. Notes at B+ BEAZER HOMES: Increases Revolving Credit Facility by $250 Million BIJOU-MARKET: Hires Edi Thomas to Litigate Employment Issues BRIDGE INFORMATION: District Court Affirms Welch Carson Settlement BURGER KING: Fitch Assigns BB Rating to $1.1 Billion Facilities CALPINE CORP: Names Gregory L. Doody as EVP and General Counsel CARGO CONNECTION: March 31 Balance Sheet Upside-Down by $8.5 Mil. CHEMTURA CORPORATION: CEO Robert Wood Renews Employment Pact CLEARSTORY SYSTEMS: Files Form 15 with SEC to Deregister Stock DANA CORPORATION: Can Continue Divestiture Program Obligations DANA CORPORATION: Court Approves Spicer Share Purchase Agreement DOMINION RESOURCES: S&P Rates Proposed $300 Million Notes at BB+ DORAL FINANCIAL: Completes Sale of $2.5 Billion of Mortgage Loans DPL INC: Deleveraging Prompts Moody's to Upgrade Ratings DS WATERS: Moody's Upgrades Ratings on $307 Million Loan to B3 ED CATES: Case Summary & 11 Largest Unsecured Creditors EL POLLO: Gets Lenders' Requisite Consents for Indenture Changes ENRON CORP: BroadBand Unit Insists i2 Technologies Owes $1.01MM ENRON CORP: Inks Stipulation Reclassifying Revolving Credit Claims EXTENDICARE INC: Board Approves Proposed Company Reorganization FALCONBRIDGE LTD: Xstrata Gets Canadian Anti-Trust Clearance FEDERAL-MOGUL: Has Until August 1 to Make Lease-Related Decisions FIRSTLINE CORP: David Cranshaw Appointed as Chapter 11 Trustee FIRSTLINE CORP: Court Okays Termination of Stone & Baxter's Work FORD MOTOR: Unveils 2007 Lineup Amidst Declining SUV Sales FORT DEARBORN: S&P Rates Proposed $105 Million Facilities at B- FOUNTAIN IMAGING: Case Summary & 58 Largest Unsecured Creditors GB HOLDINGS: Panel Files Amended Disclosure Statement in N.J. GOODYEAR TIRE: Will Cut Private Label Mfg. In North America by 1/3 HARDWOOD P-G: Hires Aaron Posnik as Auctioneers HEALTHSOUTH CORP: Gen. Counsel Gregory Doody to Resign on July 17 HIGH VOLTAGE: Ch. 11 Trustee Wants PBGC's Multi-Mil. Claims Junked HILCORP ENERGY: Moody's Rates $200 Million Sr. Unsec. Notes at B3 HONEY CREEK: Court Approves Second Amended Disclosure Statement HONEY CREEK: Can Hire Caine Mitter as Interest Rate Consultants IMMUNE RESPONSE: Discloses $7.5 Mil. Principal Balance on Notes INERGY L.P.: Selling 3.75 Million Common Units in Public Offering INTERNATIONAL COAL: Prices $175 Million of 10-1/4% Senior Notes INTERNATIONAL GALLERIES: Can Hire Cox Smith as Substitute Counsel INTERNATIONAL HELICOPTER: Case Summary & 11 Largest Creditors INTERSTATE BAKERIES: Wants to Sell Medford Property for $1.7 Mil. INTERSTATE BAKERIES: Wants $7.5M Chubb Surety Bond Program Okayed INTERSTATE BAKERIES: Wants MO Labor Dept.'s Security Motion Denied IRIDIUM SATELLITE: S&P Assigns B- Rating with Negative Outlook J.P. MORGAN: Fitch Lifts Rating on $37.9 Mil. Class Certificates J.P. MORGAN: Fitch Puts Low-B Ratings on $39.7 Mil. Class Certs. KAISER ALUMINUM: Expects to Exit Chapter 11 Protection on July 6 LB-UBS: Fitch Holds Low-B Ratings on $13.4 Mil. Class Certificates LB-UBS: Fitch Lifts Rating on $20 Million Class L Certificates LINN ENERGY: Acquires Natural Gas Pipeline System for $30 Million MADISON RIVER: S&P Affirms Corp. Credit & Facility's B+ Ratings NANOMAT INC: Court Dismisses Bankr. Case at U.S. Trustee's Behest NATIONAL CENTURY: Debt Acquisition Wants Class C-7 Claims Paid NATIONAL CENTURY: Ex-NCFE Officers Plead Not Guilty in Ohio Court NETWORK INSTALLATION: Selling 1.9 Mil. Shares of Stock to Dutchess NEVADA POWER: Prices Private Offerings of $195 Mil. Mortgage Notes NEVADA POWER: Fitch Expects to Assign BB+ Rating on $195MM Notes NIMITZ PARTNERS: Settles 7-Year Lender Liability Suit Before Trial NOVASTAR MORTGAGE: Fitch Rates $5.1 Mil. Class M-10 Certs. at BB+ NVE INC: Asks Court to Expand McElroy Deutsch's Retention NVE INC: Hires Pashman Stein as Labor & Employment Counsel OPTICAL DATACOMM: Section 341(a) Meeting Slated for July 13 OTIS SPUNKMEYER: $230 Million IPO Prompts S&P's Positive Outlook OZBURNEY-HESSEY: Debt Increase Cues Moody's to Downgrade Ratings PARMALAT USA: Reps Want to Amend Complaint Against Parmalat S.p.A PARMALAT USA: Creditors Approve Revisions to Parmalat Brasil Plan PLIANT CORP: Has Until October 30 to Solicit Acceptances for Plan PLIANT CORP: Has Until August 1 to Make Lease-Related Decisions PUREBEAUTY INC: Files Schedules of Assets and Liabilities QUIGLEY CO: Court Allows Examination of Insurance Settlement Docs RADNOR HOLDINGS: Enters Into Loan Agreements with Four Lenders RADNOR HOLDINGS: Retains Lehman Brothers as Financial Advisor RADNOR HOLDINGS: Reports Preliminary 2006 First Quarter Results RCN CORP: Completes New $130 Million First-Lien Credit Facility RENT-A-CAR: Moody's Assigns Ba2 Rating to Proposed $725 Mil. Loan REPUBLIC STORAGE: Wants to Hire Ex-CFO Christofil as Consultant ROUGE INDUSTRIES: Court Approves Settlement Pact with Minteq ROUGE INDUSTRIES: Del. Court Sets Plan Filing Hearing on July 24 RUFUS INC: Plan Admin. Has Until Aug. 17 to Object to Claims SCIENTIFIC GAMES: S&P Rates Proposed $150 Million Term Loan at BB SEARS HOLDINGS: Kmart Merger Prompts S&P's Stable Outlook SECURAC CORPORATION: Inks $500,000 Loan Deal with CAMOFI Master SECURAC CORPORATION: Signs Acquisition Deal with Edentify SOLUTIA INC: Disclosure Statement Hearing Rescheduled to Sept. 14 SOLUTIA INC: Wants to Amend & Assume Ammonia Supply Agreement SONITROL CORP: S&P Rates Proposed $175 Million Bank Facility at B STEWART & STEVENSON: Moody's Rates Proposed $150 Mil. Notes at B3 STONE ENERGY: Moody's Puts B3 Rating on Proposed $225 Mil. Notes STRUCTURED ASSET: Fitch Lifts Rating on Class B4-II & B5-II Certs. USG CORP: Bankruptcy Emergence Prompts S&P to Lift Rating to BB+ VERTICAL ABS: Fitch Rates $5 Million Class C Notes at BB+ WERNER LADDER: Wants to Hire Willkie Farr as Bankruptcy Counsel WERNER LADDER: Can Use Lenders' Cash Collateral on Interim Basis WESTPOINT STEVENS: Bankr. Court Okays Linerboard Suit Stipulation WESTPOINT STEVENS: Judge Defers Case Dismissal Hearing to July 12 * BOOK REVIEW: The Health Care Marketplace ********* A PARTNERS: Senior Lienholder Gets Relief from Stay to Foreclose ---------------------------------------------------------------- Scripps GSB I, LLC, moved for relief from the automatic stay in A Partners, LLC's chapter 11 case in order to complete a non- judicial foreclosure of its first priority trust deed against a commercial building known as the Guarantee Savings Building and an adjacent parking structure. The property is not owned by the Debtor; rather they are owned by a related limited liability company known as AB Parking Facilities, LLC. The Debtor holds a note from AB Parking secured by a junior deed of trust against the property. The Debtor's Lien is fifth in order of priority behind four other deeds of trust held by Scripps GSB, a related entity, Scripps Investments and Loans, Inc., and others. The Debtor opposed Scripps GSB's motion. However, the Debtor has little cash and it cannot exercise the rights of a junior lienholder under California law to protect its security interest in the Guarantee Buildings. In a Memorandum Decision published at 2006 WL 1593954, the Honorable W. Richard Lee grants Scripps GBS's motion for relief from the automatic stay. Judge Lee found that the obligation secured by Scripps' senior lien exceeds $23 million, that obligation exceeds the value of the property, the debtor has no funds to exercise its statutory rights of reinstatement and redemption, and the Debtor has no equity in its junior lien. Headquartered in Fresno, California, A Partners LLC -- http://www.apartnersllc.com/and http://www.apartnersllc.com/-- owns the Helm Building, a 10-story building with over 55,000 square feet of office space available for rent. The Debtor previously filed for chapter 11 protection on Oct. 28, 2005 (Bankr. E.D. Calif. Case No. 05-62656). That case was dismissed because the Debtor failed to timely file its Schedules and Statements. The Company filed for its second bankruptcy on Jan. 26, 2006 (Bankr. E.D. Calif. Case No. 06-10069). Estela O. Pino, Esq., at Pino & Associates represent the Debtor in its restructuring efforts. When the Debtor filed for its second bankruptcy, it reported assets and debts amounting to $10 million to $50 million. A rents receiver, Hal Kisller, was appointed by the Superior Court of California in and for the County of Fresco to operate the Guarantee Savings Building, which houses the Debtor's fuel cells and other energy generating equipment. The receiver was appointed in connection with a judicial foreclosure originally commenced against AB Parking Facilities by Capital Source Finance, LLC. As reported in the Troubled Company Reporter on June 5, 2006, A Partners filed a Chapter 11 plan and Disclosure Statement on May 26, 2006. A hearing to consider the adequacy of that disclosure statement is scheduled for July 20, 2006. The plan that disclosure statement describes is not premised on Scripps GSB obtaining relief from the automatic stay and forclosing on its senior lien. ACCESS WORLDWIDE: Gets Default Confirmation from CapitalSource -------------------------------------------------------------- In a Form 8-K filing with the U.S. Securities and Exchange Commission, Access Worldwide Communications, Inc., disclosed that on June 15, 206, it received confirmation from CapitalSource Finance, LLC, of a default on a certain Revolving Credit, Term Loan and Security Agreement dated as of June 10, 2003, as amended. The default was a result of the Company's non-compliance with the minimum EBITDA financial covenant, as defined in the Debt Agreement. As a result of the Default, the Company says that CapitalSource may exercise its rights and remedies as set forth in the Debt Agreement, including, among other things: (i) an increase in the applicable rate of interest to the default rate in accordance with the Debt Agreement; (ii) declare any and all loans or notes, all interest thereon and all other obligations to be due and payable immediately, the outstanding balance as of May 31, 2006 was approximately $5.5 million; (iii) terminate future obligations under the Debt Agreement; or (iv) exercise any or all of the other rights and remedies provided under the Debt Agreement. The Company reports that it is currently exploring strategic alternatives which could enable it to restructure its current financing structure. Based in Boca Raton, Florida, Access Worldwide Communications, Inc. -- http://www.accessww.com/-- is an established marketing company that provides a variety of sales, communication and medical education services. Its spectrum of services includes medical meetings management, medical publishing, editorial support, clinical trial recruitment, patient compliance, multilingual teleservices, product stocking and database management, among others. Access Worldwide has about 1,000 employees in offices throughout the United States and the Philippines. ACCESS WORLDWIDE: Sells Telemanagement Services for $10.5 Million ----------------------------------------------------------------- Access Worldwide Communications, Inc. (OTC Bulletin Board: AWWC) signed an agreement to sell Telemanagement Services, Inc., dba TMS Professional Markets Group, to a limited liability company owned and controlled by Palm Beach Capital, in a cash transaction valued at approximately $10.5 million. Telemanagement Services provide marketing services to the Pharmaceutical industry from its 350-seat call center in Boca Raton, Florida. Telemanagement Services represented approximately 38% of the revenues of Access for the five months ended May 2006. After the closing of the transaction, Access will operate approximately 700 communications seats in three locations in the U.S. and 350 seats in Manila, Philippines, with an approximate monthly run rate of $2.1 million as of May 2006. "We expect to close on or before July 31st," Shawkat Raslan, Chairman and Chief Executive Officer of Access Worldwide, commented. "With the sale of Telemanagement Services, Inc., we can now focus on and allocate more resources to continue to expand our off shore capability and capacity." About Access Worldwide Based in Boca Raton, Florida, Access Worldwide Communications, Inc. -- http://www.accessww.com/-- is an established marketing company that provides a variety of sales, communication and medical education services. Its spectrum of services includes medical meetings management, medical publishing, editorial support, clinical trial recruitment, patient compliance, multilingual teleservices, product stocking and database management, among others. Access Worldwide has about 1,000 employees in offices throughout the United States and the Philippines. Going Concern Doubt As reported in the Troubled Company Reporter on May 31, 2006, BDO Seidman, LLP, in West Palm Beach, Florida, raised substantial doubt about Access Worldwide Communications, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31, 2005, and 2004. The auditors pointed to the Company's recurring losses from operations, negative cash flows, and accumulated deficit. At March 31, 2006, Access Worldwide Communications, Inc.'s balance sheet showed a stockholders' deficit of $6,105,582, compared to a $5,060,322 deficit at Dec. 31, 2005. ACCESS WORLDWIDE: Issues Promissory Note & Warrants for $2 Mil. --------------------------------------------------------------- Access Worldwide Communications, Inc., discloses that on June 12, 2006, it issued a promissory note to Charles Henri Weil in exchange for $2,000,000. The Note will mature four months from the Issuance Date. In addition to the Note, the Company issued 200,000 warrants to the Holder on the Issuance Date. The Warrant was fully vested upon the Issuance Date and has an exercise price equal to $0.01 per share. The Warrant will remain exercisable until the date that is 10 years from the Issuance Date. A full-text copy of the promissory note dated June 12, 2006, is available for free at http://researcharchives.com/t/s?bd5 A full-text copy of the warrant certificate dated June 12, 2006, is available for free at http://researcharchives.com/t/s?bd6 Headquartered in Boca Raton, Florida, Access Worldwide Communications, Inc. (OTCBB: AWWC) -- http://www.accessww.com/-- is an established marketing company that provides a variety of sales, communication and medical education services. Its spectrum of services includes medical meetings management, medical publishing, editorial support, clinical trial recruitment, patient compliance, multilingual teleservices, product stocking and database management, among others. Access Worldwide has about 1,000 employees in offices throughout the United States and the Philippines. Going Concern Doubt As reported in the Troubled Company Reporter on May 31, 2006, BDO Seidman, LLP, in West Palm Beach, Florida, raised substantial doubt about Access Worldwide Communications, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended Dec. 31, 2005, and 2004. The auditors pointed to the Company's recurring losses from operations, negative cash flows, and accumulated deficit. At March 31, 2006, Access Worldwide Communications, Inc.'s balance sheet showed a stockholders' deficit of $6,105,582, compared to a $5,060,322 deficit at Dec. 31, 2005. AIRESURF NETWORKS: Provides Update on Financial Statement Filings ----------------------------------------------------------------- Airesurf Networks Holdings Inc. (CNQ: AIRE) provided an update in accordance with Ontario Securities Commission Policy 57-603 Defaults by Reporting Issuers in Complying with Financial Statement Filing Requirements. On June 20, 2006, Airesurf filed its audited financial statements for the year ended Dec. 31, 2006. The directors and officers of Airesurf will continue to be subject to a cease trade order in respect of securities of Airesurf until the interim financial statements for the quarter ending March 31, 2006, are filed with regulatory authorities. Based on the work-completed to-date, Airesurf anticipates that the interim financial statements will be filed by June 26, 2006. Airesurf will continue to provide bi-weekly updates, as contemplated by the OSC Policy, until the required financial statements have been filed. In the event that Airesurf does not file its interim financial statements by July 30, 2006, the Ontario Securities Commission may impose an Issuer Cease Trade Order. Airesurf intends to satisfy the provisions of the Alternative Information Guidelines during the period Airesurf remains in default of the filing requirements. The late filing of the required statements is due to the resignation of all of the directors and officers of the Airesurf on Dec. 1, 2005, and the subsequent appointment of new management of Airesurf which requires sufficient time to prepare and file the required statements. AireSurf Networks Holdings Inc. was originally incorporated in the province of Alberta on Dec. 10, 1986 as Multilink Technologies Inc. On Sept. 17, 2003, the Company was continued under the laws of the province of Ontario and changed its name to AireSurf Networks Holdings Inc. The Company's principal business is the development of its wireless network booster products. At Dec. 31, 2005, the Company's balance sheet showed a stockholders' deficit of $1,179,634, compared to a $944,647 deficit at Dec. 31, 2004. AMCAST INDUSTRIAL: Hires Equity Partners as Financial Advisor ------------------------------------------------------------- Amcast Industrial Corporation and Amcast Automotive of Indiana, Inc., obtained authority from the U.S. Bankruptcy Court for the Southern District of Indiana, in Indianapolis, to employ Equity Partners, Inc., as their special financial advisor and transaction broker. Equity Partners is expected to: (a) serve as exclusive Transaction Broker for the disposition of all of the Debtors' real property, personal property, and all other assets located or associated with the Debtors' Fremont, Indiana and Gas City, Indiana locations; (b) inspect the Debtors' assets to determine their physical condition; (c) prepare a program which may include marketing the Debtors' assets through newspapers, magazines, journals, letters, fliers, signs, telephone solicitation, or other methods as EPI may deem appropriate; (d) prepare advertising letters, fliers or similar sales materials, which would include information regarding the Debtors' assets; (e) endeavor to locate parties who may have an interest in becoming a joint venture partner or acquiring or refinancing the Debtors' assets; (f) circulate materials to interested parties regarding the Debtors' assets, after completing confidentiality documents; (g) respond, provide information to, communicate and negotiate with and obtain offers from interested parties and make recommendations to Debtors as to whether or not a particular offer should be accepted; (h) communicate regularly with Debtors in connection with the status of EPI's efforts with respect to the disposition of the Assets, which will include a weekly written report to all Parties-in-Interest; (i) recommend to Debtors the proper method of handling any specific problems encountered with respect to the marketing or disposition of their assets; and (j) perform related services necessary to maximize the proceeds to be realized for the Debtors' assets. Compensation The Debtors will pay Equity Partners a transaction fee directly out of the proceeds of any transaction equal to the sum of: -- 5% of the first $6,000,000 of Gross Sales Proceeds; plus -- 4% of Gross Sales Proceeds between $6,000,001 and $7,000,000; plus -- 3% of Gross Sales Proceeds between $7,000,001 and $8,000,000; plus -- 2% of Gross Sales Proceeds between $8,000,001 and $9,000,000; plus -- 1% of any Gross Sales Proceeds in excess of $9,000,000. The Debtors will also advance to Equity Partners a one-time payment of $25,000 for reasonable out-of-pocket expenses in connection with the Firm's provision of approved services to the Debtors, based on a budget submitted by Equity Partners for those expenses. To the best of the Debtors' knowledge, the firm does not represent any interest adverse to the estate and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Amcast Industrial Headquartered in Fremont, Indiana, Amcast Industrial Corporation, manufactures and distributes technology-intensive metal products to end-users and suppliers in the automotive and plumbing industry. The Company and four debtor-affiliates filed for chapter 11 protection on Nov. 30, 2004. The U.S. Bankruptcy Court for the Southern District of Ohio confirmed the Debtors' Third Amended Joint Plan of Reorganization on July 29, 2005. The Debtors emerged from bankruptcy on Aug. 4, 2005. Amcast Industrial Corporation and Amcast Automotive of Indiana, Inc., filed for chapter 11 protection a second time on Dec. 1, 2005 (Bankr. S.D. Ind. Case No. 05-33322). David H. Kleiman, Esq., and James P. Moloy, Esq., at Dann Pecar Newman & Kleiman, P.C., represent the Debtors in their restructuring efforts. Henry A. Efromson, Esq., and Ben T. Caughey, Esq., at Ice Miller LLP, represent the Official Committee of Unsecured Creditors. Kevin I. Dowd at Berkeley Square Group LLC serves as Amcast's financial advisor. The Creditors' Committee receives financial advice from Thomas E. Hill at Alvarez & Marsal, LLC. When the Debtor and its affiliate filed for protection from their creditors, they listed total assets of $97,780,231 and total liabilities of $100,620,855. AMCAST INDUSTRIAL: Employs Keen Realty as Real Estate Consultant ---------------------------------------------------------------- Amcast Industrial Corporation and Amcast Automotive of Indiana, Inc., obtained authority from the U.S. Bankruptcy Court for the Southern District of Indiana, in Indianapolis, to engage Keen Realty, LLC, as their real estate consultant. The Debtors expect Keen Realty to assist them in the marketing and sale of their Cedarburg and Flagg Brass real estates during the pendency of their bankruptcy cases. Specifically, Keen Realty will: a) act on behalf of the Debtors to offer the Properties for disposition on an "exclusive right to sell basis"; b) use its best efforts in marketing and offering the Properties; c) review all pertinent documents and will consult with the Debtors' counsel, as appropriate; d) develop and implement a marketing program which may include, as appropriate, newspaper, magazine or journal advertising, letter or flyer solicitation, placement of signs, direct telemarketing, and other marketing methods as may be necessary, and furnish to the Debtors, in advance, a reasonably accurate budget associated with the implementation of such marketing program; e) communicate with potential users, investors, brokers, etc. and will endeavor to locate additional parties who may have an interest in the purchase of the Properties; f) provide regular updated to the Debtors and Debtors' DIP lenders as to its activities under this engagement; g) respond and provide information to, negotiate with, and solicit offers from prospective purchasers and will make recommendations to the Debtors as to the advisability of accepting particular offers; h) meet periodically with the Debtors, its lender, its accountants and attorneys, in connection with the status of its efforts, when requested; i) work with the attorneys responsible for the implementation of the proposed transactions, reviewing documents, negotiating and assisting in resolving problems which may arise; and j) if required, appear in Court during the term of its retention, to testify or to consult with the Debtors in connection with the marketing or disposition of the Properties. Compensation The Debtor will pay for Keen Realty's services based on these conditions: -- When the Debtors sell or otherwise transfer title to the Properties, whether individually or as part of the disposition of Debtors' business or as part of a plan of reorganization, Keen will receive 4% of the gross proceeds from the transaction pertaining to the Property, which fee will be paid, in full, off the top, from the proceeds of sale or otherwise, simultaneously with the closing, sale, assignment or other consummation of the proposed transaction; and -- If the successful purchaser is properly represented by a third party broker, the commission will be increased by 2% of the gross proceeds to pay the third party broker, which fee will be paid, in full, off the top, from the proceeds of sale or otherwise, simultaneously with the closing, sale, assignment or other consummation of the proposed transaction. Given the transactional nature of Keen Realty's engagement, the firm will not be billing the Debtors by the hour and will not be keeping records of time spent for professional services rendered in these Chapter 11 Cases. Keen Realty will, however, be keeping reasonably detailed descriptions of the services that were rendered pursuant to its engagement. To the best of the Debtors' knowledge, Keen Realty does not represent any interest adverse to the estate and is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. About Amcast Industrial Headquartered in Fremont, Indiana, Amcast Industrial Corporation, manufactures and distributes technology-intensive metal products to end-users and suppliers in the automotive and plumbing industry. The Company and four debtor-affiliates filed for chapter 11 protection on Nov. 30, 2004. The U.S. Bankruptcy Court for the Southern District of Ohio confirmed the Debtors' Third Amended Joint Plan of Reorganization on July 29, 2005. The Debtors emerged from bankruptcy on Aug. 4, 2005. Amcast Industrial Corporation and Amcast Automotive of Indiana, Inc., filed for chapter 11 protection a second time on Dec. 1, 2005 (Bankr. S.D. Ind. Case No. 05-33322). David H. Kleiman, Esq., and James P. Moloy, Esq., at Dann Pecar Newman & Kleiman, P.C., represent the Debtors in their restructuring efforts. Henry A. Efromson, Esq., and Ben T. Caughey, Esq., at Ice Miller LLP, represent the Official Committee of Unsecured Creditors. Kevin I. Dowd at Berkeley Square Group LLC serves as Amcast's financial advisor. The Creditors' Committee receives financial advice from Thomas E. Hill at Alvarez & Marsal, LLC. When the Debtor and its affiliate filed for protection from their creditors, they listed total assets of $97,780,231 and total liabilities of $100,620,855. AMERICAN MEDIA: Updates Guidance on FY 2006 Debt Covenant Results ----------------------------------------------------------------- American Media Operations, Inc., updated prior guidance on the Company's anticipated Debt Covenant EBITDA results for its fiscal year ended March 31, 2006. The Company stated that it expects Debt Covenant EBITDA, excluding one-time expenses incurred as a result of the previously disclosed restatement process, to be slightly lower than the previously announced $130 million for such year. The Company's expectation is based on its current review of its financial performance for the fiscal year ended March 31, 2006. Until the review is finalized, however, and the Company files with the Securities and Exchange Commission its financial statements for the fiscal year ended March 31, 2006, the estimate is subject to change. Headquartered in Boca Raton, Florida, American Media Operations Inc. is the United States' largest publisher of celebrity, health and fitness, and Spanish language magazines. * * * Moody's assigned American Media Operations' bank loan debt and long-term corporate family ratings at B1 and B2 respectively, and junked the Company's senior subordinate debt rating. Standard & Poor's placed B- ratings on the Company's long-term local and foreign issuer credits. All ratings were placed in February 2006. AMERICAN TECH: April 30 Working Capital Deficit Tops $4.3 Million ----------------------------------------------------------------- American Technologies Group, Inc., filed its third fiscal quarter financial statements for the three months ended April 30, 2006, with the Securities and Exchange Commission on June 19, 2006. The Company reported a $1,293,576 net loss on $6,430,604 of net sales for the three months ended April 30, 2006, compared to $671,385 of net income on $1,013 of net sales for the third quarter of last year. At April 30, 2006, the Company's balance sheet showed $19,165,486 in total assets and $20,105,279 in total liabilities, resulting in a $939,793 stockholders' deficit. The Company's April 30 balance sheet also showed strained liquidity with $13,465,166 in total current assets available to pay $17,827,354 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's third fiscal quarter financial statements for the three months ended April 30, 2006, are available for free at http://ResearchArchives.com/t/s?bdf Going Concern Doubt Russell Bedford Stefanou Mirchandani LLP in New York raised substantial doubt about American Technologies Group, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended July 31, 2005. The auditor pointed to the Company's recurring losses and difficulty in generating sufficient cash flow to meet it obligations and sustain its operations. Based in California, American Technologies Group, Inc., develops, manufactures, and sells products that reduce and eliminate hazardous chemical by-products or emission resulting from industrial and combustion processes. The company's proprietary catalyst technology is also used in the manufacture of detergents and cosmetics. AMERICAN TECH: Dr. Gary From Replaces Frank Jackson as CFO ---------------------------------------------------------- The board of directors of American Technologies Group, Inc., accepted on June 19, 2006, the resignation of Frank Jackson as the Company's chief financial officer and appointed Dr. Gary Fromm to replace Mr. Jackson. Dr. Fromm is currently the Company's chairman of the board of directors and formerly served as the chief executive officer of the Corporation. Dr. Fromm also currently serves as the Chairman of the Audit Committee of the Company. Based in California, American Technologies Group, Inc., develops, manufactures, and sells products that reduce and eliminate hazardous chemical by-products or emission resulting from industrial and combustion processes. The company's proprietary catalyst technology is also used in the manufacture of detergents and cosmetics. * * * Going Concern Doubt Russell Bedford Stefanou Mirchandani LLP in New York raised substantial doubt about American Technologies Group, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the fiscal year ended July 31, 2005. The auditor pointed to the Company's recurring losses and difficulty in generating sufficient cash flow to meet it obligations and sustain its operations. AMRESCO RESIDENTIAL: S&P Cuts Rating on Class B-1F Certs. to D -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class M-2F mortgage loan pass-through certificates issued by AMRESCO Residential Securities Corp. Mortgage Loan Trust 1997-3 to 'D' from 'CCC'. Additionally, ratings are affirmed on seven other classes from the same series and on nine classes from two other AMRESCO transactions. The lowered rating reflects the fact that class B-1F suffered a principal loss of $66,373.69 as of the May 25, 2006, distribution date, which it is not likely to recover. Additionally, cumulative losses for series 1997-3 have consistently exceeded excess interest, thereby exhausting overcollateralization and reducing subordination. The affirmations reflect adequate credit support percentages. Credit support for these transactions is provided by subordination, overcollateralization, and excess interest. As of the May distribution date, total delinquencies ranged from 23.04% (group 1 from AMRESCO 1997-3) to 43.55% (AMRESCO 1999-1), and serious delinquencies ranged from 16.39% (group 1 from AMRESCO 1997-3) to 33.26% (AMRESCO 1998-1). Cumulative losses ranged from 4.65% (group 2 from AMRESCO 1997-3) to 10.64% (AMRESCO 1999-1). At issuance, the mortgage collateral backing the AMRESCO 1997-3 certificates consisted of 15- to 30-year, fixed-rate, subprime loans secured by first liens on owner-occupied, single-family detached residential properties. Rating Lowered AMRESCO Residential Securities Corp. Mortgage Loan Trust 1997-3 Mortgage loan pass-through certificates series 1997-3 Rating ------ Class To From ----- -- ---- B-1F D CCC Ratings Affirmed AMRESCO Residential Securities Corp. Mortgage Loan Trust Mortgage loan pass-through certificates Series Class Rating ------ ----- ------ 1997-3 A-8, A-9, M-1A AAA 1997-3 M-1F AA+ 1997-3 M-2A AA 1997-3 M-2F A 1997-3 B-1A BBB 1998-1 A-5, A-6, M-1A AAA 1998-1 M-1F AA 1998-1 M-2A, M-2F A 1999-1 A AAA 1999-1 M1 AA 1999-1 M2 A ARMOR HOLDINGS: S&P Rates Proposed $400 Million Subor. Notes at B+ ------------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings, including the 'BB' corporate credit rating, on Armor Holdings Inc. The outlook is revised to positive from stable. At the same time, Standard & Poor's assigned its 'B+' rating to the company's proposed $400 million subordinated notes due 2016. "The outlook revision reflects improved program diversity following the acquisition of Stewart & Stevenson Services Inc. and expectations that financial metrics will be generally above average for the rating by 2007," said Standard & Poor's credit analyst Christopher DeNicolo. The $1.1 billion acquisition was funded mostly with cash on hand at both companies, but debt increased approximately $400 million resulting in a modest deterioration in credit protection measures. The proposed notes will be sold under SEC rule 144A with registration rights and the proceeds will be used to refinance bank borrowings used to fund the acquisition. Stewart & Stevenson produces tactical wheeled vehicles (trucks) for the U.S. military, with its largest program being the Family of Medium Tactical Vehicles. The acquisition will decrease Armor's reliance on the up-armored HMMWV program, which now comprises a substantial portion of sales and profits, and increases backlog to over $2 billion. Funding for the FMTV program is easier to forecast as it comes out of the procurement portion of the defense budget, as opposed to the up-armored HMMWV contract, which is funded through supplemental appropriations. The ratings on Jacksonville, Florida-based Armor reflect limited program diversity and an active acquisition program. These factors are offset somewhat by leading positions in niche markets, moderate debt leverage, and good liquidity. The company's aerospace and defense group (81% of 2005 revenues pro forma for the acquisition) produces armored military vehicles, military body armor, and crew seats for military helicopters and transports. Armor is a leading provider of law enforcement equipment, including body armor, holsters, riot gear, and batons, through its Products Group (13%). The firm also provides commercial vehicle armoring through its Mobile Security division (6%). Strong demand for Armor's military products, contributions from acquisitions, and improved program diversification should offset increased debt levels and integration risks. Ratings could be raised if credit protection measures are restored to pre- acquisition levels. The outlook could be revised to stable if financial ratios do not improve as expected, demand for the up-armored HMMWV programs declines faster than expected, or there is a significant debt- financed acquisition. BEAZER HOMES: Increases Revolving Credit Facility by $250 Million ----------------------------------------------------------------- Beazer Homes USA, Inc. (NYSE: BZH) increased its existing revolving credit facility by $250 million in aggregate commitment effective June 16, 2006. As a result, the revolving credit facility, which matures in August 2009, now provides for borrowings up to an aggregate of $1 billion, subject to the terms and conditions set forth in the credit agreement. The facility is led by JP Morgan Chase Bank, N.A. as Administrative Agent, BNP Paribas, Guaranty Bank and Wachovia Bank as Syndication Agents, The Royal Bank of Scotland plc as Documentation Agent, Citicorp North America, Inc., SunTrust Bank and Washington Mutual Bank, FA as Managing Agents, and Comerica Bank, PNC Bank, National Association and UBS Loan Finance LLC as Co-Agents. JP Morgan Securities Inc., acted as Lead Arranger and Sole Bookrunner. Eleven other banks participate in the facility. "The increase in our revolving credit facility provides Beazer Homes with enhanced liquidity to continue to opportunistically grow our business," said James O'Leary, Executive Vice President and Chief Financial Officer. "We greatly appreciate the support and confidence of our bank syndicate, and are pleased to welcome two new lenders, Calyon and Natexis Banque Populaires. The success of this transaction illustrates our banks' confidence in Beazer Homes and its strategy." About Beazer Homes Headquartered in Atlanta, Beazer Homes USA, Inc., (NYSE: BZH) -- http://www.beazer.com/-- is one of the country's ten largest single-family homebuilders with operations in Arizona, California, Colorado, Delaware, Florida, Georgia, Indiana, Kentucky, Maryland, Mississippi, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia and also provides mortgage origination and title services to its homebuyers. * * * As reported in the Troubled Company Reporter on June 7, 2006, Moody's Investors Service assigned a Ba1 rating to the $275 million of 8.125%, 10-year senior notes of Beazer Homes USA, Inc. At the same time, Moody's affirmed Beazer's corporate family rating of Ba1 and the Ba1 ratings on the company's existing senior note issues. The ratings outlook is stable. As reported in the Troubled Company Reporter on June 6, 2006, Fitch Ratings assigned a 'BB+' rating to Beazer Homes USA, Inc.'s $275 million, 8.125% senior unsecured notes due 2016. Fitch affirmed Beazer's 'BB+' Issuer Default, senior unsecured debt and unsecured bank credit facility ratings. The Rating Outlook is Stable. The issue will be ranked on a pari passu basis with all other senior unsecured debt, including the company's unsecured bank credit facility. BIJOU-MARKET: Hires Edi Thomas to Litigate Employment Issues ------------------------------------------------------------ The U.S. Bankruptcy Court for the Northern District of California gave Bijou-Market, LLC, permission to hire The Law Offices of Edi Thomas, as its special litigation counsel. The Debtor filed for bankruptcy to resolve the claims asserted in Roe v. Bijou-Century, LLC, et al. prosecuted by Minami, Lew & Tanaki law firm. The Minami lawsuit is a nascent dancer class lawsuit. No class action certification has yet been sought. The Minami lawsuit that a former manager of the Debtor implemented a practice of forced tip-outs and that dancers were permitted to work longer hours than the hours for which they received wages. The plaintiffs assert an aggregate hypothetical claim of more than $66 million. The Debtor needs the help of Edi Thomas regarding employment law issues. The Employment Development Department has indicated that it intends to conduct an audit of the Debtor's books and records to evaluate employee/independent contractor treatment of the dancers. Additionally, the Debtor was one of the defendants in a Federal Court class action addressing the manner in which live adult theaters were operated and the treatment of dancers in the course of those operations. The confidential settlement of that class action involved non-monetary relief in the form of alterations and modification to the defendants' business practices. Edi Thomas represented the Debtor in that settlement. The firm's help would be needed in administering and monitoring compliance with the settlement. The firm also represented the Debtor in the Minami lawsuit. The Debtor tells the Court that Edi Thomas, Esq., a principal of the firm, will bill $225 per hour for this engagement. Mr. Thomas assures the Court that he doesn't hold any material interest adverse to the Debtor and that he is disinterested as defined in Section 101(14) of the Bankruptcy Code. Bijou-Market, LLC -- http://www.msclive.com/-- operates an adult entertainment facility on Market Street in