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/raid1/www/Hosts/bankrupt/TCR_Public/060728.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 28, 2006, Vol. 10, No. 178 Headlines 3548 MEAT: Involuntary Chapter 11 Case Summary ADELPHIA COMMS: Names JPMorgan as Custodian Under DIP Facility ADELPHIA COMMUNICATIONS: Discloses Terms of Plan Agreement ALLIED HOLDINGS: Trade Creditors Sell Claims to Hain Capital ALLIED HOLDINGS: Raises Proofs of Claim Issue in McConnell's Plea AMRESCO COMMERCIAL: Fitch Ups Rating on $12 Million Class Certs. ATHEROGENICS INC: June 30 Balance Sheet Upside-Down by $124 Mil. ATLANTIC MARINE: S&P Rates Proposed $155 Million Facility at B+ AVALON RE: Fitch Removes Junk Ratings From Negative Watch B/E AEROSPACE: Pays $174.94 Million of 8-1/2% Senior Notes BANC OF AMERICA: Fitch Holds Low-B Ratings on 2 Class Certificates BANC OF AMERICA: S&P Cuts Rating on Class K Certificates to BB BAKER & TAYLOR: S&P Rates $165 Million Senior Notes at B- BEAR STEARNS: Fitch Affirms Low-B Ratings on $23.2 Million Certs. BELDEN & BLAKE: Capital C Action Cues Moody's to Hold Junk Ratings BERRY PLASTICS: Commences Tender Offer for 10.75% Sr. Sub. Notes BLOCKBUSTER INC: To Terminate EVP Christopher Wyatt's Employment BOSTON COMMS: Settles with Freedom Wireless to End Patent Lawsuit BOYD GAMING: Sells South Coast Hotel and Casino to Michael Gaughan BREUNERS HOME: Trustee Taps Mcgrane Greenfield as Local Counsel BRICE ROAD: Court Values G.E. Credit's Collateral at $10.5 Mil. CILCORP INC: Moody's Downgrades Senior Unsec. Debt Rating to Ba1 CNC: Fitch Holds Junk Rating on $7.8 Million Class D Certificates COI MIDWEST: Wants to Borrow $100,000 from Delaware Capital COLLINS & AIKMAN: Huron Wants to Recover Tooling COMMUNICATIONS CORP: White Knight's Schedules of Assets & Debts COMPLETE RETREATS: Gets Interim Access to Cash Collateral COMPLETE RETREATS: Can Borrow Up to $4.9 Million from Patriot CONSTELLATION BRANDS: Agrees to Joint Venture with Grupo Modelo CONSUMERS ENERGY: Sells Midland Cogen Interests for $60.5 Million CROWN HOLDINGS: S&P Affirms BB- Rating on $1.5 Billion Facilities CUMMINS INC: Inks Agreement to Manufacture New Engines DELPHI CORP: Court Says Cindy Palmer Can Proceed with Appeal ENRON CORP: PACE Union Members' Claim Allowed for $309,926 ENRON CORP: Court Approves Lewis & Fisherv Settlement Agreement EXCO RESOURCES: Acquires Winchester Energy for $1.2 Billion EXCO RESOURCES: Winchester Buy Cues Moody's to Review Ratings EXIDE TECHNOLOGIES: Wants to Distribute Stock Subscription Rights EYE CARE: Launches Change of Control Offer for 10-3/4% Sr. Notes FALCONBRIDGE LIMITED: Earns $728 Million in 2006 Second Quarter FANNIE MAE: Credit Support Prompts S&P to Hold Low-B Ratings FEDERAL-M0GUL: Wants Lease-Decision Period Stretched to Dec. 1 FEDERAL-M0GUL: Assessment for T&N Retirement Pension Plan Begins FOSTER WHEELER: Arranging $350 Million Secured Debt Facility FRONTLINE CAPITAL: Plan-Filing Period Stretched to August 31 GALAXY NUTRITIONAL: Refinances Bridge Loans With Shareholder Note GATEHOUSE MEDIA: IPO Offer Cues Moody's to Review All Ratings GENERAL MOTORS: 2nd Quarter Results Cue S&P to Hold Negative Watch GRANITE BROADCASTING: Acquires CBS' New York Unit for $45 Million HEALTH CARE: Closes $700 Mil. Unsecured Revolving Credit Facility HEARST-ARGYLE: Fitch Holds BB Rating on Convertible Securities HONEY CREEK: Hires Lackey Hershman as General Litigation Counsel INDEPENDENT CAPITAL: Fitch Raises Preferred Stocks' Rating to BB INTEGRATED ELECTRICAL: CEO Acquires 25,000 Shares of Common Stock INTEGRATED ELECTRICAL: Issues 58,072 Shares of Stock to Tontine INVERNESS MEDICAL: Signs Joint Venture Pact with Procter & Gamble J.P. MORGAN: Fitch Junks Rating on $5.1 Million Class M Certs. JETBLUE AIRWAYS: Weak Financial Profile Cues S&P to Cut Ratings JOURNAL REGISTER: Weak Financial Profile Cues S&P to Cut Ratings LA PALOMA: S&P Affirms Low-B Ratings on $525 Million Loans LA REINA: Case Summary & 20 Largest Unsecured Creditors LARRY'S MARKETS: Gets Final Nod on Giuliani Capital as Advisor LEGACY ESTATE: Court to Consider $90MM Purchase Offer on Aug. 16 LIVING WATER: Case Summary & 15 Largest Unsecured Creditors MASTR ASSET: S&P Lifts Low-B Ratings on 11 Class Certificates MATHON FUND: Files Joint Plan of Reorganization in Arizona MATHON FUND: Selling 325-Acre Connecticut Property on Sept. 12 MIDLAND COGENERATION: Consumers Energy Sells Interests to GSO MORGAN STANLEY: Fitch Junks Rating on $3.5 Million Certificates MORGAN STANLEY: S&P Lifts Ratings on Class G & H Certificates NAVISTAR INT'L: Wants To Amend to $1.5 Billion Credit Agreement NEWPARK RESOURCES: Receives Default Notice from Noteholders NEWPARK RESOURCES: Default Notice Cues S&P to Lower Rating to B+ NOBLE DREW: Can Borrow Additional $140,000 Under the DIP Facility NOVA CDO: S&P Holds Junk Ratings on Class C-1 & C-2 Notes OHIO CASUALTY: Good Performance Prompts S&P to Upgrade Ratings ONEIDA LTD: Official Committee Hires Mesirow as Financial Advisors ONEIDA LTD: Equity Committee Opposes Panel's Mesirow Employment OWENS CORNING: To Merge Reinforcements Biz with Saint-Gobain's PARMALAT GROUP: Files EUR5.6 Billion Suit Against Graubundner PLIANT CORP: Wants Ex-CEO's $11.74 Mil. Unsec. Claim Disallowed PLIANT CORP: Gets Court OK to Assume Around 400 Contracts & Leases PNA GROUP: S&P Rates Proposed $250 Million Senior Notes at B- PRINTERA CORP: Sec. Creditors Get Assets; Unsec. Lenders Get None PROGRESS ENERGY: Sells Natural Gas Plants to EXCO for $1.2 Billion PTC ALLIANCE: Closes $70 Million Black Diamond Exit Financing PUBLICARD INC: Appoints Joseph Sarachek as Chief Executive Officer RELIANT ENERGY: Soliciting Consents from Note and Bond Holders RENATA RESORT: Hires Kerrigan & Merritt as Tax Accountants RENATA RESORT: Gets Court OK to Hire Chiron as Financial Advisor RESI FINANCE: Fitch Lifts Ratings on Five Class Certificates RESIDENTIAL ASSET: Fitch Junks Rating on Two Class Certificates REYNOLDS & REYNOLDS: Earns $28 Million in Quarter Ended June 30 ROGERS COMMUNICATIONS: Fitch Upgrades Issuer Default Rating to BB SALS 2002-2: S&P Lifts Rating on Class E Transactions to BB+ SAVVIS INC: Balance Sheet Upside Down by $137 Million at June 30 SEA CONTAINERS: High Court Sides with ORR on Railway Use Dispute SEA CONTAINERS: Christopher Garnett Steps Down as GNER CEO SERACARE LIFE: Inks Pact on Interim Plan-Filing Period Extension SERACARE LIFE: Panel Says Debtor Should Keep Derivative Claims SILICON GRAPHICS: Judge Lifland Approves Disclosure Statement SONICBLUE INC: Wants Excl. Plan-Filing Period Extended to Aug. 19 STARWOOD HOTELS: S&P Raises Corp. Credit Rating to BBB- from BB+ STONY HILL: S&P Downgrades Notes' Rating to BB- TAOVAYA LLC: Case Summary & 18 Largest Unsecured Creditors TELESOURCE INT'L: Has Capital Deficits in 2005 2nd & 3rd Quarters THERMADYNE HOLDINGS: S&P Lowers Corporate Credit Rating to CCC TIMES SQUARE: S&P Raises Certificates' Rating to BBB- from BB+ USG CORP: Balance Sheet Upside-Down by $313 Million at June 30 USG CORP: Gets Court Nod to Finalize Pre-Confirmation Settlements UTGR INC: Moody's Holds Low-Ratings and Says Outlook is Negative VARTEC TELECOM: Court Converts Ch. 11 Cases to Ch. 7 Proceedings VILLAGEEDOCS INC: Restates 2005 3rd Quarter Financial Statements WAMU MORTGAGE: S&P Lifts Rating on Class C-B-4 Certificates to BB+ WINN-DIXIE: Five Parties Object to Disclosure Statement WINN-DIXIE: Visagent Wants Claim Allowed For Voting Purposes WORLD HEALTH: Committee & CapitalSource Can Split Sale Proceeds * Thorn Reed Recognized for Commercial Litigation Expertise * BOOK REVIEW: The Titans of Takeover ********* 3548 MEAT: Involuntary Chapter 11 Case Summary ---------------------------------------------- Alleged Debtor: 3548 Meat Corp. 3548 Boston Road Bronx, New York 10469 Case Number: 06-11727 Involuntary Petition Date: July 27, 2006 Chapter: 11 Court: Southern District of New York (Manhattan) Judge: Allan L. Gropper Petitioners' Counsel: Kevin J. Nash, Esq. Finkel Goldstein Rosenbloom Nash, LLP 26 Broadway, Suite 711 New York, New York 10004 Tel: (212) 344-2929 Fax: (212) 422-6836 Petitioners Nature of Claim Claim Amount ----------- --------------- ------------ Prime Food Distributor Inc. Goods Sold and $23,609 1559 Boone Avenue Delivered Bronx, New York 10460 Vista Food Exchange Inc. Goods Sold and $16,122 Building 101 Delivered Hunts Point, Co-op Market Bronx, New York 10474 West Side Foods, Inc. Goods Sold and $5,007 Building D17-25 Delivered Hunts Point, Co-op Market Bronx, New York 10474 ADELPHIA COMMS: Names JPMorgan as Custodian Under DIP Facility -------------------------------------------------------------- Adelphia Communications Corporation and its debtor-affiliates have selected JPMorgan Chase Bank, N.A., to serve as custodian and as safekeeping agent, with regards to its $1.3 billion debtor-in- possession financing. As reported in the Troubled Company Reporter on July 21, 2006, the Debtors asked the U.S. Bankruptcy Court for the Southern District of New York to authorize and approve: (a) the amendment, restatement and extension of their existing Fourth Amended and Restated Credit and Guaranty Agreement dated as of March 17, 2006, with a group of lenders led by J.P. Morgan Securities, Inc., and Citigroup Global Markets, Inc., as Joint Bookrunners and Co-Lead Arrangers; (b) the related commitment letter for the Extended DIP Facility; and (c) the payment of related fees and expenses as provided for in the Commitment Letter and the related fee letter. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher LLP, in New York, told Judge Gerber that while the Debtors expect to consummate the Sale Transaction prior to its outside date of July 31, 2006 -- and thus prior to the current Aug. 7, 2006, maturity date of the Existing DIP Facility -- in the exercise of prudent business judgment, the Debtors have taken steps to obtain the DIP Lenders' agreement to an extension of the Existing DIP Facility in the event the Sale Transaction closing is delayed. Among other things, the Extended DIP Facility: (a) provides for a $1.3 billion facility, comprised of an $800,000,000 revolving credit facility -- including a $500,000,000 letter of credit sub facility -- and a $500,000,000 term loan, although prior to the closing date of the Extended DIP Facility, the Co-Lead Arrangers are entitled to change the allocations between the revolving credit facility and the term loan facility, but in any event the aggregate amount of the Extended DIP Facility cannot be reduced below $1.3 billion; (b) provides for a Maturity Date of Nov. 7, 2006; (c) provides for the termination of the Extended DIP Facility on the earlier of: (i) the Maturity Date, (ii) the acceleration of the loans and the termination of the commitments in accordance with the terms of the Extended DIP Facility, (iii) the date on which the transactions contemplated by either Purchase Agreement are consummated, (iv) the date on which any Break-Up Fee is paid to either Buyer pursuant to the terms of the applicable Purchase Agreement, and (v) subject to the terms of the Extended DIP Facility, the substantial consummation of a plan of reorganization; and (d) provides that the EBITDA and EBITDAR definitions contained in the Extended DIP Facility will be modified to add back to net income the aggregate amount of any charges recorded or reserves taken by any Loan Party during any period for any Break-Up Fee that becomes payable under the Purchase Agreements or is otherwise accrued by the Loan Parties during that period, provided, that the aggregate amount of those charges or reserves does not exceed $440,350,000. The Borrowing Limits under the July 10, 2006, Commitment Letter are: Initial Final Borrower Group Borrowing Limits Borrowing Limits -------------- ---------------- ---------------- Century $690,000,000 $650,000,000 Century-TCI 230,000,000 250,000,000 UCA 100,000,000 75,000,000 Parnassos 10,000,000 10,000,000 FrontierVision 215,000,000 205,000,000 Olympus 25,000,000 25,000,000 Seven A 0 0 Seven B 20,000,000 75,000,000 Seven C 10,000,000 10,000,000 ---------------- ---------------- TOTAL: $1,300,000,000 $1,300,000,000 Ms. Chapman discloses that the ACOM Debtors will seek the Court's approval of the Custodian Agreement and Safekeeping Agreement at the hearing on the DIP Financing Motion today, July 28, 2006. The Domestic Custody Agreement governs the custodial, settlement and certain other associated services offered by JPMorgan to ACOM. JPMorgan will be responsible for the performance of those Securities custody duties related to Securities that are: -- issued in the United States by an issuer that is organized under the laws of the U.S. or any state thereof; or -- both traded in the U.S. and eligible for deposit in a U.S. Securities Depository. A full-text copy of the Domestic Custody Agreement is available for free at http://ResearchArchives.com/t/s?e74 Pursuant to the Safekeeping Agreement, JPMorgan will hold and safe-keep certain of ACOM's securities certificates separately from those securities certificates belonging to JPMorgan and its other customers. JPMorgan will return the Certificates to, or upon the written instruction of, ACOM or an authorized person. A full-text copy of the Safekeeping Agreement is available for free at http://ResearchArchives.com/t/s?e75 About Adelphia Communications Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Managed Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 143; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADELPHIA COMMUNICATIONS: Discloses Terms of Plan Agreement ---------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission, Brad M. Sonnenberg, Adelphia Communications Corporation's executive vice president, general counsel and secretary, discloses that effective July 21, 2006, Adelphia entered into an amended and restated agreement concerning terms and conditions of a modified Chapter 11 plan with: -- the representatives of the ad hoc committee of holders of ACC Senior Notes represented by Hennigan, Bennett & Dorman LLP, -- the ad hoc committee of holders of ACC Senior Notes and Arahova Notes represented by Pachulski Stang Ziehl Young Jones & Weintraub LLP, -- the Ad Hoc Committee of Arahova Noteholders, -- the Ad Hoc Committee of holders of FrontierVision Opco Notes Claims and FrontierVision Holdco Notes Claims; -- W.R. Huff Asset Management Co., L.L.C.; -- the ad hoc committee of ACC Trade Claimants; -- the ad hoc committee of Subsidiary Trade Claimants; and -- representatives of the Official Committee of Unsecured Creditors. A full-text copy of the Second Amended and Restated Agreement Concerning Terms and Conditions of a Modified Chapter 11 Plan is available for free at http://ResearchArchives.com/t/s?e4e As reported in the Troubled Company Reporter on July 25, 2006, the Debtors, the different Committees in their chapter 11 cases, and significant individual creditors agreed upon the framework for a plan of reorganization intended to result in a fourth quarter 2006 emergence from Chapter 11 bankruptcy. Plan Agreement Mr. Sonnenberg explains that the Plan Agreement will form the basis of an amended plan of reorganization for the ACOM Debtors, including a proposed global compromise and settlement of all disputes among all creditors, whether parties to the Plan Agreement or not. The Plan Agreement does not apply to the Parnassos and Century- TCI Joint Venture Debtors. The Plan Agreement contemplates that the ACOM Debtors and the Creditors Committee will file the Modified Plan under which all unsecured creditors will receive payment in full of all principal and accrued interest through the Modified Plan's effective date, subject to specified "give-ups" in varying amounts of Plan Consideration, aggregating to $1,080,000,000, and would be transferred to the creditors. The "give-ups" are: (i) $750,000,000 from amounts otherwise allocable to the Arahova notes; (ii) $85,000,000 from amounts otherwise allocable to the FrontierVision operating company and holding company notes; (iii) $30,000,000 from amounts otherwise allocable to the Olympus bonds and the FPL note; (iv) $39,200,000 million from amounts otherwise allocable to subsidiary trade claims; and (v) $6,800,000 from amounts otherwise allocable to other subsidiary unsecured creditors. The creditors will also receive: -- the residual sale of consideration after funding all other distributions and reserves; and -- interests in the Contingent Value Vehicle. Treatment of Bank Claims Pursuant to the Plan Agreement, the Creditors Committee will be the sole proponent of the Modified Plan with respect to the treatment of the prepetition lenders' claims. Under the Plan Agreement, all Bank claims would be disputed claims under the Modified Plan, and would be subject to disallowance in whole or in part. The Plan Agreement proposes that, unless allowed, the Banks will not receive any distributions under the Modified Plan. The liens and security interests securing the claims would be transferred to Comcast Corporation and Time Warner NY Cable, LLC, in an amount sufficient to pay in full the maximum amount of the disputed Bank claims as determined by the Bankruptcy Court. Pending resolution of the disputed Bank claims, the Plan Agreement contemplates that the Debtors will retain the sale transaction proceeds subject to the liens. The Plan Agreement proposes that under the Modified Plan, the Banks would have the right to elect to receive payment in full in cash on the Effective Date of all outstanding principal and all accrued interest at the non-default interest rate in effect at the Petition Date, subject to disgorgement upon the entry of a final order directing the return of some or all of the distribution. Pending allowance of the Bank claims, the Plan Agreement contemplates that the ACOM Debtors or the Creditors Committee will pursue objections to all claims under all applicable provisions of the Bankruptcy Code. Mr. Sonnenberg notes that the Banks are not party to the Plan Agreement. The parties will continue their good faith negotiations with the Banks regarding the Banks' plan treatment. True-Up Reserve A true-up reserve of Class A Common Stock of Time Warner Cable Inc., or cash to the extent there is not sufficient stock available, will be created by withholding amounts otherwise payable in respect of initial Effective Date distributions pending a market valuation of that stock. Subject to certain limitations, the True-Up Reserve is intended to be sufficient to permit the upward or downward adjustment of the total number of shares received by creditors based upon a Market Value of the TWC Class A Common Stock that is up to 15% higher or lower than the deemed value used for initial distributions. Effective Date The Plan Agreement is conditioned upon the Modified Plan's Effective Date occurring before the later of September 15, 2006, and 15 days after the closing of the TWC Sale, but in no event later than October 31, 2006. Conditions to the Effective Date of the Modified Plan would also include: -- material completion of the distribution of TWC Class A Common Stock to creditors prior to October 31, 2006; and -- the distribution to Adelphia's creditors of the Plan Consideration of at least $1,080,000,000. About Adelphia Communications Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Managed Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 143; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Trade Creditors Sell Claims to Hain Capital ------------------------------------------------------------ On July 14, 2006, the Clerk of the U.S. Bankruptcy Court for the Northern District of Georgia recorded two claim transfers to: Hain Capital Holdings, LLC 301 Route 17, 6th Floor Rutherford, New Jersey 07070 Attn: Ganna Liberchuk Tel. No.: (201) 896-6100 The Claims are from: Transferor Claim Amount ---------- ------------ HSC Fabrication $9,992 SGS Automotive Services, Inc. 673,030 Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) ALLIED HOLDINGS: Raises Proofs of Claim Issue in McConnell's Plea ----------------------------------------------------------------- Allied Holdings, Inc., and its debtor-affiliates questions Frederick and Norma McConnell's assertion that that they were entitled to a relief from the automatic stay because they were allegedly seeking recovery only against two non-operating debtor entities -- GACS, Incorporated, and Commercial Carriers, Inc. The McConnell and the Debtors are parties to a civil action currently pending in the City of St. Louis Circuit Court. Mr. McConnell asserts products liability claims and seeks recovery of damages for severe personal injuries. During the hearing on their request, the McConnells told the U.S. Bankruptcy Court for the Northern District of Georgia that they were entitled to a relief from the automatic stay on the basis of their claims against non-debtor entities. Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, relates that the Debtors' review of the claims docket reveals that in February 2006, the McConnells asserted four claims, each for $3,000,000. The claims were filed not only against GACS and CCI but also against Allied Holdings, Inc., and Allied Automotive Group, Inc. Mr. Winsberg notes that the filing of the proofs of claim is germane to the pending request because it eliminates the McConnells' assertion that the matters before the Court only concern GACS and CCI. Mr. Winsberg asserts that the McConnells have not established cause for relief and will not be unduly harmed by denial of the request. Conversely, the Debtors' estates will suffer substantial harm from the modification of the stay, including the significant time and expenses of litigating the claims. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMRESCO COMMERCIAL: Fitch Ups Rating on $12 Million Class Certs. ---------------------------------------------------------------- Fitch upgrades AMRESCO Commercial Mortgage Funding I Corp.'s, mortgage pass-through certificates, series 1997-C1, as: -- $31.2 million class G to 'AAA' from 'BBB'; -- $4.8 million class H to 'A+' from 'BB+'; -- $7.2 million class J to 'BB+' from 'B'. In addition, Fitch affirms the following classes: -- Interest-only class X at 'AAA'; -- $7.6 million class D at 'AAA'; -- $26.4 million class E at 'AAA'; -- $9.6 million class F at 'AAA'; -- $2.4 million class K at 'B-'. Fitch does not rate the $8.4 million class L certificates. Classes A-1, A-2, A-3, B, and C have been paid in full. The ratings upgrades are the result of increased credit enhancement levels due to paydown. As of the July 2006 remittance report, the pool's aggregate principal balance has been reduced 79% to $97.6 million from $480.1 million at issuance. Two assets (10.5%) are in special servicing and losses are expected on all of them. The largest specially serviced asset (7.30%) is a real estate owned multifamily property is Atlanta, Georgia. The special servicer is stabilizing the property and preparing to list it for sale. The second largest specially serviced asset (3.17%) is a REO industrial property in Leominster, Massachusetts. The property is currently listed for sale although no offers have been received. The property's sole tenant has given notice of intent to vacant. ATHEROGENICS INC: June 30 Balance Sheet Upside-Down by $124 Mil. ---------------------------------------------------------------- AtheroGenics, Inc., reported its financial results for the second quarter and six months ended June 30, 2006. During the second quarter, AtheroGenics' revenue totaled $6.3 million. For the six months ended June 30, 2006, revenue totaled $10.4 million. The revenue recorded in both periods is related to the Company's collaboration agreement with AstraZeneca and reflects the amortization of the $50 million up-front license fee received in February 2006. The Company had no revenue for the same period in 2005 Research and development expense declined to $16.4 million for the second quarter of 2006, from $19.4 million for the comparable period in 2005. For the six months ended June 30, 2006, research and development expense totaled $32.7 million, compared to $35.5 million for the same period in 2005. The decrease in both periods was due to lower expenses for the Company's ongoing AGI- 1067 clinical program, as well as reduced spending on clinical supplies. This decline was partially offset by non-cash stock- based compensation expense of $1.2 million and $2.3 million for the second quarter and six-month period, respectively, resulting from AtheroGenics' adoption at the beginning of 2006 of Statement of Financial Accounting Standards No. 123(R), which requires the expensing of employee stock options. The Company anticipates that research and development expense will increase in the second half of 2006, compared to the amount spent in the first half, as it undertakes activities to close down the ARISE clinical trial. Marketing, general and administrative expense totaled $3.2 million for the second quarter ended June 30, 2006, compared to $2.2 million for the same period in the prior year. For the six months ended June 30, 2006, marketing, general and administrative expense totaled $6.9 million, compared to $4.1 million for the same period in 2005. The increase during both periods was principally due to stock-based compensation expenses of $1.1 million and $2 million for the second quarter and six month period, respectively, and higher professional fees. Interest and other income increased to $2.4 million in the second quarter ended June 30, 2006, compared to $1.7 million recorded for the quarter ended June 30, 2005. For the six months ended June 30, 2006, interest and other income increased to $4.6 million, compared to $3.1 million recorded for the six months ended June 30, 2005. The increase in the quarterly and six month periods was a result of higher interest rates on the Company's invested cash. AtheroGenics recorded interest expense of $2.1 million during the second quarter ended June 30, 2006, compared to $2.3 million in the same quarter last year. Interest expense for the first six months of 2006 was $4.2 million, as compared to $4.4 million for the first half of 2005. The decrease in interest expense was primarily due to the effect of a lower debt balance during the second quarter of 2006 compared to the same period in 2005 as a result of the exchange of a portion of the Company's 4.5% convertible notes for common stock in January 2006. For the six months ended June 30, 2006, AtheroGenics recorded $3.5 million in other expense, which was attributable to non-cash costs related to the exchange of a portion of the Company's 4.5% convertible notes for common stock in January 2006. AtheroGenics reported a net loss of $13.1 million for the second quarter of 2006, as compared to $22.2 million reported for the same period in 2005. Net loss reported for the first six months of 2006 was $32.3 million as compared to a net loss of $40.8 million for the first half of 2005. At June 30, 2006, cash, cash equivalents and short-term investments totaled $194 million. "The first half of this year has been very productive on several fronts," Russell M. Medford, M.D., Ph.D., president and chief executive officer of AtheroGenics, stated. "In addition to successfully completing preparations for closing down the ARISE clinical trial with investigators from the U.S., the U.K., Canada and South Africa, the Company continues its engagement in working with AstraZeneca on various pre- commercialization activities related to AGI-1067." AtheroGenics, Inc. (NASDAQ: AGIX) -- http://www.atherogenics.com/ -- is focused on the discovery, development and commercialization of novel drugs for the treatment of chronic inflammatory diseases, including heart disease (atherosclerosis), rheumatoid arthritis and asthma. The Company has two drug development programs currently in the clinic. AtheroGenics' lead compound, AGI-1067, is being evaluated in the pivotal Phase III ARISE clinical trial as an oral therapy for the treatment of atherosclerosis, in collaboration with AstraZeneca. AGI-1096 is a novel, oral agent in Phase I that is being developed for the prevention of organ transplant rejection in collaboration with Astellas. AtheroGenics also has preclinical programs in rheumatoid arthritis and asthma utilizing its proprietary vascular protectant(R) technology. At June 30, 2006, the Company's balance sheet showed $124,074,171 in total stockholders' deficit compared with a $115,436,216 deficit at Dec. 31, 2005. ATLANTIC MARINE: S&P Rates Proposed $155 Million Facility at B+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Atlantic Marine Holding Co. At the same time, Standard & Poor's assigned its 'B+' bank loan rating and '2' recovery rating, indicating expectations of substantial (80%-100%) recovery of principal in the event of a payment default, to the company's proposed $155 million secured credit facility. The outlook is stable. "The ratings on Atlantic Marine reflect high debt leverage, a modest revenue base (around $175 million), especially compared with some competitors in the government sector, and growth dependent on the more competitive and cyclical nonmilitary and marine fabrication segments," said Standard & Poor's credit analyst Christopher DeNicolo. "These factors are offset by the high barriers to entry in the marine repair industry and the company's fairly good diversity of vessels serviced." Jacksonville, Florida based Atlantic Marine is being acquired by J.F. Lehman & Co., a private equity firm, for a total transaction value of $180 million, including fees and expenses. The purchase will be funded with the proceeds from the new credit facility, $47.5 million of preferred equity, and $12.5 million of common equity. Leverage will be high, with debt to EBITDA of around 3.7x and debt to capital of 67% by the end of 2006. The preferred stock is considered equity as it does not pay cash interest, has no stated maturity, does not have a mandatory redemption feature, and is being held by the equity sponsor. Atlantic Marine provides maintenance, repair, overhaul, and conversion services for military and commercial vessels, as well as manufacturing ship modules and subsections for other shipyards. The MROC industry has high barriers to entry due to the need for a coastal location, with a deep draft and unobstructed access, and large, expensive assets such as drydocks. The company operates out of three locations: * Mobile, Alabama (about 50% of revenues), * on the Gulf coast, Jacksonville, Florida (33%), * on the Atlantic, and Naval Station Mayport near Jacksonville (17%), which primarily services the U.S. Navy. The company is able to service ships up to almost 1,000 feet in length, including large cruise ships and aircraft carriers. Although the customer base is fairly concentrated, with the top 10 representing more than 50% of sales of the last four years, the company has longstanding relationships with most of them and 90% of customers are repeat customers. Overall, the company is expected to maintain a credit profile consistent with current ratings in the intermediate term, supported by steady demand in key market segments and acceptable profitability The outlook could be revised to negative if demand or profitability in growth areas, mega yachts and marine fabrication, falls significantly below expectations or if leverage increases materially to fund acquisitions. A revision of the outlook to positive is not expected in the near term. AVALON RE: Fitch Removes Junk Ratings From Negative Watch --------------------------------------------------------- Fitch downgraded the ratings of the Class A and B variable-rate notes of Avalon Re Ltd., affirmed the ratings of the class C notes and removed all of the notes from Rating Watch Negative. In addition, Fitch assigned distressed recovery ratings to the class B and C notes. The class A variable rate notes were downgraded to 'BB-' from 'BBB+'. The class B variable rate notes were downgraded to 'CCC' from 'BB' and were assigned a distressed recovery rating of 'DR4'. The class C variable rate notes were affirmed at 'CCC-' and assigned a distressed recovery rating of 'DR5'. The rating actions affect $405 million of Avalon Re variable-rate notes. Avalon Re provides coverage to Oil Casualty Insurance, Ltd., a Bermuda-based insurer, on a three-year excess of loss reinsurance contract that attaches at $300 million. The rating actions reflect substantially increased expected loss statistics for each of the classes of variable rate notes. The expected loss statistics have increased primarily because OCIL has already incurred $290 million of losses in the first year of the three- year transaction. The losses recorded by OCIL have not been ceded to Avalon Re and have not resulted in a current loss of principal or interest to note holders. The class C, class B and class A note holders are exposed to the third, fourth and fifth $150 million loss, (or any portion thereof), respectively, occurring within the three-year risk period. Fitch expects to continue to monitor OCIL's insurance losses as they develop. If insurance losses develop such that they generate a loss to holders of the variable-rate notes, Fitch may further downgrade the notes. Due to the indemnity risk structure of the notes and the long-term nature of liability claims, Fitch expects that it may be several months before OCIL's losses, if any, can be quantified. Avalon Re is a Cayman Islands-domiciled insurance company formed solely to issue the variable-rate notes, enter into a reinsurance contract with OCIL, and to conduct activities related to the notes' issuance. The variable-rate notes are insurance-linked collateralized securities that will suffer a loss of principal if OCIL's aggregate insured losses exceed a specified threshold that varies by note class. Fitch removes the following from Rating Watch Negative: Avalon Re, Ltd. -- $135 million Class A Variable Rate Notes due June 6, 2008 downgraded to 'BB-' from 'BBB+'; -- $135 million Class B Variable Rate Notes due June 6, 2008 downgraded to 'CCC' from 'BB/DR4', distressed recovery rating assigned; -- $135 million Class C Variable Rate Notes due June 6, 2008 affirmed at 'CCC-/DR5', distressed recovery rating assigned. B/E AEROSPACE: Pays $174.94 Million of 8-1/2% Senior Notes ---------------------------------------------------------- B/E Aerospace, Inc., disclosed that in connection with its cash tender offer and consent solicitation for its outstanding $175.0 million aggregate principal amount of its 8-1/2% Senior Notes due 2010, it has accepted for payment and paid for $174.94 million aggregate principal amount of the Notes, which were tendered by holders on or prior to the expiration of the related consent solicitation at 5:00 p.m. New York City time on July 21, 2006, representing 99.97% of the outstanding Notes. The tender offer is scheduled to expire at 5:00 p.m. New York City time on August 7, 2006, unless extended or earlier terminated. New Senior Secured Facility In connection with the tender offer and consent solicitation, the Company entered into a new senior secured credit facility, consisting of a five-year, $150 million revolving credit facility and a six-year, $75 million term loan with J.P. Morgan Securities Inc., UBS Securities LLC and Credit Suisse Securities (USA) LLC, as Joint Lead Arrangers and Joint Bookrunners, and JPMorgan Chase Bank, N.A., as Administrative Agent. The new senior secured credit facility also provides for the ability of the Company to add additional term loans in the amount of up to $75 million upon satisfaction of certain customary conditions. The new senior secured credit facility replaces the Company's existing $50 million revolving credit facility that it had entered into in February 2004 and would have matured in 2007. Revolving credit borrowings under the new senior secured credit facility will initially bear interest at an annual rate equal to the London interbank offered rate plus 175 basis points, representing an initial interest rate of 7.2% as compared to 8-1/2% under the Notes repurchased on July 26, 2006. Term loan borrowings under the new senior secured credit facility will initially bear interest at an annual rate equal to the London interbank offered rate plus 200 basis points, representing an initial interest rate of 7.4%. After entering into this new senior secured credit facility and paying for both the Notes tendered in the tender offer and after giving effect to the consummation of the Company's acquisition of Draeger Aerospace GmbH for $80 million in cash, as of June 30, 2006, the Company would have had $447 million of long-term debt outstanding and $80 million of cash and available borrowings under the revolving credit facility, after taking into account $6 million of outstanding letters of credit. After giving effect to the refinancing, including the purchase of the tendered Notes, and the acquisition of Draeger, as of June 30, 2006, the Company's net debt-to-capital ratio would have been 38%, as compared with the Company's June 30, 2006 actual net debt-to-capital ratio of 32%. Net debt represents total debt less cash and cash equivalents. The Company plans to raise a new term loan, the proceeds of which would be used to repay all outstanding amounts borrowed under the revolving credit facility, and to negotiate a new revolving credit facility at that time. Amin J. Khoury, Chairman and Chief Executive Officer of B/E Aerospace, Inc. said, "This refinancing is another element of B/E Aerospace's ongoing commitment to lower our cost of capital and to maintain our net debt to capital ratios, while pursuing opportunities to grow our business." The Company has retained UBS Securities LLC, Credit Suisse Securities (USA) LLC and J.P. Morgan Securities Inc. to serve as Dealer Managers, and Global Bondholder Services Corporation to serve as Depositary and Information Agent. Persons with questions regarding the tender offer and consent solicitation should contact: UBS Securities LLC Toll free: 888-722-9555 ext. 4210 Collect: 203-719-4210 Credit Suisse Securities (USA) LLC Toll free: 800-820-1653 Collect: 212-325-7596 J.P. Morgan Securities Inc. Collect: 212-270-7407 Global Bondholder Services Corporation Tel. No.: 866-804-2200 Requests for documentation should be directed to Global Bondholder Services Corporation. Draeger Aerospace Acquisition On July 26, 2006, the Company disclosed that it had acquired Draeger Aerospace GmbH, from Cobham PLC of Dorset, England for approximately $80 million. The acquisition which is an all cash purchase will be funded with cash on hand. The transaction is expected to be modestly accretive to earnings per share in 2007, the first full year following the acquisition, and significantly accretive in 2008 and beyond due to strong manufacturing, research and development, sales and logistics synergies between the two organizations. About B/E Aerospace, Inc. Based in Wellington, Florida, B/E Aerospace, Inc. (Nasdaq:BEAV) -- http://www.beaerospace.com/-- is a manufacturer of aircraft cabin interior products, and an aftermarket distributor of aerospace fasteners. B/E designs, develops and manufactures a broad range of products for both commercial aircraft and business jets. B/E manufactured products include aircraft cabin seating, lighting, oxygen, and food and beverage preparation and storage equipment. The company also provides cabin interior design, reconfiguration and passenger-to-freighter conversion services. Products for the existing aircraft fleet -- the aftermarket -- generate about 60% of sales. B/E sells and supports its products through its own global direct sales and product support organization. * * * As reported in the Troubled Company Reporter on Jan. 16, 2006, Moody's Investors Service raised the ratings of B/E Aerospace, Inc., Corporate Family Rating to B1 from B3. Moody's said the ratings outlook is stable. BANC OF AMERICA: Fitch Holds Low-B Ratings on 2 Class Certificates ------------------------------------------------------------------ Fitch has affirmed these Banc of America Alternative Loan Trust mortgage pass-through certificates: Series ALT 2005-7 Total Pools 1 - 3: -- Classes CB-1 to CB-5, CB-R, 2-CB-1, 3-CB-1, CB-IO & CB-PO affirmed at 'AAA'; -- Class B-1 affirmed at 'AA'; -- Class B-2 affirmed at 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. The affirmations reflect satisfactory credit enhancement relationships to future loss expectations and affect approximately $337 million in outstanding certificates as of the July 25, 2006 distribution date. The underlying collateral in these transactions consists of fixed- rate, conventional, fully-amortizing mortgage loans secured by first lien on one- to four-family residential properties. Bank of America, N.A. which is rated 'RPS1' by Fitch for Prime & ALT-A transactions, is the servicer for these loans. This transaction is 12 months seasoned and the pool factor (i.e., current mortgage loans outstanding as a percentage of the initial pool) is 90%. To date, this transaction has not experienced any losses. The 90+ delinquencies, as a percentage of the current collateral balance, are 0.08%. BANC OF AMERICA: S&P Cuts Rating on Class K Certificates to BB -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on seven classes of commercial mortgage pass-through certificates from Banc of America Large Loan Inc.'s series 2004-BBA4. Concurrently, one rating is lowered and eight are affirmed. The raised and affirmed ratings reflect Standard & Poor's analysis of the remaining loans in the pool, as well as increased credit enhancement levels resulting from loan payoffs. The lowered rating reflects the declining operating performance of three loans in the pool, including the largest loan. As of July 17, 2006, the pool consisted of 10 floating-rate interest-only loans with an outstanding principal balance of $501.1 million, down from 18 loans with a balance of $912.3 million at issuance. The loans are indexed to one-month LIBOR. Eight of the 10 loans have subordinate interests that are held outside of the trust. In addition, four loans have $145 million in mezzanine financing in place. Four of the 10 loans mature within the next six months. All of the loans have extension options remaining. The performance of the loans has been stable, with the exception of the largest, ninth-largest and 10th-largest loans. The largest loan was transferred to the special servicer and is discussed below. Seven of the 10 loans have experienced stable or improved operating performance since issuance, with three reporting increases in net cash flow in excess of 10%. The Fifteen Group Multifamily portfolio loan (16% of the mortgage pool balance) is the largest in the pool with a trust balance of $87.9 million and a whole loan balance of $111 million. In addition, there is a $24.7 million mezzanine loan secured by equity interests of the borrower. The loan is secured by 10 cross-collateralized and cross-defaulted class B and C multifamily properties with 4,365 units located in six different states. The loan was transferred to the special servicer, CT Investment anagement Co. LLC, due to imminent default. Standard & Poor's reviewed property inspections provided by the master servicer, Banc of America, for all of the assets underlying the loan. Two properties were characterized as "fair," while the remaining collateral was characterized as "good." For the 12 months ending December 2005, the combined occupancy for the properties in the Fifteen Group Multifamily portfolio was 81%, down from 88% at issuance. Based on 2005 year-end operating statements, performance of this loan has significantly declined since issuance due to decreased occupancy, rent concessions, and increased expenses. Using the 2005 operating statements as a guide, Standard & Poor's adjusted the borrower's net operating income for tenant improvements, leasing commissions, and capital replacement reserves to arrive at an adjusted NCF of $9.6 million. Using a capitalization rate of 8.5%, S&P calculated a loan-to- value (LTV) of approximately 75%. The loan matures in October 2006 and has two remaining 12-month extension options, with one 11-month extension option thereafter. Heritage Square I and II is the ninth-largest loan in the pool (3.4%) with a trust and whole loan balance of $18.2 million. Additionally, there is $8 million in mezzanine debt secured by the partnership interests in the borrower. The loan is secured by two office buildings in Farmers Branch, Texas, with 354,486 sq. ft. For the year-end 2005, occupancy was 94%, down slightly from 98% at issuance. The performance of this loan has declined since issuance due to a substantial increase in expenses. Based on the December 2005 rent roll, Standard & Poor's adjusted the borrower's NOI for tenant improvements, leasing commissions, and capital replacement reserves to arrive at an adjusted NCF of $2 million. Using a cap rate of 9.25%, we calculated a LTV of approximately 85%. The loan matures September 2007 and has two 12-month extension options remaining. The 10th-largest loan, the Arapaho Business Park loan, has a trust balance of $13.8 million and whole-loan balance of $20.7 million (2.6%). The loan is secured by a 10-building industrial/flex complex in Richardson, Texas, with 423,397 sq. ft. comprising office (62%) and warehouse space (38%). The buildings were built between 1976 and 1980. Occupancy for the Arapaho Business Park is currently 76%, down significantly from 90% at issuance. As of the first quarter-2006, Reis Inc. reported an office vacancy rate of 43% for the Richardson submarket, with an average rent of $10.84 per sq. ft. Based on the borrower's December 2005 operating statements, Standard & Poor's adjusted the borrower's NOI for tenant improvements, leasing commissions, and capital replacement reserves to arrive at an adjusted NCF of $939,571. Using a cap rate of 9.29%, we calculated a LTV of approximately 136%. The loan matures June 2007 and has two 12-month extension options remaining. The operating performance of the remaining loans has either improved or remained stable since issuance. Ratings Raised Banc of America Large Loan Inc. Commercial mortgage pass-through certificates series 2004-BBA4 Rating ------ Class To From Credit enhancement(%) ----- -- ---- --------------------- B AAA AA+ 28.45 C AAA AA 21.03 D AA+ AA- 17.45 E AA A+ 14.07 F AA- A 10.97 G A A- 7.95 H A- BBB+ 6.09 Rating Lowered Banc of America Large Loan Inc. Commercial mortgage pass-through certificates series 2004-BBA4 Rating ------ Class To From Credit enhancement(%) ----- -- ---- --------------------- K BB BBB- N/A Ratings Affirmed Banc of America Large Loan Inc. Commercial mortgage pass-through certificates series 2004-BBA4 Class Rating Credit enhancement(%) ----- ------ --------------------- A-1 AAA 35.50 A-2 AAA 35.50 J BBB 3.85 X-1A AAA N/A X-1B AAA N/A X-2 AAA N/A X-3 AAA N/A X-4 AAA N/A N/A - Not applicable. BAKER & TAYLOR: S&P Rates $165 Million Senior Notes at B- --------------------------------------------------------- Standard & Poor's Ratings Services assigned its secured debt and recovery ratings to Baker & Taylor Acquisition Corp.'s $165 million senior secured second-priority note offering. The secured debt rating is 'B-' (two notches below the 'B+' corporate credit rating on Baker & Taylor) with a recovery rating of '5', indicating the expectation for negligible (0%-25%) recovery of principal in the event of a payment default. The initial issuer is BTAC Merger Corp. The initial issuer will merge with and into Baker & Taylor Acquisitions Corp. and, at that time, Baker & Taylor will assume the obligations of BTAC Merger Corp. The loan is guaranteed by all of the borrower's existing and future direct and indirect domestic subsidiaries, subject to exceptions for foreign subsidiaries. The facility is secured by a perfected second-priority security interest in substantially all the tangible and intangible assets of the borrower, behind the company's first-lien bank loan (not rated by Standard & Poor's). The corporate credit rating on Charlotte, North Carolina-based Baker & Taylor is 'B+' and the rating outlook is negative. The rating reflects the company's vulnerability to small changes in costs given its narrow operating margin, customer concentration, and thin cash flow protection measures. Baker & Taylor is a leading distributor of books, music, and video to institutional and retail markets. The company distributes products from 36,000 suppliers to 38,000 customers in over 125 countries. The company is a leader in the stable library distribution market and has a growing presence in the fragmented retail distribution market. Ratings List: Baker & Taylor Acquisitions Corp.: * Corporate credit