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/raid1/www/Hosts/bankrupt/TCR_Public/060807.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, August 7, 2006, Vol. 10, No. 186 Headlines ABB LUMMUS: District Court Affirms Plan Confirmation Order ABB LUMMUS: Names 3 Members to Asbestos PI Trust Advisory Panel AES IRONWOOD: Improved Credit Quality Cues Moody's to Lift Rating AES RED: Moody's Upgrades Senior Secured Bonds' Rating to B1 AK STEEL: Earns $29.1 Million in the Second Quarter of 2006 ALASKA AIR: Earns $55.5 Million in Second Quarter of 2006 AOL LLC: Plans to Lay Off One-Quarter of Workforce to Save $1 Bil. BECKMAN COULTER: Earns $44.6 Million in the Second Quarter of 2006 BERRY-HILL GALLERIES: Wants Until Dec. 6 to File Chapter 11 Plan BERRY PLASTICS: Moody's Rates $750 Million Sr. Sec. Notes at B2 BOYD GAMING: Earns $10.2 Million in Second Quarter Ended June 30 BUFFALO COAL: Selling Coal Reserves to ICG for $5 Million BUFFALO COAL: Panel Fights CDS Family Trust's Foreclosure Request BUFFALO MOLDED: Trial Required to Resolve Omega Preference Action CA INC: Moody's Hold Rating on Senior Unsecured Notes at Ba1 CA INC: 10-K Filing Cues S&P to Affirm BB Corporate Credit Rating CATHOLIC CHURCH: FCR Wants Future Claims Allowed for $30 Million CATHOLIC CHURCH: Proposed Orders on Claims Estimation Process OK'd CENTURY ALUMINUM: Moody's Lifts Rating on $250 Mil. Notes to Ba3 CHARLES RIVER: Amends Credit Agreement with Lenders and JPMorgan CHOCTAW RESORT: Moody's Lifts Senior Unsec. Notes' Rating to Ba3 CITIZENS COMMUNICATIONS: Sells ELI to Integra for $247 Million CNA FINANCIAL: Agrees to Sell 7 Million Shares in Public Offering CNET NETWORKS: Revenue Increases 14% to $92MM in Second Quarter CNH GLOBAL: Reports Second Quarter Net Income of $147 Million COMMSCOPE INC: Earns $46.6 Million in Second Quarter of 2006 COMPLETE RETREATS: Paying $400,000 of Potential Lenders' Expenses COMPLETE RETREATS: Court Fixes November 27 as Claims Bar Date COOPER TIRE & RUBBER: Board Names Byron Pond as Interim CEO COOPER TIRE: Pre-Tax Losses Prompt Moody's to Downgrade Ratings COTT CORPORATION: Forms Two Business Units Under New Structure DAVITA INC: Earns $64.3 Million in Quarter Ended June 30 DEAN FOODS: Earns $171.3 Million for the Second Quarter of 2006 DELTA AIR: Wants Court Okay on Fee Committee & Procedures Protocol DELTA AIR: Gets Court Nod to Amend and Assume Discover Agreement DEVELOPERS DIVERSIFIED: Earns $64.9 Million in Second Quarter EASTMAN KODAK: Weak Profitability Prompts S&P's Negative Watch EDGEWATER MEDICAL: Wins $13 Mil. Judgment Against Mgmt. Companies ENDURANCE SPECIALTY: Buys $235MM of Reinsurance from Shackleton ENERGAS RESOURCES: Makes Final Payments to Double G Energy FALCON AIR: Chapter 11 Trustee hires Katz Barron as Counsel FALCON AIR: U.S. Trustee Reconstitutes Official Creditors Panel FIDELITY NATIONAL: Earns $1.02 Billion in Second Quarter of 2006 FLEXTRONICS INT'L: Reports $4.1BB Net Sales for 1st Quarter 2006 FOSS MANUFACTURING: Saves 400 American Jobs, Offers 200 Positions FOSTER WHEELER: S&P Rates Proposed $350 Million Facilities at BB- GENERAL CABLE: Earns $41.5 Million in Second Qtr. Ended June 30 GERDAU AMERISTEEL: USW and Manitoba Metals Ratify Labor Pact GLIMCHER REALTY: Incurs $43 Million Net Loss in Second Quarter GREENPARK GROUP: Wants Irell & Manella as Bankruptcy Counsel GREENPARK GROUP: Files Schedules of Assets and Liabilities GS AUTO: S&P Assigns BB Rating to Class D Asset-Backed Note HVHC INC: Completes Merger with ECCA Holdings IGIA INC: May 31 Balance Sheet Upside-Down by $14.6 Million INDUSTRIAL DEVELOPMENT: S&P Lowers $27 Million Bonds' Rating to BB INDEPENDENCE TAX: June 30 Balance Sheet Upside-Down By $992,092 IPC ACQUISITION: Silver Lake Merger Spurs S&P's Negative Watch ISLE OF CAPRI: Completes $240 Mil. Sale of Properties to Legends KAISER ALUMINUM: Court Approves $77.7MM Accord with CNA Insurers KL INDUSTRIES: Files Schedules of Assets and Liabilities LAZARD LTD: June 30 Balance Sheet Upside-Down By $745 Million LEVEL 3 COMMS: Posts $201 Million Net Loss in 2nd Quarter 2006 LONE STAR: Earns $32.2 Million in Second Quarter of 2006 MARSH SUPERMARKETS: May Not Pursue Any Cardinal/Drawbridge Offer MAVERICK OIL: Board Appoints James Watt as Chairman and CEO MERITAGE HOMES: Discloses Second Quarter Financial Results MOTHERS WORK: Earns $8.8 Million in Third Quarter of Fiscal 2006 MSGI SECURITY: Balks at Reporter's Insinuations of Nondisclosure MUSICLAND HOLDING: Wants to Walk Away from 30 Contracts & Leases NATIONAL ENERGY: Lehman Says Fees Must Be Paid Despite Bankruptcy NAVISTAR INT'L: Gets Approval to Amend $1.5 Billion Senior Loan NEIMAN MARCUS: Seeks Consents from Holders of 7.124% Debentures NORTEL NETWORKS: Declares Dividends for Class A Pref. Shares NOVELIS INC: Obtains $2.855 Bil. Financing Pledge from Citigroup NVIDIA CORP: Strong Performance Prompts S&P to Raise Rating to BB- O'SULLIVAN INDUSTRIES: Incurs $5.8 Mil. Net Loss in Third Quarter OMI TRUST: S&P Puts Two Transaction Classes' Ratings on Default PULL'R HOLDINGS: Has Interim Access to $300,000 Loan From Merrill PULL'R HOLDINGS: Exclusive Plan-Filing Period Stretched to Dec. 22 QWEST CORP: Moody's Rates Proposed $500 Million Notes at (P)Ba3 REFCO INC: Chapter 7 Trustee Can Reimburse $749,579 to Refco Group REFCO INC: Refco Capital Trustee Hires Skadden as Special Counsel REICHHOLD INDUSTRIES: S&P Rates $195MM Sr. Unsecured Notes at BB- RIEFLER CONCRETE: Hires Jager Smith as Bankruptcy Counsel RIEFLER CONCRETE: U.S. Trustee Appoints Six-Member Creditors Panel RIEFLER CONCRETE: Committee Hires Goldstein Bulan as Counsel SILICON GRAPHICS: Will Pay Up to $1.6MM Prepetition Custom Duties SILICON GRAPHICS: Rosen Slome Hired as Panel's Conflicts Counsel TANGER FACTORY: Earns $4.9 Million in Second Quarter Ended June 30 TEMBEC INC: Incurs $6.6 Million Net Loss in Fiscal Third Quarter TIER TECHNOLOGIES: Nasdaq Listing Council Affirms Delisting TRANSAMERICA REAL: Case Summary & Largest Unsecured Creditor TRANSWITCH CORP: Posts $1.3 Mil. Net Loss in 2006 Second Quarter TUESDAY MORNING: Earns $2.9 Mil. in Second Quarter Ended June 30 US INVESTIGATIONS: Moody Holds $603MM Senior Loan's Rating at B2 WASTE SERVICES: Posts $11.1 Million Net loss for 2nd Quarter 2006 WINN-DIXIE STORES: Florida Court Approves Disclosure Statement WINN-DIXIE: Changes Under Amended Joint Plan of Reorganization * Fried Frank Names Alter, Arnott, and Beaudreau as Partners * Hellman & Friedman Gains Majority Stake in AlixPartners * BOND PRICING: For the week of July 31 - August 4, 2006 ********* ABB LUMMUS: District Court Affirms Plan Confirmation Order ---------------------------------------------------------- The Honorable Sue L. Robinson of the U.S. District Court for the District of Delaware has affirmed the U.S. Bankruptcy Court for the District of Delaware's order confirming ABB Lummus Global Inc.'s Plan of Reorganization. The District Court's affirmation includes, but is not limited to, the Lummus Asbestos PI Channeling Injunction found in Paragraph 7.14 of the Plan and the Asbestos Insurance Entity Injunction found in Paragraph 7.3 of the Plan. U.S. bankruptcy laws allow ABB to transfer asbestos-related injury claims away from its balance sheet and into trusts set up in the Chapter 11 process. The Lummus Plan of Reorganization is aimed at satisfying current and future claims relating to asbestos. The plan was approved by 96% of claimants in September 2005. The Debtor's Prepackaged Plan As reported in the Troubled Company Reporter on May 12, 2006, the Debtor told the Bankruptcy Court that the Plan was developed through extensive discussions among: * the Debtor; * its indirect parent, ABB Ltd.; * Richard B. Schiro, the future claimants' representative for unknown and future holders of the Debtor's Asbestos PI Trust Claims; * an informal committee comprised of representatives of certain claimants with claims against the Debtor and Combustion Engineering; * representatives of certain cancer claimants with claims against Combustion Engineering in Combustion's bankruptcy case; * the Official Committee of Unsecured Creditors appointed in Combustion's bankruptcy proceedings; and * David Austern, the future claimants representative appointed in Combustion's bankruptcy proceedings. Overview of the Plan The Plan addresses the asbestos-related personal injury liabilities of the Debtor and the Asbestos Protected Parties. The Plan provides for the issuance of the Lummus Asbestos PI Channeling Injunction pursuant to Sections 105 and 524(g) of the Bankruptcy Code that will result in the channeling of all asbestos-related personal injury liabilities, to the Lummus Asbestos PI Trust, of Lummus and other Asbestos Protected Parties, including: -- ABB Lummus Global Construction Co., a former affiliate merged with the Debtor on June 28, 2005, and -- ABB Lummus Global International Corporation, a wholly owned subsidiary of the Debtor, Terms of the Plan Under the prepackaged Plan, these claims will be paid in full: * Administrative Expense Claims; * Tax Claims; * Priority Claims; * Secured Claims; * Workers' Compensation Claims; and * General Unsecured Claims. Non-Debtor Affiliate Intercompany Claims will be paid in full subject to the subordination provisions described in the ABB Ltd., and Non-Debtor Affiliate Settlement Agreement. Holders of Equity Interests in the Debtor will retain their interests subject to the pledge and security interest in 51% of the issued and outstanding shares of Capital Stock of the Debtor. The shares will be held by ABB Oil & Gas on the Effective Date to secure the Lummus Note and the guaranty provided by ABB Ltd., ABB Holdings, and ABB Oil & Gas with respect to the Debtor's payment obligation under the Lummus Note. All Lummus Asbestos PI Trust Claims will be subject to the Lummus Asbestos PI Channeling Injunction. Other than Settled Asbestos Claims, all Lummus Asbestos PI Trust Claims will be evaluated, determined, and paid, pursuant to the terms, provision, and procedures of the Lummus Asbestos PI Trust Distribution Procedures. The Lummus Asbestos PI Trust will funded in accordance with the provision of Article 7 of the Plan and the Lummus PI Trust Agreement. A copy of the Debtor's Disclosure Statement and Prepackaged Chapter 11 Plan of Reorganization is available for free at http://ResearchArchives.com/t/s?8d6 Headquartered in Houston, Texas, ABB Lummus Global Inc. -- http://www.abb.com/lummus/-- offers advanced process technologies, project management, engineering, procurement and construction-related services for the oil and gas, petroleum refining and petrochemical process industries. The group oversees the construction of process plants and offshore facilities. The company filed for chapter 11 protection on Apr. 21, 2006 (Bankr. D. Del. Case No. 06-10401). Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Nicholson Graham LLP, represents the Debtor. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, LLP, serves as the Debtor's co-counsel. 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 more than $100 million in assets and debts. ABB LUMMUS: Names 3 Members to Asbestos PI Trust Advisory Panel --------------------------------------------------------------- The Honorable Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware has approved the nomination of Russell Budd, Esq., Perry Weitz, Esq., and Steven Kazan, Esq., as initial members of ABB Lummus Global Inc.'s Asbestos PI Trust, Trust Advisory Committee. Pursuant to the Debtor's Plan of Reorganization, the Lummus Asbestos PI Trust will assume all Lummus Asbestos PI Trust Claims. On the effective date of the Plan, the Lummus Asbestos PI Trust will be empowered to initiate, prosecute, defend and resole all legal actions and other proceedings related to any assets, liabilities or responsibilities of the Lummus Asbestos PI Trust. The Trust Advisory Committee will work with the Trustee in administering the Lummus Asbestos PI Trust. The Trust Advisory Committee members can be reached at: Russell W. Budd, Esq. Baron & Budd, P.C. 3102 Oak Lawn Avenue Suite 1100 Dallas, TX 75219 Perry Weitz, Esq. Weitz & Luxenburg PC 180 Maiden Lane New York, NY 10038 Steven Kazan, Esq. Kazan, McClain, Abrams Fernandez, Lyons, Farrise & Greenwood 171 Twelfth Street, Suite 300 Oakland, CA 94607 Headquartered in Houston, Texas, ABB Lummus Global Inc. -- http://www.abb.com/lummus/-- offers advanced process technologies, project management, engineering, procurement and construction-related services for the oil and gas, petroleum refining and petrochemical process industries. The group oversees the construction of process plants and offshore facilities. The company filed for chapter 11 protection on Apr. 21, 2006 (Bankr. D. Del. Case No. 06-10401). Jeffrey N. Rich, Esq., at Kirkpatrick & Lockhart Nicholson Graham LLP, represents the Debtor. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young, Jones & Weintraub, LLP, serves as the Debtor's co-counsel. 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 more than $100 million in assets and debts. AES IRONWOOD: Improved Credit Quality Cues Moody's to Lift Rating ----------------------------------------------------------------- Moody's Investors Service upgraded AES Ironwood's senior secured debentures to B1 from B2, concluding a review that was initiated on April 20, 2006. The upgrade reflects an improvement in the credit quality of The Williams Companies, which guarantees the offtake tolling obligation. The upgrade also reflects Moody's expectation that the project's debt service coverage ratio will improve to about 1.15x to 1.2x in 2007. A subsidiary of The Williams Companies is the source of virtually all revenues for the project, pursuant to a tolling agreement that extends until 2021. Williams guarantees its subsidiary's obligations under the contract. Under current market conditions, the gas-fired power project has weak economics, as reflected in the 13% capacity factor for 2005 and a debt service ratio that is expected to fall below 1x for 2006, after certain non-recurring capital expenditures. Under a scenario in which Williams failed to fulfill its obligations, Moody's believes it is unlikely that the project would be able to meet its obligations operating as a merchant plant. As long as the contracts remain in place, however, coverages are not expected to fall below 1x for an extended period, absent major operational difficulties. The expected recovery in 2007 notwithstanding, the rating remains constrained by poor financial performance, which Moody's believes is unlikely to improve significantly in the near to medium term. The project will be fully exposed to market pricing once the power sales agreement with Williams expires. At that point, roughly one quarter of the initial par amount of the bonds will remain outstanding. The stable outlook reflects Moody's expectation that the project will continue to exhibit sound operating performance, and capacity payments from Williams will remain sufficient to pay costs and debt service. Upgrades: Issuer: AES Ironwood, L.L.C. * Senior Secured Regular Bond/Debenture, Upgraded to B1 from B2 Outlook Actions: Issuer: AES Ironwood, L.L.C. * Outlook, Changed To Stable From Rating Under Review Ironwood is a 705 MW combined cycle gas turbine located in South Lebanon Township, Pennsylvania. AES RED: Moody's Upgrades Senior Secured Bonds' Rating to B1 ------------------------------------------------------------ Moody's Investors Service upgraded AES Red Oak's senior secured bonds to B1 from B2, concluding a review that was initiated on April 20, 2006. The rating outlook is stable. The upgrade reflects improvement in the credit quality of The Williams Companies, which guarantees the offtake tolling obligations. The upgrade also reflects