San Francisco. The company filed for chapter 11 protection on Feb. 28, 2006 (Bankr. N.D. Calif. Case No. 06-30118). Michael St. James, Esq., at St. James Law, P.C., represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in this case to date. When the Debtor filed for protection from its creditors, it listed assets totaling $620,458 and debts totaling $66,308,352. BRIDGE INFORMATION: District Court Affirms Welch Carson Settlement ------------------------------------------------------------------ Highland Capital Management, L.P., and related Highland entities (Pamco Cayman Ltd., ML CBO IV (Cayman) Ltd., Highland Legacy Limited, KZH Highland-2 LLC, KZH Pamco LLC, SRV-Highland, Inc., and Gleneagles Trading LLC) appeald from a May 23, 2005, order entered in the United States Bankruptcy Court for the Eastern District of Missouri granting a consent motion filed by Scott P. Peltz, the Chapter 11 Plan Administrator for the estates of BIS Administration, Inc. (f/k/a Bridge Information Systems, Inc.), and certain of its subsidiaries, to approve and compromise all of the debtor's claims against certain Welsh Carson entities (Welsh, Carson, Anderson & Stowe, L.P., Welsh, Carson, Anderson & Stowe VII, L.P., Welsh, Carson, Anderson & Stowe VIII, L.P., Welsh, Carson, Anderson & Stowe IX, L.P., WCAS Capital Partners II, L.P., Thomas E. McInerney, Patrick J. Welsh) and Davis Polk & Wardwell and dismissing with prejudice Highland's state law claims against Welsh Carson. Highland was a member of a lender group that provided millions of dollars of pre-petition credit to Bridge. Highland has a $65 million unsecured claim against the Bridge estate. Welsh Carson is a related group of limited partnerships; in 1995 Welsh Carson acquired a controlling interest in Bridge, and in 1999 it caused Bridge to acquire SAVVIS Communications Corp. Welsh Carson then caused Bridge to transfer 56% of Bridge's interest in SAVVIS to individual Welsh Carson partnerships in two separate transactions. In September 2000 Bridge defaulted. Some of the general partners of the Welsh Carson partnerships, who were also officers and directors of Bridge, attempted to restructure Bridge's debt in order to avoid bankruptcy. According to Highland, the Welsh Carson general partners falsely represented to Highland that they had identified a potential purchaser for Bridge's assets if Highland would agree to restructure the debt (by accepting a payment of $0.17 per $1.00 of debt). The Welsh Carson general partners allegedly further stated to Highland that there were no other potential bidders for Bridge and that, if Highland refused to accept this proposal, they would cause Bridge to file for bankruptcy and then Highland would receive nothing. Highland agreed to the proposal. However, the Welsh Carson general partners were unable to sell Bridge. In January 2001 Welsh Carson caused Bridge to transfer $18 million in cash to SAVVIS in two transactions, even though SAVVIS at the time owed Bridge $30 million. Welsh Carson and the Welsh Carson general partners controlled both Bridge and SAVVIS. In February 2001, Highland filed an involuntary petition against Bridge in the bankruptcy court. Bridge then filed a voluntary petition under Chapter 11. The bankruptcy court then dismissed the involuntary petition as moot. In August 2002, Highland filed an action against Welsh Carson, the Welsh Carson general partners, and SAVVIS in state court in Texas, alleging state law tort claims (fraudulent misrepresentation, negligent misrepresentation, tortious interference of contract, conspiracy to commit tortious interference, conspiracy to commit fraud, aiding and abetting fraud, aiding and abetting tortious interference). Highland asserted that Welsh Carson and the Welsh Carson general partners knew that there was no potential buyer for Bridge and that, if Highland had known that, it would have filed an involuntary petition before Bridge transferred cash to SAVVIS. Highland also asserted a veil-piercing claim (asserting that Bridge was merely the alter ego of Welsh Carson and the Welsh Carson general partners). Highland claimed that Welsh Carson, by causing a delay in the filing of the bankruptcy petition, was able to "strip Bridge of its assets" (the $18 million in pre-petition transfers) and divert them to SAVVIS. SAVVIS, with the consent of Welsh Carson and the Welsh Carson general partners, removed the state court action to the United States District Court for the Northern District of Texas and requested that the district court transfer venue to the U.S. Bankruptcy Court for the Eastern District of Missouri because the claims in the state court action belonged to the Bridge estate. Highland sought to remand the state court action back to the state court. In June 2003 the federal district court transferred venue to the bankruptcy court and denied the motion to remand. In the meantime, in May 2003, Welsh Carson and the Welsh Carson general partners filed a declaratory judgment action in the bankruptcy court. Welsh Carson and the Welsh Carson general partners argued that the injury of which Highland complained was derivative of Bridge's direct injury. Therefore, they argued the claims in the state court action did not belong to Highland and instead belonged to the Bridge estate and the plan administrator. Highland filed a motion to dismiss or transfer the case back to the state court. In September 2003 the bankruptcy court denied the motion to dismiss or transfer. The parties agreed to consolidate the state court action and the declaratory judgment action into a single adversary proceeding in bankruptcy court. The bankruptcy court realigned the parties: Highland and the plan administrator were designated as the plaintiffs, and Welsh Carson and the Welsh Carson general partners were designated as the defendants. The state court complaint became the complaint in the consolidated adversary proceeding. In February 2003 the plan administrator filed in the bankruptcy court several related adversary proceedings against certain Welsh Carson entities to recover certain payments as avoidable preferences. Welsh Carson vigorously defended the claims and raised affirmative defenses. After discovery and other pretrial proceedings, trial was scheduled to begin in the spring of 2005 and was expected to last about a month. However, in January 2004, the plan administrator filed an adversary proceeding against Davis Polk to recover as avoidable preferences certain payments made by Bridge. In March 2004 Davis Polk denied the allegations and raised affirmative defenses. (The plan administrator has filed other adversary proceedings that are not at issue in this appeal.) On March 22, 2005, the plan administrator filed the consent motion for entry of an order approving a settlement and compromise of all claims and controversies as to Welsh Carson and Davis Polk and to dismiss with prejudice the avoidable preference claims. Under the proposed settlement, Welsh Carson will pay $9 million to the Bridge estate. The unsecured creditors' committee filed a response to the consent motion in support of the proposed settlement. The plan administrator filed an affidavit in support of the consent motion, outlining his experience in litigating large preference claims and stating that, in his opinion, the proposed settlement was in the best interest of the Bridge estate. Only Highland objected to the consent motion. Highland did not dispute that the proposed settlement met all of the standards of Rule 9019 of the Federal Rules of Bankruptcy Procedure and was in the best interest of the Bridge estate. Highland argued that the proposed settlement could not dispose of the state law claims because those claims belonged to it and not the Bridge estate. In a decision published at 2006 WL 1579788, the Honorable Stephen N. Limbaugh of the U.S. District Court for the Eastern District, says the fraud claim belong to Bridge's estate rather than to Highland. Highland's claim, Judge Limbaugh says, is a claim for general injury to Bridge and its creditors, who were thereby deprived of assets to which they could look for payment of their claims, and not just Highland to whom the alleged misrepresentation was made. Judge Limbaugh concludes that the cause of action is property of Bridge's estate, and Mr. Peltz has authority to settle it. Bridge Information Systems Inc. filed a voluntary petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code on February 15, 2001 (Bankr. E.D. Mo. Case Nos. 01-41593-293 through 01-41614-293, inclusive). On February 13, 2002, Judge McDonald confirmed a chapter 11 plan of liquidation, which, among other items, transferred ownership of the company's assets to the holders of Bridge's secured creditors. Thomas J. Moloney, Esq., Seth A. Stuhl, Esq., and Kurt A. Mayr, Esq., at Cleary, Gottlieb, Steen & Hamilton in New York served as lead counsel to Bridge in its chapter 11 cases. Gregory D. Willard, Esq., Lloyd A. Palans, Esq., and David M. Unseth, Esq., at Bryan Cave LLP in St. Louis, served as local counsel. BURGER KING: Fitch Assigns BB Rating to $1.1 Billion Facilities --------------------------------------------------------------- Fitch assigned initial ratings for Burger King Corporation, the world's second largest fast food hamburger restaurant chain: * Issuer Default Rating 'B+'; * $1,117 million of remaining guaranteed senior secured credit facilities 'BB/RR2' (consisting of these facilities): -- $150 million revolving credit facility maturing June 2011; -- $967 million aggregate remaining term loan A and B outstandings maturing June 2011 and June 2012, respectively. The Outlook on all Ratings is Positive. The ratings incorporate the capital structure and operations of Burger King pro-forma for parent company Burger King Holdings, Inc.'s initial public offering, which closed on May 18, 2006. Approximately 18.5% of the company's common equity was sold to the public at an offering price of $17 per share. Burger King's overall market capitalization upon the IPO was thereby imputed to be $2.26 billion. The IPO generated net proceeds for the benefit of the company approximating $397 million, of which $350 million was applied against existing outstanding term loans. The balance of the net proceeds will primarily be utilized to pay a $30 million termination fee related to the existing sponsor management agreement, along with various other fees and expenses. The ratings additionally reflect certain February 2006 transactions that were implemented by Burger King in advance of the IPO. The company incurred a new $350 million term loan and used about $55 million of cash on hand in connection with Burger King's February 2006 payment of both a $367 million dividend to shareholders and a $33 million make-whole payment to holders of options and restricted stock to compensate for dilution. The 'B+' IDR rating reflects that Burger King remains a highly leveraged company within the very competitive quick serve restaurant industry. The company's high debt balance and weak historical free cash flow performance are the result of several factors, including: * inattentive management of Burger King's operations by its former ownership; * the incurrence of additional debt in conjunction with both the company's December 2002 buyout and its 2006 dividend payment; and * significant recent investments in the global reorganization of Burger King and the operating turnaround of its franchisee base. Pro forma for the IPO and incorporating actual last-twelve-month operating results through March 31, 2006, post-IPO leverage is currently estimated: * 4.0x for 'total balance sheet debt/EBITDA'; * 5.2x for 'total adjusted debt/EBITDAR (including as debt 8(x) net rent associated with operating leases)'; and * 5.7x 'total adjusted debt/EBITDAR (including as debt 8(x) gross rent associated with operating leases)'. (EBITDAR as used here is defined as operating earnings before interest, tax, depreciation, amortization, and rent expense. Net rent expense is equal to Burger King's total rent expense, net of rental income received from its franchisees.) In contrast, Burger King's almost 3.0x pro-forma EBIT coverage of gross interest is a comparatively strong credit metric relative to the company's peers within the 'B+' IDR rating category. 'Cash flow from operations/ total balance sheet debt' was satisfactory at approximately 20.5% for the LTM period, after factoring in the debt reduction resulting from the IPO. Burger King's systemwide base of approximately 11,100 restaurants consists of about 11% company-owned stores and 89% franchised stores. This proportion of franchise units compared to the total system is the highest of its competitors. While this operating structure potentially enables Burger King to minimize its fixed cost base and its capital expenditures, the high proportion of non-owned restaurants also presents several obstacles. Burger King has limited control over its franchisees and a restricted ability to facilitate changes in restaurant ownership when management is dissatisfied with operator performance. As has been proven by experience, Burger King's ability to collect royalties and fees is at substantial risk when the franchisees are distressed. Burger King also faces the expiration of about 20% if its franchise agreements over the next five years, and cannot predict with assurance the rate at which these agreements will be either extended or formally renewed. The company reported that with regard to the franchise agreements that expired during the nine months ended March 2006, 45% were renewed, 29% were extended, 4% of the franchisees continued to operate with no agreement, and 22% of the affected restaurants were closed. It is not known to Fitch to what extent the franchised restaurant closures were attributable to an inability to negotiate terms, or instead due to the fact that they were underperforming operations. Burger King's 'Franchise Financial Restructuring Program', which was initiated in February 2003 to assist over one-third of the company's franchisees in the US and Canada, notably appears to be a key driver behind Burger King's steadily improving results. While the up-front costs of implementing the program have initially been significant, the ongoing benefits are already evident. Through fiscal year-end June 30, 2005, Burger King purchased an aggregate of 170 franchised restaurants, closed 56 franchised restaurants, and re-franchised 35 of these restaurants in connection with the FFRP initiative. Burger King's approximately $1.1 million average annual revenues per restaurant currently lag meaningfully behind McDonald's average of more than $1.8 million. Burger King's current management team is implementing various initiatives to improve individual store performance, such as: * standardizing and improving menu offerings; * filling in product gaps; * introducing more health-conscious choices; * extending hours of operation; * refurbishing stores; and * improving store design prototypes. Burger King's most significant growth opportunity centers on future planned initiatives for growth in international markets, where Burger King's restaurant base is currently only one-fourth the size of the McDonald's footprint. Fitch's Positive Rating Outlook acknowledges the fact that Burger King's operating metrics have demonstrated steady improvement over the past few years and there is reason to expect that the favorable trend will continue, albeit at a more moderate pace. Burger King reports that it has achieved eight consecutive quarters of comparable stores sales growth, following seven prior consecutive quarters of comparable stores sales losses. Franchisees are notably generating a steadily higher portion of Burger King's overall restaurant-level operating income, having increased from a negative contribution during FY2003, to a positive contribution of about 20% during FY2004, 33% during FY2005, and an estimated at 45% year-to-date March 2006. However, Burger King's franchisees may be challenged to achieve the level of further improvement necessary before their almost 90% share of systemwide revenues contributes almost 90% of systemwide operating income. Burger King's brand recognition remains strong, and its royalty income stream and real estate holdings provide additional value. Fitch also believes that Burger King's access to the capital markets will be enhanced as a result of the company's IPO and new requirement to file public financial statements. The company has indicated that it plans to launch 200-250 new stores per year going forward, largely in international markets and through the use of qualified franchisees. Since expenditures associated with certain of these efforts are discretionary, Burger King would have the ability to curtail many of them in the event that operating conditions change. Fitch expects that Burger King's equity sponsorship will be less likely to seek future returns of capital in the form of dividends and other distributions, now that there exists a definitive mechanism to exit their investment through the public sale of stock. These are examples of future events that could potentially cause Fitch to lower Burger King's Outlook or ratings: -- The occurrence of a material reduction in the system-wide base of restaurants; -- Significant revenue declines attributed to weakening economic conditions or aggressive competitor initiatives; -- A declaration by the board of directors of another sizeable dividend or similar initiatives to enhance investment returns for the equity sponsors; or -- The occurrence of a severe incident involving food-borne illness or food tampering which results in public backlash. Burger King's senior secured credit agreement was amended and restated during February 2006. Obligations under the agreement are guaranteed by substantially all material domestic subsidiaries, which account for about 65% of the company's consolidated revenue base. Collateral security consists only of pledges of 100% of the stock of domestic subsidiaries (with limited exceptions) and 65% of the stock of certain first-tier foreign subsidiaries. Financial covenants consist of an 'EBITDA/cash interest coverage ratio', a 'net debt/EBITDA' leverage ratio, and a capital expenditures limitation. While there are no direct loans currently outstanding under the $150 million revolving credit facility, there are approximately $42 million of open standby letters of credit in support of various insurance programs. Provisions already exist within the credit agreement permitting an aggregate of $150 million of additional term loans, subject to future lender commitments, pro- forma compliance with covenants, and no evidence of existing defaults. A 50% mandatory excess cash flow recapture provision exists as long as leverage (as defined) exceeds 3.0x. While Burger King has stated in its public filings that the company does not intend to pay dividends, dividends are permitted under the credit agreement subject to prescribed formulas and compliance with all covenants. The recovery ratings and notching of Burger King's guaranteed senior secured credit facilities reflect Fitch's recovery expectations under a distress scenario. Fitch has used an enterprise value analysis for these recovery ratings, given the limited tangible asset base which exists in this company. The 'RR2' recovery rating assigned for Burger King's fully drawn senior secured commitment reflects Fitch's expectation that 71%- to-90% recovery would be achievable. Pro-forma for the IPO, approximately 76% of Burger King's equity remains controlled by the group of three private equity sponsors which acquired the company from Diageo plc during December 2002. This sponsor group consists of affiliates of Texas Pacific Group, Bain Capital Partners, and Goldman Sachs, which respectively continue to hold about 28%, 24%, and 24% of the company's equity after factoring in IPO dilution and the exercise of certain over- allotments. It is notable that these equity sponsors have already realized a return of substantially all their originally invested equity capital and are now poised to realize a significant positive return. Fitch believes that the sponsors will pursue an exit strategy going forward that focuses on the gradual release of additional common shares for sale through the open market. CALPINE CORP: Names Gregory L. Doody as EVP and General Counsel --------------------------------------------------------------- Calpine Corporation (OTC Pink Sheets: CPNLQ) appointed Gregory L. Doody as Executive Vice President, General Counsel and Secretary effective July 17, 2006. Mr. Doody previously held the position of Executive Vice President, General Counsel and Secretary at HealthSouth Corporation. Nancy Murray, who had been serving as Calpine's Interim General Counsel, remains in her position of Senior Vice President. "Greg is a talented attorney and he brings to Calpine substantial restructuring experience," Calpine Chief Executive Officer Robert P. May, said. "At HealthSouth, Greg directly managed negotiations with noteholders and lending institutions that resulted in nearly $5 billion of new financing. Greg's addition essentially rounds out our executive management team as we work to emerge from Chapter 11 as a profitable, competitive power company." "Calpine has a tremendous opportunity to rebuild a world-class operation," said Mr. Doody. "I am pleased to be joining a company with such an accomplished workforce and great assets. Calpine's restructuring prospects are bright, and I look forward to helping with that process so that Calpine can emerge as a profitable and viable enterprise." "I would like to thank Nancy Murray for her work as Interim General Counsel for the last three months. During this time, we have made measurable progress in our restructuring efforts, in part as the result of Nancy's contributions during this period," added Mr. May. Mr. Doody was responsible for the oversight of all legal activities for HealthSouth since 2003. Prior to joining HealthSouth, Mr. Doody was a Partner at Balch & Bingham LLP, a regional law firm based in Birmingham, Alabama. He earned a Juris Doctor from Emory University's School of Law and a Bachelor of Science - Management degree from Tulane University. He is a member of the Alabama State Bar, Birmingham Bar Association and the American Bar Association. Mr. Doody also is a member of the Executive Committee of The Federalist Society's Corporations and Securities and Antitrust Practice Group. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. CARGO CONNECTION: March 31 Balance Sheet Upside-Down by $8.5 Mil. ----------------------------------------------------------------- Cargo Connection Logistics Holding, Inc. (OTCBB: CRGOE) (BERLIN: CD6.BE) (FRANKFURT: 217026) completed the extensive work required to restate its financials from operations prior to the company becoming "CRGO." Management at Cargo Connection Logistics Holding, Inc. noted that they have completed the filing of their 1st Quarter 10-QSB filing with the SEC. The "e" denotation on their symbol should be taken off within a few days. The delay to its most recent filings has been due to restatements of previous years filings dealing with accounting issues inherited by the Company from the previous management team. The restatements dealt with 2003 and 2004 and delayed the Company's filing of its 10-KSB for the year ended Dec. 31, 2005, and its first quarter 10-QSB filing for the quarter ended Mar. 31, 2006. "With these issues, which were completely out of our control, now behind us we anticipate that all future filings will be done in a timely manner," said Jesse Dobrinsky, Cargo Connection Logistics Holding, Inc. CEO. "We regret any inconvenience this may have caused our valued shareholders and we truly appreciate your support. We can now dedicate 100 percent of our efforts to growing our business domestically and in the foreign markets we have targeted for expansion." First Quarter Financials For the three months ended Mar. 31, 2006, the Company incurred a $3,191,503 net loss on $3,640,020 of direct revenue. This compares to a net loss of $422,142 on direct revenue of $3,405,764. At March 31, 2006, the Company's balance sheet showed $2,024,483 in total assets and $10,580,161 in total liabilities, resulting in a stockholders' deficit of $8,555,678. The balance sheet also showed strained liquidity with current assets totaling $1,577,223 and current debts totaling $9,347,896. Further, the Company's March 31 balance sheet showed that the Company has an accumulated deficit totaling $11,425,607. Going Concern Doubt In its Form 10-QSB filing, the Company said that its working capital deficiency and stockholders' deficit raise substantial doubt about the Company's ability to continue as a going concern. Management is seeking to raise additional capital and to renegotiate certain liabilities in order to alleviate the working capital deficiency. A full-text copy of the Company's Form 10-QSB for the quarter ended March 31, 2006, is available for free at: http://ResearchArchives.com/t/s?be4 About Cargo Connection Cargo Connection Logistics Holding, Inc. --- http://www.carcon.com/-- consists of Cargo Connection Logistics Corp. and Cargo Connection Logistics-International, Inc. (formally Mid-Coast Management, Inc.), which are both headquartered in Inwood, New York. The Company also has offices in Atlanta, Georgia; Charlotte, North Carolina; Chicago, Illinois; Columbus, Ohio; Miami, Florida; New York; Pittsburgh, Pennsylvania; and San Jose, California. Cargo Connection Logistics is a leader in world trade logistics. Headquartered adjacent to JFK International Airport, the company is a transportation logistics provider for shipments importing into and exporting out of the United States, with service areas throughout the United States and North America. The companies currently provide a comprehensive variety of transportation and warehouse capacity services to shippers throughout the nation. They also have container freight station operations specifically designed to handle internationally arriving freight for the major retail suppliers through its CFS facilities in Florida, Georgia, Illinois, New York and Ohio. CHEMTURA CORPORATION: CEO Robert Wood Renews Employment Pact ------------------------------------------------------------ Robert L. Wood renewed his employment agreement with Chemtura Corporation as its Chairman, President and Chief Executive Officer for another 5 years, effective April 1, 2006. Mr. Wood will have an annual base salary of $1 million for three years to be reviewed annually by, and subject to adjustment at the discretion of the Board of Directors. Mr. Wood will participate in the Company's: (a) Management Incentive Plan with a Target Bonus of 100% and a maximum bonus of 200% of Base Salary; (b) long-term incentive plans and programs with awards set by the Organization, Compensation and Governance Committee of the Board; and (c) other benefit plans, programs and arrangements, including life insurance, long-term disability, and healthcare plans. He is entitled up to 40 hours of personal use of the Company's aircraft and he will be paid an annual allowance equal to $75,000 for the purchase or lease, including maintenance and associated cost, of an automobile, pay for his country club membership and tax and financial planning services. If his employment is terminated due to his death or inability to perform, he or his estate will be paid: (a) the unpaid portion of his Base Salary and bonuses for the preceding fiscal year; (b) accrued but unused vacation days; (c) reimbursement for business travel and other expenses; and (d) a Prorated Bonus, depending on the Company's Management Incentive Plan. If his employment is terminated for Cause, he will be paid: (a) the unpaid portion of his Base Salary; (b) accrued but unused vacation days; and (c) reimbursement of expenses. If his employment is terminated by the Company in an involuntary termination or if he terminates his employment for good reason, the Company will pay him: (a) the unpaid portion of his Base Salary; (b) accrued but unused vacation days; (c) reimbursement of expenses; and (d) upon execution of mutual releases and waivers of claim, he will be entitled to a lump-sum payment equal to (whichever is lower): -- 2x his Base Salary prior to Employment Termination Date, or -- the Base Salary which would have been paid to him through the end of the Employment Term; plus -- 2x the Target Bonus, provided, if fewer than two bonus payouts would be made under the Management Incentive Plan between the Employment Termination Date and the end of the Employment Term, then an amount equal to the Target Bonus. In addition, he will be eligible to continue medical, dental, vision, and life insurance benefits for himself and his family. The termination provisions will be in addition to death benefits to which he or his estate may be entitled under any stock ownership, stock options, or other benefit plan or policy. If Mr. Wood is involuntarily terminated or resigns within 24 months after a change of control, then upon execution of mutual releases and waivers of claim, he will be eligible to receive: (a) severance pay equal to 3x his Base Salary plus the annual bonus paid to him in the three full fiscal years ending prior to the change of control; (b) a pro rata of annual bonuses that he is eligible to earn; (c) accrued but unused vacation days; (d) reimbursement of expenses; (e) reimbursement of financial planning and tax services, a maximum of $25,000; (f) reimbursement of outplacement services, a maximum of $25,000; (g) the automobile supplied by the Company, for purchase by him at book value; and (h) medical, dental, vision and life insurance benefits for himself and his family. Upon a change of control, Mr. Wood will be fully vested in all Company stock options and other equity-based awards held by him. Mr. Wood agrees that while he is employed by the Company, for a one-year period following the termination of his employment, he is prohibited from engaging in a business which competes with the Company and from soliciting the Company's employees, customers and others with a business relationship with the Company as well as soliciting or interfering with any contract or arrangement that the Company is actively negotiating or any prospective business opportunity that the Company has identified. About Chemtura Corporation Headquartered in Middlebury, Connecticut, Chemtura Corporation (NYSE: CEM) -- http://www.chemtura.com/-- is a global manufacturer and marketer of specialty chemicals, crop protection and pool, spa and home care products. With pro forma 2005 sales of $3.9 billion, the company has approximately 7,300 employees around the world. * * * As reported in the Troubled Company Reporter on April 21, 2006, Moody's Investors Service assigned a Ba1 rating to Chemtura Corporation's $400 million of senior notes due 2016 and affirmed the Ba1 ratings for its other debt and the corporate family rating. As reported in the Troubled Company Reporter on April 21, 2006, Standard & Poor's Ratings Services assigned its 'BB+' senior unsecured debt rating to Chemtura Corp.'s $400 million notes due 2016. Standard & Poor's affirmed Chemtura's 'BB+' long-term corporate credit rating. The outlook remains positive. CLEARSTORY SYSTEMS: Files Form 15 with SEC to Deregister Stock -------------------------------------------------------------- ClearStory Systems, Inc. (OTC Bulletin Board: CSYS) reported on June 20, 2006, that it filed a Form 15 with the Securities and Exchange Commission to voluntarily deregister its common stock. This suspends the Company's reporting obligations under the Securities Exchange Act of 1934. ClearStory intends to delist its stock from the Over- the-Counter Bulletin Board maintained by the National Association of Securities Dealers, Inc. as soon as practicable. As reported in the Troubled Company Reporter on May 29, 2006, the Company disclosed that it intended to voluntarily deregister its common stock and suspend its reporting obligations under the Securities Exchange Act of 1934, as amended. The Company decided to deregister its stocks after members of the Company's Board of Directors approved the recommendation by the ClearStory management to deregister and delist ClearStory common stock. After carefully considering the advantages and disadvantages of continued registration and listing, the Company believes that deregistering is best for long term shareholder value. This action will result in accounting, legal and administrative expense reductions and allow ClearStory management to focus its efforts and resources on revenue growth. "At this point in our company's history, it is important for us to focus our energy and resources on securing a leadership position in the growing digital media market," commented Henry F. Nelson, ClearStory president and chief executive officer. "Over the past two years, we have executed key strategic changes and made significant investments in our digital media development platform and DAM application. We now need to concentrate on leveraging these investments for long-term shareholder value." With the filing of the Form 15, ClearStory's obligation to file certain reports with the SEC, including Forms 10-KSB, 10-QSB and 8-K, are suspended, and accordingly, ClearStory does not intend to file its Form 10-KSB for the year ended March 31, 2006 with the SEC. ClearStory also expects, but cannot guarantee, that its common stock will continue to be quoted on "Pink Sheets" after it delists from the OTCBB; however, ClearStory cannot make any assurances that brokerage firms will continue to make a market in ClearStory's common stock after delisting. ClearStory expects the deregistration of its common stock to become effective within 90 days. About ClearStory Systems ClearStory Systems, Inc. -- http://www.clearstorysystems.com/-- is the leader in high-performance, content management solutions for digital media communications. ClearStory software manages the enterprise digital media supply chain -- from creation and collaboration, to lifecycle management and delivery -- to give companies a competitive advantage, marketing agility, cost avoidance, and maximum efficiency. Backed by premier customer support and service, ClearStory award-winning products are easy to use and readily align with its customers' business objectives for both a rapid return-on-investment and low total cost of ownership. At Dec. 31, 2005, the Company's balance sheet showed $6,108,000 in total assets and liabilities of $$7,785,000, resulting in a stockholders' deficit of $1,677,000. * * * Miller Ellin & Company, LLP, expressed substantial doubt about ClearStory Systems, Inc.'s ability to continue as a going concern after it audited the Company's financial statement for the year ended March 31, 2005. The auditing firm pointed to the Company's recurring losses and working capital deficiency. DANA CORPORATION: Can Continue Divestiture Program Obligations -------------------------------------------------------------- Dana Corporation and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to continue to honor certain obligations under their historic divestiture practice. As reported in the Troubled Company Reporter on June 5, 2006, prior to their bankruptcy filing and as part of the Divestiture Program and their overall restructuring efforts, the Debtors announced the sale or planned closure of several of their businesses and facilities. Among other things, the Debtors disclosed: (a) the sale and exit of their flight operations business; (b) the closure of their facilities in Bristol, Virginia, and Buena Vista, Virginia, in their Automotive Systems Group as part of their move to a lower-cost production footprint; and (c) the planned divesture of their Engine Hard Parts Division, Fluids Division and Pump Products Division, which collectively employ more than 9,800 employees, generate more than $1,200,000,000 in revenues and operate in 44 locations worldwide. Consistent with past practice under their Divestiture Program, the Debtors entered into 59 agreements with many of their employees in the ordinary course of business related to the Divestitures. According to Corinne Ball, Esq., at Jones Day, in New York, five of those agreements provide for severance on the termination of the Flight Operations employees as a result of the sale and exit of that division, and 22 of them provide for severance on the closure of the Bristol and Buena Vista Facilities. The remaining 32 Divestiture Agreements relate to the three proposed Division Divestitures and provide for a sale completion incentive payment to be paid only upon the sale and transition of the business to a new owner. Specifically, under the five Flight Operations Agreements: 1. the Debtors are required to make a payment to each Flight Operations employee equal to 25% of annual salary within 60 days after termination, provided that certain circumstances have been satisfied; and 2. the Flight Operations employee is required to maintain the confidentiality of the agreement and sign a release prior to receiving payment. Under the 22 Bristol and Buena Vista Facilities Agreements: 1. the Debtors are required to make a payment to each employee, in an amount generally representing between two and five months of salary within 15 days after termination, provided that certain circumstances have been satisfied; and 2. the employee must, among other things: -- remain employed with the company until termination; -- cooperate in the transfer of production to other facilities; -- maintain the confidentiality of the agreement; and -- sign a release prior to receiving payment. Under the 32 Division Divestiture Agreements: 1. upon the sale of the business and subject to certain conditions, the Debtors are required to make a sale completion incentive payment in two separate installments; 2. the first installment, equal to 50% of the Incentive Payment, will be paid in cash within 60 days after the closing of any sale, provided that the employee remains employed by the company in his or her current position on the closing date; 3. the second installment, equal to 50% of the Incentive Payment, will be paid in cash within 60 days after the expiration of six months from the closing date, provided that the employee accepts employment with the buyer as of the closing date and remains employed by the buyer for six months after the closing date; 4. alternatively, the second installment will be paid by the Debtors within 60 days after the closing date if the employee does not receive an offer of employment with the buyer; 5. in addition to the Incentive Payment, the Division Divestiture employee is entitled to a severance payment between 50% and 100% of annual salary in the event of a termination other than for cause, by the employee for good reason or for disability. The severance payment must be paid within 60 days of the Qualifying Termination. The Debtors' obligations under the Flight Operations Divestiture Agreements total around $147,000, and the obligations under the Bristol and Buena Vista Facilities Agreements amount to $206,000. The Debtors' aggregate obligations under the Division Divestiture Agreements total approximately $2,486,000 for the Incentive Payments and $3,524,000 for the severance payments. Under the Divestiture Program, the Debtors have historically caused the buyer of their assets to assume the severance portion of those agreements. Accordingly, the Debtors expect that their obligations under the Division Divestiture Agreements will be limited to the Incentive Payment portion. The Debtors have confirmed with Miller Buckfire & Co., their current investment banker, that providing for the Divestiture Agreements to ensure the assistance of critical employees during the closure and selling process is not only critical to insure a smooth and successful transition, but is also an ordinary course industry practice. The Divestiture Agreements were handled by the Debtors' corporate development specialists and extended to employees that they identified as necessary to: * assist in the marketing of the business; * assist in the sale and related diligence requirements; * enable them to assure potential buyers of adequate management to transition and maintain the business until a sale closes; and * assure that the value of the business is maintained and hence, the sale price obtained is maximized during a process that takes many months. The offering memorandum for the Engine Hard Parts Division has recently been distributed, and the offering memoranda for the Fluids and Pump Products Divisions will follow, Ms. Ball disclosed. According to Ms. Ball, the Debtors' Chapter 11 cases have caused a great sense of uncertainty among the Debtors' employees, which has led to the departure of at least a few individuals that had Divestiture Agreements. The loss of more people will seriously jeopardize the Debtors' ability to preserve the value of the businesses to be divested and will pose a serious threat to the ability to transition business to Mexico or other facilities and to asset buyers. 