rating: B+/Negative/-- Ratings Assigned: * $165M sr. sec. second-priority notes: B- (Recovery rtg: 5) BEAR STEARNS: Fitch Affirms Low-B Ratings on $23.2 Million Certs. ----------------------------------------------------------------- Fitch upgrades the $30.5 million Class B of Bear Stearns Commercial Mortgage Securities Inc., Series 2003-TOP12 to 'AA+' from 'AA'. In addition, Fitch affirms these classes: -- $90.1 million class A-1 at 'AAA'; -- $150.6 million class A-2 at 'AAA'; -- $185.9 million class A-3 at 'AAA'; -- $487.3 million class A-4 at 'AAA'; -- Interest only class X-1 at 'AAA'; -- Interest only class X-2 at 'AAA'; -- $31.9 million class C at 'A'; -- $13.1 million class D at 'A-'; -- $14.5 million class E at 'BBB+'; -- $7.3 million class F at 'BBB'; -- $7.3 million class G at 'BBB-'; -- $5.8 million class H at 'BB+'; -- $5.8 million class J at 'BB'; -- $2.9 million class K at 'BB-'; -- $2.9 million class L at 'B+-'; -- $2.9 million class M at 'B'; -- $2.9 million class N at 'B-'. Fitch does not rate the $11.6 million class O. The rating upgrade reflects the stable performance, defeasance and amortization. As of the July 2006 distribution date, the pool has paid down 9.3% to $1.05 billion from $1.16 billion at issuance. Seven loans (7.7%) have defeased since issuance, including the third largest loan (4.7%). Following the payoff of a multifamily property in Mankato, Minnesota, there is currently one specially serviced loan. A retail center located in Lithia Springs, Georgia (0.5%) has experienced a series of non-monetary defaults due to unauthorized changes in ownership structure. The loan is expected to return to the master servicer. Of the original loans, ten credit assessed loans remain in the transaction (26.7%): * West Valley Mall (5.9%), * West Shore Plaza (6%), * 200 Berkeley & Stephen L. Brown Buildings (4.7%), * Sun Valley Apartments (2.4%), * Cedar Knolls Shopping Center (1.9%), * 284 Mott Street (1.8%), * Eagle Plaza (1.6%), * Carriage Way (1.0%), * Deerfield Estates (0.9%), and * Wayne Town Center (0.8%). Based on their stable to improving performance, the loans remain investment grade. BELDEN & BLAKE: Capital C Action Cues Moody's to Hold Junk Ratings ------------------------------------------------------------------ Moody's Investors Service affirmed Belden & Blake's Corporate Family Rating of Caa1, and note ratings of Caa2. Moody's assigned the developing outlook following the company's announcement that its parent company, Capital C Corporation, had agreed to sell its partnership interests to an affiliate of EnerVest Management Partners Ltd. The driving factor at the time had been the ability of bondholders to put the notes at 101% of par required under change of control provision. While EnerVest offered to redeem the notes even above the 101% required by the indenture, the holders of the notes opted to retain them. Subsequently, the company announced a restatement of its financial statements to correct the way it accounted for its hedging, which also was incorporated into the developing outlook. However, since these issues have been resolved, the outlook is moved to stable as the company's performance thus far is in line with Moody's expectations. Moody's remains concerned about bondholder protection given EnerVest's continued strategy to provide current yield to equity investors and distribute all of its excess cash flows and limit organic reserve and production growth. Therefore, the Caa1 Corporate Family Rating and Caa2 note rating reflects: -- the rising reinvestment risk driven primarily by current management's aggressive distribution policy that is draining capital vital to the company's ability to internally fund its production and reserve replacement which has already been weak compared to its peers for the past several years; -- the very high cost structure which is in line with the current ratings; and the high degree of leverage on the Proven Developed reserves, especially when factoring in the out-of-the-money hedging obligations which rank pari-passu with the bondholders further pressured by distributions that appear to be partially debt funded. Partially offsetting these risks is the fairly durable existing productive base and still supportive commodity price environment which should continue to provide a degree of cashflow support for organic reinvestment and partially offset the decline of the company's productive base while also allowing the company to continue to service the significant out-of-the-money hedges; and the company's opportunistic purchase of outstanding notes. Belden & Blake, headquartered in Houston, Texas, is a wholly-owned subsidiary of Capital C which is owned by affiliates of EnerVest Management Partners Ltd. BERRY PLASTICS: Commences Tender Offer for 10.75% Sr. Sub. Notes ---------------------------------------------------------------- Berry Plastics Corporation commenced a cash tender offer for any and all of its outstanding $335 million of 10.75% Senior Subordinated Notes due 2012 (CUSIP No. 085790AJ2). The total consideration per $1,000 principal amount of Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on Aug. 7, 2006, unless extended, will be calculated based on the present value on the payment date of the sum of $1,053.75 (the redemption price for the Notes on July 15, 2007, which is the earliest redemption date for the Notes) plus interest payments through July 15, 2007, determined using a discount factor equal to the yield on the Price Determination Date of the 3-5/8% U.S. Treasury Note due June 30, 2007, plus a fixed spread of 50 basis points. The Company currently expects that the Price Determination Date will be 2:00 p.m., New York City time, on Aug. 7, 2006, although such date may be extended if the Company extends the expiration date of the tender offer. In order to receive the total consideration, holders are required to tender and not withdraw their Notes on or prior to the execution of the supplemental indenture that will effect the amendments to the indenture, which is expected to occur promptly after the Consent Date. In connection with the tender offer, the Company is soliciting consents to proposed amendments to the indenture governing the Notes that would eliminate substantially all of the restrictive covenants and certain events of default in the indenture. The Company is offering to make a consent payment of $30 per $1,000 principal amount of Notes to holders who validly tender their Notes and deliver their consents on or prior to the Consent Date. Holders may not tender their Notes without delivering consents, and may not deliver consents without tendering their Notes. The tender offer is scheduled to expire at midnight, New York City time, on Aug. 21, 2006, unless extended or earlier terminated. Accrued and unpaid interest to but not including the payment date, which is expected to be on or about Aug. 22, 2006, will be paid on all Notes tendered and accepted. However, no consent payments will be made in respect of Notes tendered after the Consent Date. Holders who tender their Notes after the Consent Date but on or prior to the expiration date will receive the total consideration referred to above per $1,000 principal amount of Notes validly tendered and not withdrawn, less $30 per $1,000 principal amount. Tendered Notes may not be withdrawn and consents may not be revoked after the date on which the Company, the guarantors of the Notes, and the trustee for the Notes execute a supplemental indenture to effect the proposed amendments to the indenture governing the Notes, which is expected to be promptly after the Consent Date. The proposed amendments will not take effect, however, until a majority of principal amount of outstanding Notes, whose holders have delivered consents to the proposed amendments, have been accepted for payment. The tender offer and consent solicitation are subject to the satisfaction of certain conditions, including: * the receipt of tenders from holders of a majority in principal amount of the outstanding Notes; * the consummation of the previously announced acquisition of BPC Holding Corporation, the Company's parent, by affiliates of the private equity firms Apollo Management, L.P. and Graham Partners and their affiliates; * the availability of sufficient funds to pay the total consideration with respect to all Notes, such funds to be raised from borrowing under a credit facility and sale of newly issued notes; and * the execution of a supplemental indenture on or prior to the acceptance date implementing the proposed amendments. The complete terms and conditions of the tender offer and consent solicitation are described in the Offer to Purchase and Consent Solicitation Statement of the Company dated July 25, 2006, copies of which may be obtained by contacting the information agent for the offer: MacKenzie Partners, Inc. Telephone (212) 929-5500 (collect) Toll Free (800) 322-2885 Deutsche Bank Securities Inc. is the exclusive dealer manager and solicitation agent for the tender offer and consent solicitation. Additional information concerning the tender offer and consent solicitation may be obtained by contacting Deutsche Bank Securities Inc., at (212) 250-6008. About Berry Plastics Headquartered in Evansville, Indiana, Berry Plastics Corporation -- http://www.berryplastics.com/-- manufactures and markets rigid plastic packaging products. * * * As reported in the Troubled Company Reporter on July 3, 2006, Moody's Investors Service placed the ratings for Berry Plastics Corporation under review for possible downgrade in response to the company's announcement that private equity firms Apollo Management, L.P., and Graham Partners intend to acquire Berry and its direct parent, BPC Holding Corporation, for approximately $2.25 billion. Moody's placed under review its B1 ratings on the Company's $150 million senior secured revolver maturing March 31, 2010, and $789 million senior secured term loan due December 2, 2011. Moody's also placed under review for possible downgrade its B3 rating on the Company's $335 million 10.75% senior subordinated notes due July 15, 2012, B3. The Company's B1 Corporate Family Rating was included as well. BLOCKBUSTER INC: To Terminate EVP Christopher Wyatt's Employment ---------------------------------------------------------------- Blockbuster Inc. disclosed that as part of its ongoing efforts to streamline its organization, it notified, on July 19, 2006, Mr. Christopher J. Wyatt, Executive Vice President and President, International, of its intention to terminate Mr. Wyatt's employment agreement in accordance with the terms of a mutual agreement. Mr. Wyatt is expected to continue his services and to assist with the transition of his responsibilities through the end of 2006. Mr. Wyatt's responsibilities are expected to be assumed by Mr. Nicholas P. Shepherd, Executive Vice President and President, Blockbuster North America. Mr. Wyatt's employment agreement is expected to be terminated effective June 30, 2007. Mr. Wyatt's agreement provides that, in connection with the termination of his employment by Blockbuster other than for breach and conditioned on Mr. Wyatt entering into a waiver of claims against Blockbuster and its affiliated companies, he is entitled to receive his salary and bonus compensation for up to 18 months after the termination date, subject to mitigation after the first six months following the termination date. About Blockbuster Blockbuster Inc. (NYSE: BBI, BBI.B) -- http://www.blockbuster.com/ -- is a global provider of in-home movie and game entertainment, with more than 9,000 stores throughout the Americas, Europe, Asia and Australia. * * * As reported in the Troubled Company Reporter on Mar. 15, 2006, Moody's Investors Service affirmed Blockbuster Inc. long-term debt ratings and its SGL-3 speculative grade liquidity rating. Moody's affirmed its B3 rating on the Company's Corporate family rating and Senior secured bank credit facilities at B3. Moody's also affirmed its Caa3 rating on the Company's Senior subordinated notes. Standard & Poor's Ratings Services lowered, in November 2005, its corporate credit and bank loan ratings on Blockbuster Inc. to 'B-' from 'B' and the subordinated note rating to 'CCC' from 'CCC+'. S&P said the outlook is negative. Fitch downgraded, in August 2005, Blockbuster Inc.'s Issuer default rating to 'CCC' from 'B+'; Senior secured credit facility to 'CCC' from 'B+' with an 'R4' recovery rating; and Senior subordinated notes to 'CC' from 'B-' with an 'R6' recovery rating. BOSTON COMMS: Settles with Freedom Wireless to End Patent Lawsuit ----------------------------------------------------------------- Boston Communications Group, Inc., and Freedom Wireless, Inc., signed a definitive settlement and license agreement settling and dismissing, with prejudice, Freedom Wireless' patent litigation against the Company and its carrier customers, including its co-defendants. "We are thankful to be able to end this chapter in the Company's history, and we believe that the decision we've made to enter into a settlement with Freedom Wireless is the most prudent path forward to preserve and enhance the value of our business by alleviating the risk our customers and other stakeholders might have borne in the course of our continuing legal battle," said E.Y. Snowden, the Company's president and CEO. "With this agreement, and our ability to offer the wireless industry Boston Communications' best in class, 3GPP-compliant, Intelligent Network-based Real-Time Billing platform together with the protection of a license for the Freedom Wireless patents, we believe the Company's competitive position is dramatically enhanced, as evidenced by the 8-K filing disclosing a long-term contract renewal." The terms of the settlement and license agreements have been finalized, and the settlement is conditioned upon the entry of orders vacating certain orders and judgments in the U.S. District Court for the District of Massachusetts. The license agreement allows the Company to continue business, including the sale of its real-time prepaid billing product, without the burden of any infringement claim by Freedom Wireless. The license agreement protects the Company's mobile operator customers, channel partners and suppliers in connection with Boston Communications products, services and technologies. However, it does not resolve or settle any claims, disputes or liabilities relating to the use or infringement of the Freedom patents by mobile operators in connection with any prepaid wireless system or service other than services provided by the Company. Pursuant to the settlement agreement, the Company will pay to Freedom Wireless $55.3 million in full and final settlement of all claims against the Company through June 30, 2006, including $12.6 million that will be a prepayment of royalties under the license agreement. The prepayment is anticipated to cover the Company's royalty obligations to Freedom Wireless for the period from July 1, 2006, through approximately Feb. 28, 2007. The total settlement to be paid collectively by all of the defendants to Freedom Wireless is $87 million. As part of the settlement, the Company's co-defendants have agreed to release Boston Communications from its indemnification obligations to the parties. The license agreement enables the Company to provide mobile operators real-time prepaid wireless services that are fully licensed under the Freedom patents. Pursuant to the license agreement, the Company will be required to pay ongoing future royalties for prepaid subscribers beginning on or about March 1, 2007, in accordance with the terms in the license agreement. The license agreement also provides for a contingent payment equal to 5 percent of any increase in the Company's average market capitalization for the six months ending June 30, 2007, compared to the six months ended June 30, 2006, payable in four quarterly installments beginning Sept. 30, 2007. "In terms of prepaid subscribers served, this license agreement makes Boston Communications the largest Freedom Wireless licensee," Mr. Snowden said. "We believe that the protection this license affords our customers will allow future pricing to accommodate the cost of the royalties. With our license of these patents, and our industry leading Real-Time Billing features, performance and flexibility, we look forward to reinforcing our prepaid wireless leadership as the segment continues to grow." the Company, its codefendants and Freedom have filed a Joint Motion for Relief from Orders and Judgment in the District Court, requesting the court to vacate certain orders, including vacating the finding of willful infringement against the Company. If the District Court denies the joint motion, the settlement will not be consummated; the parties have asked the District Court to rule on this joint motion expeditiously. Accounting Treatment With respect to the accounting treatment of the Company's $55.3 million cash payment, Boston Communications had previously accrued a $64.3 million estimated loss related to the Freedom litigation. While the Company is still evaluating the accounting treatment relating to the payments and obligations of the Settlement and License Agreements, for the quarter ended June 30, 2006, the Company expects to reverse a portion of the previously recorded loss, resulting in a net gain to operating income to reflect the amount of settlement related to past damages. The royalty prepayment of $12.6 million is expected to be recorded as an asset as of June 30, 2006, and amortized to expense over the period from July 2006 through February 2007. The Company expects to finalize and report the accounting details of the settlement and license agreement in its second quarter earnings release, which is expected to be on July 28, 2006. Absent the impact of the settlement and license agreement on the Company's financial statements as of June 30, 2006, the Company reiterates its previous guidance of lower sequential revenues and a net loss for the second quarter. the Company's cash, cash equivalents and restricted cash totaled $70.3 million as of March 31, 2006. Under the terms of the Appeal Agreement with Cingular Wireless, the $41.9 million restricted cash amount in escrow as of March 31, 2006, will be applied toward the Company's settlement payment to Freedom. Option Grants The Staff of the Securities and Exchange Commission had contacted Boston Communications by telephone regarding an informal inquiry relating to certain option grants made between 1998 and 2002. The Board of Directors has retained outside counsel, which, along with the Company, has begun to review its historical option grants practices. The results of that review will be reported by outside counsel to a Special Committee of the Board. The review is still ongoing and the Special Committee is continuing to review these matters. Based on the investigation conducted to date, the actual measurement dates for accounting purposes for certain stock option grants during prior periods may differ from the recorded grant dates for such awards. As a result, the Company may need to record additional non-cash charges for stock-based compensation expense related to those prior periods, however, the impact of any such compensation charges, if any, for any relevant fiscal period has not been determined. About Boston Communications Based in Bedford, Massachusetts, Boston Communications Group, Inc. -- http://www.bcgi.net/-- delivers innovative products and services that enable mobile operators and MVNOs worldwide to differentiate their offerings and increase market penetration while reducing costs. Founded in 1988, bcgi is identifying and addressing new market needs with proven solutions, including prepaid and postpaid billing, payments and access management. * * * Bankruptcy Warning As reported in the Troubled Company Reporter on Nov. 11, 2005, the potential outcome of the Freedom Wireless Litigation varies greatly and could include any of the following: * If the injunction is not stayed or if security is required to be posted for royalties that exceed the Company's ability to pay, BCGI would need to negotiate a settlement and/or a license with Freedom Wireless or would likely seek protection under the U.S. Bankruptcy Code. * If the Appeals Court overturns the judgment of infringement, the Appeals Court could either rule that the Company would have no liability to Freedom Wireless or that the case would be returned to the District Court for a new trial on infringement. * If the Appeals Court overturns the judgment that the patents held by Freedom Wireless were valid or enforceable, BCGI would have no liability to Freedom Wireless, or the case could be returned to the District Court for a new trial on the issue of invalidity or unenforceability. * If the Appeals Court rules in favor of Freedom Wireless, the Company would need to seek protection under the U.S. Bankruptcy Code. * The parties may enter into a settlement agreement. BOYD GAMING: Sells South Coast Hotel and Casino to Michael Gaughan ------------------------------------------------------------------ Boyd Gaming Corporation reached an agreement to sell the South Coast Hotel and Casino to Michael Gaughan, for a purchase price equal to the net proceeds from the sale of approximately 15.8 million shares of Boyd Gaming stock owned by Mr. Gaughan. The Company disclosed that a minimum of 75% of the purchase price will be paid in cash and that the agreement allows the Company to purchase a maximum of 25% of Mr. Gaughan's shares. The Company further disclosed that the cash proceeds from the sale of South Coast will be used to repay a portion its outstanding balance on its revolving credit facility. The agreement also provides that South Coast cannot be sold for a period of five years, other than to Boyd Gaming, and Boyd Gaming retains the first right of refusal on the future sale for an additional three years. William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming, commented, "Our merger in 2004 with Coast Casinos was one of our most successful transactions ever, positioning our Company as a leading Las Vegas locals operator. While I will miss working with Michael on a daily basis, I certainly understand his desire to return to the day-to-day operations of a casino property, something he has done most of his professional life. In the end, I believe this will be a win-win for both Michael and our Company." Michael Gaughan noted, "Our merger with Boyd Gaming two years ago proved to be a very successful transaction for both companies. Our Las Vegas Locals business experienced unprecedented growth during that time. That said, I now have a desire to return to an entrepreneurial role as a casino operator. I have been friends with Bill Boyd for over 40 years and look forward to continuing our friendship in the future." About Boyd Gaming Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) -- http://www.boydgaming.com/-- is a diversified owner and operator of 19 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. The Company is also developing Echelon Place, a world class destination on the Las Vegas Strip, expected to open in early 2010. * * * As reported in the Troubled Company Reporter on Jan. 30, 2006, Standard & Poor's Ratings Services put a 'B+' rating to Boyd Gaming Corp.'s $250 million senior subordinated notes due 2016 and affirmed its existing ratings on the Company, including its 'BB' issuer credit rating. S&P said the outlook is stable. As reported in the Troubled Company Reporter on Jan. 27, 2006, Moody's Investors Service assigned a B1 to Boyd Gaming Corporation's new $250 million senior subordinated notes due 2016. Fitch Ratings assigned a 'B+' rating to Boyd Gaming Corporation's $250 million senior subordinated notes. BREUNERS HOME: Trustee Taps Mcgrane Greenfield as Local Counsel --------------------------------------------------------------- Montague S. Claybrook, the Chapter 7 Trustee overseeing the liquidation of Breuners Home Furnishings Corp. and its debtor- affiliates, asks the U.S. Bankruptcy Court for the District of Delaware for authority to employ Mcgrane Greenfield, L.L.P., as his local counsel. The Trustee says that Isabel Donovan, Debtor's former employee, commenced an action in San Jose, California, before the Labor Commissioner seeking damages of excess of $25,000 regarding a post-petition wage claim. The Trusts wants Mcgrane Greenfield to assist him in California with respect to the Donovan Labor Action. The Trustee discloses that it wants to retain Mcgrane Greenfield because of its familiarity with actions before the Labor Commissioner and extensive experience in the field of bankruptcy law. Bernard S. Greenfield, Esq., a partner at Mcgrane Greenfield, tells the Court that he will bill $450 per hour for this engagement. Mr. Greenfield discloses that Marcia E. Gerston, Esq., will be rendering services and will bill $350 per hour. Mr. Greenfield assures the Court that his Firm does not hold any interest adverse to the Debtors, its creditors or its estates. Mr. Greenfield can be reached at: Bernard S. Greenfield, Esq. Mcgrane Greenfield, L.L.P. 40 South Market Street, 2nd Floor San Jose, California 95113 Tel: (408) 995-5600 Fax: (408) 995-0308 http://www.mghh.com/ Headquartered in Lancaster, Pennsylvania, Breuners Home Furnishings Corp. -- http://www.bhfc.com/-- is one of the largest national furniture retailers focused on the middle the upper-end segment of the market. The Company and its debtor- affiliates, filed for chapter 11 protection on July 14, 2004 (Bankr. Del. Case No. 04-12030). Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors. Great American Group, Gordon Brothers, Hilco Merchant Resources, and Zimmer-Hester were brought on board within the first 30 days of the bankruptcy filing to conduct Going-Out-of-Business sales at the furniture retailer's 47 stores. The Bankruptcy Court converted the case to a Chapter 7 liquidation on Feb. 8, 2005. Montague S. Claybrook serves as the Chapter 7 Trustee. Mr. Claybrook is represented by Michael G. Menkowitz, Esq., at Fox Rothschild LLP. When the Debtors filed for chapter 11 protection, they reported more than $100 million in estimated assets and debts. BRICE ROAD: Court Values G.E. Credit's Collateral at $10.5 Mil. --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Ohio valued Brice Road Developments, L.L.C.'s apartment complex known as Kensington Commons at $10.5 million after testimonies from the experts hired by the Debtor and its secured creditor, General Electric Credit Equities, Inc. On February 13, 2006, General Electric Credit Equities, Inc. asked the Court to value the property. Around that time, the Debtor's liability to GE was around $16.4 million excluding default/contract interest, late charges, etc. To date, default interest of $569,761 and late charges of $44,645 arose under the terms of the Debtor's mortgage with GE Capital. In the event of a default, all obligations under the Mortgage become due and payable immediately at the holder's option. GE declares the full amount payable under the mortgage to be due and payable. Donald W. Mallory, Esq., at Dinsmore & Shohl LLP, in Columbus, Ohio, said that is no equity cushion in the Kensington Property. Brice Road Developments, L.L.C., modified its First Amended Joint Plan of Reorganization to reflect its proposed treatment of GE Credit's claim. As reported in the Troubled Company Reporter yesterday, the Debtor told the Court that GE Credit's allowed secured claim would be satisfied in full by the Debtor amortizing the amount monthly with 6% annual interest instead of 5.5%. Any unpaid accrued interest and principal would be due and payable, in full, on Feb. 1, 2043. GE Credit will retain its lien on Kensington Commons and on any other of Debtor's property securing its Allowed Claim. Headquartered in Dublin, Ohio, Brice Road Developments, L.L.C., owns Kensington Commons, a 264-unit apartment complex located outside of Columbus, Ohio. The Company filed for chapter 11 protection on Sept. 2, 2005 (Bankr. S.D. Ohio Case No. 05-66007). Yvette A Cox, Esq., at Bailey Cavalieri LLC represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. CILCORP INC: Moody's Downgrades Senior Unsec. Debt Rating to Ba1 ---------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Union Electric Company; Central Illinois Public Service Company; CILCORP Inc.; and Central Illinois Light Company. Moody's also downgraded Union Electric Company's short term rating for commercial paper to Prime-2 from Prime-1. Moody's confirmed the ratings of Ameren Corporation and Illinois Power Company. The rating of AmerenEnergy Generating Company is unaffected. The rating outlook is negative for Ameren Corporation, Central Illinois Public Service, CILCORP, Central Illinois Light, and Illinois Power. The rating outlook is stable for Union Electric and AmerenEnergy Generating. This action concludes a review for possible downgrade that was initiated on December 15, 2005. The downgrade of Central Illinois Public Service, CILCORP, and Central Illinois Light reflects: 1) A difficult political and regulatory environment for electric utilities in the state of Illinois, with rate increases being sought to recover purchased power costs that are expected to increase sharply starting on January 1, 2007. The Governor, the Attorney General, and some members of the state legislature have expressed strong opposition to Ameren's power procurement plans for its Illinois utilities, and the company has acknowledged that a portion of the rate increase may be deferred. 2) Moody's expectation that the outcome will involve a material regulatory deferral of recovery of higher power procurement costs, which will weaken the financial performance of the utilities for at least several years. A lengthy deferral would result in increased debt balances and raise concern about the ultimate full recovery of these costs. In addition to these factors, the two notch downgrade of Central Illinois Public Service Company's ratings represents a narrowing of the notching among Ameren's Illinois utility subsidiaries, which Moody's believes are being operated as a single system with similar credit profiles for CIPS, CILCORP, and IP. It also reflects the expiration of the utility's below market power purchase agreement with AmerenEnergy Generating on December 31, 2006. The downgrade of Union Electric Company reflects: 1) Weaker financial metrics due to higher operating costs and large capital expenditures for environmental compliance, and the expectation that financial ratios will continue to be weak for the previous rating level through 2007. Union Electric has recently filed for a rate increase in Missouri to address these higher costs, the outcome of which will be important to the maintenance of the utility's credit profile. 2) The likelihood that if the operating cash flow of Ameren's Illinois utilities declines, Ameren may need to rely on its Missouri and unregulated operations for a larger share of upstreamed dividends to meet parent company obligations. The confirmation of Illinois Power's ratings reflects Moody's expectation that the current level of proposed deferrals will result in financial ratios that would be consistent with low investment grade ratings for Ameren's three utility operating subsidiaries in Illinois. It also considers the operating and financial improvements Ameren has made at Illinois Power since it was acquired from Dynegy several years ago, as well as the new credit facility and money pool arrangement in place with affiliated companies Central Illinois Public Service, CILCORP, and Central Illinois Light. The confirmation of Ameren Corp.'s ratings reflects consolidated financial metrics that are expected to remain consistent with its Baa1 rating, the low level of debt at the parent company level, and the recent execution of a bank facility at its Illinois utilities as part of arrangements to provide separate credit arrangements for these companies, and removal of cross default provisions under the Ameren credit facility. The confirmation of Ameren Corp.'s rating considers that its unregulated generating subsidiaries are expected to generate higher cash flow after below market contracts with the Illinois utility affiliates expire on December 31, 2006. The rating of AmerenEnergy Generating Company is unchanged and considers its competitive, low cost generating portfolio, upside potential beyond Jan. 1, 2007 when contracts to sell power expire and the company can benefit from higher market prices, and the company's reduced leverage following the retirement of $225 million of long-term debt in November 2005. The negative rating outlook on Ameren and its Illinois utility subsidiaries reflects continued uncertainty about the outcome of the power supply auction, the level of increase for power purchase costs, and the full and timely recovery of these higher costs. It also reflects the possibility that consolidated financial metrics could deteriorate further if deferrals are larger than anticipated or if the rate freeze in Illinois is extended. Ratings downgraded include: Union Electric Company * senior secured debt to A2 from A1; * Issuer Rating to A3 from A2; and * short-term rating for commercial paper to Prime-2 from Prime-1; Central Illinois Public Service Company * senior secured debt to Baa2 from A3, * senior unsecured debt and Issuer Rating to Baa3 from Baa1, and * short-term rating for remarketed securities to VMIG 3 from VMIG 2; CILCORP, Inc. * senior unsecured debt to Ba1 from Baa3; Central Illinois Light Company * senior secured debt to Baa1 from A3; and * Issuer Rating to Baa2 from Baa1. Ratings confirmed include: Ameren Corp. * senior unsecured debt at Baa1, and * short-term rating for commercial paper at Prime-2; Illinois Power Company * senior secured debt at Baa2, and * Issuer Rating at Baa3. Ameren Corporation is a public utility holding company headquartered in St. Louis, Missouri. It is the parent company of Union Electric Company, Central Illinois Public Service Company, CILCORP Inc., Central Illinois Light Company, Illinois Power Company, and Ameren Energy Generating Company. CNC: Fitch Holds Junk Rating on $7.8 Million Class D Certificates ----------------------------------------------------------------- Fitch Ratings upgrades CNC's pass-through certificates, series 1994-1 classes to: -- $8.4 million class B to 'AAA' from 'BB+'; -- $7.8 million class C to 'BB' from 'B'. $7.8 million class D remains at 'CCC/DR1'. Classes A-1 through A- 3 have paid in full. The upgrades reflect increased subordination levels due to scheduled amortization and paydown as well as the disposition of a real estate owned asset in February 2006 with no loss to the trust. As of the July 2006 distribution date, the pool's aggregate certificate balance has decreased 87.5%, to $24.1 million from $192.1 million at issuance. Of the original 68 credit-tenant leases (CTLs) in the pool, 14 remain outstanding. There are currently only four credit tenants: * Kmart (74.4%), * Food Lion (21.2%), * Winn-Dixie (2.7%) and * Walgreens (1.7%). The ratings of credit tenant lease transactions are highly sensitive to the movements of the corporate credit ratings of the underlying tenants. Sears Holding Company, the credit tenant with the largest exposure in the pool, is rated 'BB' with a Stable Outlook by Fitch. COI MIDWEST: Wants to Borrow $100,000 from Delaware Capital ----------------------------------------------------------- COI Midwest Investments LLC asks the U.S. Bankruptcy Court for the Central District of California for permission to borrow $100,000 from Delaware Street Capital, L.P., and Delaware Street Capital II, L.P., on a secured basis. Delaware Street Capital holds a 95% interest in the Debtor while Delaware Street Capital II holds the remaining 5% interest. David B. Golubchik, Esq., at Levene, Neale, Bender, Rankin & Brill, LLP, tells the Court that the Debtor's primary asset is a real property located at 900 South Turnbull Canyon Road, City of Industry, California. The Property is being leased to Prime Measurement Products, Inc. The Debtor says that before it filed for bankruptcy, Prime had ceased making payments. The fact that the lease payments constitute the Debtor's sole source of operating revenue, the Debtor was unable to service its secured debt. The Debtor believes that the value of the Property, which is around $14 million, is substantially in excess of the asserted secured liabilities. The Debtor owes around $8 million to its secured creditors and around $2 million to its unsecured creditors. As a result, the Debtor believes that all allowed claims would be paid in full. The Debtor, therefore, commenced its chapter 11 cases to avoid actions by its secured creditor to foreclose on the Property and to preserve the Property's value for the benefit of the Debtor's estate and its creditors. Through its chapter 11 case, the Debtor intends to sell the Property to the highest bidder. The proceeds of the sale will be utilized to pay all creditor claims. According to Mr. Golubchik, due to Prime's failure to pay rent to the Debtor, the Debtor had no cash before its bankruptcy filing to fund a retainer to its bankruptcy counsel or to the counsel who will assist the Debtor in its dispute with Prime. In addition, the Debtor currently has no cash, other than a small $1,000 capital contribution to open a debtor-in-possession bank account, to fund ordinary and necessary expenses related to the bankruptcy, including without limitation, the U.S. Trustee quarterly fees. Fortunately, Mr. Golubchik says, the Debtor's equity holders have agreed to lend the Debtor the money. The financing will be secured by all of the Debtor's assets excluding avoidance causes of action. The loans will be junior to the Debtor's existing loan in favor of The Finova Group Inc. The loans will be due and payable on the earlier of: (a) closing date of the sale of the Property; (b) confirmation of a plan of reorganization; (c) conversion of the Debtor's case to a chapter 11 liquidation proceeding; (d) appointment of a chapter 11 trustee; (e) six months after the Court approves the loan. Interest on the unpaid balance will accrue at a rate equal to the Prime Rate plus 6% per annum. Upon approval of the financing, the Debtor plans to pay a $50,000 postpetition retainer to Levene, Neale, Bender, Rankin & Brill, LLP, its proposed bankruptcy counsel and a $10,000 postpetition retainer to Klein & Wilson, its proposed special litigation counsel. The remaining $40,000 will be used for postpetition operations. Headquartered in the City of Industry, California, COI Midwest Investments LLC leases its real property in Canyon Road. The Company filed for bankruptcy protection on June 1, 2006 (Bankr. C.D. Calif. Case No. 06-12329). Ron Bender, Esq., and David B. Golubchik, Esq., at Levene, Neale, Bender, Rankin & Brill, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for bankruptcy, it reported assets amounting between $10 million and $50 million and debts aggregating between $1 million and $10 million. COLLINS & AIKMAN: Huron Wants to Recover Tooling ------------------------------------------------ Huron Mold and Tools, Ltd., and Huron Model and Gauge asks the U.S. Bankruptcy Court for the Eastern District of Michigan to lift the automatic stay to repossess certain Tooling from Collins & Aikman Corporation and its debtor-affiliates. In the alternative, the Huron Companies ask the Court to compel the Debtors to provide them with adequate protection to protect their interests. The Huron Companies delivered various tooling for the Debtors prior to their bankruptcy filing. The Debtors use the Tooling to produce parts for many of the Debtors' vehicle programs, including acoustic insulators for M-class Mercedes, cargo mats for the GMC Hummer, engine insulators for the Ford CD338 platform including Ford Fusion and Lincoln Zephyr, and dash insulators for the Subaru Tribeca. Ryan D. Heilman, Esq., at Schafer and Weiner, PLLC, in Bloomfield Hills, Michigan, relates that the Debtors currently owe no less than $1,293,326 to Huron Model and $202,800 to Huron Mold, for a total amount of $1,496,126, plus interest and applicable fees and charges, for the Tooling. The Huron Companies have first priority statutory liens on the Production Tooling, Mr. Heilman asserts. The Huron Companies requested adequate protection from the Debtors but they failed and refused to make any offer to do adequately protect Huron's interest in the Tooling, he notes. Mr. Heilman states that the Huron Companies lack sufficient information to predict when the Tooling will become obsolete and lose all value, although they know that the value of the Tooling is decreasing. The Debtors have not provided them with critical information disclosing the number of parts that have already been produced with the Tooling or any information concerning the total number of parts the Debtors expect to produce with the Tooling. The Huron Companies have no other source or available means to obtain this information, Mr. Heilman explains. Furthermore, the Debtors have not disclosed to the Huron Companies the expected duration of the programs for which the Tooling was used. It is very possible that at least some of the Programs are now nearing conclusion. "The environment of a cash-starved, unprofitable parts producer creates conditions making it likely that the Tooling may be misused and not properly maintained or insured," Mr. Heilman says. Mr. Heilman asserts that the continued use of the Tooling, even if they are properly maintained and not misused, will eventually result in damage to the Tooling, requiring repairs and impairing their value. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and $2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) COMMUNICATIONS CORP: White Knight's Schedules of Assets & Debts --------------------------------------------------------------- White Knight Holdings, Inc., and its debtor-affiliates, delivered to the U.S. Bankruptcy Court for the Western District of Louisiana their schedules of assets and liabilities, disclosing: White Knight Holdings --------------------- Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $35,219,490 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $371,348,118 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding Unsecured Nonpriority Claims ----------- ------------ Total $35,219,490 $371,348,118 White Knight Broadcasting ------------------------- Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $35,228,794 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $371,449,541 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $77,600 Unsecured Nonpriority Claims ----------- ------------ Total $35,228,794 $371,527,141 White Knight Broadcasting of Shreveport --------------------------------------- Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $1,605,415 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $371,348,118 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $53,413 Unsecured Nonpriority Claims ---------- ------------ Total $1,605,415 $371,401,531 White Knight Broadcasting of Baton Rouge ---------------------------------------- Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $21,782,435 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $371,348,118 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $378,777 Unsecured Nonpriority Claims ----------- ------------ Total $21,782,435 $371,726,895 White Knight Broadcasting of Longview ------------------------------------- Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property $402,986 B. Personal Property $8,909,341 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $371,348,118 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $198,828 Unsecured Nonpriority Claims ---------- ------------ Total $9,312,327 $371,546,946 White Knight Broadcasting of Natchez ------------------------------------ Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $2,519,912 C. Property Claimed as Exempt D. Creditors Holding Secured Claims $371,348,118 E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $92,603 Unsecured Nonpriority Claims ---------- ------------ Total $2,519,912 $371,440,721 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. COMPLETE RETREATS: Gets Interim Access to Cash Collateral --------------------------------------------------------- The Honorable Alan H.W. Shiff of the U.S. Bankruptcy Court for the District of Connecticut authorized Complete Retreats LLC and its debtor-affiliates, on an interim basis, to use the cash collateral securing their obligations to The Patriot Group, LLC, and LLP Mortgage, Ltd., assignee of Beal Bank, S.S.B. Each of the Lenders will have priority in payment to the extent their liens on and security interests in the Collateral or any other form of adequate protection of their interests is insufficient, as a result of any postpetition diminution in the value of their existing liens on the Collateral. As further adequate protection, the Debtors are permitted to pay to the Lenders each month (i) the reasonable attorneys' fees and expenses incurred by each Lender in connection with the Debtors' cases and the Existing Loans, and (ii) accrued interest on the Existing Loans. Any action, claim or defense challenging the extent, priority, avoidability, or enforceability of the Debtors' obligations or the liens granted to the Lenders must be filed: (a) by any official committee -- and no other party -- within 60 days from its formation; or (b) by any party-in-interest with requisite standing -- in the event no committee is appointed within 30 days from the Debtors' bankruptcy filing -- on or before October 9, 2006. The Court will convene a final cash collateral hearing on August 15, 2006, at 2:00 p.m. Before the Court entered the Interim Cash Collateral Order, the United States Trustee opposed the Debtors' request contending that the Debtors should clarify that they have not granted any liens on avoidance actions. The U.S. Trustee asserted that since no committee has been appointed, no schedules have been filed, and it has not had an opportunity to review the underlying financing documents, it is premature for the Court to enter a final order on the Debtors' Cash Collateral Motion. Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000). COMPLETE RETREATS: Can Borrow Up to $4.9 Million from Patriot ------------------------------------------------------------- The Honorable Alan H.W. Shiff of the U.S. Bankruptcy Court for the District of Connecticut authorized Complete Retreats LLC and its debtor-affiliates, on an interim basis, to borrow up to $4,900,000 of the debtor-in-possession financing pledged by The Patriot Group LLC, as lender and agent, and LPP Mortgage, Ltd. The Court overruled all objections to the Debtors' request for entry of the Interim DIP Order, to the extent not withdrawn. Judge Shiff also authorized the Debtors to remit to Patriot the first $1,480,139 advanced by the DIP Lenders to pay for the loan Patriot extended to the Debtors on July 18, 2006, in accordance with the parties' prepetition Amended and Restated Master Loan Agreement. The Debtors' payment will be indefeasible in all respects. The DIP Lenders are granted senior liens and security interests on the Debtors' assets. The Court approved a Carve-Out for: * U.S. Trustee fees pursuant to 28 U.S.C. Sec. 1930(a)(6); * Clerk of Court fees; * professional fees, up to $900,000; and * unpaid business payroll expenses, up to $400,000. Judge Shiff held that no Lender consent will be required with respect to the disposition of property secured by the first priority liens of Cabo Resort Investing, LLC, DG Capital, LLC, and Bar-K, Inc. Judge Shiff ruled that Debtor Complete Retreats, LLC, as sole member of DR Abaco, LLC, will cause DR Abaco to comply in all respects with the negative covenants set forth in its operating agreement, as amended, and will not further amend the DR Abaco Operating Agreement without Patriot's prior written consent. Judge Shiff will convene a final hearing on the Debtors' DIP Financing Motion on August 15, 2006, at 2:00 p.m. Objections must be filed by August 10. A full-text copy of the Interim DIP Order is available at no charge at http://researcharchives.com/t/s?e80 Before the Court entered the Interim DIP Order, the United States Trustee opposed the Debtors' request, contending that, the Debtors should clarify that they have not granted any liens on avoidance actions. The U.S. Trustee argues that it would be premature for the Court to enter a final order on the Debtors' DIP Financing Motion since no committee has been appointed, no schedules have been filed, and it has not had an opportunity to review the underlying financing documents. Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000). CONSTELLATION BRANDS: Agrees to Joint Venture with Grupo Modelo --------------------------------------------------------------- Constellation Brands, Inc., reached a new agreement with Grupo Modelo, S.A. de C.V. to create a joint venture for importing and marketing Modelo's Mexican beer portfolio in the U.S and Guam for a 10-year period, effective Jan. 2, 2007. The joint venture board will consist of directors half from the Company and half from Grupo Modelo, including the Company's Chairman and Chief Executive Officer Richard Sands and Grupo Modelo Chairman and Chief Executive Officer Carlos Fern ndez. The joint venture will be headquartered in Chicago and led by beer industry veteran, Bill Hackett, president of the Company's Barton Beers group. "We are pleased with the creation of this joint venture and believe that it offers Modelo brands excellent long-term growth opportunities in the United States with the establishment of a unified import system," stated Carlos Fern ndez. "Constellation Brands has demonstrated its commitment to our brands for more than a quarter-of-a-century and we could not ask for a better partner to work with us in the U.S. This agreement allows Grupo Modelo to move to a single importer, which will create strategic alignment across the nation and the ability to create even more growth in one of the world's most dynamic beer markets. The joint venture will benefit from the existing momentum and popularity of our brands with consumers, add value to our business and expand our mutual relationship, which dates from 1978." "We're delighted about bringing together two companies with proven entrepreneurial cultures in a collaborative effort to take the Modelo portfolio to its next level of development in the U.S.," said Richard Sands. "This is a unique opportunity for Grupo Modelo and Constellation Brands to build a business alliance that was never before possible, and to build it in such a way that the joint venture will seek to maximize the future growth potential for the top Mexican beer portfolio. We believe the JV will have unsurpassed people, processes, expertise and retailer and consumer insights that will enable us to effectively and creatively expand the business." The Company disclosed that it expects the joint venture be operational on, Jan. 2, 2007, and the new agreement runs through Dec. 31, 2016 and further that subject to the brand owners' approval, its national rights to import St. Pauli Girl and Tsingtao into the U.S. will be part of the joint venture. About Grupo Modelo Founded in 1925, Grupo Modelo (MX: GMODELOC) is in the production and marketing of beer in Mexico, with 62.8% of the total domestic and export market share, as of Dec. 31, 2005. The company has seven brewing plants in Mexico, with a total annual installed capacity of 52.0 million hectoliters. It currently brews and distributes 12 brands; Corona Extra, the number one Mexican beer in the world, Corona Light, Modelo Especial, Victoria, Pacifico, Negra Modelo among others. The company exports five brands with a presence in more than 150 countries, and it is the exclusive importer of Anheuser-Busch products in Mexico. About Constellation Brands Constellation Brands, Inc. (NYSE:STZ, ASX:CBR), -- http://www.cbrands.com/-- is an international producer and marketer of beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Goundrey, Nobilo, Kim Crawford, Alice White, Ruffino, Kumala, Robert Mondavi Private Selection, Rex Goliath, Toasted Head, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Inniskillin, Jackson-Triggs, Simi, Robert Mondavi Winery, Stowells, Blackthorn, Black Velvet, Mr. Boston, Fleischmann's, Paul Masson Grande Amber Brandy, Chi- Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao. * * * As reported in the Troubled Company Reporter on June 19, 2006, Moody's Investors Service assigned a Ba2 rating to Constellation Brands, Inc.'s new $3.5 billion secured credit facility, which replaced its $2.9 billion secured credit facility. The $1.3 billion incremental add-on facility, which was proposed at the time of the Vincor International Inc. acquisition announcement, was never executed and the rating has been withdrawn. Constellation's existing ratings are not affected by these actions, and have been affirmed. The ratings outlook remains negative. Moody's affirmed its Ba2 ratings on the Company's Corporate Family Rating, $200 million 8.625% senior unsecured notes, due 2006, $200 million 8% senior unsecured notes, due 2008, GBP 80 million 8.5% senior unsecured notes, due 2009, and GBP 75 million 8.5% senior unsecured notes, due 2009. Moody's also affirmed its Ba3 rating on the Company's $250 million 8.125% senior subordinated notes, due 2012. CONSUMERS ENERGY: Sells Midland Cogen Interests for $60.5 Million ----------------------------------------------------------------- Consumers Energy, the principal subsidiary of CMS Energy, has reached an agreement to sell the utility's interests in the 1,500-megawatt Midland Cogeneration Venture to GSO Capital Partners and Rockland Capital Energy Investments for $60.5 million. Consumers Energy owns 49% of the MCV Partnership, which leases and operates the facility near Midland, Michigan. Consumers Energy also indirectly owns 35% of the facility and along with the other owners leases the facility to the MCV Partnership. The sales agreement calls for GSO and Rockland to purchase all of the Michigan utility's interests. GSO and Rockland also will provide Consumers Energy a financial guarantee to back certain contingent obligations. Consumers Energy is the main customer for the MCV's electricity output. The utility's contract to purchase power from the plant, and the associated customer rates, are not affected by the sale. The sale is the result of a competitive process. Proceeds from the sale will be used to reduce debt at the utility, following a review by the Michigan Public Service Commission. CMS Energy said if the sale closes this fall, as expected, it would boost 2006 cash flow by about $56 million and reduce 2006 reported and adjusted earnings by about 4 cents per share. The Company said it is maintaining its guidance for 2006 adjusted earnings, excluding mark-to-market impacts, of about $1 per share. CMS Energy does not provide specific reported earnings guidance because of the uncertainties associated with the expected reversal of mark-to-market gains and losses from potential asset sales. The natural gas-fired MCV facility can produce up to 1,500 megawatts of electricity and up to 1.35 million pounds per hour of industrial steam. It began commercial operation in 1990. Sustained high natural gas prices led the MCV Partnership to reevaluate the economics of the facility last year. Those high gas prices also led Consumers Energy to examine several long-term alternatives for its MCV interests, including a competitive sale. David Joos, the president and chief executive officer of CMS Energy, said the sale of the MCV interests reduces CMS Energy's financial risk. "This sale will reduce our exposure to sustained high natural gas prices and allow us to pay down debt at the utility at a time when interest rates are rising," he said. J.P. Morgan Securities Inc. served as financial advisor for Consumers Energy and managed the competitive sale process. About GSO Capital GSO Capital Partners LP is an investment advisor specializing in the leveraged finance marketplace. Funds managed by GSO invest in a broad array of assets including private equity securities, mezzanine securities and leveraged loans. The firm has approximately $5 billion in assets under management and has over 90 professionals in New York, London and Houston. About Rockland Capital Rockland Capital Energy Investments is a private energy investment company founded in 2003 to focus on the acquisition, development and optimization of companies and projects in the North America and European energy sectors. About Midland Cogeneration Midland Cogeneration Venture was formed in 1987 to convert a portion of an uncompleted Consumers Energy's nuclear unit into a natural gas-fired cogeneration facility. About Consumers Energy Company Headquartered in Jackson, Michigan, Consumers Energy Company -- http://www.consumersenergy.com/-- a wholly owned subsidiary of CMS Energy Corporation, is a combination electric and natural gas utility that serves more than 3.3 million customers in Michigan's Lower Peninsula. * * * As reported in the Troubled Company Reporter on April 4, 2006, Fitch assigned a rating of 'BB+' to Consumers Energy Company's $300 million 364-day revolving credit facility. Fitch said the rating outlook is stable. CROWN HOLDINGS: S&P Affirms BB- Rating on $1.5 Billion Facilities ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' rating and its '2' recovery rating on Crown Holdings Inc.'s existing $1.5 billion credit facilities including its proposed $200 million add-on senior secured term loan B due 2012. The bank loan rating is the same as the corporate credit rating; this and the recovery rating of '2' indicate that lenders can expect substantial (80% to 100%) recovery of principal in the event of a payment default. The ratings on the add-on term loan B are based on preliminary terms and are subject to review of final documentation. The borrower for the add-on term loan B is Crown Americas LLC and proceeds from the term loan B, which is being added through an amendment to Crown's existing credit facilities, will be initially used to pay down the revolving credit facility, and subsequently to fund share repurchases and meet pension payments. The corporate credit rating on Crown is 'BB-'. The rating outlook is stable. Philadelphia, Pennsylvania-based Crown's total debt was $3.6 billion at March 31, 2006. "The ratings reflect Crown's satisfactory business risk profile, characterized by market leadership, global operations, and relative earnings stability. Nevertheless, the financial profile remains highly leveraged, and the company continues to face risks associated with asbestos litigation," said Standard & Poor's credit analyst Liley Mehta. Ratings List: Crown Holdings Inc.: * Corporate credit rating: BB-/Stable/B-1 * Senior unsecured debt: B Crown Americas LLC and Crown Americas Capital Corp.: * $410 million revolving credit facility due 2011: BB- (Recovery rtg: 2) * $365 million term loan B due 2012: BB- (Recovery rtg: 2) * $500 million senior unsecured notes due 2013: B * $600 million senior unsecured notes due 2015: B Crown European Holdings S.A.: * $350 million revolving credit facility due 2011: BB- (Recovery rtg: 2) * $350 million term loan B due 2012: BB- (Recovery rtg: 2) * EUR460 mil. first-priority sr. secured notes due 2011: BB- * Recovery rating: 2 Crown Metal Packaging Canada L.P.: * $40 million revolving credit facility due 2011: BB- (Recovery rtg: 2) Crown Cork & Seal Finance PLC: * Senior unsecured debt: B CUMMINS INC: Inks Agreement to Manufacture New Engines ------------------------------------------------------ Cummins Inc. has reached agreement with a major automotive manufacturer serving the North American market to produce and market a light-duty, diesel-powered engine. For competitive reasons, Cummins' original equipment manufacturer partner in the venture has asked to remain confidential. As part of the agreement, Cummins will develop and manufacture a family of high-performance, light-duty diesel engines for a variety of automotive applications in vehicles below 8,500 pounds gross vehicle weight, including standard pickup trucks and sport utility vehicles. Certain bus, marine and industrial applications also will be served by this engine family. The first vehicles with this engine are expected to be ready for market by the end of the decade. Cummins anticipates that this diesel engine will provide an average of 30 percent fuel savings, depending on the drive cycle, over gasoline-powered engines for comparable vehicles. The concept for this product is the result of a nine-year partnership between Cummins and the U.S. Department of Energy. The DOE contract began in 1997 because of the federal agency's ongoing interest in energy efficiency in the automotive market. "This agreement gives the driving public an even greater opportunity to experience the benefits of a new class of vehicles powered by a high-performance, fuel-efficient, clean diesel engine made by Cummins," said Tim Solso, Cummins Chairman and Chief Executive Officer. "This line of diesel engines also will fuel the growth of an exciting new market in which Cummins does not currently participate." Cummins has not yet selected a manufacturing site for the new engine, but after an extensive search has narrowed the candidates to a short list of states. "Cummins is looking for a community that has a cost-competitive, suitable facility and the right resources available," said Jim Kelly, President of the Engine Business. "We also will seek state and local economic incentives from the states that are candidates for this business." Cummins expects to have added 600 new jobs approximately two years after product launch. Further growth will depend on volumes. About Cummins Headquartered in Columbus, Indiana, Cummins Inc. -- http://www.cummins.com/-- is a corporation of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Cummins serves customers in more than 160 countries through its network of 550 Company-owned and independent distributor facilities and more than 5,000 dealer locations. * * * Cummins' Junior Convertible Subordinated Debentures carry Fitch's 'BB' rating with a stable outlook. As reported in the Troubled Company Reporter on May 11, 2006, Moody's Investors Service raised Cummins' convertible preferred stock rating to Ba1 from Ba2 and withdrew the company's SGL-1 Speculative Grade Liquidity rating and its Ba1 Corporate Family Rating. DELPHI CORP: Court Says Cindy Palmer Can Proceed with Appeal ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York lifts the automatic stay for the sole and limited purpose of allowing Cindy Palmer, personal representative of the estate of Michael Palmer, deceased, to prosecute to decision her appeal pending in the Michigan Court of Appeals to determine whether Delphi Automotive Systems, LLC, et al., was rightfully dismissed from the underlying action. Ms. Palmer will not be permitted to take any other action in connection with this matter without further Court order. The automatic stay will remain in full force and effect for every other purpose. Delphi Corporation and its debtor-affiliates had asked the Court to deny Ms. Palmer's lift stay plea because the continuation of the Palmer litigation will directly affect them and their estates. The Debtors initially believed that the insurance policies under which Cindy Palmer's claim arose had been assumed pursuant to a court order authorizing renewal of insurance coverage. The Debtors subsequently determined that because the event that gave rise to Ms. Palmer's appeal occurred prior to the January 1, 1999 spin-off of Delphi from General Motors Corp., the Debtors' policies that were assumed pursuant to the Insurance Order do not cover the Palmer Claim. After further investigation, the Debtors also discovered that in fact they do not have insurance for the first $1,000,000 of liability related to the claim. The excess insurance that the Debtors have that may cover the Palmer action covers only any liability in excess of $1,000,000. Therefore, the first $1,000,000 of any liability that may arise as a result of the Palmer litigation would be borne directly by the Debtors' estates. The Debtors also pointed out that although the Palmer Appeal is in advanced stages, if the Michigan Court of Appeals were to reverse the trial court's decision, the litigation would once again be active. Under that scenario, the Debtors would be unnecessarily distracted and valuable resources that would otherwise be allocated to the administering of the estate would be wasted. Based in Troy, Mich., Delphi Corporation -- http://www.delphi.com/ -- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: PACE Union Members' Claim Allowed for $309,926 ---------------------------------------------------------- Before Enron Corporation and its debtor-affiliates filed for bankruptcy, Debtor Garden State Paper Company, LLC, was a party to three collective bargaining agreements covering employees at its paper mill and recycling facilities in Garfield, Paterson, and Carteret, New Jersey. On October 9, 2002, the Paper, Allied-Industrial, Chemical & Energy Workers International Union and its Local I-300 union filed Claim No. 7526 against GSP, asserting various unliquidated claims arising from alleged violations of the PACE CBAs in an unliquidated amount of $522,564. On October 17, 2002, PACE filed Claim No. 20269 for $911,125 against GSP asserting various unliquidated claims arising from alleged violations of the PACE CBAs. On March 10, 2005, GSP objected to Claims Nos. 7526 and 20269. The parties subsequently entered into a stipulation to resolve their dispute. They agree that: (1) PACE will withdraw with prejudice Claim Nos. 7526 and 20269. GSP will withdraw its objections to the Claims; (2) claims of 182 PACE-represented employees, for whose benefit PACE filed the claims, will allowed in the aggregate of $309,926; and (3) PACE will waive and release the Reorganized Debtors and their estates from all claims, with the exception of the Allowed Employee Claims. The Allowed Employee Claims include: Allowed Employee Name Amount ------------- ------ William Boes $3,253 Francis Buds 3,444 Richard Chmielewski 2,862 Peter Corrado 3,358 David Curtis 2,671 Edward Dyle 3,921 Floyd Gee 3,342 Robert Horvath 2,669 Robert Junoa 2,763 Ronald Longstaff $3336 Corneuus Maloney 3,554 Samuel Mcgee 3,352 Kevin Mcloughlin 3,367 Pandy Michaels 2,817 Joseph Olechowski 2,925 Michael Porcaro 2,843 Robert R. Roskam 2,488 Thomas Slota 82,827 Witold Soszynski 3,664 William Swift 2,405 The U.S. Bankruptcy Court for the Southern District of New York approved the parties' stipulation. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 176; Bankruptcy Creditors' Service, Inc., 15/945-7000) ENRON CORP: Court Approves Lewis & Fisherv Settlement Agreement --------------------------------------------------------------- The Honorable Alberto Gonzalez of the U.S. Bankruptcy Court for the Southern District of New York approves the settlement agreement among Reorganized Enron Corporation and its debtor- affiliates and Lewis & Clark College and Fiserv Securities, Inc., now known as NF Clearing, Inc. According to Richard L. Wasserman, Esq., at Venable LLP, in Baltimore, Maryland, Enron Corp., in 2001, transferred over $1,000,000,000 to various entities to prepay or redeem, prior to the stated maturity date, commercial paper that it had previously issued. On Nov. 6, 2003, Enron filed Adversary Proceeding No. 03-92667, styled Enron Corp. v. J.P. Morgan Securities Inc., et al., against a number of parties, including Lewis & Clark College and Fiserv Securities, Inc., now known as NF Clearing, Inc., to avoid and recover preferential or fraudulent transfers in connection with the early redemption transfers. Enron sought to recover $249,979 from the Lewis Parties in connection with one of the commercial paper debt prepayments. The Lewis Parties denied Enron's material allegations and sought dismissal of the Complaint. After negotiations, Enron and the Lewis Parties entered into a settlement agreement to resolve their dispute. The parties agree that: (1) the Lewis Parties will make a $100,000 settlement payment to Enron; (2) the Lewis Parties will forfeit, waive and release any claim against Enron; and (3) the Reorganized Debtors will dismiss with prejudice the Adversary Proceeding, as against the Lewis Parties. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., Matthew Scott Barr, Esq., and Paul D. Malek, Esq., at Milbank, Tweed, Hadley & McCloy, LLP, represent the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 176; Bankruptcy Creditors' Service, Inc., 15/945-7000) EXCO RESOURCES: Acquires Winchester Energy for $1.2 Billion ----------------------------------------------------------- EXCO Resources, Inc., reported and agreement to acquire Winchester Energy Company, Ltd. and its affiliated entities from Progress Energy, Inc. (NYSE: PGN) for $1.2 billion in cash, subject to purchase price adjustments. This acquisition consists of producing and undeveloped natural gas properties with current production of approximately 75 Mmcfe per day from 588 producing wells of which 89% are operated. The average acquired working interest is 87% with an average 68% net revenue interest. The properties are located in the Cotton Valley, Hosston and Travis Peak trends in East Texas and North Louisiana. Proved reserves acquired are approximately 400 Bcfe with probable reserves of 300 Bcfe and possible reserves of 30 Bcfe. The properties include approximately 775 drilling locations, 33% of which are proved, and 106,000 net acres of leasehold of which 63% is held by production. The acquisition also includes six gathering systems with 300 miles of pipe and a 54 mile, 16" pipeline with throughput of 115 Mmcf per day, 35% of which throughput is company owned. The seller's reserves were estimated by independent petroleum engineers. Such estimates were subsequently reviewed by EXCO's internal engineers and adjusted as deemed necessary for additional drilling, well performance and other factors. Preliminarily, we expect to allocate approximately $780 million to proved reserves, $150 million to the pipeline and gathering assets and approximately $270 million to probable and possible reserves and undeveloped acreage. The amount allocated to proved reserves represents $1.95 per proved Mcfe. Based upon all categories of reserves, the purchase price is $1.44 per Mcfe. Pro forma for this acquisition, EXCO's total proved reserves are approximately 1.3 Tcfe and its reserves in all categories total approximately 2 Tcfe. In connection with the acquisition, hedges of 18 Bcfe per year for 2007, 2008 and 2009 at prices of $9.07, $8.8 and $8.39, respectively, were put into place by the seller and will be assumed by EXCO. In addition, EXCO will assume approximately 5.5 Bcfe of additional existing hedges for 2006 from the seller at $9.33 per Mcfe. The transaction is expected to close on October 2, 2006, subject to customary conditions to closing and governmental clearance. The acquisition is being financed with a $750 million Term Loan Facility and a new Revolving Credit Facility. The subsidiary will be classified as an Unrestricted Subsidiary. The subsidiary will not be a guarantor of EXCO debt obligations nor will EXCO guarantee the indebtedness of the subsidiary. Douglas H. Miller, EXCO's Chief Executive Officer has this comment: "This acquisition is an important milestone in the execution of our overall acquire and exploit strategy. The production and future opportunities of the Winchester assets bring our East Texas/North Louisiana focus to a new level. The combined production of the EXCO East Texas assets and the assets being acquired currently total more than 100 Mmcfe of natural gas per day. Combined proved reserves in the area will be almost 600 Bcfe and we will have enough undrilled locations for a multiple year drilling program. Obviously, we are very excited about the opportunities presented by this transaction." Headquartered in Dallas, Texas, EXCO Resources, Inc. (NYSE: XCO) -- http://www.excoresources.com/-- is a public oil and natural gas acquisition, exploitation, development and production company with principal operations in Texas, Colorado, Ohio, Oklahoma, Pennsylvania, and West Virginia. EXCO RESOURCES: Winchester Buy Cues Moody's to Review Ratings ------------------------------------------------------------- Moody's Investors Service placed EXCO Resources, Inc.'s B2 corporate family and B3 senior unsecured note ratings on review for downgrade. This accompanies EXCO's pending all-debt funded $1.2 billion acquisition of Winchester Energy Company, Ltd., an oil and gas exploration and production subsidiary of Progress Energy, Inc., to be acquired through EXCO's newly formed wholly- owned, leveraged, non-recourse, unrestricted subsidiary. With pro-forma consolidated debt in the range of $2 billion, pro-forma consolidated leverage would be extreme and potential substantial de-leveraging is not expected until first quarter 2007 at the earliest. EXCO hopes to eventually reduce its pro-forma leverage by organizing the unrestricted subsidiary as a master limited partnership and attempting to take the subsidiary public during first quarter 2007. This could be challenging. It would be only the second exploration and production MLP launched in over twenty years and would be, by orders of magnitude, a far larger offering than the only other existing exploration and production MLP IPO. Depleting highly capital intensive oil and gas reserves have not been ideal candidates for MLP's that, by definition, must make heavy annual cash flow distributions to unit holders. Prior to filing the MLP IPO with the SEC, EXCO will need to first complete a clean third party audit of three years of the issuer's pro-forma results. Furthermore, given the volatility of natural gas markets, the sector equity market, and the scarcity of exploration and production MLP comparables, it is premature to stake EXCO's debt rating on a presumed degree of success for an IPO of the acquisition subsidiary. EXCO will capitalize the subsidiary by contributing what it believes will be in the range of $450 million worth of EXCO's existing East Texas oil and gas reserves and with the subsidiary's new $750 million secured Term Loan and $750 million secured revolver. The debt facilities will fund the Winchester acquisition and a roughly $200 million cash distribution to EXCO to repay existing revolver debt. The distribution to EXCO is required since the scale of its reserves contribution exceeds the restricted payments basket under its senior unsecured notes. In concluding the review, Moody's will assess the final acquisition funding package, the likelihood of an MLP IPO that is both sufficiently substantial and timely to support the corporate family rating, the potential pro-forma overall credit impact and impact on the notching of EXCO's senior notes, and EXCO's ability to hit its post-acquisition performance targets. The review will note EXCO's organic trends, the likely nature and funding of further likely acquisitions, further review of the Winchester properties, and the sector outlook at the time. The facts that the acquisition subsidiary would be unrestricted, that the acquisition debt would be non-recourse to EXCO, and that pro-forma leverage at EXCO excluding the acquisition subsidiary may be in the range of existing leverage could limit further notching of EXCO's senior notes. However, the subsidiary's assets, cash flow, and debt factor directly into EXCO's consolidated corporate family rating. While Winchester may prove to add important diversification and intensification to EXCO's existing East Texas and North Louisiana holdings, the purchase price, excluding $150 million allocated to midstream assets with substantial third party throughput, equates to $83,500 per current barrel of oil-equivalent current production, $32.47 per Boe of acquired proven developed reserves, $21.39 per Boe of proven reserves fully loaded for required development capital to take proven non-producing reserves to production, and it is all-debt funded. Pro-forma leverage on consolidated pro-forma PD reserves approximates an extremely high $15 per PD Boe, total debt plus estimated pro-forma FAS 69 development capital spending divided by total pro-forma proven reserves would approximate $14 per Boe, and total debt divided by pro-forma current production would approximate a very high $58,160 per Boe of production. EXCO believes that after contributing its existing East Texas assets to and the distribution to EXCO from the new unrestricted subsidiary, EXCO's pro forma leverage on pro-forma PD reserves would approximate $7 per PD Boe, total debt plus estimated pro- forma FAS 69 development capital spending divided by total pro- forma proven reserves would approximate $8 per Boe, and total debt divided by pro-forma current daily production would approximate a very high $15,963 per Boe. The review outcome could be favorably affected if EXCO employed significant private equity funding to reduce post-acquisition leverage while it evaluates the potential for a large successful MLP offering to cut leverage. Other than unspecified asset sales, EXCO has not announced alternative sources of debt reduction. To preserve its ratings, it is likely that substantial private equity is needed to bridge that tactical risk as well as operating, price, and market risk in the run-up to the MLP decision. In May 2006, Moody's downgraded EXCO's corporate family rating from B1 to B2 to accommodate anticipated highly leveraged acquisitions and potential formation of a public MLP. However, the new ratings did not anticipate leverage on the scale currently proposed by EXCO or that such a substantial time lag would elapse between the closing of such a highly leveraging acquisition and the earliest time frame during which deleveraging from a potential MLP IPO might be achieved. Per Moody's methodology, EXCO's forma consolidated corporate family rating maps to a mid-to-low B rating. Amongst several rating factors, pro-forma reserve scale and diversification together map to a Ba rating range but pro-forma leverage and unit full cycle costs map to the Caa range. Furthermore, the majority of EXCO's pro-forma reserves have been either newly acquired or have yet to be acquired, rendering minimal track record under EXCO stewardship. High up-cycle prices have covered its combined operating, interest expense, and reserve replacement costs, although the natural gas element of EXCO's price realizations has moderated considerably relative to costs. Moody's anticipates that EXCO would also carry amongst the highest leverage in the sector with reduction of that leverage dependent on a healthy and timely MLP IPO and dedication of such proceeds to debt reduction at both the MLP and EXCO levels. The ratings are supported by a sound price outlook and substantial hedging at: * favorable prices; seasoned management; * EXCO's reserve scale and onshore diversification; and * large lower risk drilling inventory. The ratings are restrained by uncertainty concerning the credit profile post completion of the MLP IPO and post-acquisition performance; extremely high pro-forma leverage prior to an IPO, and its small production base, and high cost structure. EXCO Resources, Inc. is headquartered in Dallas, Texas. EXIDE TECHNOLOGIES: Wants to Distribute Stock Subscription Rights ----------------------------------------------------------------- Exide Technologies filed a registration statement with the Securities and Exchange Commission on July 7, 2006, relating to its $75,000,000 rights offering. The Company proposes to distribute, at no charge, to shareholders non-transferable subscription rights to purchase shares of its common stock. Shareholders will receive one subscription right for each share of common stock. Exide's registration statement does not indicate how many shares of common stock each subscription right will entitle a shareholder to purchase. The per share price is equal to a 20% discount to the average closing price of Exide's common stock for the 30 trading day period ended July 6, 2006. The rights offering is subject to approval by Exide's shareholders at the Company's 2006 annual meeting scheduled on August 22, 2006. A full-text copy of the Registration Statement is available for free at http://researcharchives.com/t/s?e6c Headquartered in Princeton, New Jersey, Exide Technologies (NASDAQ: XIDE) -- http://www.exide.com/-- manufactures and distributes lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on Apr. 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represented the Debtors in their successful restructuring. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service, Inc., 215/945-7000) EYE CARE: Launches Change of Control Offer for 10-3/4% Sr. Notes ---------------------------------------------------------------- Eye Care Centers of America, Inc., commenced a Change of Control Offer for any and all of its outstanding 10-3/4% Senior Subordinated Notes due 2015, as contemplated under the Indenture dated Feb. 4, 2005 between ECCA and The Bank of New York, as trustee covering the Notes. The Change of Control Offer is being made in connection with, and is conditioned upon the closing of, the previously announced merger of Franklin Merger Sub Inc., a subsidiary of HVHC Inc., a subsidiary of Highmark Inc., with and into ECCA Holdings Corporation, the sole stockholder of ECCA. The Merger, when and if consummated, will constitute a "Change of Control" as defined in the Indenture. The Change of Control Offer is being made pursuant to the terms and conditions described in ECCA's Change of Control Notice and Offer to Purchase dated July 12, 2006 and the Letter of Transmittal related thereto. Under the terms of the Change of Control Offer, ECCA is offering to purchase the outstanding Notes for a total consideration, per each $1,000 principal amount of Notes validly tendered and accepted for payment, equal to $1,010, if the Merger is consummated. In addition, holders who validly tender and do not validly withdraw their Notes will receive accrued and unpaid interest from the last interest payment to the Change of Control Payment Date, which is described in the Change of Control Offer. The Change of Control Offer is scheduled to expire at 5:00 PM, New York City time, on the date that is 10 days following consummation of the Merger, if not extended by ECCA. The Change of Control Payment Date is scheduled to occur one business day after the expiration of the Change of Control Offer. The Change of Control Offer is being made by ECCA in advance of the closing of the Merger, as permitted under the Indenture, and ECCA will purchase Notes under the Offer only if the Merger is consummated. About Eye Care Centers of America Headquartered in San Antonio, Texas, Eye Care Centers of America, Inc. -- http://www.ecca.com/-- is a retail optical chain in the U.S. The company's brand names include EyeMasters, Binyon's, Visionworks, Hour Eyes, Dr. Bizer's VisionWorld, Dr. Bizer's ValueVision, Doctor's ValuVision, Stein Optical, Vision World, Doctor's VisionWorks, and Eye DRx. Founded in 1984, the company has 385 stores in 36 states. * * * As reported in the Troubled Company Reporter on July 14, 2006, Standard & Poor's Ratings Services affirmed its ratings, including its 'B' corporate credit rating, on San Antonio, Texas-based Eye Care Centers of America Inc. All ratings are removed from CreditWatch, where they were placed with developing implications on May 3, 2006. The outlook is positive. The company's total funded debt outstanding was $315 million as of April 1, 2006. FALCONBRIDGE LIMITED: Earns $728 Million in 2006 Second Quarter --------------------------------------------------------------- Falconbridge Limited reported second quarter 2006 net income of $728 million. This compares with second quarter 2005 net income of $202 million. "We are extremely pleased with the outstanding financial results we are reporting this quarter," said Derek Pannell, Chief Executive Officer of Falconbridge. "Our operations have stayed focused on producing metal, giving impressive results quarter after quarter. This strong performance continues to reflect both the ability of our operations to capitalize on high metals prices and to generate very substantial levels of cash. In the first half of the year, income from operating assets almost reached $2 billion, demonstrating Falconbridge's true earnings potential." Revenues for the second quarter of 2006 were $3.95 billion, 93% higher than revenues of $2.05 billion in the same period of 2005. Operating expenses totaled $2.71 billion in the second quarter, compared to $1.59 billion in the same period last year, primarily due to the higher value of raw material feeds. Net income totaled $728 million for the second quarter 2006, 260% higher than net income of $202 million in the same period of 2005. Higher net income reflects higher realized metal prices, increased copper, zinc and molybdenum sales and higher treatment and refining charges received at copper smelters and refineries. Consolidated assets totaled $13.2 billion as at June 30, 2006, compared with $12.4 billion at the end of 2005. The increase is primarily due to the investment of additional capital in advancing brownfield and greenfield expansion development projects and higher working capital levels due to increased metals. Declaration of Special Dividend On July 16, 2006, Falconbridge declared a special dividend of CDN$0.75 per common share payable on Aug. 10, 2006 to shareholders on record at the close of business on July 26, 2006. The special dividend will be paid regardless of the outcome of the offers to acquire the common shares of the Company. Redemption of Junior Preference Shares On April 26, 2006, Falconbridge redeemed a total of $20 million shares, or $500 million, of its outstanding Junior Preference Shares, based upon shareholders of record on March 22, 2006. Falconbridge utilized existing cash balances to fund the redemption. On June 28, 2006, Falconbridge redeemed the remaining balance of its 9,999,701 outstanding Junior Preference Shares for a total of $250 million utilizing internal cash resources. Upon redemption, Falconbridge had no Junior Preference Shares outstanding. Falconbridge Offer to Buy Novicourt Inc. Shares On June 22, 2006, Falconbridge would offer to acquire by way of a takeover bid all of the outstanding common shares of its subsidiary Novicourt Inc. that it did not already own. Falconbridge holds 62.1% of the outstanding common shares of Novicourt. The offer is a cash offer of CDN$2.30 per Novicourt common share. The offer circular was issued on June 26, 2006 and the offer is expected to close on Aug. 9, 2006. About Falconbridge Headquartered in Toronto, Ontario, Falconbridge Limited (TSX:FAL.LV)(NYSE: FAL) -- http://www.falconbridge.com/-- is a leading copper and nickel company with investments in fully integrated zinc and aluminum assets. Its primary focus is the identification and development of world-class copper and nickel orebodies. It employs 14,500 people at its operations and offices in 18 countries. The Company owns nickel mines in Canada and the Dominican Republic and operates a refinery and sulfuric acid plant in Norway. It is also a major producer of copper (38% of sales) through its Kidd mine in Canada and its stake in Chile's Collahuasi mine and Lomas Bayas mine. Its other products include cobalt, platinum group metals, and zinc. * * * As reported in the Troubled Company Reporter on July 24, 2006, Standard & Poor's Ratings Services revised the CreditWatch implications on Inco Ltd. and Falconbridge Ltd. to developing from positive after Phelps Dodge Corp. (BBB/Watch Neg/A-2) announced an increase in the debt-financed cash consideration for the two companies. CreditWatch with developing implications means the ratings may be raised, lowered, or affirmed. Falconbridge's CDN$119.7 Million Cumulative Preferred Shares Series 2 carries S&P's BB rating. That rating was assigned on Nov. 21, 2001. Falconbridge's CDN$150 Million Preferred Shares Series H also carries S&P's BB rating. That rating was assigned on Mar. 5, 2003. FANNIE MAE: Credit Support Prompts S&P to Hold Low-B Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its ratings on 123 classes of pass-through certificates from 16 Fannie Mae REMIC Trust transactions. The affirmations are based on credit support percentages that are sufficient to maintain the current ratings. Credit support for these transactions is provided by subordination. As of the May 2006 remittance date, total delinquencies ranged from 1.75% (series 2004-W13) to 41.93% (series 2003-W1). Cumulative losses ranged from 0.00% (series 1998-W4, 1998-W7, 2004-W4, 2004-W13, and 2005-W2) to 0.37% (series 1998-W6). The outstanding pool balances ranged from 4.93% (series 1998-W4) to 85.50% (series 2005-W2) of their original sizes. The collateral for these transactions consists of first lien, one- to four-family, fixed- and adjustable-rate, fully amortizing mortgage loans insured by the Federal Housing Administration or partially guaranteed by the U.S. Department of Veterans Affairs. Ratings Affirmed Fannie Mae REMIC Trust Series Class Rating ------ ----- ------ 1998-W4 M,B-1 AAA 1998-W4 B-2 AA+ 1998-W6 M,B-1 AAA 1998-W6 B-2 AA 1998-W7 M,B-1 AAA 1998-W7 B-2 AA 2002-W1 1A4,1AIO,2A,2AIO,3A AAA 2002-W1 M,3M AA 2002-W1 B1,3B-1 A 2002-W1 B2,3B-2 BBB 2002-W1 B3,3B-3 BB 2002-W1 B4,3B-4 B 2002-W6 3M AA 2002-W6 3B-1 A 2002-W6 3B-2 BBB 2002-W6 3B-3 BB 2002-W6 3B-4 B 2003-W1 M AA 2003-W1 B-1 A 2003-W1 B-2 BBB 2003-W1 B-3 BB 2003-W4 IM,IIM AA 2003-W4 IB-1,IIB-1 A 2003-W4 IB-2,IIB-2 BBB 2003-W4 IB-3,IIB-3 BB 2003-W4 IB-4,IIB-4 B 2003-W10 2M,3M AA 2003-W10 2B1,3B-1 A 2003-W10 2B2,3B-2 BBB 2003-W10 2B3,3B-3 BB 2003-W10 2B4,3B-4 B 2004-W3 A2,A3,A4,A5,A6,A7,A8,A11,A15,A16,A17,A18,A19 AAA 2004-W3 A20,A21,A28,A29,A30,A31,A32,A33,A34,A36,A37,A38 AAA 2004-W3 A39,IO1,IO2,IO3,PO,2AIO,3A1 AAA 2004-W3 M AA 2004-W3 B1 A 2004-W3 B2 BBB 2004-W3 B3 BB 2004-W3 B4 B 2004-W4 M AA 2004-W4 B1 A 2004-W4 B2 BBB 2004-W4 B3 BB 2004-W4 B4 B 2004-W6 M AA 2004-W6 B1 A 2004-W6 B2 BBB 2004-W6 B3 BB 2004-W6 B4 B 2004-W10 M AA 2004-W10 B1 A 2004-W10 B2 BBB 2004-W10 B3 BB 2004-W10 B4 B 2004-W13 M AA 2004-W13 B1 A 2004-W13 B2 BBB 2004-W13 B3 BB 2004-W13 B4 B 2004-W14 M AA 2004-W14 B1 A 2004-W14 B2 BBB 2004-W14 B3 BB 2004-W14 B4 B 2005-W2 M AA 2005-W2 B1 A 2005-W2 B2 BBB 2005-W2 B3 BB 2005-W2 B4 B 2005-T1 A1,A2,A3,A4 AAA FEDERAL-M0GUL: Wants Lease-Decision Period Stretched to Dec. 1 -------------------------------------------------------------- Federal-Mogul Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to further extend the time within which they may elect to assume or reject unexpired nonresidential real property leases and executory contracts, through and including December 1, 2006. While the Debtors have largely completed the process of evaluating their unexpired nonresidential real property leases and a number of economically and improvident leases have been rejected with the Court's approval, several leases are continuing to be evaluated, Scotta E. McFarland, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, in Wilmington, Delaware, relates. According to Ms. McFarland, the process of evaluating and rejecting the Real Property Leases has taken place as the Debtors, consistent with their overall business plan, seek to: -- consolidate their facilities to eliminate redundancies and inefficiencies; and -- shift certain manufacturing efforts to portions of the country and the world more suitable to their businesses. The four-month extension should be granted so the Debtors may preserve maximum flexibility in restructuring their business, Ms. McFarland maintains. Without the extension, the Debtors are concerned that they could be forced prematurely to assume the leases that would later be burdensome, giving rise to large potential administrative claims against their estates and hampering their ability to reorganize successfully. Alternatively, Ms. McFarland adds, the Debtors could be forced prematurely to reject Real Property Leases that would have been of benefit to their estates, to the collective detriment of all stakeholders. Ms. McFarland assures the Court that the Debtors, pending their election to assume or reject the Real Property Leases, will perform all their obligations arising from and after the Petition Date in a timely fashion. The Court will convene a hearing to consider the Debtors' request on August 28, 2006, at 1:30 p.m., in Pittsburgh, Pennsylvania. Objections to the extension of the Lease Decision Period are due August 11. Pursuant to Del. Bankr. L.R. 9006-2, the Debtors' filing of the Motion automatically extends the Lease Decision Period until the time the Court acts on the request. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 110; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-M0GUL: Assessment for T&N Retirement Pension Plan Begins ---------------------------------------------------------------- The United Kingdom's Pension Protection Fund has began a 12-month assessment whether to take on an estimated GBP150,000,000 -- $277.5 million -- deficit of the Turner & Newall Retirement Benefit Scheme (1989). BBC News reports that Turner & Newall's administrator, Kroll Inc., and the Pension Scheme's trustees, led by independent trustee Alexander Forbes Limited, applied to the PPF for formal rescue. The assessment process is to ensure that the Pension Scheme will qualify for rescue, BBC News says. T&N has been in administration since 2001. Throughout this time, complex negotiations between Kroll Inc. and the Pension Scheme's trustees have been in progress. During the assessment period, the trustees will be responsible for the day-to-day management of the Scheme and its assets, PPF explains in a press release. The PPF, Pensions Age Online says, will determine whether the Pension Scheme can be rescued and if it can pay benefits at or above PPF levels of compensation. If not, both the Scheme's assets and liabilities will transfer into the PPF, which will start paying out compensation. The Pension Scheme has more than 35,000 members. It has current annual expenditure of around GBP69,000,000 and assets of about GBP1,000,000,000. According to the U.K. Pensions Act 2004, Pensions Age notes, PPF compensation is 100% for retirees, and 90% for non-retired, capped at GBP26,000 per year at aged 65. The Pension Scheme will also receive funding from U.S. bondholders of Federal-Mogul, Bloomberg News relates, citing a Financial Times report. The bondholders had offered to provide up to GBP81,000,000. Kroll, the report says, will seek GBP255,000,000. In September 2005, Federal-Mogul and its affiliates in the United States reached agreement with the U.K. Administrators that allows Federal-Mogul to retain the businesses and other assets of its U.K. affiliates in exchange for monetary amounts and reserves that will be used by the Administrators to provide a distribution to U.K. creditors. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on Oct. 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan Esq., James F. Conlan Esq., and Kevin T. Lantry Esq., at Sidley Austin Brown & Wood, and Laura Davis Jones Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $10.15 billion in assets and $8.86 billion in liabilities. Federal-Mogul Corp.'s U.K. affiliate, Turner & Newall, is based at Dudley Hill, Bradford. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal; and Charlene D. Davis, Esq., Ashley B. Stitzer, Esq., and Eric M. Sutty, Esq., at The Bayard Firm represent the Official Committee of Unsecured Creditors. (Federal-Mogul Bankruptcy News, Issue No. 111; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOSTER WHEELER: Arranging $350 Million Secured Debt Facility ------------------------------------------------------------ Foster Wheeler Ltd. has mandated BNP Paribas to arrange a new $350 million, five-year senior secured domestic credit facility. The new facility would replace a $250 million credit facility arranged in 2005. The proposed new facility is intended to increase bonding capacity to support Foster Wheeler's growing operations and to reduce bonding costs. The transaction is expected to close in September 2006 subject to successful negotiation of definitive documentation. With operational headquarters in Clinton, New Jersey, Foster Wheeler Ltd. -- http://www.fwc.com/-- offers a broad range of engineering, procurement, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, upstream oil and gas, LNG and gas-to-liquids, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. * * * As reported in the Troubled Company Reporter on May 30, 2006, Moody's Investors Service upgraded Foster Wheeler's corporate family rating to B1 from B3 and assigned a Ba3 rating to the Company's $250 million senior secured bank revolving credit facility. The rating outlook is changed to Positive. As reported in the Troubled Company Reporter on May 26, 2006, Standard & Poor's Ratings Services raised its corporate credit rating on Foster Wheeler to 'B+' from 'B-'. At the same time, Standard & Poor's assigned its 'BB-' bank loan rating and '1' recovery rating to the Company's five-year, $250 million credit facility due 2010, indicating a high expectation of full recovery of principal in the event of a payment default. FRONTLINE CAPITAL: Plan-Filing Period Stretched to August 31 ------------------------------------------------------------ The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York extended until Aug. 31, 2006, FrontLine Capital Group's exclusive period to file a Plan of Reorganization. The Debtor also has until Oct. 31, 2006 to solicit acceptances of that Plan. As reported in the Troubled Company Reporter on June 7, 2006, FrontLine informed the Court that it needed more time to consummate several transactions before it can file a plan: -- the sale of its 47% interest in Concord Associates Limited Partnership and interests in Grossinger's Resort Hotel and Golf Course, The Concord Hotel, and The Concord Resort and Golf Club to Empire Resorts, Inc.; -- the recapitalization of its interest in WRAP-I, LLC, a venture with a development partner. The key underlying asset held by WRAP-I's subsidiaries is the Illinois Toll Highway development project, a project that includes 25 year leasehold interests on seven oases (i.e., rest stops with approx. 