Moody's expectation that the project's senior debt service coverage ratio will improve to about 1.3x in 2007, following a decline to about 1.1x in 2006 that is related to non-recurring capital expenditures in the form of two planned maintenance outages. A subsidiary of The Williams Companies is the source of virtually all revenues for the project, pursuant to a tolling agreement that extends until 2022. The Williams Companies guarantees its subsidiary's obligations under the contract. Under current market conditions, the gas-fired project has weak economics, as reflected in its low capacity factor, which approximated 20% in 2005. Under a scenario in which Williams failed to fulfill its obligations, Moody's believes it is unlikely that the project would be able to meet all of its obligations on a timely basis operating as a merchant plant. As long as the contracts remain in place, however, senior debt service coverages are not expected to fall below 1.2x for an extended period, absent major operational difficulties. The expected recovery in 2007 notwithstanding, the rating remains constrained by poor financial performance, which Moody's believes is unlikely to improve significantly in the near to medium term. The project will be fully exposed to market pricing once the power sales agreement with Williams expires. At that point, roughly one quarter of the initial par amount of the bonds will remain outstanding. The stable outlook reflects Moody's expectation that the project will continue to exhibit sound operating performance, and that capacity payments from Williams will remain sufficient to pay costs and debt service. Upgrades: Issuer: AES Red Oak, L.L.C. * Senior Secured Regular Bond/Debenture, Upgraded to B1 from B2 Outlook Actions: Issuer: AES Red Oak, L.L.C. * Outlook, Changed To Stable From Rating Under Review Red Oak is an 832 MW combined cycle gas turbine located in Sayreville, New Jersey. AK STEEL: Earns $29.1 Million in the Second Quarter of 2006 ----------------------------------------------------------- For the second quarter of 2006, AK Steel Corp. reported net income of $29.1 million, compared to a net income of $9 million in the same period last year. For the quarter, the Company also reported net sales of $1,497.3 million and operating profit of $63 million. "AK Steel's strong operating and financial performance across the board makes the second quarter of 2006 a defining quarter in what is a defining year for our company," said James L. Wainscott, chairman, president and chief executive officer. "By the end of the quarter, our temporary workforce was operating nearly every unit at Middletown Works at or above the levels prior to the onset of the labor dispute on March 1. In fact, the plant's hot-dip galvanizing line set a production record June 23 that is unmatched in the 49-year history of that line." Six Month Results For the first six months of 2006, the Company reported net income of $35.3 million, compared to net income of $68.2 million in the same period in 2005. First-half 2006 sales were a record $2,933.2 million, compared to $2,877.1 million for the same period in 2005. The company reported an operating profit for the first six months of 2006 of $92.4 million, compared to $187.8 million for the prior year period. Middletown, OH-based AK Steel Corp. -- http://www.aksteel.com/-- produces flat-rolled carbon, stainless and electrical steels, as well as tubular steel products for the automotive, appliance, construction and manufacturing markets. * * * As reported in the Troubled Company Reporter on Feb. 21, 2005, Moody's Investors Service upgraded AK Steel Corporation's debt ratings (Senior Implied to B1 from B2) and affirmed the company's SGL-1 rating. The rating outlook was stable. As reported in the Troubled Company Reporter on July 23, 2004, Standard & Poor's Ratings Services revised its outlook on integrated steel producer AK Steel Corp. to stable from negative. Standard & Poor's also affirmed its 'B+' corporate credit and senior unsecured debt ratings on the company and its parent, AK Steel Holding Corp. ALASKA AIR: Earns $55.5 Million in Second Quarter of 2006 --------------------------------------------------------- Alaska Air Group Inc. reported second quarter net income of $55.5 million, compared to $17.4 million in the second quarter of 2005. "We are extremely pleased with this quarter's earnings, which were the result of a combination of revenue gains and cost improvements," Bill Ayer, the Company's chairman and chief executive officer said. "It's gratifying to see everyone's hard work pay off, and I would like to thank and congratulate our employees on an outstanding quarter." Alaska Air Group had cash and short-term investments at June 30, 2006, of approximately $1.1 billion compared to $983 million at Dec. 31, 2005. The Company's debt-to-capital ratio, assuming aircraft operating leases are capitalized at seven times annualized rent, was 69 percent as of June 30, 2006, compared to 73 percent as of Dec. 31, 2005. According to the Company, the decrease from Dec. 31, 2005 is primarily due to the conversion to equity of its senior convertible notes in April 2006, partially offset by the $23.6 million net loss for the six months, coupled with an increase in the company's outstanding debt resulting from new aircraft-secured debt arrangements in the first six months of 2006. Based in Seattle, Washington, Alaska Air Group, Inc. is a holding company with two principal subsidiaries, Alaska Airlines, Inc. and Horizon Air Industries, Inc. Alaska operates an all-jet fleet with an average passenger trip length of 1,009 miles. Alaska principally serves destinations in the state of Alaska and North/South service between cities in the Western United States, Canada and Mexico. Horizon operates jet and turboprop aircraft with average passenger trip of 382 miles. Horizon serves 40 cities in seven states and six cities in Canada. * * * As reported in the Troubled Company Reporter on May 4, 2006, Standard & Poor's Rating Services revised its outlook on Alaska Air Group Inc. to stable from negative. The ratings on Alaska Air Group and its major operating subsidiary, Alaska Airlines Inc., including the 'BB-' corporate credit rating on both entities, were affirmed. AOL LLC: Plans to Lay Off One-Quarter of Workforce to Save $1 Bil. ------------------------------------------------------------------ AOL LLC plans to lay off around 5,000 employees -- around a quarter of its manpower, The Washington Post reports. The job cuts are part of the Company's restructuring plan to focus on online advertising instead of dial-up subscriptions. The planned restructuring, which will be implemented over the next six months, is expected to yield $1 billion in savings, according to the Mercury News. AOL will offer severance packages. This current round of lay-offs follow the planned termination of 1,300 customer-service employees disclosed in May 2006. AOL LLC, formerly known as America Online, is the Internet division of Time Warner. It is the world's largest Internet access provider. BECKMAN COULTER: Earns $44.6 Million in the Second Quarter of 2006 ------------------------------------------------------------------ Beckman Coulter, Inc. reported net income for the three months ended June 30, 2006 of $44.6 million, compared to $55.2 million for the same period in 2005. The Company also reported total revenues for three months ended June 30, 2006 of $616.3 million, compared to $618.8 for the same period in 2005. Total revenues were down were down about $3 million, or 0.4% below second quarter 2005, due to a July 2005 shift to operating-type leases. Net income for the six months ended June 30, 2006 was $77.2 million on $1.185 billion in total revenues, compared to $96.6 million of net income on total revenues of $1.195 billion. The Company's free cash flow year to date is $43 million, including the benefit of the Applera settlement. It is adjusting its full year outlook for free cash flow from about $50 million to at least $30 million. For the Second Quarter of 2006 the Company: -- Declared a $0.15 per share quarterly cash dividend. -- Repurchased approximately 740,000 shares of its stock at an average price of $52.76 per share. Year to date, it has repurchased nearly 1.6 million shares and completed its 2.5 million share repurchase authorization. -- Shipped the Unicela DxC 600i, the first of several fully capable, next generation chemistry / immunoassay work cells in its development pipeline. -- Shipped the Biomek(R)FXP and NXP, next generation instruments in the Biomek family of laboratory automation workstations for life science and clinical research applications. -- Signed a series of agreements with Applera Corporation to resolve all outstanding legal disputes between the parties and granted royalty-bearing licenses to Applera for its patents related to replaceable gels for capillary electrophoresis instruments and DNA sequencers and to its patent for a heated lid for thermalcyclers. Applera granted the Company royalty-bearing licenses conferring rights in the diagnostics market to its instrumentation patents for nucleic acid sequencing and real time thermalcycling. The Company also disclosed that for the month of July 2006 it: -- Sold its minority equity investment in APG to Applera for about $50 million in cash. Agencourt Bioscience's sequencing services business retains access to APG's ultra- high throughput sequencing products. -- Acquired an in vitro diagnostics product license to all real time polymerase chain reaction patents from Roche for $27.5 million plus future royalties. -- Entered an agreement with Quest Diagnostics Inc. to supply the Company's cellular technology to automate its hematology line, improving quality and efficiency throughout Quest's laboratory network. Headquartered in Fullerton, California, Beckman Coulter, Inc. -- http://www.beckmancoulter.com/-- manufactures biomedical testing instrument systems, tests and supplies that simplify and automate laboratory processes. * * * As reported in the Troubled Company Reporter on Jan. 26, 2006, Moody's Investors Service confirmed its Baa3 rating on Beckman Coulter's $240 Million 7.45% Senior Notes due 2008; $235 Million 6.875% Senior Notes due 2011; and $100 Million 7.05% Senior Debentures due 2026. Moody's also confirmed its (P)Baa3/(P)Ba1 rating on the Company's $500 Million Universal Shelf Registration (senior and subordinate). Moody's said the outlook on Beckman's ratings is stable. BERRY-HILL GALLERIES: Wants Until Dec. 6 to File Chapter 11 Plan ---------------------------------------------------------------- Berry-Hill Galleries, Inc., and its debtor-affiliate, Coram Capital, LLC, ask the U.S. Bankruptcy Court for the Southern District of New York to extend, until Dec. 6, 2006, the period within which they have the exclusive right to file a chapter 11 plan. The Debtors also want the Court to extend, until Feb. 2, 2007, their exclusive period to solicit acceptances of that plan. The Debtors cite three reasons why the extension is warranted: 1) they have made good faith progress towards rehabilitation and development of a consensual Chapter 11 Plan; 2) the size and complexity of their chapter 11 cases; and 3) the requested extension of the exclusive periods is proper. Headquartered in New York, New York, Berry-Hill Galleries, Inc. -- http://www.berry-hill.com/-- buys paintings and sculpture through outright purchase or on a commission basis and also exhibits artworks. The Debtor and its affiliate, Coram Capital LLC, filed for chapter 11 protection on Dec. 8, 2005 (Bankr. S.D.N.Y. Case Nos. 05-60169 & 05-60170). Robert T. Schmidt, Esq., at Kramer, Levin, Naftalis & Frankel, LLP, represents the Debtors in their restructuring efforts. Robert J. Feinstein, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub P.C., represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets between $10 million and $100 million and debts between $1 million and $50 million. BERRY PLASTICS: Moody's Rates $750 Million Sr. Sec. Notes at B2 --------------------------------------------------------------- Moody's Investors Service assigned ratings to Berry Plastics Holding Corporation, the entity that is to be the new parent of Berry Plastics Corporation, and took these rating actions that concluded the review for possible downgrade of BPC initiated on June 29, 2006. Moody's assigned these ratings to Berry: * $200 million senior secured first lien revolver due 2012, Ba2 * $675 million senior secured first lien term loan B due 2013, Ba2 * $750 million senior secured second lien notes due 2014, B2 * Speculative Grade Liquidity Rating, SGL-2 * Corporate Family Rating, B1 Moody's confirmed these ratings of existing BPC notes: * $335 million 10.75% senior subordinated notes, due July 15, 2012, B3 The ratings outlook is stable. Moody's withdrew these ratings for BPC: * $150 million senior secured revolver maturing March 31, 2010, B1 * $789 million senior secured term loan due Dec 2, 2011, B1 * Corporate Family Rating, B1 Upon tender of the existing $335 million 10.75% senior subordinated notes, due July 15, 2012, the rating will be withdrawn. Private equity funds affiliated with Goldman, Sachs & Co. and J.P. Morgan Chase & Co. are selling BPC to private equity firms Apollo Management, L.P. and Graham Partners. The aggregate purchase price of $2.3 billion is being funded with a cash common equity contribution of approximately $486 million and new borrowings of about $1.9 billion, including $425 million of subordinated notes that are not rated at this time. BPC's existing credit facilities and subordinated notes are being repaid as part of the transaction. Moody's expects that the fundamental operations and management of the company will remain unchanged. Although the transaction results in a material increase in financial leverage, Moody's assigned a B1 corporate family rating to Berry, the same rating as at BPC before the proposed change in ownership. EBIT coverage of pro forma interest expense, while tight in the near term, should remain at acceptable levels throughout the intermediate term. Historically, the company has temporarily stretched its credit profile to the limit of the ratings category and successfully managed back to acceptable metrics. Moody's estimates that pro forma for the transaction, Berry's total debt to EBITDA, adjusted for operating leases and pensions, would be over 6.5x, while free cash flow to debt would be in the low single digits and EBIT interest coverage would be just above 1x. Moody's expects Berry to maintain EBIT margins in the low double digits and EBIT to gross property, plant, and equipment in the high teens to low twenties. Strengths in Berry's competitive profile include annual revenue of $1.4 billion and a 15-year track record of sequential growth in operating cash flow. Moody's views Berry's substantial market shares in drink cups, plastic tubes, and prescription vials, which together account for about 30% of total revenue, and leading market positions for dairy and pry-off containers as supplying an element of structural stability in Berry's revenue base. The stable ratings outlook anticipates that Berry will meaningfully reduce financial leverage in the intermediate term and maintain strong operating and competitive profiles that offset the significant financial leverage and low interest coverage that are weak for the current corporate family rating. The stability of the outlook is highly sensitive to any acquisitions, even if they were to be moderately sized. Any sustained increase in adjusted total debt to EBITDA, or annual free cash flow becoming negative, or interest coverage falling below 1x is likely to result in a lowering of the outlook or ratings. Similarly, evidence of deterioration in Berry's operating margin or competitive position could put downward pressure on the outlook or ratings. Should adjusted total debt to EBITDA move toward the 5x area and free cash flow to debt move up on a sustained basis to the mid to high single digit range, there could be positive movement in the ratings outlook. The first time assignment of an SGL-2 Speculative Grade Liquidity rating reflects Moody's expectations of good liquidity throughout the next twelve months as cash from operations should fund working capital requirements and capital expenditures. Mandatory debt maturities during the period should be minimal and access to the committed revolver should remain satisfactory. For further information, refer to Moody's Credit Opinion and Speculative Grade Liquidity Assessment on Berry Plastics Corporation. Berry Plastics Holdings Corporation, headquartered in Evansville, Indiana, is a leading supplier of plastic packaging products, serving over 12,000 customers in the food and beverage, healthcare, household chemicals, personal care, home improvement, and other industries. Net sales for the twelve months ended July 1, 2006 were approximately $1.4 billion. BOYD GAMING: Earns $10.2 Million in Second Quarter Ended June 30 ---------------------------------------------------------------- For the second quarter ended June 30, 2006, Boyd Gaming Corporation reported net income of $10.2 million, compared with $48.6 million in the same period last year. The Company also reported net revenue of $610.9 million for the second quarter 2006. Commenting on the results, Bill Boyd, the Company's chairman and chief executive officer, said, "After eight consecutive quarter- over-quarter increases in Adjusted EPS dating back to the second quarter 2004, this quarter turned out to be a transition period, as we continued to ramp-up at Blue Chip, re-introducing our new facility within that market, and to adjust operationally for a capacity increase of approximately 14% in gaming positions in the Las Vegas Locals market." Year-To-Date Results The Company's net income for the six months ended June 30, 2006 was $73.4 million, as compared to $88.7 million for the six months ended June 30, 2005. Net revenues were $1.3 billion and $1.1 billion for the six months ended June 30, 2006 and 2005, respectively. Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) -- http://www.boydgaming.com/-- owns and operates 20 gaming entertainment properties in Nevada, New Jersey, Mississippi, Illinois, Indiana , Louisiana and Florida. The Company is also developing Echelon Place in Las Vegas, which is expected to open in mid 2010. * * * As reported in the Troubled Company Reporter on Jan. 27, 2006, Boyd Gaming Corp.'s new $250 million senior subordinated notes due 2016 carried Moody's 'B1' rating with positive outlook and Standard & Poor's 'B+' rating with a stable outlook. BUFFALO COAL: Selling Coal Reserves to ICG for $5 Million --------------------------------------------------------- Buffalo Coal Company, Inc., asks the U.S. Bankruptcy Court for the Northern District of West Virginia for permission to sell certain if its permits and coal reserves to International Coal Group, Inc. ICG proposes to buy the Debtor's permits, coal reserves and associated real property located in Maryland for approximately $5 million. The assets will be sold free and clear of all prior agreements and encumbrances, except for reclamation liabilities related to the permits purchased. The real property included in the sale is subject to a lien in favor of Grant County Bank in the approximate amount of $400,000. Grant County's liens will attach to the proceeds of the sale. In addition, a portion of the coal reserves is leased from the Carl DelSignore Family Trust and is subject to the claims of the Trust. The debtor proposes to work with the trust and ICG in order to resolve the business issues related to the coal leases. A hearing on the proposed sale was scheduled on July 28, 2006. Bankruptcy court filings as of August 4, 2006, do not show the result of the sale hearing. About Buffalo Coal Headquartered in Oakland, Maryland, Buffalo Coal Company, Inc., is engaged in coal mining and processing services. The company filed for chapter 11 protection on May 5, 2006 (Bankr. N.D. W.Va. Case No. 06-00366). David A Hoyer, Esq., at Hoyer, Hoyer & Smith, PLLC, represents the Debtor in its restructuring efforts. Thorp Reed and Armstrong, LLP, represents Buffalo Coal's Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $119,323,183 and total debts of $105,887,321. BUFFALO COAL: Panel Fights CDS Family Trust's Foreclosure Request ----------------------------------------------------------------- The Official Committee of Unsecured Creditors of Buffalo Coal Company, Inc., asks the U.S. Bankruptcy Court for the Northern District of West Virginia to deny the Carl DelSignore Family Trust's request to: -- lift the automatic stay so that it can foreclose upon its security interest on substantially all of the Debtor's assets; and -- compel the Debtor to assume or reject its lease with the trust or permit the trust to terminate the lease. Foreclosure The Debtor, C & G Energy Group, Inc., and the Carl DelSignore Family Trust are parties to a stock purchase agreement dated Feb. 28, 2001. Under the agreement, C & G executed a promissory note in the principal amount of $4.35 million payable to the Carl DelSignore Family Trust in exchange for substantially all of the Debtor's shares. To secure payment of the note, the Debtor gave the Trust a security interest in substantially all of its assets. The Note is currently in default with an unpaid principal of approximately $2.3 million, plus interest of $112,822. James W. Martin, Jr., Esq., at Siegrist & White, PLLC, tells the Court that that there is no equity in the Debtor's property for the benefit of general unsecured creditors. Lease Assumption The Carl DelSignore Family Trust leases certain coal mining properties to the Debtor for use in mining and processing coal. The lease was intended to remain in effect until all mineable and merchantable coal has been removed from the properties. Under their Master Lease Agreement, the Debtor is required to pay royalties based on the tonnage of coal produced from the leased premises, subject to an annual minimum royalty. The Trust commenced a civil action in District Court of Maryland for Garret County against the Debtor after the Debtor defaulted on its obligation under the lease agreement. In the civil case, the Trust sought possession of all properties leased to the Debtor. To resolve the civil action, the Debtor and the Trust agreed that the lease would be "reinstated" if, among other things, the Debtor pays in full the $2.4 million due on the lease by May 9, 2006. Mr. Martin informs the Court that the Debtor failed to comply with this requirement. The Trust wants the Court to rule that its lease agreement with the Debtor terminated prior to the Debtor's bankruptcy filing and that their agreement is no longer "executory" and cannot be assumed by the Debtor. If the Court finds that the lease has not terminated and is subject to assumption, the Trust wants the Court to fix the time within which the Debtor must decide whether to assume or reject the lease. Committee's Stand Kimberly Luff Wakim, Esq., at Thorp Reed & Armstrong, LLP, tells the Court that the Trust's motion to foreclose on the Debtor's assets must be denied because: -- the Debtor is not a guarantor or obligor under the promissory note issued by C & G; and -- the Debtor received no consideration for granting of the alleged security interest to the Trust. Ms. Wakim also explains that in order to be entitled to any relief on its lease termination motion, the Trust must first establish that the Master Lease in question is a true lease. Ms. Wakim claims that the Master Lease is not a true lease, and therefore is not subject to the provisions of section 365(d) (3) of the Bankruptcy Code. According to Ms. Wakim the Master Lease is a disguised financing device designed to sell the mineral rights in the coal to the Debtor. She adds that the Master Lease is not a true lease, but rather is a conveyance of the coal mining rights to the Debtor because the rights of the Debtor to mine the coal continues to run so long as merchantable coal exists to be mined. About Buffalo Coal Headquartered in Oakland, Maryland, Buffalo Coal Company, Inc., is engaged in coal mining and processing services. The company filed for chapter 11 protection on May 5, 2006 (Bankr. N.D. W.Va. Case No. 06-00366). David A Hoyer, Esq., at Hoyer, Hoyer & Smith, PLLC, represents the Debtor in its restructuring efforts. Thorp Reed and Armstrong, LLP, represents Buffalo Coal's Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $119,323,183 and total debts of $105,887,321. BUFFALO MOLDED: Trial Required to Resolve Omega Preference Action ----------------------------------------------------------------- Buffalo Molded Plastics, Inc., dba Andover Industries, commenced an adversary proceeding against Omega Tool Corp. seeking to avoid and recover, as preferential, two prepetition wire transfers totaling $1,083,370. In connection with the adversary proceeding, the Debtor sought summary judgment on the basis that all of the requirements of preference have been met. In response, Omega sought partial summary judgment and asserted three defenses to the Debtor's claim that the transfers were preferential: * the earmarking doctrine; * the contemporaneous exchange of new value defense; and * the ordinary course of business defense. In a decision published at 2006 WL 1822425, the Honorable Thomas P. Agresti of the U.S. Bankruptcy Court for the Western District of Pennsylvania denied the summary judgment requests. Judge Agresti says genuine issues of material fact prevent the Court from deciding the dispute on summary judgment pleadings. Buffalo and Omega's Relationship Buffalo produces automobile parts and sells them directly to automobile manufacturers. Omega manufactures plastic injection molds that are used to fabricate those parts. Buffalo engaged Omega to build certain molds necessary for a contract with DaimlerChrysler. On Oct. 13, 2004, two wire transfers, aggregating $1,083,370, were made to Omega from Buffalo's account at Comerica Bank as payment for the molds. Omega shipped the molds required for the DaimlerChrysler contract to the Debtor after receiving the wire transfers. Buffalo filed its voluntary Chapter 11 petition on Oct. 21, 2004. On March 7, 2005, the Debtor filed a complaint seeking avoidance of the wire transfers on the basis that the transfers constitute preference payments. Buffalo's Summary Judgment Plea Buffalo asserted that there is no material dispute of fact that the two transfers made to Omega meet the requirements for a preference pursuant to Section 547(b) of the Bankruptcy Code. In response, Omega argued that the "earmarking doctrine" precludes a finding that the wire transfers were preferential because the Debtor had no property interest in those funds. The "earmarking doctrine" is an equitable doctrine that says funds are earmarked for a creditor when a new lender extends a loan to enable a Debtor to pay a specific debt. Funds loaned by the new lender under the earmarking doctrine are not part of the Debtor's estate because the transfer substitutes one creditor for another. Omega explained that if the transfers did not involve transfers of the Debtor's interest in property, the initial statutory predicates for a preference under Section 547(b) have not been met. Because of Omega's application of the earmarking doctrine, Judge Agresti concluded that an issue of material fact exists as to whether the transfers fall within the statutory elements of Section 547(b). Judge Agresti denied Omega's request for summary judgment on account of the earmarking doctrine because the Court was unable to determine if the transfers diminished the Debtor's estate. For the earmarking defense to hold, a transfer, among other things, should not result in any diminution of the estate. The Court needs evidence to evaluate that contention. New Value and Contemporaneous Exchange To prevail on a contemporaneous exchange for new value defense, a vendor must prove that: a) both the debtor and the vendor intended the delivery of the goods and the payment of money to the vendor to be contemporaneous; b) the exchange was in fact substantially contemporaneous; and c) the exchange was for new value. Buffalo says it swapped more than $1 million in cash for molds worth less than that amount. Omega says that may be true, says the value of the molds (and subsequent engineering work) is higher than Buffalo computes. Judge Agresti says these factual disputes preclude summary judgment. Additionally, there's a dispute about when title to the molds passed from Omega to Buffalo. Judge Agresti says that while passage of title may be a legal dispute rather than a factual one, the Court is unable to make a determination without further factual development. Ordinary Course of Business Omega included the "ordinary course defense" in response to the Debtor's adversary proceeding although it did not argue that summary judgment should be granted on the basis of this defense. Buffalo anticipated the ordinary course defense and asked the court to issue a summary judgment denying Omega's defense of ordinary course. Determination of what is ordinary course activity between a Debtor and a vendor is subjective. If the parties involved have had limited dealings with each other, as in the case of Buffalo and Omega, the Court places more emphasis on prevailing industry standards to determine what an ordinary course transaction is. Judge Agresti ruled that it is difficult to assess what is ordinary course between Buffalo and Omega because of their limited dealings with each other. Judge Agresti further explained that practices prevalent in the areas where Buffalo and Omega operate makes it unclear how the defense of ordinary course could be applied. For these reasons, Judge Agresti concludes that material facts exist precluding judgment in favor of Buffalo on Omega's ordinary course defense. Willard E. Hawley, Esq., at Lindahl Gross Lievois P.C., represents the Debtor in this adversary proceeding. Ryan D. Heilman, Esq., at Schafer and Weiner, PLLC, serves as counsel to Omega. Headquartered in Andover, Ohio, Buffalo Molded Plastics, Inc., dba Andover Industries -- http://www.andoverplastics.com/-- manufactures rocker panels, grilles, pillars and body side molding components for General Motors Corp. and DaimlerChrysler. The Company filed for chapter 11 protection on Oct. 21, 2004 (Bankr. W.D. Pa. Case No. 04-12782). David Bruce Salzman, Esq., at Campbell & Levine, LLC, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated assets and debts in the $10 million to $50 million range. David W. Lampl, Esq., at Leech Tishman Fuscaldo & Lampl, LLC, represents the Official Committee of Unsecured Creditors in the Debtor's chapter 11 case. CA INC: Moody's Hold Rating on Senior Unsecured Notes at Ba1 ------------------------------------------------------------ Moody's Investors Service confirmed CA's Ba1 senior unsecured rating and assigned a negative rating outlook, concluding a review for possible downgrade initiated on June 30, 2006. The Ba1 rating confirmation reflects the company's completed accounting review and reestablishment of current filing of its 10-K and subsequent 10-Q's, including the company's filing of its 10-K for its March 2006 fiscal year on July 31, 2006. The negative outlook reflects challenges the company has to implement effective financial controls, remediate material weaknesses to its financial reporting, contain sales force compensation costs, and