/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/060710.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, July 10, 2006, Vol. 10, No. 162 Headlines ADVANCED MICRO: Second Quarter Sales Estimated at $1.215 Billion ALTERNATIVE LOAN: S&P Junks Rating on Class B-4 Certificates AMERICAN FEED: Case Summary & 20 Largest Unsecured Creditors AMERICAN NATURAL: Defaults on Interest Payment for 8% Debentures AMTROL INC: S&P Lowers Subordinated Debt Rating to CC from CCC- APHTON CORP: Delivers Schedules of Assets & Debts to Del. Court APHTON CORP: Borrows Funds to Get European Regulatory OK on Drugs APHTON CORPORATION: Selects Life Science as Investment Banker ARGENT SECURITIES: S&P Lowers Class M-11 Certificate's Rating to B ASARCO LLC: Encycle Trustee Can Employ American Appraisers ASARCO LLC: Encycle Trustee Can Hire Gayle Doraine as Accountant AXM PHARMA: AMEX to Delist Securities on July 17 BAYOU GROUP: Committee Taps Preston Gates as Litigation Counsel BAYOU GROUP: Court Denies U.S. Trustee's Plea for Chap. 11 Trustee BROADCASTVISION INC: Case Summary & 20 Largest Unsecured Creditors CA INC: S&P Lowers Corp. Credit & Sr. Unsecured Debt Ratings to BB CALPINE CORP: First-Quarter Net Loss Increases to $589 Million CALPINE CORP: Rosetta Resources Wants to Assume Oil & Gas Leases CALPINE CORP: Wants Court To Further Extend Lease Decision Period CATHOLIC CHURCH: Spokane Parishes Want Claim Objections Overruled CG MULTIFAMILY: Has Until July 12 to File Schedules and Statement CHATTEM INC: Commences Sr. Sub. Note Holder Consent Solicitation CINRAM INT'L: Isidore Philosophem Steps Down as CEO COMMUNICATIONS CORP: Has Until July 20 To File Schedules COMMUNICATIONS CORP: Hires Fletcher Heald as Special Counsel COMMUNICATIONS CORP: White Knight Hires Pillsbury as Counsel CONTINENTAL GROUP: Moody's Rates Proposed $160 Million Loan at B3 DAKOTA ARMS: Case Summary & 20 Largest Unsecured Creditors DANA CORP: Assumes Full Ownership of Mexican Biz for $19.5 Mil. DIAMOND TRIUMPH: Moody's Junks Rating on $60 Million Sr. Notes DOORTOWN MANUFACTURING: Case Summary & 20 Largest Unsec. Creditors E K SAMPLER: Case Summary & 19 Largest Unsecured Creditors ENRON CORP: Merrill Lynch Agrees to Pay $29.5 Million Settlement ENTERGY NEW ORLEANS: City Council Wants to Quash Deposition ENTERGY NEW ORLEANS: Seeks Summary Judgment on Plaintiffs' Claims ELIZABETH ARDEN: Buys Brand Portfolio from Riviera Concepts ESCHELON TELECOM: Acquires Mountain Telecom For $40 Million Cash FEMONE INC: March 31 Balance Sheet Upside-Down by $2.3 Million FIRST FIN'L: Balance Sheet Upside Down by $3 Million at March 31 FOAMEX INTERNATIONAL: Expanded A&M Retention Gets Court's Nod FOAMEX INTERNATIONAL: Selling Hamblen Facility for $390,000 G+G RETAIL: Sells Remaining Assets to Max Rave for $300,000 GARRETT KAKER: Case Summary & 13 Largest Unsecured Creditors GENCORP INC: Completes Consent Solicitation for 9-1/2% Sr. Notes GENERAL MOTORS: Board Allows CEO to Negotiate with Renault-Nissan GREENMAN TECH: AMEX Files Form 25 to Strike Common Stock Listing GREGG APPLIANCES: March 31 Balance Sheet Upside Down by $5.1 Mil. GULF COAST: Court Approves $4.2 Million Asset Sale to Jered LLC GULF COAST: U.S. Trustee Amends Creditors Committee Appointment GULF COAST: Creditors Panel Hires Winstead Sechrest as Counsel H&E EQUIPMENT: Prices Tender Offer of Senior Notes HERBALIFE INT'L: To Undertake Potential Refinancing HIDDEN POINTE: Partner Doesn't Get Automatic Stay Protection INTEGRATED ELECTRICAL: Amends Eton Park Term Loan Agreement INTEGRATED ELECTRICAL: Restates December and March Financials INT'L GALLERIES: Winstead Sechrest Hired as Trustee's Counsel JEFFERY ENRIGHT: Case Summary & Four Largest Unsecured Creditors JMJ ENTERPRISES: Voluntary Chapter 11 Case Summary JOVE CORP: Posts $101,314 Net Loss in 2006 Fiscal 1st Quarter LIFEPOINT HOSPITALS: S&P Affirms BB Rating With Negative Outlook LIGAND PHARMACEUTICALS: Settles Securities Fraud Suit in Calif. LONDON FOG: Perry Ellis Demands $200,000 Expense Reimbursement MESABA AVIATION: U.S. Trustee Wants Monthly Reports Filed On Time MESABA AVIATION: Renews Request to Reject CBAs with Unions MESABA AVIATION: Court Approves Aircraft Use Pact With Northwest MIRANT CORP: U.S. Trustee Wants Ch. 11 Cases of 13 Units Dismissed MIRANT CORP: NY-Gen Unit to Repair Swinging Bridge Dam Property MUSICLAND HOLDING: Court OKs Stipulation Paying Postpetition Debts MYLAN LABORATORIES: S&P Raises Sr. Notes' Rating to BBB- from BB+ NES RENTALS: S&P Puts B- Rating on Proposed $430MM Loan Facility NORTEL NETWORKS: Performance Concerns Cues DBRS to Hold Ratings NORTHWEST AIRLINES: Flight Attendants Choose AFA-CWA as New Rep ONEIDA LTD: Equity Committee Hires Brown Rudnick as Counsel ONEIDA LTD: Equity Panel Slams PBGC's $50-Mil. "Allowed" Claim OPAL CONCEPTS: U.S. Trustee Wants Chapter 11 Cases Dismissed OWENS CORNING: Wants Plan-Filing Period Stretched to October 31 OWENS CORNING: OCI Chemical Holds $1.47-Mil. Gen. Unsecured Claim PARKWAY HOSPITAL: Exclusive Plan-Filing Period Extended to July 14 PATH 1: American Stock Exchange to Delist Securities on July 17 PEABODY ENERGY: Buys Australian Coal Company for $1.34 Billion PORTER HAYDEN: Dist. & Bankr. Court Approve Reorganization Plan PREDIWAVE CORP: Wants to Hire Latham & Watkins as Special Counsel PREMIER AUTOMOTIVE: Maryland Port Administration Can Evict Debtor REFCO INC: Judge Drain Extends Removal Period to September 13 REFCO INC: Court to Consider Exclusive Period Requests on July 20 REFCO INC: 3 Parties Object to Ch. 11 Trustee's Skadden Retention REMEDIATION FINANCIAL: Has Until Aug. to File Disclosure Statement RJZM LLC: Voluntary Chapter 11 Case Summary ROCKWOOD SPECIALTIES: S&P Affirms B+ Corporate Credit Rating ROLLER BEARING: Secures $150 Million Revolving Credit Facility SERACARE LIFE: Wants Plan-Filing Period Stretched to October 18 SILICON GRAPHICS: Taps Financial Balloting as Voting Agent SILICON GRAPHICS: Gets Okay to File Customer Lists Under Seal STEELCASE INC: Earns $18.2 Million in First Quarter Ended May 26 TEKELEC: Restates Quarterly Reports for 2005 and 2004 THOMAS EQUIPMENT: CEO Patty Recommends Closing of Korean Facility TOP FLIGHT: Case Summary & 19 Largest Unsecured Creditors TOWER AUTOMOTIVE: C&E Sales Wants Decision on Agreement TOWER AUTOMOTIVE: Judge Gropper Denies Committee's Stay Request TRUMP ENTERTAINMENT: Suspends Casino Operations in Atlantic City UNITY WIRELESS: Completes Celerica Ltd. Acquisition VENTAS INC: Taps J. Tellatin as Appraiser in Reset Right Process WELLMAN INC: S&P Affirms B+ Rating & Revises Outlook to Negative WESTERN APARTMENT: Case Summary & Nine Largest Unsecured Creditors WHITNEY INFORMATION: March 31 Balance Sheet Upside Down at $42.2MM WINN-DIXIE: Prepares Financial Projections Underpinning Plan WINN-DIXIE: Files Liquidation Analysis Under "Best Interests Test" WINN-DIXIE: Intends to Honor Secured Claims Under Various Pacts X-RITE INC: Completes $280 Million Amazys Holding Acquisition * BOND PRICING: For the week of July 3 - July 7, 2006 ********* ADVANCED MICRO: Second Quarter Sales Estimated at $1.215 Billion ---------------------------------------------------------------- Advanced Micro Devices reported that sales for the second quarter ended July 2, 2006 are expected to be $1.215 billion -- a 52% increase compared to the second quarter of 2005[1] and a 9% decline compared to the first quarter of 2006. The company's prior guidance for the second quarter anticipated overall sales to be flat to slightly down seasonally from the first quarter of 2006. Record AMD Opteron(TM) processor sales were driven by continued strong demand for single-, dual- and multi-socket configurations for servers and workstations. Sales of entry-level and mainstream mobile and desktop processors were down. AMD will report its second quarter 2006 results after market close on Thursday, July 20, 2006. About AMD Based in Sunnyvale, California, Advanced Micro Devices Inc. (NYSE: AMD) -- http://www.amd.com/-- is a global provider of microprocessor solutions for computing, communications and consumer electronics markets. * * * As reported in the Troubled Company Reporter on Jan. 31, 2006, Standard & Poor's Ratings Services raised its ratings on Sunnyvale, California-based Advanced Micro Devices Inc., including its corporate credit rating, to 'B+' from 'B'. In addition, the ratings on the microprocessor manufacturer were removed from CreditWatch with positive implications, where they were placed on Jan. 24, 2006. S&P says the ratings outlook is stable. As reported in the Troubled Company Reporter on Jan. 26, 2006, Fitch Ratings revised Advanced Micro Devices Inc.'s Rating Outlook to Positive from Stable and affirmed the company's 'B' issuer default rating. AMD's 'B/RR4' senior unsecured debt and 'BB/RR1' senior secured bank credit facility are also affirmed. Fitch's action affected approximately $1.2 billion of total debt. As reported in the Troubled Company Reporter on Jan. 26, 2006, Moody's Investors Service raised the corporate family rating of Advanced Micro Devices, Inc., two notches to Ba3, with a stable outlook. ALTERNATIVE LOAN: S&P Junks Rating on Class B-4 Certificates ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on the class B-4 certificate from Alternative Loan Trust 2003-J1 to 'CCC' from 'B'. At the same time, the 'BB' rating on the class B-3 certificate from the same transaction is placed on CreditWatch with negative implications. The lowered rating reflects actual and projected credit support percentages that are insufficient to maintain the previous rating. The current credit support for this class is 0.13%, down 35% from its original credit support of 0.20%. The rating on class B-3 is placed on CreditWatch with negative implications because Standard & Poor's expects additional losses to result from high delinquencies. As of the May 2006 distribution date, total delinquencies were 2.57%, with 0.89% categorized as seriously delinquent (90-plus days, foreclosure, and REO). Standard & Poor's will continue to closely monitor the performance of this transaction. If the delinquent loans translate into realized losses, additional downgrades will be taken, depending on the size of the losses and remaining credit support. In contrast, if the delinquent loans decrease without significant additional realized losses, the rating on class B-3 will be affirmed and removed from CreditWatch. The collateral for the transaction consists of a pool of 15-, 20-, and 30-year conventional, fixed-rate mortgage loans secured by first liens on one- to four-family properties. Rating Lowered: Alternative Loan Trust 2003-J1 Class To From ----- -- ---- B-4 CCC B Rating Placed on CreditWatch Negative: Alternative Loan Trust 2003-J1 Class To From ----- -- ---- B-3 BB/Watch Neg. BB AMERICAN FEED: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: American Feed & Farm Supply, Inc. aka South Omaha Supply aka Green Acres County Store 3310 H Street P.O. Box 7218 Omaha, Nebraska 68107 Bankruptcy Case No.: 06-80969 Type of Business: The Debtor is a wholesaler of agricultural equipment and supplies. Chapter 11 Petition Date: July 6, 2006 Court: District of Nebraska (Omaha Office) Debtor's Counsel: Jenna B. Taub, Esq. Robert Craig P.C. 1321 Jones Street Omaha, Nebraska 68102 Tel: (402) 408-6000 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Poly Excell LLC $516,491 Building A16-A Clearfield, UT 84016 International Nutritional Inc. $308,710 P.O. Box 3366 Freeport Center Omaha, NE 68176-0405 R.G. Applegate Steel Co. $270,523 P.O. Box 68 Saratoga, IN 47382 Land-O-Lakes Farmland Feed LLC $186,457 P.O. Box 60000 San Francisco, CA 94160-3760 Purina Mills Inc. $146,843 P.O. Box 1450 Northwest, Suite 7793 Minneapolis, MN 55485 Kingman Dedicated Service $132,741 Norcross Safety Products LLC $120,021 Miller Manufacturing $97,632 Keystone Steel & Wire $96,641 Brown Logistics, Inc. $94,909 Morton Salt $92,588 Knox Fertilizer Co. $83,350 Century Livestock Feeders $74,721 Cargill Salt Division $60,940 Newfield Seeds $55,703 Behlen Manufacturing Co. $55,657 Diamond Pet Foods $54,643 Midwest AG Commodities Inc. $53,324 Sweetlix Co. $53,225 Milk Products Inc. $49,200 AMERICAN NATURAL: Defaults on Interest Payment for 8% Debentures ---------------------------------------------------------------- American Natural Energy Corporation failed to meet the interest payment due on June 30, 2006 on its outstanding 8% Convertible Secured Debentures due Sept. 30, 2006. In the event that the interest payment is not met today, July 10, 2006, ANEC expects that Computershare Trust Company of Canada, the Trustee under the Indenture governing the Debentures, will notify the debentureholders of an Event of Default pursuant to Section 7.1(b) of the Trust Indenture for ANEC's failure to timely pay interest due on June 30, 2006. Under those circumstances, the Trustee may, and upon request in writing from the holders of not less than 25% of the principal amount of the Debentures then outstanding, will declare the outstanding principal of and all interest on the Debentures and other amounts outstanding under the Indenture to be immediately due and payable. In addition, the Trustee will have the right to enforce its rights on behalf of the Debenture holders against the collateral for the Debentures. The Debentures are collateralized by substantially all of ANEC's assets. At June 30, 2006, the Debentures are outstanding in the principal amount of $11,025,000 and accrued and unpaid interest at that date amounts to $220,500. ANEC is continuing its efforts to raise additional equity to pay the current interest obligation, to fund its Louisiana drilling operation and to re-finance other outstanding obligations. About American Natural Headquartered in Tulsa, Oklahoma, American Natural Energy Corp. (TSX Venture: ANR.U) -- http://annrg.com/-- is engaged in the acquisition, development, exploitation and production of oil and natural gas. Going Concern Doubt As reported in the Troubled Company Reporter on May 22, 2006, PricewaterhouseCoopers LLP expressed substantial doubt about American Natural Energy Corporation's ability to continue as a going concern after it audited the Company's financial statements for the years ended Dec. 31, 2005, and Dec. 31, 2004. The auditing firm pointed to the Company's substantial losses, working capital deficit and accumulated deficit. At March 31, 2006, the Company's balance sheet showed $7,128,762 in total assets and $21,039,132 in total liabilities, resulting in a $13,910,370 stockholders' deficit. AMTROL INC: S&P Lowers Subordinated Debt Rating to CC from CCC- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on West Warwick, Rhode Island-based AMTROL Inc. to 'CCC' from 'CCC+' and its subordinated debt rating to 'CC' from 'CCC-'. The outlook is negative. "The downgrade reflects our growing concern that AMTROL may not be able to refinance the majority of its $180 million of debt by December 2006 as required," said Standard & Poor's credit analyst Lisa Tilis. The company has not yet announced a plan, and Standard & Poor's believes it could prove difficult for AMTROL to obtain financing given its low ratings. The company is currently exploring various means to recapitalize or restructure its debt, including the possible sale of all or portions of the business. If unsuccessful, the company may default on its debt obligations. The ratings reflect AMTROL's: * modest scope of operations; * limited product diversity; * very aggressive financial profile; * thin credit protection measures; and * increasing risk of default. APHTON CORP: Delivers Schedules of Assets & Debts to Del. Court --------------------------------------------------------------- Aphton Corp. delivered to the U.S. Bankruptcy Court for the District of Delaware its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $512,200 C. Property Claims as Exempt D. Creditors Holding Secured Claims E. Creditors Holding Unsecured Priority Claims $149,936 F. Creditors Holding Unsecured Nonpriority Claims $2,937,669 G. Executory Contracts and Unexpired Leases H. Codebtors I. Current Income of Individual Debtors J. Current Expenditures of Individual Debtors -------- ---------- Total $512,000 $3,087,605 About Aphton Headquartered in Philadelphia, Pennsylvania, Aphton Corporation -- http://www.aphton.com/-- is a clinical stage biopharmaceutical company focused on developing targeted immunotherapies for cancer. Aphton filed for chapter 11 protection on May 23, 2006. (Bankr. D. Del. Case No. 06-10510). Michael G. Busenkell, Esq., at Eckert Seamans Cherin & Mellot, LLC, represents the Debtor in its restructuring efforts. William J. Burnett, Esq., at Flaster Greenberg, represents the Official Committee of Unsecured Creditors. Aphton estimated its assets and debts at $1 million to $10 million when it filed for protection from its creditors. At Dec. 31, 2005, Aphton's balance sheet showed assets totaling $6,775,858 and debts totaling $11,641,182. APHTON CORP: Borrows Funds to Get European Regulatory OK on Drugs ----------------------------------------------------------------- The Honorable Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware allowed Aphton Corporation to borrow funds from Receptor Biologix, Inc. Aphton will use the funds to pay its consultants working to secure approval for Insegia with the European Medicines Agency -- a European regulatory agency analogous to the Food and Drug Administration in the United States. Ronald S. Gellert, Esq., in Wilmington, Delaware, told the Court that the Debtor does not have sufficient available sources of working capital to compensate Gillian Gregory and Paul Broome. The Debtor needs to pay $50,000 to Messrs. Gregory and Broome to secure the approval, so it can market Insegia to other drug companies. The loan will earn an 8% annual interest and matures on the earliest of: * 10 days after the closing of the sale of Insegia, if the winning bidder is not Receptor Biologix; * the closing date of the Insegia sale if Receptor Biologix wins the auction; or * August 31, 2006. The Court will conduct a hearing regarding the sale of substantially all of the Debtor's assets at 11:00 a.m., Eastern Time, on July 14, 2006. Pursuant to Sec. 364(c) of the Bankruptcy Code, all obligations under the DIP facility will have superpriority status over all other claims against the Debtor. Headquartered in Philadelphia, Pennsylvania, Aphton Corporation -- http://www.aphton.com/-- is a clinical stage biopharmaceutical company focused on developing targeted immunotherapies for cancer. Aphton's products seek to empower the body's own immune system to fight disease. Aphton filed for chapter 11 protection on May 23, 2006. (Bankr. D. Del. Case No. 06-10510). Michael G. Busenkell, Esq., at Eckert Seamans Cherin & Mellot, LLC, represents the Debtor in its restructuring efforts. William J. Burnett, Esq., at Flaster Greenberg, represents the Official Committee of Unsecured Creditors. Aphton estimated its assets and debts at $1 million to $10 million when it filed for protection from its creditors. At Dec. 31, 2005, Aphton's balance sheet showed assets totaling $6,775,858 and debts totaling $11,641,182. APHTON CORPORATION: Selects Life Science as Investment Banker ------------------------------------------------------------- Apthon Corp. asks the U.S. Bankruptcy Court for the District of Delaware for permission to employ Life Science Group as its investment bankers, nunc pro tunc to May 23, 2006. Life Science will assist the Debtor in evaluating its business model. The firm will also provide investment-banking services including, but not limited to, marketing and obtaining offers for the sale or other transactions related to the sale process. Life Science said it will charge the Debtor solely for its services on a percentage basis for a sale or other transaction. The firm will receive a 5% fee on a sale less than $5,000,000 and an additional 3% for any amount in excess of $5,000,000. Life Science will only be entitled to payment if the transaction approved by the Court is closed with a party that Life Science brought to the Debtor. To the best of the Debtor's knowledge, Life Science does not hold any material interests adverse to the estate and is a "disinterested person" as that term is define in Sec. 101(14) of the Bankruptcy Code. Headquartered in Philadelphia, Pennsylvania, Aphton Corporation -- http://www.aphton.com/-- is a clinical stage biopharmaceutical company focused on developing targeted immunotherapies for cancer. Aphton filed for chapter 11 protection on May 23, 2006. (Bankr. D. Del. Case No. 06-10510). Michael G. Busenkell, Esq., at Eckert Seamans Cherin & Mellot, LLC, represents the Debtor in its restructuring efforts. William J. Burnett, Esq., at Flaster Greenberg, represents the Official Committee of Unsecured Creditors. Aphton estimated its assets and debts at $1 million to $10 million when it filed for protection from its creditors. At Dec. 31, 2005, Aphton's balance sheet showed assets totaling $6,775,858 and debts totaling $11,641,182. ARGENT SECURITIES: S&P Lowers Class M-11 Certificate's Rating to B ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating on the class M-11 certificate from Argent Securities Inc.'s series 2004-PW1 to 'B' from 'BB' and placed it on CreditWatch with negative implications. In addition, the rating on the class M-10 certificate is placed on CreditWatch with negative implications. Lastly, the ratings on the remaining classes from this series are affirmed. The lowered rating and CreditWatch placements are the result of realized losses that have continuously reduced overcollateralization. During the previous six remittance periods, realized losses have exceeded excess interest by approximately $365,000. The combination of rapid principal prepayments and the failure of excess interest to cover monthly losses has caused an overcollateralization deficiency of $6.959 million. As of the June 2006 distribution date, there was $3.016 million in overcollateralization available, below its target balance of $9.975 million by approximately 70%. Severely delinquent loans represent 16.43% of the current pool balance, while cumulative realized losses represent 1.32% of the original pool balance. Standard & Poor's will continue to monitor the performance of this transaction. If delinquencies continue to translate into realized losses, and the losses continue to exceed excess interest, the rating agency will initiate additional negative rating actions. Conversely, if excess interest is sufficient to cover monthly losses in future remittance periods, and overcollateralization rebuilds toward its target balance, the ratings will be affirmed and removed from CreditWatch. Credit support for this transaction is provided through a combination of excess spread, overcollateralization, and subordination. The underlying collateral consists of conventional, fully amortizing, adjustable- and fixed-rate mortgage loans, which are secured by first-liens on one- to four- family residential properties. Rating Lowered And Placed On CreditWatch Negative: Argent Securities Inc. Asset backed pass-through certificates series 2004-PW1 Class To From ----- -- ---- M-11 B/Watch Neg. BB Rating Placed On CreditWatch Negative: Argent Securities Inc. Asset backed pass-through certificates series 2004-PW1 Class To From ----- -- ---- M-10 BB+/Watch Neg. BB+ Ratings Affirmed: Argent Securities Inc. Asset backed pass-through certificates series 2004-PW1 Class Rating ----- ------ A-1, A-2, A-3, IO-1, IO-2 AAA M-1 AA+ M-2 AA M-3 AA- M-4 A+ M-5 A M-6 A- M-7 BBB+ M-8 BBB M-9 BBB- ASARCO LLC: Encycle Trustee Can Employ American Appraisers ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi approved the employment of American Appraisers, Inc., as the appraiser for Mike Boudloche, the Chapter 7 trustee of Encycle/Texas, Inc. As reported in the Troubled Company Reporter on May 31, 2006, American Appraisers will assist the trustee in appraising and evaluating 61 acres of real property in Corpus Christi, Texas. Mr. Boudloche said AAI employees have extensive knowledge and experience in rendering real estate appraisals in Nueces County, Texas, and other areas. AAI will be paid $5,000, with a retainer of $2,500. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Encycle Trustee Can Hire Gayle Doraine as Accountant ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi approved the employment of Gayle L. Doraine, CPA, PC, as accountant for Mike Boudloche, the Chapter 7 Trustee of Encycle/Texas, Inc. As reported in the Troubled Company Reporter on June 20, 2006, Mr. Boudloche said that in order to perform his services as the Chapter 7 Trustee, he will need the services of a certified public accountant to: (a) prepare federal tax returns; (b) negotiate with the Internal Revenue Service; and (c) account services for the estate. ASARCO LLC and its debtor-affiliates will pay the Doraine firm based on its standard hourly rates: Professional Hourly Rates ------------ ------------ Partner/Shareholder $175 Senior Accountant $150 Staff Accountant $125 Bookkeeper/Clerk $75 Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000). AXM PHARMA: AMEX to Delist Securities on July 17 ------------------------------------------------ The American Stock Exchange LLC(R) reported its final determination to remove the common stock of AXM Pharma, Inc. from listing on the Exchange, and filed an application on Form 25 to strike the Securities from listing with the Securities and Exchange Commission. The delisting will become effective on July 17, 2006 unless postponed by the SEC. Pursuant to its rules, the Exchange provided notice to AXM Pharma, Inc. of the decision to delist the Securities and an opportunity to appeal the decision to a panel designated by the Exchange's Board of Governors. About AXM Pharma Headquartered in City of Industry, California, AXM Pharma, Inc. (AMEX: AXJ) -- http://www.axmpharma.com/-- through its wholly owned subsidiary, AXM Pharma Shenyang, Inc., is a manufacturer of proprietary and generic pharmaceutical products, which include injectables, capsules, tablets, liquids and medicated skin products for export and domestic Chinese sales. AXM Shenyang is located in the City of Shenyang, in the Province of Liaoning, China. AXM Shenyang has an operating history of approximately 10 years. Going Concern Doubt Lopez, Blevins, Bork & Associates, LLP, in Houston, Texas, raised substantial doubt about AXM Pharma, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's losses and need for additional capital. BAYOU GROUP: Committee Taps Preston Gates as Litigation Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors in Bayou Group, L.L.C., and its debtor-affiliates' chapter 11 cases asks the U.S Bankruptcy Court for the Southern District of New York to retain Preston Gates Ellis & Rouvelas Meeds, L.L.P., as its litigation counsel, nunc pro tunc to June 9, 2006. Preston Gates will: a) monitor litigation against third parties; b) prosecute litigation against third parties, if authorized by the Committee and Debtors; c) provide advice on avoidance and other claims being prosecuted by the Debtors; d) handle general administrative matters for the Committee; e) serve as the Committee's liaison with certain government entities, including the United Sates Attorney's Office, the SEC, the CFTC, and the Arizona Attorney General's Office; f) serve as the Committee's liaison with the Debtors, including the monitoring of professional fees by the Debtors; and g) defend any challenges to the receiver's right to serve as debtor-in-possession. The Debtors tell the Court that the Firm's professionals bill: Designation Hourly Rate ----------- ----------- Partners $675 - $305 Associates $330 - $180 Paraprofessionals $195 - $ 60 Professional Hourly Rate ------------ ----------- Richard A Kirby, Esq.(partner) $580 Philip M. Guess, Esq.(partner) $370 Scott P. Lindsay, Esq.(associate) $210 To the best of the Debtor's knowledge, the Firm does not represent any interest adverse to the Debtors or their estate. Mr. Kirby can be reached at: Richard A. Kirby, Esq. Preston Gates Ellis & Rouvelas Meed, L.L.P. 1735 New York Avenue NW Suite 500 Washington, D.C., 20006 Tel: (202) 661-3730 Fax: (202) 331-1024 http://www.prestongates.com/ Headquartered in Chicago, Illinois, Bayou Group, LLC, operates and manages hedge funds. The company and its affiliates filed for chapter 11 protection on May 30, 2006 (Bankr. S.D.N.Y. Case No. 06-22306). Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BAYOU GROUP: Court Denies U.S. Trustee's Plea for Chap. 11 Trustee ------------------------------------------------------------------ The Honorable Adlai S. Hardin Jr. of the U.S. Bankruptcy Court for the Southern District of New York denied the request of the U.S. Trustee for Region 2 to appoint a chapter 11 trustee in Bayou Group, LLC and its debtor-affiliates' bankruptcy proceedings. The U.S. Trustee told the Bankruptcy Court that prior to filing for chapter 11, the federal district court appointed Jeffrey Marwil, Esq., at Jenner & Block, as the Debtors' federal equity receiver. The U.S. Trustee contended that in chapter 11 cases where a debtor is not in possession, the debtor's chapter 11 case must be administered by a disinterested trustee with clear legal authority to pursue litigation and propose a plan. The U.S. Trustee said that as receiver, Mr. Marwil has limited ability to act as a fiduciary in a bankruptcy case. The U.S. Trustee argued that this can be construed as cause to appoint a chapter 11 trustee. The U.S. Trustee also argued that appointment of a chapter 11 trustee would be in the best interest of creditors. Headquartered in Chicago, Illinois, Bayou Group, LLC, operates and manages hedge funds. The company and its affiliates filed for chapter 11 protection on May 30, 2006 (Bankr. S.D.N.Y. Case No. 06-22306). Elise Scherr Frejka, Esq., at Dechert LLP, represents the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors is represented by Kasowitz, Benson, Torres & Friedman LLP. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. BROADCASTVISION INC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: BroadcastVision Inc. 5126 Clareton Drive, Suite 160 Agoura Hills, California 91301 Tel: (800) 770-9770 Bankruptcy Case No.: 06-11051 Type of Business: The Debtor is a world leader in fitness entertainment, serving millions of people in thousands of fitness and athletic training centers, hotels and resorts, corporations, government, and community facilities. The Debtor introduced fitness entertainment in 1989, providing health and fitness facilities with exercise-friendly workout environments offering multiple entertainment choices. See http://broadcastvision.com/ Chapter 11 Petition Date: July 6, 2006 Court: Central District Of California (San Fernando Valley) Judge: Maureen Tighe Debtor's Counsel: M. Jonathan Hayes, Esq. 21800 Oxnard Street, Suite 840 Woodland Hills, California 91367 Tel: (818) 710-3656 Fax: (818) 710-3659 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Echo Financial $730,000 P.O. Box 427 Murrieta, CA 92564 Advanced Video & Communication Goods and Services $468,492 3F 669 SEC. 4 Chung-Hsing Road Chudung Hsin-Chu 310 Taiwan, Republic of China Work Out World Judgment Goods $134,137 c/o Kevin Salute 6345 Balboa Block, Suite 330 Encino, CA 91316 Microtips Technology, Inc. $98,773 12th Floor No. 31 Lane 169 Kang Ning Street His-Chih, Taipei Hsien Taiwan, Republic of China Mastek-Innerstep $77,011 3280 East Hemisphere Loop Suite 140 Tucson, AZ 85706 Internal Revenue Service $70,000 Franchise Tax Board $55,000 Phyllis Rosenberg Loan $30,000 Wells Fargo $39,416 The Call Center aka Onelink $24,720 MR Electronic Assembly $21,215 Ronald S. Parsons $18,860 Primedia Business Exhibitions $17,850 Koss Corporation $17,444 DHL-968452417 $16,450 Brite Smile Customer Refund $16,231 Drallar $14,728 DHL-915621084 $14,186 Big Stand Enterprise Co. Ltd. $12,525 Advantage Fitness Products $12,000 CA INC: S&P Lowers Corp. Credit & Sr. Unsecured Debt Ratings to BB ------------------------------------------------------------------ Standard & Poor's Rating Services lowered its corporate credit and senior unsecured debt ratings on Islandia, New York-based CA Inc. to 'BB' from 'BBB-', and placed them on CreditWatch with negative implications. "The rating action follows the company's announcement that its board of directors authorized a $2 billion share repurchase that partly will be debt-financed," said Standard & Poor's credit analyst Philip Schrank. The rating downgrades reflect Standard & Poor's assessment that CA no longer possesses an investment-grade financial policy in light of the announced share repurchases. If the repurchase is financed solely with debt, pro forma total debt to EBITDA could rise to above the 4x range from about 2x currently. However, liquidity is provided by cash of $1.9 billion as of March 31, 2006, compared with about $1.8 billion of debt securities. Additionally, CA did not meet the deadline for filing its 10-K, and likely will need to restate previously reported results and report additional material weaknesses. The delay is from accounting issues surrounding its stock option grants and revenue recognition. As a result of the filing delay, CA could violate the terms of both its bank agreement and bond indentures. Under the undrawn $1 billion revolving credit facility, an event of default occurs if the lenders gives a notice of default, and CA has 30 days to cure from receiving a notice. Under the bond indenture, an event of default will occur if CA receives a notice of default from the trustee or the holders of 25% in aggregate principal amount of the outstanding debt of such series, and CA does not cure within 90 days of receiving the notice. At the 'BB' rating level, Standard & Poor's expectation is that CA will continue to generate free cash flow exceeding $1 billion, and manage its debt levels at about 4x or below over the intermediate term. The rating agency expects acquisitions to continue, albeit at a more moderate pace. Rating support is provided by: * a stable revenue base; * favorable business prospects; and * strong cash flow generation. The company's diversified, high-margin software portfolio is viewed as defensible because of high switching costs and entrenched customer Relationships. Standard & Poor's will meet with management to evaluate the pro forma capital structure and financing plans, review management's financial policy and growth initiatives, and the progress toward filing its financial statements. CALPINE CORP: First-Quarter Net Loss Increases to $589 Million -------------------------------------------------------------- Calpine Corporation's first quarter loss for the year 2006 widened to $589,400,000 from $168,700,000 from last year due to revenue decline and reorganization costs, Dale Crofts and Jim Polson at Bloomberg News reports. According to Bloomberg, the first-quarter results includes $298,200,000 in reorganization costs before taxes, reflecting expenses for assuming a power plant contract in Canada. The Company also disclosed a 34% drop in sales to $1.36 billion from $2.05 billion. Since filing for bankruptcy on Dec. 20, 2005, Calpine has fired 400 employees or 26% of its workforce. The Company also intends to sell more than 20% of their plants to pare annual costs by about $150,000,000. However, Reuters relates that Calpine is working on a growth plan to generate positive operating cash flow in 2007. A full-text copy of the Company's Quarterly Report in Form 10-Q is available for free at http://ResearchArchives.com/t/s?d1e About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. CALPINE CORP: Rosetta Resources Wants to Assume Oil & Gas Leases ---------------------------------------------------------------- Rosetta Resources Inc. filed, on July 7, 2006, its objection in response to Calpine Corporation's motion in the U.S. Bankruptcy Court for the Southern District of New York to assume certain oil and gas leases under Section 365 of the Bankruptcy Code. The hearing on the motion, which will include consideration of Rosetta's objection, is set for July 12, 2006. As reported in the Troubled Company Reporter on July 4, 2006, Calpine Corporation filed, on June 29, 2006, a motion with the U.S. Bankruptcy Court for the Southern District of New York, where its bankruptcy proceeding is pending. In the motion Calpine asks the Court to assume certain oil and gas leases Calpine previously agreed to sell to Rosetta Resources Inc., to the extent the leases constitute "unexpired leases of non-residential real property" and were not fully transferred to Rosetta as a result of Calpine's filing for bankruptcy. Rosetta's Objection In its objection, Rosetta asserts that oil and gas leases constitute interests in real property that are not subject to "assumption" under the Bankruptcy Code. While the court may nonetheless desire to enter a precautionary order, Rosetta also specifically requests the court eliminate from the order certain federal offshore leases from the Calpine motion because these properties were fully conveyed to Rosetta in July 2005, and the Minerals Management Service has subsequently recognized Rosetta as owner and operator of these properties. Rosetta further requests in its objection that any order entered by the Court be without prejudice to, and fully preserve Rosetta's rights, claims and legal arguments regarding the characterization and ultimate disposition of the remaining described oil and gas properties. Since July 7, 2005, Rosetta has continuously operated all of the properties held under the oil and gas leases described in the motion. In its objection, Rosetta has also urged the court to require the parties to promptly address and resolve any remaining issues under the pre-bankruptcy definitive agreements with Calpine and has proposed to the court that the parties seek arbitration (or at least mediation) to complete: (i) Calpine's conveyance of the cured consent properties to Rosetta; (ii) Calpine's execution of documents and performing tasks required under "further assurances" provisions of the agreements with respect to certain of the oil and gas properties for which Rosetta has already paid Calpine; and (iii) Resolving the final amounts, Rosetta is to pay Calpine, which Rosetta has concluded are approximately $80 million, consisting of roughly $68 million for the cured consent properties and $12 million in other true-up payment obligations. About Rosetta Resources Based in Houston, Texas, Rosetta Resources Inc. (NASDAQ: ROSE) -- http://www.rosettaresources.com/-- is an independent oil and gas company engaged in acquisition, exploration, development and production of oil and gas properties in North America. The Company's operations are concentrated in the Sacramento Basin of California, South Texas, the Gulf of Mexico and the Rocky Mountains. Rosetta is a Delaware corporation. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. CALPINE CORP: Wants Court To Further Extend Lease Decision Period ----------------------------------------------------------------- Calpine Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to further extend the time within which they may assume or reject non-residential real property leases until the confirmation date of each applicable Debtor-Lessee's plan of reorganization. As reported in the Troubled Company Reporter on April 12, 2006, the Debtors sought an extension of 90 days to assume or reject unexpired leases of nonresidential real properties. The Court extended the Debtors' lease decision period until July 10, 2006. As of June 28, 2006, the Debtors filed six omnibus assumption motions and have rejected nine office leases and three office subleases. However, the Debtors told the Court that due to the complexity of their corporate structure and business operations, they may be lessees under unidentified unexpired leases among domestic Debtor and non-Debtor affiliates in the United States. The Debtors explained that premature rejection of intercompany leases may result in potential defaults under their financing arrangements and may distract management from business planning necessary to formulate a plan. About Calpine Corp. Headquartered in San Jose, California, Calpine Corporation -- http://www.calpine.com/-- supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance and operational services. The Company filed for chapter 11 protection on Dec. 20, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-60200). Richard M. Cieri, Esq., Matthew A. Cantor, Esq., Edward Sassower, Esq., and Robert G. Burns, Esq., Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. As of Dec. 19, 2005, the Debtors listed $26,628,755,663 in total assets and $22,535,577,121 in total liabilities. (Calpine Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Spokane Parishes Want Claim Objections Overruled ----------------------------------------------------------------- Certain parishes in Spokane ask the U.S. Bankruptcy Court for the Eastern District of Washington: (a) to overrule the Tort Litigants Committee's claim objections; and (b) for an opportunity to present formal briefing on the issues raised by the Objections, and for a hearing date. As reported in the Troubled Company Reporter on June 27, 2006, the Tort Litigants Committee objected to nine proofs of claim asserted against the Diocese of Spokane as secured claims or claims based on an equitable lien: Claimant Claim No. Claim Amount -------- --------- ------------ Sacred Heart Parish 189 $3,296,516 St. Jude Parish 210 280,000 St. Joseph Parish 213 2,109 St. Genevieve Church 228 460,307 St. Genevieve Church 233 7,024,000 St. Bernard's Catholic Church 235 283,580 St. Bernard's Catholic Church 236 6,143 St. Francis of Assisi Parish 384 1,207,322 St. Patrick Parish 385 9,723,031 Each Parish has a contingent claim against the Diocese of Spokane for improvements to real property owned, possessed, and used by each Parish under the Code of Canon Law, Ford Elsaesser, Esq., at Elsaesser Jarzabek Anderson Marks Elliott & McHugh, in Sandpoint, Idaho, asserts. In addition to Canon Law mandates, Mr. Elsaesser says there are several legal remedies under Washington state civil law, which establish each Parish's equitable interest in real property located within Washington, including: * trust arguments, * breach of fiduciary duty, * right to reimbursement, * unjust enrichment, and * constructive fraud. Each claim, Mr. Elsaesser contends, gives rise to the ability to seek the remedy of an equitable lien based on restitution concepts and theories of unjust enrichment, but only after the harm has occurred. Mr. Elsaesser explains that the anticipated "harm," which prompted the filing of contingent claims by the Parishes, was the prospect of loss of millions of dollars in improvements to real properties as a consequence of the Court's property of the estate ruling on August 28, 2005. That "harm" has not yet been realized, Mr. Elsaesser tells the Bankruptcy Court. There is a possibility that it might never be realized, if the Bankruptcy Court ultimately determines that the real properties in question cannot be considered assets of the bankruptcy estate, based on the trust relationship between the Diocese and each Parish. Until the time as a final decision has been entered, "harm" will not yet have been suffered, and the statute of limitations will not yet have begun to run, Mr. Elsaesser points out. The Diocese of Spokane and the Parishes share the position that a trust exists, with Spokane acting as a trustee. Mr. Elsaesser notes that District Court Judge Quackenbush in a ruling in the District Court case CV-05-00274-JLQ, on June 15, 2006, held that a resulting trust can exist, with the Parishes as beneficiaries and the Diocese, or Bishop, as trustee. Hence, the Diocese, as trustee, owes fiduciary duties to the Parishes as beneficiaries. Mr. Elsaesser also contends that Spokane's bankruptcy filing constitutes a breach of a fiduciary duty, if, by filing the Diocese, as trustee, took an unjustified risk with the property to which the Parishes hold the beneficial interest, and this risk was in furtherance of the Diocese's interest, not each Parish. The Roman Catholic Church of the Diocese of Spokane filed for chapter 11 protection (Bankr. E.D. Wash. Case No. 04-08822) on Dec. 6, 2004. Michael J. Paukert, Esq., at Paine, Hamblen, Coffin, Brooke & Miller, LLP, represents the Spokane Diocese in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $11,162,938 in total assets and $81,364,055 in total debts. (Catholic Church Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) CG MULTIFAMILY: Has Until July 12 to File Schedules and Statement ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Eastern District of Louisiana gave CG Multifamily-New Orleans, L.P., until July 12, 2006, to file its schedules of assets and liabilities and statement of financial affairs. The Debtor tells the Court that due to the complexity of its operations as well as its limited manpower, it will be unable to file its schedules and statement within the time required by the Federal Rule of Bankruptcy Procedure 1007(c). Additionally, the Debtor states that pressing budgetary and cash collateral issues need to be dealt with on an expedited basis, thus constraining its ability to complete the schedules and statement on time. Headquartered in Charleston, South Carolina, CG Multifamily-New Orleans, L.P. owns the Saulet Apartments in New Orleans, Louisiana. The company filed for chapter 11 protection on June 12, 2006 (Bankr. E.D. La. Case No. 06-10533). John M. Landis, Esq. and Michael Q. Walshe, Jr., Esq., at Stone Pigman Walther Wittman, LLC, represents the Debtors in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's bankruptcy proceedings. When the Debtor filed for protection from its creditors, it estimated assets and debts between $50 million and $100 million. CHATTEM INC: Commences Sr. Sub. Note Holder Consent Solicitation ---------------------------------------------------------------- Chattem, Inc., has commenced the solicitation of consents from the holders of its $107.5 million 7% Senior Subordinated Notes due 2014 for an amendment to the related indenture to increase the Company's capacity to make restricted payments by an additional $85 million, including payments for the repurchase of the Company's common stock. The record date for the solicitation is June 23, 2006. The consent solicitation is conditioned on the receipt of consents from holders of at least a majority in aggregate principal amount of the notes, and other customary conditions. The consent solicitation will expire at 5:00 p.m., Eastern Time, on July 14, 2006, unless extended. The Company is offering to pay all holders of notes on the record date that consent on or prior to the Expiration Time a fee of $15.00 per $1,000 in principal amount of such holders' notes, payable in cash. The Solicitation Agent is Wachovia Securities. In connection with the consent solicitation, the Company's Board of Directors has authorized the repurchase of up to an additional $100 million of the Company's common stock, under the terms of the Company's existing stock repurchase program. Under the program, the Company may, from time to time, purchase shares of its common stock based on a number of factors, including market conditions, the market price of the common stock, anti- dilutive effect on earnings, available cash and other factors as the Company deems appropriate, subject to the limitations under the indenture, the Company's credit agreement and applicable regulatory requirements. Beginning March 1, 2006 until June 26, 2006, the Company repurchased 524,500 shares of its common stock at an average cost of $ 33.08 per share, or $17.3 million in the aggregate. Chattem expects that any costs and expenses incurred to obtain the consents in the consent solicitation will be amortized over the remaining maturity of its Senior Subordinated Notes. Questions from note holders regarding the consent solicitation may be directed to: Wachovia Securities, Liability Management Group Phone: (704) 715-8341 Toll-Free: (866) 309-6316. Global Bondholder Services Corporation is serving as Information Agent in connection with the consent solicitation. Requests from note holders for assistance in delivering consents or for additional copies of the Consent Solicitation Statement should be directed to the Information Agent at: Global Bondholder Services Corporation, 65 Broadway, Suite 723, New York City 10006 Phone: (212) 430-3774 About Chattem Headquartered in Chattanooga, Tennessee, Chattem Inc., (NASDAQ: CHTT) - http://www.chattem.com/-- manufactures and markets a variety of branded consumer products, including over- the-counter healthcare products and toiletries and skin care products. The Company's products include Gold Bond medicated powder, Icy Hot topical analgesic, Dexatrim appetite suppressant, and Bullfrog sunblock. * * * As reported in the Troubled Company Reporter on July 3, 2006, Standard & Poor's Ratings Services revised its outlook on Chattem Inc. to stable from positive. At the same time, Standard & Poor's affirmed all of Chattem's ratings, including its 'BB-' corporate credit rating. Approximately $151 million of debt is affected by this action. CINRAM INT'L: Isidore Philosophem Steps Down as CEO --------------------------------------------------- Isidore Philosophe, Cinram International Income Fund's founder and Chief Executive Officer, has tendered his resignation as CEO of the Company and as a member of the Board of Directors, effective June 30, 2006. In his letter to the Board, Mr. Philosophe said, "After 50 years of hard work and dedication, I have decided, at age 68, that it is time for me to step down and devote more time to my family. I am extremely proud of what we have accomplished at Cinram and have very mixed feelings about my decision, but I know that I am leaving the company on a very solid footing for future growth, with a dynamic team of managers and employees. I wish to offer my special thanks to our customers, investors, directors and especially our employees, for their loyalty and support during the years." The Board of Directors of Cinram accepted Mr. Philosophe's resignation and has appointed David Rubenstein, currently President and Chief Operating Officer, as its Chief Executive Officer, effective July 1, 2006. About Cinram Cinram International Inc. (TSX: CRW.UN) - http://www.cinram.com/ -- an indirect wholly owned subsidiary Cinram International Income Fund, provides pre-recorded multimedia products and related logistics services. With facilities in North America and Europe, Cinram International Inc. manufactures and distributes pre- recorded DVDs, VHS video cassettes, audio CDs, audio cassettes and CD-ROMs for motion picture studios, music labels, publishers and computer software companies around the world. * * * As reported in the Troubled Company Reporter on May 11, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on prerecorded multimedia manufacturer Cinram International Inc. to 'BB-' from 'BB' following the company's announcement that it had successfully converted into an income trust. The ratings were removed from CreditWatch with negative implications, where they were placed March 3, 2006. As reported in the Troubled Company Reporter on April 13, 2006, Moody's Investors Service downgraded Cinram International Inc.'s Corporate Family Rating and existing Senior Secured debt ratings to B1 from Ba3 and assigned provisional ratings of (P) B1 to the company's proposed Senior Secured bank facilities. The outlook is stable. The downgrade reflected the company's plans to recapitalize itself as an income trust, which will result in essentially all of Cinram's future free cash flow being paid out to shareholders without any upfront reduction in leverage. COMMUNICATIONS CORP: Has Until July 20 To File Schedules -------------------------------------------------------- The Honorable Gerald H. Schiff of the U.S. Bankruptcy Court for the Western District of Louisiana extended, until July 20, 2007, the deadline within which Communications Corporation of America, White Knight Holdings, Inc., and their respective debtor- affiliates, may file their schedules of assets and liabilities and statement of financial affairs. The Debtors tell the Court that due to the complexity and diversity of their operations and their limited manpower, they anticipate that they will be unable to complete their Schedules and Statements within the period required under Bankruptcy Rule 1007(c). The Debtors contend that to prepare their required Schedules and Statements, they have to compile information from books, records, and documents relating to a multitude of transactions. The collection of the necessary information will require heavy expenditure of time and effort on their part and their employees, the Debtor explained. About White Knight Headquartered in Lafayette, Louisiana, White Knight Holdings, Inc., is a media, television and broadcasting company. White Knight entered into commercial inventory agreements, joint sales agreements, and shared services agreements with Communications Corporation of America. However, both entities are independent companies and are not affiliates of each other. Along with Communications Corp., White Knight operates around 23 TV stations. White Knight and five of its affiliates filed for chapter 11 protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50422 through 06-50427). R. Patrick Vance, Esq., and Matthew T. Brown, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, represents White Knight and its debtor-affiliates in their restructuring efforts. White Knight and its debtor-affiliates' chapter 11 cases are jointly administered under Communication Corporation of America's chapter 11 case. When the Debtors filed for protection from their creditor, they estimated less than $50,000 in assets and estimated debts between $100,000 and $500,000. About Communications Corp. of America Headquartered in Lafayette, Louisiana, Communications Corporation of America, is a media and broadcasting company. Along with media company White Knight Holdings, Inc., it owns and operates around 23 TV stations in Indiana, Texas and Louisiana. Communications Corporation and 10 of its affiliates filed for bankruptcy protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50410 through 06-50421). Douglas S. Draper, Esq., William H. Patrick III, Esq., and Tristan Manthey, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC, represents Communications Corporation and its debtor-affiliates. When Communications Corporation and its debtor-affiliates filed for protection from their creditors, they estimated assets and debts of more than $100 million. COMMUNICATIONS CORP: Hires Fletcher Heald as Special Counsel ------------------------------------------------------------ Communications Corporation of America and its debtor affiliates obtained authority from the U.S. Bankruptcy Court for the Western District of Louisiana to employ Fletcher, Heald & Hildreth, P.L.C., as their special counsel. Fletcher Heald is expected to: a. advise and represent the Debtors with respect to all aspects of matters before the Federal Communications Commission, including but not limited to the filing of all required applications and reports; b. advise and represent the Debtors with respect to related matters as they arise at the Debtors' request; and c. assist the Debtors' bankruptcy counsel from time to time. Vincent J. Curtis, Esq., a member at Fletcher Heald, tells the Court that he will bill $350 per hour for this engagement. Mr. Curtis discloses that Anne Crump, Esq., a Senior Counsel, bills $275 per hour and Alicia Staples, a paralegal, bills $160 per hour. Mr. Curtis assures the Court that his firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. About Communications Corp. of America Headquartered in Lafayette, Louisiana, Communications Corporation of America, is a media and broadcasting company. Along with media company White Knight Holdings, Inc., it owns and operates around 23 TV stations in Indiana, Texas and Louisiana. Communications Corporation and 10 of its affiliates filed for bankruptcy protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50410 through 06-50421). Douglas S. Draper, Esq., William H. Patrick III, Esq., and Tristan Manthey, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC, represents Communications Corporation and its debtor-affiliates. When Communications Corporation and its debtor-affiliates filed for protection from their creditors, they estimated assets and debts of more than $100 million. White Knight Holdings, Inc., and five of its affiliates filed for chapter 11 protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50422 through 06-50427) and their chapter 11 cases are jointly administered under Communication Corp.'s proceedings. R. Patrick Vance, Esq., and Matthew T. Brown, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, represents White Knight and its debtor-affiliates in their restructuring efforts. COMMUNICATIONS CORP: White Knight Hires Pillsbury as Counsel ------------------------------------------------------------ White Knight Holdings, Inc., and its debtor affiliates obtained authority from the U.S. Bankruptcy Court for the Western District of Louisiana to employ Pillsbury Winthrop Shaw Pittman, LLP, as their special counsel. Pillsbury Winthrop is expected to: a. advise and represent the Debtors with respect to all aspects of matters before the Federal Communications Commission, including but not limited to the filing of all required applications and reports; b. advise and represent the Debtors with respect to related matters as they arise at the Debtors' request; and c. assist the Debtors' bankruptcy counsel from time to time. Kathryn Schmeltzer, Esq., a partner at Pillsbury Winthrop, tells the Court that she will bill $475 per hour for this engagement. Ms. Schmeltzer discloses that other professionals of the firm who will render services bill: Professional Designation Hourly Rate ------------ ----------- ----------- Miles Mason, Esq. Partner $450 Paul Cicelski, Esq. Senior Associate $385 Kimberly Lacey, Esq. Associate $300 Ms. Schmeltzer assures the Court that neither she nor her firm represent any interest adverse to the Debtors or their estates. About White Knight Headquartered in Lafayette, Louisiana, White Knight Holdings, Inc., is a media, television and broadcasting company. White Knight entered into commercial inventory agreements, joint sales agreements, and shared services agreements with Communications Corporation of America. However, both entities are independent companies and are not affiliates of each other. Along with Communications Corp., White Knight operates around 23 TV stations. White Knight and five of its affiliates filed for chapter 11 protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50422 through 06-50427). R. Patrick Vance, Esq., and Matthew T. Brown, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, represents White Knight and its debtor-affiliates in their restructuring efforts. White Knight and its debtor-affiliates' chapter 11 cases are jointly administered under Communication Corporation of America's chapter 11 case. When the Debtors filed for protection from their creditor, they estimated less than $50,000 in assets and estimated debts between $100,000 and $500,000. About Communications Corp. of America Headquartered in Lafayette, Louisiana, Communications Corporation of America, is a media and broadcasting company. Along with media company White Knight Holdings, Inc., it owns and operates around 23 TV stations in Indiana, Texas and Louisiana. Communications Corporation and 10 of its affiliates filed for bankruptcy protection on June 7, 2006 (Bankr. W.D. La. Case Nos. 06-50410 through 06-50421). Douglas S. Draper, Esq., William H. Patrick III, Esq., and Tristan Manthey, Esq., at Heller, Draper, Hayden, Patrick & Horn, LLC, represents Communications Corporation and its debtor-affiliates. When Communications Corporation and its debtor-affiliates filed for protection from their creditors, they estimated assets and debts of more than $100 million. CONTINENTAL GROUP: Moody's Rates Proposed $160 Million Loan at B3 ----------------------------------------------------------------- Moody's assigned first-time ratings to The Continental Group. With a stable outlook, Moody's assigned a B3 Corporate Family Rating to Continental and a B3 rating to its proposed $160 million senior secured bank credit facilities, comprised of a five-year $30 million revolving credit facility and a five- year $130 million Term Loan B. With $90 million in equity from EdgeStone Capital Partners Inc., the financings will be used to fund a special dividend of $175 million to Continental's current shareholders, repay $35 million of existing debt, and to pay transaction fees and expenses. The B3 ratings are restrained by Continental's small size and limited diversification; its exposure to volatile steel prices; the need to establish performance credentials as a highly leveraged company operating in a fragmented, cyclical, and working capital intensive business; its small base of fixed assets, with tangible assets of $123 million not fully covering funded debt levels; and initial pro forma negative tangible net worth. While pro forma leverage as measured by debt-to-EBITDA is only about 2.6 times as of June 30, 2006 and is expected to trend down to closer to 2 times over the next year reflecting strong near- term financial performance, Moody's believes that Continental's balance sheet is highly leveraged due to the size of the payout to current shareholders. Moody's recognizes that the potential for further dividends is mitigated by restrictive terms in the bank credit facilities. The B3 ratings are supported by Continental's long operating history; its market position and established long-term customer and supplier relationships; its focus on value-added products and services as opposed to commodity-based products, which have supported relatively good margins and returns; and a supportive near-term environment for oilfield service activity. The stable rating outlook reflects expected continued strength in Continental's financial performance over the near-term as a result of favorable industry conditions. Building up tangible assets to a level that sufficiently covers funded debt through a combination of debt reduction and retained earnings could be positive for the ratings. The bank credit facilities are not notched above the Corporate Family Rating because secured debt represents the only debt in the company's capital structure. The facilities are secured by perfected liens on all the assets of the company, including all current and future direct subsidiaries, a pledge of stock of domestic and foreign subsidiaries. The term loan, which has minimal amortization until maturity, is expected to have a cash sweep mechanism that would require 50% of excess cash flow to be applied toward debt reduction, and sets mandatory prepayments with proceeds from capital markets financings and asset sales. Financial covenants under the bank credit facilities are expected to include a leverage ratio, interest coverage ratio, and fixed charge coverage ratio. The ratings on the bank credit facilities is subject to Moody's review of final documentation. The Continental Group is headquartered in Houston, Texas. DAKOTA ARMS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Dakota Arms, Inc. dba Technology Media Ventures 1310 Industry Road Sturgis, South Dakota 57785 Tel: (605) 347-4686 Fax: (605) 347-4459 Bankruptcy Case No.: 06-41315 Type of Business: The Debtor sells guns and firearms. See http://www.dakotaarms.com/ Chapter 11 Petition Date: July 6, 2006 Court: District of Minnesota (Minneapolis) Judge: Robert J. Kressel Debtor's Counsel: Faye Knowles, Esq. Fredrikson & Byron, P.A. 200 South Sixth Street, Suite 4000 Minneapolis, Minnesota 55402-1425 Tel: (612) 492-7054 Fax: (612) 492-7077 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Technology Funding Venture 5 Advances $222,167 462 St. Michaels Drive Suite 1000 Santa Fe, NM 87505 Technology Funding Venture 4 Advances $89,831 462 St. Michaels Drive Suite 1000 Santa Fe, NM 87506 Publishers Press Printer $81,342 P.O. Box 37500 Louisville, KY 40233 Technology Funding Partner 3 Advances $71,642 460 St. Michael Drive, Suite 100 Santa Fe, NM 87505 Cecil Fredi Gunstocks Wood $70,970 2017 Pinto Lane Las Vegas, NV 89109 Elan Business Credit Card $45,983 SIACE Custom Production $41,921 Shotguns American Express Credit Card Credit Card $25,734 SCI Safari Magazine SCI Show $25,300 Advantage Machine & Tool Supplies $22,169 Sports Afield Advertising $18,917 Power Plus Electric Leasehold $17,776 Improvements Beadsley Jensen Legal $16,869 Douglas Barrels Barrels $9,851 Dynamic Rigging Machinery $8,495 Three Sigma Inventory $8,268 Concept Machine Supplies $7,799 Producticty Inc. Services $7,597 KT Connections Supplies $7,139 Bullock & Associates Legal $6,325 DANA CORP: Assumes Full Ownership of Mexican Biz for $19.5 Mil. --------------------------------------------------------------- Dana Corporation and Desc S.A. de C.V. completed the dissolution of their Mexican joint venture. The closing of this transaction provides Dana with full ownership of several core operations based in Mexico, which will operate under Dana Holdings Mexico, S. de R.L. de C.V., a new Dana subsidiary. Dana and Desc dissolved their joint venture, Spicer S.A. de C.V., with Dana assuming 100% ownership of operations that manufacture and assemble axles, driveshafts, gears, forgings, and castings in which Dana previously held an indirect 49% interest. Desc, in turn, assumed full ownership of the transmission and aftermarket gasket operations in which it previously held a 51% interest. Along with exchanging its minority interest in the joint venture, Dana also made cash payment of $19.5 million to Desc. "Taking full ownership of these core operations further solidifies our competitive profile," said Dana Chairman and CEO Mike Burns. "In particular, Dana expects to benefit from the addition of technologically advanced operations supporting our core axle and driveshaft businesses, as well as the manufacturing cost efficiencies that come with expanding our global presence in this key competitive location." With the completed transaction, Dana has acquired full ownership of five manufacturing operations, which had combined sales -- both to Dana and to third parties -- of $296 million in 2005. The facilities, Autometales, S.A. de C.V.; and Ejes Tractivos, S.A. de C.V. in Mexico City, and Cardanes, S.A. de C.V.; Engranes Conicos, S.A. de C.V.; and Forjas Spicer, S.A. de C.V. in Queretaro, produce light vehicle axle and driveshafts and a variety of related components. As part of the transaction, Desc assumed full ownership of Transmisiones y Equipos Mecanicos, S.A. de C.V. and Transmisiones TSP, S.A. de C.V. transmissions, located in Queretaro, Mexico; Transmission Technologies Corporation with operations in Knoxville, Tennessee; and the T.F. Victor, S.A. de C.V. aftermarket gasket operation in Mexico City. Dana will sell aftermarket gaskets in Mexico through T.F. Victor and original equipment gaskets directly to engine and vehicle manufacturers. About Dana Corporation Headquartered in Toledo, Ohio, Dana Corporation (OTC Bulletin Board: DCNAQ) -- 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. The Debtors' consolidated balance sheet at March 31, 2006, showed a $456,000,000 total shareholder' equity resulting from total assets of $7.788 billion and total liabilities of $7.332 billion. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. DIAMOND TRIUMPH: Moody's Junks Rating on $60 Million Sr. Notes -------------------------------------------------------------- Moody's Investors Service lowered the ratings of Diamond Triumph Auto Glass, Inc. -- Corporate Family, to Caa1 from B3, senior unsecured notes to Caa2 from Caa1. The rating action reflects Moody's expectation that the company's credit profile will remain under pressure due to lower pricing and lower insurance reimbursement rates, and increasing operational costs. In conjunction with Diamond's high financial leverage, the rating and negative outlook anticipate deteriorating credit metrics, including modest interest coverage, weakened free cash flow, and the potential for tightened liquidity given the weakening operating metrics. Moody's also stated that its ratings for Diamond will subsequently be withdrawn due to the lack of adequate financial information upon which to maintain a rating opinion. These ratings were lowered: * Corporate Family rating to Caa1 from B3 * Diamond's $60 million of remaining 9.25% senior unsecured notes due April 2008, to Caa2 from Caa1; The rating downgrade reflects the high degree of excess capacity within the automotive glass replacement and repair industry, which has resulted in a significant degree of price compression and discounting. Further restricting sales growth has been the past winter's mild weather conditions. Diamond's revenue is expected to continue to be under pressure in the near term. Based on this current weakening earnings environment, Moody's believes that the above factors will lead to worsening credit metrics, lower free cash flow, and lower liquidity. Diamond is currently under investigation for certain of its practices and has not yet delivered its audited fiscal 2005 financial statements. The company has indicated that it is cooperating with the investigation, but the ultimate cost of resolving all aspects of this investigation are uncertain. Diamond's Caa1 Corporate Family rating is consistent with characteristics which are incorporated into Moody's automotive supplier methodology. The company's financial ratios generally point to Caa metrics including leverage, interest coverage, and free cash flow generation. Further limiting Diamond's ratings are its small relative revenue base, focus on one core segment, regional focus within the U.S., and, as of the company's last public filing, its large amount of debt maturities due within one year. Moody's also stated that on Oct. 11, 2005 the company announced that it received requisite consents from holders of its senior notes which eliminated the requirement to file annual, quarterly and current reports with the Securities and Exchange Commission. While certain financial information has been available since that filing, Moody's believes that it lacks sufficient financial information to maintain a rating going forward. Consistent with Moody's policies, the ratings will be withdrawn. Diamond Triumph Auto Glass, headquartered in Kingston, Pennsylvania, is a provider of automotive glass replacement and repair services. The company operates a network of approximately 240 automotive glass service centers, 1,000 mobile installation vehicles and three distribution centers in 43 states. Diamond believes it has one of the lowest cost structures in the industry due to its focus on automotive glass replacement and repair. Annual revenues approximate $218 million. DOORTOWN MANUFACTURING: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------------ Debtor: Doortown Manufacturing, LLC 2200 Lauder Road Houston, Texas 77039 Bankruptcy Case No.: 06-33118 Type of Business: The Debtor manufactures various pre-hung doors for residential and office use. Chapter 11 Petition Date: July 6, 2006 Court: Southern District of Texas (Houston) Judge: Karen K. Brown Debtor's Counsel: James Patrick Brady, Esq. 11550 Fuqua, Suite 340 Houston, Texas 77034 Tel: (281) 484-9300 Fax: (281) 484-9360 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Taylor Door $45,128 P.O. Box 643467 Pittsburgh, PA 15267 Sundt Construction $31,100 2072 San Antonio Lane Andres AFB, MD 20762 DW Distribution $24,903 P.O. Box 671449 Dallas, TX 75267-1449 Southwest Moulding $21,554 P.O. Box 650013 Dallas, TX 75265-0013 Steves & Sons $17,730 P.O. Box 910753 Dallas, TX 75391 Bill Roberts $15,258 Woodgrain Distribution $11,413 Tellepsen Corporation $10,682 Custom Forest Products $10,279 Ledco, Inc. $7,723 Western Reflections $6,942 Tucker Millworks $6,387 Framer Saver $5,227 Holm Industries, Inc. $4,626 Camp Roofing, Ltd. $4,296 Flacon Door & Window $3,779 Donnie Jarreau Construction $3,558 Pro-Source Builders Supply $3,015 CDC Publishing $2,700 General Electric Capital $2,351 E K SAMPLER: Case Summary & 19 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: E K Sampler LLC 28 Main Street Ocean Grove, New Jersey 07756 Bankruptcy Case No.: 06-16130 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Chopin Etude, Ltd. 06-16129 Chapter 11 Petition Date: July 7, 2006 Court: District of New Jersey (Trenton) Judge: Kathryn C. Ferguson Debtor's Counsel: Timothy P. Neumann, Esq. Broege, Neumann, Fischer & Shaver LLC 25 Abe Voorhees Drive Manasquan, New Jersey 08736 Tel: (732) 223-8484 Estimated Assets Estimated Debts ---------------- --------------- E K Sampler LLC $1 Million to $1 Million to $10 Million $10 Million Chopin Etude, Ltd. $100,000 to $500,000 to $500,000 $1 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Michele Cetera Architect $5,650 234 Detroit Avenue Staten Island, NY 10312-3509 Tel: (718) 756-7103 Allied Interstate Trade Debt $4,415 P.O. Box 361594 Columbus, OH 43236-1594 Tel: (972) 934-8448 Parmalat Welsh Farms Inc. $2,920 (no address provided) Susan Zavathere Tel: (732) 922-2340 Jersey Central Power & Light $1,899 P.O. Box 3687 Akron, OH 44309-3687 Tel: (800) 962-0383 Town and Country Bakery $1,769 732 Atlantic City Boulevard Beachwood, NJ 08722-4049 Caine & Weiner $1,342 N.J. Natural Gas $1,191 Sysco Food Services $897 AT&T Bank Loan $877 Mark Gannon Plumbing $839 Sprint $567 The Times $477 N.J. America Water Co. $324 Indian Harvest $320 Western Pest Services $240 U.S. Foodservice $141 Asbury Syrup $132 All Seasons Service Farrells $78 Roth Specialty Food Corp. $94 ENRON CORP: Merrill Lynch Agrees to Pay $29.5 Million Settlement ---------------------------------------------------------------- Enron Corp. reached an agreement with Merrill Lynch & Co., Inc. and affiliated entities to settle MegaClaims litigation in the Enron bankruptcy case. According to the terms of the agreement, Merrill Lynch will pay Enron $29.5 million. The settlement further provides that approximately $73.7 million in claims against the Enron Estate will be subordinated and receive no distribution from the Enron Estate and approximately $10 million in transferred claims will be allowed. The settlement reflects that Merrill Lynch was involved in fewer transactions with Enron than certain of the other MegaClaim defendants. Merrill Lynch did not admit liability or wrongdoing and both parties agreed to settle the litigation to avoid the costs and uncertainties of further proceedings. "This settlement is a further proactive step in our efforts to settle the Enron Estate," John J. Ray III, Enron's President and Board Chairman, said. "We are gratified with the progress we have made to bring the MegaClaims litigation with Merrill Lynch to a close and remain optimistic that the remaining financial institutions will put their Enron issues to rest." Remaining MegaClaim cases include Citigroup Inc., Deutsche Bank AG, Barclays PLC, and Fleet National Bank. The settlement remains subject to the execution of a definitive agreement and the approval of the United States Bankruptcy Court for the Southern District of New York. Enron is represented in this matter by Susman Godfrey LLP; Togut, Segal & Segal; and Venable LLP. About Enron Corp. 