19,000 square feet of rentable retail space each) along the Illinois Toll Highway. Goldman Sachs is representing WRAP-I; and -- the sale of the eight assisted living facilities for $138 million. Headquartered in New York City, FrontLine Capital Group, a holding company that manages its interests in a group of companies that provide a range of office related services, filed for chapter 11 protection on June 12, 2002 (Bankr. S.D.N.Y. Case No. 02-12909). Mickee M. Hennessy, Esq., at Westerman Ball Ederer & Miller, LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $264,374,000 in assets and $781,374,000 in debts. GALAXY NUTRITIONAL: Refinances Bridge Loans With Shareholder Note ----------------------------------------------------------------- Galaxy Nutritional Foods, Inc. will repay $2.4 million in bridge financing with a new loan from Mr. Frederick A. DeLuca, the Company's largest shareholder, who currently owns approximately 23% of Galaxy's outstanding common stock. On July 19, 2006, the Company created a new unsecured convertible note in the amount of $2,685,104.17 with the shareholder. Proceeds from the Note will be used to repay $2.4 million in unsecured promissory notes that matured June 15, 2006, and a $285,104.17 registration rights penalty. The Note accrues interest at 12.5% per annum and matures Oct. 19, 2007. No interest or principal payments are due prior to the maturity date. Principal, together with any accrued and unpaid interest on the Note, can be converted into shares of the Company's common stock at any time prior to payment at a conversion price of $0.35 per share. In consideration for the Note, the shareholder was also issued a Warrant to purchase up to 200,000 shares of the Company's common stock at an exercise price of $0.35 per share. The Warrant is fully vested and expires July 19, 2009. "By entering into this note agreement with a major shareholder, we have completed the refinancing or repayment of all of the Company's short-term debt, thereby providing the financial stability to allow Galaxy to pursue its potential as a leading developer and marketer of cheese alternative and dairy- related products," stated Michael Broll, Chief Executive Officer of Galaxy Nutritional Foods, Inc. "While our operating cost structure has already begun to reflect significant benefits from a production and distribution outsourcing arrangement implemented earlier, the refinancing of previous bridge loans represents a necessary component of our turnaround strategy. As a result of this refinancing, we believe Galaxy has addressed any concerns regarding the adequacy of working capital to support its operations during Fiscal 2007. We are pleased that our largest shareholder has exhibited his confidence in the Company and its management through the execution of this Note agreement." About Galaxy Nutritional Foods Headquartered in Orlando, Florida, Galaxy Nutritional Foods, Inc. (OTCBB: GXYF) -- http://www.galaxyfoods.com/-- develops and globally markets plant-based cheese and dairy alternatives, as well as processed organic cheese and cheese food to grocery and natural foods retailers, mass merchandisers and foodservice accounts. Going Concern Doubt Auditors working for BDO Seidman, LLP, in Atlanta, Georgia, raised substantive doubt as to Galaxy Nutritional Foods, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended March 31, 2006, and 2005. The auditors pointed to the Company's default of its notes payable, recurring operating losses from operations, negative working capital and stockholders' deficiencies. Management intends to address the auditors' concerns by refinancing the $2.4 million in short-term notes, which became due June 15, 2006, and outsourcing its manufacturing and distribution functions to receive positive cash flow from operations as a result of its recent changes to the Company's operations. GATEHOUSE MEDIA: IPO Offer Cues Moody's to Review All Ratings ------------------------------------------------------------- Moody's Investors Service placed all of GateHouse Media Operating, Inc.'s ratings on review for possible upgrade in response to the company's announcement that it has filed an initial public offering with the Securities and Exchange Commission to sell $200 million of common stock, the proceeds of which will be used to repay in full its $152 million second lien term loan and to fund other general corporate expenses. The $152 million second lien term loan was incurred in connection with the company's June 2006 acquisition of CP Media Inc. and Enterprise NewsMedia LLC. The ratings placed on review include: * $40 million senior secured first lien revolving credit facility, due 2013 -- B1 * $570 million senior secured first lien term loan facility, due 2013 -- B1 * $152 million senior secured second lien term loan facility, due 2014 -- B3 * Corporate Family rating -- B2 The review will consider the probability that Gatehouse will successfully complete its proposed IPO and use proceeds to retire the second lien term loan. The review will also assess the prospects of further debt funded acquisitions, dividend payments or other event risks. Headquartered in Fairport, New York, GateHouse Operating, Inc. is a US publisher of local newspapers and related publications. In 2005, the company recorded sales of $205 million. GENERAL MOTORS: 2nd Quarter Results Cue S&P to Hold Negative Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services held all of its ratings on General Motors Corp. -- including the 'B' corporate credit rating, but excluding the '1' recovery rating -- on CreditWatch with negative implications, where they were placed March 29, 2006. The CreditWatch update follows GM's announcement of second quarter results and other recent developments involving its bank facility and progress on the GMAC sale. Cost savings sharply improved GM's second quarter North American net income -- excluding substantial special items such as charges of $3.7 billion after-tax related to attrition programs -- compared to the same period in 2005. Lower warranty accruals, which can be volatile, accounted for part of the improvement. Higher raw material and freight costs overwhelmed higher revenue per unit. Still, Standard & Poor's expects that GM's North American operations will benefit from the recognition of cost savings in the third and fourth quarters of 2006. The rating agency remains concerned, however, about the potential for negative revenue and product mix developments in North America for the remainder of 2006 in light of high gas prices and an unstable pricing environment. Market share losses, and the need to execute other aspects of the cost-savings plan such as plant closings, also remain concerns. The most pressing near-term issue remains GM's exposure to its former unit and important supplier, Delphi. Standard & Poor's expects GM's ratings to remain on CreditWatch for the next month or longer because court hearings on Delphi's motion to reject its labor contracts were adjourned until August 11, and hearings on Delphi's request to reject unprofitable supply contracts with GM have been postponed also until August 11. Standard & Poor's expects Delphi, the United Auto Workers, and GM to continue negotiations out of court, however. Delphi's attrition program also experienced strong acceptance rates, and a lower Delphi headcount is likely to be an important factor toward resolving GM's exposure to the Delphi situation. GM recently closed on its new $4.48 billion secured bank deal, which is considered an incremental positive for its liquidity. Even prior to establishment of the new bank facility, Standard & Poor's believed GM's liquidity was adequate to meet near-term funding requirements, including payments to participants in the accelerated attrition program. At June 30, 2006, the automotive cash and short-term VEBA balance was $22.9 billion, up from the end of the first quarter of 2006 and the end of fiscal 2005. A satisfactory letter related to GMAC's liability for GM's pension obligations, needed for the pending sale of a 51% stake in GMAC, has been received from the Pension Benefit Guaranty Corp. GRANITE BROADCASTING: Acquires CBS' New York Unit for $45 Million ----------------------------------------------------------------- Granite Broadcasting Corporation completed the acquisition of WBNG, Channel 12, the CBS-affiliated television station serving Binghamton and Elmira, New York, for $45 million in cash, before closing adjustments. Binghamton is ranked by Nielsen Media Research as the nation's 156th largest market, and Elmira is ranked 173rd. The acquisition was financed with proceeds from the Company's new senior credit facility, announced July 5, 2006. "This acquisition of WBNG is a terrific fit with our stated strategy of capitalizing on our core strength of operating news- oriented, network-affiliated stations," W. Don Cornwell, Chief Executive Officer of Granite Broadcasting Corporation, said. "The addition of Binghamton and Elmira to our existing Upstate New York markets, which include Buffalo, Syracuse and Utica, enables Granite to reach close to 60% of television households in this important region." About Granite Broadcasting Granite Broadcasting Corporation (OTC Bulletin Board: GBTVK) owns and operates, or provides programming, sales and other services to 21 channels in the following 8 markets: San Francisco, California; Detroit, Michigan; Buffalo, New York; Fresno, California; Syracuse, New York; Fort Wayne, Indiana; Peoria, Illinois; and Duluth, Minnesota-Superior, Wisconsin. The Company's channel group includes affiliates of NBC, CBS, ABC, CW and My Network TV, and reaches approximately 6% of all U.S. television households. * * * As reported in the Troubled Company Reporter on June 8, 2006, Moody's Investors Service downgraded Granite Broadcasting Corporation's $400 million of 9.75% senior secured notes due 2010 to Caa1 from B3. Additionally, Moody's affirmed the Company's existing ratings, including its Caa2 corporate family rating. The outlook remains negative. HEALTH CARE: Closes $700 Mil. Unsecured Revolving Credit Facility ----------------------------------------------------------------- Health Care REIT, Inc., closed an expanded $700 million unsecured revolving credit facility, replacing the company's existing $500 million facility scheduled to mature June 2008. The credit facility was arranged by KeyBank National Association as Lead Arranger and Administrative Agent and Deutsche Bank Securities Inc. as Lead Arranger and Syndication Agent. UBS Securities LLC, Bank of America, N. A. and JPMorgan Chase Bank, N. A. were the Documentation Agents. Highlights of the new credit facility include: -- Increased financial flexibility and borrowing capacity. -- Extension of the agreement to July 2009, with the ability to extend for an additional year at the company's option. -- Addition of two lenders to the bank group and commitment increases by eight of the ten existing lenders. "We are appreciative of the support and additional commitments provided by our enhanced bank group," stated George L. Chapman, chairman and chief executive officer. "We will benefit from the increased flexibility of our new facility going forward as we strive to maintain our successful growth strategy and corollary capital plan." About Health Care REIT, Inc Headquartered in Toledo, Ohio, Health Care REIT, Inc. -- http://www.hcreit.com/-- is a real estate investment trust that invests in health care facilities, primarily skilled nursing and assisted living facilities. At December 31, 2004, the company had investments in 394 health care facilities in 35 states with 50 operators and had total assets of approximately $2.5 billion. The portfolio included 234 assisted living facilities, 152 skilled nursing facilities and eight specialty care hospitals. * * * Moody's Investors Services assigned a Ba1 rating on the Company's Subordinated debts effective July 23, 2003. The Rating Outlook is Stable. HEARST-ARGYLE: Fitch Holds BB Rating on Convertible Securities -------------------------------------------------------------- Fitch Ratings has affirmed these ratings of Hearst-Argyle Television, Inc. and its wholly-owned subsidiary Hearst-Argyle Capital Trust: Hearst-Argyle Television -- Issuer Default Rating (IDR) at 'BBB-'; -- Senior unsecured at 'BBB-'. Hearst-Argyle Capital Trust -- Convertible preferred securities 'BB'. The Rating Outlook is Stable. The ratings reflect the company's, strong margins, historically conservative fiscal policies and what Fitch expects to be consistent free cash flow generation over the intermediate term, as well as the company's sizeable and geographically diverse portfolio of TV stations that reach over 18% of U.S. households. Credit concerns include pressured operating trends over the last 18 months-24 months, which has affected margins and free cash flow conversion. In addition, various secular challenges that range from new technologies (digital video recorders or DVR's), competing news outlets on the Internet and mobile devices, and the fact that the major broadcast networks have begun to sell their content on-demand (VOD) continue to be risks. The Stable Outlook is based on HTV's market position as an independent TV station group, Fitch's expectations of free cash flow generation over the next three years, the liquidity to withstand a one-time stress event, and the company's historically conservative fiscal policies that Fitch expects to continue despite what has been a generally weak stock performance. Credit metrics for 2006 will likely be weaker than the last few even-numbered years (HTV benefits from the Olympics and political campaigns in even-numbered years) due to what Fitch expects to be a partially debt-financed acquisition of CW-affiliated WKCF in Orlando, as well as higher capital expenditures due to various building projects. However, Fitch expects the Orlando acquisition to be immediately cash flow accretive and metrics for 2007 and 2008 should strengthen versus comparable years as the company will likely continue to produce margins above 35% and free cash flow in excess of $90 million per year. The company has traditionally operated in the 3 times (x)-4x leverage range (including preferred securities), and Fitch expects the company to be at the high-end of that range for 2006 and 2007 but return to more normalized levels by 2008, with cash flow to debt to return to over 10%. Margins adjusting for pension costs have become pressured due to increases in expenses related to compensation, fuel and energy, which have generally outpaced revenue increases. While margins have also been affected over the last few years as high-margin network compensation continues to decrease, Fitch expects network compensation to generally be replaced by retransmission fees over the intermediate term. It is important to note that despite recent trends, HTV's EBITDA margins remain strong at over 36% and compare favorably to the industry. While Fitch does believe that HTV has sufficient liquidity to withstand a one-time stress to revenues, the company's 31% unionized workforce could make it difficult to cut costs in a timely manner should it ever be necessary. The company's free cash conversion (defined as free cash flow divided by EBITDA) has decreased substantially over the last few years (from 56% in 2003 to 27% in 2005) as HTV implemented a dividend and made material contributions to its pension. In addition, cash taxes were higher than usual over the last two years due to settlements of tax liabilities related to prior years. Fitch expects the company's free cash flow conversion to improve in 2006 due to incremental Olympic, Super Bowl and political cash flows, normalized cash taxes, and lower pension contributions, partially offset by higher capital expenditures with improvement continuing into 2007 and 2008 with the assumption that capital expenditures return to more normal levels. Regarding secular challenges, a primary concern related to the DVR is local affiliates' dependence on promoting their late-night news casts during prime time network shows. In Fitch's opinion, increased DVR taping of network shows could pressure local news viewership, as could the proliferation of additional news outlets on the web and mobile devices. Importantly, HTV has been very proactive in its Internet initiatives. In addition, Fitch believes broadcast television operators such as HTV could have an advantage on the web over other local news sites since they have more robust video content. Network content sales (via Apple's iTunes, Google video, network websites and cable VOD) are also a concern as local affiliates, in many cases, are not part of negotiations. This however is somewhat offset by HTV being the largest affiliate group for the ABC network and second largest for the NBC network. As such, these networks still depend on HTV's affiliates to distribute their programs across a large portion of the country and therefore have an interest in the success of these affiliates. Also, the company's syndicated revenues come from first-run programming (e.g., Oprah, Dr. Phil and Jeopardy), which in Fitch's opinion should not be as pressured by the increase in DVR and DVD sales as are broadcasters who rely on second-run syndication programming. Fitch believes HTV will continue to look for acquisition opportunities going forward, which could be accelerated if regulatory restrictions are liberalized. The basis for acquisitions will likely be to form duopolies in cities where they already have a top four network-affiliated station (i.e., purchase a station outside of the top four in the demographic, likely a CW- affiliated station). The rationale is the company gains synergies related to certain costs, as well as the possibility to leverage its existing news infrastructure with the CW station, which does not always have local news broadcasts. Mitigating acquisition risk is Fitch's belief that management will be fiscally prudent with its acquisition strategy and the high likelihood that any acquisition will be immediately cash flow accretive with synergy potential. Duopolies could become more prevalent in the next 2 years-3 years as the FCC is likely to revisit the rule that only allows duopolies in cities with 8 total stations by possibly reducing that threshold, which would increase the number of cities that allows duopolies. The company's liquidity position is adequate and supported by approximately $130 million in cash and $250 million of revolver availability at March 31, 2006. Fitch expects a material portion of the revolver and cash balances to be used for the $217 million Orlando acquisition; however, free cash flow for the remainder of 2006 should exceed $75 million and therefore also support liquidity and/or the acquisition. Fitch does not believe there is material event risk related to debt-financed share repurchases and/or dividends over the intermediate term. Maturities over the next few years are material, as the company's $450 million in private placement notes will amortize annually in five equal $90 million installments beginning December 2006. In addition, the company's $125 million 7% senior notes mature December 2007. Fitch expects the company to re-finance these maturities. Remaining debentures mature in 2018 and 2027. The company's $250 million credit facility matures 2010 and contains a maximum leverage ratio (debt excluding capital trust's preferred securities to EBITDA) of 5.0x and minimum interest coverage ratio (EBITDA to interest expense) of 2.5x post Sept. 30, 2006. The facility also contains a minimum consolidated net worth test $1,045 million + 25% of positive net income beginning with 2005. Fitch estimates this to be approximately $1.1 billion minimum net worth. As of March 31, 2006, the company had net worth of approximately $1.8 billion, which includes $700,000 million of goodwill. Because of the company's mix of non-bank debt (senior public bonds, private placement notes and preferred securities) there are varying degrees of non-bank covenants. These include change of control provisions in the company's private placements and preferred securities as well as limitation on liens in the senior unsecured bonds and private placements. The company's private placements also contain a minimum net worth test similar to the bank facility covenant. There are cross-acceleration provisions in both the senior unsecured bonds and private placements. Because of the change of control provisions present in capital trust's preferred securities, it is Fitch's policy to classify the entire $130 million principal amount as debt. HTV is a stand-alone public company, of which the Hearst Corporation indirectly owns approximately 72% of outstanding common stock at March 31, 2006. The Hearst Corporation also owns a 20% interest in the parent company of Fitch Ratings. HONEY CREEK: Hires Lackey Hershman as General Litigation Counsel ---------------------------------------------------------------- Honey Creek Kiwi, LLC, obtained permission from the United States Bankruptcy Court for the Northern District of Texas to employ Lackey Hershman LLP, as its general litigation counsel. Lackey Hershman is expected to: a. represent the Debtor in any potential litigation that may arise in the context of Debtor's chapter 11 case; b. represent the Debtor in hearings and proceedings before any court or tribunal as may be necessary; c. prepare all necessary applications, motions, briefs, and any other pleadings, and perform all other legal services for the Debtor as may be necessary; d. provide assistance, advice, and representation concerning the confirmation of any proposed plan of reorganization or liquidation and solicitation of any acceptances, or respond to any rejections to the plan; e. provide assistance, advice and representation concerning the possible sale or liquidation of the Debtor's assets; f. provide assistance, advice and representation concerning any further investigation of the assets, liabilities and financial condition of the Debtor that may be required under local, state or federal law; and g. perform such other legal services as may be necessary. Jamie R. Welton, Esq., a partner at Lackey Hershman, tells the Court that he will bill $325 per hour for his services while Steven J. Nathan, Esq., bills $275 per hour. Mr. Welton assures the Court that the Firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Welton can be reached at: Jamie R. Welton, Esq Lackey Hershman LLP The Centrum 3102 Oak Lawn Avenue, Suite 777 Dallas, Texas 75219 Tel: (214) 560-2201 Fax: (214) 560-2203 http://www.lhlaw.net/ About Honey Creek Headquartered in Mesquite, Texas, Honey Creek Kiwi LLC owns a 656-unit apartment complex known as the Honey Creek Apartments. The company filed for chapter 11 protection on August 24, 2005 (Bankr. N.D. Tex. Case No. 05-39524). Richard G. Grant, Esq., at Roberts & Grant, P.C., represents the Debtor in its restructuring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it estimated assets and debts between $10 million and $50 million. INDEPENDENT CAPITAL: Fitch Raises Preferred Stocks' Rating to BB ---------------------------------------------------------------- Fitch upgraded the Issuer Default Rating and short-term rating for the Rockland, Massachusetts based Independent Bank Corp. and its banking subsidiary, Rockland Trust Company. Additionally, Fitch upgrades the preferred stock ratings of INDB's two statutory business trusts, Independent Capital Trust III and Independent Capital Trust IV. The Rating Outlook is Stable. The upgrade is based on the company's consistent earnings generation and its ability to augment capital in a relatively expeditious manner. Fitch anticipates that INDB will continue to build capital ratios, albeit while continuing to buy back stock. Although INDB's tangible equity ratio recently compressed to 5.57% due to the timing of stock buybacks, it is expected that this ratio will stand at roughly 6% by year-end 2006. Additionally, Fitch's view of INDB's ratings incorporates the company's sound asset quality and reserve levels. Although INDB's loan portfolio does contain some relatively higher risk credits -- particularly commercial real estate and indirect auto exposures -- credit metrics have been consistently solid and credit costs have remained very low. Despite the difficult interest rate environment, INDB's net interest margin has fluctuated only modestly. Profitability levels, in conjunction with the above mentioned attributes, help place INDB comfortably within its new rated peer group. Independent Bank Corp.: -- IDR upgraded to 'BBB-' from 'BB+' -- Short-term upgraded to 'F3' from 'B' -- Individual affirmed at 'B/C' -- Support affirmed at '5' Rockland Trust Company: -- IDR upgraded to 'BBB-' from 'BB+' -- Long-term deposits upgraded to 'BBB' from 'BBB-' -- Short-term upgraded to 'F3' from 'B' -- Short-term deposits affirmed at 'F3' -- Individual affirmed at 'B/C' -- Support affirmed at '5' The Rating Outlook is Stable. Independent Capital Trust III: -- Preferred stock upgraded to 'BB' from 'BB-' Independent Capital Trust IV: -- Preferred stock upgraded to 'BB' from 'BB-' INTEGRATED ELECTRICAL: CEO Acquires 25,000 Shares of Common Stock ----------------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission dated July 13, 2006, Michael J. Caliel, Integrated Electrical Services, Inc.'s president and chief executive officer, discloses he is deemed beneficially own 25,000 shares of the company's Common Stock. On July 12, 2006, Mr. Caliel acquired 25,000 shares of the company's Common Stock pursuant to the 2006 Equity Incentive Plan. Mr. Caliel also acquired an Employee Stock Option to buy 100,000 shares of the company's Common Stock at a purchase price of $17.36. 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. 14; Bankruptcy Creditors' Service, Inc. 215/945-7000) INTEGRATED ELECTRICAL: Issues 58,072 Shares of Stock to Tontine --------------------------------------------------------------- Curt L. Warnock, senior vice president, general counsel and corporate secretary of Integrated Electrical Services, Inc., discloses in a filing with the Securities and Exchange Commission that on July 16, 2006, the company entered into a stock purchase agreement with Tontine Capital Overseas Master Fund, L.P. Pursuant to the Stock Purchase Agreement, IES issued 58,072 shares of its common stock to Tontine for $1,000,000 in cash on July 17, 2006. The purchase price per share was based on the closing price of IES' Common Stock quoted on the Nasdaq Stock Market on July 14, 2006, according to Mr. Warnock. Mr. Warnock says that the proceeds of the sale were and will be used over the next two months by the company to invest $1,000,000 in Energy Photovoltaics, Inc., an entity in which the company holds a minority investment. Tontine Capital and its affiliates own approximately 33% of IES' outstanding stock. Joseph V. Lash, a member of Tontine Associates, LLC, an affiliate of Tontine Capital, is a member of the company's Board of Directors. A full-text copy of the Stock Purchase Agreement is available for free at http://ResearchArchives.com/t/s?e5c 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. 14; Bankruptcy Creditors' Service, Inc. 215/945-7000) INVERNESS MEDICAL: Signs Joint Venture Pact with Procter & Gamble ----------------------------------------------------------------- Inverness Medical Innovations, Inc., signed a non-binding letter of intent with The Procter & Gamble Company to form a joint venture to develop and market consumer diagnostic products. The Company disclosed that the collaboration brings its expertise in the development and manufacture of consumer diagnostics with P&G's expertise in the marketing and selling of consumer health care products. The Company will retain all rights with respect to the development and sale of cardiology diagnostic products and its non-consumer diagnostic businesses. About The Procter & Gamble Company The Procter & Gamble Company (NYSE: PG) -- http://www.pg.com-- has one of the strongest portfolios of trusted, quality, leadership brands, including Pampers(R), Tide(R), Ariel(R), Always(R), Whisper(R), Pantene(R), Mach3(R), Bounty(R), Dawn(R), Pringles(R), Folgers(R), Charmin(R), Downy(R), Lenor(R), Iams(R), Crest(R), Oral-B(R), Actonel(R), Duracell(R), Olay(R), Head & Shoulders(R), Wella(R), Gillette(R), and Braun(R). The P&G community consists of almost 140,000 employees working in over 80 countries worldwide. About Inverness Medical Innovations Based in Waltham, Massachusetts, Inverness Medical Innovations, Inc. -- http://www.invernessmedical.com/-- is a leading global developer of advanced diagnostic devices and is presently exploring new opportunities for its proprietary electrochemical and other technologies in a variety of professional diagnostic and consumer-oriented applications including immuno-diagnostics with a focus on women's health and cardiology. Inverness Medical Innovations, Inc.'s 8-3/4% Senior Subordinated Notes due 2012 carry Moody's Investors Service's Caa3 rating and Standard & Poor's CCC+ rating. J.P. MORGAN: Fitch Junks Rating on $5.1 Million Class M Certs. -------------------------------------------------------------- Fitch downgrades the long-term credit rating and distressed recovery rating of J.P. Morgan Chase Commercial Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2001-CIBC1, as: -- $5.1 million class M to 'CCC/DR4' from 'B-'. In addition, Fitch upgrades and removes from Rating Watch Positive these classes: -- $40.6 million class C to 'AAA' from 'AA'. -- $12.7 million class D to 'AAA' from 'AA-'; -- $25.4 million class E to 'AA' from 'A-'; -- $14 million class F to 'A+' from 'BBB+' -- $29.2 million class G to 'BBB' from 'BB+'; -- $10.1 million class H to 'BB+' from 'BB'. Fitch also upgrades this class: -- $7.6 million class J to 'BB' from 'BB-'. The following classes are affirmed by Fitch: -- $4.8 million class A-2 at 'AAA'; -- $607 million class A-3 at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $43.1 million class B at 'AAA'; -- $12.7 million class K at 'B+'; and -- $5.1 million class L at 'B'. The $7.3 million class NR certificates are not rated by Fitch. Class A-1 has been paid in full. The downgrade is the result of increased Fitch expected losses on the specially serviced assets. Fitch-projected losses are expected to fully deplete the class NR and negatively impact class M. The upgrades reflect the increased credit enhancement levels from loan payoffs and amortization, as well as the additional defeasance of nine loans (12%) since the last Fitch rating action. Since issuance, 15 loans (20.8%) have defeased, including the largest three loans (12.4%) in the pool. As of the July 2006 distribution date, the transaction has paid down 18.8% to $824.6 million from $1.01 billion at issuance. Currently, seven assets (2.8%) are in special servicing and are real estate owned. Fitch anticipates losses on all seven assets. The largest specially serviced asset (1.2%) is a multifamily property in Greece, New York that became REO in June 2006. The special servicer is in the process of curing outstanding deferred maintenance issues prior to listing the asset for sale. The second largest specially serviced asset (1.2%) is a multifamily property in Irving, Texas that became REO in September 2004. Since foreclosure, the special servicer has been working to stabilize occupancy at the property and has completed renovation on several units. The special servicer expects to take the asset to market by the second half of 2006. The next largest specially serviced asset (0.4%) is a hotel in La Porte, IN that became REO in September 2005. The previous borrower had changed the hotel flag without lender consent. The special servicer is currently in the process of stabilizing the asset and evaluating the possibility of a flag change. Fitch had designated 20 loans (11.3%) as Fitch Loans of Concern in the pool. These include the specially serviced loans and loans with low DSCR and occupancies. The largest Fitch Loan of Concern (2.7%) is a retail shopping center in Wallkill, New York and is current. The performance decline is due to a slight drop in effective gross income (EGI) accompanied by an increase in operating expenses. The occupancy at the center is high, though, at 95% as of December 2005. Fitch will continue to monitor the performance of the collateral. JETBLUE AIRWAYS: Weak Financial Profile Cues S&P to Cut Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on JetBlue Airways Corp., including lowering the long-term corporate credit rating to 'B' from 'B+' and the unsecured debt rating to 'CCC+' from 'B-', due to the company's weakened financial profile. All ratings are removed from CreditWatch, where they were placed with negative implications on April 25, 2006. The outlook is stable. "Although JetBlue reported a $14 million profit in the second quarter of 2006, after two successive quarters of losses, the company is expected to continue to experience pressure on earnings due to continued high fuel prices," said Standard & Poor's credit analyst Betsy Snyder. "As a result, its financial profile, which has weakened significantly from historically strong levels, is expected to recover only modestly over the near to intermediate term." The ratings on Forest Hills, New York-based JetBlue reflect a weaker financial profile after losses that began in 2005, with only modest improvement expected in 2006; and the inherent risk characteristics of the U.S. airline industry. Ratings also incorporate the company's relatively low operating costs, despite ongoing high fuel prices, and continuing high demand for its product offering. Since the second half of 2004, the company's results have been hurt by high fuel prices, with only minimal fuel hedges in place as an offset. JetBlue has instituted a "Return to Profitability" plan that includes: * the sale of five A320 aircraft; * the deferral of 12 A320 aircraft that had been scheduled for delivery in the 2007-2009 period to 2011-2012; * a greater focus on short- to medium-haul flying; and * revenue enhancements and nonfuel cost reductions. While the company has made some progress thus far, with a second- quarter profit of $14 million, it still expects to achieve an operating margin of only 2%-4% in 2006, compared with 5.4% in 2005, and well below the 19% achieved in 2003. As a result of the company's declining financial performance and incremental debt to finance new aircraft deliveries, its financial profile has weakened significantly. In 2005, its EBITDA interest coverage declined to around 1.4x from 2.4x in 2004, funds from operations to debt declined to around 5% from 10%, and debt to capital increased to around 79% from 75%. These ratios are not expected to materially improve over the near to intermediate term due to continued weak profitability and incremental debt to finance new aircraft. The company currently serves 40 destinations, primarily from New York's JFK airport and Long Beach airport in Southern California. JetBlue's costs are expected to remain under pressure as long as fuel prices remain high. However, its credit ratios should improve modestly over the near to intermediate term as benefits from its Return to Profitability plan are realized. If the company were to experience material losses, the outlook could be revised to negative. Revision to a positive outlook is not considered likely. JOURNAL REGISTER: Weak Financial Profile Cues S&P to Cut Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings on newspaper publisher Journal Register Co. to 'BB-' from 'BB'. These ratings were removed from CreditWatch where they were listed with negative implications on June 19, 2006. The outlook is negative. The Trenton, New Jersey- headquartered company had about $740 million of debt outstanding at June 2006. "The downgrade reflects Journal Register's weaker financial profile resulting from a decrease in operating cash flow due to the continued challenging revenue climate," said Standard & Poor's credit analyst Donald Wong. In addition, the prospects for improvement in the company's financial position will be constrained by heavier capital spending over the next year or so for a print facility expansion project. LA PALOMA: S&P Affirms Low-B Ratings on $525 Million Loans ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' rating and '1' recovery rating on La Paloma Generating Co. LLC's: * $265 million secured term loan B due 2012, * senior-lien $65 million working-capital facility, and * $40 million synthetic LC facility. Standard & Poor's also affirmed its 'B' rating and '5' recovery rating on La Paloma's second-lien $155 million term loan C. At the same time, Standard & Poor's revised its outlook on all the facilities to negative from stable. "The revised outlook reflects La Paloma's vulnerable financial performance because of depressed market power prices that resulted from robust regional hydroelectric conditions," said Standard & Poor's credit analyst David Bodek. Standard & Poor's also said that these problems were compounded by operational issues that included plant forced outages, the effects of weather on transmission access, and the acceleration of certain maintenance projects in a bid to improve long-term reliability. The negative outlook on La Paloma reflects concerns flowing from financial performance that has fallen short of anticipated levels, including projections under certain stress scenarios. La Paloma owns a net 1,022 MW combined-cycle, natural gas-fired power plant near McKittrick, California. La Paloma acquired the plant in August 2005. LA REINA: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------- Debtor: La Reina Management, Inc. 1 Ponce de Leon Street Esq. Georgetti Caguas, Puerto Rico 00725 Tel: (787) 743-4445 Bankruptcy Case No.: 06-02477 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- La Reina De Humacao, Inc. 06-02478 La Reina De Caguas, Inc. 06-02479 La Reina De Pe�uelas, Inc. 06-02480 La Reina De Vega Baja, Inc. 06-02481 La Reina De Comerio, Inc. 06-02482 La Reina De Cidra, Inc. 06-02483 La Reina De Barrio Obrero, Inc. 06-02484 La Reina De Juana Diaz, Inc. 06-02485 La Reina De Manati, Inc. 06-02486 Menos De $1 y Mas, Inc. 06-02487 La Reina De Fajardo, Inc. 06-02488 La Reina De Turabo, Inc. 06-02489 Type of Business: La Reina Management, Inc., is engaged in the administration of its affiliated companies' funds through the performance of functions such as merchandise purchases, payment to suppliers and employees, record keeping of expenses allocation, and other miscellaneous management services. The Debtor's revenues consist of fees charged to the affiliates for these services. Chapter 11 Petition Date: July 26, 2006 Court: District of Puerto Rico (Old San Juan) Debtor's Counsel: Jose Raul Cancio Bigas, Esq. 134 Mayaguez Street Hato Rey, Puerto Rico 00917 Tel: (787) 763-1940 Fax: (787) 758-9238 Debtors' Total Assets and Liabilities as of January 31, 2006: Total Assets Total Debts ------------ ----------- La Reina Management, Inc. $14,166,830 $13,810,411 La Reina De Humacao, Inc. $686,484 $640,624 La Reina De Caguas, Inc. $660,076 $431,535 La Reina De Pe�uelas, Inc. $636,769 $477,711 La Reina De Vega Baja, Inc. $762,773 $810,578 La Reina De Comerio, Inc. $498,769 $152,940 La Reina De Cidra, Inc. $669,023 $738,553 La Reina De Barrio Obrero, Inc. $709,185 $506,749 La Reina De Juana Diaz, Inc. $701,556 $424,023 La Reina De Manati, Inc. $672,681 $820,537 Menos De $1 y Mas, Inc. $516,960 $612,792 La Reina De Fajardo, Inc. $626,436 $726,860 La Reina De Turabo, Inc. $554,371 $502,475 La Reina Management, Inc.'s 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Kimberly Clark PR, Inc. Supplies $476,033 P.O. Box 191859 San Juan, PR 00919-1859 Unilever de Puerto Rico Supplies $291,496 P.O. Box 70129 San Juan, PR 00936-7129 Wyeth Consumer Healthcare Supplies $239,096 P.O. Box 70124 San Juan, PR 00936-7124 Howland Caribbean Corp. Supplies $159,792 P.O. Box 1895 San Juan, PR 00919 The Clorox Commercial Supplies $101,524 P.O. Box 2133 San Juan, PR 00922-2133 Colgate-Palmolive Supplies $101,300 Mattel Latin America Ex Supplies $85,654 P&G Commercial Co. Supplies $84,266 Alberto Culver Supplies $66,392 Markwins Int. Corp. Supplies $59,699 Four Seasons Supplies $57,201 Cadbury Adams PR Supplies $49,843 Glaxo Smith-Kline Supplies $39,642 Famosa America Inc. Supplies $32,523 Insular Trading Co. Supplies $31,564 Johnson Wax Supplies $29,304 Country Silk, Inc. Supplies $28,614 Johnson & Johnson Supplies $28,134 Pan Pepin Supplies $28,040 Lander Co., Inc. Supplies $27,297 La Reina Management's affiliates do not have any creditors who are not insiders. LARRY'S MARKETS: Gets Final Nod on Giuliani Capital as Advisor -------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Washington gave its final approval for Larry's Markets, Inc., to employ Giuliani Capital Advisors LLC, as its financial advisor and investment banker. As reported in the Troubled Company Reporter on May 26, 2006, Larry's Markets obtained interim permission from the Court to employ Giuliani Capital. The Firm is primarily expected to provide advice regarding the potential sale of the Debtor's stocks or assets, the development of the Debtor's business plans and financial projections, and the development of a restructuring plan. The Debtor will pay the Firm a $65,000 monthly advisory fee, and will also receive a fee of 5% of the transaction value in a sale or orderly liquidation of the Debtor's assets. About Larry's Markets Headquartered in Kirkland, Washington, Larry's Markets, Inc. -- http://www.larrysmarkets.com/-- operates several supermarkets and department stores in the U.S. Northwest. The company filed for chapter 11 protection on May 7, 2006 (Bankr. W.D. Wash. Case No. 06-11378). Armand J. Kornfeld, Esq., at Bush Strout & Kornfeld, represents the Debtor. The Official Committee of Unsecured Creditors has selected Marc L. Barreca, Esq., and Michael J. Gearin, Esq., at Preston Gates & Ellis LLP, to represent it in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $12,574,695 and total debts of $21,489,800. LEGACY ESTATE: Court to Consider $90MM Purchase Offer on Aug. 16 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of California in Santa Rosa will convene a hearing at 10:00 a.m., on Aug. 16, 2006, to consider the sale of substantially all of The Legacy Estate Group LLC's assets to FAB Acquisition Company LLC, subject to higher and better offers. The assets sold will be free and clear of any liens. FAB Acquisition is an organization founded by winery owner William S. Price and Huneeus Vinters LLC. FAB Acquisition proposes to purchase the Debtor's assets, including the Freemark Abbey winery in Napa Valley, the Arrowood winery in Sonoma and the Byron winery in Santa Maria, for $90 million in cash. FAB Acquisition is entitled to receive a $900,00 break-up fee in the event that the Debtor's assets are sold to another buyer at the August 16 auction. The sale to FAB will be subject to overbid pursuant to court- approved bid procedures. Interested bidders must qualify to participate in the auction by Aug. 9, 2006. The Debtor has submitted a bid procedures proposal that, among other things, limits initial overbids at not less than $93 million. The Court will consider approval of the proposed bid procedures on Aug. 3, 2006. A copy of the proposed bid procedures is available for a fee at: http://www.researcharchives.com/bin/download?id=060727043323 Headquartered in Saint Helena, California, The Legacy Estate Group LLC -- http://www.freemarkabbey.com/-- owns Freemark Abbey Winery, which produces a range of red, white, and dessert wines. Legacy Estate and Connaught Capital Partners, LLC, filed for chapter 11 protection on November 18, 2005 (Bankr. N.D. Calif. Case No. 05-14659). John Walshe Murray, Esq., Lovee Sarenas, Esq., and Robert A. Franklin, Esq., at the Law Offices of Murray and Murray represent the Debtors in their restructuring efforts. Lawyers at Winston & Strawn 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 between $50 million and $100 million. LIVING WATER: Case Summary & 15 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Living Water Outreach Ministries Inc. 2104 West Martin Luther King Boulevard Los Angeles, California 90008 Bankruptcy Case No.: 06-13440 Type of Business: The Debtor is a religious organization. Chapter 11 Petition Date: July 27, 2006 Court: Central District of California (Los Angeles) Judge: Victoria S. Kaufman Debtor's Counsel: Philip Falese, Esq. 4929 Wilshire Boulevard, Suite 700 Los Angeles, California 90010 Tel: (323) 634-7829 Estimated Assets: $50,000 to $100,000 Estimated Debts: $1 Million to $10 Million Debtor's 15 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Clifford England Mortgagee $340,000 1503 Merriman Glendale, CA 91202-1212 M&M Investments, Inc. Judgment Lien $236,979 c/o Jerry L. Freedman, Esq. 15313 Magnolia Boulevard Suite 408 Sherman Oaks, CA 91403 Sylvestor Chuckwura Loan $200,000 1851 Browning Boulevard Sherman Oaks, CA 91403 Noble Debamaka Loan $75,000 P.O. Box 1850 Los Angeles, CA 90018 Charity Debamaka Loan $75,000 P.O. Box 1850 Los Angeles, CA 90018 Patricia Driscoll, Esq. Legal Fees $35,000 JSJ Motors Automobile $13,000 Dell Corporation Office Equipment $11,000 Los Angeles Tax Collector Property Tax $10,000 Home Depot Fixtures $7,000 California Fair Plan Insurance $1,700 Yates & Associates Insurance $1,400 ADT Security $1,200 Los Angeles DWP Utility Revolving Pacific Bell Utility Revolving Southern California Gas Company Utility Revolving MASTR ASSET: S&P Lifts Low-B Ratings on 11 Class Certificates ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on 41 classes of mortgage pass-through certificates from seven MASTR Asset Securitization Trust series issued between 2002 and 2005. Concurrently, the ratings on the remaining classes from these seven transactions, as well as those from 18 other MASTR series are affirmed. The upgrades reflect increased current and projected credit support percentages that are sufficient to support the raised ratings. The increased credit support percentages are the result of significant principal prepayments and the shifting interest payment structure of the transactions. As of the June 2006 remittance period, the pools supporting the 41 upgraded classes had outstanding balances ranging from 11% (series 2002-8) to 45% (series 2003-6) of their original sizes. Furthermore, total delinquencies in the upgraded series ranged between 0.00% (series 2003-2) and 1.24% (series 2002-8) of the current pool principal balances, with the largest percentage of severe delinquencies (90-plus days, foreclosure, and REO) coming from series 2003-5 (0.29%). The affirmations reflect actual and projected credit enhancement percentages that are sufficient to support the current ratings. The mortgage pools backing the classes with the affirmed ratings had total delinquencies ranging from 0.00% (various series) to 1.45% (series 2004-4) and severe delinquencies ranging from 0.00% (various series) to 0.53% (series 2004-9). All of the MASTR Asset Securitization Trust pools have performed well. The pools have experienced either zero (19 series) or low cumulative losses. The largest cumulative loss, as a percentage of original pool balance, was 0.04% (series 2003-1). Additionally, for the June 2006 remittance period, all pools experienced zero monthly net losses. Credit support for all of the transactions is provided by