revive client billings performance. The negative outlook also considers the more aggressive financial policies of the company. Moody's notes that for fiscal 2006, the company's former sales compensation plan resulted in an unexpected $75 million increase to commission expenses, while client billings declined slightly, excluding acquisition related products and accelerated customer payments. In Moody's opinion, current revisions to the former sales force compensation plan could negatively impact morale, the retention of key sales executives, and financial performance. The company's Ba1 senior unsecured rating reflects its large portfolio of mission critical software product offerings and installed base of a diverse set of creditworthy clients, which in isolation could potentially map to a high Baa rating. However, the rating also reflects the uncertainties surrounding the company's ineffective internal controls, subdued organic client billings performance, unsettled fulfillment of the terms of the Deferred Prosecution Agreement, modest returns on net assets, competition from integrated and non-integrated technology vendors, and exposure to mature mainframe and Unix markets, which drive the overall Ba1 rating. For further information, refer to Moody's credit opinion for CA, Inc. Headquartered in Islandia, New York, California, Inc. is an enterprise software vendor for enterprise management, security, and storage applications. CA INC: 10-K Filing Cues S&P to Affirm BB Corporate Credit Rating ----------------------------------------------------------------- Standard & Poor's Rating Services affirmed its 'BB' corporate credit and senior unsecured debt ratings on Islandia, New York- based CA Inc., and removed them from CreditWatch where they were placed on July 5, 2006 with negative implications. The outlook is negative. "The rating affirmation follows the company's filing of its Form 10-K for fiscal 2006, coupled with the completion of the internal review of its past and current stock option grant programs that resulted in modest restatements to financial results (fiscal 2006 revenue was $3.796 billion, an increase of $20 million over the preliminary results CA announced on June 29, 2006)," said Standard & Poor's credit analyst Philip Schrank. The Form 10-K includes a restatement of financial results for the fiscal years 2002 through 2005 and selected quarterly information for fiscal years 2005 and 2006 to reflect additional noncash stock based compensation expense associated with stock option grants made in fiscal years 1996 through 2001. The restatement concludes a previously announced internal review of CA's policies and procedures relating to stock option plans from fiscal year 1996 to the present. The restatement increases noncash stock based compensation expense by an aggregate of $342 million for fiscal years 1996 through 2006 on a pre-tax basis. The restatement increases after-tax, non-cash stock based compensation expense in fiscal years 2002, 2003, and 2004 by $50 million, $30 million, and $16 million, respectively. The after-tax impact on fiscal 2005 was less than $1 million. For fiscal year 2006, the company recorded after-tax, non-cash stock based compensation expense associated with this review of $1 million. The Form 10-K also reflects adjustments to restate subscription revenue as a result of the company's review of certain license agreements that had been cancelled and renewed more than once prior to the expiration date of each successive license agreement. The adjustments reflected in the Form 10-K increase subscription revenue in fiscal years 2004 and 2005 by approximately $12 million and $43 million, respectively. Subscription revenue increased by approximately $19 million for the first three quarters of fiscal year 2006. The July 2006 ratings downgrade to `BB' from `BBB-' followed the company's announcement that its board of directors authorized a $2 billion share repurchase that partly will be debt-financed. The rating downgrade reflects Standard & Poor's assessment that CA no longer possesses an investment-grade financial policy in light of the announced share repurchases. If the repurchase is financed solely with debt, pro forma total debt to EBITDA could rise to above the 4x range from about 2x currently. At the 'BB' rating level, Standard & Poor's expectation is that CA will continue to generate free cash flow exceeding $1 billion, and manage its debt levels at about 4x or below over the intermediate term. Rating support is provided by: * a stable revenue base; * favorable business prospects; and * strong cash flow generation. The company's diversified, high-margin software portfolio is viewed as defensible because of high switching costs and entrenched customer relationships. Customer spending priorities continue to favor security software, application server software, and storage software -- three prominent segments of CA's product portfolio. Mainframe products, although mature, should continue to generate predictable profits and cash flow. Revenue growth should be supported by significant investments in R&D (about 20% of revenues) and strategic acquisitions. Standard & Poor's expects acquisitions to continue, albeit at a more moderate pace. CATHOLIC CHURCH: FCR Wants Future Claims Allowed for $30 Million ---------------------------------------------------------------- David A. Foraker, Esq., at Greene & Markley, P.C., in Portland, Oregon, in his capacity as Future Claimants Representative, tells the U.S. Bankruptcy Court for the District of Oregon that the future claims should not be estimated for purposes of setting a limitation in a plan of reorganization on the: (a) Archdiocese of Portland in Oregon's liability with regard to those claims; or (b) total amount of distributions that may be made under the plan on account of those claims. As reported in the Troubled Company Reporter on June 26, 2006, the Archdiocese asked the Court for the District of Oregon to estimate the aggregate amount of future claims for temporary allowance for purposes of voting, confirmation and funding of the Archdiocese's third Modified Plan of Reorganization. The Archdiocese proposed that the Bankruptcy Court as well as the U.S. District Court for the District of Oregon estimate the aggregate number and value of the future claims within the ranges stated in the report of Hamilton Rabinovitz & Alschuler, Inc., entitled "Estimating the Number and Value of Future Child Sex Abuse Claims Filed Against the Archdiocese of Portland in Oregon." Mr. Foraker contends that Future Claims, regardless of the amount at which they are estimated for plan confirmation purposes, should simply "ride through" under a plan without any cap on the total amount of distributions to be made. If the purposes of the estimation are properly limited to those relating to plan confirmation issues, Mr. Foraker asks the Bankruptcy Court to temporarily allow the Future Claims for $30,000,000. Between competing plans filed in Portland's case, Mr. Foraker says he prefers the Tort Claimants Committee's Plan because, among other reasons, the class of Future Claims, as well as other classes of claims, is unimpaired and the Archdiocese is not discharged of those debts. Under the Tort Committee's scheme, most unsecured claims would "ride through" the bankruptcy case largely unaffected, Mr. Foraker adds. By contrast, under the Archdiocese' Plan, Portland's liability on account of its debts based on tort claims is to be capped at an amount to be estimated by the U.S. District Court for the District of Oregon, with sublimits to be set for the various classes of Present Tort Claims, Future Claims, and Punitive Damages Claims. To confirm either of the Plans, Mr. Foraker asserts that all of the requirements for confirmation under Section 1129 of the Bankruptcy Code must be met, including the "best interest of creditors" test and plan feasibility. In addition, Mr. Foraker points out that it is only under the Archdiocese's Plan that the District Court must estimate the total amount of the liability on each of the various classes of tort claims for purposes of setting caps on its obligations to make plan distributions. Thus, Mr. Foraker asks the Bankruptcy Court to deny the Archdiocese's Motion to Estimate Future Claims to the extent that it seeks a ruling estimating the total dollar amount of the class of Future Claims for any purpose other than making the determinations required under Section 1129. In the event that the Bankruptcy Court overrules his Objection and decides to permit the class of Future Claims to be estimated for purposes of setting a cap on plan distributions, Mr. Foraker asks Judge Perris to recommend that the District Court employ a different methodology for setting the liability cap. Known future claimants D.E.W., D.C.W., P.R.W., P.S.E., D.R.W., W.L.T., and T.A.L., K.H., support Mr. Foraker's arguments. Erin K. Olson, Esq., in Portland, Oregon, represents the Known Future Claimants. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) CATHOLIC CHURCH: Proposed Orders on Claims Estimation Process OK'd ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Oregon conducted a hearing on June 16 and 30, 2006, on the Archdiocese of Portland in Oregon's request to estimate unresolved present child sex abuse tort claims. At Judge Perris' direction, the Archdiocese and the Official Tort Claimants Committee filed with the Bankruptcy Court proposed orders relating to the claims estimation process including discovery and trial. The Archdiocese proposes that Judge Perris: * grant its motion to estimate the Unresolved Present Child Sex Abuse Tort Claims; * defer on the selection of the precise statistical methodology to estimate the Unresolved Present Child Sex Abuse Tort Claims pending further expert review; and * conduct an estimation trial on February 7 and 8, 2007. Judge Perris conducted a hearing on the parties' Proposed Orders on July 27, 2006. In a minute order, the Bankruptcy Court adopts the Archdiocese's Proposed Order subject to certain changes. Judge Perris sustains the Tort Committee's objection regarding data verification, but clarifies that the Committee's inspection and copying of records to verify data will use sampling to the extent appropriate. The Tort Committee should consult with its expert, Dr. Ronald Schmidt, regarding sampling technique. Judge Perris directed Mr. Kennedy, the Tort Committee's counsel, to draft a final order. The Tort Committee, among other things, proposes that the Archdiocese will provide all the data collected regarding the resolved and unresolved child sex abuse tort claims for purposes of estimation. The Tort Committee did not pick out a specific date for the trial next year. Both Proposed Orders attach a copy of a Confidentiality Agreement to be entered into by the parties in connection with the Archdiocese's disclosure of claims data to the Tort Committee and its expert, LECG, LLC. A full-text copy of the Archdiocese's Proposed Order and the Confidentiality Agreement are available for free at http://researcharchives.com/t/s?ef6 A full-text copy of the Tort Committee's Proposed Order and the Confidentiality Agreement are available for free at http://researcharchives.com/t/s?ef7 Objections Prior to Portland's Court-Approved Proposed Order (A) Tort Committee Judge Perris has scheduled a final estimation hearing in February 2007, hence, it is "unnecessary" to grant the Archdiocese's estimation request at this time, Albert N. Kennedy, Esq., at Tonkon Torp, LLP, in Portland, Oregon, asserts. Mr. Kennedy points out that following the February hearing, the Court will, depending on the scope and nature of its decision, enter a final order or submit its recommendation to the U.S. District Court for the District of Oregon. The order granting the Archdiocese's Motion to Estimate, Mr. Kennedy says, may create confusion because it will prop up probable issues, including: * whether the order is a final order wherein an appeal must be immediately noticed; * the determination of: -- what, in fact, was granted; -- which of the Archdiocese's motions is being granted; and -- whether the order would require the Archdiocese to design and implement a survey to collect data from all United States dioceses and complete the survey by the end of August 2006; and * whether the Bankruptcy Court has reconsidered its finding that: -- the Archdiocese is seeking estimation for distribution purposes; and -- an estimation must be done by the District Court. Moreover, Portland's Proposed Order is a preemptive effort to limit the Tort Committee's right to discovery, Mr. Kennedy contends. The Tort Committee has requested production of, and will need access to, the Archdiocese's source documents used in assigning claim attributes. To meet the Bankruptcy Court's deadlines, the Tort Committee will need the Archdiocese's cooperation because: * not all of the 140 claimants whose claims were settled are represented by counsel currently active in Portland's case; * certain documents will not be available from sources other than the Archdiocese; and * there can be no significant burden on the Archdiocese to provide access to source documents because it has those documents. The Tort Committee, therefore, asks Judge Perris to appoint Hamilton, Rabinovitz & Anschuler, Inc., as a discovery master or examiner with limited powers for the purpose of assisting the Committee and the Archdiocese in coordinating production of relevant source documents. The Tort Committee also asks Judge Perris to reject the Archdiocese's Proposed Order. (B) Olson Claimants Certain tort claimants, represented by Erin K. Olson, Esq., in Portland, Oregon, agree with the Tort Committee's arguments. "Judge Ferris did not grant the [Archdiocese's] motion to estimate for purposes of distribution because she can't," Ms. Olson asserts. "In her Memorandum Opinion of February 28, 2006, she wrote that [the] decision was 'beyond the jurisdiction of this court.'" Ms. Olson says the Archdiocese has not been given permission to collect data from present claimants on the 34 attributes on its recent list of claims attributes. The Bankruptcy Court has clearly not decided what the Archdiocese can collect in terms of data. Ms. Olson asserts that she should also have access to any information that is provided or generated during the estimation process since it directly affects her clients. For these reasons, the Olson Claimants ask the Court to direct the Archdiocese or the Tort Committee to make the appropriate changes in their Proposed Orders. Archdiocese Responds The Archdiocese's Proposed Order eliminates confusion and is necessary to reflect the status of the proceedings, Susan S. Ford, Esq., at Sussman Shank LLP, in Portland, Oregon, asserts. Interested parties should not be left to wonder about the status of proceedings relating to estimation until the February 2007 hearing and to review multiple transcripts of proceedings to glean the current status on estimation issues, Ms. Ford tells the Court. The Archdiocese's Motion to Estimate has been granted, but the precise statistical method to be employed and the aggregate amount of the estimations will be defined in future proceedings, Ms. Ford explains. Any concern over whether entry of the Archdiocese's Proposed Order creates an issue for immediate appeal is easily clarified by simply entering that Proposed Order, Ms. Ford asserts. Consistent with the policy against piecemeal appeals, Ms. Ford says entry of Portland's Proposed Order would not be immediately appealable. Moreover, the Archdiocese has stated for several times that it seeks estimation for any and all purposes necessary to confirm its Plan of Reorganization including distribution, obtain a discharge and emerge from Chapter 11 protection, Ms. Ford notes. "If the Bankruptcy Court determines that this will require the District Court to enter the final order on estimation, then the Bankruptcy Court will make its report and recommendation to the District Court to render the ultimate decision," Ms. Ford points out. Hypothetical problems regarding certain data verification issues need not be dealt with in the Archdiocese's Proposed Order, Ms. Ford further says. The record of the estimation proceedings provides the manner on how claims data from the Archdiocese's records will be provided to the Tort Committee, the claimants and the claimants' attorneys. Ms. Ford agrees with the Tort Committee that it has the right to sample and verify data. But, Ms. Ford continues, those rights are subject to the Bankruptcy Court's power to protect the Archdiocese and all creditors from unnecessary demands for Portland to provide information on all claims while the Tort Committee ignores completely the threshold question whether there is any dispute over the data and the resources of its own constituency. Ms. Ford contends that the Tort Committee's objection is a transparent attempt to exhaust the Archdiocese's resources and to delay estimations. Thus, the Archdiocese asks Judge Perris to reject any of those attempts. The Archdiocese also asks Judge Perris to reject the Tort Committee's proposal to appoint HR&A as referee or master for discovery since the firm is the parties' joint expert with respect to future claims. Furthermore, Ms. Ford contends that the Olson Claimants' assertion regarding the Archdiocese's list of attributes is incorrect. The Archdiocese has complied with Court's direction to provide its list of attributes on July 12, 2006. Ms. Ford notes that the Court has indicated it would be disinclined to battle over data collection and may resolve issues by putting relevant attributes on a master list. Ms. Ford adds that the Tort Committee as the representative for all tort claimants will have access to data for all claimants through each of the claimants' attorney. The Confidentiality Agreement is between the Tort Committee and the Archdiocese, Ms. Ford adds. To avoid undue burden and expense, the Tort Committee is the proper party to seek relief from the provisions of that Agreement, Ms. Ford says. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq., and William N. Stiles, Esq., at Sussman Shank LLP, represent the Portland Archdiocese in its restructuring efforts. Albert N. Kennedy, Esq., at Tonkon Torp, LLP, represents the Official Tort Claimants Committee in Portland, and scores of abuse victims are represented by other lawyers. David A. Foraker serves as the Future Claimants Representative appointed in the Archdiocese of Portland's Chapter 11 case. In its Schedules of Assets and Liabilities filed with the Court on July 30, 2004, the Portland Archdiocese reports $19,251,558 in assets and $373,015,566 in liabilities. (Catholic Church Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945-7000) CENTURY ALUMINUM: Moody's Lifts Rating on $250 Mil. Notes to Ba3 ---------------------------------------------------------------- Moody's Investors Service upgraded Century Aluminum's corporate family rating to Ba3 from B1. At the same time, the company's $250 million senior unsecured guaranteed notes due 2014 were upgraded to Ba3 from B1 as were its $175 million senior unsecured guaranteed convertible notes due 2024. The ratings outlook is stable. The upgrade recognizes the progress Century has made in expanding its operations at Nordural, enhancing its competitive position, managing its cost position and improving its financial metrics. The improved operating profile and greater stability provided by the tolling operations at Nordural are expected to allow Century to exhibit improved metrics on a more sustainable basis. In addition, aluminum fundamentals, although currently at unsustainably high levels in Moody's view, are expected to remain solid over the medium term given low inventory levels and lack of significant additional capacity coming on stream, thereby allowing Century to generate more robust cash flows in the near term and better cover expansion capital expenditures for Nordural from internal cash flow. The rating also anticipates that the company will continue to prudently manage its growth projects, including the development of another Icelandic facility, and not jeopardize its balance sheet or liquidity position. Century's ratings and outlook continue to reflect its relatively high leverage, exposure to a single commodity-priced product, substantive capital spending plans, higher cost base compared to many of its integrated competitors, and concentration of sales among four customers. Positive factors supporting the ratings include the stability provided by Century's business model, which uses long-term supply and sales contracts to minimize mismatches between alumina and aluminum prices and the improved cost base resulting from expanding its manufacturing presence in Iceland. Upgrades: Issuer: Century Aluminum Company * Corporate Family Rating, Upgraded to Ba3 from B1 * Senior Unsecured Conv./Exch. Bond/Debenture, Upgraded to Ba3 from B1 * Senior Unsecured Regular Bond/Debenture, Upgraded to Ba3 from B1 Outlook Actions: Issuer: Century Aluminum Company * Outlook, Changed To Stable From Positive Headquartered in Monterey, California, Century Aluminum Company is the third largest primary aluminum producer in North America with ownership interests in four aluminum production facilities as well as bauxite and alumina facilities. Century produced approximately 616,000 metric tons of primary aluminum and generated revenues of $1.1 billion in 2005. CHARLES RIVER: Amends Credit Agreement with Lenders and JPMorgan --------------------------------------------------------------- Charles River Laboratories International, Inc. amended and restated its existing credit agreement with certain financial institutions and JPMorgan Chase Bank, as administrative agent. The amended credit agreement provides for a $156 million term loan facility, a $200 million revolving facility, a CDN$57.8 million term loan facility and a CDN$12 million revolving facility for a Canadian subsidiary of the Company, and a GBP6 million revolving facility for a U.K. subsidiary of the Company. The $156 million term loan facility matures in 20 quarterly installments with the last installment due June 30, 2011. The $200 million revolving facility matures on July 31, 2011 and requires no scheduled payment. The $200 million revolving facility may be increased by $100 million. The Canadian term loan is repayable in full by June 30, 2011. The Canadian and UK revolving facilities mature on July 31, 2011. In addition to the scheduled repayments, the Company is required to prepay the term loans with the following amounts: -- 50% of the net cash proceeds from certain asset sales and casualty and condemnation events; -- 100% of any net cash proceeds in connection with permitted receivables financings; and -- 50% of the net cash proceeds from certain incurrences of debt, unless the leverage ratio is 2:1 or less. Charles River Laboratories International, Inc. (NYSE: CRL) sells pathogen-free, fertilized chicken eggs to poultry vaccine makers. It also offers contract staffing, preclinical drug candidate testing, and other drug development services. It also markets research models -- rats and mice bred for preclinical experiments, including transgenic "knock out" mice -- to the pharmaceutical and biotech industries. It sells its products in more than 50 countries to drug and biotech companies, hospitals, and government entities. * * * As reported in the Troubled Company Reporter on March 1, 2006, Moody's Investors Service assigned Ba1 ratings to new credit facilities of subsidiaries of Charles River Laboratories International, Inc., which are guaranteed by Charles River. Moody's also affirmed Charles River's Ba1 Corporate Family Rating, the Ba1 rating on its existing credit facilities, and the Speculative Grade Liquidity Rating of SGL-1. The rating outlook for the company is stable. As reported in the Troubled Company Reporter on June 21, 2006 Standard & Poor's Ratings Services assigned its 'BB-' senior unsecured debt rating to Charles River Laboratories International Inc.'s $300 million 2.25% convertible senior notes due 2013. The corporate credit rating is 'BB+' and the rating outlook is positive. CHOCTAW RESORT: Moody's Lifts Senior Unsec. Notes' Rating to Ba3 ---------------------------------------------------------------- Moody's Investors Service raised Choctaw Resort Development Enterprise's corporate family rating and senior secured term loan rating to Ba2 from Ba3. At the same time, Choctaw's senior unsecured note rating was raised to Ba3 from B1. The ratings outlook is stable. The upgrade considers that since the initial rating in March 2001, Choctaw has maintained a financially conservative profile and continues to have a strong hold on its local market. Any serious threat of direct competition in that market is not expected in the foreseeable future and will not likely be located near Choctaw's casino operations. Choctaw's casino resort is about 125 miles from its nearest casino competitor. The stable outlook considers Choctaw's relatively small size, dependence on a single market area, and the expectation that Choctaw will continue to distribute most of its surplus operating cash flow to the Mississippi Band of Choctaw Indians. The stable outlook also recognizes the benefits that Choctaw's casino operations have experienced as a result of the post-Hurricane Katrina population shift. However these benefits are expected to subside as temporary casinos in Biloxi are operational and the development of permanent casinos in Biloxi is on the horizon. Moody's previous rating action related to Choctaw occurred on Oct. 28, 2004 with the assignment of a B1 rating to its senior unsecured notes due 2019, a Ba3 corporate family rating, and a stable ratings outlook. The Mississippi Band of Choctaw Indians established the Choctaw Resort Development Enterprise to operate the Silver Star Hotel and Casino and to develop and operate the Golden Moon Hotel and Casino along with other related resort amenities. Net revenue for the 12-month period ended Mar. 31, 2006 was about $340 million. CITIZENS COMMUNICATIONS: Sells ELI to Integra for $247 Million -------------------------------------------------------------- Citizens Communications Company closed on the sale of its subsidiary, Electric Lightwave, LLC, to Integra Telecom Holdings, Inc. for an aggregate consideration of approximately $247 million. The consideration consist of $243 million in cash plus the assumption by Integra of $4 million in capital lease obligations. The Company expects to recognize a pre-tax gain on the sale of ELI of Approximately $125 million. Based in Stamford, Conn., Citizens Communications Corporation (NYSE:CZN) -- http://www.czn.net/-- is a communications company providing services to rural areas and small and medium-sized towns and cities as an incumbent local exchange carrier, or ILEC. The Company offers its ILEC services under the "Frontier" name. * * * As reported in the Troubled Company Reporter on May 30, 2006, Moody's Investors Service placed the debt ratings of Citizens Communications' on review for possible upgrade, reflecting the company's increased commitment to maintain a stable and predictable debt profile. Affected ratings include the Ba3 ratings of the Company's Corporate family rating, Senior unsecured revolving credit facility, and Senior unsecured notes, debentures, bonds. These ratings were placed on review for possible upgrade. CNA FINANCIAL: Agrees to Sell 7 Million Shares in Public Offering ----------------------------------------------------------------- CNA Financial Corporation has agreed to sell 7 million shares of its common stock in a public offering through Citigroup. The Company also disclosed that it has agreed to sell to Loews Corporation, the owner of 91% of the Company's common stock, in a private placement, approximately 7.86 million shares of the its common stock for the same per share price paid by the underwriters to the Company in the public offering and repurchase from Loews all of the shares of the Series H for a purchase price equal to the $750 million liquidation value of the Series H plus all unpaid accumulated dividends on the Series H as of the closing date. The Company intends to finance the repurchase of its Series H with the proceeds from the public offering and the private placement of its common stock, together with proceeds from the sale of approximately $500 million of debt securities. CNA Financial Corporation (NYSE:CNA) -- http://www.cna.com-- is the country's seventh largest commercial insurance writer and the 14th largest property and casualty company. CNA's insurance products include standard commercial lines, specialty lines, surety, marine and other property and casualty coverages. CNA's services include risk management, information services, underwriting, risk control and claims administration. * * * Moody's Investors Service has assigned a Ba2 rating on CNA's preferred stock effective Nov. 12, 2003. CNET NETWORKS: Revenue Increases 14% to $92MM in Second Quarter --------------------------------------------------------------- CNET Networks, Inc., reported revenue results for the second quarter ended June 30, 2006. Total revenues for the second quarter were $92 million, a 14 percent increase compared to revenues of $80.4 million for the same period of 2005. Revenues for 2005 and 2006 exclude revenues related to Computer Shopper magazine, which was sold in the first quarter of 2006 and consequently has been treated as a discontinued operation in our financial results in both periods. Cash balances, which include cash, investments and restricted cash, at the end of the quarter were $143.3 million, compared to $138.5 million at March 31, 2006. "We are pleased with the growth of our business during the second quarter," said Shelby Bonnie, chairman and chief executive officer of CNET Networks. "We continued to expand our audience and customer base across the U.S., Europe and Asia by growing our core brands and adding new ones, enhancing our position as Internet ad spending continues to increase." The company's Board of Directors has established a special committee of independent directors to review the company's stock option practices and related accounting. The special committee has reached a preliminary conclusion that the actual measurement dates for certain past stock options granted by the company differ from the recorded measurement dates. Accordingly, the company will be required to restate certain previously issued financial statements to record non-cash charges for stock-based compensation. The company does not expect that the anticipated restatement will have any impact on its previously reported revenues or cash positions. The company will not be in a position to provide operating expense, operating income, net income or earnings per share information on a historical basis or as part of its business outlook pending the completion of the special committee's review. Business Review "Our focus during the second quarter was on expanding our portfolio with smart additions that leverage our expertise in building global brands for people and the things they are passionate about. We are beginning to capitalize on lifestyle media categories and through the re-launch of Chowhound and the acquisition of Urban Baby, we are gaining great, established brands in the food and parenting categories. We also acquired xcar.com.cn in China, building on our strong presence in China while expanding our footprint into the