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 US$7.9 billion in assets and US$6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) DANA CORPORATION: Court Approves Spicer Share Purchase Agreement ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave Dana Corporation and its debtor-affiliates authority to: (a) enter into and perform a Master Share Purchase Agreement dated May 30, 2006, by and among the Debtors, Desc Automotriz, S.A. de C.V., Inmobilaria Unik, S.A. de C.V., Spicer, S.A. de C.V., and Dana Holdings Mexico, S. de R.L. de C.V., relating to dissolution of the Spicer Joint Venture; and (b) assume the Trademark License Agreement between Dana and Transmisiones TSP, S.A. de C.V., as amended, regarding the license of the "Spicer" trademark. A full-text copy of the Master Share Purchase Agreement is available for free at http://researcharchives.com/t/s?b4d Spicer is a holding company, which, through its subsidiaries, is engaged in the manufacture and sale of automotive parts in Mexico. The Debtors have full title to 5,329,801,806 Spicer shares, which represents 48.803% of the issued and total outstanding shares of Spicer. As reported in the Troubled Company Reporter on June 16, 2006, the Debtors and Desc Automotriz are parties to the Spicer, S.A. de C.V. Shareholders Agreement, as amended, dated as of May 19, 2000, which: -- prohibits the Debtors from manufacturing or selling products in Mexico directly competitive with those of Spicer; and -- provides that Desc Automotriz will be a preferred partner through Spicer should the Debtors expand their production in Mexico. According to Corinne Ball, Esq., at Jones Day, in New York, the Debtors and Desc Automotriz have agreed on a series of transactions to unwind the Spicer JV which are memorialized in the Share Purchase Agreement and other related agreements. Upon completion of the transactions: (a) the Dana Companies will have acquire sole ownership of the Spicer Entities involved in the manufacture of axles, driveshafts and gears and the casting and forging businesses, along with some companies that support those operations -- the Dana Targets -- which include: * Ejes Tractivos, S.A. de C.V. -- Etrac, * Engranes C>nicos, S.A. de C.V. -- ENCO, * Cardanes, S.A. de C.V., * Autometales, S.A. de C.V. -- AMSA, * Forjas Spicer, S.A. de C.V., * Direcspicer, S.A. de C.V., * Spicer Servicios, S.A., and * Corporaci>n Inmobiliaria; and (b) Desc Automotriz and Spicer will have acquire sole ownership of the remaining JV Subsidiaries. The Share Purchase Agreement provides for the Debtors' divestiture of the Dana JV Shares and the acquisition of the shares of the Dana Targets: 1. The Debtors will contribute US$19,500,000, to ENCO and Cardanes in return for hybrid securities, which will be treated as equity under U.S. law and debt under Mexican law; 2. The debt owed by AMSA to Spicer will be capitalized by each of Desc Automotriz and Inmobiliaria Unik, contributing cash to AMSA in an amount equal to their percentage ownership in AMSA times the value of AMSA's debt, with the remaining portion of AMSA's indebtedness to Spicer being converted into additional equity held by Spicer in AMSA; 3. All intercompany debt owed by the Dana Targets to Spicer will be assigned to Corporacion Inmobiliaria in return for Corporacion Inmobiliaria's issuance of additional shares of its stock to Spicer in satisfaction of all of the debt; 4. After satisfaction of certain obligations, the Debtors and Desc Automotriz will split the cash held in Spicer and all of its subsidiaries based on their ownership interests in Spicer, with the resulting cash distribution to the Dana Targets being used to fund their ongoing operations; 5. Desc Automotriz will buy the Debtors' shares in Spicer for US$166,010,000, to be paid in the form of a promissory note; 6. ENCO and Cardanes will dividend the funds they received under the Hybrid Loans to Spicer and Inmobiliaria Unik; 7. The Debtors will transfer the Desc Automotriz Promissory Note to Dana Holdings Mexico SRL de C.V., which is a wholly owned non-debtor Mexican subsidiary, to facilitate the contemplated transactions; and 8. Dana Mexico will buy the Dana Targets from Spicer by transferring the Desc Automotriz Promissory Note to Spicer. After the Spicer Transaction is consummated, the Debtors will have swapped around 49% of their interest in Spicer, plus US$19,500,000, for 100% ownership of the Dana Targets. A diagram of the Spicer Transaction is available for free at: http://researcharchives.com/t/s?b4e Pursuant to the Share Purchase Agreement, the parties will adjust the purchase prices of the Dana JV Shares and the shares of the Dana Targets at Closing to take into account levels of working capital and cash in Spicer and its subsidiaries as of June 30, 2006, with an adjustment for any prepetition payables paid after June 30, 2006. In the event that the actual working capital amounts for either the Desc Targets or the Dana Targets diverge by 15% or more from the average of the projected working capital amounts of the Desc Targets and the Dana Targets, Desc Automotriz or Dana Mexico will pay an adjustment to the purchase prices in the amount by which the divergence exceeds 15%. The parties have also agreed to estimate the level of cash as of June 30, 2006, in Spicer and its subsidiaries and to debit and credit from their own portions of that cash, which is based on the ownership percentages in Spicer and the JV Subsidiaries, the amounts required to satisfy the obligations of certain parties. The Share Purchase Agreement contemplates that the Debtors will reimburse Spicer for certain expenditures totaling US$7,000,000, made on the Debtors' behalf to prepare and execute certain projects to be pursued by the Dana Targets post-Closing. The Debtors will reimburse Spicer for any amounts required to terminate certain leases with GE relating to automobiles used by employees of the Dana Targets. To optimize the production capacity of the Dana Targets, the Debtors plan to move a variety of production equipment from certain of their U.S. facilities to facilities that will be owned by the Dana Targets after the Spicer Transaction closes, including: 1. the moving assembly equipment from Fort Wayne, Indiana, and Buena Vista, Virginia, to a facility owned by Etrac in Mexico City; 2. the moving axle related equipment from Cape Girardeau, Missouri, and Fort Wayne, Indiana, to the Etrac Facility; 3. the moving plant steering machinery and assembly operations from Lima, Ohio, to a plant owned by Cardanes in Quer,taro, Mexico; 4. the moving plant driveshaft machining from Bristol, Virginia, to the Cardanes Facility; and 5. the moving plant driveshaft machining from Pottstown, Virginia, to the Cardanes Facility. 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 US$7.9 billion in assets and US$6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) DOMINION RESOURCES: S&P Rates Proposed $300 Million Notes at BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' rating to Dominion Resources Inc.'s proposed $300 million enhanced junior subordinated notes. At the same time, Standard & Poor's affirmed its 'BBB' corporate credit rating on the company. The proceeds from the notes will be used for general corporate purposes, including the repayment of existing debt. The outlook is stable. As of March 31, 2006, Richmond, Virginia- based Dominion had about $18.8 billion of GAAP debt. The ratings on Dominion Resources reflect the relative cash flow stability and supportive regulatory environment for its utility subsidiary, combined with riskier oil and gas exploration and production operations and a growing portfolio of unregulated power generation. "Although Dominion's current financial measures are weak, the stable outlook reflects expected improvement in 2007 and beyond," said Standard & Poor's credit analyst Aneesh Prabhu. The securities are rated two notches below the corporate credit rating on Dominion Resources to reflect their subordinated position in the company's capital structure and the potential for interest deferral. DORAL FINANCIAL: Completes Sale of $2.5 Billion of Mortgage Loans ----------------------------------------------------------------- Doral Financial Corporation (NYSE: DRL) successfully completed the sale of approximately $2.5 billion in mortgage loans to an affiliate of Deutsche Bank Securities Inc. Except for $100 million in mortgage loans that were not previously transferred to FirstBank Puerto Rico, all the mortgage loans sold had been previously transferred to FirstBank in several transactions occurring between the years 2000 and 2004. The sale of these mortgage loans is part of Doral's initiative to restructure the terms of certain prior mortgage loan transfers and related servicing arrangements, which were recharacterized as secured borrowings as part of the previously announced restatement process. The transactions are expected to have a positive impact on Doral's regulatory capital ratios. In addition, as part of this process, on May 25, 2006, Doral entered into credit agreements with FirstBank to document as secured borrowings the loan transfers between the parties that prior to the restatement had been accounted for as sales. The aggregate amount of the borrowings documented under the credit agreements is $2.9 billion. The agreements are secured by a pledge of the mortgage loans that were previously transferred by Doral to FirstBank. After the repayment of loans from the proceeds of the sale of these mortgage loans, the aggregate unpaid balance of the loans was reduced to $450 million. About Doral Financial Doral Financial Corporation -- http://www.doralfinancial.com/ -- a financial holding company, is the largest residential mortgage lender in Puerto Rico, and the parent company of Doral Bank, a Puerto Rico based commercial bank, Doral Securities, a Puerto Rico based investment banking and institutional brokerage firm, Doral Insurance Agency, Inc. and Doral Bank FSB, a federal savings bank based in New York City. * * * As reported in the Troubled Company Reporter on June 13, 2006, Standard & Poor's Ratings Services lowered its long-term ratings on Doral Financial Corp. (NYSE: DRL), including the company's long-term counterparty rating, to 'B+' from 'BB-'. At the same time, Doral's outlook remains on CreditWatch with negative implications. DPL INC: Deleveraging Prompts Moody's to Upgrade Ratings -------------------------------------------------------- Moody's Investors Service upgraded DPL Inc.'s senior unsecured debt to Baa3 from Ba1, and upgraded The Dayton Power and Light Company's senior secured debt to A3 from Baa1; Issuer Rating to Baa1 from Baa2; and preferred stock to Baa3 from Ba1. Moody's also upgraded the trust preferred securities issued by DPL Capital Trust II to Ba1 from Ba2. This action concludes the review for possible upgrade that was initiated on April 17, 2006. The rating outlook is positive for DPL, DP&L, and DPL Capital Trust II. The upgrades reflect the lower business risk profile of the consolidated DPL organization as a result of a significant deleveraging of the parent company following the sale of the private equity portfolio that had exposed the company to a higher degree of risk and uncertainty compared to DP&L's regulated utility operations. DPL raised cash proceeds from the portfolio sale of approximately $868 million, approximately $450 million of which has been used for debt reduction. The upgrades reflect the company's renewed focus on its core regulated utility business, and constructive amendments to the utility's rate stabilization plan that provide some rate clarity through 2010, as well as improved recovery of fuel and environmental costs. The upgrades also consider the company's strong consolidated cash flow coverage ratios, including a ratio of cash from operations to debt of approximately 20% and a ratio of CFO plus interest to interest of approximately 3.4 times in 2005, on a Moody's adjusted basis. These ratios justify a low investment grade rating for DPL in accordance with guidelines in Moody's rating methodology for electric utilities in the medium global risk category. The rating outlook is positive for both DPL and DP&L. The positive outlook reflects Moody's expectation that the consolidated financial performance at DPL will continue to improve as fuel and environmental related rate increases are enacted and as capital expenditures for environmental compliance begin to decrease from the peak year anticipated in 2006. DPL is also expected to reduce leverage further at the parent company, lowering interest costs and improving coverage metrics. Although the financial metrics at both the parent and subsidiary might be commensurate with a further upgrade in the near term, there is considerable uncertainty about top leadership at the company. DPL has an outgoing chief executive officer and no chief operating officer. The company announced yesterday that its executive chairman would also step down on June 30 when his current management contract expires. Positive changes in corporate governance, controls, and corporate culture have been noted. However, the resolution of DPL's leadership and clarity on the new top management's strategy are limiting factors for further rating improvement in the near term. Ratings upgraded: * DPL's senior unsecured debt to Baa3 from Ba1; * DP&L's senior secured debt to A3 from Baa1; Issuer Rating to Baa1 from Baa2; and preferred stock to Baa3 from Ba1; * DPL Capital Trust II trust preferred securities to Ba1 from Ba2 DPL Inc., headquartered in Dayton, Ohio, is a diversified regional energy company operating in Ohio through its subsidiaries The Dayton Power and Light Company, DPL Energy, LLC, and MVE, Inc. DS WATERS: Moody's Upgrades Ratings on $307 Million Loan to B3 -------------------------------------------------------------- Moody's Investors Service upgraded the ratings of DS Waters Enterprises, LP to reflect the significant improvement in the company's financial and operating profile since its recapitalization and business restructuring effected with the sale of DS Waters to investment fund Kelso & Company and new executive management at the end of 2005. The ratings outlook is positive reflecting Moody's expectation for further improvement in profitability and cash flow generation throughout the intermediate term principally as a result of ongoing cost cutting efforts and stabilization of declines in Home-Office Delivery of water customers -- the company's largest business segment. These ratings were upgraded: * To B3 from Caa3, $307 million senior secured credit facility consisting of a $92 million revolver, due 2008, and approximately $215 million term loans outstanding, due 2009 * To Caa1 from Caa3, Corporate Family Rating * The ratings outlook is positive. DS Waters' ratings are constrained by the ongoing challenges in HOD, including limited pricing flexibility due to ongoing significant competition from lower-priced water coolers being sold at retail outlets. Also constraining the ratings is the still- limited track record for free cash flow generation and sustained earnings improvement following the sale of the company in November 2005. The ratings outlook could revert to stable should the company's recovery efforts stall or if there were or any meaningful increases in debt or uses of cash for acquisitions, dividends or otherwise, or further increases in capital spending outside of current expectations. For further information, refer to Moody's Credit Opinion on DS Waters. DS Waters Enterprises, LP is a leading U.S. provider of a range of water products including 5 gallon and 3 gallon returnable bottles, 2.5 gallon and 1 gallon high density polyethylene bottles, individual serving or polyethylene terephthalate bottles, water dispensers, filtration products, and other ancillary items such as coffee, food products, cups, and stirrers. The company was originally formed in 2003 by the combination of the home-office water delivery businesses of Groupe Danone and Suntory Limited, and was sold to investment fund Kelso and new executive management in November 2005. Revenue in 2005 was an estimated $780 million. ED CATES: Case Summary & 11 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Ed Cates aka Ed Cates Land Investment Company aka Ed Cates Land Company 7996 Highway 70 Calera, Alabama 35040 Tel: (205) 668-2656 Bankruptcy Case No.: 06-02137 Type of Business: The Debtor is a real estate developer. Chapter 11 Petition Date: June 21, 2006 Court: Northern District of Alabama (Birmingham) Debtor's Counsel: Andre' M. Toffel, Esq. Andre' M. Toffel, P.C. 1929 3rd Avenue North 3rd Floor, Farley Building Birmingham, Alabama 35203 Tel: (205) 252-7115 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 11 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Ray Archibald $400,000 P.O. Box 38 Halls, TN 38040 Cyrus & Linda Fulton $250,000 2045 Highway 99 Shelby, AL 35143-5513 Roy Lucas $250,000 155 Melton Street Montevallo, AL 35115 Colonial Bank, N.A. $156,000 Malcomb Graves, Jr. $150,000 Pat Sanford $150,000 Peggie L. Killingworth $100,000 Anthony Dean Snable, Esq. $10,000 Smith Excavating $40,000 AmSouth Bank/Bankcard $9,400 Estate of Walter Franklin $1 EL POLLO: Gets Lenders' Requisite Consents for Indenture Changes ---------------------------------------------------------------- El Pollo Loco Inc. and EPL Intermediate Inc. disclosed that in connection with the tender offer and consent solicitation for its 11-3/4% Senior Notes due 2013 and by Intermediate for its 14-1/2% Senior Discount Notes due 2014, a majority of holders in principal amount of both notes have provided the requisite consents to amend the indentures governing the Notes. As of May 30, 2006, El Pollo Loco had received tenders and consents for $124,726,000 in aggregate principal amount of the 11-3/4% Notes, representing approximately 99.93% of the outstanding Notes and Intermediate had received tenders and consents for $39,342,000 in aggregate principal amount of the 14-1/2% Notes, representing 100% of the outstanding Notes. Holders may no longer withdraw Notes that were previously or hereafter tendered, except as described in the Offer to Purchase and Consent Solicitation Statement, dated May 15, 2006. The tender offer is scheduled to expire at 5 p.m., New York City time, on July 12, 2006, unless extended or earlier terminated. Holders of the 11-3/4% Notes who tendered their Notes prior to the consent deadline will receive a consent payment of US$50 per US$1,000 principal amount of the 11-3/4% Notes validly tendered and accepted for purchase, and Holders of the 14-1/2% Notes who tendered their Notes prior to the Consent Deadline will receive a consent payment of $50 per $1,000 of accreted value of the 14-1/2% Notes validly tendered and accepted for purchase, in each case in addition to the tender offer consideration as described in the Offer to Purchase plus, in the case of the 11-3/4% Notes, accrued and unpaid interest on the 11-3/4% Notes. On the date of the Consent Deadline, El Pollo Loco and Intermediate executed a supplemental indenture to the indentures governing each of the 11-3/4% Notes and the 14-1/2% Notes which supplemental indentures, among other things, eliminated substantially all of the restrictive covenants, certain events of default provisions and certain conditions to defeasing the Notes in the indentures. The supplemental indentures will become operative when the Notes are accepted for payment by each of El Pollo Loco and Intermediate pursuant to the Offer to Purchase. The Offer is subject to the satisfaction of certain conditions, including: -- consummation of the Common Stock Offering, -- El Pollo Loco entering into a new credit facility, -- a requisite consent condition, -- minimum tender condition, -- condition that each of the Offers be consummated and -- that each of El Pollo Loco and Intermediate receives consents from a majority of holders of each of the 11-3/4% Notes and the 14-1/2% Notes. The detailed terms and conditions of the Offer are contained in the Offer to Purchase. Requests for documents may be directed to the information agent for the offer at: Global Bondholder Services Corporation, Tel: 866-937-2200. Additional information concerning the Offer may be obtained by contacting the dealer manager and solicitation agent for the offer at: Merrill Lynch, Pierce, Fenner & Smith Incorporated, Tel: 212-449-4914 (collect) 888-ML4-TNDR (U.S. toll-free) About El Pollo Loco El Pollo Loco -- http://www.elpolloloco.com/-- pronounced "L Po-yo Lo-co" and Spanish for "The Crazy Chicken," is the nation's leading quick-service restaurant chain specializing in flame-grilled chicken and Mexican-inspired entrees. Founded in Guasave, Mexico, in 1975, El Pollo Loco's long-term success stems from the unique preparation of its award-winning "pollo" -- fresh chicken marinated in a special recipe of herbs, spices and citrus juices passed down from the founding family. * * * As reported in the Troubled Company Reporter on May 23, 2006, Standard & Poor's Ratings Services expected to raise its corporate credit rating on El Pollo Loco Inc. to 'B+' from 'B' upon the successful completion of the company's planned IPO. S&P said the outlook is stable. Standard & Poor's also assigned a 'B+' rating, same as the expected corporate credit rating, to the company's planned US$200 million senior secured bank loan. A recovery rating of '2' is also assigned to the loan, indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. * * * Moody's Investors Service upgraded El Pollo Loco, Inc.'s corporate family rating to B1 from B3 and assigned B1 ratings to the company's proposed US$200 million senior secured credit facility following the company's proposed initial public offering of shares of its common stock and planned refinancing of its existing debt. At the same time, the SGL-2 Speculative Grade Liquidity rating was affirmed. The outlook remains stable. ENRON CORP: BroadBand Unit Insists i2 Technologies Owes $1.01MM --------------------------------------------------------------- Enron Broadband Services, Inc., provided services and products to i2 Technologies, Inc., pursuant to a Network Services Agreement, dated as of September 17, 2000. Barry J. Dichter, Esq., at Cadwalader, Wickersham & Taft LLP, in New York, relates that i2 Technologies presently owes a $1,014,912 matured debt to EBS that is past due. The matured debt includes $223,898 of interest calculated as prescribed in the Services Agreement from the due date of the applicable invoice through March 31, 2006. EBS has made a demand on i2 Technologies for payment of amounts that it owes to EBS, but until now, i2 has refused the pay its obligations, Mr. Dichter tells Judge Gonzalez. Hence, EBS asks the U.S. Bankruptcy Court for the Southern District of New York to: (1) declare that i2 Technologies owes a $1,014,912 matured debt to EBS and compel i2 to pay its obligations; (2) declare that i2 Technologies' failure to pay the matured debt constitutes a violation of Sections 362(a)(3), 362(a)(7) and 542(b) of the Bankruptcy Code; and (3) award EBS its costs and expenses, including attorney's fees, incurred in connection with its efforts to obtain i2 Technologies' compliance with its obligations, together with accrued interest. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 172; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Inks Stipulation Reclassifying Revolving Credit Claims ------------------------------------------------------------------ Enron Corp. and Citibank, N.A., agree to modify a stipulation, dated August 10, 2005, that the parties entered into in connection with their 364-Day Revolving Credit Agreement. Pursuant to the Stipulation, Enron caused the docketing agent to create a separate claim -- Claim No. 99090 -- for the Remaining Non-Challenged Revolver Debt Claim for $360,284,937, which claim was assigned. Claim No. 14196 -- the 364-Day Revolver Claim -- consists solely of the Remaining Challenged Revolver Debt Claim for $393,671,231. After approval of the Stipulation, Enron became aware that as a result of a computational error, interest that should have been allocated to the principal associated with the remaining challenged revolver debt claim was mistakenly included in the amount of the Remaining Non-Challenged Revolver Debt Claim. Enron informed Citibank of the misallocation and both parties subsequently agreed to enter into the First Amendment. The parties agree that Claim No. 99090 will be decreased by $1,275,578 and Claim No. 14196 will be increased by $1,275,578. The U.S. Bankruptcy Court for the Southern District of New York approves the First Amendment to the Stipulation. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 172; Bankruptcy Creditors' Service, Inc., 15/945-7000) EXTENDICARE INC: Board Approves Proposed Company Reorganization --------------------------------------------------------------- The Board of Directors of Extendicare Inc. (TSX: EXE.A)(TSX: EXE)(NYSE: EXE.A) unanimously approved a proposed reorganization, which, subject to approvals, will be implemented by a plan of arrangement and will involve: * The spin-off of Assisted Living Concepts, Inc. (an indirect wholly owned Nevada corporation), as a public company expected to be listed on the New York Stock Exchange to the Subordinate Voting and Multiple Voting shareholders of Extendicare; and * After giving effect to the Spin-Off of ALC, the conversion of Extendicare into a Canadian real estate investment trust, expected to be listed on the Toronto Stock Exchange. On completion of the Reorganization: * Extendicare Subordinate Voting shareholders will be entitled to receive one unit of the Extendicare REIT and one ALC subordinate voting Class A common share for each Extendicare Subordinate Voting Share; and * Extendicare Multiple Voting shareholders will be entitled to receive 1.075 units of the Extendicare REIT and one ALC multiple voting Class B common share for each Extendicare Multiple Voting Share. "I am pleased that this strategic reorganization is proceeding in such a positive direction for our shareholders," Mr. Mel Rhinelander, President and Chief Executive Officer of Extendicare, stated. "The Reorganization will ensure that Extendicare continues its legacy of providing quality services and facilities for its residents, while maintaining strong relationships with its employees, suppliers and partners. Our senior management believes and the Board has concluded that the Reorganization will unlock shareholder value previously unrecognized and permit maximum flexibility for investors to adopt their own specific investment strategy." The Reorganization will require two-thirds approval of the Subordinate Voting shareholders and the Multiple Voting shareholders voting in person or by proxy at separate shareholder meetings, approval of the Ontario Superior Court of Justice and various Canadian and U.S. regulatory approvals. It is anticipated the Reorganization will be completed in Extendicare's 2006 third quarter. The Board believes the Reorganization is in the best interests of Extendicare and is fair to the Subordinate Voting and Multiple Voting shareholders. All the directors of the Board have advised Extendicare that they will vote for the Reorganization and to the extent applicable will exercise their options and participate in the Reorganization. The Board recommends that the Extendicare shareholders approve the Reorganization. Mr. Michael Burns and Mr. David Hennigar, on behalf of their respective families which own in aggregate approximately 8,292,946 Multiple Voting Shares and 28,667 Subordinate Voting Shares of Extendicare, confirmed to Extendicare they will support the Reorganization. It is anticipated that the Reorganization will be completed without disruption to the Extendicare operations, employees and residents of any Extendicare facilities. The Extendicare REIT and ALC will be independently managed, operated and financed. In addition, Extendicare is finalizing plans with respect to certain ancillary assets and liabilities. It is expected that all options under Extendicare's stock option plan will be exercised immediately prior to the effective time of the Reorganization. Extendicare REIT The Extendicare REIT, through wholly owned operating entities, will continue to operate the U.S. and Canadian skilled nursing home and related businesses of Extendicare and will apply for a TSX listing. The Extendicare REIT will have an eight-member board of trustees. Mr. Fred Ladly, the current Deputy Chairman and a former Chief Executive Officer of Extendicare, and Mr. Mel Rhinelander will be the non-executive Chairman and non-executive Vice-Chairman, respectively with Mr. Phil Small, the current President and Chief Operating Officer of EHSI, and Mr. Richard Bertrand, the current Chief Financial Officer of Extendicare, being the President and Chief Executive Officer and the Chief Financial Officer, respectively. The Trustees of the Extendicare REIT will determine the REIT's distribution policy from time to time, which will be dependent on various economic factors. Debt Refinancing In connection with the Reorganization, Extendicare anticipates refinancing the senior and senior subordinated notes and revolving credit facility and term loan of Extendicare Health Services, Inc., an indirect wholly owned U.S. holding company of Extendicare. In addition, management is reviewing the potential for refinancing its Canadian mortgages. Preferred Shares Following the completion of the Reorganization, Extendicare anticipates redeeming all of its outstanding preferred shares at CDN$25 per share, representing approximately CDN$20.1 million, plus accrued dividends. After this redemption, Extendicare will apply to the Canadian Securities Commissions to terminate its reporting issuer's status. ALC In connection with the Spin-Off, Extendicare will transfer 29 assisted living facilities currently owned by EHSI to ALC. Extendicare also expects that ALC and Extendicare REIT will enter into customary, short-term transitional services arrangements to be conducted on an arms length basis. Upon completion of the Reorganization, ALC will operate 206 assisted living facilities, totalling 8,251 units, in 17 states, and will rank in the top five in size of assisted living companies in the U.S. On a pro forma basis, including the operations of ALC for the month of January 2005, ALC's revenue for the year ended Dec. 31, 2005, and for the three months ended March 31, 2006, would have been $214 million and $55 million. ALC will have an eight member Board of Directors. Mr. David Hennigar (the current Chairman of Extendicare) and Mr. Mel Rhinelander will be the non-executive Chairman and non-executive Vice-Chairman, respectively of ALC. Laurie A. Bebo (currently the President and Chief Operating Officer) will be the President and Chief Executive Officer of ALC. About Extendicare Inc. Headquartered in Markham, Ontario, Extendicare Inc. is currently a major provider of long-term care and related services in North America. Through its subsidiaries, Extendicare operates 438 nursing and assisted living facilities in North America, with capacity for over 34,700 residents. As well, through its operations in the United States, Extendicare offers medical specialty services such as subacute care and rehabilitative therapy services, while home health care services are provided in Canada. Extendicare employs 38,300 people in North America. * * * At June 19, 2006, Standard & Poor's assigned Extendicare Inc. a BB- long-term foreign and local issuer credit rating. FALCONBRIDGE LTD: Xstrata Gets Canadian Anti-Trust Clearance ------------------------------------------------------------ Xstrata plc received an Advance Ruling Certificate from the Canadian Competition Bureau with respect to its offer to purchse Falconbridge Limited for CDN$16.1 billion. Xstrata is now free to pursue its bid for the Canadian company. As previously reported, the U.S. Department of Justice had also cleared Xstrata's offer from any competition issues. The decision from the European competition authorities will be given on July 13, 2006. About Xstrata Xstrata plc -- http://www.xstrata.com/-- is a major global diversified mining group, listed on the London and Swiss stock exchanges. The Group is and has approximately 24,000 employees worldwide, including contractors. Xstrata does business in six major international commodities markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc, with additional exposures to gold, lead and silver. The Group's operations and projects span four continents and nine countries: Australia, South Africa, Spain, Germany, Argentina, Peru, Colombia, the U.K. and Canada. About Falconbridge Headquartered in Toronto, Ontario, Falconbridge Limited (TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a leading copper and nickel company with investments in fully integrated zinc and aluminum assets. Its primary focus is the identification and development of world-class copper and nickel orebodies. It employs 14,500 people at its operations and offices in 18 countries. The Company owns nickel mines in Canada and the Dominican Republic and operates a refinery and sulfuric acid plant in Norway. It is also a major producer of copper (38% of sales) through its Kidd mine in Canada and its stake in Chile's Collahuasi mine and Lomas Bayas mine. Its other products include cobalt, platinum group metals, and zinc. * * * Falconbridge's CDN$150 million 5% convertible and callable bonds due April 30, 2007, carries Standard & Poor's BB+ rating. FEDERAL-MOGUL: Has Until August 1 to Make Lease-Related Decisions ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the period within which Federal-Mogul Corporation and its debtor-affiliates can elect to assume, assume or assign, or reject non-residential real property leases, through and including August 1, 2006. The Debtors are seeking to: * consolidate their facilities to eliminate redundancies and inefficiencies; and * shift certain manufacturing efforts to portions of the country and the world more suitable to their businesses, consistent with the overall business plan. The extension would preserve the maximum flexibility in restructuring the Debtors' business. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 108; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRSTLINE CORP: David Cranshaw Appointed as Chapter 11 Trustee -------------------------------------------------------------- Pursuant to the U.S. Bankruptcy Court for the Middle District of Georgia's order directing the U.S. Trustee to appoint a chapter 11 Trustee in accordance with the Section 1104 of the Bankruptcy Code, Felicia S. Turner, the U.S. Trustee for Region 21 appointed David W. Cranshaw, Esq., as the chapter 11 Trustee for the Debtor's bankruptcy case. As reported in the Troubled Company Reporter on June 2, 2006, the Official Committee of Unsecured Creditors sought the Court to appoint a chapter 11 Trustee. The Committee cited these events as basis for its request: (a) bidding procedures "fiasco" and the Debtor's loan defaults; (b) the intent of Donald J. Murphy, the Debtor's sole shareholder and sole director, to be part of a "joint venture" that will submit a bid to acquire the Debtor's assets of the Debtor; (c) the Debtor's failure to obey court orders; (d) the Debtor's failure to cooperate with the Committee; (e) the utter waste engendered by the Debtor's actions and inactions; (f) the Debtor has not yet filed any of the required monthly operating reports; (g) the fact that for the past two years the Debtor had multiple Chief Financial Officers (including a CFO employed postpetition for only a few weeks) and Chief Restructuring Officers, evidencing a great deal of instability, largely attributable to difficulty in dealing with the Debtor's President. Mr. Cranshaw can be reached at: David W. Cranshaw, Esq. Morris, Manning & Martin, LLP 3343 Peachtree Road, N.E. 1600 Atlanta Financial Center Atlanta, GA 30326 Tel: (404) 504-7605 Mr. Cranshaw has advised the U.S. Trustee that he is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Valdosta, Georgia, FirstLine Corporation -- http://www.firstlinecorp.com/-- supplies home-building and construction materials. The company filed for chapter 11 protection on Mar. 6, 2006 (Bankr. M.D. Ga. Case No. 06-70145). Ward Stone, Jr., Esq., at Stone & Baxter, LLP, represents the Debtor in its restructuring efforts. Todd C. Meyers, Esq., at Kilpatrick Stockton LLP represent the Official Committee of Unsecured Creditors. As of Jan. 31, 2006, the Debtor reported assets totaling $37,061,890 and debts totaling $26,481,670. FIRSTLINE CORP: Court Okays Termination of Stone & Baxter's Work ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Georgia allowed Ward Stone, Jr., Esq., James P. Smith, Esq., and their firm, Stone & Baxter, LLP, to withdraw as FirstLine Corporation's bankruptcy counsel. As reported in the Troubled Company Reporter on March 21, 2006, Stone & Baxter was hired as the Debtor's counsel. Donald J. Murphy, the company's president, finds it necessary to terminate Stone & Baxter's services to the Debtor. Documents with the Court did not state the reason for Stone & Baxter's departure. Headquartered in Valdosta, Georgia, FirstLine Corporation -- http://www.firstlinecorp.com/-- supplies home-building and construction materials. The company filed for chapter 11 protection on Mar. 6, 2006 (Bankr. M.D. Ga. Case No. 06-70145). Ward Stone, Jr., Esq., at Stone & Baxter, LLP, represents the Debtor in its restructuring efforts. Todd C. Meyers, Esq., at Kilpatrick Stockton LLP represent the Official Committee of Unsecured Creditors. As of Jan. 31, 2006, the Debtor reported assets totaling $37,061,890 and debts totaling $26,481,670. FORD MOTOR: Unveils 2007 Lineup Amidst Declining SUV Sales ---------------------------------------------------------- Ford Motor Co. unveiled its 2007 lineup of new crossover and all- wheel-drive cars to attract new customers and halt declining sales, reports said. Ford's 2007 lineup includes: -- new five-passenger Edge crossover vehicle, to be built at the Company's Oakville plant, and is due in showrooms in November 2006; -- new Lincoln MKX; -- new Ford Shelby GT, a Mustang powered by a 500 horsepower V-8, goes on sale in June; -- redesigned Ford Expedition SUV, the Expedition EL model with more storage capacity, and Lincoln Navigator SUVs will go on sale in Septermer 2006, Navigator L will follow; and -- all-wheel-drive in the Ford Fusion, Mercury Milan and Lincoln MKZ models. Crossover vehicles are sport utility vehicles but smaller in size. Declining SUV Sales Unnamed Ford officials said that the Company might not be able to earn profit in North America by 2008 because of declining SUV sales and high gasoline prices, reports said. Those officials said that General Motors Corp. and Toyota Motor Corp. may erode sales of Ford's pickup trucks, Bloomberg reported. J.D. Power and Associates reported that consumer demand for new midsize SUVs continued to slow, Wall Street Journal said. The segment, made up of traditional midsize SUVs, currently records the second-longest length of time on dealership lots among the 26 segments tracked by auto information company. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Company -- http://www.ford.com/-- is the world's third largest automobile manufacturer. The Company manufactures and distributes automobiles in 200 markets across six continents. With more than 324,000 employees worldwide, the company's core and affiliated automotive brands include Aston Martin, Ford, Jaguar, Land Rover, Lincoln, Mazda, Mercury and Volvo. Its automotive-related services include Ford Motor Credit Company and The Hertz Corporation. * * * As reported in the Troubled Company Reporter on June 12, 2006, Fitch downgraded long-term ratings for both Ford Motor Company and Ford Motor Credit Company with a Negative Rating Outlook, and assigned these Recovery Ratings: Ford: -- Issuer Default Rating to 'B+' from 'BB' -- Senior unsecured to 'BB-/RR3' from 'BB' FMCC: -- Issuer Default Rating to 'B+' from 'BB' Fitch also affirms FMCC's senior unsecured debt at 'BB/RR2'. As reported in the Troubled Company Reporter on May 31, 2006, Standard & Poor's Ratings Services placed its ratings on nine U.S. single-issue synthetic ABS transactions related to Ford Motor Co. (Ford; BB-/Watch Neg/B-2) and Ford Motor Credit Co. (Ford Credit; BB-/Watch Neg/B-2) on CreditWatch with negative implications. The May 25, 2006, placement of the ratings on Ford, Ford Credit, and all related entities on CreditWatch with negative implications does not have any immediate rating impact on the Ford-related ABS supported by collateral pools of consumer auto loans or auto wholesale loans. As reported in the Troubled Company Reporter on Jan. 13, 2006, Moody's Investors Service lowered its ratings on Ford Motor Company (Corporate Family and long-term to Ba3 from Ba1). The rating outlook for Ford Motor is negative. FORT DEARBORN: S&P Rates Proposed $105 Million Facilities at B- --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Fort Dearborn Co. The outlook is stable. At the same time, Standard & Poor's assigned a 'B-' bank loan rating and a recovery rating of '2' to the company's proposed $105 million senior secured credit facilities, based on preliminary terms and conditions. The 'B-' rating is the same as the corporate credit rating; this and the '2' recovery rating indicate that lenders can expect a substantial recovery of principal (80% to 100%) in the event of a payment default. Transaction proceeds will be used to finance the acquisition of Fort Dearborn's assets by Genstar Capital LLC, repay existing debt, and for related fees and expenses. Pro forma for the transaction, Elk Grove Village, Illinois-based Fort Dearborn had total debt outstanding of about $110 million at March 31, 2006. On June 20, 2006, affiliates of Genstar entered into a definitive agreement to purchase substantially all the assets of Fort Dearborn. If completed as proposed, the financing plan will include: * an $85 million senior secured term loan B; * $25 million senior subordinated notes due 2013 (11% cash interest and 2% payable in kind); and * an equity contribution from Genstar, management, and certain selling shareholders. The company expects to close the transaction by the end of June 2006, subject to customary closing conditions. "The ratings reflect Fort Dearborn's vulnerable business risk profile incorporating its relatively narrow scope of operations in the highly fragmented labels segment of the packaging industry, meaningful customer concentration, and risks associated with an acquisitive growth strategy and a highly leveraged financial profile," said Standard & Poor's credit analyst Liley Mehta. "These negatives are partially offset by a leading market position in the cut and stack label segment of the label market, and long-standing relationships with key customers." With annual revenues of about $175 million, Fort Dearborn manufactures cut and stack, pressure sensitive and shrink-sleeve labels with various types of printing capabilities. Cut and stack labels account for about 77% of Fort Dearborn's sales, and have low material costs and are best suited for high volume packaging like canned foods, paint cans, and beverages. FOUNTAIN IMAGING: Case Summary & 58 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Fountain Imaging of North Miami Beach, LLC fdba Golden Glades Open MRI and Imaging Center 1 Northeast 167 Street Miami, Florida 33162 Bankruptcy Case No.: 06-12686 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Fountain Imaging of Pembroke Pines, LLC 06-12688 Fountain Imaging of Plantation LLC 06-12689 Fountain Imaging of West Palm Beach, LLC 06-12690 Type of Business: The Debtors offer advanced medical imaging services. Chapter 11 Petition Date: June 20, 2006 Court: Southern District of Florida (Miami) Judge: Laurel M. Isicoff Debtor's Counsel: Peter E. Shapiro, Esq. Shutts & Bowen LLP 200 East Broward Boulevard, Suite 2100 Fort Lauderdale, Florida 33301 Tel: (954) 524-5505 Fax: (954) 524-5506 Total Assets Total Debts ------------ ----------- Fountain Imaging of $5,953,975 $4,594,862 North Miami Beach, LLC Fountain Imaging of $2,167,500 $3,343,937 Pembroke Pines, LLC Fountain Imaging of $2,104,968 $3,626,265 Plantation LLC Fountain Imaging of $1,815,585 $192,757 West Palm Beach, LLC A. Fountain Imaging of North Miami Beach, LLC's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $400,000 Philadelphia, PA 19255-0039 Digital Radiology $200,000 20131 Estero Gardens Circle Unie 5-202 Estero, FL 33928 Steven Goldberg $300,000 4010 Southwest 54th Court Fort Lauderdale, FL 33314 Phillips Medical Supplies $110,000 Konica Minolta $58,000 Robert Rivera $51,000 GE Medical Systems $34,500 Medserv, Inc. $25,677 Image Technology $24,000 Greater Bay Capital $20,647 AXSA $20,285 Bales & Sommers $20,000 Florida Department of Revenue $20,000 Ronald Booke $14,151 Ripa Enterprises $12,000 CAN Insurance (Setnor Byer) $11,805 Miami Dade Tax Collector $10,226 UHS Ultrasound $6,200 U.S. Premium Finance $6,000 Dell $5,800 B. Fountain Imaging of Pembroke Pines, LLC's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ General Electric Capital Corp. Various MRI $3,200,000 20225 Watertower Building Equipment Brookfield, WI 53045 Internal Revenue Service Payroll Taxes $120,000 Philadelphia, PA 19255-0039 Digital Radiology $80,000 20131 Estero Gardens Circle Estero, FL 33928 Broward County $8,702 FPL $4,100 Florida Department of Revenue Unemployment Taxes $4,000 U.S. Premium $2,500 FDN Digital Network $2,288 Tyco Healthcare $692 Banyan International Corp. $600 Beekly Corp. $600 Konica Minolta $255 Crown Banking Leasing $200 C. Fountain Imaging of Plantation LLC 's 9 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ General Electric Various MRI $3,200,000 Capital Corporation Equipment 20225 Watertower Building Suite 300 Brookfield, WI 53045 Phillips Medical Service $267,325 22100 Bothell-Everett Highway Bothell, WA 98021 Internal Revenue Service $150,000 Philadelphia, PA 19255-0039 Digital Radiology $80,000 Florida Department of Revenue $3,000 City of Plantation $2,000 FDN Digital Network $1,870 Zephryhills Water $1,870 ADT $200 D. Fountain Imaging of West Palm Beach, LLC's 16 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $100,000 Philadelphia, PA 19255-0339 Palm Beach County Tax Collector $40,000 P.O. Box 3715 West Palm Beach, FL 33402-3715 Home Team $21,328 Konica Minolta Medical $11,000 Bank of America $9,000 Graybar Financial Services $4,995 Florida Department of Revenue $3,000 Medical Arts Press $1,160 Stephen Denas $559 FPL $450 Siemens Medical Solutions $450 Shred It $350 ADT $250 Health First Corp. $118 Avita Coffee & Provision $50 Gold Coast Fire Equipment, Inc. $47 GB HOLDINGS: Panel Files Amended Disclosure Statement in N.J. ------------------------------------------------------------- The Official Committee of Unsecured Creditors in GB Holdings, Inc.'s bankruptcy case delivered to the U.S. Bankruptcy Court for the District of New Jersey an amended disclosure statement explaining its amended chapter 11 plan of liquidation. Treatment of Claims Under the Modified Plan, holders of Class 1 Other Priority Claims and Class 2 Other Secured Claims will receive the amount of their claims in full. Holders of Allowed General Unsecured Claims will receive a ratable proportion of the liquidating trust, which will own the liquidating trust assets, subject to the Debtor's claim on the assets. The Debtor will be entitled to and will receive any residual value in trust for the benefit of holders of Allowed Equity Interests after all Allowed General Unsecured Claims and costs of the Liquidating Trust, including repayment of exit facility, are paid in full. The residual value will then be distributed to holders of Allowed Equity Interests, who will receive a ratable proportion of the residual value held by the Debtor, and the Debtor will be dissolved. Debtor's Assets The Debtor's principal tangible asset is 2,882,938 shares of common stock of Atlantic Coast Entertainment Holdings, Inc., representing approximately 41.7% on a non-diluted basis of the equity interests in Atlantic Holdings. In addition, the Debtor holds certain causes of action. The Debtor has no operating activities and no income. Atlantic Holdings is a Delaware corporation that, through a subsidiary, controls the Sands Hotel and Casino in Atlantic City, New Jersey. Headquartered in Atlantic City, New Jersey, GB Holdings, Inc., primarily generates revenues from gaming operations in Atlantic Coast Entertainment Holdings, which owns and operates The Sands Hotel and Casino in Atlantic City, New Jersey. The Debtor also provides rooms, entertainment, retail store and food and beverage operations. These operations generate nominal revenues in comparison to the casino operations. The Debtor filed for chapter 11 protection on September 29, 2005 (Bankr. D. N.J. Case No. 05-42736). Alan I. Moldoff, Esq., at Adelman Lavine Gold and Levin, represents the Debtor. Charles A. Stanziale, Jr., Esq., at McElroy, Deutsch, Mulvaney & Carpenter, serves as counsel to the Official Committee Of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. GOODYEAR TIRE: Will Cut Private Label Mfg. In North America by 1/3 ------------------------------------------------------------------ The Goodyear Tire & Rubber Company committed on June 16, 2006, to a restructuring plan to exit certain segments of the private label tire manufacturing and distribution business in North America. The action affects approximately 10 private label brands that are currently manufactured by the company and are sold by a small number of wholesale customers to tire retailers. In 2005, this segment of the private label business represented approximately $300 million in sales and about 8 million units manufactured in five North American plants, or approximately one-third of the company's private label position overall. The restructuring plan is intended to further the Company's strategy of selectivity in its choice of private label business opportunities. In connection with the restructuring plan, the Company expects to reduce manufacturing capacity in North America. However, management has not determined which facilities will be impacted by the plan and is not in a position to estimate the amount or range of amounts expected to be incurred in connection with the plan or the amount or range of amounts of any potential charges or related cash outlays. It is anticipated that the principal categories of costs to be incurred will consist of termination and severance costs, and other employee benefit related costs. Headquartered in Akron, Ohio, The Goodyear Tire & Rubber Company (NYSE: GT) -- http://www.goodyear.com/-- is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs more than 80,000 people worldwide. * * * As reported in the Troubled Company Reporter on June 8, 2006, Fitch affirmed The Goodyear Tire & Rubber Company's Issuer Default Rating at 'B'; $1.5 billion first lien credit facility at 'BB/RR1'; $1.2 billion second lien term loan at 'BB/RR1'; $300 million third lien term loan at 'B/RR4'; $650 million third lien senior secured notes at 'B/RR4'; and Senior Unsecured Debt at 'CCC+/RR6'. As reported in the Troubled Company Reporter on June 23, 2005, Moody's Investors Service assigned a B3 rating to Goodyear Tire & Rubber Company's $400 million ten-year senior unsecured notes. As reported in the Troubled Company Reporter on June 22, 2005, Standard & Poor's Ratings Services assigned its 'B-' rating to Goodyear Tire & Rubber Co.'s $400 million senior notes due 2015 and affirmed its 'B+' corporate credit rating. HARDWOOD P-G: Hires Aaron Posnik as Auctioneers ----------------------------------------------- The U.S. Bankruptcy Court for the Western District of Texas gave Hardwood P-G, Inc., and its debtor-affiliates permission to hire Aaron Posnik & Co., Inc., as their auctioneers. The Debtors chose Aaron Posnik due to its extensive experience and knowledge and excellent reputation in corporate auctions and appraisals under chapter 11 of the Bankruptcy Code. Aaron Posnik's is expected to: a. prepare the auction and provide staff for pre-auction inspection period; b. utilize computerized, networked bookkeeping system to insure all transactions occur in an orderly and systematic fashion; c. market the inventory to be sold; and d. conclude the auction and handle the sales proceeds. Aaron Posnik will charge a 10% buyers premium on all sales other than internet sales. Sales generated via internet will carry a 13% buyers premium. Paul W. Scheer, a partner at the firm, assured the Court that the firm and its professionals do not hold material interest adverse to the Debtors' estate and are "disinterested" as defined in Section 101(14) of the Bankruptcy Code. Headquartered in San Antonio, Texas, Hardwood P-G, Inc., aka Custom Forest Products -- http://www.customforestonline.com/-- sell and deliver local and exotic hardwoods. The Company and two debtor-affiliates filed for chapter 11 protection on Jan. 9, 2006 (Bankr. W.D. Tex. Case No. 06-50057) David S. Gragg, Esq., and Steven R. Brook, Esq., at Langley & Banack, Inc., represent the Debtors. When the Debtor filed for protection from its creditors, it listed $37 million in total assets and $80,417,456 in total debts. HEALTHSOUTH CORP: Gen. Counsel Gregory Doody to Resign on July 17 ----------------------------------------------------------------- Gregory L. Doody, Executive Vice President, General Counsel and Secretary of HealthSouth Corporation (OTC Pink Sheets: HLSH), will resign effective July 17, 2006 in order to become general counsel of Calpine Corporation (OTC Pink Sheets: CPNLQ). "We thank Greg for his numerous contributions over the past three years, particularly for helping HealthSouth with the successful settlements and agreements we have reached with various government agencies and other plaintiffs," said Jay Grinney, HealthSouth President and CEO. "Greg began working at HealthSouth as a member of the interim management team in July 2003, a time when the company faced serious legal and regulatory challenges. His skills have been a great asset to this company as we have put the many 'rocks in the road' behind us and we wish him the very best as he moves on to new challenges." "I have the utmost respect for Jay Grinney and the outstanding senior management team he has assembled. Under his leadership, I have every confidence that HealthSouth will enjoy a very successful future," said Mr. Doody. "I am proud of the contributions HealthSouth's talented legal team and outside counsel have made in furthering the company's recovery and, with HealthSouth now on solid footing, am ready to move onto a company where I can continue to use my skills in the restructuring arena." HealthSouth will continue to work with it's existing outside law firms for corporate legal services as it begins the process of recruiting a new General Counsel. The company anticipates naming an interim General Counsel in the near future who will work with Doody to ensure a smooth transition. Prior to joining HealthSouth in 2003, Mr. Doody was a partner of in the Birmingham-based law firm, Balch & Bingham LLP, where he was a member of the firm's Financial Services and Transactions section and the Corporate, Tax and Finance section. While at Balch & Bingham, Mr. Doody's practice focused primarily in the areas of securities, corporate governance, capital markets transactions and financial services regulation. About HealthSouth Headquartered in Birmingham, Alabama, HealthSouth Corporation (OTC Pink Sheets: HLSH) -- http://www.healthsouth.com/-- provides outpatient surgery, diagnostic imaging and rehabilitative healthcare services, operating facilities nationwide. * * * As reported in the Troubled Company Reporter on May 30, 2006, Standard & Poor's Ratings Services assigned its 'CCC+' rating to HealthSouth Corp.'s $1 billion of floating-rate senior unsecured notes due 2014 and fixed-rate senior unsecured notes due 2016. At the same time, existing ratings on HealthSouth, including the 'B' corporate credit rating, were affirmed. The rating outlook is stable. Moody's placed HealthSouth's debt and corporate family ratings at B2 and B3 respectively. The ratings were placed on April 18, 2006, with a stable outlook. HIGH VOLTAGE: Ch. 11 Trustee Wants PBGC's Multi-Mil. Claims Junked ------------------------------------------------------------------ Stephen S. Gray, the chapter 11 Trustee appointed in the bankruptcy cases of High Voltage Engineering Corporation and its debtor-affiliates, objects to the proofs of claim asserted by Pension Benefit Guaranty Corporation. The PBGC claims arise from the anticipated termination of the High Voltage Engineering Corporation Retirement Plan, a plan devised to provide retirement benefits for the Debtors' employees. The Pension Plan is a qualified defined benefit pension plan subject to Title IV of the Employee Retirement Income Security Act of 1974. As of January 27, 1995, the Pension Plan was frozen with respect to all participants. The current value of the Pension Plan assets is around $14 million. The assets are invested roughly 38% in fixed income securities and 62% in equity investments. The Chapter 11 Trustee believes that all of the accrued benefits in the Plan are PBGC "guaranteed benefits." The Pension Plan assets, should it be terminated, will be turned over to the PBGC as the guarantor of any of the Pension Plan's unfunded liabilities. On May 26, 2005, the PBGC filed 15 separate proofs of claim contingent on the termination of the Pension Plan, each asserting a $13,185,400 claim. The PBGC Claims are based on its assertion that, when the Pension Plan is terminated, its assets will be insufficient to meet all of its future liabilities. Lisa E. Herrington, Esq., at Choate, Hall & Stewart LLP, in Boston Massachusetts, argues that the PBCG Claims are duplicative and should be disallowed. Those are not entitled to administrative or priority status and that they are improperly calculated. About High Voltage Based in Wakefield, Mass., 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. HILCORP ENERGY: Moody's Rates $200 Million Sr. Unsec. Notes at B3 ----------------------------------------------------------------- Moody's Investors Service affirmed Hilcorp Energy I, L.P.'s B2 corporate family rating and assigned a B3 rating to its pending $200 million of senior unsecured notes. The rating outlook is stable. Moody's notched Hilcorp I's new and existing senior unsecured notes to B3 due to the combination of pro-forma secured debt of approximately $100 million by June 30, 2006 under a $300 million secured borrowing base bank revolver, a proportionately large secured debt carveout, approximately 27 mmboe of reserves in three of its top fields remain effectively encumbered due to the priority back-up production claim of a volumetric production payment vehicle into which Hilcorp I had monetized 8 mmboe (4.5 mmboe remaining) of forward production, and our view that capital spending, interest expense, a pattern of heavy cash distributions to partners, and potential acquisitions will temper secured debt reduction. Note proceeds will reduce bank debt incurred to fund two acquisitions. In late May, Hilcorp I closed a $136.5 million acquisition of 9.2 million of proven reserves along the Gulf Coast of Louisiana, paying $14.80/boe of proven reserves and $79,591/boe of average daily production. Hilcorp I expects to close another $105 million purchase of 3.4 million proven reserves in South Louisiana in late June. In that acquisition, Hilcorp I is paying roughly $30.92/boe of proven reserves and $42,000/boe of average daily production. Hilcorp I is a private limited partnership engaged in onshore and coastal inland water oil and gas production, property acquisitions, exploitation, and divestitures. Moody's considers Hilcorp I to be a well-run firm pursuing and executing a cogent strategy. It acquires properties late in their productive lives and with high production costs with a goal of boosting production through recompletions, workover and repair of downhole hardware, restimulation of the wellbore/ reservoir interface, and refracturing of reservoir rock. Returns from this strategy have been aided by up-cycle price realizations. Hilcorp I markets its production through Mr. Hildebrand's wholly-owned Harvest Pipeline and Arrowhead Pipeline subsidiaries. While having a reserve base of reasonable scale, Moody's also assess the Hilcorp I credit within the larger HEC organizational, business, funding, and shareholder strategy context. While the B2 corporate family rating mostly reflects credit factors within the direct issuer Hilcorp I which has a substantial 119.5 mmboe diversified pro-forma reserve base, the ratings also reflect the broader financial structure and strategy pursued within the HEC family of affiliates. Through HEC, which is Hilcorp I's parent and general partner, Mr. Jeffery D. Hildebrand owns almost 100% of Hilcorp I. The two sister affiliates are financing vehicle partnerships with General Electric Capital Corporation where HEC is the general partner of the partnerships and HEC's ownership will rise from its original 5% interest in stages to eventual full reversion back to HEC when GECC's return thresholds are met. HEC operates the GECC partnerships' properties for a fee, provides a strategically larger base of operations, and spreads Hilcorp I's operating costs across a larger production base. The ratings are supported by seasoned management and ownership; proven access to a supportive stream of acquisition deal flow; by a long generally productive history in most of its focus regions; a supportive price environment this year; a supportive hedging program; Hilcorp I's diversified exposure to oil and natural gas; and operating risk diversification across numerous, though very mature, Gulf Coast properties acquired for further exploitation. Diversification benefits are tempered somewhat by the fact that 51% of Hilcorp I's proven reserves are located in 5 fields and that much of its other properties are scattered thinly across several producing basins. If Hilcorp I can demonstrate it can reduce is high unit cost structure proportionately when oil prices moderate it may be favorable to the ratings. Overall, the ratings are restrained by Hilcorp I's high unit production cost structure; high direct and indirect pro-forma leverage relative to the cost structure and fairly low proportion of proven developed producing reserves; high pro-forma leveraged unit full-cycle costs of roughly $33/boe dominated by high recent reserve replacement costs and very high production costs; our expectation that Hilcorp I will remain acquisitive and, since it is privately owed, would fund acquisitions with debt; and our view that annual cash distributions to Mr. Hildebrand will remain significant. High operating costs are driven by low production per wellbore and energy, water injection, water production, water disposal, and intensive workover costs incurred to sustain optimum production from its properties long in decline. Since 2002, over $400 million of Hilcorp I's debt reduction was derived from non-recourse asset sales to affiliated partnerships funded by GECC and from forward production sales into the VPP vehicle having significant volume back-up recourse to Hilcorp I's remaining reserves in the field to cover VPP production shortfalls. Per Moody's global ratings methodology for independent exploration and production firms, on historic pro-forma estimates, Hilcorp I's operating, financial, and strategy profile maps to a B2 rating after sensitizing its actual three-year average drillbit finding and development costs for the trend and historically high 2005 and 2006 costs as well as the fact that and 2004 were materially higher than 2003 results as well. The model maps Hilcorp I's reserve scale to the Ba rating range and production and PD reserves to the single B range. Per the model, pro-forma initial leverage measures are in the Caa model range, full-cycle costs are in the Caa range, and its leveraged full-cycle ratio, reflecting strong up-cycle prices are in the Ba model range. Moody's that sensitizing the reserve replacement cost input better reflects expected 2006 reserve replacement costs. Using backward-looking 2003 to 2005 drillbit reserve replacement cost result, Hilcorp I mapped to a weak B1 corporate family rating, aided as well by an up-cycle full-cycle ratio that Moody's believes will moderate this year. Through HEC, Mr. Hildebrand has a strategic economic interest in the success of Hilcorp Energy IV, L.P., which paid $150 million for Hilcorp I reserves in 2004, and Hilcorp Energy II L.P., which paid $86 million for Hilcorp I reserves in 2002. We believe Mr. Hildebrand views these properties to be strategically important to Hilcorp I though, in extremis, neither he nor Hilcorp I are obligated to inject capital into the partnerships. Another $193 million of debt reduction came from the monetization of forward production into the VPP which has significant recourse to the Hilcorp I properties from which the VPP was carved to cover VPP production shortfalls. HEC also draws substantial discretionary and statutory tax cash distributions from Hilcorp I. Distributions to Mr. Hildebrand have been substantial, approximating $92 million in 2004-2005 and expected to be in the $50 million to $60 million for 2006. Moody's notes that statutory tax formula sends cash to HEC regardless of HEC's own likelihood of paying cash taxes. Were it not for asset sales to effective affiliates, balance sheet leverage would be higher. Were it not for the scale of distributions, leverage today would be lower. Hilcorp Energy Company and Hilcorp Energy I, L.P. are headquartered in Houston, Texas. HONEY CREEK: Court Approves Second Amended Disclosure Statement --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approved the Second Amended Disclosure Statement explaining Honey Creek Kiwi LLC's Second Amended Plan of Reorganization on June 20, 2006. Judge Harlin DeWayne Hale determined that the Disclosure Statement contained adequate information -- the right amount of the right kind of information necessary for the creditor to make an informed decision -- as required by Section 1125 of the Bankruptcy Code. The Debtor is now authorized to distribute copies of the Disclosure Statement to solicit acceptances for the Plan. Terms of the Plan In general, the Plan provides for a reduction in debt service on the bonds by means of a reduction in principal balance and interest rate or a reduction in interest rate, at the option of the bondholders. The Plan also provides for a partial payout over time of prepetition claims. This reduction in debt service allows the existing cash flow of the Debtor to service the restructured bond debt, the debt service on prepetition claims, preserves the tax exempt status of the bonds, and allows the Debtor to pay postpetition operating expenses on a current basis. This results in all creditors receiving more than they would if the Debtor were to liquidate in a Chapter 7. A copy of the proposed distributions under the plan is available for free at http://ResearchArchives.com/t/s?a7d A copy of the Second Amended Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=060622232641 The Court will consider confirmation of the plan on Aug. 7, 2006. Objections and ballots are due on Aug. 1, 2006. Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC owns a 656-unit apartment complex known as the Honey Creek Apartments. The company filed for chapter 11 protection on August 24, 2005 (Bankr. N.D. Tex. Case No. 05-39524). Richard G. Grant, Esq., at Roberts & Grant, P.C., represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. HONEY CREEK: Can Hire Caine Mitter as Interest Rate Consultants --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas allowed Honey Creek Kiwi LLC to employ Caine Mitter & Associates, Inc., as its interest rate consultants. Caine Mitter is expected to: a) provide consulting services on interest rate analysis pertaining to the Debtor's bond debt servicing on the Debtor's behalf during its reorganization; b) advise the Debtor with regard to tax-exempt housing bond rates in the past and in the market; and c) conduct research and analyze necessary bond market information to support any statement or projection concerning tax-exempt multifamily housing bond rates on unrated direct placement or other credit structure as required. Timothy C. Mitter, a Caine Mitter member and senior advisor, bills $320 per hour for his work. Mr. Mitter disclosed that Andrew Goodfellow's billing rate will be $145 per hour. Mr. Mitter assured the Court that his Firm does not hold any interest adverse to the Debtor or its estate. Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC owns a 656-unit apartment complex known as the Honey Creek Apartments. The company filed for chapter 11 protection on August 24, 2005 (Bankr. N.D. Tex. Case No. 05-39524). Richard G. Grant, Esq., at Roberts & Grant, P.C., represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. IMMUNE RESPONSE: Discloses $7.5 Mil. Principal Balance on Notes --------------------------------------------------------------- In 2006, The Immune Response Corporation closed a private placement of secured convertible notes and warrants to accredited investors. The notes had an aggregate original principal amount of $8,000,000. The conversion price of the notes is $0.02 per share. The noteholders also received a total of 1,200,000,000 warrants to purchase our common stock at $0.02 per share. On June 12, 2006, 10 noteholders exercised the first tranche of their warrants at $0.02 per share by paying the total exercise price of $347,500 for 17,375,000 shares of our common stock. On June 12, 2006, one noteholder converted $50,000 of outstanding principal balance plus accrued interest of $976 into 2,552,778 shares of common stock pursuant to the terms of their notes at $0.02 per share. The 17,375,000 warrant exercise shares and the 2,552,778 note conversion shares and were issued to the accredited investor noteholders pursuant to the Securities Act Section 4(2) and Section 3(a)(9) registration exemptions, respectively. The Company's placement agent in the 2006 Private Placement, Spencer Trask Ventures, Inc. is entitled to receive $0.01 and an additional seven-year placement agent warrant for each five noteholder warrants which are exercised. The exercise price of the additional placement agent warrants will be at $0.02 per share. STVI, which is an affiliate of Kevin Kimberlin, who is a director and major stockholder of the Company, has allocated a portion of the additional placement agent warrants to various brokers and employees and its parent company. As a result of the exercise of 17,375,000 noteholder warrants, STVI became entitled to $34,750 in cash and 1,737,500 additional placement agent warrants. The additional placement agent warrants will be issued to STVI and its assignees pursuant to the Securities Act Section 4(2) registration exemption. The aggregate outstanding principal balance of the notes is now $7,552,500. Headquartered in Carlsbad, California, The Immune Response Corporation (Nasdaq: IMNR) -- http://www.imnr.com/-- is an immuno-pharmaceutical company focused on developing products to treat autoimmune and infectious diseases. The Company's lead immune-based therapeutic product candidates are NeuroVax(TM) for the treatment of multiple sclerosis (MS) and IR103 for the treatment of Human Immunodeficiency Virus (HIV) infection. Both of these therapies are in Phase II clinical development and are designed to stimulate pathogen-specific immune responses aimed at slowing or halting the rate of disease progression. Going Concern Doubt As reported in the Troubled Company Reporter on June 8, 2006, Levitz, Zacks & Ciceric expressed substantial doubt about The Immune Response's ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the company's stockholders' deficit and comprehensive loss for each of the years in the two-year period ended Dec. 31, 2005. The Company incurred $6.5 million of net income on $11 million of revenues for the three months ended March 31, 2006, compared to a $4.3 million net loss on $11 million of revenues for the same period in 2005. At March 31, 2006, the Company's balance sheet showed $9.9 million in total assets and $144.7 million in total liabilities, resulting in a $134.7 million equity deficit. INERGY L.P.: Selling 3.75 Million Common Units in Public Offering ----------------------------------------------------------------- The Board of Directors of Inergy GP, LLC, the managing general partner of Inergy, L.P. (Nasdaq:NRGY), disclosed that it plans to sell 3,750,000 common units in an underwritten public offering, pursuant to an effective shelf registration statement on Form S-3 (File No. 333-132287). This transaction is in lieu of the previously announced private placement of common units to Inergy Holdings, L.P. The underwriters have been granted the option to purchase up to 562,500 additional common units. Inergy, L.P. intends to use the net proceeds from the offering to repay amounts borrowed under its revolving acquisition credit facility and to fund capital expenditures associated with previously announced capital expansion projects. Citigroup Global Markets Inc. and Lehman Brothers Inc. will act as book-running managers. This offering of common units will be made only by means of a prospectus. A copy of the prospectus supplement and related base prospectus associated with this offering may be obtained from: Citigroup Global Markets Inc. Attention: Prospectus Department Brooklyn Army Terminal 140 58th Street, 8th floor Brooklyn, New York 11220 Tel: (718) 765-6732. Inergy, L.P.'s operations include the retail marketing, sale and distribution of propane to residential, commercial, industrial and agricultural customers. Inergy serves approximately 700,000 retail customers from over 300 customer service centers throughout the eastern half of the United States. The company also operates a natural gas storage business and a supply logistics, transportation and wholesale marketing business that serves independent dealers and multi-state marketers in the United States and Canada. Inergy Holdings, L.P.'s (Nasdaq:NRGP) assets consist of its ownership interests in Inergy, L.P., including limited partnership interests, ownership of the general partners, and the incentive distribution rights. The Company's $200 Million 8.25% Senior Notes due March 1, 2006, carries Standard & Poor's B rating. That rating was assigned on Jan 9, 2006. INTERNATIONAL COAL: Prices $175 Million of 10-1/4% Senior Notes --------------------------------------------------------------- International Coal Group, Inc. (NYSE: ICO) priced $175 million aggregate principal amount of 10-1/4% senior notes due 2014 in an offering exempt from the registration requirements of the Securities Act of 1933. The offering amount represents a reduction from the previously announced $250 million aggregate principal amount because of market conditions for senior notes. Subject to customary closing conditions, ICG expects the offering to close today, June 23, 2006. ICG intends to apply the net proceeds of the offering to repay all amounts outstanding under its existing revolving credit facility and retire its term loan facility, to fund future capital expenditures and for general corporate purposes. The notes have not been registered under the Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. International Coal Group, Inc. is a leading producer of coal in Northern and Central Appalachia and the Illinois Basin. The company has eleven active mining complexes, of which ten are located in Northern and Central Appalachia and one in Central Illinois. ICG's mining operations and reserves are strategically located to serve utility, metallurgical and industrial customers throughout the Eastern United States. * * * AS reported in the Troubled Company Reporter on June 14, 2006, Standard & Poor's Rating Services assigned its 'B' bank loan rating and its '1' recovery rating to the $350 million secured revolving credit facility of International Coal Group LLC (B-/Stable/--) and a 'CCC+' rating to parent International Coal Group Inc.'s proposed $250 million of senior unsecured notes due 2014 based on preliminary terms and conditions. At the same time, Standard & Poor's affirmed its corporate credit rating on ICG. The outlook is stable. The 'B' bank loan rating and the '1' recovery rating indicate a high expectation of full recovery of principal (100%) in the event of a payment default. S&P expects ICG to use proceeds from the offerings to fund the company's significant capital expenditure program and repay existing debt. INTERNATIONAL GALLERIES: Can Hire Cox Smith as Substitute Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave International Galleries Inc. permission to hire Cox Smith Matthews Incorporated as its substitute counsel, in place of Neligan Tarpley Andrews & Foley, LLP. The Debtor told the Court that Mark E. Andrews, Esq., formerly of Neligan Tarpley, has moved to Cox Smith. Mr. Andrews must be substituted in the Court's records as proposed counsel for the Debtor. Mr. Andrews can be reached at: Mark E. Andrews, Esq. Cox Smith Matthews Incorporated 1201 Elm Street, Suite 4242 Dallas, Texas 75270 Tel: (214) 698-7819 Fax: (214) 698-7899 Headquartered in Addison, Texas, International Galleries Inc. -- http://www.igi-art.com/-- sponsors artists and sells their artwork through referrals. The company filed for chapter 11 protection on Jan. 31, 2006 (Bankr. N.D. Tex. Case No. 06-30306). Mark Edward Andrews, Esq., at Cox Smith Matthews Incorporated, represents the Debtor in its restructuring efforts. David W. Elmquist, Esq., at Winstead Sechrest & Minick P.C., represents the Official Committee of Unsecured Creditors. Dan Lain serves as Chapter 11 Trustee for the Debtor's estate. When the Debtor filed for protection from its creditors, it estimated assets less than $50,000 and debts between $10 million to $50 million. INTERNATIONAL HELICOPTER: Case Summary & 11 Largest Creditors ------------------------------------------------------------- Debtor: International Helicopter, Inc. 3971 Gulfshore Boulevard North, Suite 1505 Naples, Florida 34103 Bankruptcy Case No.: 06-03027 Debtor-affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- Ellen Malloy 06-03025 Type of Business: The Debtor rents and leases helicopters. Ellen Malloy is the vice-president of the Debtor. Chapter 11 Petition Date: June 21, 2006 Court: Middle District of Florida (Fort Myers) Debtors' Counsel: Stephen R. Leslie, Esq. Harley E. Riedel, Esq. Stichter, Riedel, Blain & Prosser P.A. 110 East Madison Street, Suite 200 Tampa, Florida 33602-4700 Tel: (813) 229-0144 Fax: (813) 229-1811 Estimated Assets Estimated Debts ---------------- --------------- International $10 Million to $1 Million to Helicopter, Inc. $50 Million $10 Million Ellen Malloy $1 Million to $1 Million to $10 Million $10 Million A. International Helicopter, Inc. does not have any creditors who are not insiders. B. Ellen Malloy's 11 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Web Construction Company $185,000 62A Floyd Street East Hampton, NY 11937 Schiffman, Berger, Abraham & Ritter $50,000 P.O. Box 568 Hackensack, NJ 07602 MBNA $39,432 Bankcard Services P.O. Box 15137 Wilmington, DE 19886 Krovain & Associates LLC $20,000 East Hampton Town $19,708 Beacon Evaluation $16,000 Gary Lachman $13,000 Le Ciel Venetian Tower $9,000 Paul Consiglio Company $7,500 Nordstrom FSB Colorado $6,213 Chase Bank $5,562 INTERSTATE BAKERIES: Wants to Sell Medford Property for $1.7 Mil. ----------------------------------------------------------------- Interstate Bakeries Corporation and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Western District of Missouri to sell their interest in a certain property located at 48 Commercial Street, in Medford, Massachusetts, to Empire Management Corporation for $1,700,000, subject to higher or better bids. The Property is comprised of several parcels and includes about 1.53 acres of land with an approximately 30,672 square feet building, Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Chicago, Illinois, relates. The Debtors are no longer using the Property in connection with their business operations. The Debtors have utilized the services of a joint venture composed of Hilco Industrial, LLC, and Hilco Real Estate, LLC, to assist them in the sale and marketing of the Property. Empire Management has made a $170,000 deposit for the proposed sale, which is being held by the escrow agent until all conditions to closing are satisfied by the Debtors. The Debtors have agreed to: -- provide bid protection to Empire Management in the form of a termination fee equal to $34,000 to induce Empire Management to makes the first qualified bid; and -- pay to Empire Management reasonable and documented expense reimbursement of up to $50,000. The Debtors also seek the Court's authority to compromise and pay certain tax claims. In connection with the sale of the Property free and clear of all liens other than permitted encumbrances, the Debtors propose to pay to the City of Medford, Massachusetts, Office of Collector of Taxes: -- $16,769 in principal for real and personal property taxes due for the 2004-2005 tax year; -- interest, accruing at a 6.0% annual rate, beginning on the date the interest began to accrue on the past due balance; and -- no penalties will be required with respect to any and all delinquent taxes with respect to the Property, in full satisfaction of all real property taxes for the Property for the tax year 2004-2005 and all prior tax years. The Debtors and the Successful Bidder will prorate 2005-2006 real and personal property taxes as of the Closing Date in accordance with the terms of the successful sale agreement. Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Wants $7.5M Chubb Surety Bond Program Okayed ----------------------------------------------------------------- As part of their nationwide operations, Interstate Bakeries Corporation and its debtor-affiliates engage in a number of business activities that require licenses, permits, and other government authorizations. In those situations, the Debtors must provide financial assurance of payment in order to conduct business or obtain services in numerous states and from various organizations. A common and reasonable means of providing financial assurance is through surety bonds. However, certain state law prohibits certain states, including Missouri, from accepting letters of credit as security. Thus, a different form of financial assurance is required to provide the state comfort that the workers compensation claims will be paid, J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, relates. According to Mr. Ivester, when the Debtors filed for bankruptcy, they had surety bonds in place. However, the Debtors need to have bonds issued in conjunction with their postpetition operations and bonding needs. In addition, the Debtors often must post bonds in order to make conforming bids on contracts being solicited by schools, hospitals and other similar organizations to supply those organizations' needs for bread, buns and other products. The Debtors must also have an ability to post Supply Bonds in order to compete for business opportunities, Mr. Ivester adds. The Debtors also must post bonds in order to secure certain business licenses and operating permits, and to meet various other state and local regulations governing their operations. The Bankruptcy Court already approved a surety bond program and related indemnity agreement with Quanta U.S. Holdings, Inc., pursuant to which the Debtors have had bonds issued in conjunction with their postpetition operations and bonding needs. Quanta has since made a business decision to exit the surety bond business. The Debtors then engaged their insurance broker to solicit offers from several bonding companies. Federal Insurance Company (Chubb) and its subsidiaries, affiliates, co-sureties, fronting companies and re-insurers have offered terms and conditions substantially similar to those previously offered by Quanta. Therefore, the Debtors ask the U.S. Bankruptcy Court for the Western District of Missouri to approve their surety bond program and related blanket indemnity agreement with Chubb. Specifically, the Debtors ask the Court to authorize: (a) Chubb to issue bonds on the Debtors' behalf under a $7,500,000 Surety Program, with those bonds to be supplied to various obliges, at their request, at the gross rates of: -- $5 per thousand dollars in face amount of the bond for supply bonds; -- $7.50 per thousand dollars in face amount of the bond for license and permit bonds; and -- $9 per thousand dollars in face amount of the bond for self-insurer's workers compensation bonds plus a $2,500 structuring fee for Chubb's legal and other expenses; (b) them to execute and deliver an Indemnity Agreement to Chubb in the name of Interstate Brands Corporation; (c) them to obtain letters of credit as collateral from time to time in amounts sufficient to cover 100% of Chubb's outstanding exposure for the Surety Bonds; and (d) them to grant priority of payment to Chubb to any of their reimbursement obligation with respect to any of the Surety Bonds or under the Indemnity Agreement, if the letters of credit are inadequate. The Debtors believe that the financial accommodations offered by Chubb are a reasonable and effective method by which to satisfy the financial assurances that are required of them. A full-text copy of the Chubb Indemnity Agreement is available for free at http://ResearchArchives.com/t/s?bd9 Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERSTATE BAKERIES: Wants MO Labor Dept.'s Security Motion Denied ------------------------------------------------------------------ The Missouri Department of Labor and Industrial Relations, Division of Workers' Compensation, asks the U.S. Bankruptcy Court for the Western District of Missouri to compel Interstate Bakeries Corporation and its debtor-affiliates to comply with state laws related to workers' compensation. Christie A. Kincannon, Esq., in Jefferson City, Missouri, relates that under the Workers' Compensation Act, the Debtors elected to be responsible for their own workers' compensation risk. The Division granted the Debtors the privilege of becoming an individual self-insured pursuant to Chapter 287, Section 280.1 of the Missouri Revised Statutes and Labor; and the Rules Governing Self-Insurers 8 CSR 50-3.010. The Debtors were self-insured from July 1, 1972, through July 1, 1984, and again from July 1, 1992 through May 30, 2006. In order to qualify as a self-insured employer in the state of Missouri, the Debtors are required to post security consistent with the statute and regulations governing self-insured employers. The security requirement protects workers if the Debtors default or fail to honor all compensation obligations to their injured workers. The self-insured employer is also required to file certain reports with the Division, including the Self-Insurer's Annual Financial Statement. The Debtors failed to file their 2004 and 2005 annual reports, Ms. Kincannon relates. The Division conducted a reserve audit. On March 25, 2005, the Debtors informed the Division that it would be unable to provide the audited financial statements to the Division. At the Division's request, the Debtors submitted loss runs in order for the Division to ascertain whether the Debtors were in compliance with the rules applicable to self-insurers. On April 22, 2005, the Division conducted a security review. The results of the Audit and the April Security Review prompted the Division to send the Debtors a demand letter requesting additional security to be posted -- $2,641,640. The Division conducted another security review on April 6, 2006. The April 2006 Security Review was based on loss runs submitted by the Debtors. Ms. Kincannon says that the Division determined that the Debtors must provide additional security of $2,542,047. The Division believes that the current security provided by the Debtors fail to adequately represent and cover their workers' compensation obligations and liabilities as required by law. Debtors Respond According to J. Eric Ivester, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Chicago, Illinois, the Debtors have continuously stood ready, willing and able to post a letter of credit payable to the Missouri Department of Labor & Industrial Relations, Division of Workers' Compensation, in full satisfaction of their workers compensation bonding obligations with the State of Missouri. However, the Division has advised Debtors that relevant regulations prevent it from accepting a letter of credit, and instead limit the Debtors' options to posting a bond or making a cash deposit. The Debtors have recently filed a motion seeking the Court's approval of its surety bond program and related blanket indemnity agreement with Federal Insurance Company. If granted, the Federal Insurance Agreement should allow the Debtors to fully resolve the issues in the Motion to Compel, Mr. Ivester contends. However, the Debtors reserve the right to investigate and possibly dispute the amount of the bond necessary to post with the State of Missouri, the exact terms of any bond, and whether a bond is necessary in lieu of a letter of credit. Accordingly, the Debtors ask the Court to deny the Missouri's request. About Interstate Bakeries Headquartered in Kansas City, Missouri, Interstate Bakeries Corporation is a wholesale baker and distributor of fresh baked bread and sweet goods, under various national brand names, including Wonder(R), Hostess(R), Dolly Madison(R), Baker's Inn(R), Merita(R) and Drake's(R). The Company employs approximately 32,000 in 54 bakeries, more than 1,000 distribution centers and 1,200 thrift stores throughout the U.S. The Company and seven of its debtor-affiliates filed for chapter 11 protection on September 22, 2004 (Bankr. W.D. Mo. Case No. 04-45814). J. Eric Ivester, Esq., and Samuel S. Ory, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,626,425,000 in total assets and $1,321,713,000 (excluding the $100,000,000 issue of 6.0% senior subordinated convertible notes due August 15, 2014 on August 12, 2004) in total debts. (Interstate Bakeries Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 215/945-7000) IRIDIUM SATELLITE: S&P Assigns B- Rating with Negative Outlook -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' corporate credit rating to Iridium Satellite LLC, a Bethesda, Maryland-based mobile satellite services operator. The outlook is negative. The company is obtaining $235 million of aggregate senior secured credit facilities from which it will receive $225 million of proceeds to: * finance a $123 million distribution primarily to the company's investors; * repay $78.1 million in existing bank debt; * to collateralize a $15.4 million letter of credit; and * for fees and expenses. Standard & Poor's will assign bank loan and recovery ratings to the loans after receiving further documentation. "The ratings on Iridium reflect a vulnerable business risk profile from participation in a niche market with uncertain long-term customer demand, a small revenue base, substantial long-term satellite replacement capital expenditures requirements to continue current operations beyond 2014, and competition from other MSS providers and terrestrial wireless carriers," said Standard & Poor's credit analyst Eric Geil. Minimally tempering these risks are: * the attractiveness of Iridium's services to a narrow customer base requiring communications in remote locations and in emergencies; * a base of steady U.S. Department of Defense business representing about one-third of revenue; * ubiquitous global coverage; and * low customer churn. Iridium provides mobile communications services to 127,000 commercial customers and 27,500 DoD users as of May 2006. The company was formed in December 2000 following the acquisition of the operating assets of the bankrupt Iridium LLC. Iridium operates 66 low earth orbit satellites and estimates that this constellation will provide full voice and data capability until 2014, based on expected degradation. To maintain the current level of service beyond 2014, the company would need to invest substantial capital expenditures by 2010 in a second-generation replacement fleet as the existing constellation degrades. Although Iridium has not indicated any satellite replacement plans, capital expenditures are likely to well exceed any reasonable estimate of the company's operating cash flow potential. The company therefore will require substantial additional debt or equity financing to construct the replacement satellites. Iridium serves a very small customer base and growth prospects could be limited by expanding coverage of low-cost conventional wireless service. Without substantial external funding, the company is unlikely to successfully finance the second generation of satellites necessary to continue full voice and data service beyond 2014. Nevertheless, Iridium has realized solid revenue growth since its restructuring in 2000 and is able to price its service higher than its principal competitor Globalstar Inc. Further near-term growth is likely from incremental usage by existing users, geographic expansion of sales territories, and low-priced asset tracking applications. J.P. MORGAN: Fitch Lifts Rating on $37.9 Mil. Class Certificates ---------------------------------------------------------------- Fitch upgrades these J.P. Morgan Chase Commercial Mortgage Securities Corp.'s, pass-through certificates, series 2001-CIBC3: -- $36.9 million class B to 'AAA' from 'AA+'; -- $36.9 million class C to 'AAA' from 'A+'; -- $9.8 million class D to 'AAA' from 'A'; -- $27.1 million class E to 'AA- from 'BBB'; -- $10.8 million class F to 'A' from 'BBB-'; -- $17.3 million class G to 'BBB' from 'BB+'; -- $6.5 million class H to 'BB+' from 'BB'; -- $6.5 million class J 'BB' from 'BB-'; -- $7.6 million class K 'BB-' from 'B+'. In addition, Fitch affirms the following classes: -- $151.3 million class A-2 at 'AAA'; -- $457.3 million class A-3 at 'AAA'; -- Interest-only classes X1 and X2 at 'AAA'; -- $4.3 million class L at 'B'; -- $4.3 million class M at 'B-'. Class A-1 has been paid in full. Fitch does not rate the $13 million class NR. The upgrades reflect the increased credit enhancement levels from loan payoff and amortization. Since last review an additional eight loans (6.3%) have defeased. As of the June 2006 distribution date, the pool's aggregate principal balance has been reduced 9% to $789.7 million from $867.5 million at issuance. There are four loans in special servicing (2.12%). The two largest specially serviced loans (1.3% combined) are secured by two single-tenant properties in Metairie and Meraux, Louisiana, currently leased to Winn Dixie. The loans are cross defaulted and cross collateralized. Both loans transferred to the special servicer when the Meraux property suffered significant damages from Hurricanes Rita and Katrina. Currently the Meraux location is not in operation and Winn Dixie has not provided any information concerning intentions with this store. Losses are possible in the event the tenant rejects their lease. Fitch expected losses will be absorbed by the NR class. Fitch reviewed credit assessments of the Franklin Park Mall loan (10.8%) and the Kings Plaza pooled note (5.8%). The Fitch stressed debt service coverage ratio (DSCR) for each loan is calculated using servicer-provided net operating income less reserves divided by Fitch stressed debt service payment. Based on their improved performance, both loans maintain investment grade credit assessments. The Franklin Park Mall loan is secured by a 1,072,383 square foot (sf) regional mall located in Toledo, Ohio. The Fitch stressed DSCR for the loan remains strong at 2.25 times (x) for year-end 2005 compared to 1.45x at issuance. Occupancy is slightly lower at 94% compared to 99% at issuance. The Kings Plaza pooled note (5.7%) is secured by a 1,050,000 sf mall located in Brooklyn, New York. The Kings Plaza mortgage loan consists of notes A1, A2, and B, with an aggregate original balance of $222 million. The A2 note, included in this transaction, is pari passu with the A1 note, in the JPMCC 2001-KP trust, which also contains the B note. The Fitch stressed DSCR for YE 2005 was 2.47x, compared to 2.06x at issuance. Occupancy has increased to 97% from 88% at issuance. J.P. MORGAN: Fitch Puts Low-B Ratings on $39.7 Mil. Class Certs. ---------------------------------------------------------------- Fitch rates these J.P. Morgan Chase Commercial Mortgage Securities Corp. 2006-CIBC15, commercial mortgage pass-through certificates: -- $74,366,000 class A-1 'AAA'; -- $73,671,000 Class A-3 'AAA'; -- $1,001,834,000 Class A-4 'AAA'; -- $101,045,000 Class A-SB 'AAA'; -- $231,895,000 Class A-1A 'AAA'; -- $211,831,000 Class A-M 'AAA'; -- $164,168,000 Class A-J 'AAA'; -- $2,118,302,786 Class X-1 'AAA'; -- $2,069,359,000 Class X-2 'AAA'; -- $37,070,000 Class B 'AA'; -- $15,888,000 Class C 'AA-'; -- $31,774,000 Class D 'A'; -- $26,479,000 Class E 'A-'; -- $29,127,000 Class F 'BBB+'; -- $26,479,000 Class G 'BBB'; -- $21,183,000 Class H 'BBB-'; -- $7,943,000 Class J 'BB+'; -- $10,592,000 Class K 'BB'; -- $7,943,000 Class L 'BB-'; -- $2,648,000 Class M 'B+'; -- $5,296,000 Class N 'B'; -- $5,296,000 Class P 'B-'; -- $31,774,786 Class NR 'NR';. Class NR is not rated by Fitch. Classes A-1, A-3, A-4, A-SB, A- 1A, A-M, A-J, X-1, X-2, B, C and D are offered publicly, while classes E, F, G, H, J, K, L, N, M and P are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 122 fixed-rate loans having an aggregate principal balance of approximately $2,118,302,787, as of the cutoff date. KAISER ALUMINUM: Expects to Exit Chapter 11 Protection on July 6 ---------------------------------------------------------------- Kaiser Aluminum Corporation (OTCBB: KLUCQ) expects its second amended plan of reorganization to become effective on or about July 6, 2006, whereupon it will emerge from Chapter 11 protection. In accordance with the plan, the Company fixed the "Distribution Record Date" under the plan as the close of business on June 28, 2006. Pursuant to the plan, the company will have no obligation to recognize the transfer of, or the sale of any participation in, any allowed claim that occurs after the Distribution Record Date and will be entitled for all purposes of the plan to recognize and make distributions under the plan only to those holders of allowed claims that are holders of such claims, or participants therein, as of the Distribution Record Date. In addition, the plan provides that, as of the Distribution Record Date, each transfer register for the public notes and bonds giving rise to claims under the POR will be closed and that neither the company nor the applicable indenture trustee will have any obligation to recognize the transfer or sale of any public note claim that occurs after the Distribution Record Date and each of them will be entitled for all purposes of the plan to recognize and make distributions under the plan only to those holders of public note claims who are holders of such claims as of the Distribution Record Date. About Kaiser Aluminum Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on Feb. 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. Lazard Freres & Co. serves as the Debtors' financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III, Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes represent the Debtors' Official Committee of Unsecured Creditors. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. On Feb. 6, 2006, the U.S. Bankruptcy Court for the District of Delaware confirmed the Debtors' joint plan of reorganization and on May 11, 2006, the U.S. District Court for the District of Delaware affirmed that confirmation. LB-UBS: Fitch Holds Low-B Ratings on $13.4 Mil. Class Certificates ------------------------------------------------------------------ Fitch Ratings affirms LB-UBS's commercial mortgage pass-through certificates, series 2004-C6: -- $66.5 million class A-1 at 'AAA'; -- $186.9 million class A-1A at 'AAA'; -- $222 million class A-2 at 'AAA'; -- $109 million class A-3 at 'AAA'; -- $60 million class A-4 at 'AAA'; -- $54 million class A-5 at 'AAA'; -- $470.1 million class A-6 at 'AAA'; -- Interest-only class X-CL at 'AAA'; -- Interest-only class X-CP at 'AAA'; -- $13.5 million class B at 'AA+'; -- $23.6 million class C at 'AA'; -- $15.1 million class D at 'AA-'; -- $13.5 million class E at 'A+'; -- $15.1 million class F at 'A'; -- $11.8 million class G at 'A-'; -- $11.8 million class H at 'BBB+'; -- $8.4 million class J at 'BBB'; -- $16.8 million class K at 'BBB-'; -- $1.7 million class L at 'BB+'; -- $6.7 million class M at 'BB'; and -- $5.0 million class N at 'BB-'. Fitch does not rate the $3.4 million class P certificate, $1.7 million class Q certificate, $1.7 million class S certificate and $15.1 million class T certificate. The rating affirmations reflect the stable performance and minimal paydown to date. As of the May 2006 distribution date, the pool's collateral balance has paid down 1% to $1.33 billion from $1.34 billion at issuance. The pool has not incurred any realized losses to date. There is one loan (0.7%) in special servicing, and it remains current. Fitch reviewed the credit assessments of the Northshore Mall (15.8%), Westfield North Bridge (10.3%), Two Penn Plaza (9.2%), 2000 Pennsylvania Avenue (4.7%), Pacific Beach Hotel (2.6%), GWU Hotel Portfolio (0.9%) and 1030-1048 Third Avenue (0.7%) loans. All seven loans maintain investment grade credit assessments. The Fitch stressed debt service coverage ratio is calculated using servicer provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. The collateral for the Northshore Mall consists of 808,360 square feet (sf) in a 1.7 million sf, anchored retail center located in Peabody, MA, which was built in 1958 and renovated in 1977 and 1993. The year-end (YE) 2005 Fitch stressed DSCR improved to 1.57 times (x) compared with 1.41x at issuance. Occupancy has decreased to 90% as of March 2006, compared with 96% at issuance. The Westfield North Bridge loan is a 682,418 sf regional mall in Chicago, Illinois, which was built in 2000. The whole loan is split into three, pari-passu A-notes; the A-1 and A-2 notes of this loan have been contributed to this transaction. The Fitch adjusted net cash flow (NCF) for YE 2005 has decreased 4.4% since issuance. The A-note corresponding Fitch stressed DSCR as of YE 2005 dropped to 1.28x compared with 1.34x at issuance. The drop in property cash flows is primarily due to an increase in property taxes and additional repairs completed in 2005. Occupancy has improved slightly to 91% as of YE 2005 compared with 89% at issuance. Two Penn Plaza is secured by a 1.5 million sf, class A office property in New York, NY, which was built in 1968 and renovated in 1991. The whole loan has an A-B note structure, both of which are further split into two pari-passu notes; the A-2 note was contributed to this transaction. The Fitch stressed DSCR has fallen to 1.27x compared with 1.45x at issuance. The property's performance has declined since origination due to increased vacancy losses. Occupancy at the property has dropped to 90% at YE 2005 compared with 96% at issuance. 2000 Pennsylvania Avenue is a 362,488sf office building located in the Foggy Bottom neighborhood of Washington, DC. The Fitch stressed YE 2005 DSCR is 1.81x, compared with 1.80x at issuance. Occupancy has increased slightly to 97% at YE 2005 from 96% at issuance. Pacific Beach Hotel is secured by an 837-room full-service, beachfront hotel with a 29,223 sf indoor shopping mall located in Honolulu, Hawaii. The hotel continues to operate at underwriting levels, as indicated by a Fitch stressed YE 2005 DSCR of 1.55x compared with 1.54x at issuance. The collateral for the George Washington University Hotel Portfolio consists of two, cross-collateralized and cross- defaulted, full-service hotels, located in Washington, DC: the 151-room One Washington Circle Hotel and the 95-room George Washington University Inn. The Fitch YE 2005 DSCR increased to 2.69x compared with 2.02x at issuance. The blended May 2006 occupancy for both hotels is 81.1%, representing an increase over 76.5% at issuance. 1030-1048 Third Avenue, 163-165 East 61st Street, 160-162 East 162nd Street is a mixed-use property, comprised by the 8,636 sf, ground floor retail portion of Trump Plaza Apartments, two adjacent residential buildings and a 128-space garage leased to Enterprise. The property is situated in prime retail space on Third Avenue in the Upper East Side of New York City. The YE 2005 Fitch stressed DSCR declined to 1.69x compared with 1.79x at issuance. As of June 2006, occupancy at the retail and residential component was 56% and 88%, respectively. LB-UBS: Fitch Lifts Rating on $20 Million Class L Certificates -------------------------------------------------------------- Fitch Ratings upgrades 10 classes of LB-UBS Commercial Mortgage Trust commercial mortgage pass-through certificates, series 2002- C4: -- $18.2 million class B to 'AAA' from 'AA+'; -- $20 million class C to 'AAA' from 'AA'; -- $20 million class D to 'AAA' from 'AA-'; -- $12.7 million class E to 'AAA' from 'A+'; -- $16.4 million class F to 'AAA' from 'A'; -- $10.9 million class G to 'AAA' from 'A-'; -- $12.7 million class H to 'AA+' from 'BBB+'; -- $12.7 million class J to 'A+' from 'BBB'; -- $12.7 million class K to 'A-' from 'BBB-'; -- $20 million class L to 'BBB-' from 'BB+'. Additionally, Fitch affirms the following classes: -- $28.5 million class A-1 at 'AAA'; -- $90 million class A-2 at 'AAA'; -- $122.2 million class A-3 at 'AAA'; -- $86 million class A-4 at 'AAA'; -- $850.5 million class A-5 at 'AAA'; -- $7.3 million class M at 'BB'; -- $7.3 million class N at 'BB-'; -- $3.6 million class Q at 'B'; -- $1.8 million class S at 'B-'; -- $3.6 million class T at 'CCC'; -- Interest-only class X-CL at 'AAA'; -- Interest-only class X-CP at 'AAA'; -- Interest-only class X-VF at 'AAA'. Fitch does not rate classes P or U. The upgrades reflect the defeasance, stable pool performance and paydown since issuance. As of the June 2006 distribution, the pool's aggregate principal balance has been reduced by 5.2% to $1.38 billion from $1.46 billion at issuance. Fifteen loans (27.8%) have defeased, including five of the 10 largest loans. There are currently no delinquent loans and there have been no losses to date. In addition, Fitch loans of concern represent only 6.5% of the pool. One of the credit assessed loans, 605 Third Avenue (11.5%), has defeased. Fitch reviewed year-end 2005 performance data for the remaining four credit assessed loans (32.8% of the pool). Westfield Shoppingtown Valley Fair Mall (20.3%), 1166 Avenue of the Americas (5.6%), Hamilton Mall (5.4%), and the Horizon Portfolio (1.5%) maintain their investment grade assessments due to stable or improved performance since issuance. Currently, there are two loans (1.9%) in special servicing, both of which are current. The largest (1.6%) is secured by a 171,103 square foot (sf) office building located in Norwalk, Connecticut. As of June 2006, the collateral was under contract with a closing expected in July 2006. The loan will be assumed by the new borrower and returned to the master servicer. The second specially serviced loan (0.3%) is secured by a 77,786 sf shopping center located in Kenner, Louisiana. The center was damaged by Hurricane Katrina, but repairs are complete and six of its seven tenants have resumed occupancy. The loan will be returned to the master servicer. LINN ENERGY: Acquires Natural Gas Pipeline System for $30 Million ----------------------------------------------------------------- Linn Energy, LLC (Nasdaq:LINE) completed three acquisitions of natural gas and oil properties in West Virginia, including 207 producing wells, and an acquisition of a natural gas gathering pipeline system in Western Pennsylvania by its Penn West Pipeline, LLC subsidiary for an aggregate contract purchase price of $30 million, subject to customary closing adjustments. Cash Distributions Increase In connection with the completed acquisitions, the Company's management and Board of Directors are reviewing the appropriate level of future cash distributions. Management currently anticipates that it will recommend to the Board of Directors an increase in the annualized cash distribution of $0.12 per unit, or a 7.5% increase, to an annual rate of $1.72 per unit from the current annual rate of $1.60 per unit beginning with the cash distribution expected to be paid on or about Nov. 14, 2006 with respect to the third fiscal quarter. Increased Borrowing Base Additionally, the Company reported that its lenders under its $400 million secured revolving credit facility have approved an increase in the borrowing base to $265 million from $235 million effective as of June 21, 2006. At June 21, 2006, the Company had outstanding indebtedness of $193.6 million under the credit facility and additional borrowing availability of $71.4 million. About Linn Energy Headquartered in Pittsburgh, Pennsylvania, Linn Energy LLC -- http://www.linnenergy.com/-- is an independent natural gas company focused on the development and acquisition of natural gas properties in the Appalachian Basin, primarily in West Virginia, Pennsylvania, New York and Virginia. * * * At Dec. 31, 2005, Linn Energy LLC had a $51 million working capital deficit and a $45 million stockholders' deficit. MADISON RIVER: S&P Affirms Corp. Credit & Facility's B+ Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' bank loan rating and '4' recovery rating on Madison River Capital LLC's senior secured credit facility following the company's announcement that it was increasing the size of the facility to $600 million from $550 million. The recovery rating of '4' indicates expectations for a marginal (25%-50%) recovery of principal in the event of a payment default. All other ratings, including the 'B+' corporate credit rating of Mebane, North Carolina-based parent, Madison River Telephone Co. LLC, and Madison River Finance Corp., were also affirmed. The outlook is stable. Proceeds from the additional bank financing will be used to repay $50 million of 13.25% senior unsecured notes due in 2010. Pro forma for the proposed transactions, debt outstanding at March 31, 2006, totaled about $575 million. "The ratings on Madison River reflect the increasingly competitive landscape for wireline services due to the wide-scale rollout of telephony by cable operators, stagnant to declining growth in voice access lines, limited size and scale, and a highly leveraged financial profile," said Standard & Poor's credit analyst Susan Madison. Tempering factors include: * Madison River's position as an incumbent telephone provider in secondary and tertiary markets; * a track record of exploiting its above-average DSL capability to aggressively bundle voice and broadband; and * modest free operating cash flow generation. Madison River provides local, long distance, and Internet services to about 189,000 voice access lines and 49,000 broadband and high- speed data customers. Its rural local exchange business serves parts of Alabama, Georgia, Illinois, and North Carolina. In addition, it operates a small competitive local exchange in territories surrounding its rural markets. NANOMAT INC: Court Dismisses Bankr. Case at U.S. Trustee's Behest ----------------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the Western District of Pennsylvania dismissed Nanomat, Inc.'s chapter 11 case, at the request of Kelly Beaudin Stapleton, the U.S. Trustee for Region 3. Norma Hildenbrand, Esq., the U.S. Trustee's counsel, disclosed that according to the Debtor's schedules, the Debtor is a Pennsylvania corporation with two owners: (1) Srikanth Raghunathan, who owns 95% of the company and is the President, and (2) Padmashri Sampathkumar, who has the remaining 5% stake in the Debtor and is the Debtor's Executive Vice-President. Ms. Hildenbrand told the Court that aside from these two officers, no other officers or directors are able to testify on behalf of the Debtor. Ms. Hildenbrand discloses the Messrs. Raghunathan and Sampathkumar have both been indicted by the U.S. Attorney. Ms. Hildenbrand related that although Mr. Raghunathan attended the first meeting of creditors held pursuant to Section 341(a) of the Bankruptcy Code, Mr. Raghunathan only stated his name but thereafter stated that he would not respond to questions as advised by his counsel and asserted his right against self incrimination pursuant to the Fifth Amendment of the U.S. Constitution. Ms. Hildenbrand told the Court that this continued until the third scheduled meeting of creditors. On the fourth meeting of creditors however, Mr. Raghunathan and his counsel did not attend. Ms. Hildenbrand contended that the U.S. Trustee's office scheduled four creditors meetings in compliance with Bankruptcy Rule 2002(a) but the Debtor's principals failed to testify at any of these meetings. Ms. Hildenbrand said that this has deprived the Chapter 11 trustee and the Debtor's creditors of their opportunity to ask meaningful questions regarding the financial affairs of the Debtor. Ms. Hildenbrand disclosed that Joseph L. Cosetti, the chapter 11 trustee appointed in the Debtor's chapter 11 case, has investigated the financial affairs of the Debtor and has liquidated the known assets of the Debtor. Ms. Hildenbrand reminds the Court that the chapter 11 trustee has already asked for court authority to distribute the proceeds of the sale of the Debtor's property to holders of administrative claims and secured claims. According to the chapter 11 trustee, Ms. Hildenbrand says, there doesn't seem to be any funds available for distribution to lower priority creditors. Ms. Hildenbrand argued that without further cooperation of the Debtor's principals and the likely distribution of the proceeds from the sale of the Debtor's assets, there appears to be no point in continuing the case under a chapter 11 proceeding. About Nanomat Inc. Headquartered in North Huntingdon, Pennsylvania, Nanomat, Inc. -- http://www.nanomat.com/-- is a leading manufacturer of nanomaterials, powders, and technologies. Nanomat filed for chapter 11 protection on March 18, 2005 (Bankr. W.D. Pa. Case No. 05-23245). Donald R. Calaiaro, Esq., at Calaiaro, Corbett & Brungo, P.C., represents the Debtor in its restructuring efforts. Joseph L. Cosetti, the chapter 11 trustee, is represented by Carlota M. Bohm, Esq., at Houston Harbaugh, P.C. When the Debtor filed for protection from its creditors, its estimated assets and debts between $10 million and $50 million. NATIONAL CENTURY: Debt Acquisition Wants Class C-7 Claims Paid -------------------------------------------------------------- Debt Acquisition Company of America V, LLC, is presently the record holder of 30 general unsecured claims all of which are less than $500,000. According to Dean T. Kirby, Jr., Esq., at Kirby & McGuinn, A P.C., in San Diego, California, the Claims are included in Class C-7 or the "Convenience Class" under National Century Financial Enterprises, Inc., and its debtor-affiliates' Fourth Amended Plan of Liquidation. Mr. Kirby relates that: (a) the amounts for each of the Claims were scheduled by the Debtors totaling $42,096; (b) none of the Claims were scheduled as disputed, contingent or unliquidated; and (c) the Claims Objection Bar Date provided for under the Plan has expired and no objection to the Claims has been filed. Mr. Kirby asserts that none of the creditors elected treatment as a Class C-6 claim. Therefore, a distribution of at least 50% is due to each creditor under the terms of the confirmed Plan. Moreover, as far as Debt Acquisition can determine -- based on its review of the confirmed Plan -- no proceedings on any pending claims objection can affect the entitlement of Class C-7 members to at least a 50% distribution, Mr. Kirby tells Judge Calhoun. It is Debt Acquisition's understanding that distributions to Class C-7 claimholders are being withheld pending the resolution of about 10 non-related disputed claims in Class C-6 and C-7. Mr. Kirby relates that proceedings on claims objections have dragged on for more than a-year-and-a-half past the Claims Objection Bar Date. Creditors have received no report or indication of what has happened or when a distribution may take place. Given the extraordinary circumstances created by substantial unforeseen delay in the Debtors' Chapter 11 case, Debt Acquisition submits that: * Class C-7 creditors are now being treated unfairly in that no payment has been made even on account of the minimum distribution to which they will be entitled under the Plan no matter what the outcome of any claims objection; and * The Court should exercise its continuing jurisdiction to ensure that Class C-7 creditors receive the benefit of their bargain in the form of an immediate minimum distribution and some timetable for completion of any additional distribution. Against this backdrop, Debt Acquisition asks the U.S. Bankruptcy Court for the Southern District of Ohio to enter an order: 1) directing the Debtors to make full distribution on account of Class C-7 Claims; or 2) if full distribution is impractical at this time, directing the Debtors to: -- make an interim distribution of the minimum to which Class C-7 creditors will be entitled under the Plan, viz., 50%; and -- report to all holders of Class C-7 Claims as to the status of the case and the expected date of any additional distributions. A list of the 30 Class C-7 Claims is available for free at http://ResearchArchives.com/t/s?bdc Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the Debtors. (National Century Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL CENTURY: Ex-NCFE Officers Plead Not Guilty in Ohio Court ----------------------------------------------------------------- The seven former executives of National Century Financial Enterprises Inc., including former chairman Lance K. Poulsen, pleaded not guilty to federal charges of plotting to defraud NCFE investors of more than $3,000,000,000, according to Erik Johns of Bloomberg News. The seven ex-NCFE executives were arraigned in federal court in Columbus, Ohio, on June 2, 2006, Mr. Johns said. Roger Synenberg, Esq., counsel for ex-NCFE officer Rebecca Parrett, said in an interview that Ms. Parrett is innocent of the charges and looks forward to presenting her case to a jury. D. Michael Crites, Esq., counsel for Jon Beacham, on the other hand, said that Mr. Beacham "engaged in no criminal activity or wrongdoing" and fully expects to be vindicated and acquitted. Mr. Beacham is NCFE's former director and vice president of securitizations. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- through the CSFB Claims Trust, the Litigation Trust, the VI/XII Collateral Trust, and the Unencumbered Assets Trust, is in the midst of liquidating estate assets. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. S.D. Ohio Case No. 02-65235). The Court confirmed the Debtors' Fourth Amended Plan of Liquidation on April 16, 2004. Paul E. Harner, Esq., at Jones Day, represents the Debtors. (National Century Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) NETWORK INSTALLATION: Selling 1.9 Mil. Shares of Stock to Dutchess ------------------------------------------------------------------ Network Installation Corporation has issued a convertible debenture to Dutchess Private Equities Fund, LP and Dutchess Private Equities Fund II, LP. The debenture has a face amount of $1,920,000 and the Company received $1,600,000 after the discount was applied. The Company will pay a 10% annual coupon rate on the unpaid face amount of the debenture. The debenture is subject to automatic conversion at the end of 5 years from the date of issuance. The Company has also granted a warrant to Dutchess Private Equities Fund, LP to purchase up to a total of 1,920,000 shares of our common stock at an exercise price of $0.41 per share, subject to adjustment. The warrant expires five years after its original issuance. With respect to the convertible debenture and warrant, the Company relied on the Section 4(2) and 4(6) exemptions from securities registration under the federal securities laws for transactions not involving any public offering. No advertising or general solicitation was employed in offering the securities. The securities were sold to sophisticated or accredited investors. The securities were offered for investment purposes only and not for the purpose of resale or distribution, and the transfer thereof was appropriately restricted by the Company. About Network Installation Headquartered in Irvine, California, Network Installation Corp. -- http://www.networkinstallationcorp.net/-- is a single source provider of communications infrastructure, specializing in the design, installation, deployment and integration of specialty systems and computer networks. Through its wholly-owned subsidiaries, Com Services and Kelley Technologies, the Company provides its services to these customers and industries: Gaming & casinos, local and regional municipalities, K-12 and education. Going Concern Doubt As reported in the Troubled Company Reporter on June 1, 2006, Jaspers + Hall, PC, in Denver, Colorado, raised substantial doubt about Network Installation Corp.'s ability to continue as a going concern after auditing the Company's financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations and stockholders deficiency. The Company incurred a $1,329,230 net loss on $1,006,844 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $14,005,708 in total assets, $13,252,768 in total liabilities, and $752,940 in stockholders' equity. The Company's March 31 balance sheet also showed strained liquidity with $6,049,792 in total current assets available to pay $8,164,848 in total current liabilities coming due within the next 12 months. NEVADA POWER: Prices Private Offerings of $195 Mil. Mortgage Notes ------------------------------------------------------------------ Nevada Power Company (NYSE: SRP) priced private offerings of additional amounts of $120 million of its 6.650% General and Refunding Mortgage Notes, Series N, due April 1, 2036 and $75 million of its 6.50% General and Refunding Mortgage Notes, Series O, due May 15, 2018. The Notes are expected to be delivered on or about June 26, 2006. Previously, Nevada Power sold and issued $250 million of Series N Notes and $250 million of Series O Notes. Upon the consummation of the issuance of the Notes, the total amount of Series N Notes outstanding will be $370 million and the total amount of Series O Notes outstanding will be $325 million. Net proceeds from the offerings are expected to be approximately $180 million and will be used to fund the purchase of the Nevada Power's 10-7/8% General and Refunding Mortgage Notes, Series E, due 2009, which are tendered pursuant to the company's offer to purchase and consent solicitation expiring on June 28, 2006, and to pay fees, premiums and expenses associated with the company's tender offer. Currently, $162.5 million aggregate principal amount of the Series E Notes are outstanding. A substantial portion of such Series E Notes has already been tendered pursuant to the terms of the Offer to Purchase. Nevada Power intends to use any remaining proceeds to repay amounts outstanding under its Revolving Credit Facility with Wachovia Bank, N.A. Upon the consummation of the offerings, the Nevada Power will have met the financing condition contained in the Offer to Purchase; therefore, the company has waived the Series E Notes tender offer financing condition. The Notes will be secured by the lien of the Nevada Power's General and Refunding Mortgage Indenture, which constitutes a lien on substantially all of the company's real property and tangible personal property located in the State of Nevada. The offering will be made only to qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended and outside the United States in compliance with Regulation S under the Securities Act. About Nevada Power Nevada Power Company is a regulated public utility engaged in the distribution, transmission, generation, purchase and sale of electric energy in the southern Nevada communities of Las Vegas, North Las Vegas, Henderson, Searchlight, Laughlin and their adjoining areas, including Nellis Air Force Base and the Department of Energy's Nevada Test Site in Nye County. The Company provides electricity to approximately 774,000 residential and business customers. Headquartered in Nevada, Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for most of southern Nevada, and Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California. NEVADA POWER: Fitch Expects to Assign BB+ Rating on $195MM Notes ---------------------------------------------------------------- Fitch expects to assign a 'BB+' rating to Nevada Power Co.'s $195 million general and refunding mortgage notes, comprising of: * $75 million series O due 2018; and * $120 million series N due 2036. Net proceeds will be used to repay higher coupon mortgage notes and reduce borrowings under the company's $600 million working capital facility. The Rating Outlook is Positive. The notes are being offered in a private placement under Rule 144A of the Securities Act. NPC's Positive Rating Outlook reflects evidence of: * a supportive regulatory environment in Nevada; * reduced litigation exposure; * improved financial flexibility; * adequate liquidity; and * ongoing efforts to diminish reliance on the wholesale energy markets. Recent orders by the Public Utilities Commission of Nevada for NPC have continued to allow for full recovery of deferred energy costs and adjustments to going forward energy rates. This is a primary rating consideration given NPC's significant net short position. The PUCN has also supported the company's efforts to reduce its exposure to the wholesale energy markets and has approved the purchase and construction of new generating facilities. Since January 2006, NPC has added approximately 1,700 MW of new generation capacity. Regulatory decisions will remain critical going forward as NPC is expected to consistently file for recovery of capital investments and deferred energy costs. A change to this pattern of constructive regulatory orders would have adverse rating implications for the company. Fitch notes that NPC has a $172 million deferred energy case pending before the PUCN. A decision in the proceeding is expected by the end of July 2006. In addition to continued exposure to the wholesale power and natural gas markets and regulatory risk associated with recovering deferred energy costs, a primary risk for fixed-income investors is NPC's significant capital expenditure commitments and related financing required over the next several years. Given the company's strategy to close its generation gap as well as expand its transmission and distribution system, substantial additional construction/ acquisitions should be expected. NPC, together with its affiliate Sierra Pacific Power Co., have announced plans to develop two 750 MW coal-fired plants and a 250- mile transmission line near Ely, Nevada. The project is subject to regulatory approval and permitting requirements; the first unit would be operational in 2011 with the second unit following in 2014. Total capital expenditures for the project are estimated at $3 billion and will significantly exceed internally generated cash. The company has not yet laid out its financing plans, but Fitch expects that the company will utilize a balanced mix of debt and equity funding to support credit quality. NPC is an integrated utility serving Las Vegas and the surrounding area in Nevada. NPC and its affiliate SPPC are subsidiaries of the holding company Sierra Pacific Resources. NPC serves approximately 774,000 electric customers in southern Nevada and owns 3,000 MW of coal and gas-fired generation. NPC's historical annual customer growth rate of 5% is among the highest in the country. NIMITZ PARTNERS: Settles 7-Year Lender Liability Suit Before Trial ------------------------------------------------------------------ Real estate investor and Hawaii hotel owner Nimitz Partners LLC will fully retain equity ownership in the 308-room Honolulu Airport Hotel and the 314-room Best Western Plaza, also located at Hawaii's largest airport, under the terms of an eve-of-trail settlement agreement resolving its seven-year-old lender liability lawsuit. The settlement between Nimitz and its former lender, Llama Capital Mortgage Company Limited Partnership, resolves a $38 million dispute that involved some cutting edge lender liability litigation, as well as a chapter 11 bankruptcy proceeding. The dispute arose in March 1999 between Nimitz and Llama over disposition of the two hotels. Llama had acquired the interest of a prior lender, then declared a default and commenced foreclosure proceeding in Hawaii State court against the hotels. At the time, Llama claimed that Nimitz owed it more than $38 million. In response to the foreclosure complaint, Nimitz filed a lender liability counterclaim contending that Llama had improperly used confidential information to acquire the loan and had tortiously interfered with its economic relations. After Llama's motion for summary judgment in the state court litigation was denied, the parties entered into a settlement which provided for an extension of the term of the existing loan. That settlement significantly reduced Nimitz's interest rates on the loan. It also gave Nimitz the ability to pay off the loan at discounts ranging from approximately $16 - $18 million depending upon the exercise date during the three-year extension. As part of the settlement, Nimitz was required to file a Chapter 11 bankruptcy (Bankr. D. Hawaii Case No. 00-03501) and agree to have the bankruptcy court enforce default remedies. At the time, the Nimitz reorganization was the fastest Chapter 11 turnaround in Hawaii bankruptcy court from filing to confirmation. As part of the settlement, Nimitz agreed to undertake renovations of the two hotels. These renovations were not completed and in May 2003, the Nimitz bankruptcy case was reopened. Llama filed a motion seeking to have the hotels sold, and Nimitz filed a second lender liability suit alleging a breach by Llama (Bankr. D. Hawaii Adv. Pro. No. 03-90032). Nimitz's also successfully moved to transfer the case to the U.S. District Court (D. Hawaii Case No. 1:03-cv-00518-KSC) on the grounds that the alleged breach involved contract interpretation which entitled it to a jury trial. It also defeated motions for a receiver and summary judgment. The U.S. District Court was scheduled to hold the jury trial when the case was settled at the eleventh-hour. Howard J. Steinberg, Esq., at Irell & Manella LLP in Los Angeles, represented Nimitz Partners. He was assisted by local counsel Don Gelber, Esq., of the Hawaiian firm Gelber, Gelber, Ingersoll & Klevansky. The successful resolution of the claims against Nimitz is the latest victory in Mr. Steinberg's 26-year career. Mr. Steinberg, who has litigated hundreds of matters, has never lost a bankruptcy court trial. "Our client is elated at the outcome of the settlement," Mr. Steinberg said. "Not only has Nimitz Partners retained full equity ownership in the hotels, but they are relieved of having to make any out-of-pocket expenses related to the lawsuit." NOVASTAR MORTGAGE: Fitch Rates $5.1 Mil. Class M-10 Certs. at BB+ ----------------------------------------------------------------- Fitch rated NovaStar Mortgage Funding Trust's $1.01 billion home equity loan asset-backed certificates, series 2006-2, which closed on June 15, 2006: * $862.8 million classes A-1A, A-2A, A-2B, A-2C, and A-2D 'AAA'; * $60.2 million class M-1 'AA'; * $15.8 million class M-2 'AA'; * $15.3 million class M-3 'AA-'; * $13.8 million class M-4 'AA-'; * $10.2 million class M-5 'A+'; * $8.2 million class M-6 'A+'; * $6.1 million class M-7 'A'; * $10.2 million class M-8 'BBB+'; * $8.2 million class M-9 'BBB-'; and * $5.1 million privately offered class M-10 'BB+'. The 'AAA' rating on the class A certificates reflects: * the 15.50% total credit enhancement provided by the 5.90% class M-1; * the 1.55% class M-2; * the 1.50% class M-3; * the 1.35% class M-4; * the 1.00% class M-5; * the 0.80% class M-6; * the 0.60% class M-7; * the 1.00% class M-8; * the 0.80% class M-9; * the 0.50% privately offered class M-10; and * the 0.50% initial and target overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. The ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of NovaStar Mortgage, Inc. as Servicer. JPMorgan Chase Bank, NA, rated 'A+' by Fitch, will act as Trustee. On the closing date, the trust fund will consist of a pool of first and second lien, adjustable and fixed rate, fully amortizing and balloon, residential mortgage loans with a total principal balance as of the cut-off date, June 1, 2006, of approximately $1,021,101,924. For the purpose of distributing principal and interest, the mortgage pool will be segregated into two mortgage loan groups. The Group 1 mortgage pool consists of adjustable-rate and fixed- rate, conforming, first and second lien mortgage loans with a cut- off date pool balance of $510,531,179. Approximately 17.30% of the mortgage loans are fixed rate mortgage loans and 82.70% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 8.799%. The weighted average remaining term to maturity is 353 months. The average principal balance of the loans is approximately $157,377. The weighted average original loan-to-value ratio is 80.97%. The properties are primarily located in: * Florida (22.35%), * California (12.23%), and * Maryland (5.96%). The Group 2 mortgage pool consists of adjustable-rate and fixed- rate, non-conforming, first and second lien mortgage loans with a cut-off date pool balance of $510,570,745. Approximately 16.26% of the mortgage loans are fixed rate mortgage loans and 83.74% are adjustable-rate mortgage loans. The weighted average loan rate is approximately 8.780%. The weighted average remaining term to maturity is 350 months. The average principal balance of the loans is approximately $183,395. The weighted average original loan-to-value ratio is 81.50%. The properties are primarily located in: * Florida (21.66%), * California (19.45%), and * Maryland (7.09%). For federal income tax purposes, multiple real estate mortgage investment conduit elections will be made with respect to the trust estate. NVE INC: Asks Court to Expand McElroy Deutsch's Retention --------------------------------------------------------- NVE Inc. asks the U.S. Bankruptcy Court for the District of New Jersey for permission to expand the retention of McElroy, Deutsch, Mulvaney & Carpenter, LLP, as its special litigation counsel. As previously reported in the Troubled Company Reporter on Dec. 19, 2006, the Debtor hired McElroy Deutsch to handle an appeal to the Third Circuit Court of Appeals, and also to represent the Debtor in a consumer fraud action instituted against the Debtor and Robert Occhifinto. The Debtor believes that the expansion of McElroy Deutsch's retention is necessary to continue representing the Debtor in the ongoing consumer case such as that being pursued against by the Attorney General for the State of New Jersey. The current hourly rates of McElroy Deutsch's professionals are: Professional Hourly Rate ------------ ----------- Walter F. Timpone, Esq. $425 Michael B. Devins, Esq. $225 Walter R. Krzastek $200 The Debtor believes that McElroy, Deutsch, Mulvaney & Carpenter, LLP, is disinterested as that term is defined in Section 101(14) of the U.S. Bankruptcy Code. Headquartered in Andover, New Jersey, NVE Inc., dba NVE Pharmaceuticals, Inc., manufactures dietary supplements. The Debtor is facing lawsuits about its weight-loss products which contain the now-banned herbal stimulant, Ephedra. The Company filed for chapter 11 protection on August 10, 2005 (Bankr. D. N.J. Case No. 05-35692). Daniel Stolz, Esq., Leonard C. Walczyk, Esq., Michael McLaughlin, Esq., and Steven Z Jurista, Esq., at Wasserman, Jurista & Stolz, represent the Debtor in its restructuring efforts. Derek John Craig, Esq., at Brown Raysman Millstein Felder & Steiner LLP, and David J. Molton, Esq., at Brown Rudnick Berlack Israels LLP, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $10,966,522 in total assets and $14,745,605 in total debts. NVE INC: Hires Pashman Stein as Labor & Employment Counsel ---------------------------------------------------------- The U.S. Bankruptcy Court for the District of New Jersey gave NVE Inc. permission to employ Pashman Stein, P.C., as its labor and employment counsel. As reported in the Troubled Company Reporter on March 8, 2006, Pashman Stein will represent the Debtor in connection with current labor and employment matters, as well as, future labor and employment matters. Samuel J. Samaro, Esq., at Pashman Stein, told the Court that he will bill $250 per hour for this engagement. Mr. Samaro discloses that Ellen Smith, Esq., will bill $200 per hour and John Balsamo, Esq., will bill $150 per hour for their services. Headquartered in Andover, New Jersey, NVE Inc., dba NVE Pharmaceuticals, Inc., manufactures dietary supplements. The Debtor is facing lawsuits about its weight-loss products which contain the now-banned herbal stimulant, Ephedra. The Company filed for chapter 11 protection on August 10, 2005 (Bankr. D. N.J. Case No. 05-35692). Daniel Stolz, Esq., Leonard C. Walczyk, Esq., Michael McLaughlin, Esq., and Steven Z Jurista, Esq., at Wasserman, Jurista & Stolz, represent the Debtor in its restructuring efforts. Derek John Craig, Esq., at Brown Raysman Millstein Felder & Steiner LLP, and David J. Molton, Esq., at Brown Rudnick Berlack Israels LLP, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $10,966,522 in total assets and $14,745,605 in total debts. OPTICAL DATACOMM: Section 341(a) Meeting Slated for July 13 ----------------------------------------------------------- A meeting of Optical Datacomm, LLC's creditors will be held at 1:00 p.m., on July 13, 2006, at Room 2112, US District Court, 844 King St., Wilmington, Delaware. This is the first meeting of creditors after the Debtors' chapter 11 case was converted to a chapter 7 proceeding. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Optical Datacomm, LLC, now known as OODC LLC, supplies network integration services solutions and design and manufactures custom connectionized fiber optic, copper and coaxial cable assemblies to telecommunication companies worldwide. The Company filed for chapter 11 protection on November 17, 2001. H. Jeffrey Schwartz, Esq. at Benesch, Friedlander, Coplan & Aronoff, LLP and Joel A. Waite, Esq. at Young Conaway Stargatt & Taylor represented the Debtor. Anthony M. Saccullo, Esq., and Neil B. Glassman, Esq, at The Bayard Firm represent the Debtor's Official Committee of Unsecured Creditors. In its petition, the Company listed estimated assets of $10 million to $50 million and estimated debts of $50 million to $100 million. The Court converted the Debtor's chapter 11 case to a chapter 7 liquidation proceeding on June 2, 2006, and named Jeoffrey L. Burtch as the interim chapter 7 trustee. OTIS SPUNKMEYER: $230 Million IPO Prompts S&P's Positive Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on San Leandro, California-based Otis Spunkmeyer Inc. to positive from stable. Existing ratings on the company, including the 'B+' corporate credit rating, were affirmed. About $215 million total debt was outstanding at April 1, 2006. "The outlook revision follows the company's S-1 filing with the SEC for an IPO of up to $230 million of its common stock and reflects the potential for lower debt leverage if the IPO is successful," said Standard & Poor's credit analyst Alison Sullivan. Otis Spunkmeyer intends to use proceeds from the IPO: * to repay debt; * to redeem class A preferred stock ($32 million outstanding); and * for general corporate purposes. The company's preferred stock are treated as intermediate equity content securities. With the anticipated debt reduction, Standard & Poor's estimates lease-adjusted total debt to operating EBITDA could strengthen to about 3.5x, from about 4.6x for the 12 months ended April 1, 2006. The ratings reflect: * Otis Spunkmeyer's high debt leverage; * its narrow business focus; and * the highly competitive industry in which it competes. Otis Spunkmeyer manufactures frozen and pre-baked products for the foods service and retail distribution channels. The company's portfolio of premium-baked goods includes cookies, muffins, danishes, bagels, and brownies. The company holds a leading share with a No. 1 position in the frozen cookie dough market and a No. 2 position in the branded pre-baked muffin category. OZBURNEY-HESSEY: Debt Increase Cues Moody's to Downgrade Ratings ---------------------------------------------------------------- Moody's Investors Service downgraded the debt ratings of Ozburn- Hessey Holding Company, LLC, senior secured to B3 from B2; the outlook is stable. The rating action reflects the increase in debt due to the planned $140 million add-on to the existing term loan facility, which Ozburn-Hessey will use to fund planned growth, and the increase in leverage and decrease in EBIT/Interest coverage. Moody's also expects future increases in leverage due to additional debt- financed acquisitions and to increasing lease-adjusted debt due to growth in the core warehousing operation. Additionally, low barriers to entry and prospects of increased competition in the company's core third-party logistics operations and transportation segments resulting from expansion by existing service providers could pressure Ozburn-Hessey's margins. Offsetting these factors are Ozburn-Hessey's record of profitable acquisitive growth of its 3PL business supported by favorable customer retention rates and Moody's expectation of marginally positive free cash flow over the intermediate term. The ratings reflect Moody's belief that Ozburn-Hessey will continue to pursue acquisitions, largely cash financed at current market multiples of EBITDA for companies with nominal investments in on-balance sheet fixed assets. Additional acquisitions could offset potential improvements in the company's credit profile that would be derived from the Credit Agreement covenant requiring the application of 75% of excess cash flow to debt reduction. Moody's notes that Ozburn-Hessey closed five acquisitions subsequent to 2001, growing annual gross revenue to $399 million in 2005 from $99 million in 2002. Over this same period, EBITDA margins on gross revenue declined to 8.4% from 10.7%, and EBIT / Interest coverage declined to 0.7 times from 1.4 times. Moody's also believes that operating results could be pressured if a slowdown in the U.S. economy were to occur and could also be affected by the complexity of increasingly larger operations. Additionally, the 3PL sector is subject to ongoing consolidation of service providers and increased pressure from customers to lower prices. In Moody's view, these dynamics could place pressure on Ozburn-Hessey to become more efficient in order to maintain price competitiveness to maintain market share. Upon closing of the add-on to the credit facility, total debt will approximate $555 million, consisting of $237 million outstanding under the term loan due 2012, $8 million under the $40 million revolving credit facility due 2010, $230 million from the capitalization of operating leases and $80 million of subordinated debt issued by OHH Acquisition Corporation, the direct parent of Ozburn-Hessey. Moody's considers the subordinated debt of OHHAC in the assessment of Ozburn-Hessey's ratings since OHHAC provides an unconditional guarantee of Ozburn-Hessey's obligations under the rated credit facilities. Additionally, the annual debt service obligations of OHHAC are met solely from dividends from Ozburn-Hessey. Ozburn-Hessey had consolidated total assets of $380 million at December 2005; however, only $37 million or 10% represented tangible assets, reflecting the low asset intensity of the company's business model and the significant acquisition premiums the company has incurred in executing past acquisitions. Moody's ratings of Ozburn-Hessey consider that low asset intensity implies limited asset coverage for the senior secured facilities and low likely recovery levels by debt holders in the event of default. The B3 rating of the senior secured bank facility is at the same level as the Corporate Family Rating since the Credit Facility obligations account for the preponderance of debt capital. The Credit Facility is supported by upstream guarantees from substantially all of Ozburn-Hessey's domestic subsidiaries. The stable rating outlook reflects Moody's expectation that the company will be able to preserve EBITDA margins at or above the low 8% level achieved in 2005 and to manage its exposure to lease obligations on warehouse space as the demand for warehouse space declines with any consumer-driven slowdown. In addition, the credit profile should improve, absent additional debt financed acquisitions; as long as existing contracts are renewed at approximately the same terms as currently exist while gradually reducing debt levels through the cash recapture provision in the bank agreements. Ratings or their outlook may be subject to further downward revision if the company's EBITDA margin or EBIT to Interest ratio decline from the levels achieved in 2005; if free cash flow were to be sustained below 3% of total adjusted debt or if the company's customer retention rate fell to below 85% of the annual contracted revenue base. Ratings could also be pressured lower if Ozburn-Hessey makes a significant debt-financed acquisition. The ratings or outlook could be revised upward if the company demonstrates success in operating a larger, more diversified enterprise, measured by organic top line growth and margin improvement while reducing debt and maintaining capital spending levels, resulting in free cash flow exceeding 10% of total adjusted debt; lease adjusted leverage being sustained below 4.5 times and EBIT/Interest coverage being sustained above 1 times. Downgrades: Issuer: Ozburn-Hessey Holding Company, LLC * Corporate Family Rating, Downgraded to B3 from B2 * Senior Secured Bank Credit Facility, Downgraded to B3 from B2 Ozburn-Hessey Holding Company, LLC, headquartered in Nashville, Tennessee, is a leading provider of third-party logistics and related services. The company also provides non-asset based freight transportation through its Transportation Services segment. Ozburn-Hessey is a wholly-owned subsidiary of OHH Acquisition Corporation. PARMALAT USA: Reps Want to Amend Complaint Against Parmalat S.p.A ----------------------------------------------------------------- Lawyers leading a securities class action against Parmalat have filed a fresh motion seeking permission to amend their complaint to assert claims against Parmalat S.p.A., the entity that recently emerged from Extraordinary Administration Proceedings (akin to U.S. bankruptcy) in Italy. Until recently, the class plaintiffs were prevented from filing claims against Parmalat Finanziaria and its subsidiaries and affiliates due to a stay issued in the Italian bankruptcy proceedings against all creditors, including class plaintiffs, and also a preliminary injunction issued by the U.S. bankruptcy court against all creditors and class plaintiffs. The newly filed complaint allows Parmalat investors who lost billions of dollars in the dairy giant's fraud-soaked collapse to seek claims against the company itself. In October 2005, the court in Parma, Italy issued a decree approving a "composition" or agreement with Old Parmalat's creditors causing Parmalat S.p.A. to formally succeed Old Parmalat and triggering the transfer of Old Parmalat's assets and liabilities to New Parmalat. Thus, unlike U.S. bankruptcy, Parmalat S.p.A., or "New Parmalat" did not get a "fresh start" with its prepetition debts being discharged. Rather, it emerged with the assets and liabilities of its predecessor companies that were not discharged in the Extraordinary Administration. In its first official prospectus, New Parmalat recognized that plaintiffs in the United States securities class action could assert claims against it in the United States. For these reasons, lead plaintiffs moved for leave to assert federal securities fraud claims against New Parmalat based on the actions of Old Parmalat and its officers, directors, statutory auditors and others prior to Extraordinary Administration. The amended complaint was filed in U.S. District Court for the Southern District of New York. Grant & Eisenhofer represents Parmalat shareholders, including UK-based Hermes Focused Asset Management Europe Ltd. Law firm Cohen Milstein Hausfeld & Toll, P.L.L.C. represents Parmalat's former bondholders. "Our new filing is an important milestone in this case -- for the first time since the rapid implosion of Parmalat nearly three years ago, investors have the opportunity and the right to seek compensation from the company itself, an option that was not available while Parmalat was in bankruptcy proceedings in Italy," said Stuart Grant, name partner at Grant & Eisenhofer. As alleged in the original securities fraud complaint, during the Class Period -- January 5, 1999 through December 18, 2003 (and thus prior to the Extraordinary Administration) -- those individuals, along with Old Parmalat's banks and accounting firms, structured and participated in a panoply of fraudulent schemes designed to hide Old Parmalat's growing debts to third parties and artificially inflate its assets, revenues and ultimately, the market prices of its securities. The scheme culminated in Old Parmalat's financial collapse when it was revealed that the company's total consolidated debt had been understated by nearly $10 billion and its total net assets (or shareholder equity) had been overstated by $16.4 billion. Parmalat, an international food and dairy company, filed for bankruptcy in Italy in December 2003. The amended complaint also contains new allegations against accounting Grant Thornton LLP (which had previously been dismissed from the case) showing that it controlled its U.S. affiliate, defendant Grant Thornton International, which had participated in the fraud. Plaintiffs also amended their claims against Credit Suisse First Boston (now known as Credit Suisse) and added new claims against related entities Credit Suisse First Boston International (now known as Credit Suisse International), Credit Suisse First Boston (Europe) Limited (now known as Credit Suisse Securities (Europe) Limited), and Credit Suisse Group, for their direct participation in, or control of entities that participated in, the fraud. About Grant & Eisenhofer Wilmington, DE and New York-based Grant & Eisenhofer represents institutional investors and shareholders nationally in securities class actions, corporate governance actions and derivative litigation. The firm has recovered more than $2 billion for shareholders in the last five years and was named one of the Top 5 firms for shareholder recovery in 2005 by Institutional Shareholder Services. Currently, Grant & Eisenhofer is lead counsel in shareholder cases against Tyco, Global Crossing, Parmalat, Marsh & McLennan and Refco. In 2005, the firm published the Shareholder Activism Handbook, a practical guide for shareholders on corporate governance matters. Grant & Eisenhofer has also obtained major corporate governance settlements in shareholder cases against News Corp., Health South and Siebel Systems. For more go to http://www.gelaw.com/ A full-text copy of the Amended Complaint is available for free at http://researcharchives.com/t/s?bd3 About Parmalat Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. PARMALAT USA: Creditors Approve Revisions to Parmalat Brasil Plan ----------------------------------------------------------------- Certain amendments to the Restructuring Plan of Parmalat Brasil Industria de Alimentos S.A. have been approved in Parmalat Brasil's general creditors meeting. The amendments include: -- Authorization of the subscription by Laep Capital LLC of PA's capital increase. As a result, Laep will hold a majority shareholding of 98.5% of PA's share capital. Parmalat group has waived its pre-emption rights to the newly issued shares. -- Sale by PA to Perdigao Agroindustrial SA of the controlling stockholding in Batavia SA, and of the bakery division and the production plant of Guaranhus in the State of Pernambuco. -- Trademark license agreement between Parmalat SpA and Batavia. The amendments to the Plan are subject to approval by the Court of Sao Paulo. Upon completion of the procedure, the control of the Parmalat Group over PA will cease. About Parmalat Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. PLIANT CORP: Has Until October 30 to Solicit Acceptances for Plan ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware extended the period within which Pliant Corporation and its debtor- affiliates have the exclusive right to file a chapter 11 plan of reorganization to Sept. 1, 2006. The Court also extended the Debtors exclusive period to solicit acceptances of that plan to Oct. 30, 2006. The Debtors delivered to Court their Third Amended Plan of Reorganization on June 5, 2006. Pliant Vice President and General Counsel Stephen T. Auburn discloses that the Third Amended Plan includes a new class -- Class 11A, which consists of the Durham Subordinated Claims. The Claims are impaired. The Durham Subordinated Claims are the claims of the Durham Parties related to the Durham Put Shares to the extent subordinated by the Bankruptcy Court pursuant to Section 510(b) of the Bankruptcy Code. The Durham Parties refers to Richard P. Durham and Durham Capital, L.L.C. The Durham Put Shares refers to the capital stock and warrants of the Debtors that are subject to the alleged "put" right of the Durham Parties. As of the Petition Date, the Durham Put Shares consisted of 18,200 shares of outstanding common stock, 1,232 shares of Series A Preferred Stock and 1,250 Warrants. The Plan provides if and to the extent the Court determines that Holders of Allowed Durham Subordinated Claims are entitled to receive: (a) a portion of the New Equity Common Stock that is otherwise distributable to Holders of Outstanding Common Stock Interests; or (b) a portion of the Series A Common Stock and the Series A or Series AA Preferred Stock that is otherwise distributable to Holders of Series A Preferred Stock Interests; then the Holders of Allowed Durham Subordinated Claims will receive a payment in Cash equal to the value as of the Effective Date, as agreed with the Debtors or determined by the Court, of that Subordinated Claim Common Stock Allocation and that Subordinated Claim Preferred Allocation; provided, however, that the amount of the distribution will be reduced by the value, as agreed with the Debtors or determined by the Court, of the New Equity Common Stock, the Series A Common Stock and the Series A or Series AA Preferred Stock that is distributed to Holders of Allowed Durham Subordinated Claims on account of Durham Put Shares. For the avoidance of doubt, Class 11 includes the Durham Put Shares that are Outstanding Common Stock Interests but does not include Durham Subordinated Claims. Mr. Auburn clarifies that Class 9 includes the Durham Put Shares that are Series A Preferred Stock Interests but does not include Durham Subordinated Claims. A full-text copy of Pliant's Third Amended Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?bda Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. (Pliant Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLIANT CORP: Has Until August 1 to Make Lease-Related Decisions --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Pliant Corporation and its debtor-affiliates until August 1, 2006, to assume, assume and assign or reject their non-residential real estate leases and executory contracts. Kenneth J. Enos, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, noted the Debtors contemplate filing a global motion to assume all of their unexpired nonresidential leases. The Debtors anticipate filing the Global Assumption Motion contemporaneously with a confirmation hearing for their Plan. The Debtors are party to at least 23 major facility lease agreements, Mr. Enos told Judge Walrath. The facilities, which include many of the Debtors' primary production facilities and warehousing centers, are the core of the Debtors' operations. Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. (Pliant Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 215/945-7000) PUREBEAUTY INC: Files Schedules of Assets and Liabilities --------------------------------------------------------- PureBeauty, Inc., and Pure Salons, Inc., delivered its Schedules of Assets and Liabilities to the U.S. Bankruptcy Court for the Central District of California, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $9,843,727 C. Property Claimed as Exempt D. Creditors Holding $3,561,303 Secured Claims E. Creditors Holding $68,172 Unsecured Priority Claims F. Creditors Holding $77,108,818 Unsecured Nonpriority Claims ---------- ----------- Total $9,843,727 $80,828,293 PureBeauty, Inc. -- http://www.purebeauty.com/-- operates 48 retail stores and salons offering professional hair care and skincare services, featuring a leading assortment of professional and prestige personal care products. PureBeauty also operates six "brand" stores, providing customers with a variety of aspirational products and services. PureBeauty Inc. and Pure Salons, Inc., an affiliate, filed for chapter 11 protection on April 18, 2006 (Bankr. C.D. Calif. Case No. 06-10545). Stacia A. Neeley, Esq., at Klee, Tuchin, Bogdanoff & Stern LLP represent the Debtors in their restructuring efforts. The Debtors' Official Committee of Unsecured Creditors selected Eric E. Sagerman, Esq., and David J. Richardson, Esq., at Winston & Strawn, LLP, as its counsel. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $50 million and debts between $50 million and $100 million. QUIGLEY CO: Court Allows Examination of Insurance Settlement Docs ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Albert Togut, the legal representative for future asbestos personal injury claimants in Quigley Company, Inc., to access and evaluate certain insurance settlement agreements pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. The Legal Representative has requested that the Debtor produce insurance policies, settlement agreements, and related documents, including: (a) Agreement entered among Pfizer, Inc., the Debtor and Eurinco Allegemeine Versicherungs, A.G., dated Dec. 12, 1995, regarding coverage for asbestos bodily injury claims; (b) Pfizer's agreement with Florist Mutual, dated Aug. 15, 1997, regarding coverage for heart valve claims; (c) Pfizer's agreement with Hannover Allegemeine Versicherungs, date unavailable, regarding coverage for heart valve claims; and (d) Pfizer's agreement with Mead Reinsurance, dated April 7, 1995, regarding coverage for heart valve claims. Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Nicholson Graham LLP, in Manhattan, told the Court that these Settlement Agreements are relevant to the Legal Representative's ongoing evaluation of the insurance-related assets that may be available to pay future asbestos bodily injury claims under the Debtor's Plan. The Debtor has indicated that it cannot produce copies of the Settlement Agreements on a voluntary basis due to contractual confidentiality restrictions imposed on it and Pfizer. Additionally, in spite of its attempts, the Debtor has been unable to obtain waivers of confidentiality from the relevant insurers for a variety of reasons, including the fact that certain of the insurers have ceased to exist. Headquartered in Manhattan, Quigley Company, Inc., is a subsidiary of Pfizer, Inc., which used to produce and market a broad range of refractories and related products to customers in the iron, steel, glass and other industries. The Company filed for chapter 11 protection on Sept. 3, 2004 (Bankr. S.D.N.Y. Case No. 04-15739) to resolve legacy asbestos-related liability. When the Debtor filed for protection from its creditors, it listed $155,187,000 in total assets and $141,933,000 in total debts. Michael L. Cook, Esq., Lawrence V. Gelber, Esq., and Jessica L. Fainman, Esq., at Schulte Roth & Zabel LLP, represent the Company in its restructuring efforts. Albert Togut, Esq., at Togut Segal & Segal serves as the Futures Representative. Elihu Inselbuchm Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Unsecured Creditors. RADNOR HOLDINGS: Enters Into Loan Agreements with Four Lenders -------------------------------------------------------------- Radnor Holdings Corporation entered into a Loans Agreement, on June 14, 2006 with: -- National City Business Credit, Inc., agent and lender, -- Bank of America, N.A., syndication agent and lender, -- KeyBank, National Association, lender, and -- National City Bank, letter of credit issuer. Under the Agreement, the Lenders agreed to continue providing funds through Aug. 31, 2006, for the Company's operations in accordance with the agreed budget, provided that: (a) the Company and its domestic operating subsidiaries do not exceed agreed limits, with respect to outstanding advances permitted by the Revolving Credit and Security Agreement, dated Dec. 29, 2005, and (b) the Loan Parties continue to meet certain conditions and covenants set in the Agreement and the Bank Agreement. The Lenders also agreed to forbear from exercising their rights against the Loan Parties regarding repayment of the Over-Advance and certain existing and potential defaults under the Bank Agreement. The Over-Advance currently totals approximately $20 million, including certain reserves and a block reducing availability. The Loan Parties also agreed to certain negative covenants in addition to those set in the Bank Agreement. Radnor Holdings Corporation -- http://www.radnorholdings.com/-- is a leading manufacturer and distributor of a broad line of disposable foodservice products in the United States and specialty chemical products worldwide. The Company operates 15 plants in North America and 3 in Europe and distributes its foodservice products from 10 distribution centers throughout the United States. At Dec. 31, 2005, the Company's equity deficit widened to $87,404,000 from a $770,000 deficit at Dec. 31, 2004. RADNOR HOLDINGS: Retains Lehman Brothers as Financial Advisor ------------------------------------------------------------- Radnor Holdings Corporation is undertaking a comprehensive review of its strategic alternatives, including potential capital raising, recapitalization, asset sale and other restructuring transactions designed to reduce its outstanding indebtedness, strengthen its balance sheet and improve its liquidity. The Company has retained Lehman Brothers to serve as its financial advisor in its review of strategic alternatives. This strategic review is in addition to the Company's previously announced company-wide cost reduction program to reduce operating costs by $16 million to 19 million annually and improve operating efficiencies. Bank Lenders' Agreement In furtherance of its initiatives, the Company is in discussions with the lenders under each of its senior secured credit facilities, and has entered into an agreement with the bank lenders under the Company's domestic revolving credit and security agreement. Under the terms of the agreement, the bank lenders will continue to provide funding for the Company's operations through Aug. 31, 2006, subject to the ongoing satisfaction of certain conditions. The bank lenders also agreed to forbear from exercising their rights and remedies regarding repayment of certain advances that have been made to the Company in excess of advances permitted by the Bank Agreement. Excess advances total approximately $20 million, including certain reserves and a block reducing availability. The Company also is in discussions with the lenders under the loan facilities for its foreign subsidiaries to address certain covenant defaults under the relevant loan agreements and to modify certain covenants under those agreements going forward. "The Company has implemented its previously announced cost reduction initiatives; however, the business continues to face volatility and escalating prices in the resin and energy markets and a higher interest rate environment. These factors, which occurred during a period when the Company has been investing in new product launches, require us to examine alternatives for reducing the Company's overall indebtedness. We are engaging in a constructive dialogue with our lenders to provide ongoing adequate liquidity for our business, while we work towards putting together a longer-term strategic solution which achieves our financial goals," Michael Kennedy, the Company's CEO, stated. Senior Notes Indenture Defaults The Company also has notified the trustee of its outstanding 11% Unsecured Senior Notes due 2010 that it was not in compliance with certain covenants in the Indenture governing the Senior Notes. Under the terms of the Indenture, those events of non-compliance could, upon the happening of certain events, constitute a default, subject to the Company's right to cure those non-compliance during a period of not less than 30 days. Radnor Holdings Corporation -- http://www.radnorholdings.com/-- is a leading manufacturer and distributor of a broad line of disposable foodservice products in the United States and specialty chemical products worldwide. The Company operates 15 plants in North America and 3 in Europe and distributes its foodservice products from 10 distribution centers throughout the United States. At Dec. 31, 2005, the Company's equity deficit widened to $87,404,000 from a $770,000 deficit at Dec. 31, 2004. RADNOR HOLDINGS: Reports Preliminary 2006 First Quarter Results --------------------------------------------------------------- Radnor Holdings Corporation reported preliminary operating results for the first quarter of 2006. Net sales increased $1.3 million, or 1.1%, to $116.2 million during the three months ended March 31, 2006, compared to the three months ended April 1, 2005, while gross profit decreased by at least $4.5 million, or 25%. Higher average selling prices at the Company's packaging operations were partially offset by lower overall sales volumes and the unfavorable impact of changes in foreign currency exchange rates. The decrease in gross profit was primarily due to higher material and other manufacturing costs and lower sales volumes, which were partially offset by the higher average selling prices. Income from operations decreased by at least $5.7 million due to lower gross profit combined with higher distribution costs. The decrease in both gross profit and income from operations for the first quarter could be materially larger as a result of certain charges that could result from the Company's ongoing review of inventory adjustments. In connection with the preparation of its consolidated financial statements for the fiscal quarter ended March 31, 2006, the Company is evaluating the out of period inventory adjustment on its current and historical financial statements, as well as the related impact with respect to the Company's internal controls. Upon completion of this evaluation, the Company intends to finalize its first quarter financial statements and file its quarterly report on Form 10-Q for the first quarter with the Securities and Exchange Commission. Radnor Holdings Corporation -- http://www.radnorholdings.com/-- is a leading manufacturer and distributor of a broad line of disposable foodservice products in the United States and specialty chemical products worldwide. The Company operates 15 plants in North America and 3 in Europe and distributes its foodservice products from 10 distribution centers throughout the United States. At Dec. 31, 2005, the Company's equity deficit widened to $87,404,000 from a $770,000 deficit at Dec. 31, 2004. RCN CORP: Completes New $130 Million First-Lien Credit Facility --------------------------------------------------------------- RCN Corporation (NASDAQ: RCNI) closed a new $130 million first- lien credit facility. The new facility is comprised of two parts: * a 7-year $75 million term loan that will be used to refinance both RCN's existing $34 million first-lien and $41 million third-lien term loans; and * a 5-year $55 million revolving credit line that will replace RCN's existing letter of credit facilities. The new term loan is priced at LIBOR + 175 basis points and the new credit line is priced initially at LIBOR + 200 basis points, with a step-down to LIBOR + 175 basis points if RCN receives an increase in its debt ratings in the future. The new facility also contains a revised covenant package with fewer and less restrictive financial covenants, and provides enhanced baskets for asset sales, acquisitions and additional debt, as well as greater flexibility regarding the use of its cash resources. In connection with the new first-lien facility, RCN amended its existing second-lien indenture to allow for the early repayment of its third-lien facility and to revise the second-lien covenants to make them consistent with the new first-lien facility. "This transaction completes the balance sheet transformation set in motion after the sale of our investments in Megacable and MCM in March 2006," Michael T. Sicoli, Chief Financial Officer of RCN, stated. "After reducing our debt by nearly $300 million and receiving a multiple-notch upgrade in our debt ratings from Moody's Investors Service, we launched this refinancing effort and are extremely pleased with the results. We have simplified our capital structure, improved our strategic and financial flexibility, and lowered our interest expense, all in one transaction. We look forward to using this flexibility to drive increased value for our shareholders." About RCN Corporation Based in Herndon, Virginia, RCN Corporation -- http://www.rcn.com/ -- is one of the largest facilities-based competitive providers of cable, high-speed internet and phone services delivered over its own fiber-optic local network to residential customers in the most densely populated markets in the U.S. RCN Business Solutions is a growing business that also provides bulk video, high-capacity data and voice services to business customers. RCN provides service in the Boston, New York, Eastern Pennsylvania, Washington, D.C., Chicago, San Francisco and Los Angeles metropolitan markets. * * * As reported in the Troubled Company Reporter on May 1, 2006, Moody's Investors Service upgraded RCN Corporation's corporate family rating to B1 and assigned a Ba3 rating to RCN's new senior secured first lien credit facility. At the same time, Moody's rated the new first lien bank facility Ba3, one notch higher than the corporate family rating, because lenders for the now smaller first lien will benefit from a greater proportion of junior debt as a percent of total debt. Pro forma for the repayment and refinancing, Moody's anticipates a decline in first lien debt of $250 million compared to a decline in junior debt of only $40 million. Moody's said the outlook is stable. RENT-A-CAR: Moody's Assigns Ba2 Rating to Proposed $725 Mil. Loan ----------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to the proposed bank loan of Rent-A-Center, Inc., and affirmed the Ba2 corporate family as well as the senior subordinated note issue at Ba3. 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. This rating is assigned: * $725 million proposed secured bank loan at Ba2. These additional ratings are affirmed: * $600 million existing secured bank loan at Ba2, * $300 million 7.5% senior subordinated notes at Ba3, * Corporate family rating at Ba2. The rating on the existing bank loan will be withdrawn following completion of the contemplated transaction. Rent-A-Center's corporate family rating of Ba2 reflects the balance of certain key quantitative and qualitative rating drivers that have low investment grade characteristics with other attributes that are solidly non-investment grade. Weighting down the ratings are the company's aggressive financial policies whereby virtually all operating cash flow is spent for share repurchases, capital investment, and industry consolidation; the unproven success to date 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 reduction over the previous several years. However, supporting the company's ratings are the leading position of Rent-A-Center in the consumer rent-to-own industry in terms of geography, store count, sales, and store count; the lower cyclicality and seasonality of rent-to-own stores compared to many other retailing segments; and the relatively high quality of the store base. In addition, key credit metrics such as leverage and retained cash flow to debt have Baa and better characteristics, with the exception of free cash flow to debt that scores at the B level because of the substantial ongoing investment in store count growth. Moody's does not expect that the pending replacement of the existing $600 million credit facility with a new $725 million credit facility will materially impact debt protection measures. 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 strengthens 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 likely 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 increases in leverage, share repurchases, increased capital investment, or for operating reasons that prevent the company from improving its operating margin. A stable outlook would result if comparable store sales becomes 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. REPUBLIC STORAGE: Wants to Hire Ex-CFO Christofil as Consultant --------------------------------------------------------------- Republic Storage Systems Company, Inc., nka The Belden Locker Company, asks the U.S. Bankruptcy Court for the Northern District of Ohio for permission to hire James L. Christofil as its consultant to assist with the post-sale closing bankruptcy matters. As reported in the Troubled Company Reporter on May 15, 2006, the Debtor sold substantially all of its assets to an affiliate of Chrysalis Capital Partners, LP, a private equity investment firm, for $20 million. Prior to filing for bankruptcy until May 8, 2006, Mr. Christofil was the Debtor's chief financial officer. However, as part of the asset purchase agreement, Chrysalis Capital did not assume the Extended Executive Employment Agreement between James L. Christofil and the Debtor. However, according to Lisa M. Yerrace, Esq., at Calfee, Halter & Griswold LLP, in Cleveland, Ohio, the Debtor has a significant need for Mr. Christofil's consulting services to assist it with the continuation and winding up of its bankruptcy proceedings. The Debtor seeks to employ and retain Christofil, nunc pro tunc to May 10, 2006. Mr. Christofil started working for the Debtor in October 14, 1968 receiving several promotions to his final position of CFO of the Debtor until his retirement on May 8, 2006. Ms. Yerrace tells the Court that Mr. Christofil was an essential part of the Debtor's preparation for the filing of the chapter 11 case and assisted in all stages of the bankruptcy filing and proceedings. Mr. Christofil has extensive knowledge of the Debtor. Currently, the Debtor does not have a CFO or a chief executive officer, because as stated previously, Mr. Christofil was the CFO and he retired and the chief executive officer resigned and is currently working for Chrysalis Capital. Mr. Christofil's services will: (a) prepare U.S. Trustee financial reports; (b) work with the providers on the medical claims and assist with the termination of retiree medical benefits; (c) assist regarding designated remaining leases; (d) review Chrysalis Capital's proposed closing balance sheet within 15 days after receipt and then work to finalize the working capital adjustment; (e) work on the purchase price allocation statement; (f) provide assistance dealing with any indemnification claims Chrysalis Capital may make; (g) close out all existing benefit plans and deal with the related issues; (h) assist with any employee, vendor and other claims; (i) assist with preparation and review of tax returns and paying those claims; (j) assist with preparation of liquidating plan of reorganization; (k) handle vendor calls and other inquiries; and (l) appear in bankruptcy court as necessary and help respond to any motions or other pleadings filed in the case. Mr. Christofil will be paid $150 per hour for his services. Mr. Christofil assures the Court that he does not hold material interest adverse to the Debtor's estate and is disinterested as defined in Section 101(14) of the Bankruptcy Code. Headquartered in Canton, Ohio, Republic Storage Systems Company, Inc. -- http://www.republicstorage.com/-- an employee-owned firm, manufactures industrial and commercial shelving, storage rack, mezzanine systems and shop equipment. The Company filed for Chapter 11 protection on March 14, 2006, (Bankr. N.D. Ohio Case No. 06-60316). James Michael Lawniczak, Esq., at Calfee, Halter & Griswold, LLP, represents the Debtor in its restructuring efforts. Dov Frankel, Esq., at Buckley King, LPA, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. ROUGE INDUSTRIES: Court Approves Settlement Pact with Minteq ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware approved Rouge Industries, Inc., and its debtor-affiliates' settlement agreement with Minteq International, Inc. On January 2004, Minteq filed a claim of lien in Michigan asserting a construction lien on the Debtors' real property to secure payment of an alleged $492,732 debt. The Debtors disputed the validity, extent, priority and enforceability of the Minteq Lien. Minteq also filed a proof of claim against the estate of Rouge Steel Company, asserting a $492,732 secured claim purportedly secured by the Minteq Lien and a $26,747 non-priority general unsecured claim. The Debtors also disputed the amount of the Minteq Claim and its alleged secured status. The Debtors asserted that certain transfers made to or for the benefit of Minteq are avoidable and recoverable under chapter 5 of the bankruptcy code, including, without limitation, a wire transfer in the amount of $375,731 made to Minteq prior to their bankruptcy filing. Minteq disputed its liability for the Chapter 5 claims. Subsequently, Stefan Krasusky, an individual, filed an action against Rouge Steel in the Circuit Court for the County of Wayne, State of Michigan, seeking $25,000 in damages against Rouge Steel arising from injuries allegedly suffered while performing work on Rouge Steel's premises as an employee of Minteq. The Debtors asserted that Minteq is required to indemnify and hold the Debtors harmless from any expenses or losses incurred in connection with the Krasusky Action or the claims asserted, which assertions were contested by Minteq. On Oct. 17, 2005, the Parties entered into a tolling agreement extending the tolling period applicable to potential claims. Accordingly, to resolve all disputes between them, the Parties, in a Court-approved stipulation, agreed that the Debtors will pay to Minteq the sum of $150,000 in satisfaction of Minteq's claim. Headquartered in Dearborn, Michigan, Rouge Industries, Inc., an integrated producer of flat-rolled steel, filed for chapter 11 protection on October 23, 2003 (Bankr. D. Del. Case No. 03-13272). Donna L. Harris, Esq., Robert J. Dehney, Esq., Eric D. Schwartz, Esq., Gregory W. Werkheiser, Esq., and Alicia B. Davis, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtors in their restructuring efforts. Kurt F. Gwynne, Esq., Claudia Z. Springer, Esq., and Paul M. Singer, Esq., at Reed Smith LLP, serve as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $558,131,000 in total assets and $558,131,000 in total debts. On Dec. 19, 2003, the Court approved the sale of substantially all of the Debtors' assets to SeverStal N.A. for $285.5 million. The Asset Sale closed on Jan. 30, 2005. ROUGE INDUSTRIES: Del. Court Sets Plan Filing Hearing on July 24 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will be conducting a hearing to consider Rouge Industries, Inc., and its debtor-affiliates' request for further extension of their exclusive periods to: a) file a plan through and including August 14, 2006; and b) solicit acceptances of that plan through and including Oct. 13, 2006. The hearing will take place on July 24, 2006, 9:30 a.m. at the 5th Floor of the U.S. Bankruptcy Court in 824 Market Street in Wilmington, Delaware. Interested parties may file objections until July 17. The Debtors have filed eight prior motions seeking to extend the exclusive periods. The Debtors told the Court that the requested extension will be used to resolve few remaining impediments to advancing the plan process which include their dispute with Ford Motor Company. The Debtors further told the Court that they continue to make progress in other areas toward the successful conclusion of their bankruptcy cases, including claims administration, employee benefits matters, avoidance action analysis and recoveries, lien adversary proceedings and other estate administration matters. Headquartered in Dearborn, Michigan, Rouge Industries, Inc., an integrated producer of flat-rolled steel, filed for chapter 11 protection on October 23, 2003 (Bankr. D. Del. Case No. 03-13272). Donna L. Harris, Esq., Robert J. Dehney, Esq., Eric D. Schwartz, Esq., Gregory W. Werkheiser, Esq., and Alicia B. Davis, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtors in their restructuring efforts. Kurt F. Gwynne, Esq., Claudia Z. Springer, Esq., and Paul M. Singer, Esq., at Reed Smith LLP, serve as counsel to the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $558,131,000 in total assets and $558,131,000 in total debts. On Dec. 19, 2003, the Court approved the sale of substantially all of the Debtors' assets to SeverStal N.A. for $285.5 million. The Asset Sale closed on Jan. 30, 2005. RUFUS INC: Plan Admin. Has Until Aug. 17 to Object to Claims ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware further extended until Aug. 17, 2006, the period within which Michael Wilkey, the plan administrator appointed pursuant to Rufus, Inc.'s plan, can object to claims filed against the Debtor. Mr. Wilkey tells the Court that he has worked deligently in: a) reviewing analyzing the approximately 450 proofs of claim that have been filed; b) performing the required due diligence to determine the objectionable claims; and c) either negotiating or prosecuting the objectionable claims. Most of the current disputed claims are with state and municipal taxing authorities, Mr. Wilkey adds. The extension, according to Mr. Wilkey, will provide him more time to: * evaluate all remaining claims; * prepare and file additional objections, if necessary; and * attempt to consensually resolve disputed claims. Mr. Wilkey notes that he needs more time to finish its review of the remaining priority claims. He believes that a careful and thorough analysis of these claims is necessary so that objections may properly be filed to invalid or deficient priority claims. Headquartered in Meriden, Connecticut, Rufus, Inc., sells dogs, dog food, supplies and accessories. The Debtor also operates a chain of six retail stores in the Northeastern United States. The Company filed for chapter 11 protection on Aug. 10, 2005 (Bankr. D. Del. Case No. 05-12218). Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its bankruptcy proceeding. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman, represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $1.8 million in total assets and $12.7 million in total debts. SCIENTIFIC GAMES: S&P Rates Proposed $150 Million Term Loan at BB ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' bank loan rating and its '2' recovery rating to Scientific Games Corp.'s proposed $150 million senior secured term loan due Dec. 23, 2009, reflecting the expectation lenders would likely achieve substantial (80%-100%) recovery of principal in a simulated payment default scenario. Proceeds from the proposed term loan will be used to refinance the company's existing term loan B and to reduce amounts outstanding under its revolving credit facility. All other ratings on the New York City-headquartered lottery and pari-mutuel operator were affirmed, including its 'BB' corporate credit rating. The outlook is stable. Scientific Games had about $687 million in lease-adjusted debt as of March 31, 2006. The ratings on Scientific Games reflect: * the highly competitive market conditions in the lottery and pari-mutuel industries; * the mature nature and capital intensity of the online lottery industry; * the cash flow concentration from the company's lottery segment (both instant ticket and online); and * the existence of a much larger and well-established competitor in the online lottery segment, GTECH Holdings Corp. Still, the company has a leadership position in the pari-mutuel gaming and instant-ticket lottery industries, and possesses good credit measures for the rating. SEARS HOLDINGS: Kmart Merger Prompts S&P's Stable Outlook --------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Hoffman Estates, Illinois-based Sears Holdings Corp. to stable from negative. All ratings, including the 'BB+' corporate credit rating, and the 'B-1' short-term rating for Sears Roebuck Acceptance Corp., are affirmed. "The outlook revision reflects our assessment that the merger of Kmart and Sears has been completed without major disruption and that same-store sales at Kmart have generally stabilized, although Sears' same-store sales are still declining significantly," said Standard & Poor's credit analyst Gerald Hirschberg. Management has done a credible job to date in identifying key areas for improvement, and it is now actively implementing programs to enhance merchandising, marketing, in-stock positions, and labor productivity. Success in these areas is critical to building customer relationships and eventually to revenue growth. The company's off-mall strategy still represents some risk, but its decision to scale back conversions is viewed as a favorable development in terms of capital outlays and potential business risk. The ratings on Sears Holdings reflect the relatively high business risk associated with Sears department stores and Kmart discount department stores, and Standard & Poor's expectation that both concepts will continue to be challenged to improve store productivity and profitability, partly offset by a currently strong balance sheet for the rating. Since it was formed in early 2005, Sears Holdings has attracted a senior management team whose common purpose is steady improvement by building a better relationship with customers, and growing its profits. It has also made good progress in integrating the different corporate cultures at Sears and Kmart, and has achieved considerable cost savings while developing programs to make Sears and Kmart stores more relevant to consumers in terms of convenience, merchandising, and value. Sears Holdings' financial profile is solid for the rating, providing an offset to some of the uncertainties of its business prospects. SECURAC CORPORATION: Inks $500,000 Loan Deal with CAMOFI Master --------------------------------------------------------------- Securac Corp. entered into a series of definitive agreements with CAMOFI Master LDC under which the Lender provided Securac with $500,000 in principal amount of short-term debt on May 11, 2006. The agreements, which are dated April 28, 2006, were delivered on the Closing Date. Pursuant to the terms of a bridge loan agreement, the Lender provided funding to Securac in the principal amount of $500,000. The loan bears interest at 10% per annum pursuant to a form of note granted in favor of the Lender. Principal and interest is due and payable on November 11, 2006 or, if earlier, the date on which Securac consummate an equity financing in excess of $1,000,000. Securac's obligations under the Loan Agreement and Note are secured by a general security interest in all of Securac's assets, as well as a pledge of an aggregate of 21,309,009 shares of Securac's common stock owned by certain of Securac's trust stockholders, the beneficiaries of which include certain of Securac's directors and management. In connection with the Loan Agreement, Securac also issued to the Lender 87,500 restricted shares of common stock and caused an additional 87,500 shares to be transferred to the Lender by existing stockholders. Securac has committed to provide the Lender with additional issued shares in an amount equal to $175,000 worth of common stock in the event that the Note is not repaid in its entirety on or before July 31, 2006. In connection with the loan, Securac issued to the Lender a warrant to purchase 175,000 shares of Securac's common stock at an exercise price of US$0.13 per share. The warrant contains a cashless exercise provision and is exercisable at any time until May 11, 2011, five years from the Closing Date. Securac agreed to file, by September 1, 2006, a registration statement with the SEC covering resale of the shares underlying the warrant as well as restricted shares issued to the Lender in connection with the loan. Securac also granted piggyback registration rights to the Lender in connection with such shares. As a condition to the loan, two of Securac's directors, one of whom is also Securac's CEO, guaranteed repayment of the loan, which guarantees are secured by mortgages in their personal residences. Recourse under the guarantees is limited to the mortgages. Repayment of the loan is also guaranteed by Securac's wholly owned subsidiaries. Securac was introduced to the Lender through an agent. Securac agreed to and have paid that agent 10% of the loan proceeds. About Securac Corp Securac Corp. provides enterprise risk management software and services for the public sector, financial and Global 2000 companies. The Company has developed risk management and compliance solutions designed to enable organizations to identify, measure, and manage information and physical risks, and to assess their compliance against best practice standards. Going Concern Doubt As reported in Troubled Company Reporter on Dec. 5, 2005, Chisholm, Bierwolf & Nilson, LLC, raised substantial doubt about the Company's ability to continue as a going concern based on significant losses which have resulted in an accumulated deficit of CA$12,412,396 at September 30, 2005, a working capital deficit of approximately CA$2,010,000, and limited internal financial resources. As reported in the Troubled Company Reporter on June 5, 2006, the Company incurred a CA$527,332 net loss on CA$613,579 revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed CA$1,825,732 in total assets, CA$2,768,545 in total liabilities, and CA$942,813 in stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with CA$403,195 in total current assets available to pay CA$2,762,166 in total current liabilities coming due within the next 12 months. SECURAC CORPORATION: Signs Acquisition Deal with Edentify --------------------------------------------------------- Securac Corp. entered into a Letter of Intent with Edentify, Inc. regarding a possible acquisition of Securac by Edentify. Under the LOI, Securac agreed to an exclusivity period under which Securac is to cease any existing acquisition discussions with third parties and are not to initiate or solicit third party acquisition proposals prior to August 31, 2006, the date of expiration of the LOI. Securac also agreed to pay Edentify a break up fee in the amount of $50,000 plus reasonable costs incurred by Edentify in the event that prior to August 31, 2006 Securac either (i) fail to enter into a definitive acquisition agreement with Edentify (other than due to Edentify's action or inaction) and Securac materially breach their obligations under the LOI or (ii) Securac notify Edentify that Securac no longer desire to pursue the acquisition on the contemplated terms. The exact method by which the acquisition would be effected has not yet been determined, and there can be no assurance that a transaction with Edentify will be consummated within the contemplated time frame, or at all, Securac said. About Securac Corp Securac Corp. provides enterprise risk management software and services for the public sector, financial and Global 2000 companies. The Company has developed risk management and compliance solutions designed to enable organizations to identify, measure, and manage information and physical risks, and to assess their compliance against best practice standards. Going Concern Doubt As reported in Troubled Company Reporter on Dec. 5, 2005, Chisholm, Bierwolf & Nilson, LLC, raised substantial doubt about the Company's ability to continue as a going concern based on significant losses which have resulted in an accumulated deficit of CA$12,412,396 at September 30, 2005, a working capital deficit of approximately CA$2,010,000, and limited internal financial resources. As reported in the Troubled Company Reporter on June 5, 2006, the Company incurred a CA$527,332 net loss on CA$613,579 revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed CA$1,825,732 in total assets, CA$2,768,545 in total liabilities, and CA$942,813 in stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with CA$403,195 in total current assets available to pay CA$2,762,166 in total current liabilities coming due within the next 12 months. SOLUTIA INC: Disclosure Statement Hearing Rescheduled to Sept. 14 ----------------------------------------------------------------- The Hon. Prudence Carter Beatty of the U.S. Bankruptcy Court for the Southern District of New York adjourned the hearing to consider the adequacy of the Disclosure Statement explaining Solutia, Inc., and its debtor-affiliates' Joint Plan of Reorganization scheduled for June 20, 2006, to 11 a.m. on Sept. 14, 2006. A number of parties including, the Official Committee of Equity Security Holders, the Ad Hoc Committee of Solutia Noteholders, The Bank of New York, the U.K. Environment Agency, and JP Morgan Chase Bank, have filed objections to the Disclosure Statement. The Debtors filed their Joint Plan of Reorganization and Disclosure Statement on February 14, 2006. Based in St. Louis, Mo., Solutia, Inc. -- http://www.solutia.com/ -- with its subsidiaries, make and sell a variety of high- performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Wants to Amend & Assume Ammonia Supply Agreement ------------------------------------------------------------- Solutia, Inc., and its debtor-affiliates ask authority from the U.S. Bankruptcy Court for the Southern District of New York to enter into a Claim Agreement that amends and assumes the Ammonia Supply Agreement. As part of the examination and analysis of their prepetition contracts, the Debtors reviewed an ammonia sales and exchange agreement dated March 30, 1998, between Solutia Inc. and El Paso Merchant Energy-Petroleum Company, formerly known as Coastal Refining & Marketing, Inc. Solutia buys ammonia for its facility in Chocolate Bayou, Texas, which produces acrylonitrile needed in the manufacture of nylon. The facility has no ammonia storage on site and no cost-effective alternatives for delivery other than through El Paso's pipeline system, Jonathan S. Henes, Esq., at Kirkland & Ellis LLP, in New York, relates. Under the Ammonia Supply Agreement, Solutia is obligated to buy the first 10,000 tons of ammonia required for use by the Chocolate Bayou facility each month from El Paso. The pricing for the first 5,000 tons is based on a set formula and the pricing for the next 5,000 tons is calculated by discounting the market price for ammonia. In the event less than 10,000 tons of ammonia are required for that month, Solutia is not obligated to pay for any shortfall. If the Chocolate Bayou facility requires more than 10,000 tons of ammonia in a given month, Solutia may purchase it from a third party producer located in Freeport, Texas. El Paso is required to transport the purchased ammonia via its pipeline connected to the third party's terminal. El Paso's delivery fee, which is substantially below market rates, will not increase for the term of the Ammonia Supply Agreement. Thus, the Agreement is favorable to Solutia both with respect to the supply component and the delivery component, Mr. Henes points out. El Paso asserts unsecured Claim No. 1264 for $3,630,261 on account of outstanding invoices allegedly due prepetition from Solutia under the Ammonia Supply Agreement. On the other hand, Solutia asserts a claim against El Paso for certain damages relating to a 27-day ammonia pipeline outage that caused a shutdown of one unit at the Chocolate Bayou facility during September and October 2004. On Dec. 12, 2005, Solutia filed Adversary Proceeding No. 05-0334 against El Paso for the avoidance and recovery of preferential transfers totaling $6,778,396. Claim Agreement On Dec. 1, 2005, El Paso completed the sale of certain assets, including the ammonia pipeline system and the Ammonia Supply Agreement, to Buckeye Gulf Coast Pipe Lines, L.P. In connection with the sale of the pipeline assets, El Paso requested that Solutia not only assume the Ammonia Supply Agreement but also consent to the sale of the Agreement to Buckeye. The request led to extensive negotiations, the result of which was the resolution of El Paso's Claim and Solutia's Outage Claim, and Solutia's agreement to assume the Ammonia Supply Agreement. Pursuant to the Claim Agreement: (a) El Paso's Claim No. 1264 will be reduced and allowed as a general unsecured claim for $2,600,000; (b) the Outage Claim and all related claims, including any claim for cure amounts that El Paso may have with respect to the assumption of the Ammonia Supply Agreement, will be released; (c) Solutia will withdraw the Preference Action; and (d) Solutia will consent to El Paso's assignment of the Ammonia Supply Agreement to Buckeye. El Paso will waive any claim for outstanding prepetition amounts due under the Ammonia Supply Agreement in exchange for the allowance of Claim No. 1264. Mr. Henes asserts that entry into the Claim Agreement is in the estate's best interest because: (1) it provides a favorable resolution of the outstanding claims between the parties; (2) it secures a critical source of ammonia supply and transportation at below market prices; (3) it will conserve cash for Solutia's estate since El Paso agreed to reduce the amount of its Claim and waive its right to a cure payment; and (4) Solutia will avoid the cost and expense associated with litigating its disputes with El