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. ENTERGY NEW ORLEANS: City Council Wants to Quash Deposition ----------------------------------------------------------- The Council of the City of New Orleans asks the U.S. Bankruptcy Court for the Eastern District of Louisiana to: (1) quash the deposition notice and order that the deposition not take place; or in the alternative (2) enter a protective order directing the Plaintiffs' counsel, Steffes Vingiello, under the penalty of the Court's contempt, not to inquire during their deposition into any communication or information that is privileged under: -- the Council's legislative privilege, -- the deliberative-process privilege, -- the attorney-client privilege, and -- the work-product doctrine. The Reverend C.S. Gordon, Jr., et al., and Thomas P. Lowenburg, et al., had served the City Council with a notice seeking its deposition in connection with the Council's opposition to the certification of their proofs and adversary proceeding as a class action. The Plaintiffs assert that they are representatives of a class of all New Orleans ratepayers who are customers of Entergy New Orleans Inc., and who were unlawfully and wrongfully overcharged for electric services by the Debtor. Various parties, including the City Council, have opposed the Plaintiffs' request for class- action certification in regard to their claims. In anticipation of the hearing on the Plaintiffs' request, the Court has permitted the taking of appropriate discovery. On June 2, 2006, the Plaintiffs served the City Council with the notice scheduling a deposition under Rule 30(b)(6) of the Federal Rules of Civil Procedure of the Council to be held at the office of the Plaintiffs' counsel, Steffes, Vingiello & McKenzie, LLC. The Claimants identified five areas on which they seek discovery from the City Council: (1) the Council's opposition and objections to the certification of classes; (2) the factual grounds for the Council's assertion that ratepayers of ENOI do not meet the requirements for class certification; (3) the factual grounds for any assertion by the Council that it adequately represents the interests of ENOI's ratepayers; (4) the factual grounds for the Council's assertion that it has standing to oppose the certification; and (5) any and all actions claimed to have been undertaken or planned to be undertaken by the Council to protect and promote the interests of ENOI's ratepayers in its bankruptcy proceeding. In 1999, the Gordon Plaintiffs filed cases with the City Council, which is ENOI's regulator. The Gordon Plaintiffs challenged under ratemaking principles, the legality of ENOI's recouping of certain costs through its fuel-adjustment clause as opposed to its base rates. In 2004, the Council issued a resolution ordering ENOI to refund ratepayers for $11,310,072, which was paid by ENOI prior to the commencement of its Chapter 11 case. The Council refused to award any refunds and on appeal, the Civil Court affirmed the Council's judgment. The case, through which the Gordon Plaintiffs seek an additional $57,500,000 in refunds, and which was allowed to proceed pursuant to the Bankruptcy Court's order and the agreement of all the parties, is pending before the Louisiana Fourth Circuit Court of Appeal where briefs are still being filed. In 2000, the Lowenburg Plaintiffs filed a petition before the City Council challenging the legality of awarding ENOI rates of return above a 7-1/2% rate to which the Plaintiffs allege ENOI is limited under a 1922 ordinance. The Lowenburg Plaintiffs sought refunds from ENOI of up to $823,000,000. The Council issued a resolution and order denying the claims on April 20, 2006. Pursuant to the Bankruptcy Court's order and the agreement of certain parties-in-interest, the Lowenburg case has been permitted to proceed on appeal in the state courts. Representing the City Council, Gayle P. Ehrlich, Esq., at Sullivan & Worcester LLP, in Boston, Massachusetts, argues that the Plaintiffs are not entitled to depose the Council because it has exclusive jurisdiction over the regulation of the Debtor and the sole authority to represent the interests of the New Orleans ratepayers. She asserts taht the jurisdiction of the Bankruptcy Court does not stretch to allow for review of the acts of the Council, making the notice of Entergy New Orleans Inc. unenforceable and null and void. Ms. Ehrlich adds that the City Council has legislative immunity as provided for in the Louisiana State Constitution, which covers not only actual state legislators and Council members, but also their assistants and other representatives, as long as these those individuals exercise discretionary functions that fall within the legitimate sphere of legislative-related activities. The Council's undeniable legislative immunity includes immunity from having to appear at a deposition or to respond to questions, directly or through representatives, concerning matters within the Council's legitimate legislative authority. Deposition of the Court is also inappropriate under the deliberative-process privilege, which shields opinions, recommendations and deliberations comprising part of a process by which governmental decisions are formulated, Ms. Ehrlich asserts. She maintains that, in seeking to depose the Council, the Plaintiffs will undoubtedly ask questions that will touch upon pre-decisional and deliberative communications that are otherwise protected against disclosure by the deliberative-process privilege. The City Council is protected by the attorney-client privilege, which is recognized in Louisiana and protects governmental bodies, Ms. Ehrlich further argues. Moreover, according to Ms. Ehrlich, the matters sought by the Plaintiffs in deposing the Council is protected under the work- product doctrine, which protects legal work done in anticipation of litigation as well as the mental processes of an attorney in his or her representation of the client. The work-product doctrine, which covers governmental entities, including the Council and their lawyers, protects against the disclosure of privileged information whether the request for the disclosure is made to an attorney or directly to a client. Furthermore, the request for deposition of the Council is part of a harassment strategy by Plaintiffs because this is not the first time they have sought to depose a representative of the Council, Ms. Ehrlich relates. She explains that in the Lowenburg case, the Lowenburg Plaintiffs sought to depose certain attorneys, acting as Council advisors, on the excuse that the Lowenburg Plaintiffs needed to develop their factual basis for an unfounded conflict- of-interest claim, a claim later rejected by the Council and over which the Claimants later lost on appeal in each of the three levels of the Louisiana-court system. Plaintiffs Respond The actions of the Council with regards to its opposition to the certification of classes and the Gordon and Lowenburg proceedings are administrative actions, which unlike legislative actions are not subject to immunity or privilege, asserts William E. Steffes, Esq., at Steffes, Vingiello & McKenzie, LLC, in Baton Rouge, Louisiana. The participation of the City Council in the status conference regarding the Class Certification Motion and in the discovery was specifically focused on the Claims, not general policy, Mr. Steffes points out. When the City Council filed its objection, it became a party-in- interest in the Debtor's bankruptcy case, subject to both the jurisdiction of the Bankruptcy Court and discovery, Mr. Steffes argues. Mr. Steffes also notes that, it has been recognized since the earliest days of regulation that a regulatory body acts in different capacities depending upon the nature of the specific proceedings before it. When a regulator sets the rates of a utility on a prospective basis, it is acting in a legislative or quasi-legislative capacity. But when a petitioner seeks refunds or reparation because the utility has violated the tariff previously approved by the regulator, the regulator acts as an adjudicator, takes evidence and acts as the arbiter between the private parties. The mere fact that the City Council sits as a legislative body does not mean that all proceedings before it are legislative in nature, Mr. Steffes asserts. Mr. Steffes argues that the Gordon and Lowenburg proceedings were adjudicative in nature. He notes that in the proceedings, the Plaintiffs did not seek the enactment of new laws, but sought determination of ENOI's liability on present or past facts and under existing laws. To render a decision, the Council determined adjudicative facts and was required to conduct evidentiary hearings and take evidence. Consequently, the Plaintiffs ask the Court to dismiss the City Council's request to quash the Deposition Notice. About Entergy New Orleans Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENTERGY NEW ORLEANS: Seeks Summary Judgment on Plaintiffs' Claims ----------------------------------------------------------------- Entergy New Orleans, Inc., Entergy Corporation, Entergy Services, Inc., and System Fuels, Inc., ask the U.S. Bankruptcy Court for the Eastern District of Louisiana to enter a summary judgment denying class certification to the Gordon and Lowenburg Plaintiffs and their proofs of claim, to the extent the claims are based upon alleged claims of purported class members. The Gordon Plaintiffs and Lowenburg Plaintiffs have filed Claim Nos. 328 and 329 for $240,000,000 and $82,796,573 in connection with their allegations against ENOI in the Civil District Court for the Parish of New Orleans, Louisiana, and the Council for the City of New Orleans. The Gordon Plaintiffs -- The Reverend C. S. Gordon, Jr., on behalf of New Zion Baptist Church; J. Michael Malec; Darryl Malek-Wiley; Willie Webb, Jr.; and Maison St. Charles, L.L.C., d/b/a Quality Inn Maison St. Charles -- filed two actions, one with the Council of the City of New Orleans, and another in the Civil District Court for the Parish of Orleans, against Entergy New Orleans, Inc., and other Entergy entities. The Lowenburg Plaintiffs -- Thomas P. Lowenburg, Martin Adamo, Vern K. Baxter, Philip D. Carter, Bernard Gordon, Leonard Levine, Ivory S. Madison, Donetta Dunn Miller, and Maison St. Charles, L.L.C. d/b/a Quality Inn Maison St. Charles -- also filed a class action against ENOI and the Council for the City of New Orleans, seeking various remedies for ENOI's overcharges in base rates billed to ratepayers since 1975 in violation of the allowable 2% rate of return on rate base established in 1922 by the Commission Council of the City of New Orleans. As reported in the Troubled Company Repoter on May 5, 2006, the Gordon and Lowenburg Plaintiffs jointly asked the Court to: (a) certify the classes of ENOI's customers who have claims for declaratory and injunctive relief, for restitution of ascertainable losses of money, including refund of overcharges, and damages as the result of payments of overcharges for electricity sold by, or electric service provided by, provided by ENOI; and (b) designate representatives of the classes, appoint counsel to represent the classes, and authorize appropriate notice to be provided to the class members. Pursuant to Rule 23(a) of the Federal Rule of Civil Procedure, putative class representatives are required to show that the class is so numerous that joinder of all members is impracticable, that there are questions of law or fact common to the class, that the claims or defenses of the representative parties are typical of the claims or defenses of the class and that the representative parties will fairly protect the interests of the class. Besides claiming that they satisfy the Rule 23(a) requirements for certification, the Plaintiffs contend that their Claims should be maintained as a class action under Rule 23(b)(3). Under Rule 23(b)(3), the Plaintiffs must show that the questions of law common to the members of the class predominate over any questions affecting only individual members and that a class action is superior to other available methods for the fair adjudication of any controversy. The Plaintiffs assert that they satisfy Rule 23(b)(3) because thousands of claims based upon overcharging of the ratepayers are unmanageable and the claims administration process for the class members' claims can be handled in an efficient manner that is far superior to any alternatives. The Entergy Entities assert, however, that the Plaintiffs' putative class claims can be resolved by an administrative body with expertise over the claims or can be resolved through the bankruptcy claims process. The Entergy Entities argue that a class action is not superior to other available methods for adjudicating the dispute as the claims at issue can be resolved by a regulatory or administrative body. The Gordon Plaintiffs' claims concern "the sale of electric energy at wholesale in interstate commerce." These claims are subject to the U.S. Federal Energy Regulatory Commission's jurisdiction under the Federal Power Act, 16 U.S.C. Section 791 et seq., asserts Nan Roberts Eitel, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, LLP, in Washington, D.C. In addition, as the Louisiana Supreme Court has noted in State ex rel. Guste V. Council of City of New Orleans, 309 So. 2d 290, 294 (La. 1975), the Council is "vested with the sole legal authority to regulate the rates charged by companies furnishing utility services in the City of New Orleans." The Council's exclusive jurisdiction over ENOI's retail rates and changes encompasses regulation of the precise conduct that the Gordon Plaintiffs complain about, Ms. Eitel contends. Ms. Eitel also points out that the Gordon Plaintiffs do not have valid anti-trust or other claims beyond the FERC and the Council's exclusive jurisdiction. She notes that the Gordon Plaintiffs have not explained how they suffered any damages other than alleged overcharges, and the nature or extend of any other "damages". Because exclusive original jurisdiction over the Plaintiffs' claims lie with the FERC and the City Council, the administrative proceedings before the FERC and the Council are superior to a class action to resolve the Gordon Plaintiffs' claims. The Entergy Entities also assert that the exclusive jurisdiction over the Lowenburg Plaintiffs' claims lies with the City Council. Thus, regulatory proceedings before the City Council and subsequent appeals that may be filed are superior to a class action to resolve the Lowenburg Plaintiffs' claims, Ms. Eitel argues. She adds that a regulatory proceeding before the Council is superior to a class action because it is the only party authorized to pursue any claims of alleged overcharges on behalf of ENOI customers. Additionally, the Debtor's pending bankruptcy claims process is superior to a class action in resolving the Plaintiffs' claims, Ms. Eitel argues. She says that, because bankruptcy procedural rules are designed to handle large numbers of claims, the bankruptcy court has complete control over the bankruptcy estate and the mandatory joinder of all claims against a debtor. * * * The Court denies Gordon and Lowenburg Plaintiffs' request to strike the Summary Judgment Motions as untimely. The Plaintiffs argued that the Court's May 25, 2006 scheduling order adopts the Court's "short-form pre-trial order" for matters relating to the Plaintiffs' Class Certification Motion, which is set for evidentiary hearing on July 31 and August 1, 2006. The short-form pre-trial order requires that "all dispositive motions [will] be filed and served in sufficient time to permit hearing, and counsel will set the motion so as to be heard no later than 30 days before the trial." The Entergy Entities filed their Summary Judgment Motions on June 22, 2006, and sought a hearing on the Motions on July 12. The Plaintiffs also argued that their counsel will be involved in the final preparation for the trial on their Class Certification Motion, not only in preparing the witnesses, but also preparing the exhibits, trial memoranda and bench books. The Entergy Parties responded that having a hearing on the Summary Judgment Motions on July 12 is the most economical and efficient way to proceed, and will not prejudice the Plaintiffs. Ms. Eitel argued that the Motions, if granted, would obviate the need for the trial on July 30 and August 1. Judge Brown will convene a hearing on the Motions for Summary Judgment on July 13, 2006, at 2 p.m. The Plaintiffs are granted an extension to file their oppositions to the Motions for Summary Judgment until noon today. About Entergy New Orleans Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) ELIZABETH ARDEN: Buys Brand Portfolio from Riviera Concepts ----------------------------------------------------------- Elizabeth Arden, Inc. acquired the brand licenses and certain assets of Riviera Concepts Inc. The acquired brands include the Badgley Mischka(R) fragrance, which is launching this fall in prestige department and specialty stores in the U.S. and Canada, the classic fragrances of Canadian designer Alfred Sung, including SUNG Alfred Sung, SHI Alfred Sung and JEWEL Alfred Sung, the HUMMER(TM) Fragrance for Men, under a licensing agreement with General Motors Corporation, as well as the designer fragrance brands of Nanette Lepore and Cynthia Rowley, British accessory designer Lulu Guinness and American couturier Bob Mackie. "We are pleased with the acquisition of these distinctive fragrance brands," E. Scott Beattie, Chairman and Chief Executive Office of Elizabeth Arden, Inc., commented. "Each will contribute to and complement our Elizabeth Arden fragrance portfolio. Riviera Concepts has done an exemplary job of developing these brands during their ownership; we will continue this momentum and focus on building these brands on a more global basis through increased support and distribution." "It has been a pleasure to work with Elizabeth Arden on this transaction," Adrian Ellis, President of Riviera, stated. "They offer a tremendous opportunity for these brands to grow. Each brand will benefit from their global infrastructure, sales, marketing, and distribution capabilities." Financial terms of the agreement were not disclosed. About Elizabeth Arden Elizabeth Arden (NASDAQ: RDEN) -- http://www.elizabetharden.com/ -- is a global prestige beauty products company. The Company's portfolio of brands includes the fragrance brands of Elizabeth Arden: Red Door, Red Door Revealed, Elizabeth Arden 5th Avenue, Elizabeth Arden after five, Elizabeth Arden green tea, and Elizabeth Arden Provocative Woman; the fragrance brands of Elizabeth Taylor: White Diamonds and Passion; the fragrances brands of Britney Spears: curious, curious In Control and fantasy; the Daytona 500 and GANT adventure men's fragrances; and the fragrances White Shoulders, Geoffrey Beene's Grey Flannel, the Halston brands, Halston and Halston Z-14, PS Fine Cologne for Men, Design and Wings; the Elizabeth Arden skin care lines, including Ceramide and Eight Hour Cream, PREVAGE(TM) anti-aging treatment and the Elizabeth Arden color cosmetics line. * * * As reported in the Troubled Company Reporter on Feb. 22, 2005, Standard & Poor's Ratings Services revised its outlook on prestige beauty products company Elizabeth Arden, Inc., to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the company, including its 'B+' corporate credit rating. Approximately $225 million of rated debt is affected by this action. ESCHELON TELECOM: Acquires Mountain Telecom For $40 Million Cash ---------------------------------------------------------------- Eschelon Telecom, Inc., signed a definitive agreement to acquire Mountain Telecommunications, Inc. for approximately $40 million in cash. The transaction is expected to close in the fourth quarter of 2006. MTI, based in Tempe, Arizona, is Arizona's only locally owned and operated telecommunications company. MTI provides services in Phoenix, Tucson and markets throughout the state of Arizona. "This transaction combines the financial stability of Eschelon with the strong presence of MTI throughout Arizona to enable the company to continue providing the highest level of service to their customers while maintaining competitive prices," stated Richard A. Smith, President and Chief Executive Officer of Eschelon Telecom, Inc. "MTI fits our acquisition filters well as it has focused on the medium and small business segment, is in one of our existing states and is EBITDA and cash flow positive. Those factors, combined with its significant presence in Arizona, are what attracted us to MTI. Before our acquisition of Oregon Telecom, we established an objective of acquiring $100M of competitive local exchange carrier revenue over a two to three- year period. With the acquisitions of Oregon Telecom and now MTI, we have acquired over $42 million in revenue -- we continue to make progress toward our goal," said Mr. Smith. Jack Pleiter, President and CEO of Mountain Telecommunications, Inc. stated, "We share many similarities with Eschelon, including a mission to deliver superior products and service to our customers. That focus will not change once we are part of Eschelon -- our customers will remain at the center of our business. The MTI team of Associates is proud of what we have built and this transaction will be good for all of our constituents." The Company says that the completion of the transaction will enhance its market leadership in the fast growing Phoenix market and will expand its network footprint to Tucson and other high growth markets throughout the state of Arizona. About Mountain Telecommunications Headquartered in Tempe, Arizona, Mountain Telecommunications, Inc., is a locally owned, facilities-based Competitive Local Exchange Carrier serving business, government, and educational organizations throughout the State of Arizona. About Eschelon Telecom Headquartered in Minneapolis, Minnesota Eschelon Telecom, Inc. (NASDAQ: ESCH) -- http://www.eschelon.com/-- is a facilities- based competitive communications services provider of voice and data services and business telephone systems in 19 markets in the western United States. The company offers small and medium-sized businesses a comprehensive line of telecommunications and Internet products. Eschelon currently employs 1,118 telecommunications and Internet professionals, serves over 50,000 business customers and has approximately 415,000 access lines in service throughout its markets in Minnesota, Arizona, Utah, Washington, Oregon, Colorado, Nevada and California. * * * As reported in the Troubled Company Reporter on March 27, 2006, Standard & Poor's Rating Services assigned its 'B-' rating to Eschelon Telecom's $46 million 8.375% senior second secured notes due 2010. The 'B-' corporate credit rating and stable outlook on Eschelon were affirmed. FEMONE INC: March 31 Balance Sheet Upside-Down by $2.3 Million -------------------------------------------------------------- FemOne, Inc., reported consolidated net sales of $2,695,730 for the quarter ended March 31, 2006, an increase of 54% from the prior year. Sales from the Company's BIOPRO Technology division represented 86% of consolidated revenues for 2006. The Company's gross profits in 2006 increased to $2,111,390, an increase of 62% over gross profits of $1,306,320 in 2005. Consolidated net loss from operations for the three months ended March 31, 2006 increased to $539,811, less than 1% over $537,571 in 2005. Consolidated net loss attributable to common stockholders for the three months ended March 31, 2006 was $1,930,251 compared to net loss of $1,288,246 a year ago. Included in the consolidated net loss attributable to common stockholders for the three months ended March 31, 2006 are net non-cash expenses of approximately $1.4 Million from the increase in the valuation of derivative liabilities at March 31, 2006, partially offset by gains recorded in the quarter. Operating expenses for the three months ended March 31, 2006 were $2,651,201 compared to $1,843,890 for the three months ended March 31, 2005. The increase in operating expenses is due to increased sales commission expense on increased sales, as well as increased sales and marketing expenses due to efforts to promote BIOPRO Technology and expand international operations. Included in the Company's consolidated results for 2006 are revenues and expenses from its three controlled subsidiaries: * BIOPRO Australasia Pty., Ltd, operating the Company's Direct Sales division in Australia and New Zealand; * BIOPRO Asia, Inc., operating the Company's Direct Sales division in the Philippines; and * SRA Marketing, Inc., its subsidiary for the Direct Response Shopping Network. During the three months ended March 31, 2006, 9% of total revenues came from BIOPRO Australia, 1% from BIOPRO Asia and 9% from SRA Marketing. At March 31, 2006, the Company's balance sheet showed $2,033,991 in total assets and $4,358,990 in total liabilities, resulting in a stockholders' deficit of $2,324,999. The Company's March 31 balance sheet also showed a working capital deficit with $1,276,533 in total current assets and $4,303,493 in total current liabilities. The Company's March 31 balance sheet further revealed an accumulated deficit of $10,392,211. Commenting on the first quarter 2006 results, Ray W. Grimm, FemOne's chief executive officer states: "We are very pleased with having increased our revenues in the first quarter of 2006 by 54% over the first quarter in 2005. We are also showing our continued momentum to grow revenues quarterly by increasing our revenues by over 20% from the fourth quarter of 2005." "Our consolidated net loss, before the non-cash effects of the accounting treatment of our convertible financings, is continuing to decrease and is approximately 20% less than our net loss from operations for the fourth quarter of 2005, proving our ability to not only grow our sales, but reaching our goal of profitability in the near future." A full-text copy of the Company's financial report for the quarter ended March 31, 2006, is available for free at: http://ResearchArchives.com/t/s?d10 Going Concern Doubt Peterson & Co., LLP, expressed substantial doubt about FemOne's ability to continue as a going concern after it audtied the Company's financial statements for the year ended December 31, 2005. The auditing firm pointed to the COmpany's recurring losses from operations and working capital deficit. About FemOne Inc Based in Carlsbad, California, FemOne, Inc. (OTCBB: FEMO) -- http://www.femone.com/-- is a sales and marketing company with distribution in the United States, Canada, Australia, New Zealand, the Philippines and South Africa. FIRST FIN'L: Balance Sheet Upside Down by $3 Million at March 31 ---------------------------------------------------------------- First Financial Corp., reported a $753,732 net loss on $1,034,424 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $3,317,385 in total assets and $6,391,531 in total liabilities resulting in $3,074,146 stockholders' deficit. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?d5f Going Concern Doubt Pattillo, Brown & Hill, L.L.P., in Albuquerque, New Mexico, raised substantial doubt about First Financial's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's losses from its mortgage operations. About First Financial Headquartered in Terre Haute, Indiana, First Financial Corp. -- http://www.first-online.com-- through its subsidiaries, offers financial services in Indiana and Illinois. The company's lending portfolio comprises commercial, real estate and mortgage loans. It also offers trust account and insurance services. FOAMEX INTERNATIONAL: Expanded A&M Retention Gets Court's Nod ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted Foamex International Inc. and its debtor-affiliates permission to expand the scope of services provided by Alvarez & Marsal Business Consulting LLC. As reported in the Troubled Company Reporter on June 7, 2006, A&M, in addition to the original services provided, will: (a) review and analyze a further revised business plan as well as analyze several operational alternatives with respect to the Debtors' carpet cushion business; (b) facilitate the resolution of time sensitive issues with respect to the Debtors' information technology system and structure on a more in-depth basis than contemplated in the original engagement letter; and (c) develop new initiatives that are central to the operational realization of the Debtors' revised business plan. Aside from the reimbursement of all out-of-pocket expenses, the Debtors will pay A&M: -- $125,000; and -- $75,000 per month to provide continued support with respect to the Debtors' information technology system, at the Debtors' option. The total fees to be paid to A&M pursuant to the Amendment will not exceed $350,000, Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor LLP, in Wilmington, Delaware, tells the Court. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOAMEX INTERNATIONAL: Selling Hamblen Facility for $390,000 ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware authorized Foamex International Inc. and its debtor-affiliates to sell 7.27 acres of real property and facility located in Hamblen County, Tennessee, for $390,000, to Don Bunch. As reported in the Troubled Company Reporter on May 9, 2006, the Facility was formerly used as a manufacturing facility for the Debtors' carpet cushion business segment. In April 2005, the Debtors ceased operations at the Facility. Afterwards, the Debtors utilized the Facility for miscellaneous storage but no longer utilized it for any operational purpose. According to Pauline K. Morgan, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, the Debtors do not anticipate any future need of the Facility. The Debtors initially believed that leasing the Facility to an adjacent landowner or any other interested party may be a viable business use. However, after further investigation, it was determined that no party was interested in leasing the Facility, and the Facility's roof has fallen into disrepair. Pursuant to a Sale Contract, Don Bunch will provide a $20,000 deposit, which will be credited to the purchase price upon the closing of the sale. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) G+G RETAIL: Sells Remaining Assets to Max Rave for $300,000 ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York allowed G+G Retail Inc. to sell certain personal property to Max Rave, LLC, for $300,000. Early this year, Max Rave, and Guggenheim Corporate Funding LLC, won the auction of substantially all of the Debtor's assets for $35 million. GCF provided equity and loan commitments to Max Rave to: * fund the purchase of the company, * provide fresh inventory for stores, and * provide operating working capital for operations. The assets sold at the auction did not include the inventory of network servers and related equipment and certain computer software and software licenses that Max Rave wants to own. Other key terms of the asset purchase agreement on the personal property include: (a) the release and discharge of the Debtors from any further obligation to provide computer or information technology services to Max Rave under that Feb. 17, 2006, Transition Services Agreement; (b) reasonable access for the Debtor to records, information and certain personnel until the closing of the Debtor's bankruptcy sale; and (c) the Debtor to have the right to occupy and use certain areas at Max Rave's facility located at 8501 West Side, North Bergen, New Jersey. Headquartered in New York, New York, G+G Retail Inc. retails ladies wear and operates 566 stores in the United States and Puerto Rico under the names Rave, Rave Girl and G+G. The Debtor filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. S.D.N.Y. Case No. 06-10152). William P. Weintraub, Esq., Laura Davis Jones, Esq., David M. Bertenthal, Esq., and Curtis A. Hehn, Esq., at Pachulski, Stang, Ziehl, Young & Jones P.C. represent the Debtor in its restructuring efforts. Scott L. Hazan, Esq.. at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets of more than $100 million and debts between $10 million to $50 million. GARRETT KAKER: Case Summary & 13 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Garret Kaker aka Gary Kaker 6510 Superior Avenue Kohler, Wisconsin 53044 Bankruptcy Case No.: 06-23607 Chapter 11 Petition Date: July 6, 2006 Court: Eastern District of Wisconsin (Milwaukee) Judge: Pamela Pepper Debtor's Counsel: Benjamin P. Payne, Esq. Hanson & Payne, LLC 1841 North Prospect Avenue Milwaukee, Wisconsin 53202 Tel: (414) 271-4550 Fax: (414) 271-7731 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 13 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lorraine Debaey Personal Loan $8,000 1705 Greenfield Avenue Sheboygan, WI 53081 Professional Placement Collection - $2,124 316 North Milwaukee Street Sheboygan County Suite 4 Milwaukee, WI 53202 City of Sheboygan Ordinance Violation $2,124 828 Center Avenue Sheboygan, WI 53081 Finance Sys Onyx Waste Services $1,058 301 North Jackson Pob. 1595 Green Bay, WI 54305 Resource Management Airgas North Central $550 2211 East Clairemo Suite 1 Eau Claire, WI 54701 Larry's Hauling Inc. Disputed Claim for $500 Unpaid Services Account Receivables Service Med102 Sheboygan $364 Clinic Charter Communications Goods & Services $300 State Collection Service Collection - $419 St. Nicholas Hospital Fed Adj. Co. Med102 Ihc Street $180 Nicholas Emerg. Phys. Encore Recievable Mana Collection Sbc $143 Sixel & Schwinn Goods & Services $130 La Chapelle Credit Service Collection $32 GENCORP INC: Completes Consent Solicitation for 9-1/2% Sr. Notes ---------------------------------------------------------------- GenCorp Inc. disclosed that pursuant to the terms of its previously announced consent solicitation with respect to a proposed amendment to the Indenture governing its 9 1/2% Senior Subordinated Notes due 2013, it has received consents to the amendment representing greater than a majority in principal amount of the Notes outstanding as of the expiration of the consent solicitation at 5:00 p.m., New York City time, on June 27, 2006. As of the Expiration Time, consents had been received from $96.9 million in aggregate principal amount, or approximately 99%, of the outstanding Notes. GenCorp, its subsidiaries that are party to the Indenture and the trustee under the Indenture have entered into a Second Supplemental Indenture including the proposed amendment. In addition, GenCorp reported that it has amended its senior credit agreement primarily to increase its letter of credit subfacility from $44 million to $80 million to provide capacity for additional letters of credit required by various environmental agencies, and increase term loans to provide collateral for the April 2007 maturity of $19.8 million outstanding under GenCorp's 5 3/4% Convertible Subordinated Notes. Wachovia Securities is the Solicitation Agent for the consent solicitation. Persons with questions regarding the consent solicitation should contact: Wachovia Securities, Liability Management Group Phone: 704-715-8341 (collect) or 866-309-6316 (toll-free) Holders of Notes can obtain copies of the consent solicitation statement and related material from: Global Bondholder Services Corporation Information and Tabulation Agent Phone: 212-430-3774 (banks and brokers) or 866-470-4500 (toll-free). GenCorp Inc. (NYSE: GY) -- http://www.GenCorp.com/-- manufactures aerospace and defense products and systems with a real estate business segment that includes activities related to the entitlement, sale, and leasing of the Company's excess real estate assets. * * * As reported in the Troubled Company Reporter on July 5, 2006, Fitch took these rating actions on GenCorp: -- 5.75% subordinated convertible notes due 2007 upgraded to 'BB-/RR1' from 'B-/RR4'; -- 4% contingent convertible subordinated notes due 2024, lowered to 'CCC+/RR5' from 'B-/RR4'; and -- 2.25% contingent convertible subordinated debentures due 2024, lowered to 'CCC+/RR5' from 'B-/RR4'. The rating action resulted from GenCorp Inc. increasing its senior secured credit facilities to $234.5 million from $178.5 million and securing its 5.75% subordinated convertible notes due 2007 with cash collateral. GENERAL MOTORS: Board Allows CEO to Negotiate with Renault-Nissan ----------------------------------------------------------------- General Motors Corp.'s Board of Directors endorsed, on July 7, 2006, a recommendation by the company's senior management that it engage in exploratory discussions with Renault and Nissan regarding GM's potential participation in an alliance among the three companies. "The GM Board of Directors authorized management to proceed with its plan to consider ideas the other two companies have and to weigh the potential benefits of such an alliance in order to assist the Board in its decision making," said GM Director George Fisher. "Management will keep the Board well informed and the directors, of course, will closely monitor the process to assure that its outcome serves the best interests of all GM shareholders. The Board continues to fully support the company's North American turnaround strategy, and we encourage management to also continue its efforts to conclude a satisfactory resolution of the issues associated with the Delphi bankruptcy and to complete the pending GMAC transaction." The Board action was taken in response to a request made by Tracinda Corporation, one of GM's larger shareholders, and to expressions of interest made public by the respective boards of Renault and Nissan. GM Chairman Rick Wagoner will lead the company's effort to conduct exploratory talks with the managements of Renault and Nissan. "General Motors has a lot of experience with different types of alliances, and some have provided significant benefits to GM's competitive position and financial strength," said Mr. Wagoner. "We will enter into discussions with the managements of Renault and Nissan with an open mind -- eager to hear their ideas of how an alliance between our companies might work to our mutual benefit. Given the complexity of any potential relationship, it has to be carefully considered on its merits before coming to any conclusion. We are committed to an objective and thorough review of that potential." Mr. Wagoner noted that when the idea of joining an alliance with Renault and Nissan was first suggested to him, he promptly contacted Carlos Ghosn and the two leaders agreed to meet at a mutually convenient time to have an initial exploratory discussion. "We periodically receive interesting proposals and we owe it to the company and its shareholders to explore how they might work, and to objectively weigh the potential benefits and issues that each might present," Mr. Wagoner said. "That is exactly what we recommended to the GM Board in this specific case, and exactly what it has agreed we should do." North American Turnaround Strategy In the meantime, both Mr. Wagoner and Mr. Fisher noted that it is crucial for General Motors to stay focused on implementing its North American turnaround strategy. "We announced this strategy about one year ago, and have made tremendous progress in implementing all the key initiatives," Mr. Wagoner said. "The positive results from these major actions are already evident. We have some major items that we are working on right now that are important to our continued progress, including the Delphi restructuring and the GMAC transaction. So there's plenty more work to do to return our North American operations to sustained profitability. We remain focused on achieving this as quickly as possible." About General Motors General Motors Corp. -- http://www.gm.com/-- the world's largest automaker, has been the global industry sales leader for 75 years. Founded in 1908, GM today employs about 327,000 people around the world. With global headquarters in Detroit, GM manufactures its cars and trucks in 33 countries including Mexico. In 2005, 9.17 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn and Vauxhall. GM operates one of the world's leading finance companies, GMAC Financial Services, which offers automotive, residential and commercial financing and insurance. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. * * * As reported in the Troubled Company Reporter on June 30, 2006, Standard & Poor's Ratings Services held all its ratings on General Motors Corp. -- including the 'B' corporate credit rating and the 'B+' bank loan rating, but excluding the '1' recovery rating -- on CreditWatch with negative implications, where they were placed March 29, 2006. As reported in the Troubled Company Reporter on June 22, 2006, Fitch assigned a rating of 'BB' and a Recovery Rating of 'RR1' to General Motor's new $4.48 billion senior secured bank facility. The 'RR1' is based on the collateral package and other protections that are expected to provide full recovery in the event of a bankruptcy filing. GREENMAN TECH: AMEX Files Form 25 to Strike Common Stock Listing ---------------------------------------------------------------- The American Stock Exchange LLC(R) reported its final determination to remove the common stock of GreenMan Technologies, Inc. from listing on the Exchange, and has filed an application on Form 25 to strike the Securities from listing with the Securities and Exchange Commission. The delisting will become effective on July 17, 2006 unless postponed by the SEC. As reported in the Troubled Company Reporter on June 21, 2006, the American Stock Exchange delisted GreenMan's common stock after the close of trading on June 14, 2006. AMEX stated that it will proceed with filing an application with the SEC to strike GreenMan's common stock from listing on the AMEX. Pursuant to its rules, the Exchange provided notice to GreenMan Technologies, Inc. of the decision to delist the Securities and an opportunity to appeal the decision to a panel designated by the Exchange's Board of Governors. About GreenMan Headquartered in Lynnfield, Massachusetts, GreenMan Technologies, Inc., markets scrap granular tires in the United States. The company's products are used as a tire-derived fuel used by pulp and paper producers. Going Concern Doubt As reported in the Troubled Company Reporter on June 6, 2006, Wolf & Company, PC, in Boston, Massachusetts, raised substantial doubt about GreenMan Technologies Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Sept. 30, 2005. The auditor pointed to the Company's losses from operations and working capital deficiency of $8,667,886 at September 30, 2005. GREGG APPLIANCES: March 31 Balance Sheet Upside Down by $5.1 Mil. ----------------------------------------------------------------- Gregg Appliances, Inc., filed its financial results for the fiscal year ended March 31, 2006, with the Securities and Exchange Commission on June 26, 2006. For the full year ended March 31, 2006, the Company earned $22.2 million of net income on $900.4 million of net revenues, compared to $29.2 million of net income earned on $803.2 million of net revenues in 2005. At March 31, 2006, the Company's balance sheet showed $283.7 million in total assets and $288.9 million in total liabilities, resulting in a $5.1 million stockholders' deficit. A full-text copy of the Company's Annual Report is available for free at http://researcharchives.com/t/s?d61 Headquartered in Indianapolis, Indiana, Gregg Appliances, Inc., -- http://www.hhgregg.com/-- is a specialty retailer of consumer electronics, home appliances and related services operating under the name HH Gregg. The Company operates 58 stores in six midwestern and southeastern states with revenues of approximately $753 million for the fiscal year ended March 31, 2004. * * * As reported in the Troubled Company Reporter on Jan. 18, 2006, Moody's Investors Service assigned these ratings to Gregg Appliances, Inc.: -- Senior Implied of B2, -- $165 million of senior unsecured guaranteed notes of B2, -- Issuer rating of B2, -- Speculative Grade Liquidity Rating of SGL-2. GULF COAST: Court Approves $4.2 Million Asset Sale to Jered LLC --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas approved the sale of substantially all of the assets of Gulf Coast Holdings, Inc., dba Unidynamics, Inc., to Jered LLC. Jered's $4.2 million cash offer for the Debtor's assets during the June 1 auction bested PaR Systems, Inc.'s $3 million stalking- horse bid. Federal Equipment Company, Inc., made a backup bid of $4.05 million in cash. The Stalking-Horse Bidder is entitled to a break-up fee of $75,000, plus reimbursement for actual out-of pocket expenses incurred of up to a maximum of $40,000. Qualified bidders were required a minimum initial bid deposit of $100,000 payable to the order of Hughes & Luce, L.L.P, as agent for the Debtor. Headquartered in Conroe, Texas, Gulf Coast Holdings, Inc., field for bankruptcy protection on April 28, 2006 (Bankr. N.D. Tex. Case No. 06-31695). Daniel I. Morenoff, Esq., and Jeffrey R. Fine, Esq., at Hughes & Luce, LLP, represent the Debtor in its restructuring efforts. The Debtor has employed David Hull as its chief restructuring officer. J. Frasher Murphy, Esq., and Jaime Myers, Esq., at Winstead, Sechrest & Minick represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor reported assets amounting to $18,258,575 and debts totaling $19,553,664. GULF COAST: U.S. Trustee Amends Creditors Committee Appointment --------------------------------------------------------------- William T. Neary, the U.S. Trustee for Region 6, appointed new members to the Official Committee of Unsecured Creditors in Gulf Coast Holdings, Inc., dba Unidynamics, Inc.'s chapter 11 case. The new members of the Creditors Committee are: 1. Salvatore J. Mira 42 Redbud Ridge Place, The Woodlands TX 77380 Tel: 281-367-4113 Cell: 713-851-9577 Fax: 281-298-8799 saljmira@yahoo.com 2. Dave Wencka, President InstaTech, Inc. Suite A-103, 7010 NW 100 Drive Houston, TX 77092 Tel: 713-869-9900 Fax: 713-880-1144 dw_instatech@sbcglobal.net 3. Eugene L. Butler, Managing Director CapSource Financial, Inc. Suite 325 14505 Torrey Chase, Houston, TX 77014 Tel: 281-893-9494 Cell: 713-824-0767 Fax: 281-893-4508 GButler@capsources.com Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in Conroe, Texas, Gulf Coast Holdings, Inc., field for bankruptcy protection on April 28, 2006 (Bankr. N.D. Tex. Case No. 06-31695). Daniel I. Morenoff, Esq., and Jeffrey R. Fine, Esq., at Hughes & Luce, LLP, represent the Debtor in its restructuring efforts. The Debtor has employed David Hull as its chief restructuring officer. J. Frasher Murphy, Esq., and Jaime Myers, Esq., at Winstead, Sechrest & Minick represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor reported assets amounting to $18,258,575 and debts totaling $19,553,664. GULF COAST: Creditors Panel Hires Winstead Sechrest as Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors in Gulf Coast Holdings, Inc., dba Unidynamics, Inc.'s chapter 11 case obtained authority from the U.S. Bankruptcy Court for the Northern District of Texas to retain Winstead Sechrest & Minick P.C. as its bankruptcy counsel. As reported in the Troubled Company Reporter on May 31, 2006, as counsel, Winstead Sechrest will: (a) advise and consult with the Committee concerning legal questions arising in the administration of the Debtor's estate and the unsecured creditors' rights and remedies in connection with the estate; (b) assist the Committee in preserving and protecting the Debtor's estate; (c) investigate and, with Court authority, prosecute preference, fraudulent transfers, and other actions arising under the Debtor's avoiding powers; (d) prepare and prosecute any pleadings, motions, answers, notices, orders and any reports that are required for the protection of the Committee's interest and the orderly administration of the Debtors' estate; (e) advise the Committee regarding the negotiation and documentation of debt restructuring and related transactions or agreements; (f) monitor transactions proposed by the Debtor during the course of its chapter 11 cases and advise the Committee; (g) review the nature and validity of liens asserted against the Debtor's property and advise the Committee concerning the enforceability of those liens; (h) review and monitor the Debtor's ongoing business, if any; (i) advise the Committee in connection with any suggested or proposed plans of reorganization; (j) counsel the Committee in connection with the formulation, negotiation, and promulgation of alternative plans of reorganization, if necessary or appropriate; and (k) perform any and all of the legal services for the Committee. Phillip L. Lamberson, Esq., a partner at the firm, told the Court that he charges $350 per hour for his services. He further disclosed that his colleagues at the firm working for the Debtor's case and their hourly rates are: Professionals Hourly Rate ------------- ----------- C. Mark Brannum $380 J. Frasher Murphy $295 Jaime Myers $265 Mr. Lamberson assured the Court that his firm and its professionals do not hold material interest adverse to the Debtor's estate and are disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Conroe, Texas, Gulf Coast Holdings, Inc., field for bankruptcy protection on April 28, 2006 (Bankr. N.D. Tex. Case No. 06-31695). Daniel I. Morenoff, Esq., and Jeffrey R. Fine, Esq., at Hughes & Luce, LLP, represent the Debtor in its restructuring efforts. The Debtor has employed David Hull as its chief restructuring officer. J. Frasher Murphy, Esq., and Jaime Myers, Esq., at Winstead, Sechrest & Minick represent the Official Committee of Unsecured Creditors. In its schedules filed with the Court, the Debtor reported assets amounting to $18,258,575 and debts totaling $19,553,664. H&E EQUIPMENT: Prices Tender Offer of Senior Notes -------------------------------------------------- H&E Equipment Services, Inc., and its wholly owned subsidiary, H&E Finance Corp., prices the cash tender offer and consent solicitation for their 11-1/8% Senior Secured Notes due 2012 (CUSIP No. 404085AB8), and 12-1/2% Senior Subordinated Notes due 2013 (CUSIP No. 404085AF9). As a result of the extension of the price determination date from June 7, 2006 to July 6, 2006, the pricing terms of the tender offer and consent solicitation have been recalculated. The total consideration for the Senior Secured Notes and Senior Subordinated Notes was determined as of 10:00 a.m., New York City time, July 6, 2006, by reference to a fixed spread of 50 basis points above the yield to maturity of the applicable U.S. Treasury security as described in the Offer to Purchase and Consent Solicitation Statement of the Issuers, dated May 25, 2006. The reference yield for the Notes was 5.408%. The total consideration per $1,000 principal amount of Senior Secured Notes that are validly tendered prior to Midnight, New York City time, on July 20, 2006 will be $1,097.74, and the total consideration per $1,000 principal amount of Senior Subordinated Notes that are validly tendered prior to the Expiration Date will be $1,116.13. In each case, the total consideration per $1,000 principal amount of Notes that are validly tendered prior to the Expiration Date includes a cash consent payment of $30. Holders of Notes validly tendered prior to the Expiration Date will also receive accrued and unpaid interest on their Notes up to, but not including, the payment date for the tender offer and consent solicitation. As of July 6, 2006, the Issuers had received tenders and consents for $195.5 million in aggregate principal amount of the Senior Secured Notes, representing 97.8% of the outstanding Senior Secured Notes and $53 million in aggregate principal amount of the Senior Subordinated Notes, representing 100% of the outstanding Senior Subordinated Notes. The tender offer and consent solicitation remains open and is scheduled to expire on the Expiration Date. The tender offer and consent solicitation are subject to the satisfaction of certain conditions, including the consummation by H&E Inc. of one or more debt financings on terms satisfactory to H&E Inc. in an aggregate amount not less than $250 million and consent of the lenders under H&E Inc.'s senior secured credit facility. No assurance can be given that such conditions will be satisfied, that such new financing will be completed in a timely manner or at all or that such consent will be obtained. The complete terms and conditions of the tender offer and consent solicitation are described in the Statement and the related Consent and Letter of Transmittal, copies of which may be obtained by contacting the information agent for the tender offer and consent solicitation: D.F. King & Co., Inc. Telephone (212) 269-5550 Toll Free (800) 714-3312 Questions regarding the tender offer and consent solicitation may be directed to the Dealer Manager and Solicitation Agent for the tender offer and consent solicitation: Credit Suisse Securities (USA) LLC Telephone (212) 538-0652 Toll Free (800) 820-1653 About H&E Based in Baton Rouge, Louisiana, H&E Equipment Services, Inc., (NASDAQ:HEES) -- http://www.he-equipment.com/-- is one of the largest integrated equipment services companies in the United States with 47 full-service facilities throughout the Intermountain, Southwest, Gulf Coast, West Coast and Southeast regions of the United States. The Company is focused on heavy construction and industrial equipment and rents, sells and provides parts and service support for four core categories of specialized equipment: hi-lift or aerial platform equipment; cranes; earthmoving equipment; and industrial lift trucks. * * * As reported in the Troubled Company Reporter on Feb. 20, 2006, Standard & Poor's Ratings Services raised its corporate credit rating on rental equipment company H&E Equipment Services Inc. fka H & E Equipment Services LLC to 'BB-' from 'B+'. HERBALIFE INT'L: To Undertake Potential Refinancing --------------------------------------------------- Herbalife Ltd. and its indirect subsidiary Herbalife International, Inc., disclosed that it is considering a potential refinancing transaction with a new senior secured credit facility. If the refinancing is consummated, certain of the proceeds may be used to repay or redeem substantially all of Herbalife's existing debt, including its outstanding 9 1/2% Notes due 2011 and fund closing costs. About Herbalife Herbalife (NYSE:HLF) -- http://ir.herbalife.com/-- is a global network marketing company that sells weight-management, nutritional supplements and personal care products intended to support a healthy lifestyle. Herbalife products are sold in 62 countries through a network of more than one million independent distributors. The company supports the Herbalife Family Foundation and its Casa Herbalife program to bring good nutrition to children. * * * As reported in the Troubled Company Reporter on July 4, 2006, Moody's Investors Service rated the proposed bank loan of Herbalife International, Inc. at Ba1 and upgraded the corporate family rating to Ba1. Herbalife will use proceeds from the new debt to repay the existing term loan and to redeem the $165 million issue of 9.5% senior subordinated notes. At the same time, Standard & Poor's Ratings Services raised its ratings on Herbalife International Inc., including its corporate credit rating to 'BB+' from 'BB'. Standard & Poor's also raised its ratings on Herbalife's parent, Herbalife Ltd., including the corporate credit rating to 'BB+' from 'BB'. The outlook is stable. HIDDEN POINTE: Partner Doesn't Get Automatic Stay Protection ------------------------------------------------------------ The Honorable James E. Massey of the U.S. Bankruptcy Court for the Northern District of Georgia ruled that the automatic stay afforded to Hidden Pointe Properties, L.P., under Section 362 of the Bankruptcy Code does not extend to the Debtor's alleged de facto general manager, Wilmann LLC. These Hidden Pointe's creditors, then, can pursue their state court actions against Wilmann: * Alexander Properties Group, Inc., * Kay Borders d/b/a Borders 'N' Blooms Landscaping, and * Borders 'N' Blooms Landscaping, Inc. The creditors, however, have dismissed those cases after Wilmann asked the Court to prohibit them from proceeding with the suits temporarily. The Creditors allege that Wilmann, legally a limited partner, assumed the role and duty of a general partner, and is responsible to pay Hidden Pointe's debts. The Creditors say that Wilmann, through D. Curtis Mann and Donald Williams, actively participated in the management and operation of Hidden Pointe and actively and aggressively directed and made significant decisions for the partnership -- including trying to sell the apartments or its operations. Wilmann denied having liability to any of Hidden Pointe's creditors because, Wilmann says, it's not the Debtor's general partner. No documents filed by Hidden Pointe in its bankruptcy case identify Willman as a general partner or creditor. Wilmann makes no claim against Hidden Pointe's estate. In a decision published at 2005 WL 3952887, Judge Massey opined that if Wilmann is not a general partner, it is not entitled to injunctive relief because the outcome of state court litigation could have no effect on the Debtor its estate or its creditors. Judge Massey pointed out that, as a general proposition, the automatic stay does not extend to non-bankrupt co-defendants. Wilmann could have obtained an exception under Section 105 of the Bankruptcy Code if it could have shown (1) a substantial likelihood of success on merits; (2) a substantial threat of irreparable injury if an injunction were not granted; (3) that the threatened injury to it outweighs the harm an injunction may cause the creditors; and (4) that granting an injunction would not disserve public interest. Willman didn't meet this four-pronged test. Headquartered in Dallas, Texas, Hidden Pointe Properties, L.P., is the owner of an apartment project including 440 separate units located in Stone Mountain, Georgia. The Company filed for chapter 11 protection on March 29, 2004 (Bankr. N.D. Ga. Case No. 04-65132). Carole Thompson Hord, Esq., and John A. Christy, Esq., at Schreeder, Wheeler & Flint, LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. INTEGRATED ELECTRICAL: Amends Eton Park Term Loan Agreement ----------------------------------------------------------- In a filing with the Securities and Exchange Commission, Curt L. Warnock, senior vice president and general counsel of Integrated Electrical Services, Inc., disclosed that on June 29, 2006, the company entered into the First Amendment to the Term Loan Agreement with Eton Park Fund, L.P., and an affiliate, Flagg Street Partners LP and affiliates, and Wilmington Trust Company as administrative agent. The First Amendment, dated June 1, 2006, amended the Loan Agreement, dated May 12, 2006, to, among other things, permit the Company to issue $1,000,000 in its common stock to Tontine Capital Partners, L.P., in exchange for $1,000,000 in cash. Mr. Warnock reported that the company will use the proceeds to invest $1,000,000 in Energy Photvoltaics, Inc., without the transaction reducing the company's existing $2,000,000 limit on permitted investments or violating the restriction on transactions with affiliates contained in the Loan Agreement. The company has also received the requisite consent to the Transaction from its lenders under the Loan and Security Agreement, dated May 12, 2006, by and among the Company, certain of its subsidiaries and Bank of America, N.A., and other lenders. A full-text copy of the Eton Park Amended Term Loan Agreement is available for free at http://ResearchArchives.com/t/s?d5b Headquartered in Houston, Texas, Integrated Electrical Services, Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is an electrical and communications service provider with national roll-out capabilities across the U.S. Integrated Electrical Services offers seamless solutions and project delivery of electrical and low-voltage services, including communications, network, and security solutions. The Company provides system design, installation, and testing to long-term service and maintenance on a wide array of projects. The Debtor and 132 of its affiliates filed for chapter 11 protection on Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson & Elkins, L.L.P., represent the Debtors in their restructuring efforts. Marcia L. Goldstein, Esq., and Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, represent the Official Committee of Unsecured Creditors. As of Dec. 31, 2005, Integrated Electrical reported assets totaling $400,827,000 and debts totaling $385,540,000. The Court confirmed the Debtors' Modified Second Amended Joint Plan of Reorganization on Apr. 26, 2006. That plan became effective on May 12, 2006. (Integrated Electrical Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc. 215/945-7000) INTEGRATED ELECTRICAL: Restates December and March Financials ------------------------------------------------------------- In a filing with the Securities and Exchange Commission, Integrated Electrical Services, Inc., corrects a misstatement of insurance expense in its financial reports for the three months ended December 31, 2005, and the three and six months ended March 31, 2006. Senior Vice President and Chief Financial Officer David A. Miller discloses that on the company's Consolidated Statements of Operation, net loss from continuing operations and net loss increased by: (a) $400,000 for the three months ended December 31, 2005; (b) $1,200,000 for the three months ended March 31, 2006; and (c) $1,600,000 for the six months ended March 31, 2006. In addition, accounts payable and accrued expenses on the company's Consolidated Balance Sheet were understated by: (a) $400,000 at December 31, 2005; and (b) $1,600,000 at March 31, 2006. There are no changes in the net cash flows from operating, investing or financing activities, Mr. Miller relates. A full-text copy of IES' restated Quarter Report ended December 31, 2005 is available for free at: http://ResearchArchives.com/t/s?d5c A full-text copy of IES' restated Quarter Report ended March 31, 2006 is available for free at: http://ResearchArchives.com/t/s?d22 Headquartered in Houston, Texas, Integrated Electrical Services, Inc. -- http://www.ielectric.com/and http://www.ies-co.com/-- is an electrical and communications service provider with national roll-out capabilities across the U.S. Integrated Electrical Services offers seamless solutions and project delivery of electrical and low-voltage services, including communications, network, and security solutions. The Company provides system design, installation, and testing to long-term service and maintenance on a wide array of projects. The Debtor and 132 of its affiliates filed for chapter 11 protection on Feb. 14, 2006 (Bankr. N.D. Tex. Lead Case No. 06-30602). Daniel C. Stewart, Esq., and Michaela C. Crocker, Esq., at Vinson & Elkins, L.L.P., represent the Debtors in their restructuring efforts. Marcia L. Goldstein, Esq., and Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, represent the Official Committee of Unsecured Creditors. As of Dec. 31, 2005, Integrated Electrical reported assets totaling $400,827,000 and debts totaling $385,540,000. The Court confirmed the Debtors' Modified Second Amended Joint Plan of Reorganization on Apr. 26, 2006. That plan became effective on May 12, 2006. (Integrated Electrical Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc. 215/945-7000) INT'L GALLERIES: Winstead Sechrest Hired as Trustee's Counsel ------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas allowed Dan Lain, the Chapter 7 Trustee overseeing the liquidation of International Galleries, Inc., to employ Winstead Sechrest and Minick P.C. as his counsel. Winstead Sechrest will: a) assist the Trustee in investigating and evaluating the financial and business activities, assets, liabilities and financial condition of the Debtor; b) represent the Trustee in matters and transactions relating to the disposition of the assets of the Debtors' estate; c) advise the Trustee with respect to legal matters arising from the Debtor's financial and business activities, and the disposition of the Debtor's assets; d) represent the Trustee in all contested matters and adversary proceedings that may be filed in the Debtor's case; e) appear at proceedings in the case as deemed necessary or appropriate by the Trustee; f) pursue on behalf of the Trustee and for the benefit of the estate all preference, avoidance, and other causes of action owned by the estate; and g) perform other legal services. David W. Elmquist, Esq., a Winstead Sechrest shareholder, disclosed that his firm's professionals bill: Professional Position Hourly Rate ------------ -------- ----------- David W. Elmquist, Esq. Shareholder $450 Jeff Carruth, Esq. Associate $315 Linda Kaye Paquette, Esq. Paralegal Mr. Elmquist assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. 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). Omar J. Alaniz, Esq., at Neligan Tarpley Andrews & Foley LLP, represents the Debtor. David W. Elmquist, Esq., at Winstead Sechrest & Minick P.C., represents the Official Committee of Unsecured Creditors. On May 16, 2006, the case was converted to a Chapter 7 liquidation. Dan Lain serves as the Chapter 7 Trustee for the Debtor. When the Debtor filed for protection from its creditors, it estimated assets less than $50,000 and debts between $10 million to $50 million. JEFFERY ENRIGHT: Case Summary & Four Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Jeffery J. Enright 805 South 5th Street Selah, Washington 98942 Bankruptcy Case No.: 06-01553 Chapter 11 Petition Date: July 6, 2006 Court: Eastern District of Washington (Spokane/Yakima) Debtor's Counsel: Donald D, Hackney, Esq. Hackney & Carroll 120 North Wall Street, Suite 500 Spokane, Washington 99201 Tel: (509) 624-8200 Fax: (509) 623-1491 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Four Largest Unsecured Creditors: Entity Claim Amount ------ ------------ KeyBank $183,941 P.O. Box 145404 Cincinnati, OH 45250 Bank of America $4,000 P.O. Box 60069 City Industry, CA 91716 Nordstrom Bank $800 P.O. Box 79137 Phoenix, AZ 85062-9137 James A. Perkins, Esq. $500 P.O. Box 550 Yakima, WA 98907-0550 JMJ ENTERPRISES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: JMJ Enterprises International Inc. 10759 Magnolia Avenue, Suite F Riverside, California 92882 Bankruptcy Case No.: 06-11700 Chapter 11 Petition Date: July 6, 2006 Court: Central District Of California (Riverside) Judge: Mitchel R. Goldberg Debtor's Counsel: Todd B. Becker, Esq. 3750 East Anaheim Street, Suite 100 Long Beach, California 90804 Tel: (562) 495-1500 Fax: (562) 494-8904 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor does not have any creditors who are not insiders. JOVE CORP: Posts $101,314 Net Loss in 2006 Fiscal 1st Quarter ------------------------------------------------------------- Jove Corp., incurred a net loss of $101,314 on $36,105 of revenues for the three months ended March 31, 2006. At March 31, 2006, the Company's balance sheet showed $1,274,384 in total assets, $1,535,149 in total liabilities and $260,765 of stockholders' equity. The Company's March 31 balance sheet also showed strained liquidity with $765,300 in total current assets available to pay $1,535,149 in total current liabilities coming due within the next 12 months. A full-text copy of the regulatory filing is available for free at http://ResearchArchives.com/t/s?d5d Going Concern Doubt Freedman & Goldberg, CPA, in Farmington Hills, Michigan, raised substantial doubt about Jove Corp's ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's losses from operations since inception. About Jove Corp Based in Berkley, Michigan, Jove Corporation engages in the development and commercialization of the developmental software for the network supported by major banking institutions. The Company owns 100% interest in Innovative Business Systems, LLC, an approved IBM software development partner. In addition, it has 27.4% interest in MessageWay Solutions, Inc., which provides middleware software solutions that enable user companies to communicate with their customers' and suppliers' database and software applications. LIFEPOINT HOSPITALS: S&P Affirms BB Rating With Negative Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on LifePoint Hospitals Inc., including the 'BB' corporate credit rating. The rating outlook is negative. The affirmation follows the company's announcement of an increase in the size of its term loan by $50 million. This additional borrowing will help fund the acquisition of four hospitals from HCA Inc. The rating reflects LifePoint's aggressive growth strategy, uncertain reimbursement rates from Medicare and managed care clients, and moderately high leverage, highlighted by the April 2005 acquisition of Province Healthcare Inc., and the long-awaited acquisition of four hospitals from HCA. These acquisitions have helped strengthen the company's business profile by increasing the size and diversity of its hospital portfolio to 53 facilities in 20 states, from 30 hospitals in nine states. In addition, the acquisitions have improved the company's payor mix by lessening its concentration in any state, particularly with regard to Kentucky. Still, LifePoint, assuming it completes the acquisition of four hospitals from HCA, has more than doubled its size within a reasonably short period of time. "This has created the challenge of effectively operating a much-enlarged organization. The company has had unexpected difficulties with certain acquired hospitals. LifePoint also remains subject to uncertain third-party reimbursement," said Standard & Poor's credit analyst David Peknay. LIGAND PHARMACEUTICALS: Settles Securities Fraud Suit in Calif. --------------------------------------------------------------- Ligand Pharmaceuticals Inc. has settled the securities class action litigation filed in the U.S. District Court for the Southern District of California against the company and certain of its directors and officers. In addition, the company has also reached an agreement to settle the shareholder derivative actions filed on behalf of the company in the Superior Court of California and the U.S. District Court for the Southern District of California. The settlements, which are subject to court approval, resolve all claims by the parties, including those asserted against Ligand and the individual defendants in these cases. Under the agreements, in exchange for a release of all claims, the company will pay a total of $12.15 million in cash. The company's insurance carrier will fund the settlement amounts and a portion of the company's total legal expenses while the Company will pay the remainder of the legal fees. As part of the settlement of the state derivative action, the company has agreed to adopt certain corporate governance enhancements. Neither the company nor any of its current or former directors and officers made any admission of liability or wrongdoing. A related investigation by the Securities and Exchange Commission is ongoing and is not affected by the settlements. "Although Ligand believes these suits are without merit, the Company is pleased to put the uncertainty, expense, and management time drain of the class action and derivative litigation behind it and believes that the decision to settle is in the best interests of its shareholders," said David E. Robinson, Ligand Chairman, President and Chief Executive Officer. "Settling this litigation will also facilitate continued full focus of our organization on the ongoing strategic alternatives process and the Company's business," Mr. Robinson added. About Ligand Pharmaceuticals Ligand Pharmaceuticals Incorporated -- http://www.ligand.com/-- discovers, develops and markets new drugs that address critical unmet medical needs of patients in the areas of cancer, pain, skin diseases, men's and women's hormone-related diseases, osteoporosis, metabolic disorders, and cardiovascular and inflammatory diseases. Ligand's proprietary drug discovery and development programs are based on gene transcription technology, primarily related to intracellular receptors. At March 31, 2006, the Company's balance sheet showed a $224,358,000 stockholders' deficit. The Company reported $110,419,000 of stockholders' deficit at Dec. 31, 2005. LONDON FOG: Perry Ellis Demands $200,000 Expense Reimbursement -------------------------------------------------------------- Perry Ellis International, Inc., asks the U.S. Bankruptcy Court for the District of Nevada to determine that the $200,000 it is asking from London Fog Group, Inc., and its debtor-affiliates as reimbursement for its expenses as a stalking-horse bidder to the sale the Debtor's Pacific Trail brands is reasonable. As reported in the Troubled Company Reporter on March 31, 2006, Columbia Sportswear Company outbid Perry Ellis with a $20.4 million cash bid plus the assumption of certain liabilities. Under the original asset purchase agreement between the Debtors and Perry Ellis, Perry Ellis is entitled to a $397,750 breakup fee and a $200,000 expense reimbursement if it loses at the auction. The breakup has been paid. Perry Ellis asked the Debtors and the Official Committee of Unsecured Creditors to sign an agreed order on the expense reimbursement. The Debtors and the Committee agreed but wanted Wachovia National Bank Association and DDJ Capital Management, LLC, as parties to the agreed order. Wachovia is the Debtors' senior secured lender while DDJ Capital is their junior secured lender. DDJ Capital refused to sign the agreed order based on the belief that the Debtors' estates may have claims against Perry Ellis in connection with a post-closing agreement between Perry Ellis, Columbia and Levi Strauss & Company relating to Columbia's subsequent transfer of the Dockers' license to Perry Ellis. Jeffrey L. Hartman, Esq., at Hartman & Hartman reminds the Court that Perry Ellis is already entitled to expense reimbursement based on prior Court orders. Additionally, as a result of Perry Ellis' participation in the auction process, the Debtors were able to sell the assets for $20.4 million. The stalking horse transaction directly and substantially benefited the Debtors and their estates, Mr. Hartman contends. Headquartered in Seattle, Washington, London Fog Group, Inc. -- http://londonfog.com/-- designs and retails the latest styles in jackets and other professional apparel. The company and six of its affiliates filed for chapter 11 protection on March 20, 2006 (Bankr. D. Nev. Case No. 06-50146). Stephen R. Harris, Esq., at Belding, Harris & Petroni, Ltd., represents the Debtors in their restructuring efforts. Avalon Group, Ltd., serves as the Debtors' financial advisor. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million to $100 million. MESABA AVIATION: U.S. Trustee Wants Monthly Reports Filed On Time ----------------------------------------------------------------- Habbo G. Fokkena, U. S. Trustee for Region 12, asks the United States Bankruptcy Court for the District of Minnesota to compel Mesaba Aviation, Inc., dba Mesaba Airlines, to submit all delinquent operating reports, and to timely submit all future operating reports as is necessary. The U. S. Trustee complains that the Debtor failed to submit operating reports for April and May 2006. "Failure to submit the operating reports denies creditors and the U.S. Trustee the ability to monitor the Debtor's post petition operations, including losses and accrued liabilities," Sarah J. Wencil, trial attorney for the U.S. Trustee, tells the Court. Ms. Wencil notes that the Bankruptcy Code and Rules require debtors to submit monthly operating reports and file those reports with the Court. The Debtor should be compelled to become current and stay current with that duty, particularly in the circumstances of the Chapter 11 case where the Debtor is alleging large monthly losses of money and threatening to liquidate if certain of its requests are not granted, Ms. Wencil explains. Debtor Responds For several months, MAIR Holdings, Inc., the Debtor's owner, has engaged Deloitte & Touche to assist it in preparing its annual Form 10-K to be filed with the Securities and Exchange Commission, Will R. Tansey, Esq., at Ravich, Meyer, Kirkman, McGrath & Nauman, in Minneapolis, Minnesota, tells the Court. In connection with Deloitte's audit of MAIR's financial statements, Deloitte must audit the financial reports of the Debtor. Mr. Tansey points out that Deloitte's audit has been complicated by the deadline for filing proofs of claims for non-governmental entities in the Chapter 11 case. Deloitte, MAIR, and the Debtor are engaged in an extensive analysis of the likely liability of the Debtor on a significant number of claims filed at the end of February. In light of the ongoing audit, the Debtor was unable to close its books for March 2006 until Deloitte had substantially completed its audit of March results -- causing a delay in the preparation and service of the March monthly operating report, Mr. Tansey asserts. Consequently, the delay in finalizing the March operating report made it impossible for the Debtor to timely prepare and serve operating reports for April and May. Mr. Tansey notes that the Debtor has already served the U.S. Trustee with the April operating report on June 24, 2006, and the Debtor intends to finalize and file the May operating report by July 7. The Debtor believes that it will be able to timely prepare and serve future reports on the 25th of each month. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MESABA AVIATION: Renews Request to Reject CBAs with Unions ---------------------------------------------------------- Mesaba Aviation, Inc., dba Mesaba Airlines, renews its request and asks the U.S. Bankruptcy Court for the District of Minnesota for permission to reject its collective bargaining agreements with the Air Line Pilots Association, International, the Association of Flight Attendants-CWA, AFL-CIO, and the Aircraft Mechanics Fraternal Association, pursuant to Section 1113(c). The Honorable Gregory F. Kishel had previously denied the Debtor to reject its CBAs with the unions. The Debtor tells the Court that it revised its Section 1113 proposals to the unions to correct the defects identified by the Court and presented each union with a comprehensive written proposal to modify their CBAs. According to Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman, in Minneapolis, Minnesota, each proposal was accompanied by a spreadsheet showing: (a) the group's target savings number, based on a 19.4% cost reduction; (b) how the Debtor proposed for each group to meet its target; and (c) the underlying costing of each of the line items that was identified as a savings target. Mr. Meyer submits that the Term Sheets, the Costing Sheets, and the underlying Business Plan: (a) were based on the most complete and reliable information available to the Debtor at the time the proposals were made; and (b) assure that the employees are treated fairly and equitably. The Debtor arranged for all union negotiators to be released from duty for the purpose of preparing for and attending bargaining meetings with the Debtor. The Debtor met with the union representatives as often as they made themselves available. The Debtor responded to numerous information requests from AMFA, AFA, and ALPA and gave the unions all relevant information as is necessary to evaluate the Debtor's proposals, Mr. Meyer relates. The Debtor has stated consistently that consensual agreements with its unions are the most desired outcome. To date, however, the Debtor has reached agreement only with the Transport Workers Union of America. AMFA, AFA and ALPA adhere to the position that the Debtor does not need 19.4% in labor savings for six years, Mr. Meyer says. The Debtor has made all reasonable efforts to explain the necessity of firmly identifying the cost structure it needs to participate in the immediate process of negotiating Northwest's acceptance of the Omnibus ASA, now reduced to addressing only 49 Saabs, and following through on a conditional bid it placed on January 17, 2006, as amended on January 31, 2006, in response to a Northwest RFP for 126 regional jet aircraft. The Debtor notes that its survival is dependent on securing relief under Sec. 1113(c) of the Bankruptcy Code, as it continues to lose money at the rate of approximately $2,000,000 to $3,000,000 per month. Absent any DIP financing, the accelerating losses will result in the Debtor exhausting its cash by the end of August 2006. The Debtor believes, and has so advised the unions, that their reasons for refusing to bargain do not constitute good cause and that a delay in the Section 1113(c) process seriously jeopardizes the Debtor's ability to not only survive, but to take timely steps to put in place the principal building block of its plan of reorganization -- the commitment for future business. With AMFA, AFA and ALPA failing to provide good cause for rejecting the Debtor's proposal, the Debtor has no alternative but to seek authority to reject the CBAs in accordance with the Bankruptcy Code, Mr. Meyer says. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MESABA AVIATION: Court Approves Aircraft Use Pact With Northwest ---------------------------------------------------------------- The Hon. Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota gave Mesaba Aviation, Inc., dba Mesaba Airlines, permission to enter into the Aircraft Use and Return Conditions Agreement with Northwest Airlines Inc. The Debtor currently operates a fleet of commercial aircraft leased or subleased from Northwest Airlines, Inc., pursuant to an Airline Services Agreement dated August 29, 2005. As of the Petition Date, the Debtor leased or subleased 35 AVRO 146-RJ85A aircraft in addition to Saab aircraft. As part of its reorganization, Northwest has determined to remove the AVROs, including the Aircraft from the Debtor's fleet prior to the termination dates specified in the subleases. According to Will R. Tansey, Esq., at Ravich Meyer Kirkman McGrath & Nauman, in Minneapolis, Minnesota, Northwest's determination to remove the Debtor's AVROs from its fleet and flight schedule raises issues related to the Debtor's obligations under the ASA and the subleases, including the Debtor's obligations to meet return conditions. Both Northwest and the Debtor are operating in Chapter 11 and neither has assumed or rejected the relevant contracts, Mr. Tansey reminds the Court. To address the considerable uncertainty surrounding both parties' rights and obligations under the subleases, the Debtor and Northwest entered into an aircraft use and return conditions agreement. The Agreement amends certain lease and sublease agreements pursuant to which the Debtor: -- subleases three British Aerospace AVRO Model 146-RJ85A; and -- leases 10 ten British Aerospace AVRO Model 146-RJ85A AVRO 146-RJ85A aircraft. The amendments provide for an earlier termination date, and modifies and resolves any disputes concerning the required Aircraft return conditions specified in each sublease agreement. Mr. Tansey asserts that the Agreement permits the Debtor and Northwest to focus on reorganization, and avoid potentially significant litigation costs related to the amount and priority of claims associated with returning the Aircraft. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945- 7000). MIRANT CORP: U.S. Trustee Wants Ch. 11 Cases of 13 Units Dismissed ------------------------------------------------------------------ William T. Neary, the U.S. Trustee for Region 17, asks Judge Michael D. Lynn of the U.S. Bankruptcy Court for the Northern District of Texas to dismiss the Chapter 11 cases of 13 debtor affiliates of Mirant Corporation: Debtor Case No. ------ -------- Mirant Capital Management, L.L.C. 03-46622 Mirant Central Texas, L.P. 03-46624 Mirant D.C. O&M, L.L.C. 03-46627 Mirant Danville, L.L.C. 03-46628 Mirant Gastonia, L.L.L. 03-46632 Mirant Michigan Investments, Inc. 03-46638 Mirant Mid-Atlantic Services, L.L.C. 03-46639 Mirant New England, Inc. 03-46640 Mirant Parker, L.L.C. 03-46643 Mirant Peaker, L.L.C. 03-46644 Mirant Sugar Creek Holdings, Inc. 03-46651 Mirant Sugar Creek Ventures, Inc. 03-46652 Mirant Texas Investments, Inc. 03-46654 Assistant U.S. Trustee George F. McElreath relates that the 13 Debtors have ceased to exist either by virtue of a motion approving a merger or dissolution of each of the entities granted by the Court or by virtue of the terms of the Plan of Reorganization. Moreover, pursuant to Section 1930(a)(6) of the Judicial Procedures Code, the quarterly fees due to the U.S. Trustee will continue to accrue in each case until it is closed, dismissed or converted to another chapter. Mr. McElreath tells the Court that in spite of any merger or dissolution that may have taken place, each of the 13 cases is considered an open case for quarterly fee purposes. Accordingly, as a matter of good housekeeping, it would be in the best interest of creditors and the Debtors' estates for the Court to order dismissal of each of the cases, he says. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on January 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Dec. 8, 2005, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to power generator and developer Mirant Corp. and said the outlook is stable. That rating reflected the credit profile of Mirant, based on the structure the company expects to have on emergence from bankruptcy at or around year-end 2005, S&P said. MIRANT CORP: NY-Gen Unit to Repair Swinging Bridge Dam Property --------------------------------------------------------------- The Honorable Michael D. Lynn of the U.S. Bankruptcy Court for the Northern District of Texas allowed Mirant NY-Gen, LLC, to use its estate property to do remediation in one of its hydroelectric facilities. Mirant NY-Gen, LLC, discovered a sinkhole in the property -- the Swinging Bridge Dam -- in May 2005. As a result, Mirant NY-Gen ceased its operation of the facility. Pursuant to the direction of the Federal Energy Regulatory Commission, Mirant NY-Gen took all the necessary steps to address the sinkhole by: * implementing a systematic plan for testing and evaluating the integrity of the dam; and * engaging in repairs of the sinkhole and related damage to the dam. Jeff P. Prostok, Esq., at Forshey & Prostok LLP, in Fort Worth, Texas, noted that Mirant NY-Gen and the FERC's experts and advisors have identified and analyzed elements of a final remediation plan for the Swinging Bridge Dam. In a letter dated June 14, 2006, the FERC approved the final remediation plan to address the safety issues raised by remediation of the Swinging Bridge Dam. The FERC directed Mirant NY-Gen to implement the Final Remediation Plan. The Final Remediation Plan requires Mirant NY-Gen to, among others, construct certain filters and rehabilitate certain tunnels of the dam. Mr. Prostok says the construction activities will be completed by November 2006. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03-46590), and emerged under the terms of a confirmed Second Amended Plan on January 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 100; Bankruptcy Creditors' Service, Inc., 215/945-7000) * * * As reported in the Troubled Company Reporter on Dec. 8, 2005, Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to power generator and developer Mirant Corp. and said the outlook is stable. That rating reflected the credit profile of Mirant, based on the structure the company expects to have on emergence from bankruptcy at or around year-end 2005, S&P said. MUSICLAND HOLDING: Court OKs Stipulation Paying Postpetition Debts ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved Musicland Holding Corp. and its debtor-affiliates' Stipulation with Licensing Ventures, Inc. As reported in the Troubled Company Reporter on Jun 7, 2006, the Debtors and LVI stipulate that: (1) in full and final settlement of LVI's Motion to Compel the Debtors to pay postpetition expenses, and of all claims asserted by LVI, the Debtors will pay LVI $239,492, representing the difference between: * $387,500, which as agreed on by the Parties will constitute LVI's allowed administrative claim; and * $148,007, which LVI owes and is obligated to turn over to the Debtors, but which the Debtors will allow LVI to retain under the settlement. (2) the Debtors will make the Settlement Payment to LVI without delay; (3) the Debtors will no longer be obligated to hold $622,138 in Internet sale proceeds in a separate account; (4) LVI's Motion to Compel will be withdrawn, without prejudice; (5) the Supply Agreement and the License Agreement will be deemed rejected as of March 22, 2006; and (6) LVI and the Debtors mutually release and waive any and all claims asserted against each other. Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) MYLAN LABORATORIES: S&P Raises Sr. Notes' Rating to BBB- from BB+ ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'BBB-' rating to Mylan Laboratories Inc.'s proposed new $700 million senior unsecured revolving credit facility due 2011, and raised its rating on Mylan's existing senior unsecured notes to 'BBB-' from 'BB+'. At the same time, Standard & Poor's affirmed its 'BBB-' corporate credit rating on the Canonsburg, Pa.-based generic drug maker. Standard & Poor's will withdraw its 'BBB-' senior secured debt rating on Mylan at the completion of the new credit facility. The rating actions reflect Mylan's continued solid position in the expanding generic drug industry and new $700 million revolving credit facility's unsecured status, meaning that lenders will fare no better than other unsecured creditors in the event of payment default. NES RENTALS: S&P Puts B- Rating on Proposed $430MM Loan Facility ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on equipment rental company NES Rentals Holdings Inc., including its 'B+' corporate credit rating. All ratings were removed from CreditWatch with negative implications. Ratings were originally placed on CreditWatch developing on Feb. 22, 2006. At the same time, Standard & Poor's assigned its 'B-' secured bank loan rating to NES's proposed $430 million second-lien term loan facility due in seven years. A recovery rating of '4' was assigned, indicating marginal prospects for recovery following repayment of the entire principal amount of the unrated $450 million first-lien revolving ABL facility in the event of a default. Ratings on the existing second-lien term loan will be withdrawn when the deal is expected to close in July 2006. The outlook is stable. The Chicago, Illinois-based company's sales for 2005 approached $600 million and its total debt outstanding was about $430 million. "The affirmation reflects our view that NES's credit profile will remain within metrics commensurate for the existing rating, and the expectations that the company will continue to demonstrate financial and operational discipline," said Standard & Poor's credit analyst John R. Sico. NES has signed a definitive agreement to sell the company to an affiliate of Diamond Castle Holdings LLC, a private equity firm, in a transaction valued at $850 million. NORTEL NETWORKS: Performance Concerns Cues DBRS to Hold Ratings --------------------------------------------------------------- Dominion Bond Rating Service confirmed the long-term ratings of Nortel Networks Capital Corporation, Nortel Networks Corporation, and Nortel Networks Limited at B (low) along with the preferred share ratings of Nortel Networks Limited at Pfd-5 (low). All trends are Stable. * Senior Unsecured Notes Confirmed B (low) Stb * Convertible Notes Confirmed B (low) Stb * Notes & Long-Term Senior Debt Confirmed B (low) Stb * Class A, Redeemable Preferred Shares Confirmed Pfd-5 (low) Stb * Class A, Non-Cumulative Redeemable Preferred Shares Confirmed Pfd-5 (low) Stb The unsecured ratings of Nortel remain at B (low) with the Company recently completing a $2 billion debt refinancing that has given Nortel a 100% unsecured debt structure. Despite the removal of the secured debt from its capital structure, DBRS maintained the unsecured ratings of Nortel at B (low), reflecting heightened concerns about Nortel's ability to improve its operating performance despite the Company implementing a strategy to improve its competitive position over the medium term. DBRS's concerns are predominantly attributable to revenue and margin pressures resulting from customer consolidation and the increasing presence of emerging market vendors in both the wireline and wireless segments, both of which negatively impacted Q1 2006 results. However, DBRS does acknowledge that this recent debt issuance extends the Company's debt maturity profile, with the nearest debt maturity being $1.8 billion in 2008. In addition, Nortel will maintain a cash balance of approximately $2.6 billion pro forma the debt issuance, which provides the Company with a significant cushion to absorb contingencies, such as potential cash settlements relating to the U.S. Securities and Exchange Commission and Ontario Securities Commission investigations. In addition, Nortel will need to make substantial payments related to pension funding and cash payments relating to previous restructuring initiatives; thus, Nortel's debt levels are expected to remain high for the near term. DBRS will continue to monitor Nortel's progress on several key issues over the next 18 months. These issues include the Company's ability to grow revenues above the current $10.5 billion annual run rate while keeping its gross margins above 40%; and the implementation of its new financial reporting system. The system should assist management in providing more timely reporting and helping to resolve several of the outstanding material weaknesses relating to internal controls, which have weighed negatively against the Company's credibility. DBRS notes that if Nortel can improve its cash flow from operations over the medium term, which targets approximately $1.5 billion in margin improvements over the next three years, while resolving most of its outstanding contingencies without a significant deterioration of its current financial profile, the potential for ratings improvement may exist. NORTHWEST AIRLINES: Flight Attendants Choose AFA-CWA as New Rep -------------------------------------------------------------- Northwest flight attendants elected the Association of Flight Attendants-CWA as their new bargaining representative on Thursday. AFA-CWA received 4,349 votes. The total vote exceeded the Railway Labor Act requirement that 50% plus one of unit members vote in the election in order to change representation. "Despite the many obstacles along the path, Northwest flight attendants today took control of their careers and joined forces with the strongest flight attendant union in the world," Patricia Friend, AFA-CWA International President, said. "For the first time in a long while, our sisters and brothers at Northwest have hope. They are hopeful that with AFA-CWA's wealth of experience in negotiating with airlines in bankruptcy, their careers will be protected." AFA-CWA plans to begin negotiations immediately with the company. On June 30, a federal bankruptcy judge gave Northwest permission to impose terms detailed in a tentative agreement that the flight attendants struck down earlier this year if an agreement could not be reached within two weeks. AFA-CWA launched the organizing campaign in September 2005 after a coalition of Northwest flight attendants approached the union seeking new representation. From the beginning, the Northwest AFA-CWA campaign has been a model of grassroots organizing. While AFA-CWA supported their efforts at every opportunity, this was a campaign initiated, led, and conducted by Northwest flight attendants. For over 60 years, the Association of Flight Attendants -- http://www.afanet.org/-- has been serving as the voice for flight attendants in the workplace, in the aviation industry, in the media and on Capitol Hill. More than 46,000 flight attendants at 20 airlines come together to form AFA-CWA, the world's largest flight attendant union. AFA is part of the 700,000-member strong Communications Workers of America, AFL-CIO. About Northwest Airlines Northwest Airlines Corporation (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. ONEIDA LTD: Equity Committee Hires Brown Rudnick as Counsel ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York allowed the Official Committee of Equity Security Holders in Oneida Ltd., and its debtor-affiliates' chapter 11 cases to hire Brown Rudnick Berlack Israels LLP as its counsel, nunc pro tunc to May 22, 2006. Brown Rudnick was originally retained by an ad hoc committee of stockholders. Three former members of that ad hoc committee comprise the Equity Committee. As part of that prior engagement, Brown Rudnick, among other things: (a) developed a significant knowledge base regarding the Debtors; (b) began reviewing the numerous bankruptcy and other legal issues that will drive the maximization of value to stockholders; and (c) successfully petitioned the Court for the appointment of the Equity Committee. Brown Rudnick will: (a) assist and advise the Equity Committee in its discussions with the Debtors and other parties in interest regarding the overall administration of the Debtors' chapter 11 cases; (b) represent the Equity Committee at hearings to be held before the Court and communicating with the Equity Committee regarding the matters heard and the issues raised as well as the decisions and considerations of the Court; (c) assist and advise the Equity Committee in its examination and analysis of the conduct of the Debtors' affairs; (d) review and analyze pleadings, orders, schedules, and other documents filed and to be filed with the Court by interested parties in the Debtors' Chapter 11 cases; advise the Equity Committee as to the necessity, propriety, and impact of the foregoing upon these cases; and consent or object to pleadings or orders on behalf of the Equity Committee, as appropriate; (e) assist the Equity Committee in preparing the applications, motions, memoranda, proposed orders, and other pleadings as may be required in support of positions taken by the Equity Committee, including all trial preparation as may be necessary; (f) confer with the professionals retained by the Debtors and other parties-in-interest, as well as with other professionals as may be selected and employed by the Equity Committee; (g) coordinate the receipt and dissemination of information prepared by and received from the Debtors' professionals, as well as any information as may be received from professionals engaged by the Equity Committee or other parties-in-interest in the Debtors' chapter 11 cases; (h) participate in examinations of the Debtors and other witnesses as may be necessary in order to analyze and determine, among other things, the Debtors' assets and financial condition, whether the Debtors have made any avoidable transfers of property, or whether causes of action exist on behalf of the Debtors' estates; (i) negotiate and formulate a plan of reorganization for the Debtors; and (j) assist the Equity Committee generally in performing other services as may be desirable or required for the discharge of the Equity Committee's duties pursuant to Section 1103 of the Bankruptcy Code. Robert J. Stark, Esq., a partner at the firm, disclosed that he charges $600 per hour for his services. Emilio Galvan, Esq., who will be helping Mr. Stark charges $575 per hour. Steven B. Smith, Esq., charges $480. Other Brown Rudnick attorneys or paraprofessionals will provide additional supporting legal services on behalf of the Equity Committee. These hourly rates for Brown Rudnick's attorneys and paraprofessionals are currently in effect: Attorneys $200 to $825 Paraprofessionals $175 to $240 Mr. Stark assured the Court that his firm and its professionals do not hold any material interest adverse to the Debtors' estate and are disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Based in Oneida, New York, Oneida Ltd. -- http://www.oneida.com/ -- is the world's largest manufacturer of stainless steel and silverplated flatware for both the Consumer and Foodservice industries, and the largest supplier of dinnerware to the foodservice industry. Oneida is also a leading supplier of a variety of crystal, glassware and metal serveware for the tabletop industries. The Company and its 8 debtor-affiliates filed for Chapter 11 protection on March 19, 2006 (Bankr. S.D. N.Y. Case Nos. 06-10489 through 06-10496). Douglas P. Bartner, Esq., at Shearman & Sterling LLP represents the Debtors. Credit Suisse Securities (USA) LLC is the Debtors' financial advisor. Scott L. Hazan, Esq., and Lorenzo Marinuzzi, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represent the Official Committee of Unsecured Creditors. Robert J. Stark, Esq., at Brown Rudnick Berlack Israels LLP represents the Official Committee of Equity Security Holders. When the Debtors filed for protection from their creditors, they listed $305,329,000 in total assets and $332,227,000 in total debts. On May 12, 2006, Judge Gropper approved the Debtors' disclosure statement. Judge Groper has set 10:00 a.m. on July 12, 2006, to consider confirmation of the Debtors' plan. ONEIDA LTD: Equity Panel Slams PBGC's $50-Mil. "Allowed" Claim ----------------------------------------------------------------- The Official Committee of Equity Security Holders appointed in the chapter 11 cases of Oneida Ltd. and its debtor-affiliates objected to the proposed settlement agreement entered into among the Debtors, the Official Committee of Unsecured Creditors and the Pension Benefit Guaranty Corporation. Robert J. Stark, Esq., at Brown Rudnick Berlack Israels LLP, in Manhattan, said that the settlement, which deems allowed an "estimated" claim for the PBGC amounting to around $50 million, unfairly and inequitably prejudices the interests of equity security holders. According to Mr. Stark, the stipulated PBGC claim is grossly overstated and, therefore, not legally sustainable. The PBGC's alleged claim is predicated on the termination of one of the Debtors' pension plans and, in turn, the PBGC's obligation to pay future benefits under the terminated plan. Under Section 502(b) of the, the PBGC's claim for future obligations must be discounted to its present value as of the Debtor's bankruptcy filing. In calculating the PBGC's deemed allowed claim, the parties utilized an overly conservative discount rate adopted by the PBGC for non-bankruptcy purposes. Mr. Stark points out that this is not in keeping with the law. Rather, the overwhelming weight of authority holds that those claims must be discounted using a "prudent investor" rate. The Equity Committee's experts have concluded that, due to this error, the stipulated claim is overstated by about $24.8 million. Mr. Stark adds that the stipulated PBGC claim is further overstated due to certain miscalculations. In reaching the $50 million "deemed allowed" claim, the settling parties failed to: (a) account for a claim off-set arising from value in an employee stock ownership plan; and (b) reduce future benefits that are not legally sustainable under the Employee Retirement Income Security Act of 1974. As a result of these miscalculations, the stipulated claim is overstated by an additional $4 million, Mr. Stark contends. Mr. Stark explains that the settlement unfairly and inequitably prejudices the interests of equity security holders by artificially hindering their ability to present their valuation case to the Court. As part of the settlement, the PBGC will receive a nominal distribution under the pre-negotiated plan, while other similarly situated creditors receive full cash payment. Under that agreement, the estimation of the PBGC claim is a gratuitous add-on, with no substantive justification other than creating a more difficult environment for the Equity Committee to prove that stockholders are entitled to estate value. Tellingly, Mr. Stark points out, the stipulated claim is effective "solely for purposes of the [Pre-Negotiated Plan]." Thus, if that plan is not confirmed or respecting any other issue in the Chapter 11 cases, the "deemed allowed" claim is not binding on any party and, presumably, the Debtors and the Official Creditors' Committee will institute litigation to reduce the amount of the PBGC's alleged claim. This qualifier speaks volumes about how resolute the Debtors and the Official Creditors' Committee are in their belief that the stipulated claim amount is, in fact, sustainable. Mr. Stark argues that the settlement prohibits distributions to equity security holders absent full satisfaction of the "deemed allowed" claim, regardless of whether it is sustainable, or unless the PBGC consents. In so doing, the settling parties afforded the PBGC the right to "claim" an artificially high entitlement to estate value, and also place the PBGC in the role of "gate-keeper" respecting any settlement discussions involving the Equity Committee. This is entirely inappropriate, Mr. Stark laments. Based in Oneida, New York, Oneida Ltd. -- http://www.oneida.com/ -- is the world's largest manufacturer of stainless steel and silverplated flatware for both the Consumer and Foodservice industries, and the largest supplier of dinnerware to the foodservice industry. Oneida is also a leading supplier of a variety of crystal, glassware and metal serveware for the tabletop industries. The Company and its 8 debtor-affiliates filed for Chapter 11 protection on March 19, 2006 (Bankr. S.D. N.Y. Case Nos. 06-10489 through 06-10496). Douglas P. Bartner, Esq., at Shearman & Sterling LLP represents the Debtors. Credit Suisse Securities (USA) LLC is the Debtors' financial advisor. Scott L. Hazan, Esq., and Lorenzo Marinuzzi, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represent the Official Committee of Unsecured Creditors. Robert J. Stark, Esq., at Brown Rudnick Berlack Israels LLP represents the Official Committee of Equity Security Holders. When the Debtors filed for protection from their creditors, they listed $305,329,000 in total assets and $332,227,000 in total debts. On May 12, 2006, Judge Gropper approved the Debtors' disclosure statement. Judge Groper has set 10:00 a.m. on July 12, 2006, to consider confirmation of the Debtors' plan. OPAL CONCEPTS: U.S. Trustee Wants Chapter 11 Cases Dismissed ------------------------------------------------------------ The U.S. Trustee for Region 16 asks the U.S. Bankruptcy Court for the Central District of California to dismiss the chapter 11 cases of Opal Concepts, Inc., and its debtor-affiliates or to convert them to chapter 7 liquidation proceedings. Michael J. Hauser, Esq., tells the Court that the Debtors have not paid their quarterly fees to the U.S. Trustee since April 30, 2006. The U.S. Trustee had been informed that the Debtors currently have no cash on hand. Mr. Hauser pointed out that under Section 1112(b) of the Bankruptcy Code, a debtor's case can be dismissed for non-payment of fees required under Chapter 123 of the Judiciary Procedures Code. Mr. Hauser reminds the Court that under chapter 7, accrual of fees will stop. As reported in the Troubled Company Reporter July 7, 2006, Howard M. Ehrenberg, the responsible person appointed in the Debtors' cases and the Joint Committee of Creditors asked the Court for permission to use certain settlement funds to pay the U.S. Trustee quarterly fees. After the sale of substantially all of the Debtors' assets, the estates' remaining assets are claims that the Committee is pursuing against some of the Debtors' former directors and officers and the Debtors' former outside accounting and auditing firm. The Debtors' remaining prepetition liabilities total $27 million. Despite of the Debtors' lack of business operations, the U.S. Trustee continues to charge quarterly fees. The Debtors currently owe the U.S. Trustee $18,250. The Debtor wants to use funds from the trust account of Winthrop Couchet, the Creditors Committee's former counsel. The trust account, which has a $264,058 balance, was created by the Committee to hold proceeds from the sale of some claims to Cheveux Acquisition, LLC. Opal Concepts, Inc., used to manage Fantastic Sams, one of the largest franchised hair salon chains in the country with approximately 1,300 salons operating under its name. The Company and its affiliates filed for bankruptcy on July 16, 2002 (Bankr. C.D. Calif. Case No. 02-15441). Michael A. Morris, Esq., of Los Angeles, Calif., represent the Debtors in their restructuring efforts. Ames Davis, Esq., of Nashville, Tenn., and Derek W Edwards, Esq., at Waller Lansden Dortch & Davis, represent the Joint Committee of Creditors. The Debtors no longer have business operations after selling substantially all of their assets. Howard M. Ehrenberg is the Debtors' sole employee and responsible person handling the Debtors' estates. OWENS CORNING: Wants Plan-Filing Period Stretched to October 31 --------------------------------------------------------------- Owens Corning and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend the exclusive periods within which they retain the exclusive right to file a plan of reorganization and solicit acceptances of that plan through and including October 31, 2006. The Debtors want the extension to give them adequate time to complete the necessary procedures to gain approval of the Disclosure Statement accompanying their Sixth Amended Plan of Reorganization, solicit votes on the Plan and, assuming the Court confirms the Plan, bring the Plan to effectivity. Maintenance of exclusivity is appropriate and necessary to facilitate the Debtors' prompt emergence from bankruptcy in light of the key constituencies' support for the Sixth Amended Plan and given the scheduled July 10, 2006 Disclosure Statement Hearing and the September 18 Confirmation Hearing, Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington, Delaware, says. The Debtors assert that they have made substantial progress towards their reorganization. In addition to the agreements the Debtors have reached with their major creditor groups, Mr. Pernick tells the Court that these major steps have been taken towards confirmation: * The Debtors completed the process leading to the final decision on whether the plan should contain substantive consolidation and, as a result, the Sixth Amended Plan addresses the distributable values of the Debtors considered on a non-substantively consolidated basis; * The Debtors completed the process leading to a decision estimating Owens Corning's aggregate present and future asbestos liabilities; * The Debtors have analyzed and objected to the validity of numerous claims resulting in the disallowance or withdrawal of claims totaling $5.9 billion and the reduction of the Currently Disputed Claims by $1.8 billion, as of March 31, 2006; * Through the end of November 2005, the Debtors had rejected approximately 75 nonresidential real property leases, assumed 12 nonresidential real property leases, and assumed and assigned nine nonresidential real property leases; * The Debtors obtained a case management order relating to asbestos property damage claims and have resolved all but a handful of the hundreds of property damage cases originally filed for a fraction of the amounts originally claimed; * The Debtors sought approval of a settlement in principal of two purported nationwide class actions on behalf of purchasers of its Mira Vista roofing tile products. The aggregate amount of the claims was $275 million -- although the claimants have asserted in pleadings filed with the Court that their claims total $80 million; * The Debtors reached settlements with FM Insurance Co., AIG Companies, Allianz and Royal Indemnity Company resolving insurance coverage disputes related to asbestos "non- property" claims and filed motions seeking Court approval of the settlements; * The Debtors have resolved the vast majority of their prepetition mutual obligations with creditors that are subject to set-off; * The Debtors have sought and obtained approval to sell certain assets; * The Debtors have obtained approval under Section 363 of the Bankruptcy Code for various special business transactions and ventures, including: -- the restructuring of two of Owens Corning's joint ventures in China (OC Shanghai and OC Guangzhou); -- the restructuring of Owens Corning's Indian joint venture, Owens-Corning (India) Limited; -- the purchase of assets from Wolverine Fabricating, Inc.; -- authorization for Owens Corning to consummate the terms of a Stock Purchase Agreement with Vitro, S.A. de C. V., and -- the acquisition of the composites business of the Asahi Fiber Glass Co., Ltd. in Japan; and * The Debtors have obtained approval to implement a foreign fund repatriation program for tax purposes, plan of reorganization and post-confirmation tax planning. Mr. Pernick assures the Court that the requested exclusivity extension is not a negotiation tactic used to pressure creditors. The extension, he contends, will instead continue to allow the Debtors and their key constituencies to progress towards confirmation and emerge from bankruptcy this year. The Debtors believe that the extension is reasonable, justified, appropriate and realistic under the circumstances of their Chapter 11 cases. Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, the Company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 133; Bankruptcy Creditors' Service, Inc., 215/945-7000) OWENS CORNING: OCI Chemical Holds $1.47-Mil. Gen. Unsecured Claim ----------------------------------------------------------------- OCI Chemical Corp. filed two general unsecured, non-priority claims against Owens Corning: -- Claim No. 6626 for $4,995,160, asserting breach of contract; and -- Claim No. 6624 for $1,263,928, for goods sold prepetition. The Claims are based on a sales contract, entered on January 1, 1997, for OCI to sell soda ash to Owens Corning. The Debtors objected to Claim No. 6626 alleging that OCI willfully violated the automatic stay and anticipatorily breached the contract. OCI asserted that the contract was a forward contract merchant and, thus, OCI had the right to liquidate it without violating the stay. The Debtors and OCI later agreed to resolve their dispute. In a settlement agreement, the parties agree: a. to allow the Claims as against Owens Corning, on a final basis, as general unsecured non-priority claims at these amounts: * Claim No. 6626 for $225,000; and * Claim No. 6624 for $1,251,166; b. that the allowance of the Claims are in full and final satisfaction of all claims, liabilities or demands relating to the contract; and c. to release each other from all claims, liabilities and demands arising from the contract. At the Debtors' request, Judge Fitzgerald approves the Settlement. Owens Corning (OTC: OWENQ.OB) -- http://www.owenscorning.com/-- manufactures fiberglass insulation, roofing materials, vinyl windows and siding, patio doors, rain gutters and downspouts. Headquartered in Toledo, Ohio, the Company filed for chapter 11 protection on Oct. 5, 2000 (Bankr. Del. Case. No. 00-03837). Norman L. Pernick, Esq., at Saul Ewing LLP, represents the Debtors. Elihu Inselbuch, Esq., at Caplin & Drysdale, Chartered, represents the Official Committee of Asbestos Creditors. James J. McMonagle serves as the Legal Representative for Future Claimants and is represented by Edmund M. Emrich, Esq., at Kaye Scholer LLP. (Owens Corning Bankruptcy News, Issue No. 134; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARKWAY HOSPITAL: Exclusive Plan-Filing Period Extended to July 14 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York gave The Parkway Hospital, Inc. until: a) July 14, 2006, to file a plan; and b) Sept. 12, 2006, to solicit acceptances of that plan. As reported in the Troubled Company Reporter on July 3, 2006, the Debtor told the Court that it needs the extension to negotiate settlements with certain significant creditors. The Debtor said it is narrowing down outstanding issues with the Official Committee of Unsecured Creditors in order to formulate a consensual plan in final form. The Parkway Hospital, Inc., operates a 251-bed proprietary, acute care community hospital located in Forest Hills, New York. The Company filed for chapter 11 protection on July 1, 2005 (Bankr. S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper Rudnick Gray Cary US LLP, represents the Debtor in its restructuring efforts. The firm of Alston & Bird LLP serves as substitute bankruptcy counsel to the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $28,859,000 in total assets and $47,566,000 in total debts. PATH 1: American Stock Exchange to Delist Securities on July 17 --------------------------------------------------------------- The American Stock Exchange LLC(R) reported its final determination to remove the common stock and common stock purchase warrants of Path 1 Network Technologies, Inc. from listing on the Exchange, and filed an application on Form 25 to strike the Securities from listing with the Securities and Exchange Commission. The delisting will become effective on July 17, 2006 unless postponed by the SEC. Pursuant to its rules, the Exchange provided notice to Path 1 Network Technologies, Inc. of the decision to delist the Securities and an opportunity to appeal the decision to a panel designated by the Exchange's Board of Governors. About Path 1 Based in San Diego, California, Path 1 Network Technologies Inc. -- http://www.path1.com/-- provides a variety of software and services used for real-time, high-quality audio and video-on- demand distribution over Internet Protocol. Its Cx1000 broadcast video gateway is used to transmit and receive ASI and SDI video images over FastE and Gigabit Ethernet network interfaces. Paulson Capital owns almost 14% of it. Going Concern Doubt Swenson Advisors, LLP, in New York, raised substantial doubt about Path 1 Network Technologies Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's operating losses and inability to raise additional capital. At March 31, 2006, the Company's balance sheet showed $2,333,000 in total assets and $4,456,000 in total liabilities, resulting in a $2,136,000 stockholders' deficit. PEABODY ENERGY: Buys Australian Coal Company for $1.34 Billion -------------------------------------------------------------- Peabody Energy signed a merger implementation agreement to acquire Excel Coal Limited. Under the terms of the agreement, Peabody will pay AU$8.50 per share ($6.21) in cash for all outstanding shares, representing a total acquisition price of approximately $1.34 billion plus assumed debt of approximately $190 million. The acquisition is expected to be accretive to earnings per share and cash flows in 2007, and significantly accretive beyond as new capacity comes online. The transaction represents a 10.2% premium over Excel's one-month weighted average share price. "This transaction increases Peabody's position in the world's largest coal-exporting nation, and marks another step in our strategy to expand into high-growth global markets," Peabody President and Chief Executive Officer Gregory H. Boyce, said. "The combined entity creates one of the largest coal companies in Australia with some of the highest-quality products, mines and reserves. Excel is clearly the premier independent coal company in Australia, and we have very high regard for both the people and the assets." Nearly one-third of the world's coal exports come from Australia, and the U.S. Energy Information Administration projects that Australian coal exports are expected to increase 55% by 2030. Australian metallurgical and thermal coal serves the fast-growing Asian markets that will account for the majority of growth in the global coal industry in coming decades. The combination of Peabody's Australian operations and Excel's assets creates a major new player in the Australian coal sector, with substantial market diversity, a broad portfolio of metallurgical and thermal coal products, both domestic and seaborne customers, and the capacity to utilize multiple railroads and ports. Peabody currently produces 9 million tons of mostly metallurgical coal per year in Queensland. The purchase provides Peabody with extensive growth opportunities from its core operations, along with major metallurgical and thermal coalmines in the latter stages of development by Excel Coal. Excel produced 5.6 million tons of coal in calendar year 2005. Excel operations are expected to produce up to 15 million tons in calendar year 2007, and up to 20 million tons per year in 2008, from coalmines in New South Wales and Queensland. The transaction also provides substantial synergies in the areas of sales and trading, and reserve holdings in Queensland near existing Peabody operations. Excel has more than 500 million tons of metallurgical and thermal coal reserves. The acquisition would greatly expand Peabody's existing Queensland base. In the past five years, Peabody purchased the Wilkie Creek thermal coal mine, acquired the Burton and North Goonyella metallurgical coalmines, developed the Eaglefield metallurgical mine, and developed the Baralaba thermal and PCI mine. It also marks a return to New South Wales, where the company has significant experience and success. The transaction by way of "Scheme of Arrangement" is subject to various approvals including regulatory, court, Excel shareholders, and other conditions. Excel's directors have agreed not to solicit alternative proposals or competing transactions and not to respond to unsolicited approaches except as required by their fiduciary duties. In addition, Peabody is entitled to a reimbursement fee of AU$18 million under certain situations outlined in the merger implementation agreement. Closing is targeted for early in the fourth quarter 2006. About Excel Headquartered in Sydney, Australia, Excel Coal Company (ASX: EXL) -- http://www.excelcoal.com.au/-- produces a diverse range of products including thermal coal, hard coking coal, semi-soft coking coal and coke, most of which is sold under contract to major customers in both export and domestic markets. Excel's export production is shipped through the Port of Newcastle and Port Kembla. About Peabody Headquartered in St. Louis, Missouri, Peabody Energy Corp. (NYSE: BTU) -- http://www.peabodyenergy.com/-- is the world's largest private-sector coal company, with 2005 sales of 240 million tons of coal and U.S.$4.6 billion in revenues. Its coal products fuel 10% of all U.S. and 3% of worldwide electricity. * * * As reported in the Troubled Company Reporter on March 2, 2006, Moody's Investors Service upgraded Peabody Energy Corporation's corporate family rating to Ba1 from Ba2 and senior unsecured ratings to Ba2 from Ba3. PORTER HAYDEN: Dist. & Bankr. Court Approve Reorganization Plan --------------------------------------------------------------- Following a rare joint hearing before the U.S. District Court for the District of Maryland and the U.S. Bankruptcy Court for the District of Maryland, the Chapter 11 reorganization plan for Porter Hayden Company was approved on July 7, 2006. An Asbestos Trust, a pool of funds for payment of tens of thousands of existing claimants and potentially thousands of future claimants, was also created. U.S. District Court Judge Andre Davis and Bankruptcy Court Judge E. Stephen Derby confirmed the plan, which represents a comprehensive settlement negotiated by Paul Nussbaum of Whiteford, Taylor & Preston LLP, counsel for Porter Hayden; Philip Milch of Campbell & Levine, counsel for the Unsecured Creditors Committee, including the approximately 58,000 known plaintiffs with asbestos injury claims against Porter Hayden; and Edward Harron of Young Conaway, counsel for the Legal Representative for Future Asbestos Claimants. The key component of Porter Hayden's Reorganization Plan is the creation of the Asbestos Trust. 1) The Trust assets will include: a) all insurance policies and proceeds or other payments made by asbestos insurance companies in respect of Porter Hayden's claims; b) recoveries from the Manville Trust; c) cash or cash equivalents received by Porter Hayden after its reorganization; and d) 100% of the common stock of Porter Hayden. 2) The Asbestos Trust's purpose will be to: a) assume Porter Hayden's asbestos bodily injury liabilities; b) manage the affairs of Porter Hayden to maximize the value of its assets for the benefit of the asbestos claimants; and, c) under the continuing jurisdiction of the Bankruptcy and District Courts, equitably distribute those assets to both present and future asbestos bodily injury claimants. 3) The Reorganization Plan included a Channeling Injunction, permanently enjoining the assertion of any asbestos claim against Porter Hayden or against its insurers who contribute to the funding of the Asbestos Trust. "This reorganization accomplished precisely what was envisioned by Congress when it provided special legislation under Title 11 for Asbestos bankruptcies," Paul Nussbaum, counsel for Porter Hayden and chair of WTP's Bankruptcy Group, commented. "The Chapter 11 case and the Plan of Reorganization enjoyed the unanimous support of Asbestos claimants and has resulted in what will be enhanced recoveries for victims of asbestosis poisoning and a comprehensive method of efficiently and equitably processing payment for existing and future claimants." About Porter Hayden Headquartered in Baltimore, Maryland, Porter Hayden sold and installed insulation products. The Company went out of business in 1989. Since then, its activities have been limited to running off its asbestos claims, securing insurance coverage for the claims, and paying claims and related expenses. The Company filed for chapter 11 protection on March 15, 2002 (Bankr. D. Md. Case No. 02-54152). Paul Nussbaum, Esq., at Whiteford, Taylor & Preston, LLP, represents the Debtor. Philip Milch, Esq., at Campbell & Levine, represents the Unsecured Creditors Committee. Edward Harron, Esq., at Young Conaway, is counsel for the Legal Representative for Future Asbestos Claimants. PREDIWAVE CORP: Wants to Hire Latham & Watkins as Special Counsel ----------------------------------------------------------------- PrediWave Corporation asks the U.S. Bankruptcy Court for the Northern District of California for permission to hire Latham & Watkins LLP as its special counsel, nunc pro tunc to April 14, 2006. Latham & Watkins has served as principal litigation counsel to the Debtor since the Summer of 2005 and intends to continue in that role during the pendency of the Debtor's chapter 11 case. From and after June 2005, Latham & Watkins' attorneys have represented the Debtor in two pending lawsuits. The first was brought against Jimmy Li and Fu Sze Shing for breach of fiduciary duty, unfair competition, tortious interference with contract, tortious interference with prospective business advantage and declaratory relief. The second lawsuit, was brought by New World TMT Ltd., the holder of the Debtor's preferred stock and a contract party with Prediwave, against: * the Debtor, * CyberLancet Corporation, * CyberNova Corporation, * TechStock Corporation, * WarpEra Corporation, * Visionaire Technology Corporation, * S.T.U.B. SATertainment, Incorporated, * Athena Database, Incorporated, * Pine Global Marketing Limited, and * Jianping "Tony" Qu, the Debtor's chairman and majority stockholder. The Debtor has filed cross-claims against New World. The Debtor and the other defendants agree that the Debtors will pay 30% of Latham's fees and expenses in connection with the New World Action. The other defendants will pay the remaining 70%. Patrick E. Gibbs, Esq., a partner at the firm, discloses that as of the date of the filing of the Debtor's chapter 11 petition, Latham held around $91,000 as retainer. The Debtor made these payments to Latham during the 90-day period immediately preceding the Debtor's bankruptcy filing: -- $1,210,410.42 on January 17, 2006; -- $1,157,683.90 on January 27, 2006; -- $2,021,977.63 on March 6, 2006; and -- $2,602,977.07 on March 23, 2006. With regards to the New World action, the Debtor paid $3,817,745.97 on April 7, 2006, of which $2,000,000 was a retainer. The second payment was made on May 9, 2006 in the amount of $1,400,000, and this payment was made for the purpose of bringing the retainer back up to $2,000,000. Mr. Gibbs further discloses his firm's hourly rates: Partners and Counsel $475 to $895 Associates $250 to $600 Paralegals $115 to $290 Partners and counsel expected to be most active are: Paul H. Dawes $775 per hour Patrick E. Gibbs $595 per hour Daniel Scott Schecter $595 per hour Associates expected to be most active are: Xochitl Arteaga $360 per hour Emily Dahm $320 per hour Jennie Foote Feldman $410 per hour David Fortney $360 per hour David M. Friedman $430 per hour Risha Jamison $360 per hour Phillip J. Wang $410 per hour Paralegals expected to be most active are: Celeste Bucciarelli $220 per hour Amanda Gough $125 per hour Anna Moren $160 per hour Mr. Gibbs assures the Court that his firm and its professionals do not hold material interest adverse to the Debtor's estate and are disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Fremont, Calif., PrediWave Corporation -- http://www.prediwave.com/-- provides cable and satellite operators with end-to-end digital broadcast platforms, and offers products like Video On Demand, Digital Video Recording, interactive video shopping, and subscription services. The Debtor filed for chapter 11 protection on April 14, 2006 (Bankr. N.D. California Case No. 06-40547). Robert A. Klyman, Esq., at Latham & Watkins, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and more than $100 million in debts. PREMIER AUTOMOTIVE: Maryland Port Administration Can Evict Debtor ----------------------------------------------------------------- The Honorable James F. Schneider of the U.S. Bankruptcy Court for the District of Maryland refused to breathe life into Premier Automotive Services, Inc.'s lease with the Maryland Port Administration that expired before Premier filed for bankruptcy. Finding that Premier's bankruptcy petition was filed in bad faith, Judge Schneider also lifted the automatic stay in Premier's bankruptcy case, giving MPA officials the right to evict the Debtor. Premier Automotive had a vehicle-processing center located at the Dundalk Marine Terminal, a facility of the port of Baltimore that is owned and managed by the Maryland Port Administration, an agency of the State of Maryland. Premier Automotive occupied Lot 90 at the Terminal as a tenant since 1964. The Debtor constructed a 27,500 square-foot building at the beginning of its occupancy. On July 28, 1992, Premier and MPA entered into a written lease for Lot 90. On July 1, 1997, Premier Automotive and the MPA renewed the lease. Upon its expiration, the renewed lease provided that Premier Automotive became a month-to-month tenant, and Premier Automotive was required to remove any buildings it had erected, or with the MPA's approval, to abandon the buildings to it. The renewed lease terminated on June 30, 2002. On that date, the parties had not executed a new lease. Premier Automotive objected to certain proposed terms contained in a new five-year lease proposed by the MPA. From 2002 through 2004, MPA proposed lease agreements to Premier Automotive. Each time, the Debtor refused to accept the terms. On March 29, 2005, the MPA requested that Premier Automotive vacate Lot 90 on or before May 1, 2005. On April 29, 2005, Premier Automotive filed for bankruptcy and sued the MPA (Bankr. D. Md. Adv. Pro. No. 05-1378). Premier's complaint against MPA sought an award of damages and an order compelling the Maryland Port Administration to execute a new lease. The Debtor's schedules show it was solvent on the date of filing. The schedules did not indicate that the Debtor owed $17,045.08 to the MPA. The schedules also showed that the Debtor had no secured creditors. On Schedule G, the real property lease with MPA was listed as "dated July 28, 1992, as amended from time to time," indicating an executory contract or unexpired lease. The situation was further aggravated because the MPA did not authorize Premier Automotive to sublease Lot 401 from APS North Terminal, Inc. The MPA said that its reasons stemmed from Premier Automotive's poor financial condition rather than its dispute with the Debtor over Lot 90. Besides, the MPA said, it already made arrangements to lease Lot 90 to Pasha Automotive Services. In a decision published at 2006 WL 1620304, Judge Schneider held that: (a) the Bankruptcy Court has no authority to resuscitate a lease of real property that expired by its own terms prepetition; (b) the Debtor had no cause of action against the MPA pursuant to the Bankruptcy Code's turnover provision to recover non-estate property; (c) the MPA's refusal to approve the Debtor's sublease of one of its leased lots due, in part, to Premier's status as a debtor-in-bankruptcy did not violate the Code's anti-discrimination provision; (d) the MPA, as the lessor of property subject to a lease that expired prepetition, was entitled to stay relief; and (e) the Debtor filed its bankruptcy petition in bad faith, which warrants lifting the stay to permit the MPA to evict the Debtor. Charles S. Fax, Esq., at Rifkin Livingston Levitan & Silver LLC in Greenbelt, Maryland, represented Premier Automotive in this litigation. Peter Wilson Taliaferro, Esq., the Assistant Attorney General, represented the Maryland Port Administration. Baltimore-based Premier Automotive Services, Inc., processes motor vehicles, including automobile, trucks, military, agricultural and construction equipment through the port of Baltimore. The Debtor filed for chapter 11 protection on April 29, 2005 (Bankr. D. Md. Case No. 05-20168). Joel I. Sher, Esq., at Shapiro Sher Guinot & Sandler in Baltimore, Maryland represented the Debtor. REFCO INC: Judge Drain Extends Removal Period to September 13 ------------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York extended, until September 13, 2006, the time within which Refco Inc. and its debtor-affiliates may file notices of removal pursuant to Rule 9006(b) of the Federal Rules of Bankruptcy Procedure. As reported in the Troubled Company Reporter on June 28, 2006, the Debtors told the Court that the request has the consent of Marc S. Kirschner, the Chapter 11 trustee of the estate of Refco Capital Markets, Ltd. Prior to filing for bankruptcy, the Debtors were plaintiffs in approximately 37 actions and proceedings in a variety of state and federal courts throughout the country. Sally McDonald Henry, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in New York, relates that the Debtors have not yet reviewed all the Actions to determine whether any Actions should be removed. The Debtors have continued to focus primarily on stabilizing and maximizing the value of the wind-down of their businesses. The RCM trustee also needs additional time to evaluate the Actions to determine whether they should be removed. Moreover, the Debtors and the RCM Trustee are engaged in a bankruptcy plan formulation process, which may impact decisions with respect to the Actions. Ms. Henry asserts that extension of the Removal Period will afford the Debtors sufficient opportunity to assess whether the Actions can and should be removed, thus, protecting the Debtors' valuable right to adjudicate lawsuits under 28 U.S.C. Section 1452. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000). REFCO INC: Court to Consider Exclusive Period Requests on July 20 ----------------------------------------------------------------- The Hon. Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York adjourned, to July 20, 2006, the hearing to consider Refco Inc., and its debtor-affiliates' request to extend their: * Exclusive Plan Filing Period to Sept 1, 2006; and * Exclusive Solicitation Period to Oct. 31, 2006. As reported in the Troubled Company Reporter on May 22, 2006, the Court had previously set the hearing on June 27, 2006. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000). REFCO INC: 3 Parties Object to Ch. 11 Trustee's Skadden Retention ----------------------------------------------------------------- As reported in the Troubled Company Reporter on July 5, 2006, Marc S. Kirschner, the Chapter 11 trustee of the estate of Refco Capital Markets, Ltd., asked the U.S. Bankruptcy Court for the Southern District of New York for authority to employ Skadden, Arps, Slate, Meagher & Flom LLP, as his special counsel. Objections (A) Wells Fargo Wells Fargo Bank, National Association tells Judge Drain that it is not at all clear whether Skadden, Arps, Slate, Meagher & Flom, LLP, may provide legal advice to the Debtors' creditors, including those of the non-RCM Debtors, on matters that may be adverse to RCM, and whether the Other Refco Entities could act on that advice to maximize recoveries for the parties to whom they owe duties of loyalty. Wells Fargo is the indenture trustee under an Indenture dated as of August 5, 2004, with respect to the 9% Senior Subordinated Notes due 2012, aggregating $600,000,000. Walter H. Curchack, Esq., at Loeb & Loeb LLP, in New York, asserts that if the role of the executives of the Other Refco Entities will not include zealous advocacy solely for the non-RCM creditors when conflict issues arise between RCM and the Other Refco Entities, the Bankruptcy Court, at a minimum, must clarify who will play that role for the benefit of those creditors and give that party authority to act for the sole interest of the Other Refco Entities -- a privilege that, at this point, only the RCM creditors enjoy. Specifically, Wells Fargo proposes that if Skadden is to be retained by the RCM Trustee, its role should be limited to advising the RCM Trustee solely with respect to issues that are not and do not have potential to be in conflict with the interests of the Other Refco Entities. Wells Fargo maintains that any order approving the Skadden Retention should make clear that the allocation referred to in the engagement letter is not binding on any party, will not create a presumption regarding cost-allocation for any purpose, and will remain subject to further Court order. Wells Fargo cannot at this time take a position with respect to the allocation methodology of Skadden's professional fees because the RCM Trustee has failed to disclose the rationale for that allocation. Moreover, Mr. Curchack notes that the Skadden engagement letter contemplates that only the proposed fee committee may challenge the proposed allocation. (B) Ad Hoc Committee The Ad Hoc Committee of holders of the 9.0% Senior Subordinated Notes due 2012, issued by Refco Finance, Inc., and Refco Group Ltd., LLC, contends that the Skadden Application is patently inappropriate and is not what the Court intended when it appointed the RCM Trustee. Michael J. Sage, Esq., at Stroock & Stroock & Lavan LLP, in New York, points out that the Court indicated that the RCM Trustee should rely primarily on his own business and legal judgment and should not hire an army of professionals. Mr. Sage says the RCM Trustee's attempt to hire professionals with undivided loyalty to RCM, and to systematically silence the estate-funded fiduciaries that may be adverse to RCM, indicates that the RCM Trustee is not interested in working toward a global resolution of the RCM cases. Mr. Sage notes that intercompany claims may well be the preeminent issue in these cases. However, the RCM Trustee's Application provides that Skadden will not be permitted, without a waiver from RCM, to represent the non-RCM Entities in litigation against RCM with respect to intercompany claims. Skadden will also provide services to the RCM Trustee with respect to the BAWAG settlement and the SPhinX preference action, both of which will presumably include issues relating to the allocation of the recovered proceeds, according to Mr. Sage. The allocation of the recovered proceeds from both the BAWAG and the SPhinX litigations will be hotly contested by all parties-in- interest in these cases and will likely involve issues that relate to intercompany claims. In the event the Application is granted, Skadden would be precluded from taking positions that are adverse to RCM with respect to the allocation of the recovered proceeds. (C) Bank of America Bank of America, N.A., the administrative agent for prepetition secured lenders, says the RCM Trustee is attempting to neutralize the professionals representing the other Debtors estates. BofA notes that those professionals are obligated to defend the rights of the Debtors' creditors against RCM s attacks, and perhaps even to pursue offensive claims against RCM and its constituents. They cannot be required to obtain the permission of the RCM Trustee to do so. "If these cases are about to degenerate into a litigation quagmire over intercompany and inter-creditor issues, then the other Debtors and their creditors are entitled to unconflicted representation in this Court," Karen E. Wagner, Esq., at Davis Polk & Wardwell, in New York, tells Judge Drain. According to Ms. Wagner, the provision in the engagement letter, which provides that Skadden will not to litigate against RCM without obtaining a waiver from the RCM Trustee, will leave the Refco Group Estates unrepresented with regard to key matters. Ms. Wagner says the more appropriate resolution is to require that, rather than being preserved by the RCM Trustee, any conflict will be waived, Ms. Wage says. RCM Trustee Wants All Objections Overruled "The [O]bjecting [P]arties have it all wrong," Timothy B. DeSieno, Esq., at Bingham Mccutchen LLP, in New York, tells Judge Drain. "They ascribe to the [RCM] Trustee the Machiavellian motive of 'conflicting out' the [o]ther Chapter 11 Debtors' professionals so that those professionals cannot be adverse to the [RCM] Trustee." Mr. DeSieno clarifies that what the RCM Trustee is really seeking to do is balance his many duties as trustee with cost concerns in accordance with the Bankruptcy Court's order. Mr. DeSieno explains that the conflicts issues raised by the Objecting Parties are illusory -- to the extent they exist, they also existed before the appointment of the RCM Trustee. Mr. DeSieno says that the RCM Trustee requires the advice and assistance of professionals to discharge his duties in RCM's case, considering: (a) the size and complexity of the RCM estate; (b) the myriad issues in RCM's cases; (c) the extensive fiduciary, management, reporting, and other responsibilities imposed on a Chapter 11 trustee; and (d) the fact that RCM has no employees of its own. According to Mr. DeSieno, it is not reasonable to expect that the RCM Trustee acting alone could discharge those statutory duties, much less also spend the innumerable hours he has spent striving to achieve a resolution among the RCM constituencies as a precursor to working out a global resolution of the Chapter 11 Debtors' cases. Mr. DeSieno argues that the Objecting Parties' primary suggestion -- that the RCM Trustee only informally consult other estates' and professionals without their having any responsibility to him -- is unworkable in view of the RCM Trustee's numerous and non- delegable responsibilities as a fiduciary in the RCM's case. "Nor does it address the fact that the conflicts the Objecting Parties decry have always existed, and will continue to exist, in these cases," Mr. DeSieno says. Resolving substantial intercompany disputes and other matters underlying a global resolution of the RCM's cases are, and have always been, central issues, well before the RCM Trustee's appointment, Mr. DeSieno points out. The conflicting loyalties of the Professionals were born of different interests of creditor constituencies, not because of the RCM Trustee's appointment. Given that each of the Professionals is already performing services for RCM, prevailing rules of professional responsibility already prohibit their being adverse to RCM, regardless of whether the RCM Trustee were to engage them. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000). REMEDIATION FINANCIAL: Has Until Aug. to File Disclosure Statement ------------------------------------------------------------------ The Honorable Charles G. Case, II, of the U.S. Bankruptcy Court for the District of Arizona gave Remediation Financial, Inc., and its debtor-affiliates until August 14, 2006, to file an amended disclosure statement. The Debtors filed their Disclosure Statement and Joint Plan on Jan. 28, 2005. The Plan implements two major agreements entered by the Debtors in their bankruptcy proceedings: a) the Debtors' Settlement Agreement with Zurich American Insurance Company and certain of its affiliates, dated Dec. 22, 2004, and b) the Debtors' Purchase and Sale Agreement with Lewis-Soledad Canyon, L.L.C., dated Dec. 1, 2004. The Plan groups claims against and interests in Remediation Financial into four classes. Unimpaired claims consist of Other Priority Claims, totaling $4,800, which will be paid in full on the Effective Date. Impaired Remediation Financial Claims consist of: a) Non-Insider Unsecured Claims, to receive a Pro Rata portion of the proceeds of the sale of the unencumbered assets of Bermite Recovery LLC, after the payment in full of all Priority Claims; b) Insider Unsecured Claims, to receive their Pro Rata distribution of all remaining proceeds of the Remediation Financial Unencumbered Property only upon the full payment of Class 1 and Class 2 claims; and c) Equity Interests, which Myla Bobrow will retain following Plan's confirmation subject to the terms of a Voting Trust under the Plan. Debtor-affiliates RFI Realty, Inc., Santa Clarita, L.L.C., and Bermite Recovery L.L.C., have their own groups of claims and interests under the Plan and their respective treatments are specified under the Plan. Full-text copies of the Disclosure Statement and Joint Plan are available for a fee at: http://www.researcharchives.com/bin/download?id=050224022447 - and - http://www.researcharchives.com/bin/download?id=050224024357 The Court also extends the period within which only the Debtors can solicit acceptances to any chapter 11 plan through Sept. 5, 2006. On that date, the Court will consider further extending the exclusive solicitation period. The deadline for objections to the Debtors' Disclosure Statement is extended to September 12, 2006. The Court will consider approval of the Disclosure Statement on Sept. 19, 2006. Headquartered in Phoenix, Arizona, Remediation Financial, Inc., is a real estate developer. Remediation Financial, Inc., and Santa Clarita, L.L.C. filed for chapter 11 protection on July 7, 2004 (Bankr. D. Ariz. Case No. 04-11910). RFI Realty, Inc., filed on June 15, 2004 (Bankr. D. Ariz. Case No. 04-10486) and Bermite Recovery, L.L.C., filed on September 30, 2004 (Bankr. D. Ariz. Case No. 04-17294). Alisa C. Lacey, Esq., at Stinson Morrison Hecker LLP, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets of more than $100 million and estimated debts of $10 million to $50 million. RJZM LLC: Voluntary Chapter 11 Case Summary ------------------------------------------- Debtor: RJZM LLC dba All-Med & Rehabilitation of New York 423 East 138th Street Bronx, New York 10454 Bankruptcy Case No.: 06-11535 Chapter 11 Petition Date: July 6, 2006 Court: Southern District of New York (Manhattan) Debtor's Counsel: Jonathan S. Pasternak, Esq. Rattet, Pasternak & Gordon Oliver, LLP 550 Mamaroneck Avenue, Suite 510 Harrison, New York 10528 Tel: (914) 381-7400 Fax: (914) 381-7406 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million The Debtor did not file a list of its 20 largest unsecured creditors. ROCKWOOD SPECIALTIES: S&P Affirms B+ Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Rockwood Specialties Group Inc. to positive from stable. At the same time, the rating agency affirmed all of its ratings on the company, including the 'B+' corporate credit rating. The outlook revision reflects Standard & Poor's expectation that Rockwood's financial profile should continue to strengthen, primarily through gradual earnings improvement, to a level that would warrant a slightly higher rating during the next 18 to 24 months. "Earnings are expected to trend upward because of favorable market prospects, moderate organic sales growth, and close attention to operating costs. However, the company's high debt leverage and our expectation that it will continue to pursue modest-size acquisitions will likely limit the amount of cash available for debt reduction," said Standard & Poor's credit analyst Cynthia Werneth. The ratings on Princeton, New Jersey-based Rockwood reflect a highly leveraged financial profile, which overshadows an attractive portfolio of specialty chemical businesses with annual sales of about $3 billion. Operations are organized into these seven business areas of which management considers the first four to be core: * Specialty chemicals (lithium, fine chemicals, and other surface treatment chemicals); * Performance additives (clay-based additives, iron oxide pigments, water treatment chemicals, and timber treatment chemicals); * Titanium dioxide pigments (functional additives, titanium dioxide chemicals, and paper and water treatment chemicals); * Advanced ceramics (ceramic materials used in medical, electronics, and other applications); * Groupe Novasep (synthesis of pharmaceutical intermediates); * Specialty compounds (specialty compounds for wire and cable); and * Electronics (electronic chemicals and photomasks). Rockwood benefits from well-established business positions, with a significant portion of sales in products with leading niche market shares. The firm's diverse end markets, product range, and technology platforms lend stability to earnings and cash flow generation, tempering the cyclical swings in larger end markets, such as electronics and construction. A focus on technology-based products underpins value-added pricing. In addition, favorable long-term business fundamentals in key product lines should aid cash flow generation. The company's credit quality is supported by a broad customer base and meaningful geographic diversity, with about two-thirds of sales outside the U.S. A global network of manufacturing facilities provides a platform to expand product sales internationally. ROLLER BEARING: Secures $150 Million Revolving Credit Facility ----------------------------------------------------------- Roller Bearing Company of America, Inc., and RBC Bearings Incorporated entered into a credit agreement and related security and guaranty agreements with certain banks, Keybank National Association, as Administrative Agent, and J.P. Morgan Chase Bank, N.A. as Co-Lead Arrangers and Joint Lead Book Runners on June 26, 2006. The credit agreement provides Roller Bearing with a $150 million five-year senior secured revolving credit facility. The credit facility can be increased by up to $75 million, in increments of $25 million, under certain circumstances and subject to certain conditions, including the receipt from one or more lenders of the additional commitment. Amounts outstanding under the credit facility generally bear interest at the prime rate or Libor plus a specified margin, depending on the type of borrowing being made. The applicable margin is based on the Company's consolidated ratio of net debt to adjusted EBITDA from time to time. Currently, the Company's margin is 0.0% for prime rate loans and 1.0% for Libor rate loans. Amounts outstanding under the credit facility are generally due and payable on the expiration date of the credit agreement on June 24, 2011. The Company can elect to prepay some or all of the outstanding balance from time to time without penalty. The credit agreement requires the Company to comply with various covenants, including among other things, financial covenants to maintain: -- From the closing date through March 31, 2007 a ratio of consolidated net debt to adjusted EBITDA not to exceed 3.5 to 1 and from June 30, 2007 a ratio of consolidated net debt to adjusted EBITDA not to exceed 3.25 to 1. -- A consolidated fixed charge coverage ratio not to exceed 1.5 to 1 The credit agreement allows the Company to, among other things, make distributions to shareholders, repurchase its stock, incur other debt or liens, or acquire or dispose of assets provided that the Company complies with certain requirements and limitations of the credit agreement. The Company's obligations under the credit agreement are secured by a pledge of substantially all of Roller Bearing and RBC Bearings' assets and a guaranty by RBC Bearings of Roller Bearing's obligations. On June 26, 2006, the Company borrowed approximately $79 million under the revolving credit facility and used the funds, to pay fees and expenses associated with the new credit facility and repay the approximately $78 million balance outstanding under the Company's old credit facility. The Company terminated its Fifth Amended and Restated Credit Agreement with certain lenders and General Electric Capital Corporation following the repayment of approximately $78 million term loan outstanding under the facility. Headquartered in Oxford, Connecticut, RBC Bearings Incorporated -- http://www.rbcbearings.com/-- is an international manufacturer and marketer of highly engineered precision bearings and components. Founded in 1919, the Company is primarily focused on producing highly technical or regulated bearing products requiring sophisticated design, testing, and manufacturing capabilities for the diversified industrial, aerospace and defense markets. RBC Bearings currently employs approximately 1,700 people in 18 facilities located throughout North America and Europe. * * * Moody's Investors Service assigned a B2 Corp. Family Rating, B3 issuer rating and a Caa1 subordinated debt rating to Roller Bearing in March 2004. SERACARE LIFE: Wants Plan-Filing Period Stretched to October 18 --------------------------------------------------------------- SeraCare Life Sciences, Inc., asks the U.S. Bankruptcy Court for the Southern District of California to extend the period within which it has the exclusive right to file a chapter 11 plan to Oct. 18, 2006. The Debtor also asks the Court to extend the period within which it has the exclusive right to solicit acceptances for any chapter 11 plan to Dec. 18, 2006. As reported in the Troubled Company Reporter on July 6, 2006, an Ad Hoc Committee of Equityholders, holding around 28.5% of the Debtor's outstanding shares, asked the Court to terminate the Debtor's exclusive periods after negotiations on a proposed financing failed. Thomas E. Patterson, Esq., at Klee, Tuchin, Bogdanoff & Stern, in Los Angeles, California, told the Court that the Debtor has failed to hold its annual meeting of shareholders for over 15 months, the maximum interval permitted by California law. Mr. Patterson disclosed further that, recently, the Debtor informed the Ad Hoc Committee that the Debtor is no longer being managed by the Debtor's board of directors, but is rather being controlled by a special committee that had been "delegated all of the powers of the Board." Paul J. Couchot, Esq., at Winthrop Couchot, P.C., contends that there is more than some promise of success for reorganization in the Debtor's case. The Debtor has substantial equity in its assets and the financial ability to reorganize. The Debtor has been current on its vendor and trade claims since filing for bankruptcy. In fact, the bankruptcy petition itself was precipitated by a technical default, rather than an actual monetary default, under its credit agreement with its senior secured lenders. The Debtor's case is relatively large and complex, Mr. Couchot points out. The Debtor is a publicly held entity. Until recently, its shares were actively traded on the NASDAQ National Market. The Debtor has approximately 240 employees, and its annualized revenues for fiscal year 2005 ending Sept. 30, 2005, were approximately $55 million. Mr. Couchot insists on the necessity of sufficient time to permit the Debtor to negotiate a plan of reorganization. The Debtor's case involves numerous active parties and constituencies including the senior secured Lenders, the subordinated lenders, Official Committee of Creditors, the Ad Hoc Committee, etc. Given the number of active constituencies in this case, additional time is needed to formulate a chapter 11 plan. The Debtor recently obtained Court approval of a four-month cash collateral stipulation that will result in full repayment of its term loan with the senior secured lenders. The Debtor is now in a position to negotiate with all constituencies, Mr. Couchot argues. Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. SILICON GRAPHICS: Taps Financial Balloting as Voting Agent ---------------------------------------------------------- In contrast with cases where public securities do not play a prominent role, the solicitation process for Silicon Graphics, Inc., and its debtor-affiliates will be significantly more complex, Shai Y. Waisman, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the U.S. Bankruptcy Court for the Southern District of New York. Because proper notice to, and tabulation of the votes of, the holders of Silicon Graphics' public securities is critical, the Debtors seek the Court's authority to employ Financial Balloting Group LLC, as their voting agent. Mr. Waisman asserts that FBG is uniquely qualified to act as voting agent in the Debtors' Chapter 11 cases as FBG is familiar with the applicable procedures and has a specialty practice in bankruptcy solicitations involving publicly held securities. According to Mr. Waisman, FBG: -- has employees experienced in all areas pertaining to the identification and solicitation of holders of securities; -- has a state-of-the-art mailing facility; and -- is highly experienced in dealing with the back offices of the various departments of banks and brokerage firms. Mr. Waisman adds that FBG's Jane Sullivan, Esq., who would be primarily responsible for handling the Debtors' notices, has (i) more than 20 years of experience in public securities solicitations and other transactions, (ii) specialized in bankruptcy solicitations since 1991, and (iii) worked on more than 100 bankruptcy solicitations including Footstar, WorldCom, and Enron. As Voting Agent, FBG will: (a) assist with tabulation of votes of creditors in connection with the confirmation process of the Debtors' First Amended Joint Plan of Reorganization; (b) act as subscription agent in connection with the Rights Offering; and (c) coordinate the distribution of any notices required as part of the Plan confirmation process to the creditors and to equity interest holders by forwarding the appropriate documents to the Voting Nominees. In exchange for its services, FBG will be paid: * a $20,000 project fee plus $2,000 for each issue of public securities entitled to vote on the Plan; $3,000 for each issue of public securities entitled to vote on the Plan and participate in the rights offering; $1,500 for each debt issue not entitled to vote on the Plan but entitled to receive notice; $10,000 for the common stock if it is entitled to vote; and $5,000 for the common stock if it is not entitled to vote but entitled to receive notice; * labor charges for the mailing to registered record holders of securities and any other creditors which the Debtors ask FBG to serve, estimated at $1.75 to $2.25 per package, depending on the complexity of the mailing, with a $500 minimum charge for each file; * a minimum charge of $2,000 for up to 250 telephone calls from security holders and other creditors within a 30-day solicitation period. Additional calls will be charged at $8.00 per call. Any calls to security holders or other creditors will be charged at $8.00 per call; * a charge of $125 per hour for the tabulation of ballots and master ballots, plus set-up charges of $1,000 for each tabulation element; * for consulting hours billed at FBG's current hourly rates: Executive Director $410 Director $360 Senior Case Manager $300 Case managers $240 Programmer II $190 Programmer I $165 * out-of-pocket Expenses; and * to the extent requested by the Debtors, $6,500 for notice mailings to beneficial holders of debt securities held in street name. Mailings to registered holders of securities will be charged at a rate of $0.50 to $0.65 per holder, with a $250 minimum. Ms. Sullivan assures the Court that her firm has no connection with, and holds no interest adverse to, the Debtors, their creditors, or any other party-in-interest. FBG is a "disinterested person," as defined in Section 101(14) of the Bankruptcy Code, Ms. Sullivan says. About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 215/945-7000) SILICON GRAPHICS: Gets Okay to File Customer Lists Under Seal ------------------------------------------------------------- Silicon Graphics, Inc., and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's authority to file portions of: 1. their schedules of assets and liabilities, schedule of executory contracts and unexpired leases, statement of financial affairs, and list of equity holders; and 2. any affidavits of service, which may be filed in connection with the Debtors' request to establish a bar date for the filing of proofs of claim, that contain lists of their customers, under seal for in camera review. Schedule G of the Schedules requires the Debtors to provide a customer list. The Debtors also anticipate that they may need to provide notice of the claims bar date to some or all of the parties on the Customer Lists. As with nearly every company, and particularly in the high-tech sector, the identity of the customers on SGI's Customer Lists is one of SGI's most closely guarded secrets, Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP, in New York, explains. The Debtors' Customer Lists constitute proprietary trade secrets and are among the Debtors' most valuable assets. Mr. Holtzer contends that filing the Customer Lists on the public docket would compromise one of the Debtors' most significant assets, and negatively impact their reorganization prospects. If the Lists are made public, the Debtors' competitors would get a clear picture of who the Debtors' customers are, the locations within the customer's operations where they interface with the Debtors, and an insight into the scope and type of work the Debtors and the customers are engaged in. "This would enable the competitors to strategically target the Debtors' major customers and attempt to secure them as their own," Mr. Holtzer says. About Silicon Graphics Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000) STEELCASE INC: Earns $18.2 Million in First Quarter Ended May 26 ---------------------------------------------------------------- Steelcase Inc. reported revenue totaling $727.3 million for its first quarter ended May 26, 2006. Revenue increased 7.6 percent compared to $676 million in the prior year. First quarter revenue includes $5.4 million from acquisitions and $4.8 million from currency translation effects, compared to the prior year. For the three months ended May 26, 2006, the company earned net income of $18.2 million, compared to net income of $6.7 million in the prior year. First quarter results include restructuring charges of $2.7 million after-tax. Charges were primarily related to facility rationalizations in the company's International and North America segments. Prior year restructuring charges totaled $6.8 million after-tax. "We see plenty of evidence that our company's positive momentum is continuing," said James P. Hackett, president and CEO. "In addition to our solid first-quarter performance, we successfully launched the Nurture healthcare brand and won six product awards at NeoCon." Cost of sales, which does not include restructuring charges, was 69.2 percent in the first quarter, similar to the prior year. Improved pricing yield and the benefits of prior restructuring actions helped offset higher material costs and lower margins in certain product categories. Gross margin was 30.3 as a percent of sales compared to 29.5 percent last year. The improvement was driven by lower restructuring costs. Steelcase reduced operating expenses as a percent of sales to 26.4 percent from 27 percent in the prior year. This improvement was related to continued cost control and leverage from higher sales volume. Reported operating income was $28 million or 3.9 percent of revenue, and includes pre-tax restructuring charges of $(4.3) million. Operating income without restructuring charges was $32.3 million or 4.4 percent of revenue, compared to $26 million or 3.8 percent of revenue, in the prior year. Other income was $4.9 million compared with $800,000 in the prior year. The increase is primarily a result of higher interest income and gains on currency derivatives. Total cash and cash equivalents were $386.3 million at the end of the first quarter, down from $423.8 million at the end of fiscal 2006 due to normal seasonal disbursements associated with bonus payments and retirement plan contributions. Total debt was $255.3 million compared to $264 million at the end of fiscal 2006. "The year is off to a good start with revenue and income consistent with our estimates. Over the next few quarters we will be implementing the final stages of the North America restructuring plan, and we will be working to improve gross margin performance in some specific areas," said James P. Keane, chief financial officer. Headquartered in Grand Rapids, Michigan, Steelcase, Inc. (NYSE: SCS) -- http://www.steelcase.com/-- designs and manufactures architecture, furniture and technology products. Founded in 1912, Steelcase serves customers through a network of more than 800 independent dealers and approximately 13,000 employees worldwide. * * * Moody's Investor Services placed Steelcase's senior unsecured debt and corporate family ratings at Ba1 with a positive outlook. TEKELEC: Restates Quarterly Reports for 2005 and 2004 ------------------------------------------------------ Tekelec filed with the Securities and Exchange Commission its quarterly reports on Form 10-Q/A for the three months ended March 31, 2005, June 30, 2005, and Sept. 30, 2005, in which it restates its previously issued consolidated financial statements for each of the quarters during the nine months ended Sept. 30, 2005, and 2004. The company's Statement of Operations showed: For the three months ended ----------------------------- Quarter Quarter 03/31/04 03/31/05 ----------- ------------ Revenue $75,974,000 $138,863,000 Net (Loss) $17,475,000 $5,314,000 For the three and six months ended ------------------------------------------------------ Quarter Quarter Quarter Quarter 06/30/04 06/30/05 06/30/04 06/30/05 ----------- ------------ ------------ ------------ Revenue $95,196,000 $122,728,000 $171,170,000 $261,591,000 Net (Loss) ($1,440,000) $785,000 $3,874,000 $18,260,000 For the three and nine months ended ------------------------------------------------------ Quarter Quarter Quarter Quarter 09/30/04 09/30/05 09/30/04 09/30/05 ----------- ------------ ------------ ------------ Revenue $96,894,000 $120,980,000 $268,064,000 $382,571,000 Net (Loss) $9,519,000 ($4,078,000) $13,393,000 $14,182,000 The company's Balance Sheet showed: For the period ended ---------------------------------------------- Quarter Quarter Quarter Quarter 12/31/04 03/31/05 06/30/05 09/30/05 ------------ ------------ ------------ ------------ Current Assets $403,761,000 $416,084,000 $449,363,000 $494,867,000 Total Assets $774,983,000 $787,182,000 $823,994,000 $831,524,000 Current Liabilities $254,457,000 $251,075,000 $287,292,000 $290,425,000 Total Liabilities $383,602,000 $382,844,000 $418,159,000 $423,517,000 Total Stockholders' Equity $373,753,000 $391,492,000 $823,994,000 $400,627,000 Restated Quarterly Financial Statements The Restated Quarterly Financial Statements include adjustments to the Company's previously issued Unaudited Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income (Loss), and Statements of Cash Flows for: (i) the three months ended March 31, 2005, and 2004; A full-text copy of the Company's restated financial statements is available for free at: http://researcharchives.com/t/s?d2b (ii) the three and six months ended June 30, 2005, and 2004; A full-text copy of the Company's restated financial statements is available for free at: http://researcharchives.com/t/s?d2d (iii) the three and nine months ended Sept. 30, 2005, and 2004. A full-text copy of the Company's restated financial statements is available for free at: http://researcharchives.com/t/s?d2f The restated unaudited results for each of the three quarters in the nine months ended Sept. 30, 2005, and 2004 had previously been disclosed in summary form in Note 18 of the Notes to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2005. Tekelec expected that it will file on July 12, 2006, its First Quarter 2006 Form 10-Q and has scheduled a conference call on that date for senior management to discuss first quarter results. The Company also plans to discuss during this call and to provide on its web site prior thereto historical non-GAAP numbers for each of the quarters in 2004 and 2005, the full years 2004 and 2005 and the first quarter of 2006. With the filing of the First Quarter 2006 Form 10-Q, the Company believed that it will have met all the conditions set by a Nasdaq Listing Qualifications Panel for the continued listing of the Company's Common Stock on the Nasdaq National Market System, which conditions require that the Company file with the Commission, on or before July 17, 2006, its 2005 Form 10-K, all required restatements and the First Quarter 2006 Form 10-Q. The Company also reported that it expects to timely file its Quarterly Report on Form 10-Q for the three months ended June 30, 2006. Events of Default In June 2003, the Company issued and sold $125 million aggregate principal amount of its 2.25% Senior Subordinated Convertible Notes due June 15, 2008. The Indenture governing the Notes obligates the Company to provide Deutsche Bank Trust Company Americas, the Notes' Trustee with documents and reports as are required to be filed with the Securities and Exchange Commission. Because of the delayed filing of the Company's Annual Report for the year ended Dec. 31, 2005, with the SEC, the Company received a notice of default on April 1, 2006, from holders of more than 25% of the outstanding principal amount of the Notes. Because the Company filed its Annual Report with the SEC on May 30, 2006, the Company said that neither the Trustee nor the holders have the right to accelerate the Notes since it filed within the 60-day cure period. The Company also failed to timely deliver its quarterly report for the quarter ended March 31, 2006, to the SEC and to the Trustee on before May 25, 2006, which resulted in an additional default under the Indenture. The Company said that if the default is not cured or waived within 60 days after any notice of default is delivered by the Trustee or by the holders of the Notes, the Trustee or holders of the Notes have the right to accelerate the payment of indebtedness under the Indenture. The Company expects to file its first quarter report on or before July 17, 2006. The filing will be able to cure this default under the Indenture, the Company said. The Indenture also provides that if the Company's common stock ceases to be listed on the Nasdaq National Market, that constitute an event of default. Nasdaq Delisting The company received, on March 20, 2006, a notice from The Nasdaq Stock Market indicating that the Company's common stock is subject to potential delisting from the Nasdaq National Market as a result of its failure to comply with Marketplace Rule 4310(c)(14). This listing standard requires the Company to timely file all reports with the Securities and Exchange Commission, as required by the Securities Exchange Act of 1934, as amended. The Company intends to request a hearing before a Nasdaq Listing Qualifications Panel for review of the delisting determination. This request will automatically stay the delisting of the Company's common stock pending the Panel's review and decision. The Company's common stock will continue to trade on the Nasdaq National Market until the Panel issues a decision and any exception granted by the Panel expires. About Tekelec Tekelec (NASDAQ: TKLC) -- http://www.tekelec.com/-- develops traditional and next-generation signaling and switching telecommunications solutions, business intelligence tools and value-added applications. Tekelec's innovative software are widely deployed in traditional and next-generation wireline and wireless networks and contact centers worldwide. Corporate headquarters are located in Morrisville, N.C., with research and development facilities and sales offices throughout the world. THOMAS EQUIPMENT: CEO Patty Recommends Closing of Korean Facility ----------------------------------------------------------------- James E. Patty, Chief Executive Officer of Thomas Equipment, Inc., recommended, on July 3, 2006, the termination of all operations of Thomas Equipment Asia, Inc., to the Company's Board of Directors. Thomas Equipment Asia is the Company's subsidiary with operations in Busan, South Korea. The Company reported that as part of its restructuring and operational review, Mr. Patty visited the Busan plant on June 27, 2006. Upon Mr. Patty's arrival, the office manager advised him that Mr. Lim Chul Jin, president of Thomas Equipment Asia, and all workers had quit as a sign of solidarity and support for the recently terminated President of the Company, Clifford Rhee. Including the office manager, four former employees of the Company were on the premises upon Mr. Patty's arrival. The Company said that Mr. Patty was further advised that if certain undefined conditions were met, all the workers would immediately return to work. The Company further disclosed that on June 28, 2006, David M. Marks, Chairman of the Company, received a facsimile of a letter dated June 26, 2006 from Mr. Lim Chul Jin, terminating his employment with the Company and its subsidiaries. The Company reported that it has been advised by Mr. Rhee that the workers would return to its Busan plant if certain demands of Mr. Lim Chul Jin were met. The Company's senior management however declined to have any such discussions or negotiations with Mr. Lim Chul Jin regarding the resumption of operations in the Busan plant given their recommendation to close that manufacturing facility. Mr. Patty also recommended: 1. In an orderly fashion, the Company sell its finished goods located in Busan, South Korea; 2. The Company relocate certain of its other intellectual and capital assets to its plant in Centreville, New Brunswick, Canada; and 3. The Company or its agent proceed to sell its land and improvements in Busan, South Korea and apply the proceeds, net of any financial costs and charges from the closure, to reduction of its senior debt with Laurus Master Funds, Ltd. In connection with its recent financing with Laurus, the Company perfected Laurus' security interest in all of its assets in South Korea. Mr. Patty says that these recommendations reflect his and the senior managements team's agreement on the steps necessary to restructure and make the Company successful and these recommendations had nothing to due with the actions of Mr. Lim Chul Jin or Company's former workers in Busan. About Thomas Equipment Headquartered in Milwaukee, Wisconsin, Thomas Equipment, Inc. -- http://www.thomas-equipment.com/-- is a technologically advanced global manufacturer of a full line of skid steer and mini skid steer loaders as well as attachments, mobile screening plants and six models of mini excavators. The Company distributes its products through a worldwide network of distributors and wholesalers. In addition, the Company's wholly owned subsidiaries manufacture specialty industrial and construction products, a complete line of potato harvesting and handling equipment, fluid power components, pneumatic and hydraulic systems, spiral wound metal gaskets, and packing material. At March 31, 2006, Thomas Equipment Inc.'s balance sheet showed a stockholders' deficit of $31,289,000, compared to a $67,129,000 at June 30, 2005. TOP FLIGHT: Case Summary & 19 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Top Flight Stairs & Rails, Ltd. 865 Commerce Drive South Elgin, Illinois 60177 Tel: (847) 697-5913 Bankruptcy Case No.: 06-07975 Type of Business: The Debtor manufactures stairs and stair accessories. Chapter 11 Petition Date: July 6, 2006 Court: Northern District of Illinois (Chicago) Judge: A. Benjamin Goldgar Debtor's Counsel: Abraham Brustein, Esq. DiMonte & Lizak, LLC 216 West Higgins Road Park Ridge, Illinois 60068 Tel: (847) 698-9600 Ext. 221 Fax: (847) 698-9623 Estimated Assets: Less than $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Elgin State Bank Guarantee Of $1,325,000 1001 South Randall Road Real Estate Loans to Elgin, IL 60121 Gilberts Development Properties, LLC U.S. Small Business Admin. Guarantee of Loan $1,091,000 Sacramento Loan to Gilberts Processing Center Properties 501 I Street, Suite 12-100 Development, LLC Sacramento, CA 95814 Employment Management $303,957 Services, Inc. 1813 North Mill Street, Suite F Naperville, IL 60563-4872 Cook County Lumber Company $100,667 200 East 130th Street Chicago, IL 60628-6901 Okaw Truss, Inc. $101,721 368 East Street, Route 133 Arthur, IL 61911 Carolina Stair Supply $96,958 Old World Mill Works $70,622 Robbins Manufacturing $59,563 Charles J. Gries & Company $50,460 Kane County Collector $33,544 Spartan Forest Products, Inc. $31,099 Sierra Forest Products $29,202 Pawnee Leasing $25,688 Carlos Perez Wages $24,140 Frank Paxton Lumber Co., LLC $20,708 Art Benton Wages $20,263 Bluelinx $19,105 Wasserman & Associates, Inc. $18,675 Cardunal Financial Insurance $16,813 TOWER AUTOMOTIVE: C&E Sales Wants Decision on Agreement ------------------------------------------------------- C & E Sales, Inc., asks the U.S. Bankruptcy Court for the Southern District of New York to compel Tower Automotive, Inc., and its debtor-affiliates to either assume or reject the executory contract entered into by C&E and the Debtors. On March 17, 2001, Tower Automotive and C&E Sales entered into an agreement under which C&E agreed to provide consignment inventory of parts and maintenance of a parts crib at Tower's Bardstown, Kentucky facility. On September 15, 2004, the agreement was modified to provide for the placement of vending machines owned by Turck, Inc., at the Bardstown facility instead of maintaining a parts crib. The inventory contained in the machines was still owned, and continues to be owned, by C&E. David E. Larson, Esq., at Altick & Corwin, Co., L.P.A., in Dayton, Ohio, relates that C&E has continued to service the machines, monitor usage, replenish parts, and maintain accounts pursuant to the agreement to the present day. C&E wants the agreement either to be assumed or rejected so that it can either adequately plan for continued service, or arrange to discontinue service and submit a proof of claim for the account receivable due on February 2, 2005. About Tower Automotive Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000). TOWER AUTOMOTIVE: Judge Gropper Denies Committee's Stay Request --------------------------------------------------------------- The Honorable Allen Gropper of the U.S. Bankruptcy Court for the Southern District of New York holds that the Official Committee of Unsecured Creditors appointed in Tower Automotive, Inc., and its debtor-affiliates' chapter 11 cases, failed to satisfy any of the criteria necessary for the court to grant a stay pending a ruling on the Committee's appeal of the order dated May 22, 2006, approving settlement agreements between the Debtors, the Milwaukee Unions and the Official Committee of Retired Employees. "The Committee's request for a stay is denied," Judge Gropper declares. Judge Gropper says the Committee's arguments in support of its position that it is "likely to prevail on appeal" are the same arguments made in the Committee's objection to the Settlements -- which the Court has already dealt with. According to Judge Gropper, the Committee failed to: -- understand Section 1114 of the Bankruptcy Code; -- understand the fact that retirees are not similarly situated to general unsecured creditors; -- acknowledge that the appeal is from the approval of a compromise, which Section 1114 was designed to foster. The Committee will have to show on appeal that approval of the Settlements was "manifestly erroneous and a clear abuse of discretion," Judge Gropper maintains. "The Committee does not even try to demonstrate that it can satisfy this burden," he adds. Irreparable Harm The Court holds that the Committee does not explain how a settlement with the retirees will irreparably harm the Committee's negotiation of a plan of reorganization. The Court further holds that Committee has not made any attempt to demonstrate that (i) giving the retirees a guaranteed recovery is any more "prejudicial" than paying them cash, and (ii) it could not negotiate a plan of reorganization in the face of consummated settlements with the retirees. By contrast, Judge Gropper says, a stay would significantly harm the Debtors and the retirees. The timing of the termination of the Debtors' prior obligation to provide retiree health benefits is a critical component of the Settlements. Any delay would undermine effectuation of the Settlements, Judge Gropper explains. Also, a grant of the stay would complicate the Debtors' ongoing efforts to secure exit financing, which in turn, would hinder the Debtors' efforts to emerge from bankruptcy. This prospect would harm all parties-in-interest, Judge Gropper says. The public interest would also be adversely affected. The Court notes that the Settlements brought to a close a complex negotiation process. To freeze or undo the Settlements at this point might require the Debtors, the Retiree Committee and the Milwaukee Unions to start the time-consuming Section 1114 process again, and would disrupt ongoing Section 1113 negotiations and the Debtors' ability to resolve other major issues in the Chapter 11 cases. "In light of all of the prior proceedings, which the Committee supported, it is highly inequitable for the Committee now to contend that a settlement is premature and should be put on hold until a plan is negotiated," Judge Gropper maintains. Judge Gropper notes that the Committee's position is particularly inequitable in view of the fact that it delayed seeking a stay until the eve of consummation of a settlement that has been projected for months. About Tower Automotive Headquartered in Grand Rapids, Michigan, Tower Automotive, Inc. -- http://www.towerautomotive.com/-- is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including BMW, DaimlerChrysler, Fiat, Ford, GM, Honda, Hyundai/Kia, Nissan, Toyota, Volkswagen and Volvo. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The Company and 25 of its debtor-affiliates filed voluntary chapter 11 petitions on Feb. 2, 2005 (Bankr. S.D.N.Y. Case No. 05-10576 through 05-10601). James H.M. Sprayregen, Esq., Ryan B. Bennett, Esq., Anup Sathy, Esq., Jason D. Horwitz, Esq., and Ross M. Kwasteniet, Esq., at Kirkland & Ellis, LLP, represent the Debtors in their restructuring efforts. Ira S. Dizengoff, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $787,948,000 in total assets and $1,306,949,000 in total debts. (Tower Automotive Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000). TRUMP ENTERTAINMENT: Suspends Casino Operations in Atlantic City ---------------------------------------------------------------- Twelve casinos in Atlantic City, New Jersey could reopen on July 7, 2006, after the New Jersey legislators agreed on a state budget, The Wall Street Journal reports. Trump Entertainment Resorts, Inc., has been forced to suspend gaming operations starting 8:00 a.m. on July 5 at its three casino hotels -- Trump Taj Mahal, Trump Marina and Trump Plaza -- as a result of the inability of the New Jersey legislature to pass a budget, and in response to an order from the New Jersey Casino Control Commission. In a filing with the U.S. Securities and Exchange Commission, Trump said that its non-union employees in the affected areas of operations will be given the option to use accumulated vacation and paid time off, or take time off without pay. Union employees will be treated in a manner consistent with their negotiated contracts but generally will be off without pay until gaming operations resume. Trump will monitor demand in the non-casino areas of its operations during the closure and adjust operating hours and staffing levels accordingly, Dale R. Black, executive vice president and chief financial officer, said. Peter Sanders of the WSJ said that, according to industry estimates, the shutdown cost the casinos about $20,000,000 a day in lost revenue, and the state up to $1,300,000 in daily tax revenue. Headquartered in Atlantic City, New Jersey, Trump Hotels & Casino Resorts, Inc., nka Trump Entertainment Resorts, Inc. -- http://www.thcrrecap.com/-- through its subsidiaries, owns and operates four properties and manages one property under the Trump brand name. The Company and its debtor-affiliates filed for chapter 11 protection on Nov. 21, 2004 (Bankr. D. N.J. Case No. 04-46898 through 04-46925). Robert A. Klymman, Esq., Mark A. Broude, Esq., John W. Weiss, Esq., at Latham & Watkins, LLP, and Charles Stanziale, Jr., Esq., Jeffrey T. Testa, Esq., William N. Stahl, Esq., at Schwartz, Tobia, Stanziale, Sedita & Campisano, P.A., represent the Debtors in their successful chapter 11 restructuring. When the Debtors filed for protection from their creditors, they listed more than $500 million in total assets and more than $1 billion in total debts. The Court confirmed the Debtors' Second Amended Plan of Reorganization on Apr. 5, 2005, and the plan took effect on May 20, 2005. (Trump Hotels Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 215/945-7000). * * * As reported in the Troubled Company Reporter on Nov. 10, 2005, Moody's Investors Service affirmed the ratings of Trump Entertainment Resorts, Inc.'s $200 million senior secured revolver due 2010 at B2; $150 million senior secured term loan due 2012 at B2; $150 million senior secured delayed draw term loan due 2012 at B2; $1.25 billion second lien senior secured notes due 2015 at Caa1; Speculative grade liquidity rating at SGL-3; and Corporate family rating at B3. Moody's says the rating outlook is stable. UNITY WIRELESS: Completes Celerica Ltd. Acquisition --------------------------------------------------- Unity Wireless Corporation closed its acquisition of Celerica Ltd., an Israel-based developer of coverage enhancement solutions for 2G and 3G wireless networks, effective July 4, 2006. "We are pleased to announce the closing of this transaction and welcome the Celerica employees into the Unity Wireless family," Ilan Kenig, President and CEO of Unity Wireless, commented. "We are looking forward to completing our strategic acquisition plan, previously announced May 16, 2006, over the next several weeks and presenting a much stronger company to our market." The acquisition of Celerica brings to Unity Wireless a unique line of coverage enhancement solutions that are being used today by operators of UMTS 3G networks in Europe and Asia. Often referred to in the industry as "distributed antenna systems" or "remote RF heads" mainly utilizing unlicensed free space optics and 5.8Ghz microwave links, these systems allow operators to cost-effectively expand their coverage footprint by remotely distributing the capacity of centrally located base stations. In addition, several elements within the Celerica product lines are also marketable as stand-alone products. "As a result of this transaction, we are seeing the potential of significantly increasing our opportunities with existing customers," Nissim Atias, CEO of Celerica Ltd, commented. "We are very excited about this transaction and looking forward to play a role in a much bigger organization." Celerica had audited 2005 revenues of $2.2 million, a loss of $6.1 million, and had positive net assets of $2.9 million at Dec. 31, 2005. The company has had the backing of an international group of venture capital investors whose investments in the development of Celerica's coverage enhancement products exceeded $30 million. "Restructuring Celerica is somewhat complete and the capital burn-rate that existed prior to our transaction has been reduced significantly," Dallas Pretty, CFO of Unity Wireless, added. " As we have said previously, the transactions currently underway are expected to create greater economies of scale across the entire operations infrastructure and are pleased with our efforts made so far." Terms of the acquisition were unchanged from the initial terms reported on Feb. 10, 2006 whereby Unity Wireless acquired Celerica Ltd. for preferred shares that upon conversion will represent 20 million shares of common stock. About Unity Wireless Based in Bellingham, Washington, Unity Wireless Corporation (OTCBB: UTYW) -- http://www.unitywireless.com/-- is a developer of wireless subsystems and coverage-enhancement solutions for wireless communications networks. Going Concern KPMG LLP expressed doubt about Unity Wireless' ability to continue as a going concern after auditing the Company's 2005 financial statements. The auditing firm pointed to the Company's recurring losses from operations. At March 31, 2006, the Company's balance sheet showed $5.1 million in total assets and $6.6 million in total liabilities, resulting in a $1.4 million stockholders' deficit. VENTAS INC: Taps J. Tellatin as Appraiser in Reset Right Process ---------------------------------------------------------------- Ventas, Inc. selected James K. Tellatin, MAI, the founding principal in Tellatin, Short & Hansen, Inc., as its appraiser for the Reset Right process under each of its four Master Leases with its tenant Kindred Healthcare, Inc. (NYSE: KND). "We have been working with Jim for over a year as one of our principal advisors regarding the fair market rental of our 225 healthcare assets leased to Kindred," Ventas Chairman, President and CEO Debra A. Cafaro said. "He is respected for his independence, as well as his specialized expertise and extensive experience in valuing healthcare real estate. Jim has served as an expert witness and written authoritative pieces on the valuation of healthcare real estate." "We have surrounded ourselves with industry experts in anticipation of the Reset Right process so that, in the exercise of our fiduciary duties and best judgment, we benefit from the advice of skilled and experienced professionals. That includes Mr. Tellatin, who has completed fair market rental analyses of all the assets in our portfolio," Ms. Cafaro added. "Our proposal to increase Kindred's annual base rent to $317 million and reset our annual escalation to 3 percent is based upon the input of Mr. Tellatin and other professional appraisers, the terms of the Master Leases, comparable recent transactions and our own extensive knowledge of the rental market for healthcare real estate facilities." "We continue to believe that another tenant operator would be willing to pay at least $317 million to rent our 225 healthcare facilities on a fully licensed basis under the existing Master Leases because that tenant operator would make a significant profit from our facilities and incur a limited capital outlay to control a high-quality and extremely valuable platform for the next 17 to 22 years," Ms. Cafaro explained. Ventas also stated that Kindred selected Edwin W. Litolff, Jr. from American Appraisal Associates as its appraiser for the Reset Right process. Mr. Tellatin's Credentials Mr. Tellatin, Ventas's designated appraiser, is a member of the Appraisal Institute, holding the MAI designation. Since starting his firm in 1984, he has specialized in the valuation of nursing facilities, hospitals, assisted living facilities and senior housing developments. His extensive background validates Mr. Tellatin's reputation as an authority on healthcare real estate valuations. He has prepared appraisal reports for courts and boards, testified as an expert witness in many cases involving nursing facilities and authored numerous works on healthcare real estate valuation. In addition, he has developed the on-line version of The Appraisal of Nursing Facilities for the Appraisal Institute, where he is the sole instructor, approved in over 30 states. The Reset Right Process The Reset Right process outlined in the Master Leases gives Ventas the right to increase base rental rates on the 225 healthcare facilities it leases to Kindred to "Fair Market Rental" levels. On May 9, Ventas initiated the Reset Right process by delivering notices to Kindred with its proposal that aggregate base rents under the Master Leases increase by $111 million to $317 million per year. Because Ventas and Kindred did not reach an agreement on Fair Market Rental for the Ventas facilities within the stipulated time period, each company had a second period to designate its appraiser. Mr. Tellatin and the Kindred appraiser now have 10 days to agree on the selection of a third appraiser who meets the qualifications under the Master Leases. If the companies' two appraisers are not able to agree on a Third Appraiser within that time, the parties may seek the appointment of an independent expert to determine Fair Market Rental and the annual escalation for the facilities. Once the Third Appraiser is selected, that person will have 60 days to complete its work. Ventas can then choose, on a Master Lease by Master Lease basis, whether to opt into the Third Appraiser's new rental and escalation schedule, or retain its existing annual cash rentals and 3.5% annual rent increase. Ventas's current annual cash rent is $206 million. The determination of the Fair Market Rental under the Reset Right is dependent on and may be influenced by a variety of factors, including market conditions, reimbursement rates, and cash flow to rent coverages applicable to healthcare facilities. It is highly speculative, and there can be no assurances (and Ventas is expressing no views) regarding the final determination of the Fair Market Rental. If Fair Market Rental is determined by the appraisal process in the Master Leases, it is subject to the inherent risks, uncertainties, subjectivity and judgment contained in any appraisal process. A Third Appraiser's determination regarding Fair Market Rental amounts or escalations for Ventas's 225 healthcare facilities that are covered by the Master Leases could materially differ from Ventas's estimates, analyses or proposals. About Ventas Headquartered in Louisville, Kentucky, Ventas, Inc. (NYSE:VTR) -- http://www.ventasreit.com/-- is a healthcare real estate investment trust that is the nation's largest owner of seniors housing and long-term care assets. Its portfolio of properties located in 42 states includes independent and assisted living facilities, skilled nursing facilities, hospitals and medical office buildings. * * * As reported in the Troubled Company Reporter on June 5, 2006, Moody's Investors Service changed the rating outlook for Ventas, Inc. to positive. This rating action results from Ventas' recent refinancing of its bank facility from a secured facility to an unsecured facility, once again demonstrating the REIT's commitment to balance sheet enhancement. Ventas' ratings were affirmed with a positive outlook including (P)Ba3 senior debt shelf rating; (P)B1 rating subordinated debt shelf rating; and (P)B1 preferred stock shelf. In its previous rating action with respect to Ventas, Moody's upgraded the senior debt rating to Ba2 with a stable outlook. WELLMAN INC: S&P Affirms B+ Rating & Revises Outlook to Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Wellman Inc. to negative from stable. At the same time, Standard & Poor's affirmed all ratings on the company, including its 'B+' corporate credit rating. "The outlook revision reflects our expectation for a challenging operating landscape as a result of elevated raw material costs and meaningful capacity additions in the polyethylene terephthalate resin market in the U.S.," said Standard & Poor's credit analyst Paul Kurias. In the near term, Wellman's profitability in both the PET segment and the polyester staple fiber segment is likely to be negatively affected by elevated raw material costs and limited pricing power. The ratings on Shrewsbury, New Jersey-based Wellman reflect a weak business profile that recognizes the company's leading positions in the fragmented PET resin and polyester staple fiber segments of the polyester market, offset by inherent industry cyclicality, considerable competitive pressure from foreign producers primarily in Asia, and exposure to volatile raw material costs, which are likely to remain high throughout 2006. The ratings are supported by continued growth in demand for PET container products and sufficient availability under committed bank facilities. Wellman, with about $1.4 billion in annual revenues, is a narrowly focused U.S.