automobile market," said Mr. Bonnie. CNET Networks' global network of Internet properties reached an average of 116.2 million unique monthly users during the second quarter of 2006(1), an increase of 1 percent from the second quarter of 2005. Average daily page views were over 92.8 million during the second quarter(1), down 5 percent from the year-ago quarter. CNET Networks entered two lifestyle categories during the second quarter of 2006 -- food and parenting -- that align directly with its goal to provide brands for people and the things they are passionate about. Through the well-received beta re-launch of Chowhound (www.chowhound.com) following the acquisition of that site during the first quarter, and through the acquisition of Urban Baby (www.urbanbaby.com), the Company expects to expand its demographic profile and its appeal to new advertising segments. About CNET Networks CNET Networks, Inc. (Nasdaq: CNET) is a global media company. The company's brands -- CNET, GameSpot, TV.com, MP3.com, Webshots, BNET and ZDNet -- serve the technology, games and entertainment, business, and community categories. CNET Networks was founded in 1993 and has always been "a different kind of media company" creating engaging media experiences through a combination of world-class content and technology infrastructure. * * * As reported in the Troubled Company Reporter on Feb. 27, 2006, Standard & Poor's Ratings Services raised its ratings on Internet publisher CNET Networks Inc., including raising the corporate credit rating to 'B' from 'B-'. The outlook is positive. CNH GLOBAL: Reports Second Quarter Net Income of $147 Million ------------------------------------------------------------- CNH Global N.V. earned net income of $147 million for the second quarter ended June 30, 2006, up 29% compared to net income of $114 million in 2005. Results include restructuring charges, net of tax, of $7 million in the second quarter of 2006, and $4 million in the second quarter of 2005. "CNH's renewed focus on customers and dealers is delivering increasingly better results," said Harold Boyanovsky, CNH president and chief executive officer. "Our Equipment Operations gross margin improvement has continued into the second quarter, up 2.7 percentage points compared with last year, and we are firmly on track to meet our targets for the year." Net sales of equipment, comprising the company's agricultural and construction equipment businesses, were $3.5 billion for 2006, compared to $3.4 billion for the same period in 2005. Net of currency variations, net sales increased by 2% over the prior year. CNH Outlook for Full Year 2006 The company expects its net sales of equipment to increase in the range of 2% to 5%. Continuing pricing and margin improvement initiatives at Equipment Operations will drive better results. Profitability at Financial Services is expected to be up slightly. Results of CNH's joint ventures are expected to better than in 2005. The benefit of this improvement at Equipment Operations will be partially offset by an increase in CNH's effective tax rate, as previously stated. Full-year restructuring costs, net of tax, are expected to be slightly higher than in 2005, as CNH recognizes the balance of the costs related to the planned manufacturing rationalization in Europe. The company's previously announced $120 million contribution to its U.S. defined benefit pension plan was made in April 2006. After considering this contribution, Equipment Operations now expects slightly better cash generation from working capital reductions during the year, and to reduce its net debt by approximately $400 million, as compared with year-end 2005 levels. CNH Global N.V. (NYSE: CNH) -- http://www.cnh.com/-- is the power behind agricultural and construction equipment brands of the Case and New Holland brand families. Case New Holland Inc., headquartered in Lake Forest, Illinois, is a wholly owned subsidiary of CNH., and indirectly through its subsidiaries, owns substantially all of the US assets of CNH. * * * Standard & Poor's Ratings Services rates CNH Global N.V.'s LT local issuer and LT foreign issuer credits at BB- with a stable outlook. COMMSCOPE INC: Earns $46.6 Million in Second Quarter of 2006 ------------------------------------------------------------ CommScope, Inc., reported second quarter sales of $411.9 million and net income of $46.6 million for the second quarter results for the period ended June 30, 2006. The reported net income includes an after-tax gain of $18.6 million related to a recovery on a note receivable from OFS Bright Wave, LLC, and after-tax charges of $2.6 million related to restructuring costs. Excluding these special items, adjusted second quarter earnings were $30.6 million. For the second quarter of 2005, CommScope reported sales of $336.7 million and net income of $16.3 million. Second quarter 2005 net income included after-tax restructuring charges of $1 million. "We are pleased with the strong revenue and earnings growth that we delivered in the second quarter," said Frank M. Drendel, CommScope Chairman and Chief Executive Officer. "We believe that our solid financial performance -- notably record sales and orders during the quarter -- further demonstrates the quality of our businesses and our operational execution. We intend to continue building upon our global leadership position in the 'last mile' of telecommunications while effectively managing our cost structure. We believe that CommScope is well positioned to continue creating value for our stockholders." "We are particularly proud of the turnaround we executed in the Carrier segment. Through reorganization, focus on productivity and effective integration, we transformed a business that had significant historical losses to our highest margin segment in only two years," noted Mr. Drendel. Sales Overview Sales for the second quarter of 2006 increased 22.3% year over year, primarily driven by increased customer demand and price increases in response to higher raw material costs. Enterprise segment sales rose 18% year over year to $205.1 million primarily due to higher sales prices for most cable products and higher sales volume in North America and Asia. Information technology investment, new bandwidth-intensive applications and development of consolidated data centers are among the ongoing drivers of the Enterprise business. Broadband segment sales rose to $136.5 million, up 24.2% year over year, as a result of both higher prices for coaxial cable products and increased global sales volumes. Broadband sales continue to be positively affected by competition between cable television operators and telephone companies as they work to provide video, voice and data services to customers. Carrier segment sales rose 32.2% year over year to $71.0 million primarily due to increased demand for Integrated Cabinet Solutions products. ICS sales increased significantly as domestic telephone companies continued investing in their infrastructure to support video and high-speed data services. While Wireless sales increased significantly sequentially, sales rose modestly year over year as North American market demand softened. Total international sales rose 17.1% year over year to $132.9 million, or approximately 32% of total company sales. Overall external orders booked in the second quarter of 2006 were $500.9 million, up 45.1% from the year-ago quarter. Book-to-bill ratios were positive in all segments with particular strength continuing in the Enterprise segment. Gain on OFS Note Receivable During the second quarter of 2006, CommScope received a cash payment of $29.8 million plus accrued interest of approximately $0.5 million from OFS BrightWave, LLC. This payment satisfied the $30 million outstanding note issued under a revolving credit facility between CommScope and OFS BrightWave, a venture formed in 2001 by CommScope and The Furukawa Electric Co., Ltd. The companies also agreed to terminate the revolving credit facility, which was created in 2001 and was scheduled to mature in November 2006. The $30 million long-term note had been considered fully impaired by CommScope since the Company exited the venture in June 2004. CommScope recorded a gain of $29.8 million ($18.6 million after tax) during the second quarter of 2006. Global Manufacturing Initiatives CommScope's second quarter 2006 results reflect pretax restructuring charges of $4 million ($2.6 million after tax) primarily for employee-related and equipment relocation costs associated with the Company's global manufacturing initiatives. The global manufacturing initiatives, which were announced in September 2005, continue to progress on schedule. The Company has achieved a number of notable accomplishments since the implementation of its global manufacturing initiatives, including improved factory efficiency, lower overhead and enhanced customer service. As previously announced, CommScope anticipates total annualized pretax savings of $35 million to $40 million from the initiatives, which are expected to be completely implemented by early 2007. The Company expects to realize about half of these annualized pretax savings during 2006. Other Second Quarter 2006 Highlights * during the quarter, CommScope announced a number of new products, including a new family of dry, loose-tube fiber optic cable designs. The new designs provide for a smaller and a more lightweight and craft- friendly cable. * CommScope also introduced ExtremeFlex(R), the wireless industry's first full line of 50-ohm aluminum transmission cables. Carriers have experienced excellent results from smaller diameter ExtremeFlex cables that have been installed in thousands of cell sites across North America during the past three years. Customers can now take advantage of a broader portfolio of aluminum cables that meet or exceed the electrical, mechanical and environmental specifications of traditional copper cables. * gross margin for the second quarter rose to 26.4%, up more than 200 basis points sequentially. Gross margin improved sequentially primarily due to higher sales volumes and ongoing cost management programs. * SG&A for the second quarter of 2006 was $58.3 million or 14.1% of sales, compared to $54.0 million or 16.0% of sales in the year-ago quarter. SG&A declined as a percentage of sales primarily due to higher sales levels and ongoing cost management. * second quarter 2006 results include $1.1 million (pretax) of equity-based compensation expense in accordance with SFAS No. 123(R). * operating income for the second quarter of 2006 was $38.1 million or 9.2% of sales. Excluding restructuring costs, operating income would have been $42.1 million or 10.2% of sales. In the year-ago quarter, operating income was $24.6 million or 7.3% of sales. Adjusted operating income was $26.2 million or 7.8% of sales for the second quarter of 2005, excluding restructuring charges. * total depreciation and amortization expense was $14.2 million for the second quarter, which included $3.5 million of intangibles amortization. * net cash provided by operating activities in the second quarter was $15.0 million. Capital spending in the quarter was $8.3 million. Outlook CommScope management provided these guidance for the third quarter and calendar year 2006: * for the third quarter of 2006, revenue is expected to be in the range of $420 million to $435 million and operating margin is expected to be in the 10.5%-11.5% range, excluding special items. * for calendar year 2006, revenue is expected to be in the range of $1.56 billion to $1.59 billion and operating margin is expected to be in the 9.0% to 9.5% range, excluding special items. * higher expected tax rate of 30%-34% in the second half of the year, primarily due to changes in the mix of international and domestic income. "We delivered strong financial results in the second quarter and we are raising our sales and operating income guidance for calendar year 2006 to reflect the expectation of improving Enterprise sales volume, higher sales prices and ongoing cost management," said Jearld L. Leonhardt, Executive Vice President and Chief Financial Officer. Headquartered in Hickory, North Carolina, CommScope, Inc. (NYSE: CTV) -- http://www.commscope.com/-- designs and manufactures "last mile" cable and connectivity solutions for communication networks. Through its SYSTIMAX(R) Solutions(TM) and Uniprise(R) Solutions brands CommScope is the global leader in structured cabling systems for business enterprise applications. It is also the world's largest manufacturer of coaxial cable for Hybrid Fiber Coaxial applications. Backed by strong research and development, CommScope combines technical expertise and proprietary technology with global manufacturing capability to provide customers with high-performance wired or wireless cabling solutions. * * * CommScope, Inc.'s 1% Convertible Senior Subordinated Debentures due 2024 carry Moody's Investors Service's B1 rating and Standard & Poor's B+ rating. COMPLETE RETREATS: Paying $400,000 of Potential Lenders' Expenses ----------------------------------------------------------------- Complete Retreats LLC and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the District of Connecticut to advance up to $400,000 to cover due diligence and related expenses of potential postpetition lenders. As reported in the Troubled Company Reporter on July 27, 2006, the Debtors are seeking up to $85,000,000 in postpetition financing, and have recently received non-binding term sheets from potential postpetition lenders and intend to negotiate with two of them, if possible, to obtain the best available terms. As a condition to pursuing a financing arrangement with the Debtors, Holly Felder Etlin, the Debtors' chief restructuring officer, said that every potential lender has required that the Debtors advance funds to pay their expenses incurred in gathering and reviewing information to enable them to finalize a financing proposal. Unless and until the funds are advanced, potential lenders will not begin their due diligence in earnest. Ms. Etlin told the Court that the maximum amount the Debtors would be required to pay is reasonable and relatively small when compared to both the amount of the likely postpetition facility itself and the amount that they expect to save in interest, costs, and fees by negotiating a postpetition facility on the most favorable terms. Moreover, parties-in-interest will be afforded an opportunity to object to the specific terms and conditions contained in any postpetition credit agreement. The Debtors have secured a short-term $10,000,000 postpetition revolving line of credit with The Patriot Group, LLC, to give them some time to secure a longer-term DIP financing arrangement. About Complete Retreats 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. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000). COMPLETE RETREATS: Court Fixes November 27 as Claims Bar Date ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Connecticut set Nov. 27, 2007, as the deadline for all creditors, except governmental units, owed money by Complete Retreats LLC and its debtor-affiliates on account of claims arising prior to the bankruptcy filing, to file their proofs of claim. Creditors must file their written proofs of claim on or before the Claims Bar Date, and those forms must be delivered to: United States Bankruptcy Court District of Connecticut, Bridgeport Division 915 Lafayette Blvd. Bridgeport, Connecticut 06604 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. 