Paso while preserving the value of the Ammonia Supply Agreement. About Solutia Inc. Based in St. Louis, Mo., Solutia, Inc. -- http://www.solutia.com/ -- with its subsidiaries, make and sell a variety of high- performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. Solutia is represented by Richard M. Cieri, Esq., at Kirkland & Ellis. Daniel H. Golden, Esq., Ira S. Dizengoff, Esq., and Russel J. Reid, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Creditors, and Derron S. Slonecker at Houlihan Lokey Howard & Zukin Capital provides the Creditors' Committee with financial advice. (Solutia Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) SONITROL CORP: S&P Rates Proposed $175 Million Bank Facility at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' debt rating, and '3' recovery rating, to Berwyn, Pennsylvania-based Sonitrol Corporation's proposed $175 million first-lien senior secured bank facility. The bank facility will consist of a $10 million add-on to the existing $40 million revolving credit facility (due 2010) and a $125 million term loan C (due 2011). At the same time, Standard & Poor's affirmed its 'B' corporate credit rating and stable outlook. The bank loan rating, which is the same as the corporate credit rating, along with the '3' recovery rating, reflect Standard & Poor's expectation of meaningful (50%-80%) recovery of principal by creditors in the event of a payment default. Proceeds from the proposed term facility will be used to refinance Sonitrol's existing term loan and repay borrowings under the revolving credit facility, and will include a $10 million delayed draw available to fund subsequent acquisitions for up to six months. "The ratings reflect Sonitrol's modest presence in the highly competitive U.S. security alarm industry, high debt leverage and reliance on debt to fund its growth strategy," said Standard & Poor's credit analyst Ben Bubeck. These are offset partly by a largely recurring revenue base, and favorable industry growth trends. With annual revenues of approximately $80 million, Sonitrol is a second-tier provider of alarm monitoring equipment and services, providing sales, installation, and maintenance of security alarm systems to approximately 42,000 commercial customers in 45 of the top 100 U.S. markets. Including all Sonitrol franchisees, the company serves approximately 125,000 commercial customers and has direct operations in 93 of the top 100 U.S. markets. The company's growth strategy revolves around acquiring franchisees, in addition to developing its existing business base. Pro forma for the proposed bank facility (excluding the delayed draw), Sonitrol had approximately $120 million in operating lease- adjusted debt as of June 2006. STEWART & STEVENSON: Moody's Rates Proposed $150 Mil. Notes at B3 ----------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Stewart & Stevenson LLC, an oilfield services company providing capital equipment, aftermarket parts and services, and rental equipment. With a stable outlook, Moody's assigned a B2 Corporate Family Rating to S&S and a B3 rating to its proposed $150 million senior notes offering. Moody's also assigned a Speculative Grade Liquidity rating of SGL-3 to S&S. Proceeds from notes offering will be used to repay existing indebtedness. The rating is restrained by S&S's exposure to the volatile oilfield service equipment cycle; its small size and uneven historical financial performance; limited operating history under current management; and high leverage on a small base of fixed assets. The rating is supported by S&S's established market position and brand recognition; its long-standing relationships with a number of original equipment manufacturers; the diversification benefits associated with its mix of products and services; the potential for further improvements in productivity, greater focus, and expansion internationally; and a supportive near-term environment for oilfield service equipment. The rating outlook is stable and reflects Moody's expectations of continued strength in S&S's business over the near- and medium- term. This strength is supported by S&S's current and growing backlog, which adds visibility to expected performance over the next year or so, particularly with respect to its more volatile oilfield service equipment business. An improvement in the ratings would require greater size and scale, particularly in terms of asset base, improved focus in terms of product offerings, and a furtherance of the company's track record under current management, including ability to deliver on expectations, inclination to pursue acquisitions, and management of the capital structure. S&S offers a broad array of products and services split between equipment, aftermarket parts and services, and rental equipment. S&S's equipment business accounts for 54% of LTM revenues of which about 73% relates to oilfield service equipment, such as well stimulation equipment and coiled tubing equipment. This portion of the business is highly cyclical and is frequently considered a "second derivative" in terms of its exposure to oil and gas activity. While the near-term outlook for oilfield service equipment is currently robust, demand for this type of equipment can fall dramatically in a downturn as oilfield service providers can easily choose to defer additions or enhancements to their fleet. Evaluating how S&S's equipment business would perform in a downturn is difficult because of the significant restructuring and business repositioning occurring in prior years. The remaining 27% of S&S's equipment revenues includes items such as engines, fork lifts, transmissions, power generation, and rail car movers most of which are not related to oilfield service activity. S&S's aftermarket parts and supplies business provides a more stable revenue stream than equipment sales as it services a sizable installed base of both S&S's manufactured and stand-alone equipment. A meaningful portion of S&S's aftermarket parts and services business relates to oilfield service equipment, although because it is servicing an installed base, it is less volatile than equipment sales. S&S's rentals business is also relatively stable as this equipment is offered to a broad range of customers. S&S's products and services not related to oilfield service equipment provide a level of diversification that helps to soften cyclicality in S&S's revenue stream. S&S's profitability and returns in recent periods have been strong reflecting supportive market conditions and the benefits of the cost and productivity enhancements implemented in prior years. For the LTM period ended May 6, 2006, S&S reported EBITDA of $53.1 million, up significantly from fiscal years 2005 and 2004 when EBITDA was $39.1 million and $23.4 million, respectively. S&S's financial results in fiscal 2003, which would probably provide the best indication of more moderate industry conditions, were distorted by various non-recurring expenses, a high cost structure, and changes resulting from the consolidation and closure of a number of facilities. In terms of margins, S&S's gross margin percentage has remained relatively consistent over the last few years in the range of 15%-16%. S&S's aftermarket parts and services historically has had higher margins than the equipment business although equipment margins are picking up reflecting an increase in pricing power and more focused management of the business. EBITDA margins have increased from about 4% in fiscal 2004 to about 7% for the most recent quarter. S&S's leverage in terms of its capitalization is high with debt-to-book capitalization of approximately 73% based on pro forma debt of $202.2 million as of May 6, 2006. S&S was acquired on January 23, 2006 for $284.7 million, of which only $70 million was funded in equity. S&S's debt-to-EBITDA, is approximately 3.8 times, which is in line with Moody's expectations for single-B rated companies in this industry under current conditions. Assuming no other changes in the capital structure, Moody's expects that S&S will bring debt-to-EBITDA to under 3 times in fiscal 2006. The notes are notched down one from the Corporate Family Rating due to the size of S&S's senior secured credit facility relative to the amount of the notes. Once amended as expected, S&S's senior secured credit facility will be $125 million, of which approximately $49.2 million is expected to be outstanding on a pro forma basis. The SGL-3 rating reflects adequate liquidity. While S&S is expected to generate free cash flow on a projected basis over the next 12 months, Moody's notes that its operating cash flow has historically been volatile with periods of negative operating cash flow, including fiscal 2005 when cash flow used in continuing operations was $25 million. The most significant source of variability of S&S's operating cash flow has to do with the working capital intensive nature of its business. During an upturn, working capital builds whereas in a downturn or during a moderation in activity, working capital liquidates which provides a source of liquidity. Sources of external financing are adequate with availability under S&S's revolving credit facility of approximately $75.8 million, once amended as expected and pro forma for the notes offering. The credit agreement contains only one financial covenant which requires a minimum fixed charge coverage of 1.1 times. Moody's expects that S&S will maintain compliance with this and other covenants over the next 12 months. S&S's back-door liquidity, or the ability to sell assets to raise cash, is limited due to the secured nature of its credit facility. Stewart & Stevenson LLC is headquartered in Houston, Texas. STONE ENERGY: Moody's Puts B3 Rating on Proposed $225 Mil. Notes ---------------------------------------------------------------- Moody's Investors Service assigned a B3 rating to Stone Energy Corporation's proposed $225 million senior unsecured floating rate notes offering due 2010 and kept the company's B2 Corporate Family Rating and Caa1 Senior Subordinated Notes ratings under review direction uncertain. Moody's does not rate Stone's $300 million senior secured revolving credit facility. Proceeds from the offering will go to complete the planned purchase of Stone's working interest in two Gulf of Mexico properties through the exercise of preferential rights for approximately $190.5 million. The properties remain shut-in from last year due to hurricane related pipeline infrastructure damage. However, the company expects to spend approximately $15 million in incremental repair expenditures to bring the properties back-up during the fourth quarter of this year. The notes contain provisions for mandatory redemption post- consummation of the contemplated merger at par plus accrued interest, effectively making the notes a source of bridge financing for the purchase of the increased working interest in the properties. The notes are callable at any time by Stone at par plus accrued interest and also contain an optional put by the note-holders upon a change of control other than the ones currently contemplated, which would then enable the note-holders to put the notes to Stone for 100% of par plus accrued interest. Moody's estimates that Stone's leverage pro-forma for the acquisition and senior unsecured notes offering is $10.24/boe on the proved-developed reserve base, which includes the associated reserves Stone is expected to book with the increased working interest. On a total proved reserves base, when adding back the capex associated with bringing proved undeveloped reserves to production, leverage is approximately $13.87/boe. Moody's notes that current pro-forma leverage is at record levels for the company and at Caa levels when mapped to Moody's E&P Methodology. Stone's rating review direction uncertain continues to reflect the possibility that its ratings could be downgraded, upgraded, or confirmed depending on the final bidder for the company and how the acquisition is structured. If Energy Partners, Ltd's counter offer to Plains Exploration & Production's original bid to acquire Stone is completed as currently structured, a downgrade of Stone's ratings is possible given the expected amount of debt that will be used to complete the acquisition in addition to the high leverage currently employed at Stone. However, if PXP's original merger agreement with Stone proceeds, Stone's ratings may be confirmed or upgraded. Stone Energy Corporation is headquartered in Lafayette, Los Angeles. STRUCTURED ASSET: Fitch Lifts Rating on Class B4-II & B5-II Certs. ------------------------------------------------------------------ Fitch upgrades four and affirms 11 classes of Structured Asset Securities Corp. residential mortgage-backed certificates, as follows: Series 2002-8A Pools 1, 2, 3, 4, 5 and 6 -- Classes 1A, 2A, 3A, 4A, 5A, 6A affirmed at 'AAA'; -- Class B1-I affirmed at 'AA+'; -- Class B2-I affirmed at 'A+'; -- Class B3-I upgraded to 'BBB+' from 'BBB'. Series 2002-8A Pool 7 -- Class 7A affirmed at 'AAA'; -- Class B1-II affirmed at 'AA+'; -- Class B2-II affirmed at 'A+'; -- Class B3-II upgraded to 'BBB+' from 'BBB'; -- Class B4-II upgraded to 'BB+' from 'BB'; -- Class B5-II upgraded to 'BB' from 'B'. The affirmations reflect adequate relationships of credit enhancement to future loss expectations and affect $98.3 million of outstanding certificates. The upgrades reflect an improvement in the relationship of CE to future loss expectations and affect $1.6 million of outstanding certificates. The above classes have maintained CE or experienced slight growth in CE since the last rating action date. May 2005 remittance information indicates cumulative losses for Pools 1-6 and Pool 7 equal $337,895 and $345,227, respectively. The transaction is seasoned 49 months. The pool factor (current principal balance as a percentage of original) is 6% for Pools 1-6 and 17% for Pool 7. The mortgage loans were acquired by Lehman Capital or Lehman Brothers Bank from various banks and other mortgage lending institutions and are master serviced by Aurora Loan Services, Inc., which is rated 'RMS1-' by Fitch. The mortgage pools consist of conventional, adjustable and fixed-rate, fully amortizing residential mortgage loans extended to prime/AltA borrowers. USG CORP: Bankruptcy Emergence Prompts S&P to Lift Rating to BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on USG Corp. to 'BB+' from 'D', following the Chicago, Illinois-based building products company's emergence from bankruptcy on June 20, 2006. The outlook is stable. The 'BB+' senior unsecured bank loan rating on USG's proposed $2.8 billion senior unsecured bank facility is affirmed. The bank loan rating was assigned on June 1, 2006, based on the assumption that USG would exit bankruptcy as well as other conditions. "USG should benefit from favorable long-term fundamentals in overall construction activity and demographics," said Standard & Poor's credit analyst Kenneth L. Farer. "We could revise the outlook to negative if a more aggressive financial policy is adopted or if wallboard pricing declines to a sharply lower level for an extended period. We could revise the outlook to positive if the company is able to achieve its growth plans and adopts a more conservative financial policy." USG has the leading position in the U.S. gypsum wallboard and ceiling system markets, competitive cost position, flexible capital spending needs, and moderate financial policies. If Congress creates a national trust for payment of asbestos personal-injury claims by the 10th day after final adjournment of the 109th Congress, USG's total debt levels will decline significantly in 2007, because of the cancellation of its contingent note obligations, with cash balances of more than $1 billion. However, Standard & Poor's does not believe USG will maintain cash balances at this level because of potential acquisitions to expand its specialty building materials distribution business and possible commencement of shareholder initiatives. VERTICAL ABS: Fitch Rates $5 Million Class C Notes at BB+ --------------------------------------------------------- Fitch assigned these ratings to notes issued by Vertical ABS CDO 2006-2, Ltd. and Vertical ABS CDO 2006-2, Corp.(collectively, the co-issuers): -- $335 million class A-S1VF senior secured floating-rate notes due 2046 'AAA'; -- $52 million class A1 senior secured floating-rate notes due 2046 'AAA'; -- $41 million class A2 senior secured floating-rate notes due 2046 'AA'; -- $26 million class A3 secured deferrable interest floating- rate notes due 2046 'A'; -- $21 million class B mezzanine secured deferrable interest floating-rate notes due 2046 'BBB'; -- $5 million class C mezzanine secured deferrable interest floating-rate notes due 2046 'BB+'. The ratings of the class A-S1VF, A1 and A2 notes address the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings of the class A3, B and C notes address the likelihood that investors will receive ultimate and compensating interest payments, as per the governing documents, as well as the aggregate outstanding amount of principal by the stated maturity date. The ratings are based upon the capital structure of the transaction, the quality of the collateral, the Guaranteed Investment Contract account, and the overcollateralization coverage tests provided for within the indenture. During the four-year reinvestment period, the collateral manager may trade up to 15% of the total portfolio balance annually on a discretionary basis, along with any credit risk, defaulted or impaired securities as determined by the collateral manager. The collateral portfolio will be managed by Vertical Capital Investment Advisors. The quality of the collateral will have a maximum Fitch weighted average rating factor of 5.0 ('BBB/BBB-'). The proceeds of the notes will be used to purchase a portfolio of real estate based structured finance securities, consisting of approximately 95% credit default swaps of subprime residential mortgage-backed securities, and 5% CDS of collateralized debt obligations. VCIA also has the ability to include cash securities in the portfolio; however, at issuance the initial portfolio consisted entirely of synthetic securities. Structural features include the GIC account that has an initial balance of $160 million from cash proceeds. If there are any credit events with respect to the CDS in the portfolio, the GIC account will initially make credit protection payments. After the GIC account has been depleted, the class A-S1VF will be drawn to make credit protection payments (or for payment in the case of the physical settlement option). The outstanding drawn amount of the class A-S1VF receives an interest rate of 3-month London Interbank Offered Rate (LIBOR) plus 29 basis points (bps), while the undrawn portion of the senior swap will receive 16bps ongoing. During the four-year reinvestment period, the collateral manager may use cash principal collections to purchase additional collateral for the portfolio or may re-reference securities as the synthetic assets amortize. All reinvested and re-referenced assets must adhere to the eligibility criteria. The GIC account may also be drawn upon to purchase additional cash bonds during the reinvestment period; however, at all times the CDS notional must be equal to or less than the sum of the unfunded amount of the class A-S1VF and the GIC account. VCIA is a subsidiary of Vertical Capital, LLC (Vertical Capital), which was established in December 2002 as a Delaware limited liability corporation. Vertical Capital is owned 46% by its seven principals, 48% by Bank of America, and 6% by third party investors. Vertical Capital describes itself as a collateral manager dedicated to the structured finance securities markets. Vertical Capital currently manages seven existing CDOs and as of December 2005 had in excess of $5 billion in assets under management. WERNER LADDER: Wants to Hire Willkie Farr as Bankruptcy Counsel --------------------------------------------------------------- Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates ask permission from the U.S. Bankruptcy Court for the District of Delaware to employ Willkie Farr & Gallagher LLP as their lead bankruptcy counsel, nunc pro tunc to June 12, 2006. Willkie Farr will: (1) prepare, on the Debtors' behalf, all necessary documents in the areas of corporate finance, employee benefits, tax and bankruptcy law, commercial litigation, debt restructuring and asset dispositions; (2) take all necessary actions to protect and preserve the Debtors' estates during the pendency of their chapter 11 cases, including the prosecution of actions by the Debtors, the defense of actions commenced against the Debtors, negotiations concerning all litigation in which the Debtors are involved, and objection to claims filed against the Debtors' estates; (3) prepare, on Debtors' behalf, all necessary motions, applications, answers, orders, reports and papers in connection with the administration of their chapter 11 cases; (4) counsel the Debtors with regards to their rights and obligations as debtors-in-possession; and (5) perform all other necessary or requested legal services to the Debtors in their chapter 11 cases. Matthew A. Feldman, Esq., a member of Willkie Farr, is one of the lead professionals from the firm performing services to the Debtors. He discloses that Willkie Farr received a $1,073,337 retainer. Mr. Feldman further discloses that Willkie Farr's professionals bill: Professional Hourly Rate ----------- ----------- Counsel $255 - $865 Paralegals $115 - $225 Mr. Feldman assures the Court that Willkie Farr is a disinterested person as the term is defined in Section 101(14), as modified by Section 1107(b) of the Bankruptcy Code, and that the firm represents no interest adverse to the Debtors and their estates. Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, serves as the Debtors' counsel. The firm of Willkie Farr & Gallagher LLP represents the Debtors as its co-counsel. The Debtors hhave retained Rothschild Inc. as their financial advisor and invesement banker while Loughlin Meghji & Company serves as the Debtors' restructuring consultants. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) WERNER LADDER: Can Use Lenders' Cash Collateral on Interim Basis ---------------------------------------------------------------- Werner Holding Co. (DE), Inc., aka Werner Ladder Company, and its debtor-affiliates ask authority from the U.S. Bankruptcy Court for the District of Delaware to use their lenders' Cash Collateral. Prior to the Petition Date, the Debtors obtained financing under: Agreement Amount --------- ------ First Lien Credit Facility $230,000,000 with JPMorgan Chase Bank, N.A., as administrative agent Second Lien Credit Facility $100,000,000 with Credit Suisse First Boston, as administrative agent Accounts Receivable Financing Facility $50,000,000 with The CIT Group Variable Rate Demand Industrial $5,000,000 Building Revenue Bonds 10% Series A Senior Subordinated Notes due November 15, 2007 $135,000,000 The First Lien Credit Facility was initially comprised of a $180,000,000 first lien term loan and a $50,000,000 first lien revolving credit facility. The available borrowings under the First Lien Revolving Credit Facility are reduced by the aggregate face amount of letters of credit issued and outstanding pursuant to a $35,000,000 letter of credit sub-facility. As of March 31, 2006, the borrowings outstanding under the First Lien Term Loan were approximately $78,000,000. There were no funded borrowings outstanding under the First Lien Revolving Credit Facility as of that date. As of the Petition Date, approximately $28,000,000 of letters of credit remained outstanding. As of March 31, 2006, $101,400,000 was outstanding under the Second Lien Credit Facility. As of May 31, 2006, the borrowings outstanding under the A/R Securitization were approximately $48,000,000, and no more borrowings are available. As of March 31, 2006, $134,300,000 of bond debt was outstanding. Cash Collateral The First Lien Credit Facility and the Second Lien Credit Facility are secured by substantially all of the assets of Werner Holding Co., (DE), Inc., and its subsidiaries, and is guaranteed by each of Werner DE's subsidiaries (except for Werner Funding Corporation) and Werner Holding Co., (PA), Inc. The liens securing the Second Lien Credit Facility are second in priority to the liens securing the First Lien Credit Facility. Borrowings under the A/R Securitization are secured by the assets of Werner Funding. The Industrial Building Revenue Bonds are secured by a standby letter of credit issued under the First Lien Credit Facility. The Notes are general unsecured obligations of Werner DE, ranking subordinate in right of payment to all existing and future senior indebtedness of Werner DE. The Notes rank pari passu in right of payment with all other indebtedness of Werner DE that is subordinated to the senior indebtedness of Werner DE. Larry V. Friend, vice president, chief financial officer and treasurer of Werner Holding Co. (DE), Inc., relates that the Debtors generate cash from the use of the collateral pledged under the First Lien Credit Facility and the Second Lien Credit Facility. "The Debtors use Cash Collateral in the normal course of their business in order to continue to finance their operations, make essential payments, such as employee payroll, taxes, and to purchase goods." When the Debtors filed for bankruptcy, they had a cash balance of less than $3,000,000. Because the Debtors filed for bankruptcy, absent court authority pursuant to Section 363(c) of the Bankruptcy Code, the Debtors can't touch their lenders' cash collateral. Adequate Protection The Debtors propose to grant adequate protection to the Prepetition Secured Parties of their interests in the Prepetition Collateral. Specifically, the Debtors will grant their First Lien Lenders and Senior Prepetition Agent a valid, perfected replacement security interest in and lien on all Collateral, subject an subordinate only to: (i) permitted prepetition liens, (ii) postpetition liens granted to postpetition lenders, and (iii) carve-out for professional and U.S. Trustee fees. The Debtors will grant the same adequate protection to their Second Lien Lenders and Junior Prepetition Agent. The liens and security interest of the Second Lien Lenders are further subject to the Adequate Protection Liens granted to the First Lien Lenders and the Senior Prepetition Agent. The Adequate Protection Obligations will constitute superpriority claims. The Prepetition Lenders' claims will accrue and be allowed interest at the contractual rate. The Debtors will pay all reasonable fees and expenses required. Interim Approval At a hearing in Delaware, the Hon. Kevin J. Carey authorized the Debtors on an interim basis to use the Cash Collateral of (i) the Senior Prepetition Agent and the Senior Prepetition Lenders and (ii) to the extent that the value of the Prepetition Collateral exceeds the value of the Senior Prepetition Secured Obligations, the Junior Prepetition Agent and the Junior Prepetition Lenders, and the Prepetition Secured Lenders are directed to promptly turn over to the Debtors all Cash Collateral received or held by them; provided that the Prepetition Secured Lenders are granted adequate protection. The Court rules that the Prepetition Secured Lenders are entitled to adequate protection of their interest in the Prepetition Collateral, in an amount equal to the aggregate diminution in value of the Prepetition Secured Lenders' Prepetition Collateral. Judge Carey will convene the Final Cash Collateral Hearing on July 13, 2006, at 4 p.m. Objections must be filed and served no later than July 7, 2006. Headquartered in Greenville, Pennsylvania, Werner Co. -- http://www.wernerladder.com/-- manufactures and distributes ladders, climbing equipment and ladder accessories. The company and three of its affiliates filed for chapter 11 protection on June 12, 2006 (Bankr. D. Del. Case No. 06-10578). Kara Hammond Coyle, Esq., Matthew Barry Lunn, Esq., and Robert S. Brady, Esq., Young, Conaway, Stargatt & Taylor, LLP, serves as the Debtors' counsel. The firm of Willkie Farr & Gallagher LLP represents the Debtors as its co-counsel. The Debtors hhave retained Rothschild Inc. as their financial advisor and invesement banker while Loughlin Meghji & Company serves as the Debtors' restructuring consultants. At March 31, 2006, the Debtors reported total assets of $201,042,000 and total debts of $473,447,000. (Werner Ladder Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT STEVENS: Bankr. Court Okays Linerboard Suit Stipulation ----------------------------------------------------------------- The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York approved the stipulation entered into between WestPoint Home, Inc., WestPoint Stevens, Inc., and WestPoint Stevens Stores, Inc., with respect to the Linerboard Antitrust Litigation. The Stipulation provides, among other things, that: (1) the Claims in the Linerboard Antitrust Litigation previously owned and asserted by WPS and WestPoint Stores are "Purchased Assets" in accordance with the Asset Purchase Agreement; (2) Lester D. Sears, the Court-designated "Responsible Officer" for the winding down of the Debtors' estates, is authorized to consent to the substitution; (3) Mr. Sears will execute and deliver all instruments and documents and take all other necessary actions to implement and effectuate the substitution; and (4) it will not affect or modify the Asset Purchase Agreement and all other sale-related documents and orders. WestPoint Stevens, Inc., and WestPoint Stevens Stores, Inc., are plaintiffs in an antitrust action styled Procter & Gamble Company, et al. v. Stone Container Corporation, et al., Case No. 03 C 3944, in the United States District Court for the Northern District of Illinois. The Antitrust Action arose out of the Debtors' and their predecessors' purchase of various linerboard products -- corrugated containers and sheets. The Antitrust Action was consolidated along with the other similar cases in the consolidated class action styled In re Linerboard Antitrust Litigation, MDL No. 1261, currently pending in the United States District Court for the Eastern District of Pennsylvania. The Linerboard Antitrust Litigation alleges that the linerboard products manufacturers fixed prices of linerboard products in violation of federal antitrust laws. On July 8, 2005, Judge Drain authorized the sale of substantially all of WPS and WestPoint Stores' assets to Textile Co., Inc., an affiliate of Carl Icahn, as purchaser, pursuant to Section 363(b) of the Bankruptcy Code and in accordance with the terms of an asset purchase agreement. Under the Asset Purchase Agreement, WPS and WestPoint Stores sold their claims in the Linerboard Antitrust Litigation to Textile. Hence, WPS and WestPoint Stores do not own any claims against the defendants in the Linerboard Antitrust Litigation. WestPoint Home, Inc., as successor to Textile, became the sole and exclusive owner of WPS and WestPoint Stores' claims in the Linerboard Antitrust Litigation. Settlement Negotiations According to Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal, LLP, in New York, WestPoint Home's attorney, six defendants in the Linerboard Antitrust Litigation have engaged in productive settlement discussions with WestPoint Home to resolve the case in its entirety. However, the procedural posture of the case presents an anomaly: the real party-in-interest - WestPoint Home -- is not a plaintiff, and the current plaintiffs -- WPS and WestPoint Stores have no interest in any claims against the defendants. Mr. Wolfson believes that substituting WestPoint Home as a plaintiff and dismissing WPS and WestPoint Stores with prejudice would reflect the true posture of the case, and would allow the defendants to negotiate with the real party-in-interest as a plaintiff. Absent the change, the defendants would be in the untenable position of negotiating a settlement with a non-plaintiff, and then seeking dismissal of plaintiffs who own no claims and who are not controlled by the real party-in-interest, Mr. Wolfson points out. The Debtors' counsel, Michael F. Walsh, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the District Court that WPS and WestPoint Stores are nominal plaintiffs and have no interest in any claims in the Linerboard case. WPS and WestPoint Stores support WestPoint Home's arguments. The Stipulation Consequently, WestPoint Home and WPS and WestPoint Stores entered into a stipulation to memorialize their joint request. About WestPoint Stevens Headquartered in West Point, Georgia, WestPoint Stevens, Inc. -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTPOINT STEVENS: Judge Defers Case Dismissal Hearing to July 12 ----------------------------------------------------------------- The Hon. Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York further adjourns the hearing on WestPoint Stevens, Inc., and its debtor-affiliates' request to dismiss their Chapter 11 cases to July 12, 2006, at 10:00 a.m., Eastern Time. As reported in the Troubled Company Reporter on Aug. 16, 2005, the Debtors informed the Court that they have no ongoing business operations and are administratively insolvent, thus, confirmation of a chapter 11 plan is impossible in accordance with the Bankruptcy Code. The Debtors believed that a chapter 7 conversion is not advisable because it will increase administrative cost to the estate and require the appointment of a chapter 7 trustee. Headquartered in West Point, Georgia, WestPoint Stevens, Inc. -- http://www.westpointstevens.com/-- is the #1 US maker of bed linens and bath towels and also makes comforters, blankets, pillows, table covers, and window trimmings. It makes the Martex, Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux brands, as well as the Martha Stewart bed and bath lines; other licensed brands include Ralph Lauren, Disney, and Joe Boxer. Department stores, mass retailers, and bed and bath stores are its main customers. (Federated, J.C. Penney, Kmart, Sears, and Target account for more than half of sales.) It also has nearly 60 outlet stores. Chairman and CEO Holcombe Green controls 8% of WestPoint Stevens. The Company filed for chapter 11 protection on June 1, 2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq., at Weil, Gotshal & Manges, LLP, represents the Debtors in their restructuring efforts. (WestPoint Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) * BOOK REVIEW: The Health Care Marketplace ------------------------------------------ Author: Warren Greenberg, Ph.D. Publisher: Beard Books Paperback: 184 Pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1587981319/internetbankrupt Warren Greenberg is an economist who analyzes the healthcare field from the perspective that "health care is a business [in which] the principles of supply and demand are as applicable . . . as to other businesses." This perspective does not ignore or minimize the question of the quality of health, but rather focuses sharply on the relationship between the quality of healthcare and economic factors and practices. For better or worse, the American healthcare system to a considerable degree embodies the beliefs, principles, and aims of a free-market capitalist economic system driven by competition. In the early sections of The Health Care Marketplace, Greenberg takes up the question of how physicians and how hospitals compete in this system. "Competition among physicians takes place locally among primary care physicians and on a wider geographical scale among specialists. There is competition also between M.D.s and allied practitioners: for example, between ophthalmologists and optometrists and between psychiatrists and psychologists." Regarding competition between physicians in a fee-for-service practice and those in managed care plans, Greenberg cites statistics and studies that there was lesser utilization of healthcare services, such as hospitalization and tests, with managed care plans. Some of the factors affecting the economics of different areas of the healthcare field are self-evident, albeit may be little recognized or little realized by consumers. One of these factors is physician demeanor. Most readers would see a physician's demeanor as a type of personality exhibited during the course of the day. But after the author notes that "[c]ompetition also takes place in professional demeanor, location, and waiting time," the word "demeanor" takes on added meaning. The demeanor of a big-city plastic surgeon, for example, would be markedly different from that of a rural pediatrician. Thus, demeanor has a relationship to the costs, options, services, and payments in the medical field, and also a relationship to doctor education and government funding for public health. Greenberg does not follow his economic data and summarizations with recommendations or advice. He leaves it to the policymakers to make decisions on the basis of the raw economic data and indisputable factors such as physician demeanor. Nor does he take a political position when he selects what data to present or emphasize. It is this apolitical, unbiased approach that makes The Health Care Marketplace of most value to readers interested in understanding the economics of the healthcare field. Without question, a thorough understanding of the factors underlying the healthcare marketplace is necessary before changes can be made so that the health needs of the public are better met. Conditions that are often seen as intractable because they are regarded as social or political problems such as the overcrowding of inner-city health centers or preferential treatment of HMOs are, in Greenberg's view, problems amenable to economic solutions. According to the author, the basic economic principle of supply- and-demand goes a long way in explaining exorbitantly high medical costs and the proliferation of specialists. Greenberg's rigorous economic analysis similarly yields an informative picture of the workings of other aspects of the healthcare field. Among these are hospitals, insurance, employee health benefits, technology, government funding of health programs, government regulation, and long-term health care. In the closing chapter, Greenberg applies his abilities as a keen- eyed observer of the economic workings of the U.S. healthcare field to survey healthcare systems in three other countries: Canada, Israel, and the Netherlands. "An analysis of each of the three systems will explain the relative doses of competition, regulation, and rationing that might be used in financing of health care in the United States," he says. But even here, as in his economic analyses of the U.S. healthcare system, Greenberg remains nonpartisan and does not recommend one of these three foreign systems over the other. Instead he critiques the Canadian, Israel, and Netherlands systems -- "none [of which] makes use of the employer in the provision of health insurance," he says -- to prompt the reader to look at the present state and future of U.S. healthcare in new ways. The Health Care Marketplace is not a book of limited interest, and the author's focus on the economics of the health field does not make for dry reading. Healthcare is a central concern of every individual and society in general. Greenberg's book clarifies the workings of the healthcare field and provides a starting point for addressing its long-recognized problems and moving down the road to dealing effectively with them. Warren Greenberg is Professor of Health Economics and Health Care Sciences at George Washington University, and also a Senior Fellow at the University's Center for Health Policy Research. Prior to these positions, in the 1970s he was a staff economist with the Federal Trade Commission. He has written a number of other books and numerous articles on economics and healthcare. ********* 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 G. Lopez, Robert Max Quiblat, 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 ***