-based chemical company. The company produces polyester staple fibers primarily for the home furnishing, fiberfill, and apparel markets and is the second-largest producer of PET resins used in beverage bottles and food containers. Despite Wellman's strong market share of the U.S. market, the company lacks the diversity of some of its competitors and industry peers, which heightens its exposure to industry downturns. Adequate liquidity and a manageable debt maturity profile during the next couple of years add some support to Wellman's credit quality, particularly if business conditions begin to stabilize. However, ratings could be lowered in the next year if PET resin markets weaken more than expected as a result of resin capacity additions or increasing imports, or if continued raw material price volatility affects operating results. WESTERN APARTMENT: Case Summary & Nine Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Western Apartment Supply & Maintenance 1335 Hotel Circle South San Diego, California 92108 Bankruptcy Case No.: 06-00459 Type of Business: Western Apartment originally filed for chapter 11 protection on April 18, 2006 (Bankr. S.D. Calif. Case No. 06-00821). The Debtor obtained permission from the U.S. Bankruptcy Court for the Southern District of California to have their chapter 11 case transferred to the District of Hawaii bankruptcy court. The Debtor also filed for chapter 11 protection on January 12, 2004 (Bankr. D. Hawaii Case No. 04-00072). Chapter 11 Petition Date: July 6, 2006 Court: District of Hawaii (Honolulu) Judge: Robert J. Faris Debtor's Counsel: John L. Smaha, Esq. Smaha & Daley 7860 Mission Center Court, Suite 100 San Diego, California 92108 Tel: (619) 688-1557 Total Assets: $18,131,069 Total Debts: $10,045,054 Debtor's Nine Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Reinwald, O'Connor & Playdon Legal Fees $137,455 P.O. Box 3199 Honolulu, HI 96801 County of Maui Real Estate Taxes $116,000 Property Tax Division P.O. Box 1405 Wailuku, HI 96793 Thomas R. Cole Legal Fees $89,007 233 A.S. Market Street Wailuku, HI 96793 Tom Cole Tel: (808) 242-6854 Ing, Horikowa Trade Debt $56,342 Jorgenson & Stewart 745 Fort Street, 17th Floor Honolulu, HI 96813 Sumie Toyashima Trade Debt $40,000 c/o Stanly Ching 220 South King Street Suite 1280 Honolulu, HI 96813 Department of Land and Property Lease $29,240 Natural Resources Internal Revenue Service $13,342 Chris Hart & Partners Trade Debt $10,668 Phoenix Asset Advisors, Inc. Management Fee $10,000 WHITNEY INFORMATION: March 31 Balance Sheet Upside Down at $42.2MM ------------------------------------------------------------------ Whitney Information Network, Inc., reported revenue for the three months ended March 31, 2006, of $45.3 million, 17.9% over the restated prior year amount of $38.4 million and a net loss of $3.5 million versus a restated net earnings of $800,000 in the comparable 2005 period. At March 31, 2006, the Company's balance sheet showed $106.8 million in total assets and $149 million in total liabilities, resulting in a $42.2 million stockholders' deficit. The Company's March 31 balance sheet also showed strained liquidity with $69.2 million in total current assets available to pay $142.9 million in total current liabilities coming due within the next 12 months. Q1 2006 Highlights: -- Paid student attendance increased 18.7% over the same period in 2005 -- Cash received from course and product sales totaled $57.3 million, a 20.7% increase versus Q1 2005 -- Cash flows provided by operations amounted to $8.7 million, versus $6.7 million, a 30.2% increase over the same period in 2005 -- Cash, cash equivalents and restricted cash totaled $43.7 million at March 31, 2006 versus $13.3 million at March 31, 2005 On May 15, 2006, the Company disclosed that it would restate certain historical financial results. The financial restatements for the quarter ended March 31, 2005, reflect: -- a modification associated with a change in revenue recognition policy and restatement of revenue from expired courses; -- reclassifications in financial statement categories and the timing of accruals necessary for comparability to the current period's presentation; and -- a revision to the revenue recognition policy with respect to deferral of revenue from the Company's teleconferencing product and service offering and subscription services. The Company is in the process of amending its Annual Reports on Form 10-K for the years ended 2003 through 2005 to reflect certain policy revisions and the effect of such revisions on its historical Consolidated Financial Statements. Headquartered in Cape Coral, Florida, Whitney Information Network, Inc. (OTCBB: RUSSE) -- http://www.russwhitney.com/-- provides financial education and training services through seminars, workshops and publications. The educational and training services are concentrated in the area of financial management and real estate investment. The Company markets its services and products primarily through periodic publications, telemarketing, television and radio. The Company also develops and markets educational resource materials which are prepared to support course offerings and for sale to the general public. The courses are provided in the United States, Canada and the United Kingdom. WINN-DIXIE: Prepares Financial Projections Underpinning Plan ------------------------------------------------------------ Winn-Dixie Stores, Inc., and its debtor-affiliates prepared financial projections for fiscal years 2007 to 2011 in connection with their Joint Plan of Reorganization. Pursuant to Section 1129(a)(11), the Court is required to determine that the confirmation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of the Debtors. Based on the Debtors' financial projections, the Reorganized Debtors should have sufficient cash flow to pay and service their debt obligations and to fund their operations, according to H. Jay Skelton, chairman of Winn-Dixie Stores, Inc.'s board of directors. Reorganized Debtors Projected Balance Sheets 2007 through 2009 (In Thousands) FY 2007 FY 2008 FY 2009 ------- ------- ------- Assets Current Assets: Cash and cash equivalents $67,713 $34,377 $34,377 Trade and other 97,978 101,984 108,981 receivables, net Insurance claims receivable 14,631 11,983 11,983 Income tax receivable 45,610 63,438 79,196 Inventories 487,225 511,902 546,261 Prepaid expenses 45,337 47,267 49,953 ---------- ---------- ---------- Total current assets 758,494 770,951 830,751 Non-current assets PP&E, net 524,169 593,431 657,378 Other assets, net 70,663 65,930 52,008 Reorganization value in excess of book value 70,563 70,563 70,563 ---------- ---------- ---------- Total non-current assets 665,395 729,924 779,949 ---------- ---------- ---------- Total Assets $1,423,889 $1,500,875 $1,610,700 ========== ========== ========== Liabilities & Shareholders' Deficit Current liabilities: Current obligations under capital leases $3,834 $3,834 $3,834 Accounts payable 248,976 277,662 336,338 Reserve for insurance - ST 88,642 88,642 88,642 Accrued wages and salaries 67,385 69,551 72,503 Accrued expenses 102,384 104,231 107,178 ---------- ---------- ---------- Total current liabilities 511,221 543,920 608,495 Non-current liabilities Exit facility - 36,731 26,569 Obligations under 3,192 2,192 1,692 capital lease Reserve for insurance - LT 132,910 128,409 125,155 Other liabilities 33,248 33,240 33,230 ---------- ---------- ---------- Total non-current liabilities 169,350 200,572 186,646 Total liabilities 680,570 744,492 795,141 Total stockholders' equity 743,319 756,383 815,559 ---------- ---------- ---------- Total Liabilities and Stockholders' Equity (Deficit) $1,423,889 $1,500,875 $1,610,700 ========== ========== ========== Reorganized Debtors Projected Balance Sheets 2010 through 2011 (In Thousands) FY 2010 FY 2011 ------- ------- Assets Current Assets: Cash and cash equivalents $58,225 $155,971 Trade and other receivables, net 116,709 123,637 Insurance claims receivable 11,983 11,983 Income tax receivable 95,109 114,089 Inventories 584,995 619,723 Prepaid expenses 52,982 55,697 ---------- ---------- Total current assets 920,003 1,081,100 Non-current assets PP&E, net 689,124 704,560 Other assets, net 35,335 21,201 Reorganization value in excess of book value 70,563 70,563 ---------- ---------- Total non-current assets 795,022 796,324 ---------- ---------- Total Assets $1,715,025 $1,877,424 ========== ========== Liabilities & Shareholders' Deficit Current liabilities: Current obligations under capital leases $3,834 $3,834 Accounts payable 360,188 381,570 Reserve for insurance - ST 88,642 88,642 Accrued wages and salaries 75,678 78,653 Accrued expenses 110,591 113,830 ---------- ---------- Total current liabilities 638,933 666,529 Non-current liabilities Exit facility - - Obligations under capital lease 1,192 692 Reserve for insurance - LT 122,390 120,509 Other liabilities 33,220 33,209 ---------- ---------- Total non-current liabilities 156,803 154,411 Total liabilities 795,735 820,940 Total stockholders' equity 919,289 1,056,484 ---------- ---------- Total Liabilities and Stockholders' Equity (Deficit) $1,715,025 $1,877,424 ========== ========== Reorganized Debtors Projected Statements of Operations 2007 through 2009 (In Thousands) FY 2007 FY 2008 FY 2009 ------- ------- ------- Retail sales $7,285,045 $7,664,732 $8,190,642 Other revenue 44,396 46,710 49,915 Total gross profit 2,036,322 2,150,699 2,307,317 % of retail sales 28.0% 28.1% 28.2% Selling, general (1,927,587) (1,969,994) (2,035,070) & administrative ---------- ---------- ---------- EBITDA 108,735 180,705 272,247 Depreciation (113,629) (131,301) (149,565) Amortization (17,878) (20,473) (21,223) ---------- ---------- ---------- EBIT (22,773) 28,932 101,460 Interest Expenses (6,032) (8,359) (8,270) Taxes 3,052 (7,509) (34,014) Bankruptcy related expenses/ Professional fees (27,400) - - ---------- ---------- ---------- Net Income ($53,152) $13,064 $59,176 ========== ========== ========== Reorganized Debtors Projected Statements of Operations 2010 through 2011 (In Thousands) FY 2010 FY 2011 ------- ------- Retail sales $8,771,428 $9,292,134 Other revenue 53,455 56,628 Total gross profit 2,471,833 2,619,307 % of retail sales 28.2% 28.2% Selling, general & administrative (2,109,813) (2,180,770) ---------- ---------- EBITDA 362,020 438,537 Depreciation (171,369) (197,231) Amortization (21,473) (20,184) ---------- ---------- EBIT 169,178 221,121 Interest Expenses (5,822) (5,066) Taxes (59,625) (78,860) Bankruptcy related expenses/ Professional fees - - ---------- ---------- Net Income $103,731 $137,195 ========== ========== Reorganized Debtors Projected Statements of Cash Flows 2007 through 2009 (In Thousands) FY 2007 FY 2008 FY 2009 ------- ------- ------- Cash flows from operating activities Net income (loss) ($53,152) $13,064 $59,176 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 132,623 153,223 172,238 Changes in assets & liabilities Accounts receivable 4,763 (4,006) (6,998) Inventories (2,412) (24,677) (34,358) Prepaid expenses and others 5,333 2,084 3,212 Accounts payable 61,283 28,686 58,677 Others 25,391 (19,689) (19,021) ---------- ---------- ---------- Net cash provided by operating activities 173,830 148,686 232,924 Cash flows - investing activities: Acquisition of property, PP&E (149,781) (217,752) (222,263) Disposition of assets, net 46,277 - - ---------- ---------- ---------- Net cash provided by investing activities (103,505) (217,752) (222,263) Cash flows - financing activities: Principal payments of capital lease obligations (1,250) (1,000) (500) Proceeds from/ (repayment of) debt (10,371) 36,731 (10,162) ---------- ---------- ---------- Net cash used in financing activities (11,621) 35,731 (10,662) ---------- ---------- ---------- Net Increase (decrease) in cash & cash equivalents 58,704 (33,336) - Balance sheet excess cash used at emergence (122,200) - - Cash & cash equivalents at beginning of period 131,209 67,713 34,377 ---------- ---------- ---------- Cash and cash equivalents at end of period $67,713 $34,377 $34,377 ========== ========== ========== Reorganized Debtors Projected Statements of Cash Flows 2010 through 2011 (In Thousands) FY 2010 FY 2011 ------- ------- Cash flows from operating activities Net income (loss) $103,731 $137,195 Adjustment to reconcile net income to net cash provided by operating activities: Depreciation and amortization 194,292 218,865 Changes in assets & liabilities Accounts receivable (7,728) (6,928) Inventories (38,735) (34,728) Prepaid expenses and others 3,560 3,499 Accounts payable 23,849 21,382 Other (18,688) (20,872) ---------- ---------- Net cash provided by operating activities 260,283 318,413 Cash flows from investing activities: Acquisition of property, PP&E (209,365) (220,167) Disposition of assets, net - - ---------- ---------- Net cash provided by investing activities (209,365) (220,167) Cash flows from financing activities: Principal payments of capital lease obligations (500) (500) Proceeds from/(repayment of) debt (26,569) - ---------- ---------- Net cash used in financing activities (27,069) (500) ---------- ---------- Net Increase (decrease) in cash & cash equivalents 23,848 97,746 Balance sheet excess cash used at emergence - - Cash & cash equivalents at beginning of period 34,377 58,225 ---------- ---------- Cash and cash equivalents at end of period $58,225 $155,971 ========== ========== Mr. Skelton notes that the Financial Projections are based on numerous assumptions, including confirmation and consummation of the Plan in accordance with its terms; realization of the operating strategy of the Reorganized Debtors; industry performance; no material adverse changes in applicable legislation or regulations, or generally accepted accounting principles; and no material adverse changes in general business and economic conditions. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Files Liquidation Analysis Under "Best Interests Test" ------------------------------------------------------------------ Winn-Dixie Stores, Inc., and its debtor-affiliates, with the assistance of their restructuring advisors, XRoads Solutions Group, LLC, prepared a liquidation analysis to demonstrate that their Joint Plan of Reorganization satisfies the "best interests test" under Section 1129(a)(7) of the Bankruptcy Code. The "best interests test" requires the Court to find either that: (i) all members of an impaired class of claims or interests have accepted the Plan; or (ii) the Plan will provide a member who has not accepted the Plan with a recovery value greater than the amount the member would get if the Debtors were liquidated under Chapter 7 of the Bankruptcy Code. H. Jay Skelton, chairman of Winn-Dixie Stores, Inc.'s board of directors, asserts that holders of prepetition unsecured claims would recover less in a Chapter 7 liquidation than what they would receive under the Plan. According to the Debtors' Liquidation Analysis, in a hypothetical Chapter 7 liquidation commencing June 30, 2006: Consolidated Case Deconsolidated Case ----------------- ------------------- (In Thousands) Low High Low High --- ---- --- ---- Noteholder Recovery $12,930 $39,458 $37,128 $112,854 Percentage Recovery 4% 13% 12% 36% Landlord Recovery $23,761 $72,510 $14,423 $44,150 Percentage Recovery 4% 13% 3% 8% Vendor/Supplier Recovery $9,523 $29,060 $2,618 $7,989 Percentage Recovery 4% 13% 1% 3% Retirement Plan Recovery $5,388 $16,443 - - Percentage Recovery 4% 13% 0% 0% Other Unsecured Recovery $3,501 $10,683 $935 $3,162 Percentage Recovery 4% 13% 1% 3% ------- -------- ------- -------- Total $55,104 $168,155 $55,104 $168,155 Percentage Recovery 4% 13% 4% 13% Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000). WINN-DIXIE: Intends to Honor Secured Claims Under Various Pacts --------------------------------------------------------------- Pursuant to their Joint Plan of Reorganization, Winn-Dixie Stores, Inc., and its debtor-affiliates intend to continue their obligations with respect to secured claims existing under the terms of these agreements: (i) the Application and Agreement for Standby Letter of Credit, dated as of Dec. 6, 2001, as modified on April 29, 2002, between AmSouth Bank and Winn-Dixie; (ii) the Assumption Agreement dated as of October 12, 2000, among Winn-Dixie as assuming borrower, Gooding's Supermarket, Inc., as original borrower, and Lutheran Brotherhood, now known as Thrivent Financial for Lutherans, as lender; and (iii) the Teradata Purchase Addendum dated as of December 22, 2004, between Winn-Dixie and NCR Corporation. This will result in a continuing contingent obligation with respect to the AmSouth claim of about $17,000,000 and secured payment obligations with respect to the Thrivent/Lutherans and NCR claims of approximately $3,800,000 in the aggregate. In addition, the Debtors will have approximately $31,300,000 of secured payment obligations with respect to Secured Tax Claims and other secured obligations as may be identified. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates stores across the Southeastern United States and in the Bahamas and employs approximately 90,000 people. The Company, along with 23 of its U.S. subsidiaries, filed for chapter 11 protection on Feb. 21, 2005 (Bankr. S.D.N.Y. Case No. 05-11063, transferred Apr. 14, 2005, to Bankr. M.D. Fla. Case Nos. 05-03817 through 05-03840). D.J. Baker, Esq., at Skadden Arps Slate Meagher & Flom LLP, and Sarah Robinson Borders, Esq., and Brian C. Walsh, Esq., at King & Spalding LLP, represent the Debtors in their restructuring efforts. Paul P. Huffard at The Blackstone Group, LP, gives financial advisory services to the Debtors. Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, and John B. Macdonald, Esq., at Akerman Senterfitt give legal advice to the Official Committee of Unsecured Creditors. Houlihan Lokey & Zukin Capital gives financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they listed $2,235,557,000 in total assets and $1,870,785,000 in total debts. (Winn-Dixie Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000). X-RITE INC: Completes $280 Million Amazys Holding Acquisition ------------------------------------------------------------- X-Rite, Incorporated, completed its acquisition of Amazys Holding AG for a purchase price of CHF77 per share plus 2.11 shares of X- Rite, Incorporated stock for each Amazys share. The total purchase price on the settlement date of July 5, 2006 was $280 million. The acquisition was financed through a combination of cash, debt and X-Rite stock. Amazys develops, markets and supports hardware, software and services to measure and communicate color under the GretagMacbeth brand. The combined company will be called X-Rite, Incorporated. The major benefits of the acquisition are expected to include: * creating a global market leader in the color industry; * accelerating technology innovation; * building the strongest talent pool in the industry; and * generating significant synergy potential The combined company expects to achieve approximately $25 million of annual operating expense savings in connection with the transaction in year three. The company expects to incur cash restructuring costs totaling $20 million during the first three years. The transaction is expected to be accretive to X-Rite's cash EPS during year two of the combined operations. "Our new company combines top notch talent, technology and products in the color industry," said Michael C. Ferrara, X-Rite CEO. "We expect our expertise, talent and technology to help us expand the global color market through innovation." Organization of the Combined Entity A strong team of X-Rite and GretagMacbeth executives lead the combined organization. Michael C. Ferrara is the CEO, Thomas J. Vacchiano, Jr. is the President and COO, Mary E. Chowning is the CFO, and Dr. Francis Lamy is the CTO. The X-Rite Board of Directors is now comprised of nine members, including six current directors of X-Rite and three former directors of Amazys Holding AG. "I am confident that the new X-Rite Board of Directors and senior management team under the leadership of Michael C. Ferrara, CEO, will ensure that X-Rite excels in every aspect of the business," John Utley, X-Rite Chairman, said. "The combined company is poised to lead the future of the color industry and maximize shareholder value." The global headquarters for the combined entity is in Grandville, Michigan, with European headquarters in Regensdorf, Switzerland, and Asia Pacific headquarters in Hong Kong. X-Rite will be represented by the new logo, incorporating the core colors of both companies, and symbolizing how our shared values and goals will drive this new company. Financing and Listing on the SWX Exchange The cash portion of the transaction was financed through a combination of cash on hand and new borrowings. Goldman Sachs provided a total debt package of $220 million to fund the transaction and post-closing working capital needs. Concurrent with the settlement X-Rite has established a secondary listing on the SWX Swiss Exchange. "We are excited about the potential financial benefits this acquisition brings to X-Rite shareholders," Mary E. Chowning, X- Rite Chief Financial Officer, said. "The synergies expected from this acquisition will reduce costs, enhance our margins, and ultimately increasing our shareholder value." Advisors X-Rite was advised exclusively by Headwaters MB for investment banking and financial advisory services, including securing debt financing which has been committed by Goldman Sachs. X-Rite's other advisors include McDermott Will & Emery LLP and Wenger Plattner for legal advice. Amazys Holding AG was advised by Credit Suisse for investment banking and financial advice, and by Lenz & Staehelin for legal advice. About X-Rite Headquartered in Grandville, Michigan, X-Rite Incorporated (Nasdaq: XRIT) -- http://www.xrite.com/-- is a global leader offering color measurement technology solutions comprised of hardware, software and services for the verification and communication of color data. The Company serves a broad range of industries, including graphic arts, digital imaging, industrial and retail color matching, and medical, among other industries. X-Rite is global, with 21 offices throughout Europe, Asia, and the Americas, serving customers in 100 countries. * * * As reported in the Troubled Company Reporter on May 29, 2006, Standard & Poor's Rating Services assigned its 'B+' corporate credit rating to Grandville, Michigan-based X-Rite Inc. The outlook is stable. At the same time, Standard & Poor's assigned a 'B+' rating and a recovery rating of '2' to the company's proposed first-lien loan, which amounts to $160 million (a term loan of $120 million and an undrawn revolving credit facility of $40 million). As reported in the Troubled Company Reporter on May 23, 2006, Moody's Investors Service assigned a first-time corporate family rating of B1 to X-Rite, Inc., B1 to X-Rite's proposed senior secured first priority term loan and revolver and B3 to the proposed senior secured second priority term loan. The ratings outlook is stable. * BOND PRICING: For the week of July 3 - July 7, 2006 ----------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 1 Adelphia Comm. 6.000% 02/15/06 1 Adelphia Comm. 7.500% 01/15/04 56 Adelphia Comm. 7.750% 01/15/09 55 Adelphia Comm. 7.875% 05/01/09 54 Adelphia Comm. 8.125% 07/15/03 44 Adelphia Comm. 8.375% 02/01/08 55 Adelphia Comm. 9.250% 10/01/02 54 Adelphia Comm. 9.375% 11/15/09 57 Adelphia Comm. 9.500% 02/15/04 54 Adelphia Comm. 9.875% 03/01/05 48 Adelphia Comm. 9.875% 03/01/07 54 Adelphia Comm. 10.250% 06/15/11 59 Adelphia Comm. 10.250% 11/01/06 54 Adelphia Comm. 10.500% 07/15/04 53 Adelphia Comm. 10.875% 10/01/10 55 Aetna Industries 11.875% 10/01/06 8 AHI-DFLT07/05 8.625% 10/01/07 73 Allegiance Tel. 11.750% 02/15/08 47 Allegiance Tel. 12.875% 05/15/08 45 Amer & Forgn Pwr 5.000% 03/01/30 65 Amer Color Graph 10.000% 06/15/10 70 Amer Plumbing 11.625% 10/15/08 18 Ames Dept. Stores 10.000% 04/15/06 0 Antigenics 5.250% 02/01/25 56 Anvil Knitwear 10.875% 03/15/07 57 Armstrong World 6.350% 08/15/03 72 Armstrong World 6.500% 08/15/05 74 Armstrong World 7.450% 05/15/29 74 Armstrong World 9.000% 06/15/04 73 At Home Corp. 0.525% 12/28/18 2 At Home Corp. 4.750% 12/15/06 1 ATA Holdings 12.125% 06/15/10 2 Atlantic Coast 6.000% 02/15/34 21 Atlas Air Inc 9.702% 01/02/08 74 Autocam Corp. 10.875% 06/15/14 62 Banctec Inc 7.500% 06/01/08 74 Bank New England 8.750% 04/01/99 5 Bank New England 9.500% 02/15/96 0 Big V Supermarkets 11.000% 02/15/04 0 Burlington North 3.200% 01/01/45 53 CCH II/CCH II CP 10.250% 01/15/10 63 Cell Therapeutic 5.750% 06/15/08 58 Charter Comm Hld 10.000% 05/15/11 60 Charter Comm Hld 11.125% 01/15/11 63 Chic East Ill RR 5.000% 01/01/54 61 CIH 9.920% 04/01/14 60 CIH 10.000% 05/15/14 60 CIH 11.125% 01/15/14 63 Collins & Aikman 10.750% 12/31/11 31 Color Tile Inc 10.750% 12/15/01 1 Comcast Corp. 2.000% 10/15/29 40 Constar Int'l 11.000% 12/01/12 74 CPNL-Dflt12/05 4.000% 12/26/06 28 CPNL-Dflt12/05 4.750% 11/15/23 44 CPNL-Dflt12/05 6.000% 09/30/14 35 CPNL-Dflt12/05 7.625% 04/15/06 69 CPNL-Dflt12/05 7.750% 04/15/09 70 CPNL-Dflt12/05 7.750% 06/01/15 35 CPNL-Dflt12/05 7.875% 04/01/08 69 CPNL-Dflt12/05 8.500% 02/15/11 45 CPNL-Dflt12/05 8.625% 08/15/10 45 CPNL-Dflt12/05 8.750% 07/15/07 70 CPNL-Dflt12/05 10.500% 05/15/06 69 Cray Research 6.125% 02/01/11 12 Curagen Corp 4.000% 02/15/11 74 Dal-Dflt09/05 9.000% 05/15/16 27 Delco Remy Intl 9.375% 04/15/12 56 Delco Remy Intl 11.000% 05/01/09 62 Delphi Trust II 6.197% 11/15/33 64 Delta Air Lines 2.875% 02/18/24 27 Delta Air Lines 7.700% 12/15/05 27 Delta Air Lines 7.900% 12/15/09 28 Delta Air Lines 8.000% 06/03/23 27 Delta Air Lines 8.187% 10/11/17 36 Delta Air Lines 8.300% 12/15/29 28 Delta Air Lines 8.540% 01/02/07 71 Delta Air Lines 8.950% 01/12/12 66 Delta Air Lines 9.200% 09/23/14 75 Delta Air Lines 9.250% 03/15/22 26 Delta Air Lines 9.320% 01/02/09 73 Delta Air Lines 9.375% 09/11/07 63 Delta Air Lines 9.750% 05/15/21 28 Delta Air Lines 9.875% 04/30/08 68 Delta Air Lines 9.950% 06/01/06 70 Delta Air Lines 9.950% 06/01/06 70 Delta Air Lines 10.000% 06/01/12 63 Delta Air Lines 10.000% 08/15/08 28 Delta Air Lines 10.060% 01/02/16 74 Delta Air Lines 10.125% 05/15/10 27 Delta Air Lines 10.375% 02/01/11 27 Delta Air Lines 10.375% 12/15/22 29 Delta Air Lines 10.500% 04/30/16 69 Deutsche Bank NY 8.500% 11/15/16 62 Diva Systems 12.625% 03/01/08 1 Dov Pharmaceutic 2.500% 01/15/25 49 Dura Operating 9.000% 05/01/09 54 Dura Operating 9.000% 05/01/09 59 Eagle-Picher Inc 9.750% 09/01/13 68 Emergent Group 10.750% 09/15/04 0 Epix Medical Inc. 3.000% 06/15/24 68 Exodus Comm. Inc. 11.625% 07/15/10 0 Falcon Products 11.375% 06/15/09 3 Federal-Mogul Co. 7.375% 01/15/06 60 Federal-Mogul Co. 7.500% 01/15/09 60 Federal-Mogul Co. 8.160% 03/06/03 59 Federal-Mogul Co. 8.250% 03/03/05 63 Federal-Mogul Co. 8.370% 11/15/01 58 Federal-Mogul Co. 8.370% 11/15/01 59 Federal-Mogul Co. 8.800% 04/15/07 61 Finova Group 7.500% 11/15/09 29 Ford Motor Co 6.500% 08/01/18 69 Ford Motor Co 6.625% 02/15/28 68 Ford Motor Co 7.125% 11/15/25 69 Ford Motor Co 7.400% 11/01/46 67 Ford Motor Co 7.500% 08/01/26 70 Ford Motor Co 7.700% 05/15/97 69 Ford Motor Co 7.750% 06/15/43 69 Ford Motor Cred 5.650% 01/21/14 71 Ford Motor Cred 5.750% 01/21/14 74 Ford Motor Cred 5.750% 02/20/14 71 Ford Motor Cred 5.750% 02/20/14 74 Ford Motor Cred 5.900% 02/20/14 75 Ford Motor Cred 6.000% 01/20/15 74 Ford Motor Cred 6.000% 02/20/15 73 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 03/20/14 74 Ford Motor Cred 6.000% 03/20/14 75 Ford Motor Cred 6.000% 03/20/14 75 Ford Motor Cred 6.000% 11/20/14 71 Ford Motor Cred 6.000% 11/20/14 74 Ford Motor Cred 6.000% 11/20/14 74 Ford Motor Cred 6.050% 02/20/14 75 Ford Motor Cred 6.050% 02/20/15 71 Ford Motor Cred 6.050% 03/20/14 73 Ford Motor Cred 6.050% 12/22/14 73 Ford Motor Cred 6.050% 12/22/14 73 Ford Motor Cred 6.050% 12/22/14 73 Ford Motor Cred 6.100% 02/20/15 74 Ford Motor Cred 6.150% 01/20/15 73 Ford Motor Cred 6.150% 12/22/14 73 Ford Motor Cred 6.200% 03/20/15 73 Ford Motor Cred 6.250% 01/20/15 70 Ford Motor Cred 6.250% 03/20/15 74 Ford Motor Cred 6.300% 05/20/14 74 Ford Motor Cred 7.250% 07/20/17 75 Ford Motor Cred 7.500% 08/20/32 70 Gateway Inc. 2.000% 12/31/11 72 GB Property Fndg 11.000% 09/29/05 62 General Motors 7.400% 09/01/25 75 GMAC 5.900% 01/15/19 74 GMAC 6.050% 10/15/19 75 GMAC 6.200% 04/15/19 74 Golden Books Pub 10.750% 12/31/04 0 Graftech Intl 1.625% 01/15/24 74 Graftech Intl 1.625% 01/15/24 74 Gulf Mobile Ohio 5.000% 12/01/56 73 Gulf States Stl 13.500% 04/15/03 0 HNG Internorth 9.625% 03/15/06 33 Imperial Credit 9.875% 01/15/07 0 Inland Fiber 9.625% 11/15/07 60 Insight Health 9.875% 11/01/11 45 Iridium LLC/CAP 10.875% 07/15/05 28 Iridium LLC/CAP 11.250% 07/15/05 29 Iridium LLC/CAP 13.000% 07/15/05 27 Iridium LLC/CAP 14.000% 07/15/05 29 Isolagen Inc. 3.500% 11/01/24 74 Kaiser Aluminum & Chem. 9.875% 02/15/02 49 Kaiser Aluminum & Chem. 10.875% 10/15/06 58 Kaiser Aluminum & Chem. 12.750% 02/01/03 12 Kellstrom Inds 5.500% 06/15/03 0 Kellstrom Inds 5.750% 10/15/02 0 Kmart Corp. 9.780% 01/05/20 10 Kmart Funding 8.800% 07/01/10 75 Kmart Funding 9.440% 07/01/18 43 Liberty Media 3.250% 03/15/31 75 Liberty Media 3.750% 02/15/30 56 Liberty Media 4.000% 11/15/29 61 Lifecare Holding 9.250% 08/15/13 70 Macsaver Financl 7.400% 02/15/02 2 Macsaver Financl 7.600% 08/01/07 1 Merisant Co 9.500% 07/15/13 65 Missouri Pac RR 5.000% 01/01/45 74 Motorola Inc 5.220% 10/01/97 74 MSX Int'l Inc. 11.375% 01/15/08 66 Muzak LLC 9.875% 03/15/09 54 New Orl Grt N RR 5.000% 07/01/32 65 Northern Pacific RY 3.000% 01/01/47 52 Northern Pacific RY 3.000% 01/01/47 52 Northwest Airlines 6.625% 05/15/23 48 Northwest Airlines 7.248% 01/02/12 40 Northwest Airlines 7.625% 11/15/23 48 Northwest Airlines 7.875% 03/15/08 49 Northwest Airlines 8.700% 03/15/07 51 Northwest Airlines 8.875% 06/01/06 47 Northwest Airlines 9.179% 04/01/10 25 Northwest Airlines 9.875% 03/15/07 52 Northwest Airlines 10.000% 02/01/09 48 Northwest Stl&Wir 9.500% 06/15/01 0 NTK Holdings Inc 10.750% 03/01/14 72 Oscient Pharm 3.500% 04/15/11 66 Osu-Dflt10/05 13.375% 10/15/09 0 O'Sullivan Ind 10.630% 10/01/08 59 Outboard Marine 7.000% 07/01/02 0 Outboard Marine 10.750% 06/01/08 9 Overstock.com 3.750% 12/01/11 71 Owens-Corning Fiber 9.375% 06/01/12 75 PCA LLC/PCA Fin 11.875% 08/01/09 20 Pegasus Satellite 9.625% 10/15/49 11 Pegasus Satellite 12.375% 08/01/06 9 Pegasus Satellite 12.500% 08/01/07 12 Piedmont Aviat 10.350% 03/28/11 0 Pixelworks Inc. 1.750% 05/15/24 70 Pliant-DFLT/06 13.000% 06/01/10 43 Pliant-DFLT/06 13.000% 06/01/10 50 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 0 Primedex Health 11.500% 06/30/08 70 Primus Telecom 3.750% 09/15/10 50 Primus Telecom 8.000% 01/15/14 64 PSINET Inc 10.500% 12/01/06 0 Radnor Holdings 11.000% 03/15/10 39 Railworks Corp 11.500% 04/15/09 1 Read-Rite Corp. 6.500% 09/01/04 18 Reliance Group Holdings 9.000% 11/15/00 20 RJ Tower Corp. 12.000% 06/01/13 65 Salton Inc 12.250% 04/15/08 72 Silicon Graphics 6.500% 06/01/09 72 Startec Global 12.000% 05/15/08 0 Tekni-Plex Inc. 12.750% 06/15/10 70 Tom's Foods Inc 10.500% 11/01/04 9 Toys R Us 7.375% 10/15/18 70 Transtexas Gas 15.000% 03/15/05 0 Tribune Co 2.000% 05/15/29 66 Triton Pcs Inc. 8.750% 11/15/11 71 Triton Pcs Inc. 9.375% 02/01/11 71 United Air Lines 7.270% 01/30/13 53 United Air Lines 7.870% 01/30/19 54 United Air Lines 9.020% 04/19/12 58 United Air Lines 9.350% 04/07/16 30 United Air Lines 9.560% 10/19/18 58 United Air Lines 10.020% 03/22/14 45 US Air Inc. 10.250% 01/15/49 5 US Air Inc. 10.250% 01/15/49 11 US Air Inc. 10.550% 01/15/49 45 US Air Inc. 10.610% 06/27/07 0 US Air Inc. 10.680% 06/27/08 2 US Air Inc. 10.700% 01/01/49 20 US Air Inc. 10.700% 01/15/49 44 US Air Inc. 10.700% 01/15/49 45 US Air Inc. 10.700% 01/15/49 45 US Air Inc. 10.700% 01/15/49 45 US Air Inc. 10.850% 01/01/49 48 US Air Inc. 11.200% 03/19/05 0 Venture Holdings 9.500% 07/01/05 1 Vesta Insurance Group 8.750% 07/15/25 34 Werner Holdings 10.000% 11/15/07 26 Westpoint Steven 7.875% 06/15/05 0 Westpoint Steven 7.875% 06/15/08 0 Wheeling-Pitt St 6.000% 08/01/10 70 Winsloew Furniture 12.750% 08/15/07 26 Winstar Comm 14.000% 10/15/05 0 Winstar Comm Inc 10.000% 03/15/08 0 World Access Inc. 13.250% 01/15/08 4 XM Satellite Rad 1.750% 12/01/09 74 ********* 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, Robert Max Victor M. Quiblat II, Shimero R. Jainga, Joel Anthony G. Lopez, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin and Peter A. Chapman, Editors. Copyright 2006. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***