3; Bankruptcy Creditors' Service, Inc., 215/945-7000). COOPER TIRE & RUBBER: Board Names Byron Pond as Interim CEO ----------------------------------------------------------- The Board of Directors of Cooper Tire & Rubber Company appointed Byron O. Pond as interim Chief Executive Officer following Thomas A. Dattilo's resignation from the Company on Aug. 2, 2006. Mr. Pond will receive base compensation at the rate of $850,000 per year and will receive a stock grant with a value of $185,000 priced at the closing market price for the Registrant's common stock on the first day of trading during each three-month period in which he occupies the position of interim Chief Executive Officer. Mr. Pond will also continue to be compensated as a Director of the Company under the compensation arrangements applicable to its Directors. About Cooper Tire Headquartered in Findlay, Ohio, Cooper Tire & Rubber Company -- http://www.coopertire.com/-- specializes in the design, manufacture and sale of passenger, light & medium truck tires and has subsidiaries specializing in motorcycle and racing tires, as well as tread rubber and related equipment. The company has 39 manufacturing, sales, distribution, design and technical facilities around the world. COOPER TIRE: Pre-Tax Losses Prompt Moody's to Downgrade Ratings --------------------------------------------------------------- Moody's Investors Service downgraded the ratings of Cooper Tire & Rubber Company's, Corporate Family rating to B2 from Ba3, and lowered the company's Speculative Grade Liquidity rating to SGL-3 from SGL-2. The action follows Cooper Tire's second quarter announcements of pre-tax losses of approximately $27 million, $35 million for the first half of 2006, and the resignation of its CEO. Cooper Tire's performance has been adversely affected by weak replacement tire demand in its core North American market and elevated raw material costs, which, to date, have not been fully recovered through pricing actions. While Cooper Tire has marginally increased its share in a declining market, the impact of lower volumes, un-recouped material costs, and reduced overhead absorption following temporary plant shutdowns designed to reduce inventory levels contributed to losses and a cash burn for the quarter. The outlook remains negative. Ratings downgraded: * Corporate Family to B2 from Ba3 * Senior Unsecured Notes to B2 from Ba3 * Unsecured shelf to (P)B2 from (P)Ba3 * Preferred shelf to (P)Caa2 from (P)B3 * Speculative Grade Liquidity rating to SGL-3 from SGL-2 The company's Not Prime Short Term ratings have been withdrawn as Cooper Tire has discontinued its commercial paper program. During the quarter, Cooper Tire's shipments in its North American operations declined 5% from prior year periods and compared to Rubber Manufacturing Association member shipments which declined 7%. Despite an improvement in the mix of tires sold and improved pricing, the unit reported an operating loss as it experienced substantially higher raw material costs for synthetic and natural rubber and carbon black. The company's 51% owned Cooper Chengshan subsidiary remained profitable, and Cooper Tire's wholly-owned international operations generated a small profit. Results have been below prior expectations, debt coverage ratios have deteriorated, and financial leverage measured on a debt basis for its wholly-owned operations has increased. Replacement tire demand in North America remains uncertain and tire manufacturers face challenging markets in which it may be increasingly difficult to recover higher costs. The company has not announced any revisions to its corporate strategy and has initiated a search for a new CEO. Accordingly, the Corporate Family rating has been downgraded to B2. Ongoing uncertainty of underlying replacement tire demand in North America and elevated raw material costs could continue to pressure results and supports a negative outlook. The company's consolidated cash and temporary investments declined from $194 million at the end of March to $105 million at the end of June with a significant portion located offshore. Cooper Tire, ex-Chengshan, does not face any significant debt maturities until 2009. Seasonal working capital, special payment terms made available during the quarter, and raw material increases placed pressure on cash flows, and consolidated balance sheet debt increased $56 million during the quarter with $40 million drawn under the company's $175 million revolving credit. Seasonal factors, resumption of normal trade terms, incremental pricing actions, lower levels of capital expenditures, a slower pace of investment at Cooper Kenda, and increased manufacturing efficiencies are anticipated to stabilize cash flow over the second half of 2006. But, working capital requirements will resume in early 2007, making cash flow over the coming twelve months more uncertain to forecast. The company was in compliance with its financial covenants under its revolving credit facility, but headroom has narrowed under financial covenants in its revolving credit facility. Applicable lien basket language under its borrowing arrangements provide flexibility for alternative liquidity planning. Consequently, the company's liquidity profile has diminished, but remains adequate at the SGL-3 level. Cooper Tire & Rubber Company, headquartered in Findlay, Ohio, specializes in the design, manufacture and sale of passenger, light & medium truck tires and has subsidiaries specializing in motorcycle and racing tires, as well as tread rubber and related equipment. The company has 60 manufacturing, sales, distribution, design and technical facilities around the world. Revenues in 2005 were approximately $2.2 billion. COTT CORPORATION: Forms Two Business Units Under New Structure -------------------------------------------------------------- Cott Corporation reported changes to its senior management structure, roles and responsibilities, as well as the addition of two new executives to its senior management team. Under its new structure, two business units, North America and International, are created to focus on customer management, channel development, sales, and marketing. Leading the North American business unit as president will be John Dennehy, currently Senior Vice President of Sales and Marketing for North America. Mr. Dennehy has more than 25 years of experience in the North American beverage industry and was one of of the Company's first U.S. employees when he joined the Company in 1991 and played a key role in the Company's recent North American realignment. Wynn Willard was hired as president for the International business unit. Mr. Willard has extensive senior leadership experience with major international consumer packaged goods companies including Cadbury Schweppes, Nabisco and Hershey Foods. He has been president of Planters Company, chief executive officer of Nabisco Ltd. and most recently, chief executive officer of New World Pasta Company. Clyde Preslar remains as chief financial officer. Mr. Preslar joined the Company in August of last year after spending nine years as chief financial officer of Lance Inc., a U.S. manufacturer of branded and retailer brand snack foods. As a result of the changes, three senior executives will be leaving the Company. The executives are, Mark Benadiba, executive vice president of North American Operations; Colin Walker, senior vice president of Corporate Resources; and Andrew Murfin, Managing Director of the U.K. and Europe. "These three men are highly respected professionals and they should be commended for their significant contributions to Cott," Brent Willis, Cott's president and chief executive officer, said. "We want to thank them for their commitment and dedication to the Company." The Company further disclosed that the senior management changes are effective Aug. 1, 2006. Headquartered in Toronto, Ontario, Canada, Cott Corporation (NYSE:COT; TSX:BCB) -- http://www.cott.com/-- is a non-alcoholic beverage company and a retailer brand beverage supplier. The Company commercializes its business in over 60 countries worldwide, with its principal markets being the United States, Canada, the United Kingdom and Mexico. Cott markets or supplies over 200 retailer and licensed brands, and Company-owned brands including Cott, Royal Crown, Vintage, Vess and So Clear. Its products include carbonated soft drinks, sparkling and flavoured mineral waters, energy drinks, juices, juice drinks and smoothies, ready-to-drink teas, and other non-carbonated beverages. * * * As reported in the Troubled Company Reporter on Feb. 3, 2006, Moody's Investors Service downgraded Cott Beverages, Inc.'s Senior Subordinated Regular Bond/Debenture rating to B1 from Ba3 and Cott Corporation's Corporate Family Rating, to Ba3 from Ba2. The ratings outlook is stable, Moody's said. As reported in the Troubled Company Reporter on Jan. 31, 2006, Standard & Poor's Ratings Services lowered its ratings on Cott Corp. by one notch, including its corporate credit rating, to 'BB- ' from 'BB'. S&P said the outlook is negative. DAVITA INC: Earns $64.3 Million in Quarter Ended June 30 -------------------------------------------------------- DaVita Inc. reported income from continuing operations for the three and six months ended June 30, 2006 of $64.3 million and $122.1 million respectively, as compared with $48.1 million and $100.1 million respectively for the same periods of 2005. Net income including discontinued operations for the three and six months ended June 30, 2006 was $63.2 million and $120.7 million or respectively. The Company disclosed operating cash flow for the three months ended June 30, 2006 was $256 million and free cash flow was $227 million. For the rolling 12-months ended June 30, 2006 operating cash flow was $572 million and free cash flow was $482 million, in each case excluding the tax benefit from stock option exercises and an $85 million income tax payment associated with the divestiture of centers in conjunction with the Gambro Healthcare acquisition. Operating income for the three months and six months ended June 30, 2006, was $172 million and $334 million, respectively. Headquartered in El Segundo, California, DaVita, Inc. (NYSE: DVA) -- http://www.davita.com-- operates a chain of dialysis centers in the US. DaVita has more than 1,200 centers in nearly 40 states and Washington, DC; the centers provide dialysis and related services to patients suffering from chronic kidney failure. The firm also provides home-based dialysis and pre- and postoperative kidney transplant care, as well as inpatient dialysis services in some 795 hospitals. Subsidiary DaVita Clinical Research conducts clinical trials for devices and drugs in the renal-related field for pharmaceutical and medical device firms. * * * The Company's 6-5/8% Senior Notes due Mar. 15, 2013, carries Standard & Poor's Ratings Services' B rating. DEAN FOODS: Earns $171.3 Million for the Second Quarter of 2006 --------------------------------------------------------------- Dean Foods Company reported consolidated operating income in the second quarter of 2006 of $171.3 million, a 7% increase from $159.7 million in the second quarter of 2005. Adjusted second quarter operating income totaled $174.2 million, an increase of 7% from $162.2 million in the second quarter of 2005. Adjusted net income for the second quarter was $76.6 million, versus $75.5 million reported in the second quarter of 2005. Net sales for the second quarter totaled $2.5 billion, a decrease of 1% from the second quarter of 2005. At June 30, 2006, long-term debt was under $3.4 billion, including $182 million due within one year, and approximately $1.1 billion of the Company's senior credit facility was available for future borrowings. The Company has made the decision to sell its Iberian operations and took a $46.4 million impairment charge in the second quarter relative to the reclassification of Iberian as a discontinued operation. Recent Events Jack F. Callahan Jr. began his tenure, on May 2006, as executive vice president and chief financial officer of Dean Foods. Mr. Callahan served as senior vice president of Corporate Strategy and Development at PepsiCo. The Company made open market purchases of its common stock totaling 3.3 million shares for a total cost of $120 million, during the quarter. The Company has a total of $183 million remaining under its repurchase authorizations. During the quarter, the Company issued $500 million of 7% senior unsecured bonds due in 2016. Proceeds from the offering were used to pay down a commensurate amount of outstanding debt on the Company's revolving credit facility. About Dean Foods Dean Foods Company is a food and beverage company in the U.S. Its Dairy Group division is the largest processor and distributor of milk and other dairy products in the country, with products sold under more than 50 familiar local and regional brands and a wide array of private labels. The Company's WhiteWave Foods subsidiary markets and sells a variety of dairy and dairy-related products, such as Silk soymilk, Horizon Organic milk and other dairy products and International Delight coffee creamers. WhiteWave Foods' Rachel's Organic brand is the largest organic milk brand and second largest organic yogurt brand in the United Kingdom. * * * As reported in the Troubled Company Reporter on May 15, 2006, Standard & Poor's Ratings Services assigned its 'BB-' rating to Dean Foods Inc.'s proposed issue of $300 million 10-year notes. The notes are a drawdown from a Rule 415 shelf filing. As senior unsecured obligations, the rating is notched down twice from the 'BB+' corporate credit rating on the company because of the amount of secured debt outstanding. As reported in the Troubled Company Reporter on May 12, 2006, Moody's assigned a Ba2 rating to the $300 million senior unsecured bonds issued by Dean Foods Company from its shelf and affirmed the company's other ratings with a stable outlook. DELTA AIR: Wants Court Okay on Fee Committee & Procedures Protocol ------------------------------------------------------------------ Delta Air Lines, Inc., and its debtor-affiliates and the Official Committee of Unsecured Creditors jointly ask the U.S. Bankruptcy Court for the Southern District of New York to approve and implement the Fee Committee and Fee Procedures Protocol. The Protocol reflects the agreement among the Debtors, the Creditors Committee, and the U.S. Trustee as to the formation of the Fee Committee and the rules governing its operation. The Fee Committee will be primarily mandated to review interim and final fee applications submitted by professionals retained in the Debtors' Chapter 11 cases for reasonableness of fees and out- of-pocket expenses and compliance with the applicable provisions of the Bankruptcy Code and the applicable guidelines of the U.S. Trustee. The Fee Committee will consist of up to three representatives of each of the Debtors, the Creditors Committee, and the U.S. Trustee. The members will receive no compensation for their service on the Fee Committee or time expended on Fee Committee matters, but are entitled to seek reimbursement for reasonable, documented out-of-pocket costs and expenses from the estates. The Protocol also addresses various administrative issues associated with the administration of the Fee Committee, including procedures for subsequent retentions and retentions by the Fee Committee of a professional fee analyst to assist the Fee Committee in the effective discharge of its duties, The U.S. Trustee has indicated that it has no objection to the Protocol or the formation of the Fee Committee. About Delta Air Lines Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) DELTA AIR: Gets Court Nod to Amend and Assume Discover Agreement ---------------------------------------------------------------- Delta Air Lines, Inc., and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to enter into an Amendment and to assume the Agreement, as amended, with Discover Financial Services LLC. As