a senior-subordinate structure with cross-collateralization and shifting interest features. The collateral backing the certificates originally consisted of 15- to 30-year prime fixed- rate mortgage loans secured by one- to four-family residential properties. Ratings Raised MASTR Asset Securitization Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-8 B-2 AAA AA+ 2002-8 B-3 AA+ AA- 2003-1 15-B-1 AAA AA+ 2003-1 15-B-2 AA+ AA- 2003-1 15-B-3 A+ BBB 2003-1 15-B-4 BBB BB 2003-1 15-B-5 BB B 2003-1 30-B-1 AAA AA+ 2003-1 30-B-2 AA+ AA- 2003-1 30-B-3 A+ BBB+ 2003-1 30-B-4 BBB+ BB+ 2003-1 30-B-5 B+ B 2003-2 15-B-1 AAA AA+ 2003-2 15-B-2 AA- A+ 2003-2 15-B-3 BBB+ BBB 2003-2 15-B-4 BB+ BB 2003-2 30-B-2 AA+ AA 2003-2 30-B-3 AA- A 2003-2 30-B-4 A- BBB 2003-2 30-B-5 BB B+ 2003-3 B-1 AAA AA+ 2003-3 B-2 AA+ A+ 2003-3 B-3 A BBB 2003-3 B-4 BBB BB 2003-3 B-5 BB B 2003-4 B-1 AA+ AA 2003-4 B-2 AA A 2003-4 B-3 A BBB 2003-4 B-4 BBB BB 2003-4 B-5 B+ B 2003-4 6-B-1 AA+ AA 2003-4 6-B-2 AA- A 2003-4 6-B-3 BBB+ BBB 2003-4 6-B-4 BB+ BB 2003-5 B-1 AA+ AA 2003-5 B-2 A+ A 2003-5 B-3 BBB+ BBB 2003-6 15-B-1 AA+ AA 2003-6 15-B-2 A+ A Ratings Affirmed MASTR Asset Securitization Trust Series Class Rating ------ ----- ------ 2002-8 1-PO, 1-A-X, 1-A-1 AAA 2002-8 1-A-2, 1-A-3, 1-A-4, 1-A-5, 1-A-11 AAA 2002-8 2-A-5, 2-A-6, 2-PO, 2-A-X, B-1 AAA 2003-1 1-A-1, 2-A-3, 2-A-4 AAA 2003-1 2-A-6, 2-A-10, 2-A-11 AAA 2003-1 2-A-12, 2-A-13, 2-A-14, 2-A-15, 2-A-16 AAA 2003-1 2-A-17, 2-A-18 AAA 2003-1 3-A-1, 3-A-2, 3-A-3, 3-A-4, 3-A-5 AAA 2003-1 3-A-6, 3-A-7, PO, 15-A-X, 30-A-X AAA 2003-2 1-A-1, 2-A-1, 2-A-2, 2-A-3, 2-A-6 AAA 2003-2 2-A-7, 2-A-8, 2-A-9, 2-A-10 AAA 2003-2 15-A-X, PO, 3-A-2, 3-A-5 AAA 2003-2 3-A-10, 3-A-11, 3-A-12, 3-A-13 AAA 2003-2 3-A-14, 30-A-X AAA 2003-2 15-B-5 B 2003-2 30-B-1 AAA 2003-3 1-A-1, 2-A-1, 2-A-2, 2-A-3, 2-A-4 AAA 2003-3 3-A-2, 3-A-3, 3-A-4, 3-A-5, 3-A-6, 3-A-7 AAA 2003-3 3-A-8, 3-A-17, 3-A-18 AAA 2003-3 4-A-1, 5-A-1, PO-1, PO-2, A-X-1, A-X-2 AAA 2003-3 A-X-3, A-X-4 AAA 2003-4 1-A-1, 2-A-1, 2-A-2, 2-A-3, 2-A-4, 2-A-5 AAA 2003-4 2-A-6, 2-A-7, 3-A-1, 3-A-2, 4-A-1, 4-A-2 AAA 2003-4 4-A-3, 5-A-1, 6-A-1, 6-A-2, 6-A-3, 6-A-5 AAA 2003-4 6-A-6, 6-A-7, 6-A-8, 6-A-9, 6-A-10, 6-A-11 AAA 2003-4 6-A-16, 6-A-17, 7-A-1, 7-A-2, 8-A-1, 8-A-2 AAA 2003-4 8-A-3, 8-A-4, C-A-1, C-A-2, PO, 15-A-X AAA 2003-4 30-A-X AAA 2003-4 6-B-5 B 2003-5 1-A-1, 2-A-1, 2-A-2, 2-A-3, 2-A-4, 2-A-5 AAA 2003-5 3-A-1, 4-A-1, 4-A-2, 4-A-3, 4-A-4, 4-A-5 AAA 2003-5 5-A-1, 15-P-O, 30-P-O, 15-A-X, 30-A-X AAA 2003-5 B-4 BB 2003-5 B-5 B 2003-6 1-A-1, 2-A-1, 3-A-1, 3-A-2, 3-A-3 AAA 2003-6 3-A-5, 4-A-1, 5-A-1, 6-A-1, 6-A-2, 6-A-3 AAA 2003-6 6-A-4, 6-A-5, 6-A-6, 6-A-7, 6-A-8, 6-A-9 AAA 2003-6 7-A-1, 8-A-1, 9-A-1, 9-A-2, 9-A-3, 9-A-4 AAA 2003-6 9-A-5, 9-A-6, 9-A-7, P-O, PP-A-X, 15-A-X AAA 2003-6 30-A-X AAA 2003-6 30-B-1 AA 2003-6 30-B-2 A 2003-6 15-B-3, 30-B-3 BBB 2003-6 15-B-4, 30-B-4 BB 2003-6 15-B-5, 30-B-5 B 2003-7 1-A-1, 1-A-2, 1-A-3, 2-A-1, 2-A-2, 2-A-3 AAA 2003-7 2-A-4, 2-A-5,.2-A-6, 2-A-7, 3-A-1, 3-A-2 AAA 2003-7 4-A-1, 4-A-2, 4-A-3, 4-A-4, 4-A-6 AAA 2003-7 4-A-7, 4-A-8, 4-A-12, 4-A-18 AAA 2003-7 4-A-19, 4-A-21, 4-A-22, 4-A-24 AAA 2003-7 4-A-32, 4-A-33, 4-A-34, 4-A-35, 4-A-36 AAA 2003-7 4-A-37, 4-A-38, 4-A-41, 4-A-42 AAA 2003-7 4-A-44, 4-A-45, 4-A-46, 5-A-1, 15-P-O AAA 2003-7 30-P-O, PP-A-X, 15-A-X, 30-A-X AAA 2003-7 B-1 AA 2003-7 B-2 A 2003-7 B-3 BBB 2003-7 B-4 BB 2003-7 B-5 B 2003-8 1-A-1, 2-A-1, 3-A-1, 3-A-2, 3-A-3, 3-A-4 AAA 2003-8 3-A-5, 3-A-6, 3-A-7, 3-A-8, 3-A-9, 3-A-10 AAA 2003-8 3-A-11, 3-A-12, 3-A-13, 4-A-1, 4-A-2, 5-A-1 AAA 2003-8 5-A-2, 6-A-1, 7-A-1, 8-A-1, 15-P-O, 30-P-O AAA 2003-8 PP-A-X, 15-A-X, 30-A-X AAA 2003-8 B-1 AA 2003-8 B-2 A 2003-8 B-3 BBB 2003-8 B-4 BB 2003-8 B-5 B 2003-9 1-A-1, 2-A-1, 2-A-2, 2-A-3, 2-A-4, 2-A-5 AAA 2003-9 2-A-6, 2-A-7, 2-A-8, 2-A-9, 2-A-10, 2-A-11 AAA 2003-9 2-A-12, 3-A-1, 4-A-1, 4-A-2, 5-A-1, 5-A-2 AAA 2003-9 5-A-3, 15-PO, 30-PO, 15-A-X, 30-A-X AAA 2003-9 B-1 AA 2003-9 B-2 A 2003-9 B-3 BBB 2003-9 B-4 BB 2003-9 B-5 B 2003-10 1-A-1, 1-A-2, 2-A-1, 3-A-1, 3-A-2, 3-A-3 AAA 2003-10 3-A-4, 3-A-5, 3-A-6, 3-A-7, 4-A-1, 5-A-1 AAA 2003-10 6-A-1, 15-PO, 30-PO, 15-A-X, 30-A-X AAA 2003-10 B-1 AA 2003-10 B-2 A 2003-10 B-3 BBB 2003-10 B-4 BB 2003-10 B-5 B 2003-11 1-A-1, 2-A-1, 2-A-2, 2-A-3, 2-A-4, 2-A-5 AAA 2003-11 2-A-6, 2-A-7, 2-A-8, 2-A-9, 2-A-10, 2-A-11 AAA 2003-11 2-A-12, 3-A-1, 3-A-2, 3-A-3, 4-A-1, 5-A-1 AAA 2003-11 5-A-2, 6-A-1, 6-A-2, 6-A-3, 6-A-4 AAA 2003-11 6-A-6, 6-A-7, 6-A-8, 6-A-9, 6-A-10, 6-A-11 AAA 2003-11 6-A-12, 6-A-13, 6-A-14, 6-A-15, 6-A-16 AAA 2003-11 6-A-17, 7-A-1, 7-A-2, 7-A-3, 7-A-4, 7-A-5 AAA 2003-11 7-A-6, 7-A-7, 8-A-1, 9-A-1, 9-A-2, 9-A-3 AAA 2003-11 9-A-4, 9-A-5, 9-A-6, 9-A-7, 9-A-8, 10-A-1 AAA 2003-11 30-P-O, 15-P-O, 15-A-X, 30-A-X AAA 2003-11 B-1 AA 2003-11 B-2 A 2003-11 B-3 BBB 2003-11 B-4 BB 2003-11 B-5 B 2003-12 1-A-1, 1-A-2, 2-A-1, 3-A-1, 3-A-2, 3-A-3 AAA 2003-12 3-A-4, 3-A-5, 3-A-6, 3-A-7, 3-A-8, 3-A-9 AAA 2003-12 3-A-10, 4-A-1, 5-A-1, 5-A-2, 6-A-1, 6-A-2 AAA 2003-12 15-PO, 30-PO, 15-A-X, 30-A-X AAA 2003-12 B-1 AA 2003-12 B-2 A 2003-12 B-3 BBB 2003-12 B-4 BB 2003-12 B-5 B 2004-1 1-A-1, 1-A-3, 1-A-6, 1-A-7, 1-A-8, 1-A-9 AAA 2004-1 1-A-10, 1-A-11, 1-A-12, 2-A-1, 3-A-1, 3-A-2 AAA 2004-1 3-A-3, 3-A-4, 3-A-5, 3-A-6, 3-A-7, 3-A-8 AAA 2004-1 4-A-1, 4-A-2, 5-A-4, 5-A-8, 5-A-13 AAA 2004-1 5-A-14, 5-A-15, 5-A-16, 5-A-17, 5-A-18 AAA 2004-1 5-A-19, 5-A-20, 15-P-O, 30-P-O, 15-A-X AAA 2004-1 30-A-X AAA 2004-1 B-1 AA 2004-1 B-2 A 2004-1 B-3 BBB 2004-1 B-4 BB 2004-1 B-5 B 2004-P2 A-1, A-1-I-O, A-2 AAA 2004-P2 B-1 AA 2004-P2 B-2 A 2004-P2 B-3 BBB 2004-P2 B-4 BB 2004-P2 B-5 B 2004-3 P-O, 1-A-1, 1-A-2, 1-A-3, 2-A-1, 3-A-1 AAA 2004-3 3-A-2, 4-A-2, 4-A-3, 4-A-4, 4-A-5, 4-A-6 AAA 2004-3 4-A-7, 4-A-8, 4-A-9, 4-A-10, 4-A-11, 4-A-12 AAA 2004-3 4-A-13, 4-A-14, 4-A-15, 5-A-1, 5-A-X AAA 2004-3 15-A-X, 30-A-X AAA 2004-3 B-1 AA 2004-3 B-2 A 2004-3 B-3 BBB 2004-3 B-4 BB 2004-3 B-5 B 2004-4 P-O, 30-A-X, 1-A-1, 1-A-2, 1-A-3, 1-A-4 AAA 2004-4 1-A-5, 1-A-6, 1-A-7, 1-A-8, 2-A-1, 15-A-X AAA 2004-4 2-A-2, 2-A-3, 2-A-4, 2-A-5, 2-A-6, 2-A-7 AAA 2004-4 2-A-8, 3-A-1 AAA 2004-4 B-4 BB 2004-4 B-5 B 2004-5 1-A-1, 1-A-2, 1-A-3, 1-A-4, 1-A-5, 1-A-6 AAA 2004-5 2-A-1, 15-P-O, 15-A-X, 30-P-O, 30-A-X AAA 2004-5 B-3 BBB- 2004-5 B-4 BB 2004-5 B-5 B 2004-6 1-A-1, 1-A-2 AAA 2004-6 2-A-1, 2-A-2, 2-A-3, 2-A-4, 2-A-5, 2-A-6 AAA 2004-6 2-A-7, 2-A-8, 2-A-9, 2-A-10, 2-A-11 AAA 2004-6 2-A-12, 2-A-13, 2-A-14, 2-A-15 AAA 2004-6 3-A-1, 4-A-1, 5-A-1, 5-A-2, 6-A-1, 7-A-1 AAA 2004-6 30-P-O, 15-P-O, 30-A-X, 15-A-X AAA 2004-6 B-1, 1-B-1 AA 2004-6 B-2, 1-B-2 A 2004-6 B-3, 1-B-3 BBB 2004-6 B-4, 1-B-4 BB 2004-6 B-5, 1-B-5 B 2004-8 1-A-1, 2-A-1, 3-A-1, 4-A-1, 4-A-2, 4-A-3 AAA 2004-8 A-X, P-O AAA 2004-8 B-1, 4-B-1 AA 2004-8 B-2, 4-B-2 A 2004-8 B-3, 4-B-3 BBB 2004-8 B-4, 4-B-4 BB 2004-8 B-5, 4-B-5 B 2004-9 1-A-1, 2-A-1, 2-A-2, 2-A-3, 2-A-4, 3-A-1 AAA 2004-9 3-A-2, 3-A-3, 3-A-4, 3-A-5, 3-A-6, 3-A-7 AAA 2004-9 4-A-1, 5-A-1, 6-A-1, 7-A-1, 8-A-2 AAA 2004-9 30-A-X, P-O, 15-A-X AAA 2004-9 15-B-1, 8-B-1 AA 2004-9 15-B-2, 8-B-2 A 2004-9 15-B-3, 8-B-3 BBB 2004-9 30-B-3 BBB- 2004-9 30-B-4, 15-B-4, 8-B-4 BB 2004-9 30-B-5, 15-B-5, 8-B-5 B 2004-10 1-A-1, 2-A-1, 2-A-2, 2-A-3, 3-A-1, 4-A-1 AAA 2004-10 4-A-2, 4-A-3, 4-A-4, 5-A-1, 5-A-2, 5-A-3 AAA 2004-10 5-A-4, 5-A-5, 5-A-6, 6-A-1, 15-A-X, 30-A-X AAA 2004-10 15-P-O, 30-P-O AAA 2004-10 B-1 AA 2004-10 B-2 A 2004-10 B-3 BBB 2004-10 B-4 BB 2004-10 B-5 B 2004-11 1-A-1, 2-A-1, 3-A-1, 4-A-1, 4-A-2, 4-A-3 AAA 2004-11 4-A-4, 4-A-5, 5-A-1, 5-A-2, 5-A-3 AAA 2004-11 5-A-4, 5-A-5, 15-P-O, 30-P-O, 15-A-X AAA 2004-11 30-A-X AAA 2004-11 B-5 B 2005-1 15-PO, 15-A-X, 30-P-O, 30-A-X, 1-A-1, 2-A-1 AAA 2005-1 2-A-2, 2-A-3, 2-A-4, 2-A-5, 2-A-6, 2-A-7 AAA 2005-1 2-A-8, 2-A-9 AAA 2005-1 B-1 AA 2005-1 B-4 BB 2005-1 B-5 B 2005-2 P-O, A-X, 1-A-1, 1-A-2, 1-A-3, 1-A-4, 1-A-5 AAA 2005-2 1-A-6, 2-A-1, 2-A-2, 3-A-1, 4-A-1 AAA 2005-2 B-1 AA 2005-2 B-2 A 2005-2 B-3 BBB 2005-2 B-4 BB 2005-2 B-5 B MATHON FUND: Files Joint Plan of Reorganization in Arizona ---------------------------------------------------------- Mathon Fund LLC and its debtor-affiliates filed with the U.S. Bankruptcy Court for the District of Arizona a joint plan of reorganization and an accompanying a disclosure statement explaining that plan on July 7, 2006. Treatment of Claims Under the Plan, Class 1B Wage Claims and Class 3D Claims will be paid in full on the effective date of the Plan, while Class 1C Tax Claims will be paid in full in installments over five years after Nov. 13, 2005, with interest. Holders of Class 2A Lessor Secured Claims will receive payment in the amount of the allowed secured claim, with interest at a rate determined in accordance with the Plan, in monthly installments over the balance of the lease term. Holders of Class 2B Deposit Secured Claims will be entitled, on the effective date of the Plan, to apply the deposits in full payment of the secured portion of their claims. If the total claim exceeds the amount of the deposit, the balance of the claim will be treated as a General Claim in Class 3C. Class 2C Secured Tax Claims will be treated in the same manner as tax claims, except that the holder will retain a lien on any collateral to secure payment of the amounts provided for in the Plan. Each holder of an Investor Claim will be entitled to elect between treatment as a participating investor or treatment as a non- participating investor. Each participating investor will be eligible to share in distributions from the liquidating trust and the participating trust, pro rata based on net investment amount. Each participating investor other than ineligible investors will also receive a release of avoidance claims. Holders of Class 3B Claims will release all their Claims against the Debtor's debtor-affiliates and other conservatorship entities. Each holder of a Class 3E Claim may elect to receive either: (i) 90% of the allowed amount of their Claim in cash on the effective date of the Plan; or (ii) 100% of their Claim in equal quarterly installments, over five years from the effective date of the Plan, with interest at a rate to be determined by the Court. Holders of Class 3C ACC Claim will not receive any distributions under the Plan and holders of Class 4A Interests will receive nothing on account of their interests in the Debtor. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=060727042506 Headquartered in Phoenix, Arizona, Mathon Fund LLC and its debtor-affiliates filed for chapter 11 protection on Nov. 13, 2005 (Bankr. D. Ariz. Case Nos. 05-27993 through 05-27995). Lawrence E. Wilk, Esq., at Jaburg & Wilk, P.C. represents the Debtors in their restructuring efforts. Alan A. Meda, Esq., at Stinson Morrison Hecker LLP represents the Official Committee of Unsecured Creditors. When Mathon Fund filed for protection from its creditors, it listed assets totaling $16,851,721 and debts totaling $79,259,996. MATHON FUND: Selling 325-Acre Connecticut Property on Sept. 12 -------------------------------------------------------------- Mathon Fund LLC obtained permission from the U.S. Bankruptcy Court for the District of Arizona to sell its 325-Acre real property in New London Waterford Airport in Connecticut. An auction will be on Sept. 12, 2006, 9:00 a.m., at Courtroom No. 702, 7th Floor, 230 North First Avenue, in Phoenix, Arizona. Qualifying bids must be received by the Debtor not later than 5:00 p.m. on September 5, 2006. Qualified bidders must provide an overbid deposit of $100,000. The bidding will begin at $12,274,700, with increments of $50,000 for the subsequent bids. Meridian Development Partners LLC, as stalking-horse bidder, is entitled to a $224,700 breakup fee if its purchase price is exceeded by a successful bidder. For further bid procedure information, please contact Mr. Ed Standage at (480) 215-7248. Headquartered in Phoenix, Arizona, Mathon Fund LLC and its debtor-affiliates filed for chapter 11 protection on Nov. 13, 2005 (Bankr. D. Ariz. Case Nos. 05-27993 through 05-27995). Lawrence E. Wilk, Esq., at Jaburg & Wilk, P.C. represents the Debtors in their restructuring efforts. Alan A. Meda, Esq., at Stinson Morrison Hecker LLP represents the Official Committee of Unsecured Creditors. When Mathon Fund filed for protection from its creditors, it listed assets totaling $16,851,721 and debts totaling $79,259,996. MIDLAND COGENERATION: Consumers Energy Sells Interests to GSO ------------------------------------------------------------- Consumers Energy, the principal subsidiary of CMS Energy, has reached an agreement to sell the utility's interests in the 1,500-megawatt Midland Cogeneration Venture to GSO Capital Partners and Rockland Capital Energy Investments for $60.5 million. Consumers Energy owns 49% of the MCV Partnership, which leases and operates the facility near Midland, Michigan. Consumers Energy also indirectly owns 35% of the facility and along with the other owners leases the facility to the MCV Partnership. The sales agreement calls for GSO and Rockland to purchase all of the Michigan utility's interests. GSO and Rockland also will provide Consumers Energy a financial guarantee to back certain contingent obligations. Consumers Energy is the main customer for the MCV's electricity output. The utility's contract to purchase power from the plant, and the associated customer rates, are not affected by the sale. The sale is the result of a competitive process. Proceeds from the sale will be used to reduce debt at the utility, following a review by the Michigan Public Service Commission. CMS Energy said if the sale closes this fall, as expected, it would boost 2006 cash flow by about $56 million and reduce 2006 reported and adjusted earnings by about 4 cents per share. The Company said it is maintaining its guidance for 2006 adjusted earnings, excluding mark-to-market impacts, of about $1 per share. CMS Energy does not provide specific reported earnings guidance because of the uncertainties associated with the expected reversal of mark-to-market gains and losses from potential asset sales. The natural gas-fired MCV facility can produce up to 1,500 megawatts of electricity and up to 1.35 million pounds per hour of industrial steam. It began commercial operation in 1990. Sustained high natural gas prices led the MCV Partnership to reevaluate the economics of the facility last year. Those high gas prices also led Consumers Energy to examine several long-term alternatives for its MCV interests, including a competitive sale. David Joos, the president and chief executive officer of CMS Energy, said the sale of the MCV interests reduces CMS Energy's financial risk. "This sale will reduce our exposure to sustained high natural gas prices and allow us to pay down debt at the utility at a time when interest rates are rising," he said. J.P. Morgan Securities Inc. served as financial advisor for Consumers Energy and managed the competitive sale process. About GSO Capital GSO Capital Partners LP is an investment advisor specializing in the leveraged finance marketplace. Funds managed by GSO invest in a broad array of assets including private equity securities, mezzanine securities and leveraged loans. The firm has approximately $5 billion in assets under management and has over 90 professionals in New York, London and Houston. About Rockland Capital Rockland Capital Energy Investments is a private energy investment company founded in 2003 to focus on the acquisition, development and optimization of companies and projects in the North America and European energy sectors. About Consumers Energy Company Headquartered in Jackson, Michigan, Consumers Energy Company -- http://www.consumersenergy.com/-- a wholly owned subsidiary of CMS Energy Corporation, is a combination electric and natural gas utility that serves more than 3.3 million customers in Michigan's Lower Peninsula. About Midland Cogeneration Midland Cogeneration Venture was formed in 1987 to convert a portion of an uncompleted Consumers Energy's nuclear unit into a natural gas-fired cogeneration facility. * * * As reported in the Troubled Company Reporter on July 27, 2006, Fitch did not expect to change the ratings or Stable Outlook for Consumers Energy Co. following the announcement that Consumers has reached an agreement to sell its interests in the Midland Cogeneration Venture to GSO Capital Partners and Rockland Capital Energy Investments for $60.5 million. Proceeds from the sale will be used to reduce debt at Consumers. The transaction is expected to close by this fall. The Issuer Default Rating (IDR) for Consumers is 'BB-'. As reported in the Troubled Company Reporter on July 27, 2006, Standard & Poor's Ratings Services said that its 'B' rating on Midland Cogeneration Venture L.P.'s $200 million bonds remain on CreditWatch with negative implications. The bonds were issued by Midland Funding Corp. II and Economic Development Corp. of the County of Midland (Michigan). The CreditWatch update follows Consumers Energy Co.'s announcement that it has sold its interests in MCV to GSO Capital Partners and Rockland Capital Energy Investments. The CreditWatch listing will be resolved once there is more clarity regarding the effect of the new ownership. MORGAN STANLEY: Fitch Junks Rating on $3.5 Million Certificates --------------------------------------------------------------- Fitch downgrades Morgan Stanley Capital I Inc.'s Commercial Mortgage Pass-Through Certificates, series 1999-CAM1 as: -- $3.5 million class N to 'CC/DR4' from 'CCC/DR3'. In addition, Fitch affirms the following classes: -- $196.4 million class A-4 at 'AAA'; -- Interest only class X at 'AAA'; -- $26.2 million class B at 'AAA'; -- $26.2 million class C at 'AAA'. -- $12.1 million class D at 'AAA'; -- $20.2 million class E at 'AAA'; -- $8.1 million class F at 'AAA'; -- $14.1 million class G at 'AA'; -- $14.1 million class H at 'A'; -- $6.0 million class J at 'BBB-'; -- $8.1 million class K at 'BB'; -- $6.0 million class L at 'BB-'; -- $6.0 million class M at 'B-'. Classes A-1, A-2, and A-3 have paid in full. The downgrade is due to the expected loss associated with the recent valuation of the only specially serviced loan. The loss is expected to significantly reduce the balance of class N. The loan (1.4%) is secured by an industrial/warehouse facility located in Lewisville, Texas. The property is currently 100% vacant and there are no prospective tenants at this time. The property is being listed for sale. As of the July 2006 distribution date, the transaction's aggregate principal balance has been reduced 57% to $347.0 million from $806.5 million at issuance. The pool remains geographically diverse with the largest concentration of properties (19%) in California. MORGAN STANLEY: S&P Lifts Ratings on Class G & H Certificates ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on five classes of commercial mortgage pass-through certificates from Morgan Stanley Capital I Inc.'s series 1999-FNVI. Concurrently, ratings are affirmed on five other classes from the same series. The raised and affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios, as well as the defeasance of an additional $98 million (19%) in collateral since Standard & Poor's last review. As of the July 15, 2006, remittance report, the collateral pool consisted of 152 loans with an aggregate trust balance of $512.9 million, down from 166 loans totaling $632.1 million at issuance. The master servicer, Capmark Finance Inc., reported primarily full-year 2005 financial information for 89% of the pool. Based on this information, Standard & Poor's calculated a weighted average net cash flow debt service coverage ratio (DSCR) of 1.54x, up from 1.40x at issuance. To date, the trust has experienced six losses totaling $15.2 million. The top 10 exposures secured by real estate have an aggregate outstanding balance of $144.1 million (28%) and a weighted average DSCR of 1.38x, equal to 1.38x at issuance. Two of the top 10 exposures are with the special servicer, five of the 22 loans that make up the largest exposure are on the watchlist, as are the third-, sixth-, and 10th-largest exposures. Standard & Poor's reviewed property inspections provided by the master servicer for all of the assets underlying the top 10 exposures. One property was characterized as "excellent," while the remaining collateral was characterized as "good." There are currently three assets with an aggregate balance of $19.9 million with the special servicer, CWCapital Asset Management LLC. Televideo is a 69,630-sq.-ft. flex-industrial REO asset with an unpaid principal balance of $8.6 million and additional advances, including interest thereon, totaling $600,000. The asset became REO Dec. 6, 2005, and was transferred to special servicing after the sole tenant, Televideo, stopped making monthly debt service payments. Televideo paid a $75,000 lease termination fee and will vacate in August 2006. Standard & Poor's anticipates a significant loss upon the liquidation of this asset. Governors Crossing is a 135,000-sq.-ft. REO asset in Sevierville, Tennessee, with an unpaid principal balance of $8.2 million and additional advances, including interest thereon, totaling $1.9 million. The borrower defaulted and declared bankruptcy after a loan workout agreement could not be reached. An appraisal from February 2006 indicates a value greater than the total exposure and Standard & Poor's anticipates a minimal loss if any, upon liquidation. The Elmwood Office Park is a 71,746-sq.-ft. four-building office complex in Harahan, Louisina. The property suffered extensive damage from Hurricane Katrina and has received $1.5 million in insurance proceeds thus far, which has been used to keep the loan current and fund necessary repairs. The majority of the tenants have moved back into their space and repairs are expected to be completed shortly. It is expected that the loan will be returned to the master servicer in the near future. Capmark reported a watchlist of 32 loans ($114.7 million, 22%). Quail Oaks Apartments, the third-largest exposure, has an outstanding balance of $19.9 million (4%) and is secured by a 404- unit multifamily property in Tampa, Florida. The loan appears on the watchlist because it reported a 2005 DSCR of 0.91x. The Ramada Plaza Hotel loan is the sixth-largest exposure, has an outstanding balance of $10.9 million (2%), and is secured by a 182-unit lodging property in San Diego, California. This loan appears on the watchlist because it reported a 2005 DSCR of 0.58x. Marina View Towers, the 10th-largest exposure, has an outstanding balance of $7.0 million (1%) and is secured by a 84-unit multifamily property in Alameda, California. This loan appears on the watchlist because it reported a 2005 DSCR of 1.02x. The remaining loans on the watchlist primarily have DSCR or occupancy issues. Standard & Poor's stressed the specially serviced loans, loans on the watchlist, and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1999-FNVI Rating ------ Class To From Credit enhancement(%) ----- -- ---- --------------------- C AAA AA+ 22.64 D AAA AA 20.18 E AA BBB+ 14.33 G BBB BB+ 7.55 H BB+ BB 6.01 Ratings Affirmed Morgan Stanley Capital I Inc. Commercial mortgage pass-through certificates series 1999-FNVI Class Rating Credit enhancement(%) ----- ------ --------------------- A-2 AAA 34.35 B AAA 27.88 K B- 2.62 L CCC 1.39 X AAA N/A N/A - Not applicable. NAVISTAR INT'L: Wants To Amend to $1.5 Billion Credit Agreement --------------------------------------------------------------- Navistar International Corporation seeks an amendment to its three-year senior unsecured term loan facility totaling $1.5 billion. On Feb. 22, 2006, Navistar entered into a 3-year senior unsecured term loan facility providing for borrowings in the aggregate principal amount of $1.5 billion, which was arranged by Credit Suisse Securities (USA) LLC and included Banc of America Securities LLC, Banc of America Bridge LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities, Inc. This term loan facility is guaranteed by International Truck and Engine Corporation, the principal operating subsidiary of Navistar. To date, Navistar has borrowed an aggregate of $1,305 million under the term loan facility to refinance a significant portion of its previously outstanding debt securities. In connection therewith, Navistar has eliminated any defaults or alleged defaults that may have existed under certain indentures from its failure to timely file its 2005 Annual Report or Form 10-Qs with the SEC. This amendment to the term loan facility would provide additional flexibility to Navistar, including permitting Navistar to borrow the remaining balance of the loan facility by Aug. 9, 2006 and place such funds in escrow to repay, discharge or otherwise cure any existing default under its outstanding 2.50 percent senior convertible notes by Dec. 21, 2006. About Navistar Based in Warrenville, Illinois, Navistar International Corporation (NYSE: NAV) -- http://www.nav-international.com/-- is the parent company of Navistar Financial Corp. and International Truck and Engine Corp. The company produces International(R) brand commercial trucks, mid-range diesel engines and IC brand school buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. The company also provides truck and diesel engine parts and service sold under the International(R) brand. A wholly owned subsidiary offers financing services. * * * As reported in the Troubled Company Reporter on Feb 14, 2006, Fitch downgraded Navistar International Corp.'s Issuer default rating to 'BB-' from 'BB'; Senior unsecured debt to 'BB-' from 'BB'; and Subordinated debt to 'B' from 'B+'. Fitch also downgraded Navistar Financial Corp.'s Senior unsecured bank lines to 'BB-' from 'BB'; and Senior unsecured debt to 'BB-' from 'BB'. Fitch also assigned an indicative rating of 'BB-' to Navistar's prospective $1.5 billion credit facility. The ratings remain on Rating Watch Negative. Resolution of the Watch status will be contingent on the filing of audited financial statements and resolution of Navistar's debt structure. NEWPARK RESOURCES: Receives Default Notice from Noteholders ----------------------------------------------------------- Newpark Resources Inc. discloses that on July 20, 2006, it received a notice of default from the purported holders of more than 25% in aggregate principal amount of Newpark's 8-5/8% Senior Subordinated Notes due 2007. The Notes were issued in 1997 under an indenture with U.S. Bank N.A., as trustee, in an aggregate principal amount of $125 million. Under the indenture, Newpark is obligated to timely file its periodic reports under federal securities law and to deliver those reports to Noteholders. As previously disclosed, Newpark has not yet filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q for the quarter ended March 31, 2006. If Newpark fails to cure these defaults within 30 days after receipt of the Notice, the trustee or the Noteholders may declare the Notes, together with accrued interest, to be immediately due and payable. Although Newpark may be able to cure the default and file the required Quarterly Report on Form 10-Q by August 19, 2006, Newpark cannot predict with certainty that it will be able to do so. Newpark has received temporary waivers under all other material obligations that may be affected as a result of the Notice. These waivers terminate on various dates and are subject to renewal or early termination under specified conditions. The Notes may be redeemed by Newpark, at its election, at any time at their original principal amount plus accrued unpaid interest upon notice given at least 30 days and not more than 60 days before the redemption date. To that end, JPMorgan Chase Bank, N.A. has committed to provide to Newpark a $150 million collateralized term loan that can be used to retire the Notes. The commitment is subject to customary terms, fees and conditions. Newpark Resources, Inc. provides integrated fluids management, environmental and oilfield services to the exploration and production industry. NEWPARK RESOURCES: Default Notice Cues S&P to Lower Rating to B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Newpark Resources Inc. to 'B+' from 'BB-'. The downgrade follows the company's announcement that it received a notice of default from the purported holders of more than 25% in aggregate principal amount of its $125 million 8.625% senior subordinated notes due 2007. The rating on Newpark remains on CreditWatch with negative implications, which also incorporates the company's announcement on July 10, 2006, that it will restate its financial filings for the previous five years and further delay filing statements for the first quarter of 2006. The notice of default from its purported holders triggers a 30-day period in which the company has to cure its technical default. "A failure to receive waivers from its note holders within this 30-day cure period could cause a liquidity crunch for the company," said Standard & Poor's credit analyst Ben Tsocanos. "Newpark does not currently appear to have the financial resources to pay the amount of the accelerated debt, which could cause a default," said Mr. Tsocanos. Somewhat tempering this potential liquidity crisis is Newpark's public statement that JPMorgan Chase Bank N.A. has committed to provide to the company a $150 million collateralized term loan that can be used to retire the $125 million subordinated notes due 2007 if they required accelerated payment. Standard & Poor's will continue to closely monitor the company's current liquidity predicament, especially the status with its noteholders and bank lenders. Standard & Poor's plans to meet with the company in August 2006 to review and discuss all of the above concerns. Resolution of the CreditWatch is dependent on: * Newpark receiving additional financing to meet its potential debt acceleration payment; * filing its restated financials for the past five years and its first-quarter 2006 10-Q; * completing its internal investigation; and * the demonstrating sound performance by the firm's new management team. NOBLE DREW: Can Borrow Additional $140,000 Under the DIP Facility ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorized Noble Drew Ali Plaza Housing Corp. through its managing agent, Wavecrest Management Team Ltd., to make an additional $140,000 loan under its debtor-in-possession financing agreement with Euro-American Corporation. In the DIP Agreement, Euro-American agreed to lend up to $1.4 million to the Debtor. As adequate protection, the Debtor granted Euro-American a first-position secured lien on all of its assets. The Debtor made two previous drawdowns on the DIP Facility totaling $200,000 pursuant to the Court's first and second interim DIP orders. The Debtor will use the $140,000 additional loan based on a revised interim budget for weeks ending June 27, 2006 through August 6, 2006. A full-text copy of the Six-Week Budget is available for a fee at: http://www.researcharchives.com/bin/download?id=060727042856 The Debtor tells the Court that it needs the additional financing to, among other things, fund the Debtor's working capital to maintain its going concern value. The Debtor also tells the Court that it did not obtain other financing on equal or more favorable terms than the DIP Loan Agreement. Headquartered in Brooklyn, New York, Noble Drew Ali Plaza Housing Corp., filed for chapter 11 protection on March 25, 2005 (Bankr. S.D.N.Y. Case No. 05-11915). Gerard R. Luckman, Esq., at Silverman Perlstein & Acampora, LLP, represents the Debtor. Martin G. Bunin, Esq., at Alston & Bird LLP represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $43,500,000 and total debts of $18,639,981. NOVA CDO: S&P Holds Junk Ratings on Class C-1 & C-2 Notes --------------------------------------------------------- Standard & Poor's Ratings Services placed its rating on the class B notes issued by NOVA CDO 2001 Ltd., a high-yield arbitrage CBO transaction, on CreditWatch with positive implications. At the same time, the ratings on the class A, C-1, and C-2 notes are affirmed based on the level of credit enhancement available to support these notes. The CreditWatch placement reflects factors that have positively affected the credit enhancement available to support the class B notes since the last rating action in September 2004, primarily an increase in the overcollateralization ratio resulting from significant paydowns to the class A notes. According to the trustee report dated June 16, 2006, the outstanding balance of the class A notes is 12.06% of the amount at issuance. The transaction paid down the class A notes by $116.6 million on the February 2006 payment date. As part of its analysis, Standard & Poor's will be reviewing the results of the current cash flow runs generated for NOVA CDO 2001 Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings assigned to the notes remain consistent with the credit enhancement available. Rating Placed on Creditwatch Positive NOVA CDO 2001 Ltd. Rating ------ Class To From Current balance ----- -- ---- --------------- B BBB/Watch Pos BBB $17,100,000 Ratings Affirmed NOVA CDO 2001 Ltd. Class Rating Current balance ----- ------ --------------- A AAA $28,590,000 C-1 CCC+ $3,500,000 C-2 CCC+ $9,700,000 Other Outstanding Ratings NOVA CDO 2001 Ltd. Class Rating Current balance ----- ------ --------------- D-1 CC $12,690,000 D-2 CC $4,270,000 OHIO CASUALTY: Good Performance Prompts S&P to Upgrade Ratings -------------------------------------------------------------- Standard & Poor's Rating Services raised its counterparty credit and senior debt ratings on Ohio Casualty Corp. (NASDAQ:OCAS), to 'BBB-' from 'BB+'. At the same time, Standard & Poor's raised its counterparty credit and financial strength ratings on the members of the Ohio Casualty Insurance Co. Intercompany Pool to 'A-' from 'BBB+'. The outlook is stable. "These rating actions are based on the group's continued strong operating performance, improved expense structure, very strong capitalization, stabilized loss reserve levels, strong interest coverage, low financial leverage, strong liquidity and cash flow, and the expectation that these favorable trends will continue," explained Standard & Poor's credit analyst Donovan Fraser. Offsetting these positive factors are: * an expense ratio that remains moderately higher than its industry peers; * continued underwriting challenges in segments of its core commercial lines division; and * negligible top-line growth. OCIP has addressed prior operating issues mostly by re-underwriting existing books of business, expense control improvements and culling unprofitable accounts. This has led to two consecutive years of underwriting profitability and the company's best operating performance in more than two decades. The trend continued through June 30, 2006, as the company reported a 97% combined ratio. These corrective actions led to negligible top-line growth during the rising tide of a hard market cycle. The company is now faced with the formidable task of maintaining underwriting discipline while increasing premium growth in a less favorable rate environment. Overall, Standard & Poor's believes that the company will continue to demonstrate modest growth while maintaining profitability in line with or better than industry results. The outlook is stable. The expense ratio is expected to decline to 30%, somewhat aided by moderate premium growth of less than 5% over the next 24 months. Standard & Poor's expects that OCIP should begin to reap the rewards of expense control and information technology initiatives to achieve this goal. In addition, the company's attention to loss control is expected to produce a combined ratio of 97% or less in 2006. Capitalization is expected to remain very strong and in excess of 160% (as measured by Standard & Poor's capital adequacy model) while aggregate reserve levels are expected to remain stable. Financial leverage is expected to remain modest and less than 20%, which we consider in line for the rating category. GAAP interest coverage is expected to remain extremely strong and more than 10x driven by continued underwriting profitability. ONEIDA LTD: Official Committee Hires Mesirow as Financial Advisors ------------------------------------------------------------------ The Official Committee of Unsecured Creditors in Oneida Ltd. and its debtor-affiliates' Chapter 11 case, obtained interim authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Mesirow Financial Consulting LLC, as its financial advisor. Mesirow Financial is expected to: a. assist in the review of reports and filings as required by the Court or the Office of the U.S. Trustee, including any filed schedules of assets and liabilities, statements of financial affairs and monthly operating reports; b. review the Debtors' financial information, including analyses of cash receipts and disbursements, financial statement items and proposed transactions for which Court approval is sought; c. review and analyse reports regarding cash collateral and any debtor-in-possession financing arrangements and budgets; d. evaluate potential employee retention and severance plans; e. assist with identifying and implementing potential cost containment opportunities; f. assist with identifying and implementing asset redeployment opportunities; g. analyse assumption and rejection issues regarding executory contracts and leases; h. review and analyse the Debtors' proposed business plan and the financial condition of the Debtors; i. assist in evaluating reorganization strategies and alternatives that may be presented to the creditors; j. review and give critiques concerning the Debtors' financial projections and assumptions; k. prepare enterprise, asset and liquidation valuations, as necessary; l. assist in preparing documents necessary for confirmation; m. advise and assist the Creditor's Committee in negotiations and meetings with the Debtors and the bank lenders; n. provide advice and assistance on the tax consequences of the proposed plan of reorganization that may be modified or amended; o. assist with any claims resolutions procedures, including analyses of the creditors' claims by type and entity; p. provide litigation consulting services and expert witness testimony regarding confirmation issues, avoidance actions or other matters; and q. provide other functions as requested by the Creditors Committee or its counsel. Larry H. Lattig, a senior managing director at Mesirow Financial, tells the Court that the Firm's professionals bill: Professional Hourly Rate ------------ ----------- Senior Managing Directors and $620 - $690 Managing Directors Senior Vice Presidents $530 - $590 Vice Presidents $430 - $490 Senior Associates $330 - $390 Associates $190 - $290 Paraprofessionals $150 Mr. Lattig assures the Court that the Firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. About Oneida Ltd. Headquartered in Oneida, New York, Oneida Ltd. (OTC: ONEI) -- http://www.oneida.com/-- manufactures stainless steel and silverplated flatware for both the Consumer and Foodservice industries, and supplies dinnerware to the foodservice industry. Oneida also supplies 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. ONEIDA LTD: Equity Committee Opposes Panel's Mesirow Employment --------------------------------------------------------------- The Honorable Judge Allan L. Gropper of the U.S. Bankruptcy Court for the Southern District of New York gave the Official Committee of Unsecured Creditors in Oneida Ltd. and its debtor-affiliates' Chapter 11 cases, interim authority to employ Mesirow Financial Consulting LLC, as its financial advisor. Mesirow Financial is expected primarily to assist in the review of the Debtors' reports, filings, and various financial information, and to provide consultation on other financial issues in the Debtors' cases. Objection to Mesirow's Employment Prior to the Court's interim order, the Equity Holders Committee objected to the Firm's employment, saying that the Creditor's Committee does not need a financial advisor to offer operational advice, since the cases do not involve any form of operational restructuring. The Committee also asserted that the Creditor's Committee does not need a financial advisor to assist in negotiating a plan of reorganization, since the Debtors' pre-negotiated plan contemplates full satisfaction of unsecured claims. The Creditor Committee, they purported, "seemed very supportive of the plan." The only reason why the Creditor's Committee would want to retain the Firm is to offer the testimony of yet another financial advisor in support of the pre-negotiated plan, the Equity Committee argued. The Equity Committee said that the estates should not bear the costs of another unnecessary duplication of effort. Creditor's Committee Response According to the Creditor's Committee, the Equity Holders Committee suggested in its objection that the proposed plan is a "fait accompli", and that the plan guarantees the creditors a full recovery, so much so that the Creditor's Committee has no need for the services of a financial advisor. The Creditor's Committee rebutted the argument, saying that plan confirmation and successful emergence are never assured. The Creditor's Committee also argued that the Equity Committee objection is a "litigation tactic aimed at precluding the Creditors Committee from offering any valuation testimony at the hearing on the confirmation of the Plan." The Creditor's Committee stressed that whatever economic solution that may be proposed, or assistance it can offer in brokering a settlement, will require the Creditor's Committee to be sufficiently informed based on the advice of its financial advisors. About Oneida Ltd. Headquartered in Oneida, New York, Oneida Ltd. (OTC: ONEI) -- http://www.oneida.com/-- manufactures stainless steel and silverplated flatware for both the consumer and foodservice industries, and supplies dinnerware to the foodservice industry. Oneida also supplies a variety of crystal, glassware and metal serveware for the tabletop industries. The Company and its eight 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. OWENS CORNING: To Merge Reinforcements Biz with Saint-Gobain's -------------------------------------------------------------- Owens Corning and Saint-Gobain Group are in discussions to merge Owens Corning's Reinforcements Business and Saint-Gobain's Reinforcement and Composites Businesses (a part of the entity known as Vetrotex) into a new company, to be called Owens Corning- Vetrotex Reinforcements. The partnership of these two businesses would establish a global company in reinforcements and composite fabrics products, with worldwide revenues of approximately $1.8 billion (EUR1.5 billion) and 10,000 employees. The new company would have operations across Europe, North and South America, and Asia, including the following key emerging markets: China, India, Russia, Mexico and Brazil. Saint-Gobain's Textile Solutions business, serving mainly construction markets, will remain part of Saint-Gobain's High Performance Materials Sector. Owens Corning's Veil Technologies and Fabwel businesses will remain part of the Owens Corning Composite Solutions Business. A Customer-Focused Enterprise Owens Corning-Vetrotex Reinforcements would bring together two pioneers in the reinforcements and composite fabrics industry, each with long histories of product innovation and customer focus. Owens Corning-Vetrotex Reinforcements would provide outstanding service to its customers as a result of improved geographic scale, an expanded product base and combined technological expertise. The new company would better serve both regional and global customer needs by taking advantage of new world-class technologies and innovative products, and improved logistics, productivity and supply efficiency. The new company and its customers would also benefit from access to greater financial and human resources. The new company would have a strengthened presence in both developed and emerging markets. This broad geographic presence would lead to more security of supply and reduced shipping time for current and future customers. Owens Corning-Vetrotex Reinforcements would participate more effectively in today's increasingly competitive marketplace. "This is an exciting opportunity for Owens Corning, our customers and our employees," said Dave Brown, President and Chief Executive Officer of Owens Corning. "It demonstrates our commitment to the composites business and our customers on every continent. We plan to combine the best of both companies, grow with our customers, and deliver strong operating results." "The combined company is an excellent project," Saint-Gobain Group President, Jean-Louis Beffa said. "It would enable us to better serve our customers and ensure a promising future for our Reinforcement and Composites business and its employees." Structure and Financial Impact While the parties have not yet reached a definitive agreement, it is anticipated that the transaction would be structured as a joint venture, with Owens Corning owning a 60% equity interest and Saint-Gobain owning the remaining 40%. After a minimum of four years, the joint venture provisions would give an option to Saint- Gobain to sell its 40% stake to Owens Corning, and Owens Corning to buy the same. On a pro forma basis, the new company would have approximately $1.8 billion (EUR1.5 billion) in annual revenues. The Owens Corning-Saint-Gobain joint venture would present significant opportunities for synergies. These are expected to come primarily from scale benefits in purchasing and procurement; operational and technological plant improvements; improved distribution costs; reduced administrative costs; and asset management optimization. The transaction is expected to close by early 2007 and is subject to the negotiation and execution of definitive transaction documents, Board of Directors approval by the parent companies, and regulatory and antitrust approvals. Leadership and Operations Owens Corning-Vetrotex Reinforcements would be headquartered in Toledo, Ohio, and would maintain leadership offices in key locations around the world. The Board of Directors for the new company would be comprised of three representatives from Owens Corning and two from Saint-Gobain. The Chief Executive Officer of Owens Corning-Vetrotex Reinforcements would be Chuck Dana, currently President of Owens Corning's Composite Solutions Business. The new organization would be managed by an executive management team comprised of key leaders from Owens Corning and Vetrotex. About Saint-Gobain Headquartered in Paris, France, Saint-Gobain Group -- http://www.saint-gobain.com/-- specializes in the design, production and distribution of functional materials for the construction, industrial and consumer markets. The Group is organized into five business sectors: Flat Glass, Packaging, Construction Products, Building Materials Distribution, and High- Performance Materials. About Owens Corning 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. PARMALAT GROUP: Files EUR5.6 Billion Suit Against Graubundner ------------------------------------------------------------- Following the conclusion on March 3, 2006, of preliminary investigations by the Procura della Repubblica di Parma into several financial transactions organised by Bank of America for Parmalat Group between 1999 and 2003, Parmalat S.p.A. and Parmalat S.p.A. in Extraordinary Administration have together filed a lawsuit with the Tribunale di Parma against Graubundner Kantonalbank, the Coira, Switzerland based bank and Nino Giuralarocca. The latter is a former officer of GKB and is already under investigation by the Procura Federale Svizzera. The Company's lawsuit alleges complicity between GKB and Mr. Giuralarocca with Bank of America and former Parmalat Group directors and officers in arranging and managing complex financial transactions that allowed the former Parmalat Group artificially to continue trading from at least 2001. The lawsuit seeks compensation for damages in the amount of at least EUR5,674,000,000 as well as the return of $10,796,161. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 74; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLIANT CORP: Wants Ex-CEO's $11.74 Mil. Unsec. Claim Disallowed --------------------------------------------------------------- Pliant Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to disallow Richard P. Durham's unsecured non-priority claim for $11,747,513, in its entirety pursuant to Section 502(b) of the Bankruptcy Code and Rules 3001 and 3007 of the Federal Rules of Bankruptcy Procedure. From 1997 to 2000, Mr. Durham acted as the president and chief executive officer of Huntsman Packaging Corporation, now known as Pliant Corporation. When HPC effectuated a recapitalization in the spring of 2000, Mr. Durham entered into an employment agreement, a stockholder's agreement, a restricted stock purchase agreement, and a pledge agreement with HPC. In connection with the recapitalization, Mr. Durham and Durham Capital, L.L.C., acquired 28,289 shares of HPC common stock. As a result, Mr. Durham remained a significant stockholder in HPC, owning approximately 5% of its common stock. Pursuant to Durham Employment Agreement, the Durham Parties were granted the right to ask HPC to repurchase Capital Stock they owned under certain circumstances. On October 9, 2000, HPC changed its name to Pliant Corporation. In June 2002, Pliant and Mr. Durham entered into a Separation Agreement, which, among other things: (a) provides for Mr. Durham's right to ask Pliant to repurchase Capital Stock; and (b) specifies the price to be paid by Pliant in connection with any repurchase of Capital Stock: * in respect of Common Stock -- $483.13; * in respect of warrants for Common Stock -- $483.13 less any exercise price; and * in respect of shares of Preferred Stock -- the Series A Liquidation Amount. Specifically, the Separation Agreement called for the Durham Parties to sell 9,677 unvested shares of restricted common stock to a person designated by Pliant, leaving the Durham Parties with 4,833 vested shares of restricted common stock. The Separation Agreement also called for: * a secured promissory note in the principal amount of $7,005,389 issued in connection with original purchase of the 14,500 shares to be retired; and * two new promissory notes to be issued -- one in the principal amount of $4,862,100 and one in the principal amount of $2,430,798. On July 9, 2002, Mr. Durham asked Pliant to repurchase: (a) 28,289 shares of Pliant's common stock; (b) 1,232 shares of Pliant's Series A Cumulative Exchangeable Redeemable Preferred Stock; and (c) warrants for 1,250.48 shares of Pliant's common stock. On October 3, 2002, Pliant repurchased 8,204 shares of common stock and 9,667 unvested shares of restricted stock from the Durham Parties. Pliant then cancelled two promissory notes -- one for $1,573,400 and another for $4,862,100 -- issued by Mr. Durham, and made a $2,325,625 cash payment to the Durham Parties. After the transaction, the Durham Parties held 4,833 shares of vested restricted stock, in respect of which Pliant held a promissory note in the principal amount of $2,430,798. On December 31, 2002, Pliant repurchased 1,885 additional shares of common stock from the Durham Parties for $910,700. As of the Petition Date, the Durham Parties owned: (a) 18,200 shares of common stock in Pliant; (b) warrants for the purchase of 1,250.48 shares of common stock; (c) 1,232 shares of Series A Preferred Stock; and (d) 4,833 shares of common stock originally acquired pursuant to the Restricted Stock Purchase Agreement. Durham's Claim Mr. Durham's Claim is based on damages arising from Pliant's failure to repurchase certain of the Durham Parties' common stock, preferred stock and warrants. Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, argues that the Durham Claim does not assert a "claim" within the meaning of Section 101(5) of the Bankruptcy Code. Mr. Brady contends that the Durham Parties do not have an enforceable "right to payment" because under the Employment Agreement and the Separation Agreement, any "repurchase" of the Durham Put Shares was always conditioned on the repurchase being permissible under the financing and other restrictive covenants applicable to Pliant. "In 2003 and thereafter, however, [Pliant's] financing and other restricted covenants never permitted the repurchase of the Durham Put Shares." Because the provisions of the Employment Agreement and the Separation Agreement relief upon by the Durham Parties embody only a right to request purchase or repurchase, they only constitute an "equity security" within the meaning of Section 101(16)(C), Mr. Brady adds. In the event the Court determines that the Durham Claim constitutes a "claim" within the meaning of the Bankruptcy Code, Pliant asks Judge Walrath to subordinate the Durham Claim because it is a claim for damages arising out of the purchase or sale of securities. Thus, the Durham Claim is subject to the mandatory subordination provisions of Section 510(b). Mr. Brady adds that the Durham Claim should be subordinated because both before and after the issuance of the Repurchase Notice, the Durham Parties did not take any steps to divest themselves of any indicia of ownership of the Durham Put Shares and participated in the business of Pliant. In the event the Court determines that the Durham Claim represents an unsubordinated claim for $11,747,513 or less, Pliant asks the Court to avoid the transfer, which took place when it repurchased some of the securities held by the Durham Parties. Mr. Brady contends that becoming obligated to pay the Durham Parties the price specified in the Separation Agreement constituted a transfer of the Debtor's property, which was made: (a) within four years of the Petition Date; (b) without receiving a reasonably equivalent value in exchange for the transfer; (c) at a time when Pliant: -- had assets that were less than its total liabilities; -- was engaged or was about to engage in a business or a transaction for which its remaining assets were unreasonably small in relation to the business or transaction; -- intended to incur, or believed or reasonably should have believed that it would incur, debts beyond its ability to pay as they became due; or -- was insolvent. Pursuant to Section 544 of the Bankruptcy Code and applicable law, the transfer may be avoided as a fraudulent transfer, Mr. Brady argues. Pursuant to Section 550(a) of the Bankruptcy Code, Pliant may avoid the transfer and recover the amount of the transfer from the Durham Parties. In the event the Court determines that the Durham Parties are entitled to recovery under the Durham Claim, Pliant asks the Court to allow it to effect a set-off based on: (a) the fraudulent transfer, which took place in 2002, in violation of Sections 25-6-5(1)(b) and 25-6-6 of the Utah Code, and Sections 544 and 546 of the Bankruptcy Code, when Pliant repurchased some of the Repurchase Notice securities in October and December 2002 -- this set-off should be in the amount of $4,809,724 minus the reasonably equivalent value of the Repurchase Notice securities transferred by the Durham Parties to Pliant; and (b) the Promissory Note -- this set-off should be in the amount of $2,325,624. Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006 (Pliant Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLIANT CORP: Gets Court OK to Assume Around 400 Contracts & Leases ------------------------------------------------------------------ The Honorable Mary K. Walrath of the U.S. Bankruptcy Court for the District of Delaware authorizes Pliant Corp. and its debtor- affiliates to assume close to 400 executory contracts and unexpired leases pursuant to Section 365(a) of the Bankruptcy Code. Judge Walrath adjourns the determination of the cure amounts owed to Federal Express Corporation, Caterpillar Financial Services Corporation and Winthrop Resources Corporation to a later date. With respect to each non-debtor party to each Assumed Contract and Assumed Lease who failed to timely file an Assumption Objection: (i) the Debtors will be authorized to assume, if and as applicable, the Assumed Contract or Assumed Lease upon the payment of the Cure Amount and the occurrence of the Assumption Effective Date; (ii) the Cure Amount is fixed, subject to any payments the Debtors may have made prior to the Assumption Effective Date, notwithstanding anything to the contrary in any Assumed Contract or Assumed Lease, proof of claim, whether formal or informal, or any other document and instrument; and (iii) the counterparty to the Assumed Contract or Assumed Lease will forever be barred from asserting any claims arising on or before the Assumption Effective Date against the Debtors, the Reorganized Debtors, or their successors or assigns, with respect to the Assumed Contract or Assumed Lease. A 29-page list of the Assumed Contracts and Leases is available for free at http://ResearchArchives.com/t/s?e71 Headquartered in Schaumburg, Illinois, Pliant Corporation -- http://www.pliantcorp.com/-- produces value-added film and flexible packaging products for personal care, medical, food, industrial and agricultural markets. The Debtor and 10 of its affiliates filed for chapter 11 protection on Jan. 3, 2006 (Bankr. D. Del. Lead Case No. 06-10001). James F. Conlan, Esq., at Sidley Austin LLP, and Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. The Debtors tapped McMillan Binch Mendelsohn LLP, as their Canadian bankruptcy counsel. The Ontario Superior Court of Justice named RSM Richter, Inc., as the Debtors' information officer in their restructuring proceeding under Companies Creditors Arrangement Act in Canada. Kenneth A. Rosen, Esq., at Lowenstein Sandler, P.C., serves as counsel to the Official Committee of Unsecured Creditors. Don A. Beskrone, Esq., at Ashby & Geddes, P.A., is local counsel to the Creditors' Committee. As of Sept. 30, 2005, the company had $604,275,000 in total assets and $1,197,438,000 in total debts. The Debtors emerged from chapter 11 protection on July 19, 2006 (Pliant Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 215/945-7000) PNA GROUP: S&P Rates Proposed $250 Million Senior Notes at B- ------------------------------------------------------------- Standard & Poor's Rating Services assigned its 'B+' corporate credit rating to steel processor and distributor PNA Group Inc. At the same time, Standard & Poor's assigned its 'B-' rating to the company's proposed $250 million senior unsecured notes. The outlook is stable. The rating on the senior unsecured notes is two notches below the corporate credit rating, recognizing the existence of priority claims, including the senior secured revolving credit facility, which could result in a material disadvantage to unsecured creditors in the event of a default. Total debt pro forma for the transaction, including present value of capitalized operating leases, tax-adjusted pension and employee benefits, and a seller note held by the parent, is $377 million at March 31, 2006. Proceeds from the unsecured notes will be used to refinance debt, including debt for the May 2006 acquisition of unrated Metals Supply Co. Ltd. Atlanta, Georgia-based PNA is a moderate-size distributor and processor of mainly flat and structural carbon steel products. The company's 23 service centers and 12 joint ventures cater to geographical niches in a freight-intensive commodity market. "Meaningful acquisitions and dividends are not factored into the rating," said Standard & Poor's credit analyst Paul Kurias. "We expect operational cash flows to decline in the near term, from their Dec. 31, 2005, historical high levels. We could lower ratings if a downturn in markets results in a significant decline in margins, cash flow generation, or an increase in debt levels. The rating is capped by the business profile." PRINTERA CORP: Sec. Creditors Get Assets; Unsec. Lenders Get None ----------------------------------------------------------------- Printera Corporation has been served with Notice Of Intention to Enforce Security under section 244 of the Bankruptcy and Insolvency Act (Canada) and Notice of Intention to Dispose of Collateral under section 63 of the Personal Property Security Act (Ontario) on Monday, July 24, 2006 by the Peoples Bank of Stamford, Connecticut as a result of its default in payment of its secured obligations to the Peoples Bank. Printera Corporation is of the view that the proceeds of disposition of the secured collateral are unlikely to be sufficient to repay the indebtedness of Printera Corporation to the Peoples Bank in full. As a result, there will not be any recovery available to unsecured creditors or shareholders. Headquartered in Toronto, Ontario, Printera Corporation -- http://www.printera.com/-- produces custom labels focusing on the beverage and food industries. At Dec. 31, 2005, the Company's balance sheet showed a stockholders' deficit of CDN$13,684,000, compared to a CDN$13,213,000 at Sept. 30, 2005. PROGRESS ENERGY: Sells Natural Gas Plants to EXCO for $1.2 Billion ------------------------------------------------------------------ Progress Energy (NYSE: PGN) sold its Winchester Energy and associated natural gas businesses to Texas-based EXCO Resources, Inc., $1.2 billion in cash. There is essentially no debt at Winchester Energy; therefore, proceeds from the sale will be available to reduce holding company debt and for other corporate purposes. The transaction is expected to close in fall 2006 and is subject to customary closing provisions and adjustments. "We view this strategic action as very positive for Progress Energy," said Bob McGehee, chairman and CEO, Progress Energy. "The Winchester Energy and Progress Ventures team have successfully grown this business in recent years. Over the past year, we have explored several alternatives to extract value from this business and have decided that a full exit at this opportune time is the right choice." "When combined with our previously announced sale of nonregulated assets, this will strengthen our balance sheet and significantly reduce the overall risk profile of the company," said Mr. McGehee. So far in 2006, the company has announced divestitures totaling over $1.7 billion, all of which are expected to close before the end of this year. These divestitures are part of the company's previously announced commitment to lower holding company debt by $1.3 billion by the end of 2007. As a result of this transaction, Progress Energy expects to record a one- time after-tax gain of approximately $400 million, or $1.60 per share, in the third quarter of 2006. After-tax cash proceeds are expected to be approximately $850 million. Accounting standards require the reclassification of earnings from this natural gas business from continuing to discontinued operations in the third quarter. This will negatively impact expected core ongoing earnings for 2006. The company expects that a portion of this impact will be offset by interest savings due to the use of the proceeds for debt reduction purposes. "While we are very pleased with the results of this transaction, we recognize that on a stand-alone basis it has a negative impact on core ongoing earnings of approximately $90 million for the full year 2006," said Mr. McGehee. "However, it represents one more step in the overall plan for the company, and we are currently pursuing other strategic alternatives that would potentially offset a significant portion of this core ongoing earnings negativity. We anticipate that our 2006 core ongoing earnings will remain in the previously announced range of $2.45 to $2.65 per share, assuming sufficient progress on additional strategic alternatives this year." "When looking forward to 2007, the company anticipates that core ongoing earnings will benefit significantly from a full year of interest savings as well as from the recurring effects of previously announced sales and expected additional strategic alternatives," said Mr. McGehee. Headquartered in Raleigh, North Carolina, Progress Energy -- http://www.progress-energy.com-- is an energy company with more than 24,000 megawatts of generation capacity and $10 billion in annual revenues. The company's holdings include two electric utilities serving approximately 3 million customers in North Carolina, South Carolina and Florida. The Company also includes non-regulated operations covering energy marketing and natural gas exploration. * * * Progress Energy's 9-1/8% Senior Subordinated Notes Maturing 2001 carry Moody's Investors Service Ba2 rating and S&P BB rating. PTC ALLIANCE: Closes $70 Million Black Diamond Exit Financing ------------------------------------------------------------- Black Diamond Commercial Finance, L.L.C., provided a $70 million senior secured credit facility for PTC Alliance Corp., which emerged from Chapter 11 on July 25, 2006. The $70 million credit facility will be used to refinance its existing Debtor-In-Possession credit facility, pay bankruptcy and emergence related fees and expenses, and will fund the Company's operations upon emergence from Chapter 11. "We are very pleased to have collaborated with Black Diamond Commercial Finance during this important phase in our company's development," Peter Whiting, Chairman and Chief Executive Officer of PTC Alliance said. "They have been very responsive to our needs as we have worked to complete our pre-packaged Chapter 11 filing in record time." "We are impressed with the senior management team's ability to effectuate a confirmed Plan of Reorganization in such an expedited timeframe," Stuart Armstrong, President and CEO of Black Diamond Commercial Finance, said. "We look forward to continuing to build this relationship and to provide PTC Alliance with the capital required to execute their business plan." About Black Diamond Based in Stamford, Connecticut, Black Diamond Commercial Finance is an independent commercial finance company that provides capital and financial solutions to the corporate market. BDCF's products include first lien term loans, revolving lines of credit, rescue and restructuring capital, acquisition and bridge loan financings. BDCF provides financings in most industries including healthcare, transportation, real estate, media/broadcasting, energy, gaming, telecom, consumer products and general manufacturing. About PTC Alliance Corp. Headquartered in Wexford, Pennsylvania, PTC Alliance Corp. -- http://www.ptcalliance.com/-- manufactures and markets welded and cold drawn mechanical steel tubing and tubular shapes, chrome plated bar products, fabricated parts, and precision components. The company filed for chapter 11 protection on May 10, 2006 (Bankr. W.D. Pa. Case No. 06-22110). Eric A. Schaffer, Esq., at Reed Smith LLP, represents the Debtor 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 of more than $100 million. PUBLICARD INC: Appoints Joseph Sarachek as Chief Executive Officer ------------------------------------------------------------------ The Board of Directors of PubliCARD, Inc., appointed Joseph Sarachek, Esq., as its next Chief Executive Officer effective July 31, 2006. He succeeds Tony DeLise, who is leaving PubliCARD to pursue other opportunities. Mr. Sarachek has also been elected to the Company's Board of Directors. Mr. Sarachek, 44, is the Managing Director and founder of Triax Capital Advisors, LLC, a restructuring advisory firm. Mr. Sarachek is also an attorney and formerly practiced corporate and bankruptcy law at McDermott, Will & Emery and Kelley Drye & Warren. About PubliCARD, Inc. Headquartered in New York City, PubliCARD, Inc. (OTC BB:CARD.OB) -- http://www.publicard.com/-- through its Infineer Ltd. subsidiary, designs smart card solutions for educational and corporate sites. Going Concern Doubt Deloitte & Touche LLP, expressed doubt about PubliCARD, Inc.'s 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, a substantial decline in working capital and negative cash flows from operations, and requires additional capital to meet its obligations at Dec. 31, 2005. RELIANT ENERGY: Soliciting Consents from Note and Bond Holders -------------------------------------------------------------- Reliant Energy, Inc. is soliciting consents from all holders of: i) three series of its outstanding Senior Secured Notes: * 9.25% Senior Secured Notes due 2010 (CUSIP No. 75952BAF2); * 9.50% Senior Secured Notes due 2013 (CUSIP No. 75952BAJ4); * 6.75% Senior Secured Notes due 2014 (CUSIP No. 75952BAM7). ii) five series of Pennsylvania Economic Development Financing Authority's outstanding Exempt Facilities Revenue Bonds (Reliant Energy Seward, LLC Project): * Series 2001A (CUSIP No. 708686BJ8); * Series 2002A (CUSIP No. 708686BM1); * Series 2002B (CUSIP No. 708686BN9); * Series 2003A (CUSIP No. 708686BK5); and * Series 2004A (CUSIP No. 708686BL3). The consents are being solicited with respect to proposed amendments to the Indentures governing the Notes and the Guarantee Agreements governing Reliant Energy's guarantees of the Bonds. Reliant Energy is currently negotiating to enter into a new retail credit structure. The primary purpose of the consent solicitation is to amend the Indentures and the Guarantee Agreements to permit Reliant Energy to enter into the new retail credit structure. The new retail credit structure is intended to substantially eliminate collateral postings and reduce liquidity requirements associated with procuring supply for Reliant Energy's retail energy business. If consummated, the new retail credit structure will include: (1) a credit support agreement pursuant to which the credit support provider will agree to provide guarantees on behalf of Reliant Energy's retail energy business and post collateral to counterparties in supply transactions related to the retail energy business, and (2) a credit facility to finance the working capital needs of the retail energy business, each of which will be secured on a first lien basis by the assets of the retail energy business. The proposed amendments to the Indentures and the Guarantees would: (1) amend the restrictions on liens and indebtedness in the Indentures and the Guarantee Agreements to permit the liens contemplated by the credit support agreement and the new working capital credit facility and to permit the indebtedness associated with the new working capital credit facility; (2) amend the restrictions in the Indentures and the Guarantee Agreements on limitations on distributions by Reliant Energy's subsidiaries to permit restrictions on the ability of the retail energy business to upstream money to Reliant Energy; and (3) make certain other technical amendments to the Indentures and the Guarantee Agreements to permit the new retail credit structure. In addition to amendments relating to the new retail credit structure, the proposed amendments would conform the definition of "Significant Subsidiary" in the Indentures relating to the 9.25% Senior Secured Notes due 2010 and the 9.50% Senior Secured Notes due 2013 to the definition of this term in the Indenture relating to the 6.75% Senior Secured Notes due 2014 and in the Guarantee Agreements. The Consent Solicitation is being made to all persons in whose name a Note or Bond is registered on July 25, 2006. The solicitation will expire at 5:00 p.m., New York City time, on Thursday, Aug. 3, 2006, unless extended or terminated by Reliant Energy. For the proposed amendments to be approved with respect to any series of Notes or Bonds, holders of record must grant (and not revoke) valid consents in respect of a majority in aggregate principal amount of all outstanding Notes or Bonds of such series. Holders of Notes or Bonds will be able to revoke their consents as to any series of Notes or Bonds until the time and date on which Reliant Energy announces that the requisite consent to approve the amendments has been achieved for such series of Notes or Bonds. Promptly after the expiration of the consent solicitation and the satisfaction or waiver of all conditions to the consent applicable to a series of Notes or Bonds, the Company will cause to be paid to each holder of Notes or Bonds of such series who has delivered (and has not revoked) a valid consent prior to the expiration of the consent solicitation a cash consent fee of $1.25 for each $1,000 in principal amount of Notes or Bonds in respect of which such consent has been delivered. The detailed terms and conditions of the consent solicitation are contained in a consent solicitation statement dated July 26, 2006. Goldman, Sachs & Co. will act as Solicitation Agent for the consent solicitation. Global Bondholder Services Corporation will act as the Information Agent. Requests for documents may be directed to: Global Bondholder Services Corporation Telephone (212) 430-3374 Toll Free (866) 873-6300 Questions regarding the consent solicitation may be directed to: Goldman, Sachs & Co. Telephone (212) 902-0041 Toll Free (800) 828-3182 Headquartered in Houston, Texas, Reliant Energy, Inc. (NYSE: RRI) -- http://www.reliant.com/-- provides electricity and energy services to retail and wholesale customers in the United States. In Texas, the company provides service to 1.9 million retail electricity customers, including residential and small business customers and commercial, industrial, governmental and institutional customers. Reliant also serves commercial, industrial, governmental and institutional customers in the PJM (Pennsylvania, New Jersey and Maryland) market. * * * As reported in the Troubled Company Reporter on March 23, 2006, Fitch Ratings revised the Rating Outlook assigned to Reliant Energy, Inc.'s outstanding debt obligations to Negative from Stable. Fitch currently rates the Company's Issuer Default Rating at 'B'; Senior secured debt at 'BB-/RR2'; and Senior subordinated convertible notes at 'B/RR4'. As reported in the Troubled Company Reporter on March 20, 2006, Standard & Poor's Ratings Services lowered its corporate credit ratings on electricity provider Reliant Energy Inc. and two of Reliant's subsidiaries, Reliant Energy Mid-Atlantic Power Holdings LLC, and Orion Power Holdings Inc., to 'B' from 'B+'. In addition, Orion Power's senior unsecured rating was lowered to 'B-' from 'B' and the rating on Reliant's convertible issue was lowered to 'CCC+' from 'B-'. Standard & Poor's also lowered its short-term rating to 'B-3' from 'B-2'. The ratings were removed from CreditWatch with negative implications, where they were placed on Nov. 4, 2005. At the same time, Standard & Poor's affirmed its '3' recovery rating on all of Reliant's senior secured debt. The outlook is negative. As reported in the Troubled Company Reporter on March 16, 2006, Moody's Investors Service downgraded the ratings of Reliant Energy, Inc., and its primary rated subsidiaries, Orion Power Holdings and Reliant Energy Mid-Atlantic Power Holdings. Reliant Energy's senior implied, corporate family and senior secured ratings have been downgraded to B2 from B1, and its senior subordinated convertible notes have been downgraded to Caa1 from B3. Orion Power Holdings' senior unsecured rating has been downgraded to B3 from B2 and REMA's semior secured pass-through certificates have been downgraded to B2 from B1. The ratings for Reliant, OPH and REMA are on review for possible further downgrade. RENATA RESORT: Hires Kerrigan & Merritt as Tax Accountants ---------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Florida in Panama City gave Renata Resort LLC permission to employ Kerrigan & Merritt, LLC, as its tax accountants. As reported in the Troubled Company Reporter on July 3, 2006, Kerrigan & Merritt will: a. prepare and review federal and state corporate income tax returns and supporting schedules together with any loss carryback returns that may be necessary; b. provide tax advisory services in connection with the completion of a loss carry back claim and related tax research and consultation; c. provide tax consulting services relative to any existing or future IRS, state and local examinations; d. provide accounting support related to tax advisory services; e. provide any other tax advice and assistance as may be requested from time to time by the Debtor; and f. assist the Debtor in addressing issues and in discussions with existing lenders in connection with maintaining ongoing financing of the Debtor's operations; The Debtor told the Court that Tom Merritt and Diane Kerrigan will be the lead professional in this engagement. Mr. Merritt and Ms. Kerrigan both bill at $250 per hour. Mr. Merritt, a partner at Kerrigan & Merritt, assured the Court that his firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Headquartered in Panama City, Florida, Renata Resort, LLC, fdba Sunset Pier Resort, LLC, operates a hotel and resort. The company filed for chapter 11 protection on May 31, 2006 (Bankr. N.D. Fla. Case No. 06-50114). John E. Venn, Jr., Esq., at John E. Venn, Jr., P.A., represents the Debtor in its restrucutring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $19,947,271 and total debts of $8,524,196. RENATA RESORT: Gets Court OK to Hire Chiron as Financial Advisor ---------------------------------------------------------------- Renata Resort LLC obtained authority from the U.S. Bankruptcy Court for the Northern District of Florida in Panama City to employ Jay H. Krasoff and Chiron Financial Group Inc. as its financial advisors. Chiron Financial is expected to: a) review and analyze the financial and operating statements of the Debtor; b) evaluate the assets and liabilities of the Debtor; c) review and analyze the Debtor's business and financial projections; d) evaluate the Debtor's debt capacity in light of its projected cash flows; e) assist in the determination of an appropriate capital structure; f) render financial advice to the Debtor and participate in meetings or negotiations with the Debtor and other stakeholders in connections with any restructuring, modification or refinancing of the Debtor's existing debt obligations; g) analyze payments made to unsecured creditors prior to and during the Debtor's chapter 11 proceedings; h) advise the Debtor on the timing, nature and terms of new securities, other consideration or other inducements to be offered pursuant to the restructuring relating to the Chapter 11 case; i) assist the Debtor in preparing documentation required in connection with the restructuring of the existing debt obligations; j) determine a theoretical range of values for the Debtor on an ongoing basis; k) advise and assist the Debtor in negotiations with potential acquirers of the Debtor's or investors in the Debtor's limited liability corporation; l) evaluate the sales process for some of the Debtor's assets; m) assist the Debtor in analyzing issues with respect to preparing a plan of reorganization; n) provide testimony, as necessary, in any proceeding before the Bankruptcy Court; and o) provide the Debtor with other appropriate general restructuring advice. Mr. Krasoff tells the Court that, as compensation, he and the other members of Chiron Financial will receive: 1. a $50,000 retainer; 2. a fee of 2% for any interim loan secured by the real estate at issue. If a term sheet is procured for DIP financing and it is subsequently used as a stalking horse for a sale, and is not closed, Chiron will earn a fee of 1% of the value of the term sheet procured by Chiron. If Chiron places an exit facility for a construction loan of $65 million or greater, one-half of the fee will be credited back to the Debtor; 3. a placement fee equal to: a) 1.0% of the aggregate commitment amount of any senior debt or revolving debt financing, payable in cash at the closing of a transaction; b) 3.0% of the aggregate commitment amount of subordinated debt financing, payable in cash at the closing of a transaction; but in the event the subordinate debt financing is procured from a source identified by or previously known to the Debtor then only 2% of the aggregate commitment amount will be payable to Chiron at closing; c) 4.0% of the gross proceeds raised in any offering of equity securities in a private placement, payable in cash at the closing of each placement of securities, whether through one or multiple tranches; d) 2.0% of the gross proceeds raised in any offering of equity securities in a private placement which is secured by Tom S. Murphree, payable in cash at the closing of each placement of Securities, whether through one or multiple tranches; If Chiron facilitates a placement that allows the Debtor or Mr. Murphree to retain a controlling interest with respect to the development of the condominium, or provides a plan of reorganization in bankruptcy which is supported by the members or management of Renata, then Chiron will be paid an additional sum of $100,000 above the placement fee percentages. 4. an alternative transaction fee, if all or a portion of the Debtor's land is sold or there is a material change of control, equal to 2.0% of the total amount of the implied value of the consideration received by Renata or its shareholders, warrant holders and stock option holders in any of the transaction which occurs during or within six months during Chiron's engagement, and with a minimum fee of $150,000 to be paid to Chiron upon closing of the transaction; 5. a 3/4 of the fees with respect to any real estate loan, DIP loan or senior debt, should the Debtor consummate a transaction with any financing source, using Chiron's services; 6. an expert fee at a rate of $3,000 per day if an expert assistance through testimony at deposition or in court, or attendance at mediation is provide by the Firm to the Debtor. Mr. Krasoff assures the Court that he and Chiron Financial do not hold any interest adverse to the Debtor and are "disinterested" as the term is defined in Sec. 101(14) of the Bankruptcy Code. Headquartered in Panama City, Florida, Renata Resort, LLC, fdba Sunset Pier Resort, LLC, operates a hotel and resort. The company filed for chapter 11 protection on May 31, 2006 (Bankr. N.D. Fla. Case No. 06-50114). John E. Venn, Jr., Esq., at John E. Venn, Jr., P.A., represents the Debtor in its restrucutring efforts. No Official Committee of Unsecured Creditors has been appointed in the Debtor's case. When the Debtor filed for protection from its creditors, it listed total assets of $19,947,271 and total debts of $8,524,196. RESI FINANCE: Fitch Lifts Ratings on Five Class Certificates ------------------------------------------------------------ Fitch has taken rating action on these mortgage pass-through certificates from RESI Finance Limited Partnership series 2004-A: -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA+' ; -- Class B-2 upgraded to 'AA' from 'AA-' ; -- Class B-3 upgraded to 'A+' from 'A'; -- Class B-4 upgraded to from 'A' from 'A-' ; -- Class B-5 upgraded to 'A-' from 'BBB+'; -- Class B-6 upgraded to 'BBB' from 'BBB-'; -- Class B-7 upgraded to 'BB+' from 'BB'; -- Class B-8 upgraded to 'BB' from 'BB-'; -- Class B-9 upgraded to 'BB-' from 'B+'; -- Class B-10 upgraded to 'B+' from 'B'; -- Class B-11 upgraded to 'B' from 'B-'. The collateral in the transaction consists of three groups of adjustable interest rate, fully amortizing loans, secured by first and second liens on one- to four-family residential properties. Approximately 61.36%, 70.44%, and 57.05% of the group 1, 2 and 3 mortgage loans, respectively, were originated under the Accelerated Processing Programs. Loans in the Accelerated Processing Program (which include, among others, the All-Ready Home and Rate Reduction Refinance programs) are subject to less stringent documentation requirements. Bank of America Mortgage Securities, Inc. originated and deposited the loans in the trust. Bank of America Mortgage Securities, Inc. is also the servicer for the transaction, and is currently rated 'RPS1' by Fitch. The affirmation reflects a stable relationship between credit enhancement and future expected losses, and affects approximately $5.90 billion in outstanding certificates. The upgrades reflect an improvement in the relationship between credit enhancement and future expected losses, and affect approximately $333.06 million in outstanding certificates. The transaction is currently 27 months seasoned, and has a pool factor (current collateral balance as a percentage of initial) of approximately 48%. The credit enhancement for all classes has at least doubled since issuance. The trust has only experienced $21,926 in cumulative losses, and currently has 29 basis points worth of collateral that is considered delinquent. RESIDENTIAL ASSET: Fitch Junks Rating on Two Class Certificates --------------------------------------------------------------- Fitch Ratings has taken rating actions on these Residential Asset Securities Corporation's home equity loan transactions: RASC, series 2001-KS2 Group 1: -- Class A-I-5 affirmed at 'AAA'; -- Class A-I-6 affirmed at 'AAA'; -- Class M-I-1 downgraded to 'A-' from 'AA-'; -- Class M-I-2 downgraded to 'BBB' from 'A-'; -- Class M-I-3 downgraded to 'CC' from 'B' and assigned distressed recovery rating of 'DR4'. RASC, series 2001-KS2 Group 2: -- Class A-II affirmed at 'AAA'; -- Class M-II-1 affirmed at 'AAA'; -- Class M-II-2 affirmed at 'A'; -- Class M-II-3 affirmed at 'BBB'. RASC, series 2001-KS3 Group 1: -- Class A-I-5 affirmed at 'AAA'; -- Class A-I-6 affirmed at 'AAA'; -- Class M-I-1 downgraded to 'A-' from 'AA-'; -- Class M-I-2 downgraded to 'BBB' from 'A-'; -- Class M-I-3 downgraded to 'CCC' from 'B' and assigned distressed recovery rating of 'DR2'. RASC, series 2001-KS3 Group 2: -- Class A-II affirmed at 'AAA'; -- Class M-II-1 affirmed at 'AA'; -- Class M-II-2 downgraded to 'BBB' from 'A'; -- Class M-II-3 downgraded to 'BB' from 'BBB'. The affirmations of the above classes ($324,409,532 in aggregate), reflect credit enhancement consistent with future loss expectations. The downgrades affect about $61,218,534 of outstanding certificates and reflect potential negative impact of loan performance issues on these bonds. The collateral in these deals consists of fixed rate and adjustable rate one- to four-family residential mortgage loans secured by first and second liens. Certain first lien loans with original loan-to-value ratios greater than 65% were insured by a mortgage insurance policy from PMI Mortgage Insurance Co. These loans were sold by Residential Funding Corporation to Residential Asset Securities Corporation (RASC), the depositor. The loans are primarily serviced by Homecomings Financial Network, Inc which is rated 'RPS1', Rating Watch Evolving by Fitch. The master servicer for these loans is Residential Funding Corporation (rated 'RMS1', Rating Watch Evolving by Fitch). Series 2001-KS2 Group 1: The monthly excess interest has averaged approximately $283,936 during the past six months and the monthly losses have averaged $486,516 during the same period. This has resulted in an average monthly reduction of approximately $202,580 to the available credit support. This loss has been somewhat mitigated by the fact that some of the excess spread from Group 2 is available to cover losses for this group. This transaction is structured so that excess spread is crossed between the two groups. This means that any excess spread available from Group 2 after the Group 2 losses have been covered, goes to cover losses occurring in Group 1. The 60+ delinquencies have averaged 24.23% of the current pool balances during this period. As of the June 26, 2006 distribution date, the overcollateralization was $1,346,018 with a target of $4,500,000. The pool factor (loan principal outstanding as a percentage of the loan principal at closing) currently stands at 14%. Series 2001-KS2 Group 2: As of the June 26, 2006 distribution date, the OC was $2,572,262, with a target of $3,125,000. The pool factor currently stands at 8%. As discussed in the previous section, excess spread from Group 2 is available to offset losses incurred in Group 1 after Group 2 losses have been accounted for. This support occurs before such monies can be used to fund Group 2's OC to its required level. Therefore, despite the ongoing generation of positive net excess spread, Group 2's OC remains below its target level. Series 2001-KS3 Group 1: The monthly excess interest has averaged approximately $340,974 during the past six months and the monthly losses have averaged $561,707 during the same period. This has resulted in an average monthly reduction of approximately $220,733 to the available credit support. This transaction is also structured in the same way as the 2001-KS2 transaction so that excess spread is crossed between the two groups. The 60+ delinquencies have averaged 23.13% of the current pool balances during this period. As of the June 26, 2006 distribution date, the OC was $1,263,398, with a target of $4,250,003. The pool factor currently stands at 15%. Series 2001-KS3 Group 2: The monthly excess interest has averaged approximately $523,140 during the past six months and the monthly losses have averaged $445,800 during the same period. This has resulted in an average monthly increase of approximately $77,340 to the available credit support. As discussed above, excess spread from Group 2 is available to offset losses incurred in Group 1 after Group 2 losses have been accounted for. This support occurs before such monies can be used to fund Group 2's OC to its required level. Therefore, despite the ongoing generation of positive net excess spread, Group 2's OC remains slightly below its target level. The 60+ delinquencies have averaged 35.68% of the current pool balances during this period. As of the June 26, 2006 distribution date, the OC was $5,678,068, with a target of $5,750,000. The pool factor currently stands at 8%. REYNOLDS & REYNOLDS: Earns $28 Million in Quarter Ended June 30 --------------------------------------------------------------- The Reynolds and Reynolds Company reported increases in revenue and net income for its third fiscal quarter ended June 30, 2006. The company also announced a plan to drive enhanced shareholder value by growing revenue in the mid-single digits over each of the next three years and reducing costs through productivity improvements. The plan is intended to increase operating margins to 25% by the end of fiscal year 2009. The three-year plan encompasses a range of revenue growth initiatives, as well as productivity improvements and cost reductions expected to lower operating expenses by approximately $90 million. The reductions include approximately 450 positions that will be impacted through job eliminations, attrition and outsourcing. For the third quarter, Reynolds reported revenue of $250 million, up from $247 million in the prior-year period. Net income increased to $28 million from $24 million in 2005. Revenue in the company's Software Solutions segment rose 1.5%. Recurring revenue increased 4% on increased volume in Finance and Insurance services, Customer Relationship Management solutions, REYNOLDSYSTEM(TM) Applications on Demand and Reynolds Web Solutions. The growth in recurring revenue was partially offset by the effect of the divestiture in 2005 of Campaign Management Services. On a comparative basis, the divestiture reduced revenue by approximately $1 million in the third quarter versus the prior- year period. One-time revenue declined 8% primarily on lower consulting revenue. Documents segment revenue grew 3% while revenue in the Financial Services segment declined 5%. "Our third-quarter results show that we are gaining momentum in our effort to improve performance and grow the company," Fin O'Neill, Reynolds' president and chief executive officer, said. "The plans we are announcing accelerate our pace. Through these efforts, we can substantially increase our operating margins and deliver significant shareholder value." The company expects its operating margins for the 2006 fiscal year to be approximately 17%, excluding any charges incurred to implement productivity initiatives. O'Neill said that Reynolds is committed to preserving its singular focus on its dealer customers as it implements its strategic plan. "While the decision to eliminate positions is difficult, it is necessary to ensure that our costs are aligned to our business strategy. In all cases, we are seeking to "remember who's boss" -- our customers -- so that the actions we take will allow us to maintain our leadership in customer service and support while reducing costs where possible. None of these reductions will in any way impact customer support," he said. Most of the positions to be eliminated are tied to overhead and management functions within the company's Dayton headquarters. Enhanced Shareholder Value Plan Greg Geswein, Reynolds' senior vice president and CFO, said the company has identified approximately $40 million in immediate cost savings opportunities, of which more than $11 million have already been implemented. The company expects to incur a charge of approximately $4 million to $6 million during the fourth quarter to provide for the costs associated with plan implementation, and additional charges of approximately $8 million to $10 million in fiscal 2007. "We have created a three-year plan with clear actions, targets and accountability," Geswein said. "Our objective is substantial growth in shareholder value." Among the key components of the plan are: * Corporate actions to result in savings of approximately $50 million by 2009. These include: -- Actions to eliminate approximately 170 positions in the next 90 days and reduce costs by approximately $10 million; -- Plans to eliminate an additional 280 positions (for a total of 450) over the next three years as the company streamlines business operations through the automation of manual processes, consolidation of facilities and improvements in business processes and logistics. Reynolds is improving its order processing systems and internal customer relationship management to accelerate sales productivity and customer satisfaction. The company also expects to gain efficiencies through improved standards and scheduling for field support associates. Overall, these changes are expected to save approximately $25 million; -- Freezing its defined benefit, company-sponsored pension plan for U.S. associates while doubling its 401(k) plan match and adding a profit-sharing plan. Reynolds will record a curtailment expense of $5.2 million during the first fiscal quarter of 2007 to account for the cost of adopting the new program. By freezing the plan, the company estimates it will reduce future annual expense by approximately $7 million per year, based on current actuarial assumptions. The change will allow the company to minimize the financial volatility inherent in accounting for traditional defined benefit pension plans; -- Sale of its Networkcar business for net proceeds of approximately $21 million and a pre-tax gain of $7 million to $8 million. Reynolds expects the sale to close by August 1 subject to customary closing conditions. Reynolds announced plans in 2005 to explore strategic alternatives for the business following its transition from dealership-based retail sales to a fleet management tool; and * Reduction of product-related and support costs totaling approximately $40 million by 2009. To take advantage of offshore opportunities, Reynolds has opened an engineering and development center in Xian, China, which is expected to drive significant savings and organizational efficiencies in engineering and development. "Reynolds has the strongest, most recognized name in the automotive dealer market. We are expanding our customer base in Europe six-fold through the acquisition of DCS Group PLC, which we expect to finalize on July 27. We are also determined to increase the penetration of our value-added applications and services in Europe, and enter high-growth markets, such as China," O'Neill said. O'Neill said that in addition to cutting costs and implementing productivity improvements, Reynolds is reinvesting in critical parts of its business. Reynolds will invest in features, functionality and architecture to enhance and extend the REYNOLDSYSTEM(TM), the company's single- source, integrated approach to improving dealership performance. The investments will strengthen the REYNOLDSYSTEM while bringing dealers additional value through new applications that will drive company growth. Pension plan changes Reynolds' pension plan changes are designed to preserve the accrued benefits associates have earned in the company pension plan, while reducing the company's future annual expense. Reynolds will double its contribution to the company's 401(k) plan by matching 100% of the first 6% an associate contributes, subject to IRS limits. The company will also establish an annual profit sharing plan through which it will make an additional contribution, tax-deferred, to associates' 401(k) accounts. The contributions will be determined by the company's profitability. The pension plans changes will be effective Oct. 1, 2006, and apply to current U.S. associates. Retired and former Reynolds associates vested in the plan will not be affected. "This is a necessary step for Reynolds to be competitive," O'Neill said. "At the same time, we are offering associates a portable plan to help support and fund their retirement. "The enhancements we've made to our 401(k) plan put us well above the norm, and we believe this will be another recruiting edge Reynolds will have in competing for talent in the future. More and more, individuals want to own, manage and control more of their retirement savings. An enhanced 401(k) plan, plus profit sharing, can be strong incentive for talented individuals to join and stay with Reynolds," O'Neill said. Guidance The company issued guidance for its 2007 fiscal year. This guidance also excludes the impact of any restructuring charges associated with the plan announced today to deliver more value to shareholders. It also excludes future acquisitions (except for DCS Group). The company anticipates: * Revenue will be approximately 6% to 10% higher than in 2006; * Operating margins will be approximately 20%; * Net capital expenditures of approximately $15 million; * Depreciation and amortization will be $26 million to $28 million; and * A tax rate of approximately 39%. Over the next three years, Reynolds expects mid-single digit growth in revenue and double-digit growth in earnings. About Reynolds The Reynolds and Reynolds Company (NYSE: REY) -- http://www.reyrey.com/-- helps automobile dealers sell cars and take care of customers. Serving dealers since 1927, it provides dealer management systems in the U.S. and Canada. The Company's award-winning product, service and training solutions include a full range of retail Web and Customer Relationship Management solutions, e-learning and consulting services, documents, data management and integration, networking and support and leasing services. Reynolds serves automotive retailers and OEMs globally through its incadea solution and a worldwide partner network, as well as through its consulting practice. * * * As reported in the Troubled Company Reporter on June 20, 2006, Moody's Investors Service confirmed The Reynolds & Reynolds Company's senior unsecured ratings at Ba1 and assigned a positive rating outlook. ROGERS COMMUNICATIONS: Fitch Upgrades Issuer Default Rating to BB ----------------------------------------------------------------- Fitch upgraded the ratings for Rogers Communications Inc. and its subsidiaries: Rogers Communications Inc.: -- Issuer default rating to 'BB' from 'BB-' Rogers Wireless Inc.: -- IDR to 'BB' from 'BB-' -- Senior subordinated notes to 'BB' from 'BB-' Rogers Cable Inc.: -- IDR to 'BB' from 'BB-' In addition, Fitch affirmed the senior secured ratings at Wireless and Cable at 'BB+'. Fitch also withdrew all of the ratings at Call-Net Enterprises Inc., the senior subordinated debt rating at Cable and the senior unsecured debt rating at RCI due to debt repayment. The Rating Outlook is Positive for RCI and its subsidiaries. Approximately $7 billion of debt securities are affected by these actions. The upgrade reflects RCI's improving credit measures driven by: * the strong operating performance at the wireless segment that has materially exceeded expectations; * debt reduction primarily at the RCI level; and * its robust bundled service offering across the wireless and cable assets. Fitch expects RCI to rapidly improve free cash flow and credit measures as the wireless operations should experience continued market share gains coupled with expectations for improved churn levels, stable pricing and positively trending ARPU due to increasing data revenue. Fitch also expects RCI to use free cash flow to reduce debt over the next couple of years. Leverage (adjusted debt to EBITDAR) is 3.9x at the end of the first quarter 2006 with expectations for improvement to approximately 3.5x by the end of 2006. Credit concerns include the on-going cash requirements at Cable, which had a free cash flow deficit of $400 million (based on Fitch adjustments) in 2005 and the competitive environment from incumbent local exchange operators and DBS operators that will likely pressure operating margins. Cable free cash flow generation was impacted by elevated capital spending, launch of voice over IP telephone service and working capital requirements. Fitch expects Cable's free cash flow deficit will moderate to under $300 million during 2006 and improve substantially in 2007. While the launch of telephony service will hinder Cable's ability to generate free cash flow, Fitch believes that the company has the right set of products and is well positioned to grow EBITDA and reduce capital expenditures that will eventually lead to generation of free cash flow. Key to the company closing its current free cash flow deficit will be growing its telephone business and Rogers Business Solution business that currently consume cash. In addition, from Fitch's perspective the company's ability to offer subscribers its bundle of video, HSD, Cable Telephony and wireless services can mitigate a portion of the competitive threat presented by the DBS and telco operators. In Fitch's opinion, the favorable characteristics of the Canadian wireless industry suggest long-term stability and more predictable operating performance that set the stage for healthy revenue and cash flow prospects particularly when compared to the U.S. The Canadian wireless industry benefits from: * three comparatively sized players; * lower penetration rates (approximately 20% lower the U.S); * relatively lower minute usage; * low churn (approximately 30 basis points lower than the U.S); and * positively trending ARPU. Consequently industry EBITDA margins for the LTM are 40%, approximately 800 basis points higher than the U.S. Fitch believes Rogers Wireless will realize further subscriber growth and margin expansion over the rating horizon to significantly increase free cash flow despite higher capital spending requirements for its HSDPA network. RCI's liquidity position is ample given the cash generation at Wireless, the undrawn revolver capacity at its three subsidiaries, Rogers Cable cash requirements and the significant flexibility in advancing funds throughout the company as the restricted payments basket at wireless and cable are not overly limiting. At the end of the first quarter of 2006, RCI had approximately $1.7 billion of undrawn revolver capacity. Rogers Wireless maintains a $700 million bank credit facility maturing in 2010 that had $20 million drawn at the end of the first quarter. Rogers Cable's bank credit facility is $1 billion consisting of two tranches: * a $600 million revolving credit facility that matures in 2010; and * a $400 million revolver that also matures in 2010. The bank credit facility covenants at wireless, and cable provides significant cushion under its most restrictive terms. The ratings do not currently consider any level of share repurchase programs or potential M&A activity. Fitch believes that any such actions could temper further ratings improvement. SALS 2002-2: S&P Lifts Rating on Class E Transactions to BB+ ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on four classes from four U.S. synthetic CDO transactions. The ratings remain on CreditWatch with negative implications. Concurrently, the ratings are raised on four classes from two U.S. synthetic CDO transactions. The ratings on the downgraded classes all had been previously placed on CreditWatch negative and were reviewed to determine the appropriate rating action. Where the synthetic rated overcollateralization ratio was less than 100% at the current date and at a 90-day-forward projected date, S&P lowered the rating on the class. All of the upgraded classes had SROC ratios above 100% at the new rating levels. Rating List Firebird SCDO Series 2002-1 Rating ------ Class To From ----- -- ---- B AA AA- C A A- Mistletoe ORSO Trust 3 Rating ------- Class To From ----- -- ---- Credit-linked A-/Watch Neg A/Watch Neg REPACS Trust Series 2006 Mount Ventoux Rating ------ Class To From ----- -- ---- Debt units AA+/Watch Neg AAA/Watch Neg SALS 2002-2 Rating ------ Class To From ----- -- ---- D BBB+ BBB E BB+ BB Stony Hill CDO SPC Series 2005-1 SEG Rating ------ Class To From ----- -- ---- Notes BB-/Watch Neg BB/Watch Neg Tribune Ltd. Series 26 (Aspen 2006) Rating ------ Class To From ----- -- ---- Aspen-B AA-/Watch Neg AA/Watch Neg SAVVIS INC: Balance Sheet Upside Down by $137 Million at June 30 ---------------------------------------------------------------- SAVVIS, Inc.'s balance sheet at June 30, 2006, showed $460.8 million in total assets and $598.1 million in total liabilities, resulting in a stockholders' deficit of approximately $137 million. The Company reported a $132 million stockholders' deficit at Dec. 31, 2005. SAVVIS generated $189.6 million of total revenue for the second quarter of 2006, compared to $167.2 million in the second quarter of 2005 and $180 million in the first quarter of 2006. SAVVIS achieved income from operations of $6 million in the second quarter, and its consolidated net loss narrowed to $11.1 million, compared to a net loss of $21.3 million in the second quarter of 2005 and a net loss of $12.4 million in the first quarter of 2006. Cost of revenue was $117.1 million, up 8% from a year ago and 4% from the prior quarter. Gross profit was $72.5 million, up 24% from a year ago and 8% from the first quarter 2006. Operating cash flow was $21.3 million and cash capital expenditures were $20.5 million in the quarter. Chief Executive Officer Phil Koen said, "SAVVIS achieved strong financial performance again in the second quarter, demonstrating the success of our business model. With 13% revenue growth from a year ago, and 41% of that flowing through to the Adjusted EBITDA line, the company is further extending its track record for margin improvement. Given this continued strong performance, we've raised our expectations for both revenue and Adjusted EBITDA growth for the full year. We also achieved a substantial improvement in our capital structure with the exchange of Preferred stock for common. Given the accomplishments of this quarter, and our strong outlook, SAVVIS is well positioned to create value for our stockholders. Our success is driven by our ability to address the pressing needs of enterprises by delivering unique, managed solutions that offer IT infrastructure as a service." Total revenue for the second quarter increased 13% from a year ago and 5% from the first quarter, primarily reflecting strong growth in hosting and managed IP VPN revenue. Colocation services contributed 57% of hosting revenue, consistent with the first quarter, with growth of approximately $5 million from the first quarter, of which approximately $1.4 million was attributable to renewal of existing contracts at higher prices. Revenue from virtualized utility services, also included in hosting revenue, increased to $6.2 million in the quarter, up 244% from a year ago and 29% from the first quarter. Managed IP VPN revenue increased 24% from the prior year and 6% from the previous quarter. Income from operations was $6 million in the second quarter, compared to a loss from operations of $3.5 million in the same period last year and income from operations of $3.7 million in the first quarter 2006. SAVVIS' consolidated net loss of $11.1 million was an improvement of $10.2 million from the second quarter 2005 and $1.4 million from the first quarter 2006. The second quarter 2005 loss from operations and net loss included $4.0 million of restructuring charges and integration costs. Net cash provided by operating activities was $21.3 million, compared to $200,000 in the same period last year and $18.9 million in the first quarter 2006. Cash capital expenditures for the second quarter 2006 totaled $20.5 million, including $2.6 million for the completion of an existing data center in Santa Clara, California. Overall, approximately 70% of SAVVIS' capital expenditures are driven by revenue-generating opportunities. SAVVIS' cash position at June 30, 2006, was $86.1 million, including $36.8 million of net cash proceeds resulting from a data-center property transaction on June 30, 2006. On July 3, 2006, the first business day of the third quarter, the company used $32 million of cash to pay down its revolving credit facility. On a pro-forma basis as of June 30, 2006, after giving effect for the debt payment, SAVVIS' cash balance was 54.1 million and the company had no debt outstanding on the revolving credit facility, which provides a total borrowing capacity of $85 million. The data center transaction in the second quarter pertained to an existing leased facility located in Dallas, Texas. On June 29, the company purchased the facility for $13.8 million. On June 30, 2006, SAVVIS relinquished title to the building and certain leasehold improvements in exchange for $50.6 million and entered into a long-term lease of the facility for 15 years. The annual base rent under the new lease is approximately $4.3 million for the first year, increasing 2.5% annually for the term of the lease. The transaction was recorded as a financing-method lease under generally accepted accounting principles, resulting in a long-term lease obligation of $50.6 million. Future payments under the lease will be recorded as interest expense and a reduction in the long-term lease obligation. On June 30, 2006, SAVVIS completed the exchange of its Series A Preferred stock for 37.4 million shares of common stock. Shares of common stock outstanding at June 30 totaled 50.8 million. Common stock issued in exchange for shares of the Series A Preferred stock in the second quarter totaled 37.4 million shares, including 29 million shares representing the as-converted value of the Preferred stock and 8.4 million shares equivalent to 58% of the value of future dividends. The 8.4 million shares recorded at fair value resulted in a $240.1 million charge to net loss attributable to common shareholders in the second quarter. Financial Outlook Chief Financial Officer Jeff Von Deylen said, "SAVVIS' industry- leading IT infrastructure solutions are selling well in a strong market, driving revenue growth. Our focus on margin is yielding results in gross profit and Adjusted EBITDA improvements, as well as narrowing net loss. Given the solid results of the first half, we are revising our outlook to reflect higher revenue and Adjusted EBITDA expectations." SAVVIS management's current expectations for 2006 financial results include: -- Total revenue in a range of $750-760 million, for growth of 12-14% (up from previous guidance of $730-750 million, for growth of 9-12%), including: * Hosting revenue increasing 25-30% * Managed IP VPN revenue increasing 16-20%, and * Reuters contributing approximately 12% of total revenue; -- Adjusted EBITDA in a range of $112-118 million (up from previous guidance of $100-110 million, for growth of over 30%), for growth of over 40%; -- Cash capital expenditures of $75-80 million (up from previous guidance of $60-70 million); and -- Continued positive cash flow before loan repayments. Headquartered in Town & Country, Missouri, SAVVIS, Inc. -- http://www.savvis.net/-- is a global provider of managed and outsourced IT services that focuses exclusively on IT solutions for businesses. With an IT services platform that extends to 47 countries, SAVVIS has over 5,000 enterprise customers and leads the industry in delivering secure, reliable, and scalable hosting, network, and application services. These solutions enable customers to focus on their core business while SAVVIS ensures the quality of their IT systems and operations. SAVVIS' strategic approach combines virtualization technology, a global network and 25 data centers, and automated management and provisioning systems. SEA CONTAINERS: High Court Sides with ORR on Railway Use Dispute ---------------------------------------------------------------- Great North Eastern Railway, the UK rail subsidiary of Sea Containers Ltd. is extremely disappointed with the conclusions reached by the High Court on GNER's application for judicial review of the decision by the Office of Rail Regulation to grant access rights on the East Coast Mainline to Grand Central Railways and Hull Trains based on a different charging regime to franchised train operators. GNER sought an order quashing the ORR's March 23 decision and a declaration that the ORR's charging regime is unlawful. Mr. Justice Sullivan declined to grant the order or the declaration. GNER considers that the judgment is fundamentally flawed. It considers that two train operators calling at the same station and picking up the same set of passengers are not in competition because of their differing contractual arrangements with government. It is obvious that GNER and its competitors operate in the same market. GNER continues to believe that the ORR's charging regime is discriminatory, is in breach of national and European law, amounts to an unlawful grant of state aid and distorts competition. It also continues to believe that the decision to grant access rights was unfair. GNER has always been a supporter of competition both on the East Coast Mainline and in the rail industry in general. However, it believes that franchised and open access operators should operate on a level-playing field, which is not the position under the current charging arrangement. This regime makes franchised operators pay significantly higher charges than open access operators for access to the same infrastructure. Additionally, GNER believes that by stopping at York, which already has 61 services a day to and from London, under an industry revenue allocation system at least 80 percent of Grand Central's revenues will be abstractive from GNER's premium-paying franchise. GNER is taking legal advice in respect of the options now open to it, including the possibility of an application to the Court of Appeal or a complaint to the European Commission. GNER will need to look more closely at Mr. Justice Sullivan's decision before being able to quantify the precise impact on the company. Bob MacKenzie, President and CEO of Sea Containers, the parent company of GNER, said: "[Thurs]day's decision is truly extraordinary. It has serious commercial consequences for GNER and for the Department for Transport. It undermines the profitability of GNER, which already operates to modest margins, and devalues a recently-awarded public contract agreed with government and the East Coast franchise in perpetuity. It will also make bidders for other franchises elsewhere on the network more risk-adverse. "We believe we had a strong case to contest the ORR's decision. The real losers from today's judgment are not just those who believe in fair competition, but also passengers on the East Coast Main Line and other rail users on the network who may not see as much money reinvested into their railway. "We will be discussing the serious implications of today's decision with the Department for Transport, as it is likely to jeopardize GNER's ability to pay some of the premium payments agreed with the government over the course of our franchise. This cannot be what the government intended to happen to any of its newly-awarded rail franchises." Once it has considered the consequences of the High Court's decision in full, Sea Containers, GNER's parent company, intends to issue a further statement in August, which will also include a financial update on trading matters relating to GNER. About Sea Containers London-based Sea Containers -- http://www.seacontainers.com/-- engages in passenger and freight transport and marine container leasing. The Bermuda registered company is primarily owned by U.S. shareholders and its common shares have been listed on the New York Stock Exchange (SCRA and SCRB) since 1974. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. * * * In June 2006, Moody's Investors Service downgraded the senior unsecured ratings and confirmed the senior secured rating of Sea Containers -- Senior Unsecured to Caa3, Senior Secured at B3. Moody's said the outlook is negative. The downgrades were due to the increased probability of a payment default following Sea Containers' disclosure that it is unable to confirm whether it will pay the $115 million principal amount of 10-3/4% senior unsecured notes due October 2006. As reported in the Troubled Company Reporter on May 4, 2006, Standard & Poor's Ratings Services lowered its ratings on Sea Containers, including lowering the corporate credit rating to 'CCC-' from 'CCC+'. All ratings remain on CreditWatch with negative implications. The rating action followed the company's announcement that it is continuing to evaluate a range of strategic and financial alternatives, including the "appropriate level of debt capacity, with the intent to engage the public note holders and other stakeholders." SEA CONTAINERS: Christopher Garnett Steps Down as GNER CEO ---------------------------------------------------------- Sea Containers Ltd. disclosed that Christopher Garnett, Chief Executive Officer of GNER and Senior Vice President - Rail of Sea Containers, will be stepping down after 10 years with the Company. Mr. Garnett, 60, will leave the Company on Aug. 31. Bob MacKenzie, President and CEO of Sea Containers, will become Executive Chairman of GNER, supported by the other GNER directors. "After ten challenging and rewarding years helping to transform GNER into a company renowned for customer service, now is the right time to step down and hand over to others to lead the next stage in GNER's development," Mr. Garnett said. Commenting on Mr. Garnett's departure, Mr. MacKenzie said: "We thank Christopher for his sterling work building GNER into the first class train operating company which it is, and for his efforts and commitment to the company since 1996. Looking ahead, GNER does face a number of challenges, which in the current financial environment need urgent attention. I will be working with the GNER team to address these." About Sea Containers Headquartered in London, England, Sea Containers -- http://www.seacontainers.com/-- engages in passenger and freight transport and marine container leasing. The Bermuda registered company is primarily owned by U.S. shareholders and its common shares have been listed on the New York Stock Exchange (SCRA and SCRB) since 1974. * * * In June 2006, Moody's Investors Service downgraded the senior unsecured ratings and confirmed the senior secured rating of Sea Containers -- Senior Unsecured to Caa3, Senior Secured at B3. The outlook is negative. The downgrades were due to the increased probability of a payment default following Sea Containers' disclosure that it is unable to confirm whether it will pay the US$115 million principal amount of 10-3/4% senior unsecured notes due October 2006. As reported in the Troubled Company Reporter on May 4, 2006, Standard & Poor's Ratings Services lowered its ratings on Sea Containers, including lowering the corporate credit rating to 'CCC-' from 'CCC+'. All ratings remain on CreditWatch with negative implications. The rating action followed the company's announcement that it is continuing to evaluate a range of strategic and financial alternatives, including the "appropriate level of debt capacity, with the intent to engage the public note holders and other stakeholders." SERACARE LIFE: Inks Pact on Interim Plan-Filing Period Extension ---------------------------------------------------------------- SeraCare Life Sciences, Inc., and the Ad Hoc Committee of Equity Holders have entered into a stipulation extending the Debtor's exclusive periods to file a plan of reorganization and solicit acceptances of that plan to Aug. 4, 2006 and Oct. 4, 2006, respectively. The Ad Hoc Equity Panel is seeking to terminate the Debtor's exclusive period. Concurrently, the Debtor is asking the Court to extend its exclusive plan-filing period to Oct. 18, 2006, and its solicitation period to Dec. 18, 2006. The hearing on these two opposing motions is scheduled at 10:00 a.m. on Aug. 2, 2006. As reported in the Troubled Company Reporter on July 6, 2006, the Ad Hoc Equity Committee wants the Court to lift the automatic stay so it can ask the California Superior Court to compel the Debtor to promptly hold its annual meeting of shareholders. If the Bankruptcy Court won't lift the automatic stay, the Ad Hoc Committee wants the Court to terminate the Debtor's exclusive plan-filing period. The Ad Hoc Equity Committee has raised concerns over the legitimacy of the special committee currently holding all of the powers of the Company's Board of Directors. According to the Committee, this "highly unusual" governance arrangement also casts doubt on the legitimacy of the special committee as a debtor-in- possession. Despite the Ad Hoc Equity Committee's concerns, the Debtor insists that there is more than some promise of success for reorganization in its case. The Debtor claims it has substantial equity in its assets and the financial ability to reorganize. The Debtor further claimed that it needed more time to negotiate a plan of reorganization given the number of active constituencies in its case. Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). The Official Committee of Unsecured Creditors selected Henry C. Kevane, Esq., and Maxim B. Litvak, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, as its counsel. When the Debtor filed for protection from its creditors, it listed $119.2 million in assets and $33.5 million in debts. SERACARE LIFE: Panel Says Debtor Should Keep Derivative Claims -------------------------------------------------------------- The Official Committee of Unsecured Creditors of SeraCare Life Sciences, Inc., opposes Wade Y. Sato's motion asking the U.S. Bankruptcy Court for the Southern District of California to compel the Debtor to abandon certain derivative claims against its former directors and officers. Mr. Sato, one of the Debtor's shareholders, filed a derivative case in the U.S. District Court for the Southern District of California against officers and directors who allegedly led the Debtor into bankruptcy. SeraCare's stock price had plummeted after Mayer Hoffman McCann P.C., its independent auditor, raised concerns about "the Debtor's financial statements, accounting documentation and the representations of its management. Mr. Sato accuses SeraCare's officers and directors of issuing misleading financial statements to sell the Debtors stock at artificially inflated prices. The directors and officers party to Mr. Sato's action (S.D. Ca. Case No. 06CV0304W WMc) are Michael F. Crowley, Jr., Craig A. Hooson, Barry D. Plost, Robert J. Cresci, Jerry L. Burdick, Samuel Anderson, Ezzat Jallad, Dr. Bernard Kasten and Dr. Nelson Teng. According to Mr. Sato, the Debtor should abandon its derivative claims against these officers because the pursuit of the claims is burdensome to the estate. In addition, Mr. Sato contends that the Court should order the abandonment since the Debtor's directors and its current lawyers at O'Melveny & Myers have unwaivable conflicts of interests preventing them from pursuing the derivative case. Brett M. Weaver, Esq., at Johnson Law Firm APC tells the Court that the Debtor's directors are hiding behind the bankruptcy code in order to prevent the derivative case from going forward. As debtor-in-possession, SeraCare presently has the exclusive right to purse the derivative cases. The Debtor's abandonment of the derivative claims will allow Mr. Sato to resume the derivative suit in order to hold the individual defendants liable for the damages the Debtor suffered as a result of their breaches of fiduciary duties, unjust enrichment and statutory violations. Committee's Concerns The Committee tells the Court that Mr. Sato's request should be denied for three reasons: 1) there is no basis for the estate to abandon what Mr. Sato admits are valuable derivative claims that belong to the estate; 2) abandonment of the estate's assets to a shareholder would violate the absolute priority rule by sidestepping the interests of creditors; and 3) it is premature to consider abandoning estate assets when there is no evidence that the Debtor is unwilling or unable to pursue the claims. Henry C. Kevane, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub LLP, says Mr. Sato failed to establish the requisite grounds for the Court to take the exceptional remedy of compelling the estate to abandon some of its assets. Mr. Kevane argues that derivative claims are not a burden and are not of inconsequential value. He adds that the possible conflict of the Debtor or its counsel in relation to the derivative claims does not mean that these claims should be abandoned. He explains that other representative of the estate, like the Creditors' Committee, can be appointed for the purpose of pursuing the claims. The Court will convene a hearing at 2:00 p.m., on Aug. 17, 2006, at Room 118, Weinberger Courthouse to consider Mr. Sato's request. About SeraCare Based in Oceanside, California, SeraCare Life Sciences, Inc. -- http://www.seracare.com/-- develops and manufactures biological based materials and services for diagnostic tests, commercial bioproduction of therapeutic drugs, and medical research. The Company filed for chapter 11 protection on March 22, 2006 (Bankr. S.D. Calif. Case No. 06-00510). Garrick A. Hollander, Esq., and Paul J. Couchot, Esq., at Winthrop Couchot, P.C., represent the Debtor. The Official Committee of Unsecured Creditors hired 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: Judge Lifland Approves Disclosure Statement ------------------------------------------------------------- The Disclosure Statement of Silicon Graphics has been approved by the U.S. Bankruptcy Court for the Southern District of New York, on July 27, 2006, thereby enabling the Company to continue on its path toward emerging from chapter 11 by the end of September. At a hearing in New York, the Honorable Burton R. Lifland ruled that SGI's Disclosure Statement contained adequate information for the purpose of soliciting creditor approval of SGI's Plan of Reorganization. The Plan is supported by the Official Creditors' Committee, the Ad Hoc Committee of Senior Secured Noteholders and the largest holder of Silicon Graphics' Unsecured Debentures. SGI will commence mailing of the Plan and Disclosure Statement by Aug. 3, 2006. A hearing for the court to consider confirmation of the Plan has been scheduled for Sept. 19, 2006. Certain other motions related to employees and financing were also approved. A full-text copy of the Approved Disclosure Statement is available for free at http://ResearchArchives.com/t/s?e81 A full-text copy of the First Amended Plan is available for free at http://ResearchArchives.com/t/s?e82 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. SONICBLUE INC: Wants Excl. Plan-Filing Period Extended to Aug. 19 ----------------------------------------------------------------- SONICblue Incorporated and its debtor-affiliates ask the U.S Bankruptcy Court for the Northern District of California in San Jose to approve a tenth stipulation with the Official Committee of Unsecured Creditors extending their exclusive periods for filing a plan of reorganization and obtaining acceptances of that Plan to Aug. 19, 2006 and Oct. 18, 2006, respectively. The Debtors and Committee have deferred filing a Plan because of uncertainty caused by claims in excess of $70 million filed by VIA Technologies, Inc., and S3 Graphics Co., Ltd. The Debtors have failed to reach a settlement with VIA and S3 during several months of negotiations. The existence of these claims lead to uncertainty regarding the amounts to be distributed under a plan. The Debtors remain optimistic that they will be able to reach a settlement with VIA and S3. The Debtors tell the Court they have drafted a plan and disclosure statement. However, they need to secure additional information regarding potential claim objections before the plan and disclosure statement can be finalized. About SONICBlue Headquartered in Santa Clara, California, SONICblue Incorporated is involved in the converging Internet, digital media, entertainment and consumer electronics markets. The Company, together with three of its wholly owned subsidiaries, Diamond Multimedia Systems, Inc., ReplayTV, Inc., and Sensory Science Corporation, filed for chapter 11 protection on Mar. 21, 2003 (Bankr. N.D. Calif. Case Nos. 03-51775 to 03-51778). Craig A. Barbarosh, Esq., at the Law Offices of Pillsbury Winthrop, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed assets totaling $342,871,000 and debts totaling $335,473,000. STARWOOD HOTELS: S&P Raises Corp. Credit Rating to BBB- from BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit and senior unsecured ratings on Starwood Hotels & Resorts Worldwide Inc. to 'BBB-' from 'BB+'. "The upgrade reflects our expectation that Starwood would pursue an operating strategy and a financial policy that can sustain an investment-grade financial profile over the lodging cycle, notwithstanding Starwood's move in 2006 toward executing an aggressive level of share repurchases," said Standard & Poor's credit analyst Emile Courtney. Stock repurchases exceeded $570 million in the five months ended May 2006 following three fiscal years (2003-2005) in which Starwood generated more cash from stock issuances than it spent on repurchases. The outlook is stable. In addition, the lodging environment in the U.S. is expected to remain supportive of considerable improvements in operating performance over the intermediate term, providing Starwood the opportunity to maintain flexibility in its financial profile notwithstanding aggressive share repurchases. Cash proceeds received by Starwood from the Host transaction, expected proceeds of $325 million from asset sales in 2006 to date, and $760 million in unrestricted cash balances as of March 2006 are expected to allow the completion of Starwood's $1 billion share repurchase authorization over the intermediate term. Starwood has reduced debt balances by more than $1 billion so far in 2006, including the defeasance of $510 million in mortgage- backed and other secured debt. STONY HILL: S&P Downgrades Notes' Rating to BB- ----------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on four classes from four U.S. synthetic CDO transactions. The ratings remain on CreditWatch with negative implications. Concurrently, the ratings are raised on four classes from two U.S. synthetic CDO transactions. The ratings on the downgraded classes all had been previously placed on CreditWatch negative and were reviewed to determine the appropriate rating action. Where the synthetic rated overcollateralization ratio was less than 100% at the current date and at a 90-day-forward projected date, S&P lowered the rating on the class. All of the upgraded classes had SROC ratios above 100% at the new rating levels. Rating List Firebird SCDO Series 2002-1 Rating ------ Class To From ----- -- ---- B AA AA- C A A- Mistletoe ORSO Trust 3 Rating ------- Class To From ----- -- ---- Credit-linked A-/Watch Neg A/Watch Neg REPACS Trust Series 2006 Mount Ventoux Rating ------ Class To From ----- -- ---- Debt units AA+/Watch Neg AAA/Watch Neg SALS 2002-2 Rating ------ Class To From ----- -- ---- D BBB+ BBB E BB+ BB Stony Hill CDO SPC Series 2005-1 SEG Rating ------ Class To From ----- -- ---- Notes BB-/Watch Neg BB/Watch Neg Tribune Ltd. Series 26 (Aspen 2006) Rating ------ Class To From ----- -- ---- Aspen-B AA-/Watch Neg AA/Watch Neg TAOVAYA LLC: Case Summary & 18 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Taovaya, LLC 2803 Wilbarger Vernon, Texas 76384 Bankruptcy Case No.: 06-70241 Chapter 11 Petition Date: July 27, 2006 Court: Northern District of Texas (Wichita Falls) Debtor's Counsel: Mark Joseph Petrocchi, Esq. Goodrich Postnikoff Albertson & Petrocchi, LLP 777 Main Street, Suite 1360 Fort Worth, Texas 76102 Tel: (817) 335-9400 Fax: (817) 338-9209 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 18 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Herring Bank Approximate $2,860,424 c/o David L. LeBas Deficiency Gwinn & Roby, LLP 600 Maxor Building 320 South Polk Street Amarillo, TX 79101-1426 Frank Espanoza Arrearage $1,400 201 Fayette Street Nocona, TX 76255 Jack Duncan Pool Service $100 P.O. Box 415 Nocona, TX 76255 Cavender Investment Notice Only $0 Properties, Ltd. 7820 South Broadway Tyler, TX 75703 Ronnie Sanders Party to Lawsuit $0 710 West Weatherford Fort Worth, TX 76102 Roger Williams $0 R & R Motor Company Party to Lawsuit $0 Montague County Tax Assessor $0 Landrum Chevrolet-Pontiac- Party to Lawsuit $0 Oldsmobile LLP JP Morgan Chase Bank, NA Party to Lawsuit $0 John Wolfe Auto Group, LP Party to Lawsuit $0 John C. Wolfe Arrearage $0 John c. Wolfe, Inc. Party to Lawsuit $0 Jim Hedrick $0 JCFW Inventory Management Party to Lawsuit $0 Internal Revenue Service $0 Carol Keeton Strayhorn $0 Allie Beth Allman Contingent Claim $0 TELESOURCE INT'L: Has Capital Deficits in 2005 2nd & 3rd Quarters ----------------------------------------------------------------- Telesource International, Inc., filed with the Securities and Exchange Commission on July 25, 2006, its financial statements for the: -- second quarter ended June 30, 2005; and -- third quarter ended Sept. 30, 2005. Second Quarter Results The Company reported a $2,603,573 net loss on $3,386,961 of gross revenues for the second quarter ended June 30, 2006, compared with $8,819,762 net loss on $9,970,921 of gross revenues for the same period in 2004. At June 30, 2005, the Company's balance sheet showed $16,037,516 in total assets, and $27,320,271 in total liabilities, resulting in an $11,282,755 stockholders' deficit. The Company's $15,740,798 stockholders' deficit at Dec. 31, 2004, was higher than the 2005 second quarter figure. The Company's balance sheet at June 30, 2005, also showed strained liquidity with $8,269,055 in total current assets available to pay $10,335,306 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's 2005 second quarter financials are available for free at http://ResearchArchives.com/t/s?e78 Third Quarter Results The Company reported a $3,755,346 net loss on $4,653,570 of gross revenues for the third quarter ended Sept. 30, 2005, compared with $10,909,937 net loss on $16,929,710 of gross revenues for the same period in 2004. At Sept. 30, 2005, the Company's balance sheet showed $13,898,319 in total assets and $25,375,176 in total liabilities, resulting in an $11,476,857 stockholders' deficit. The Company's $15,740,798 stockholders' deficit at Dec. 31, 2004, was higher than the 2005 third quarter figure. The Company's balance sheet at Sept. 30, 2005, also showed strained liquidity with $6,763,093 in total current assets available to pay $9,086,452 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's 2005 third quarter financials are available for free at http://ResearchArchives.com/t/s?e79 About Telesource International Telesource International, Inc. (Pink Sheeet: TSCI) has three main operating segments: i) power generation, ii) construction of power plants and construction services, and iii) brokerage of goods and services. Sayed Hamid Behbehani & Sons Co. W.L.L., a Kuwait-based civil, electrical and mechanical construction company, currently controls over 85% of the Company's shares. Telesource International is located in Lombard, Illinois, U.S.A., the Company's headquarters, where it operates a small service for the procurement, export and shipping of U.S. fabricated products for use by the Company's subsidiaries or for resale to customers outside of the mainland. Telesource Fiji, Ltd., a subsidiary, is located on the island of Fiji where it maintains and operates diesel fired electric power generation plants for the sale of electricity in the country. The Company also is attempting to develop future construction and other energy related business activities in Fiji. Telesource CNMI, Inc., is on the island of Tinian, an island in the Commonwealth of Mariana Islands (U.S. Territory), where it operates a diesel fired electric power generation plant for the sale of electricity to the local power grid. In Saipan, the Company maintains offices for coordinating marketing and development activities in the region and is responsible for all operations including the development of future construction projects and energy conversion opportunities in the region. THERMADYNE HOLDINGS: S&P Lowers Corporate Credit Rating to CCC -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Thermadyne Holdings Corp., including its corporate credit rating to 'CCC' from 'B-'. The outlook on the St. Louis, Missouri-based welding products manufacturer remains negative. As of March 31, 2006, total outstanding debt was approximately $265 million. "The downgrade reflects deterioration in liquidity due, in part, to uncertainty about whether the company can meet the filing deadlines for financial reports required by its lender and bondholders, and concern that liquidity pressures could jeopardize payment of financial obligations," said Standard & Poor's credit analyst Anita Ogbara. Under the terms of the company's most recent amendment, bank creditors agreed to a July 27, 2006, deadline for filing financial statements, as well as to more lenient covenants. However, on Aug. 1, 2006, the company is required to make an $8.1 million interest payment on the 9.25% senior subordinated notes due 2014. Even if the company makes the August interest payment, its liquidity will likely remain under pressure. The company is currently seeking an amendment to the senior subordinated notes, which would extend the filing deadline through Aug. 21, 2006, and adjust payment arrangements for interest on the notes. Recently, Thermadyne has experienced a series of financial control and operations issues, including the resignation of its independent auditor, Ernst & Young, as well as the departure of several key senior executives on the financial reporting staff. Year over year, EBITDA was relatively flat after accounting restatements and adjustments related to discontinued operations. The company's operating and financial performance continues to reflect: * weak cost controls; * high inventory levels; and * product pricing challenges. Profitability and cash flow generation are hampered by high selling, general, and administrative costs and heavy working capital requirements. Additionally, the company's performance has been stymied by its exposure to raw materials prices, namely copper, brass, and steel. The company has a multifaceted plan to deal with these issues and is also trying to address shortcomings in its internal control over financial reporting. TIMES SQUARE: S&P Raises Certificates' Rating to BBB- from BB+ -------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on Times Square Hotel Trust's mortgage and lease amortizing certificates to 'BBB-' from 'BB+'. Concurrently, the outlook is revised to stable from positive, where it was placed on Nov. 15, 2005. The action follows the July 26, 2006, raising of the corporate credit rating assigned to Starwood Hotels & Resorts Worldwide Inc. to 'BBB-'. The outlook on Starwood is stable. The rating on the Times Square Hotel Trust transaction is based on the payments and obligations of Starwood pursuant to a triple-net lease of the W New York - Times Square Hotel on Broadway at 47th Street. USG CORP: Balance Sheet Upside-Down by $313 Million at June 30 -------------------------------------------------------------- USG Corporation reported second quarter 2006 net sales of $1.6 billion, a record for any quarter in USG's history, and net earnings of $176 million. Net sales increased $286 million, or 22%, and net earnings increased $66 million, or 60%, compared with the second quarter of last year. "USG's businesses continued to perform exceptionally well in the second quarter," said USG Corporation Chairman and CEO William C. Foote. "Once again, sales were the highest ever recorded for a quarter, driven by record product shipments achieved by L&W Supply and United States Gypsum Company. All of our businesses achieved profitable growth, reflecting the success of our strategies, including the ongoing expansion of our distribution business and additions to our industry-leading wallboard manufacturing facilities." Mr. Foote continued, "With our emergence from bankruptcy on June 20th, I am pleased to report that USG has delivered on its commitment to repay our creditors in full, compensate those who have been injured by asbestos, preserve equity value and emerge operationally stronger. I am particularly proud of USG's excellent operational performance over the last several years, which enabled us to emerge from Chapter 11 as a stronger and more profitable company. Our businesses are well-positioned to continue growing and providing superior service to customers." Net sales for the first half of 2006 were $3.0 billion versus $2.5 billion for the same period in 2005. Net earnings were $35 million, or $0.60 per share, for the first six months of this year. Net earnings of $187 million were recorded in the first six months of last year. Results in the second quarter and first half of 2006 included a $27 million reversal of a reserve for asbestos-related claims. This reversal, which is reflected as income in the statement of earnings, was based on the corporation's evaluation of the asbestos property damage settlements it has reached in principle and the remaining unresolved asbestos property damage claims. The after-tax income from this reversal amounted to $17 million. Second quarter and first half results also included a charge for post-petition interest and fees related to prepetition obligations. These pretax charges for the second quarter and first six months of 2006 were $36 million and $520 million. The corresponding after-tax amounts for the second quarter and first half were $21 million and $321 million. Core Business Results North American Gypsum USG's North American Gypsum business recorded net sales of $977 million and operating profit of $267 million in the second quarter of 2006. Second quarter net sales increased by $173 million, or 22 percent, while operating profit increased $119 million, or 80 percent, compared with the same period a year ago. United States Gypsum Company recorded second quarter 2006 net sales of $878 million and operating profit of $242 million, increases of $158 million and $117 million, compared with the second quarter of 2005. U.S. Gypsum's strong performance during the quarter was primarily attributable to higher selling prices and record shipments of the company's SHEETROCK(R) Brand gypsum wallboard. Strong customer demand for U.S. Gypsum products was also reflected in higher selling prices and record shipments of FIBEROCK(R) Brand gypsum fiber panels and SHEETROCK Brand joint compound. Second quarter 2006 operating profit for U.S. Gypsum included the previously mentioned favorable effects of the $27 million pre-tax reversal of a reserve for asbestos claims. These strong results were partially offset by higher costs, including higher energy and raw material prices. U.S. Gypsum's second quarter shipments of gypsum wallboard were a record for any quarter in its history, totaling 3.0 billion square feet, 3 percent higher than shipments in last year's second quarter. U.S. Gypsum's nationwide average realized selling price for gypsum wallboard was $182.65 per thousand square feet during the second quarter of 2006, an increase of 32 percent compared with the second quarter of last year. The gypsum division of Canada-based CGC Inc. reported second quarter 2006 net sales of $91 million, an increase of $9 million, or 11 percent, compared with the same period a year ago. Operating profit of $14 million was the same level attained in last year's second quarter. Higher net sales were largely attributable to improved pricing for SHEETROCK Brand gypsum wallboard and the favorable effects of currency translation. This improvement was offset by higher gypsum wallboard manufacturing costs. Worldwide Ceilings USG's Worldwide Ceilings business reported second quarter 2006 net sales of $199 million, up $21 million, or 12 percent, compared with the second quarter of 2005. Operating profit was $26 million in the quarter, an increase of $9 million, or 53 percent, compared with the same period a year ago. USG's domestic ceilings business, USG Interiors, reported second quarter 2006 net sales and operating profit of $137 million and $17 million. Net sales and operating profit improved $13 million and $4 million, compared with the second quarter of 2005. The improvement in results was largely attributable to improved selling prices for and higher shipments of ceiling grid. The gains reflect a rebound in the commercial construction market, which has benefited from declining office vacancy rates, job growth, and improved corporate investment, as well as improved plant efficiencies. These results were partially offset by higher manufacturing costs for ceiling tile. USG International reported net sales and operating profit of $59 million and $5 million in the second quarter of 2006. This compared with net sales of $52 million and operating profit of $2 million for the same period a year ago. This improvement primarily reflected higher demand for USG ceiling grid in Europe. The ceilings division of CGC Inc. reported second quarter 2006 net sales of $14 million, unchanged from last year's second quarter. Operating profit doubled to $4 million for the period, largely as a result of lower manufacturing costs for ceiling grid. Building Products Distribution L&W Supply, USG's building products distribution business, reported second quarter 2006 net sales of $680 million and operating profit of $58 million, both records for any quarter in L&W's history. Net sales rose $174 million, or 34 percent, while operating profit increased by $19 million, or 49 percent, over the second quarter of 2005. The improved results reflect record shipments for gypsum wallboard and complementary building products, such as drywall metal, ceiling products and joint compound. Results also benefited from higher prices for gypsum wallboard. Selling prices for L&W Supply's gypsum wallboard increased 33 percent versus the second quarter of 2005. Sales of products other than gypsum wallboard were up 17 percent compared with last year's second quarter. Other Consolidated Information Second quarter 2006 selling and administrative expenses of $103 million increased by $16 million versus the second quarter of 2005. For the first six months, these expenses were $202 million versus $176 million a year ago. These increases related primarily to increased levels of compensation and benefits and expenses in connection with growth initiatives. Selling and administrative expenses as a percent of net sales were 6.5 percent and 6.6 percent in the second quarter and first six months of 2006 compared with 6.8 percent and 7.2 percent for the comparable 2005 periods. USG reported Chapter 11 reorganization expense of $6 million in the second quarter of 2006, compared with income of $1 million in last year's second quarter. For the second quarter of 2006, this consisted of $18 million in legal and financial advisory fees, offset by $12 million in bankruptcy-related interest income. In the same period a year ago, USG incurred $6 million in legal and financial advisory fees, which was more than offset by $7 million in bankruptcy-related interest income. Under AICPA Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code," interest income on USG's bankruptcy-related cash is offset against Chapter 11 reorganization expenses. Interest expense for the second quarter and first six months of 2006 was $37 million and $523 million. These amounts included charges for postpetition interest and fees related to prepetition obligations as previously discussed. Under SOP 90-7, virtually all of USG's outstanding debt was classified as liabilities subject to compromise until the corporation's emergence from bankruptcy on June 20, 2006. Interest expense, other than that related to post-petition interest and fees, was $2 million and $3 million in the second quarter and first six months of 2005. As of June 30, 2006, USG had $663 million of cash, cash equivalents, restricted cash and marketable securities on a consolidated basis, compared with $1.5 billion as of March 31, 2006 and $1.6 billion as of December 31, 2005. This decline was due primarily to payments in the second quarter related to the corporation's Plan of Reorganization, including the $890 million payment to fund the Section 524(g) asbestos personal injury trust fund. Capital expenditures in the second quarter of 2006 were $98 million compared with $43 million in the corresponding 2005 period. For the first six months of 2006, capital expenditures were $150 million versus $76 million in the first six months of 2005. As of June 30, 2006, liabilities subject to compromise have been reclassified on the consolidated balance sheet. This included the reclassification of the corporation's remaining asbestos reserve to current liabilities either as notes payable to the Section 524(g) asbestos trust or accrued expenses, as appropriate. USG Corporation Unaudited Consolidated Balance Sheet As of June 30, 2006 Assets Current Assets: Cash and cash equivalents $587,000,000 Short-term marketable securities 69,000,000 Restricted cash 7,000,000 Receivables, net 579,000,000 Inventories 361,000,000 Income taxes receivable 329,000,000 Deferred income taxes 1,247,000,000 Other current assets 156,000,000 -------------- Total current assets $3,335,000,000 Long-term marketable securities - Property, plant and equipment (net of accumulated depletion -- $1,054,000,000 & $982,000,000) 2,035,000,000 Deferred income taxes - Goodwill 105,000,000 Other assets 182,000,000 -------------- Total Assets $5,657,000,000 ============== Liabilities and Stockholders' Equity (Deficit) Current Liabilities: Accounts payable 368,000,000 Accrued expenses 868,000,000 Notes payable to Section 524(g) asbestos trust 10,000,000 Deferred income taxes - Income taxes payable 53,000,000 -------------- Total current liabilities 5,098,000,000 Long-term debt 239,000,000 Deferred income taxes 137,000,000 Other liabilities 496,000,000 Liabilities subject to compromise - Stockholders' Equity (Deficit): Common stock 5,000,000 Treasury stock (209,000,000) Capital received in excess of par value 444,000,000 Accumulated other comprehensive income 7,000,000 Retained earnings (deficit) (560,000,000) -------------- Total stockholders' equity (deficit) (313,000,000) -------------- Total liabilities and stockholders' equity (deficit) $5,657,000,000 ============== USG Corporation Unaudited Consolidated Statement of Earnings Three Months Ended June 30, 2006 Net Sales $1,573,000,000 Cost of products sold 1,173,000,000 -------------- Gross profit 400,000,000 Selling & administrative expenses 103,000,000 Reversal of asbestos claims reserve (27,000,000) Chapter 11 reorganization expenses 6,000,000 -------------- Operating profit 318,000,000 Interest expense 37,000,000 Interest income (4,000,000) -------------- Earnings before income taxes 285,000,000 Income taxes 109,000,000 -------------- Net earnings $176,000,000 ============== USG Corporation Unaudited Core Business Results Three Months Ended June 30, 2006 Net Sales: North American Gypsum: U.S. Gypsum Company $878,000,000 CGC Inc. (gypsum) 91,000,000 Other subsidiaries 64,000,000 Eliminations (56,000,000) -------------- Total 977,000,000 Worldwide Ceilings: USG Interiors, Inc. 137,000,000 USG International 59,000,000 CGC Inc. (ceilings) 14,000,000 Eliminations (11,000,000) -------------- Total 199,000,000 Building Products Distribution: L&W Supply Corporation 680,000,000 Eliminations (283,000,000) -------------- Total USG Corporation $1,573,000,000 ============== Operating Profit: North American Gypsum: U.S. Gypsum Company 242,000,000 CGC Inc. (gypsum) 14,000,000 Other subsidiaries 11,000,000 -------------- Total 267,000,000 Worldwide Ceilings: USG Interiors, Inc. 17,000,000 USG International 5,000,000 CGC Inc. (ceilings) 4,000,000 -------------- Total 26,000,000 Building Products Distribution: L&W Supply Corporation 58,000,000 Corporate (24,000,000) Chapter 11 reorganization expenses (6,000,000) Eliminations (3,000,000) -------------- Total USG Corporation $318,000,000 About USG Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., Gus Kallergis, Esq., Brad B. Erens, Esq., Michelle M. Harner, Esq., Mark A. Cody, Esq., and Daniel B. Prieto, Esq., at Jones Day represent the Debtors in their restructuring efforts. Lewis Kruger, Esq., Kenneth Pasquale, Esq., and Denise Wildes, Esq., represent the Official Committee of Unsecured Creditors. Elihu Inselbuch, Esq., and peter Van N. Lockwood, Esq., at Caplin & Drysdale, Chartered, represent the Official Committee of Asbestos Personal Injury Claimants. Martin J. Bienenstock, Esq., Judy G. Z. Liu, Esq., Ralph I. Miller, Esq., and David A. Hickerson, Esq., at Weil Gotshal & Manges LLP represent the Statutory Committee of Equity Security Holders. Dean M. Trafelet is the Future Claimants Representative. Michael J. Crames, Esq., and Andrew A. Kress, Esq., at Kaye Scholer, LLP, represent the Future Claimants Representative. Scott Baena, Esq., and Jay Sakalo, Esq., at Bilzen Sumberg Baena Price & Axelrod LLP, represent the Asbestos Property Damage Claimants Committee. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. The Debtors emerged from bankruptcy protection on June 20, 2006. (USG Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service, Inc., 215/945-7000) USG CORP: Gets Court Nod to Finalize Pre-Confirmation Settlements ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware allowed USG Corp. and its debtor-affiliates to finalize several pre-confirmation settlement agreements. Throughout their Chapter 11 cases, the Debtors worked diligently to settle and resolve as many disputed claims as possible before a hearing on confirmation of the Debtors' First Amended Joint Plan of Reorganization, Karen McKinley, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates. Before the Plan became effective on June 20, 2006, many settlements were finalized pursuant to Court-approved settlement procedures or by filing motions pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure seeking approval of those settlements. As of the Effective Date, Ms. McKinley said, the Debtors reached settlements with various creditors in principle to resolve certain claims, including asbestos property damage claims, for which relevant settlement agreements as of that time had not been fully documented, finalized or approved by the parties. In addition, the Debtors sent out for execution numerous claim stipulations to general unsecured claim holders before the Effective Date. The Debtors received back these stipulations after the Effective Date. Ms. McKinley told Judge Fitzgerald that oftentimes, the stipulations still must be signed by the Debtors. Some of the Affected Settlements also resolve claims greater than $200,000. As a result, Ms. McKinley noted, had the Effective Date not occurred, the Debtors would have filed motions to approve various asbestos PD-related settlements and provided notice under the Prepetition Settlement Procedures Order to the core group service list on account of the Affected Settlements. If a party on the list objected to any settlement, the Debtors would have been required to obtain Bankruptcy Court approval of the settlement. In light of the fact that all creditors other than asbestos personal injury claimants are unimpaired and that the distributions to, or treatment of, other creditors will be unaffected by the Affected Settlements, the Debtors insist that the need for Bankruptcy Court approval of their request is limited. About USG Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., Gus Kallergis, Esq., Brad B. Erens, Esq., Michelle M. Harner, Esq., Mark A. Cody, Esq., and Daniel B. Prieto, Esq., at Jones Day represent the Debtors in their restructuring efforts. Lewis Kruger, Esq., Kenneth Pasquale, Esq., and Denise Wildes, Esq., represent the Official Committee of Unsecured Creditors. Elihu Inselbuch, Esq., and peter Van N. Lockwood, Esq., at Caplin & Drysdale, Chartered, represent the Official Committee of Asbestos Personal Injury Claimants. Martin J. Bienenstock, Esq., Judy G. Z. Liu, Esq., Ralph I. Miller, Esq., and David A. Hickerson, Esq., at Weil Gotshal & Manges LLP represent the Statutory Committee of Equity Security Holders. Dean M. Trafelet is the Future Claimants Representative. Michael J. Crames, Esq., and Andrew A. Kress, Esq., at Kaye Scholer, LLP, represent the Future Claimants Representative. Scott Baena, Esq., and Jay Sakalo, Esq., at Bilzen Sumberg Baena Price & Axelrod LLP, represent the Asbestos Property Damage Claimants Committee. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. The Debtors emerged from bankruptcy protection on June 20, 2006. (USG Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service, Inc., 215/945-7000) UTGR INC: Moody's Holds Low-Ratings and Says Outlook is Negative ---------------------------------------------------------------- Moody's Investors Service changed the ratings outlook on UTGR, Inc. to negative from stable and affirmed the existing B1 corporate family, B1 first lien and B2 second lien ratings. The change in the ratings outlook reflects expected higher proforma and peak leverage that will now follow an enlarged redevelopment budget. Originally planned to be a $125 million expansion, now the expansion will require an additional $95 million due to higher costs and a larger than originally planned scale of renovation. It is expected that the bulk of the overrun will be funded by new borrowing with an equity contribution supplementing the balance. The additional anticipated borrowing and expected slight delay in project completion will likely push both proforma and peak leverage to levels that will leave the rating very vulnerable to downgrade due to further construction delays, minor operating shortfalls or slower then planned ramp up. Previously the proforma and peak leverage levels assumed were 5.3 times and 7.3 times. Therefore, Moody's view is that the negative outlook more appropriately reflects the heightened risk to the existing ratings over the next 12 to 18 months. Nevertheless, Moody's believes that several factors support the B1 corporate family rating including: strong market potential, the significant property upgrade underway and the presence of "slippage protection" that UTGR has in its 15-year revenue sharing arrangement with Rhode Island. Slippage protection protects UTGR against net revenues lost to new casinos that Rhode Island permits in the future by way of adjusting UTGR's VLT commission to offset the impact of lower gross VLT revenues. Ratings affirmed: * 1st Lien $125 Million Revolving Credit Facility -- B1 * 1st Lien $245 Million Revolving Term Loan B -- B1 * 2nd Lien $125 Million Revolving Term Loan C -- B2 UTGR, Inc. is a wholly-owned subsidiary of BLB Investors, LLC. UTGR is a joint venture comprised of Kerzner International Limited, Starwood Capital Group and Waterford Group LLC. UTGR's single property, the Lincoln Park racino, is located near Providence, Rhode Island. VARTEC TELECOM: Court Converts Ch. 11 Cases to Ch. 7 Proceedings ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas converted the chapter 11 cases of Vartec Telecom Inc. and its debtor-affiliates to chapter 7 liquidation proceedings. Daniel C. Stewart, Esq., at Vinson & Elkins L.L.P., in Dallas, Texas reminded the Court that it approved a sale of substantially all of the Debtors' assets to Comtel Investments LLC. Due to the need to obtain lengthy federal and state regulatory clearance and approvals, the final closing date of the sale did not occur until June 7, 2006. As reported in the Troubled Company Reporter on Feb. 13, 2006,the Court allowed the Debtors to borrow funds from Rural Telephone Finance Cooperative until June 15, 2006. The Debtor would have wanted to extend the use of the debtor-in-possession facility. RTFC and the Official Committee of Unsecured Creditors, however, are at odds over the terms of the financing. Despite substantial continuing efforts by the Debtors since June 2, 2006, to bridge a resolution of disputes between the RTFC and the Committee, including a lengthy mediation/negotiation session on June 13, 2006, those two parties remain as significantly apart as they were in respect of settling their litigation. As the term of the DIP Facility expired on June 15, 2006, and the Debtors have been unable to extend the term or secure other avenues of funding, the Debtors deem it best to have their cases converted. Headquartered in Dallas, Texas, Vartec Telecom Inc. -- http://www.vartec.com/-- provides local and long distance service and is considered a pioneer in promoting 10-10 calling plans. The Company and its affiliates filed for chapter 11 protection on November 1, 2004 (Bankr. N.D. Tex. Case No. 04- 81694. Daniel C. Stewart, Esq., William L. Wallander, Esq., and Richard H. London, Esq., at Vinson & Elkins, represent the Debtors in their restructuring efforts. J. Michael Sutherland, Esq., and Stephen A. Goodwin, Esq., at Carrington Coleman Sloman & Blumenthal, represent the Official Committee of Unsecured Creditors. When the Company filed for protection from its creditors, it listed more than $100 million in assets and debts. VILLAGEEDOCS INC: Restates 2005 3rd Quarter Financial Statements ---------------------------------------------------------------- VillageEDOCS, Inc., files its quarterly report on Form 10-QSB/A to amend its third quarter financial statements for the three months ended Sept. 30, 2005, with the Securities and Exchange Commission on July 21, 2006. The amended quarterly report restates the Company's financial statements and Management's Discussion and Analysis or Plan of Operations to properly account for some of its convertible notes payable during 2005. Previously, the Company had not identified or separately valued derivative instruments later determined to have been embedded within certain of the notes. The Company has restated its financial statements to: -- recognize the existence of derivatives, -- account for a derivative liability, and -- record the changes in fair value of the derivatives. In addition, the quarterly report has been amended to reflect changes in accounting for certain transactions involving the issuance of its common stock and common stock purchase warrants to employees in connection with the acquisitions of Tailored Business Systems, Inc., and Phoenix Forms Inc. Accordingly, changes have been made to the applicable line items associated with goodwill, convertible notes payable, derivative liability, additional paid-in capital, accumulated deficit, general and administrative expense, change in fair value of derivative liability, interest expense, net loss and net loss per common share. Restated Financials The Company reported a restated net loss of $711,279 on $2,620,854 of net sales for the three months ended Sept. 30, 2005, compared to a $96,777 net loss on $1,682,917 of net sales for the same period in 2004. At Sept. 30, 2005, the Company's balance sheet showed $8,821,120 in total assets, $2,991,620 in total liabilities, and $5,829,500 in total stockholders' equity. Full-text copy of the Company's restated second quarter financials are available for free at http://ResearchArchives.com/t/s?e62 Going Concern Doubt As reported in the Troubled Company Reporter on June 14, 2006, Corbin & Company, LLP, in Irvine, California, raised substantial doubt about VillageEDOCS' ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses since inception and its working capital deficit of $676,198. VillageEDOCS, Inc. -- http://www.villageedocs.com/-- through its MessageVision subsidiary, provides comprehensive business-to- business information delivery services and products for organizations with mission-critical needs, including major corporations, government agencies and non-profit organizations. The Company's Tailored Business Systems subsidiary provides accounting and billing solutions for county and local governments. Through its Resolutions subsidiary, it provides products for document management, archiving, document imaging, imaging software, document scanning, e-mail archiving, document imaging software, electronic forms, and document archiving. WAMU MORTGAGE: S&P Lifts Rating on Class C-B-4 Certificates to BB+ ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on 14 classes from five WaMu Mortgage Pass-Through Certificates Trust transactions. At the same time, ratings are affirmed on the remaining 1,082 classes from 80 WaMu Mortgage transactions. The raised ratings are based on favorable pool performance, which has increased available credit enhancement percentages enough to support the classes at the higher rating levels. Actual and projected credit support percentages for these classes, along with low delinquencies and losses, are positive indicators that warrant the one-notch upgrades. The affirmations on the remaining classes reflect stable pool performance and adequate credit support percentages. Credit support for all of the transactions is provided by subordination. As of the June 2006 distribution date, the pools had total delinquencies ranging from 0.00% (series 2003-AR2, 2004-RS1, and 2004-RS2) to 6.37% (series 2001-AR3). The lack of realized cumulative losses combined with the shifting interest feature of the transactions have caused current credit support percentages to increase as a percentage of the pool balances. The pools initially consisted of 15- and 30-year fixed- and adjustable-rate, prime mortgage loans secured by first and second liens on owner occupied, one- to four-family dwellings. The borrowers' average FICO scores were approximately 725. Washington Mutual Bank, a select servicer in Standard & Poor's Servicer Evaluations program, is the servicer for the mortgage loans. Ratings Raised WaMu Mortgage Pass-Through Certificates Trust Rating ------ Series Class To From ------ ----- -- ---- 2002-AR17 II-B-1 AAA AA 2002-AR17 II-B-2 AA- A 2002-AR17 II-B-3 BBB+ BBB 2002-S6 B-3 AAA AA+ 2003-S1 B-2 AA- A+ 2003-S1 B-3 A- BBB+ 2003-S1 B-4 BBB- BB+ 2003-S4 C-B-1 AA+ AA 2003-S4 C-B-2 A+ A 2003-S4 C-B-3 BBB+ BBB 2003-S4 C-B-4 BB+ BB 2004-AR2 B-1 AA+ AA 2004-AR2 B-2 A+ A 2004-AR2 B-3 BBB+ BBB Ratings Affirmed WaMu Mortgage Pass-Through Certificates Trust Series Class Rating ------ ----- ------ 2001-AR3 I-A, R, II-A AAA 2002-AR17 I-A, R, II-A AAA 2002-AR17 I-B-1 AA+ 2002-AR17 I-B-2 AA 2002-AR17 I-B-3 A+ 2002-S4 A3, A4, X, P, AR, B1, B2, B3 AAA 2002-S6 A-4, A-21, A-22, A-23, A-24 AAA 2002-S6 A-25, P, R, B-1, B-2 AAA 2003-AR1 A-5, A-6, R, X, B-1 AAA 2003-AR1 B-2 AA 2003-AR1 B-3 A- 2003-AR2 A-1, A-2, X, R, M AAA 2003-AR2 B-1 AA+ 2003-AR2 B-2 AA 2003-AR2 B-3 A 2003-AR7 A-4, A-5, A-6, A-7, A-8, X, R AAA 2003-AR7 B-1 AA+ 2003-AR7 B-2 A+ 2003-AR7 B-3 BBB+ 2003-AR7 B-4 BBB- 2003-AR7 B-5 BB- 2003-AR8 A1, X, R, AAA 2003-AR8 B1 AA 2003-AR8 B2 A 2003-AR8 B3 BBB 2003-AR8 B4 BB 2003-AR8 B5 B 2003-AR9 I-A-3, I-A-4, I-A-5, I-A-6 AAA 2003-AR9 I-A-7, R, II-A AAA 2003-AR9 I-B-1, II-B-1 AA 2003-AR9 I-B-2, II-B-2 A 2003-AR9 I-B-3, II-B-3 BBB 2003-AR9 I-B-4, II-B-4 BB 2003-AR9 I-B-5, II-B-5 B 2003-AR12 A-3, A-4, A-5, A-6, X, R AAA 2003-AR12 B-1 AA 2003-AR12 B-2 A 2003-AR12 B-3 BBB 2003-AR12 B-4 BB 2003-AR12 B-5 B 2003-S1 A-3, A-4, A-5, A-6, A-11, X, P,R AAA 2003-S1 B-1 AA+ 2003-S1 B-5 B 2003-S2 A-1, A-2, A-3, A-4, A-5, A-6 AAA 2003-S2 A-7, A-8, A-9, A-11, X, P, R AAA 2003-S2 B-1 AA+ 2003-S2 B-2 AA 2003-S2 B-3 A+ 2003-S2 B-4 BBB 2003-S2 B-5 BB 2003-S3 I-A-1, I-A-2, I-A-3, I-A-4 AAA 2003-S3 I-A-5, I-A-6, I-A-7, I-A-8 AAA 2003-S3 I-A-9, I-A-10, I-A-11, I-A-12 AAA 2003-S3 I-A-13, I-A-14, I-A-15, I-A-16 AAA 2003-S3 I-A-17, I-A-18, I-A-19, I-A-20 AAA 2003-S3 I-A-21, I-A-22, I-A-23, I-A-24 AAA 2003-S3 I-A-25, I-A-26, I-A-27, I-A-28 AAA 2003-S3 I-A-29, I-A-30, I-A-31, I-A-32 AAA 2003-S3 I-A-34, I-A-35, I-A-36, I-A-37 AAA 2003-S3 I-A-38, I-A-39, I-A-40, I-A-41 AAA 2003-S3 I-A-44, I-A-45, I-A-46, II-A-1 AAA 2003-S3 II-A-2, III-A-1, III-A-2, A-X AAA 2003-S3 II-X,A-P, II-P, R AAA 2003-S3 C-B-1 AA 2003-S3 C-B-2 A 2003-S3 C-B-3 BBB 2003-S3 C-B-4 BB 2003-S3 C-B-5 B 2003-S4 I-A-1, I-A-2, I-A-3, AAA 2003-S4 II-A-1, II-A-2, II-A-3, II-A-4 AAA 2003-S4 II-A-5, II-A-6, II-A-7, II-A-7 AAA 2003-S4 II-A-8, II-A-9, II-A-10, II-A-11 AAA 2003-S4 II-A-12 III-A, IV-A-1, IV-A-2 AAA 2003-S4 I-X, II-X, III-X, IV-X, I-P, AAA 2003-S4 A-P, R AAA 2003-S4 C-B-5 B 2003-S5 I-A-1, I-A-2, I-A-3, I-A-4 AAA 2003-S5 I-A-5, I-A-6, I-A-7, I-A-8 AAA 2003-S5 I-A-9, I-A-10, I-A-11, I-A-12 AAA 2003-S5 I-A-13, I-A-14, I-A-15, I-A-16 AAA 2003-S5 I-A-17, I-A-18, I-A-19, I-A-20 AAA 2003-S5 I-A-21, I-A-22, I-A-23, I-A-24 AAA 2003-S5 I-A-25, I-A-26, I-A-27, I-A-28 AAA 2003-S5 I-A-29, II-A, III-A, C-X, C-P AAA 2003-S5 II-X, II-P, R AAA 2003-S5 C-B-1 AA+ 2003-S5 C-B-2 AA 2003-S5 C-B-3 A+ 2003-S5 C-B-4 BB 2003-S5 C-B-5 B 2003-S5 II-B-1 AA+ 2003-S5 II-B-2 AA- 2003-S5 II-B-3 BBB+ 2003-S5 II-B-4 BB 2003-S5 II-B-5 B 2003-S6 I-A, II-A-1, II-A-2, II-A-3 AAA 2003-S6 II-A-4, II-A-5, II-A-6, II-A-7 AAA 2003-S6 II-A-8, II-A-9, II-A-10, II-A-11 AAA 2003-S6 I-X, II-X, I-P, II-P, R AAA 2003-S6 C-B-1 AA 2003-S6 C-B-2 A 2003-S6 C-B-3 BBB 2003-S6 C-B-4 BB 2003-S6 C-B-5 B 2003-S7 A-1, A-2, A-3, X, P, R AAA 2003-S7 B-1 AA 2003-S7 B-2 A- 2003-S7 B-3 BBB 2003-S7 B-4 BB 2003-S7 B-5 B 2003-S8 A-1, A-2, A-3, A-4, A-5, A-6 AAA 2003-S8 X, P, R AAA 2003-S8 B-1 AA 2003-S8 B-2 A 2003-S8 B-3 BBB 2003-S8 B-4 BB 2003-S8 B-5 B 2003-S9 A-1, A-2, A-3, A-4, A-5, A-6 AAA 2003-S9 A-7, A-8, A-9, A-10, A-11, X, P AAA 2003-S9 R AAA 2003-S9 B-1 AA 2003-S9 B-2 A 2003-S9 B-3 BBB 2003-S9 B-4 BB 2003-S9 B-5 B 2003-S10 A-1, A-2, A-3, A-4, A-5, A-6 AAA 2003-S10 A-7, X, P AAA 2003-S10 B-1 AA 2003-S10 B-2 A 2003-S10 B-3 BBB 2003-S10 B-4 BB 2003-S10 B-5 B 2003-S11 1-A, 2-A-1, 2-A-2, 2-A-3, 2-A-4 AAA 2003-S11 2-A-5, 2-A-6, 2-A-7, 3-A-1 AAA 2003-S11 3-A-2, 3-A-3, 3-A-4, 3-A-5, X AAA 2003-S11 P, R AAA 2003-S11 B-1 AA 2003-S11 B-2 A 2003-S11 B-3 BBB 2003-S11 B-4 BB 2003-S11 B-5 B 2003-S12 1-A-1, 1-A-2, 1-A-3, 2A, 3A AAA 2003-S12 X, P, R AAA 2003-S12 B-1 AA 2003-S12 B-2 A 2003-S12 B-3 BBB 2003-S12 B-4 BB 2003-S12 B-5 B 2003-S13 I-1-A-1, I-1-A-2, I-2-A-1 AAA 2003-S13 I-2-A-2, I-2-A-3, I-2-A-4 AAA 2003-S13 I-2-A-5, I-3-A-1, I-3-A-2 AAA 2003-S13 I-P, II-1-A-1, II-2-A-1, AAA 2003-S13 II-3-A-1, II-3-A-2, II-P, R AAA 2003-S13 C-B-1 AA 2003-S13 C-B-2 A 2003-S13 C-B-3 BBB 2003-S13 C-B-4 BB 2003-S13 C-B-5 B 2004-AR1 A, X, R AAA 2004-AR1 B-1 AA 2004-AR1 B-2 A 2004-AR1 B-3 BBB 2004-AR1 B-4 BB 2004-AR1 B-5 B 2004-AR2 A, R AAA 2004-AR2 B-4 BB 2004-AR2 B-5 B 2004-AR3 A-1, A-2, X, R AAA 2004-AR3 B-1 AA 2004-AR3 B-2 A 2004-AR3 B-3 BBB 2004-AR3 B-4 BB 2004-AR3 B-5 B 2004-AR4 A-1, A-2, A-3, A-4, A-5, A-6, R AAA 2004-AR4 B-1 AA 2004-AR4 B-2 A 2004-AR4 B-3 BBB 2004-AR4 B-4 BB 2004-AR4 B-5 B 2004-AR5 A-1, A-2, A-3, A-4, A-5, A-6, R AAA 2004-AR5 B-1 AA 2004-AR5 B-2 A 2004-AR5 B-3 BBB 2004-AR5 B-4 BB 2004-AR5 B-5 B 2004-AR6 A, X, R AAA 2004-AR6 B-1 AA 2004-AR6 B-2 A 2004-AR6 B-3 BBB 2004-AR6 B-4 BB 2004-AR6 B-5 B 2004-AR7 A-1, A-2A, A-2B, A-3, A-4, A-5 AAA 2004-AR7 A-6, R AAA 2004-AR7 B-1 AA 2004-AR7 B-2 A 2004-AR7 B-3 BBB 2004-AR7 B-4 BB 2004-AR7 B-5 B 2004-AR8 A-1, A-2, A-3, X, R AAA 2004-AR8 B-1 AA 2004-AR8 B-2 A 2004-AR8 B-3 BBB 2004-AR8 B-4 BB 2004-AR8 B-5 B 2004-AR9 A-1,A-2, A-3, A-4, A-5, A-6 AAA 2004-AR9 A-7, R AAA 2004-AR9 B-1 AA 2004-AR9 B-2 A 2004-AR9 B-3 BBB 2004-AR9 B-4 BB 2004-AR9 B-5 B 2004-AR10 A-1-A, A-1-B, A-1-C, A-2-A AAA 2004-AR10 A-2-B, A-2-C, A-3, R, X AAA 2004-AR10 B-1 AA 2004-AR10 B-2 A 2004-AR10 B-3 BBB 2004-AR10 B-4 BB 2004-AR10 B-5 B 2004-AR11 A AAA 2004-AR11 B-1 AA 2004-AR11 B-2 A 2004-AR11 B-3 BBB 2004-AR11 B-4 BB 2004-AR11 B-5 B 2004-AR12 A-1, A-2A, A-2B, A-3, A-4A, A-4B AAA 2004-AR12 A-5, X-, R AAA 2004-AR12 B-1 AA 2004-AR12 B-2 A 2004-AR12 B-3 BBB 2004-AR12 B-4 BB 2004-AR12 B-5 B 2004-AR13 A-1A, A-1B1, A-1B2, A-2A,- A-2B AAA 2004-AR13 X, R AAA 2004-AR13 B-1 AA 2004-AR13 B-2 A 2004-AR13 B-3 BBB 2004-AR13 B-4 BB 2004-AR13 B-5 B 2004-AR14 A-1, A-2, A-3, X, R AAA 2004-AR14 B-1 AA 2004-AR14 B-2 A 2004-AR14 B-3 BBB 2004-AR14 B-4 BB 2004-AR14 B-5 B 2004-CB1 I-A, II-A, III-A-1, III-A-2 AAA 2004-CB1 III-A-3, III-A-4, III-A-5 AAA 2004-CB1 III-A-6, IV-A, V-A, VI-A, C-X AAA 2004-CB1 V-X, C-P, R AAA 2004-CB1 B-1 AA 2004-CB1 B-2 A 2004-CB1 B-3 BBB 2004-CB1 B-4 BB 2004-CB1 B-5 B 2004-CB2 I-A, II-A, III-A, IV-A, V-A AAA 2004-CB2 VI-A, VII-A, C-X, D-X, R AAA 2004-CB2 B-1 AA 2004-CB2 B-2 A 2004-CB2 B-3 BBB 2004-CB2 B-4 BB 2004-CB2 B-5 B 2004-CB3 I-A, II-A, III-A, IV-A, C-X, I-P AAA 2004-CB3 III-P, R AAA 2004-CB3 B-1 AA 2004-CB3 B-2 A 2004-CB3 B-3 BBB 2004-CB3 B-4 BB 2004-CB3 B-5 B 2004-CB4 I-1-A, I-2-A, II-1-A, II-2-A AAA 2004-CB4 C-X, I-P, II-P, R AAA 2004-CB4 B-1 AA 2004-CB4 B-2 A 2004-CB4 B-3 BBB 2004-CB4 B-4 BB 2004-CB4 B-5 B 2004-RS1 A-1, A-2, A-3, A-4, A-5, A-6 AAA 2004-RS1 A-7, A-8, A-9, A-10, A-11, A-12 AAA 2004-RS1 A-13, A-14, A-15, A-16, A-17, AAA 2004-RS1 A-18, A-19, R AAA 2004-RS2 A-1, A-2, A-3, A-4, A-5, A-6 AAA 2004-RS2 A-7, R AAA 2004-S2 1-A-1, 1-A-2, 1-A-3, 1-A-4 AAA 2004-S2 1-A-5, 2-A-1, 2-A-2, 2-A-3 AAA 2004-S2 2-A-4, 2-A-5, 2-A-6, 3-A-1 AAA 2004-S2 3-A-2, 3-A-3, X, P, R AAA 2004-S2 B-1 AA 2004-S2 B-2 A 2004-S2 B-3 BBB 2004-S2 B-4 BB 2004-S2 B-5 B 2004-S3 1-A-1, 1-A-2, 1-A-3, 1-A-4 AAA 2004-S3 1-A-5, 1-A-6, 2-A-1, 2-A-2 AAA 2004-S3 2-A-3, 2-A-4, 2-A-5, 2-A-6 AAA 2004-S3 2-A-7, 2-A-8, 3-A-1, 3-A-2 AAA 2004-S3 3-A-3, R, X, P AAA 2004-S3 B-1 AA 2004-S3 B-2 A 2004-S3 B-3 BBB 2004-S3 B-4 BB 2004-S3 B-5 B 2005-AR1 A-1A, A-1B, A-2A1, A-2A2, A-2A3 AAA 2005-AR1 A-2B, A-3, X, R AAA 2005-AR1 B-1 AA 2005-AR1 B-2 A 2005-AR1 B-3 BBB 2005-AR1 B-4 BB 2005-AR1 B-5 B 2005-AR2 1-A-1A, 1-A-1B, 2-A-1A, 2-A-1B AAA 2005-AR2 2-A-2A1 2-A-2A2, 2-A-2A3, 2-A-2B AAA 2005-AR2 2-A-3, X, R AAA 2005-AR2 B-1 AA+ 2005-AR2 B-2 AA 2005-AR2 B-3 AA- 2005-AR2 B-4 A+ 2005-AR2 B-5 A 2005-AR2 B-6 A- 2005-AR2 B-7 BBB+ 2005-AR2 B-8 BBB 2005-AR2 B-9 BBB- 2005-AR2 B-10 BB 2005-AR2 B-11 B 2005-AR3 A-1, A-2, A-3, R AAA 2005-AR3 B-1 AA 2005-AR3 B-2 A 2005-AR3 B-3 BBB 2005-AR3 B-4 BB 2005-AR3 B-5 B 2005-AR4 A-1, A-2A, A-2B, A-3, A-4A AAA 2005-AR4 A-4B, A-5, X AAA 2005-AR4 B-1 AA 2005-AR4 B-2 A 2005-AR4 B-3 BBB 2005-AR4 B-4 BB 2005-AR4 B-5 B 2005-AR5 A-1, A-2, A-3, A-4, A-5, A-6, R AAA 2005-AR5 B-1 AA 2005-AR5 B-2 A 2005-AR5 B-3 BBB 2005-AR5 B-4 BB 2005-AR5 B-5 B 2005-AR6 1-A-1A, 1-A-1B, 2-A-1A, 2-A-1B1 AAA 2005-AR6 2-A-1B2, 2-A-1B3, 2-A-1C, X R AAA 2005-AR6 B-1 AA+ 2005-AR6 B-2 AA 2005-AR6 B-3 AA- 2005-AR6 B-4 A+ 2005-AR6 B-5 A 2005-AR6 B-6 A- 2005-AR6 B-7 BBB+ 2005-AR6 B-8 BBB 2005-AR6 B-9 BBB- 2005-AR6 B-10 BB 2005-AR6 B-11 B 2005-AR7 A-1, A-2, A-3, A-4, X, R AAA 2005-AR7 B-1 AA 2005-AR7 B-2 A 2005-AR7 B-3 BBB 2005-AR7 B-4 BB 2005-AR7 B-5 B 2005-AR8 1-A-1A, 2-A-1A, 2-A-1B1, 2-A-1B2 AAA 2005-AR8 2-A-1B3, 2-A-1C1, 2-A-1C2 AAA 2005-AR8 2-A-1C3, X, R AAA 2005-AR8 B-1 AA+ 2005-AR8 B-2 AA 2005-AR8 B-3 AA- 2005-AR8 B-4 A+ 2005-AR8 B-5 A 2005-AR8 B-6 A- 2005-AR8 B-7 BBB+ 2005-AR8 B-8 BBB 2005-AR8 B-9 BBB- 2005-AR8 B-10 BB 2005-AR8 B-11 B 2005-AR9 A-1A, A-1B, A-1C1, A-1C2, A-1C3 AAA 2005-AR9 A-2A, X, R AAA 2005-AR9 B-1 AA 2005-AR9 B-2 A 2005-AR9 B-3 BBB 2005-AR9 B-4 BB 2005-AR9 B-5 B 2005-AR10 1-A1, 1-A2,1-A3, 1-A4, 1-A5 AAA 2005-AR10 2-A1, 3-A1 AAA 2005-AR10 B-1, AA 2005-AR10 B-2 A 2005-AR10 B-3 BBB 2005-AR10 B-4 BB 2005-AR10 B-5 B 2005-AR11 A-1A, A-1B1, A-1B2, A-1B3 AAA 2005-AR11 A-1C1, A-1C2, A-1C3, A-1C4, X, R AAA 2005-AR11 B-1 AA+ 2005-AR11 B-2 AA 2005-AR11 B-3 AA- 2005-AR11 B-4 A+ 2005-AR11 B-5 A 2005-AR11 B-6 A- 2005-AR11 B-7 BBB+ 2005-AR11 B-8 BBB 2005-AR11 B-9 BBB- 2005-AR11 B-10 BB+ 2005-AR11 B-11 BB 2005-AR11 B-12 B 2005-AR12 1-A1, 1-A2, 1-A3, 1-A4, 1-A5 AAA 2005-AR12 1-A6, 1-A7, 1-A8, 1-A9, 2-A1 AAA 2005-AR12 2-A2, R AAA 2005-AR12 B-1 AA 2005-AR12 B-2 A 2005-AR12 B-3 BBB 2005-AR12 B-4 BB 2005-AR12 B-5 B 2005-AR13 A-1A1, A-1A2, A-1A3, A-1B1 AAA 2005-AR13 A-1B2, A-1B3, A-1C1, A-1C2 AAA 2005-AR13 A-1C3, A-1C4, X, R AAA 2005-AR13 B-1 AA+ 2005-AR13 B-2 AA 2005-AR13 B-3 AA- 2005-AR13 B-4 A+ 2005-AR13 B-5 A 2005-AR13 B-6 A- 2005-AR13 B-7 BBB+ 2005-AR13 B-8 BBB 2005-AR13 B-9 BBB- 2005-AR13 B-10 BB+ 2005-AR13 B-11 BB 2005-AR13 B-12 BB- 2005-AR13 B-13 B 2005-AR14 1-A1, 1-A2, 1-A3, 1-A4, 1-A5 AAA 2005-AR14 2-A1, 2-A2, R AAA 2005-AR14 B-1 AA 2005-AR14 B-2 A 2005-AR14 B-3 BBB 2005-AR14 B-4 BB 2005-AR14 B-5 B 2005-AR15 A-1A1, A-1A2, A-1B1, A-1B2 AAA 2005-AR15 A-1B3, A-1B4, A-1C1, A-1C2 AAA 2005-AR15 A-1C3, A-1C4, X, R AAA 2005-AR15 B-1 AA+ 2005-AR15 B-2 AA 2005-AR15 B-3 AA- 2005-AR15 B-4 A+ 2005-AR15 B-5 A 2005-AR15 B-6 A- 2005-AR15 B-7 BBB+ 2005-AR15 B-8 BBB 2005-AR15 B-9 BBB- 2005-AR15 B-10 BB+ 2005-AR15 B-11 BB 2005-AR15 B-12 BB- 2005-AR15 B-13 B 2005-AR16 1-A1, 1-A2, 1-A3, 1-A4A, 1-A4B AAA 2005-AR16 1-A5, 2-A1, 2-A2, 2-A3, 2-A4, R AAA 2005-AR16 B-1 AA 2005-AR16 B-2 A 2005-AR16 B-3 BBB 2005-AR16 B-4 BB 2005-AR16 B-5 B 2005-AR17 A-1A1, A-1A2, A-1B1, A-1B2 AAA 2005-AR17 A-1B3, A-1C2, A-1C2, A-1C3 AAA 2005-AR17 A-1C4, X, R AAA 2005-AR17 B-1 AA+ 2005-AR17 B-2 AA 2005-AR17 B-3 AA- 2005-AR17 B-4 A+ 2005-AR17 B-5 A 2005-AR17 B-6 A- 2005-AR17 B-7 BBB+ 2005-AR17 B-8 BBB 2005-AR17 B-9 BBB- 2005-AR17 B-10 BB+ 2005-AR17 B-11 BB 2005-AR17 B-12 BB- 2005-AR17 B-13 B 2005-AR18 1-A1, 1-A2, 1-A3A, 1-A3B, 1-A4 AAA 2005-AR18 2-A1, 2-A2, 2-A-3, 3-A1, 3-A2, R AAA 2005-AR18 B-1 AA 2005-AR18 B-2 A 2005-AR18 B-3 BBB 2005-AR18 B-4 BB 2005-AR18 B-5 B 2005-AR19 A-1A1, A-1A2, A-1B1, A-1B2 AAA 2005-AR19 A-1B3, A-1C1, A-1C2, A-1C3 AAA 2005-AR19 A-1C4, X, R AAA 2005-AR19 B-1 AA+ 2005-AR19 B-2, B-3 AA 2005-AR19 B-4 AA- 2005-AR19 B-5 A+ 2005-AR19 B-6 A 2005-AR19 B-7 BBB+ 2005-AR19 B-8 BBB 2005-AR19 B-9 BBB- 2005-AR19 B-10 BB+ 2005-AR19 B-11 BB 2005-AR19 B-12 BB- 2005-AR19 B-13 B WINN-DIXIE: Five Parties Object to Disclosure Statement ------------------------------------------------------- Five parties filed objections to Winn-Dixie Stores, Inc., and its debtor-affiliates' disclosure statement: -- The Louisiana Department of Revenue; -- E&A Financing and other parties; -- Terranova Landlords; -- Unarco Industries; and -- Visagent Corp. Louisiana Department of Revenue The Louisiana Department of Revenue has filed numerous claims, including unsecured general claims that are classified under Class 16 pursuant to the Debtors' Disclosure Statement, David M. Hansen, Esq., in Baton Rouge, Louisiana, relates. The Debtors' Plan and Disclosure Statement provide that holders of Class 16 claims will receive either shares of stock or 67% of the claim amount in cash if the holder agrees to reduce each claim to $3,000 and sufficient cash remains available. Mr. Hansen asserts that the Louisiana Department of Revenue should not be forced to receive shares of common stock because, as a state agency, it is forbidden from collecting anything except money as payment of taxes. Thus, the Louisiana Department of Revenue asks the U.S. Bankruptcy Court for the Middle District of Florida to deny approval of the Disclosure Statement. E&A Financing, et al. E&A Financing II L.P., E&A Southeast L.P., Shields Plaza, Inc., Woodberry Plaza (E&A) LLC, Villa Rica Retail Properties LLC, West Ridge LLC, E&A Acquisition Two L.P., and Bank of America, as trustee of Betty Holland, leased retail space for several of the Debtors' stores. The Debtors rejected the leases postpetition. The Landlords have filed claims for rejection damages. The Landlords complain that the Disclosure Statement does not provide adequate information regarding the effect of substantive consolidation, specifically: (1) the difference in treatment that various creditor groups would receive in the Debtors' proposed consolidated plan as opposed to the deconsolidated plan; and (2) differences between the Debtors' proposed distribution and the distribution that would occur under a Court-ordered substantive consolidation. It is not clear to the Landlords how the Debtors' proposed deemed substantive consolidation would affect their claims. They are concerned that the portion of the distribution that would have gone to them under a deconsolidated plan will now go to holders of Vendor/Supplier Claims under the consolidated plan. Adam N. Frisch, Esq., at Herld & Israel, in Jacksonville, Florida, says that if the Landlords are to vote for a Plan that is unfavorable to them, they should at least be told specifically how much more or less they are getting as a result of the deemed consolidation. If the Landlords' claims are being reduced disproportionately to the other creditors to finance the payoff to the Vendor/Suppliers, the Landlords may decide to vote against the Plan and object to it, Mr. Frisch adds. The Landlords ask the Bankruptcy Court to withhold approval of the Disclosure Statement unless it is amended to include specific information showing the recovery that each group of creditors would receive under these scenarios: (a) the proposed substantive consolidation compromise; (b) a Court-ordered substantive consolidation; and (c) a plan with no substantive consolidation. Terranova Landlords Westfork Tower LLC, Concord Fund Retail IV LLP, TA Cresthaven LLC, Flagler Retail Associates Ltd., and Elston/Leetsdale LLC, are landlords of five of the Debtors' stores in South Florida. Terranova Corporation is their property manager. The Terranova Landlords filed claims against the Debtors that constitute administrative cure claims. The cure claims may be categorized as unsecured Landlord Claims under Class 13 of the Disclosure Statement if the Debtors reject the Landlords' leases after the effective date of the Plan. Karen K. Specie, Esq., at Scruggs & Carmichael PA, in Gainesville, Florida, says that the Disclosure Statement does not contain adequate information for the Terranova Landlords, whose leases are subject to pending but unresolved assumption motions and objections to proposed cure amounts. The Disclosure Statement, Ms. Specie asserts, should be clarified as to the status and voting rights for landlords whose leases are subject to pending assumption motions. Accordingly, Terranova asks the Bankruptcy Court to deny approval of the Disclosure Statement. Unarco Industries Shopping carts-maker Unarco Industries, Inc., holds an unsecured, non-priority claim for $132,492 against the Debtors. It is not clear to Unarco if its claim will be treated under Class 14 or Class 16 under the Disclosure Statement. According to Jason B. Burnett, Esq., at Gray/Robinson P.A., in Jacksonville, Florida, Unarco requested clarification from the Debtors on its claim classification but the Debtors were unable to provide the information prior to the Disclosure Objection Deadline. Unarco objects to the Disclosure Statement and requests confirmation of its assigned class. Depending on its claim classification, Unarco reserves its right to further object to the Disclosure Statement. Visagent Corp. Visagent Corporation disagrees with the proposed treatment of its $131,875,000 general unsecured claim. Visagent's claim has been included under Class 16, although it is not substantially similar to the other claims in that class as required by Section 1122(a) of the Bankruptcy Code, Guy Bennett Rubin, Esq., in Stuart, Florida, explains. Mr. Rubin says that the vote with respect to the Visagent Claim was improperly solicited by the Debtors prior to their submission of the Disclosure Statement to their creditors, which violates Section 1125(b) of the Bankruptcy Code. Thus, Visagent asks the Bankruptcy Court to deny confirmation of the Plan. 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. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) WINN-DIXIE: Visagent Wants Claim Allowed For Voting Purposes ------------------------------------------------------------ Visagent Corp. asks the U.S. Bankruptcy Court for the Middle District of Florida to permit it to cast a provisional ballot in the voting on Winn-Dixie Stores, Inc., and its debtor-affiliates' Plan of Reorganization pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure. Guy Bennett Rubin, Esq., in Stuart, Florida, informs the Court that Visagent has contested the Debtors' objection to Claim No. 9953 and has filed a response in due course, which will be the subject of further proceedings. Visagent filed Claim No. 9953 for $131,875,000. Visagent seeks to have the Claim temporarily allowed for voting purposes on the Plan. Mr. Rubin assures the Court that no harm may be caused by the granting of Visagent's request as the Court may order Visagent's vote to be considered provisional until its claim is finally determined by the Court or agreed by the parties. 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. 45; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLD HEALTH: Committee & CapitalSource Can Split Sale Proceeds --------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware approved the terms of a letter agreement among World Health Alternatives, Inc., and its debtor-affiliates, the Official Committee of Unsecured Creditors and CapitalSource Finance LLC. The letter agreement resolves disputes regarding the proceeds of the $43 million sale of substantially all of the Debtors' assets to Jackson Healthcare Staffing, LLC, the validity of CapitalSource lien, and the debtor-in-financing loan provided by CapitalSource. The parties agreed that the cash proceeds from the asset sale together with all cash that has not been swept to a concentration account will be paid to CapitalSource in satisfaction of the Debtors prepetition and postpetition debt up to a maximum amount of $42.5 million. CapitalSource will pay $1.625 million for the benefit of the Debtors' general unsecured creditors from a carve-out from its lien. Judge Walsh explained that denial of approval of the Letter Agreement could have an additional negative impact on the estate. The estate has $1,347,000 remaining from the sale proceeds, after administrative expenses have been paid or otherwise provided for. If the Letter Agreement is not approved, then CapSource could seek to recover the full amount of its secured claim against the sale proceeds. This, in turn, could reduce the $1,347,000 remaining in the estate that may be used by the chapter 7 trustee to pursue estate causes of action against Debtors' officers, directors, and professionals. On the record, it is not possible to quantify the difference between CapSource's $42,500,000 capped claim and a potential allowed claim. CapSource believes that it could assert an additional claim of $1,850,196 with respect to the remaining sale proceeds. The Debtors contend that CapSource's claim against the Debtors has been fully satisfied by the amounts previously paid by the Debtors to CapSource. Judge Walsh concluded that, absent approval of the Letter Agreement, some or all of the $1,347,000 remaining in the estate may be subject to CapSource's secured claim and thus not available to benefit unsecured creditors. Headquartered in Pittsburgh, Pennsylvania, World Health Alternatives, Inc. -- http://www.whstaff.com/-- is a premier human resource firm offering specialized healthcare personnel for staffing and consulting needs in the healthcare industry. The company and six of its affiliates filed for chapter 11 protection on Feb. 20, 2006 (Bankr. D. Del. Case Nos. 06-10162 to 06-10168). Stephen M. Miller, Esq., at Morris, James, Hitchens & Williams LLP, represents the Debtors in their restructuring efforts. Lawyers at Young, Conaway, Stargatt & Taylor, LLP, represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. * Thorn Reed Recognized for Commercial Litigation Expertise ----------------------------------------------------------- Thorp Reed & Armstrong, LLP, Partner William "Bill" Wycoff were named in Chambers USA's publication America's Leading Lawyers as a "Leading Law Firm/Lawyer in Pennsylvania for Litigation (General Commercial)". This is third consecutive year that the firm and Mr. Wycoff have been chosen for this distinction. "We're extremely proud of our team of litigators and Bill Wycoff for once again garnering this distinction for Thorp Reed & Armstrong," said Douglas E. Gilbert, Managing Partner of Thorp Reed & Armstrong. "Chambers particularly recognized our team's talent in our insurance coverage, securities, and bankruptcy practices, as well as the overall excellence of Bill Wycoff as one of Pennsylvania's best trial attorneys." In their appraisal of the firm, Chambers highlighted that the firm, "has defended numerous NYSE-listed companies in securities and stockholder class action cases. The team has also applied its niche professional liability expertise to good effect, and was recently involved in the defense of various legal firms." In their appraisal of Mr. Wycoff they noted that he has "garnered respect for his record of success as well as for his dynamic style in the courtroom. He is considered one of the leading antitrust experts in the state. However, his practice is not limited to one field, as proven by his involvement in a growing number of securities and corporate governance matters." Chambers methodology has been approved by the British Market Research Bureau, which audits the research annually. In-depth interviews with clients and with attorneys are done over the telephone, each one lasting about half an hour. The qualities on which rankings are assessed include technical legal ability, professional conduct, client service, commercial awareness/astuteness, diligence, commitment, and other qualities most valued by the client. For the current US directory, over 10,000 of these interviews were conducted covering the whole of the USA. They were carried out by a team of 40 full-time researchers over a period of 6 months. The rankings and editorial comment about attorneys are independent and objective. Inclusion is based solely on the research team's findings. About Thorp Reed & Armstrong Based in Pittsburgh, Pennsylvania, Thorp Reed & Armstrong, LLP -- http://www.thorpreed.com/-- is a premier law firm, which has grown to include additional offices in Philadelphia, Pennsylvania, Princeton, New Jersey, and Wheeling, West Virginia. Earning the respect, trust and appreciation of clients, peers, and those who live in our communities, Thorp Reed & Armstrong attorneys have gained a reputation as "lawyer's lawyers" -- lawyers who exemplify the profession's best qualities. Since 1895, the firm supports a wide variety of clients' needs within the practice areas of business law, litigation, and corporate finance. * BOOK REVIEW: The Titans of Takeover ------------------------------------- Author: Robert Slater Publisher: Beard Books Softcover: 252 pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1893122506/internetbankrupt Once upon a time -- and for a very long while -- corporate behemoths decided for themselves when and if they would merge. No doubt such decisions were reached the civilized way, in a proper men's club with plenty of good brandy and better cigars. Like giants, they strode Wall Street, fearing no one save the odd trust-busting politico, mutton-chopped at the turn of the twentieth century, perhaps mustachioed in the 1960s when the word was no longer trust but monopoly. Then came the decade of the 1980s. Enter the corporate raiders, men with cash in hand, shrewd business sense, and not a shred of reverence for the Way Things Have Always Been Done. These businesspeople -- T. Boone Pickens, Carl Icahn, Saul Steinberg, Ted Turner -- saw what others missed: that many of the corporate giants were anomalies, possessed of assets well worth possessing yet with stock market performances so unimpressive that they could be had for bargain prices. When the corporate raiders needed expert help, enter the investment bankers (Joseph Perella and Bruce Wasserstein) and the M&A attorneys (Joseph Flom and Martin Lipton). And when the merger went through, enter the arbitragers who took advantage of stock run-ups, people like Ivan "Greed is Good" Boesky. The takeover frenzy of the 1980s looked like a game of Monopoly come to life, where billion-dollar companies seemed to change ownership as quickly as Boardwalk or Park Place on a sweet roll of dice. By mid-decade, every industry had been affected: in 1985, 3,000 transactions took place, worth a record-breaking $200 billion. The players caught the fancy of the media and began showing up in the news until their faces were almost as familiar to the public as the postman's. As a result, Jane and John Q. Citizen's in Wall Street began its climb from near zero to the peak where (for different reasons) it is today. What caused this avalanche of activity? Three words: President Ronald Reagan. Perhaps his most firmly held conviction was that Big Business was Being shackled by the antitrust laws, deprived a fair fight against foreign competitors that has no equivalent of the Clayton Act in their homelands. Reagan took office on Jan. 20, 1981, and it wasn't long after that that his Attorney General, William French Smith, trotted before the D.C. Bar to opine that, "Bigness does not necessarily mean badness. Efficient firms should not be hobbled under the guise of antitrust enforcement." (This new approach may have been a necessary corrective to the over-zealousness of earlier years, exemplified by the Supreme Court's 1966 decision upholding an enforcement action against the merger of two supermarket chains because the Court felt their combined share of 8% (yes, that's "eight percent") of the Los Angeles market was potentially anticompetitive.) Raiders, investment bankers, lawyers, and arbitragers, plus the fun couple Bill Agee and Mary Cunningham --remember them? -- are the personalities Profiled in Robert Slater's book, originally published in 1987, Slater is a wonderful writer, and he's given us a book no less readable for being absolutely stuffed with facts, many of them based on exclusive behind-the-scenes interviews. ********* 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 ***