reported in the Troubled Company Reporter on July 21, 2006, Delta Air, and Discover, are parties to a Master Services Agreement dated December 9, 1985, under which Discover operates and administers a merchant authorization and settlement program for transactions involving Discover credit cards. Marshall S. Huebner, Esq., at Davis Polk & Wardwell, in New York, explains that when a customer presents a Discover Card to the Debtors for the purchase of goods or services, the Debtors process the Discover Card and produce a record of sale. The Debtors then submit the record of sale to Discover, which makes a settlement payment to the Debtors in the amount of the sale, net of fees and other amounts. Delta and Discover have entered into an amendment to the Discover Agreement. The amendment will be considered to have taken effect as of April 1, 2006, subject to, among other things, the Court's approval of the amendment. The term of the Discover Agreement automatically renews for successive one-year periods on its anniversary date, unless either party gives notice to the other party of an intent not to renew. As such, Discover will continue to provide processing services for transactions involving Discover Cards at least through Dec. 9, 2007. As provided by the amendment, the fees charged by Discover for the processing services remain very attractive to the Debtors, Mr. Huebner relates. Mr. Huebner notes that credit card transactions account for approximately 90% of the Debtors' total revenue in 2005 and the Debtors' acceptance of Discover Cards provides an important payment option for the Debtors' customers. Any interruption in the processing of purchases made using Discover Cards would adversely affect a critical source of revenue, to the detriment of all parties in interest, Mr. Huebner avers. The amendment is a fair accommodation that will preserve the Debtors' ability to accept Discover Cards from their customers. About Delta Air Lines Headquartered in Atlanta, Georgia, Delta Air Lines -- http://www.delta.com/-- is the world's second-largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offering daily flights to 502 destinations in 88 countries on Delta, Song, Delta Shuttle, the Delta Connection carriers and its worldwide partners. The Company and 18 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17923). Marshall S. Huebner, Esq., at Davis Polk & Wardwell, represents the Debtors in their restructuring efforts. Timothy R. Coleman at The Blackstone Group L.P. provides the Debtors with financial advice. Daniel H. Golden, Esq., and Lisa G. Beckerman, Esq., at Akin Gump Strauss Hauer & Feld LLP, provide the Official Committee of Unsecured Creditors with legal advice. John McKenna, Jr., at Houlihan Lokey Howard & Zukin Capital and James S. Feltman at Mesirow Financial Consulting, LLC, serve as the Committee's financial advisors. As of June 30, 2005, the Company's balance sheet showed $21.5 billion in assets and $28.5 billion in liabilities. (Delta Air Lines Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) DEVELOPERS DIVERSIFIED: Earns $64.9 Million in Second Quarter ------------------------------------------------------------- Developers Diversified Realty Corporation reported operating results for the second quarter ended June 30, 2006. -- core portfolio leased percentage increased 40 basis points over the prior year to 96%; -- executed leases during the second quarter totaled approximately 1.75 million square feet, including 116 new leases and 178 renewals; -- base rents increased 21% on new leases, 10.8% on renewals and 12.9% on a blended basis; -- same store net operating income for the quarter increased 3.3% over the prior year. Scott Wolstein, Developers Diversified's Chairman and Chief Executive Officer stated, "I'm pleased to report this quarter's results, which reflect approximately $33 million in merchant building gains from sales to Macquarie DDR Trust, as well as solid portfolio fundamentals. Based on meetings with retailers at the International Council of Shopping Centers convention in May, we expect demand for space to remain robust for the 2007 and 2008 seasons. From a balance sheet perspective, we were upgraded to Baa2 by Moody's during the quarter, which supported the pricing and operating improvements we made to our unsecured credit facilities in June." Financial Results Funds From Operations, a widely accepted measure of a Real Estate Investment Trust performance, available to common shareholders was $109.8 million, as compared to $92.5 million for the three months ended June 30, 2006 and 2005, respectively, an increase of 18.7%. Net income available to common shareholders was $64.9 million for the three months ended June 30, 2006, as compared to $54.2 million for the prior comparable period. The increase in net income and FFO for the three months ended June 30, 2006, is primarily related to an increase in gain on sale of real estate assets through the Company's merchant building program as compared to 2005. FFO available to common shareholders was $196.0 million, as compared to $191.6 million for the six months ended June 30, 2006 and 2005, respectively, an increase of 2.3%. Net income available to common shareholders was $100.9 million for the six months ended June 30, 2006, as compared to $145.9 million for the prior comparable period. The decrease in net income for the six months ended June 30, 2006, is primarily related to a decrease in gain on sale of real estate assets as compared to 2005. Leasing Leasing activity continues to be strong throughout the portfolio. During the second quarter of 2006, the Company executed 116 new leases aggregating 967,351 square feet and 178 renewals aggregating 765,326 square feet. Rental rates on new leases increased by 21.0% and rental rates on renewals increased by 10.8%. On a blended basis, rental rates for new leases and renewals increased by 12.9%. At June 30, 2006, the average annualized base rent per occupied square foot, including those properties owned through joint ventures, was $11.64, as compared to $11.27 at June 30, 2005. At June 30, 2006, the portfolio, including those properties owned through joint ventures, was 96.2% leased. Excluding the impact of the properties acquired from Mervyns, the core portfolio was 96.0% leased, as compared to 95.6% at June 30, 2005. These percentages include tenants for, which signed leases have been executed and occupancy has not occurred. Based on tenants in place and responsible for paying rent as of June 30, 2006, the portfolio was 95.2% occupied. Excluding the impact of the properties acquired from Mervyns, the core portfolio was 95.0% occupied, as compared to 95.0% at June 30, 2005. Strategic Real Estate Transactions MDT Joint Ventures During the second quarter of 2006, the Company sold seven properties, aggregating 0.8 million owned square feet, to the MDT Preferred Joint Venture, a newly formed joint venture with Macquarie DDR Trust, for approximately $122.7 million and recognized gains totaling approximately $38.5 million of which $32.5 million represented merchant building gains from recently developed shopping centers. Under the terms of the new MDT Preferred Joint Venture, MDT receives a 9% return on its preferred equity investment of approximately $12.2 million and then receives a 10% return on its common equity investment of approximately $20.8 million before DDR receives a 10% return on its common equity investment. DDR is then entitled to a 20% promoted interest in any cash flow achieved above a 10% leveraged IRR on all common equity. The Company remains responsible for all day-to-day operations of the properties and receives ongoing fees for property management, leasing and construction management, in addition to a promoted interest, along with other periodic fees such as financing fees. In addition, in July 2006, the Company sold two additional expansion areas in McDonough, Georgia and Coons Rapids, Minnesota to the MDT Joint Venture for approximately $10.1 million. These expansion areas are adjacent to shopping centers currently owned by the MDT Joint Venture. The Company anticipates recording merchant building gains of approximately $3 million in the third quarter relating to these sales. Coventry II Joint Venture In May 2006, the Coventry II Joint Ventures acquired three assets located in Cincinnati, Ohio; Benton Harbor, Michigan and Dallas, Texas at an aggregate cost of approximately $225 million. The Company is responsible for all day-to-day operations of the properties and receives its share of ongoing fees for property management, certain leasing, construction management, and construction oversight, in addition to a promoted interest in the three properties acquired. Service Merchandise Joint Venture In June 2006, the Company exercised its purchase and sale rights under the Service Merchandise Joint Venture agreement, and agreed to purchase its partners' approximate 75% interest in the remaining 52 assets owned by the Joint Venture. The Company expects to complete this acquisition in August 2006 at an expected gross purchase price of approximately $138 million relating to our partners' approximately 75% interest, based on a total valuation of approximately $185 million for all remaining aspects. Following this acquisition, the Company expects to sell the assets to the Coventry II Joint Venture and anticipates recording a gain of approximately $5 million of which $3 million will be included in FFO. Acquisitions In April 2006, the Company acquired its partner's 50% ownership interest in the Deer Valley Towne Center located in Phoenix, Arizona for approximately $15.6 million in addition to assuming the partner's proportionate share of the $17.3 million of existing mortgage debt (or $8.65 million). The total shopping center was valued at approximately $48.2 million. Following the date of acquisition, this previously unconsolidated joint venture is consolidated into the Company's consolidated financial statements. Expansions During the six month period ended June 30, 2006, the Company completed three expansions and redevelopment projects located in Ocala, Florida; Rome, New York and Mooresville, North Carolina at an aggregate cost of $15.9 million. The Company is currently expanding/redeveloping nine shopping centers located in Gadsden, Alabama; Lakeland, Florida; Stockbridge, Georgia; Ottumwa, Iowa; Gaylord, Michigan; Olean, New York; Bayamon, Puerto Rico; Ft. Union, Utah and Brookfield, Wisconsin at a projected aggregate cost of approximately $57.2 million. The Company anticipates commencing construction on five additional expansion and redevelopment projects at shopping centers located in Birmingham, Alabama; Crystal River, Florida; Hamilton, New Jersey; Amherst, New York and Stow, Ohio. Five of the Company's joint ventures are currently expanding/redeveloping their shopping centers located in Phoenix, Arizona; Lancaster, California; Benton Harbor, Michigan; Kansas City, Missouri and Cincinnati, Ohio at a projected incremental cost of approximately $82.8 million. Two of the Company's joint ventures anticipate commencing expansion/redevelopment projects at their shopping centers located in Deer Park, Illinois and Kirkland, Washington. Development (Wholly Owned and Consolidated Joint Ventures) As of June 30, 2006, the Company has substantially completed the construction of the Freehold, New Jersey shopping center, which has an aggregate cost of $25.4 million. The Company currently has nine shopping center projects under construction. These projects are located in Miami, Florida; Nampa, Idaho; McHenry, Illinois; Chesterfield, Michigan; Seabrook, New Hampshire; Horseheads, New York; Apex, North Carolina (Beaver Creek Crossings - Phase I, which is being developed through a joint venture with First Carolina Properties); Pittsburgh, Pennsylvania and San Antonio, Texas, (which is being developed through a joint venture with David Berndt Interests). These projects are scheduled for completion during 2006 through 2007 at a projected aggregate cost of approximately $517 million and will create an additional 4.7 million square feet of gross leasable retail space. At June 30, 2006, approximately $257.2 million of costs were incurred in relation to these development projects. The Company anticipates commencing construction in 2006 on two additional shopping centers located in Homestead, Florida and McKinney, Texas. These projects have an estimated aggregate cost of $59.3 million and will create an additional 0.5 million square feet of gross leasable retail space. Development (Joint Ventures) Four of the Company's joint ventures currently have shopping center projects under construction. These projects have an aggregate projected cost of approximately $210.5 million. T hese projects are located in Merriam, Kansas; Apex, North Carolina (Beaver Creek Crossings - South, adjacent to a wholly owned development project); Allen, Texas and San Antonio, Texas. The projects located in Merriam, Kansas; Allen, Texas and San Antonio, Texas are being developed through the Coventry II program. The majority of the project located in San Antonio, Texas was substantially completed during 2005. The remaining three projects are scheduled for completion during 2007 and 2008. At June 30, 2006, approximately $72.4 million of costs were incurred in relation to these development projects. Financing In June 2006, the Company amended and restated its senior unsecured credit facility to expand the facility from $1 billion to $1.2 billion and add an accordion feature to increase the facility, at the Company's option, up to $1.4 billion. The Company reduced interest rate pricing to LIBOR plus 60 basis points, based on the Company's current corporate credit ratings (Baa2 stable from Moody's and BBB stable from Standard and Poors) and extended the maturity to June 2010. The Company also amended its $60 million unsecured credit facility with National City Bank to reflect consistent terms, pricing and maturity as in the $1.2 billion senior unsecured credit facility. In addition, its $400 million secured term loan was amended to add an accordion feature to increase the loan, at the Company's option, up to $500 million and make similar covenant modifications. Developers Diversified Realty Corporation (NYSE: DDR) -- http://www.ddr.com/-- currently owns and manages approximately 500 retail operating and development properties in 44 states, plus Puerto Rico, comprising approximately 114 million square feet of real estate. Developers Diversified Realty is a self-administered and self-managed real estate investment trust (REIT) operating as a fully integrated real estate company which acquires, develops, leases and manages shopping centers. * * * Developers Diversified Realty Corp's Preferred stock has Fitch Ratings' BB+' rating. Fitch said the Rating Outlook is Stable. EASTMAN KODAK: Weak Profitability Prompts S&P's Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Eastman Kodak Co. (B+/Watch Neg/--) on CreditWatch with negative implications. The Rochester, New York-based imaging company had $3.5 billion in debt as of June 30, 2006. "We are concerned that currently weak profitability and a slower- than-anticipated revenue growth in the company's emerging digital business will not offset the rapid decline in its traditional business," said Standard & Poor's credit analyst Tulip Lim. Kodak has announced that it anticipates digital revenue growth for full-year 2006 slowing to 10%, compared with its previous expectation of 16%-22%. Digital revenue increased only 6% in the second quarter of 2006. In its traditional business, the company expects a 22% decline in revenues, at the higher end of its previously forecast decline of between 16% and 22%. In resolving the CreditWatch listing, Standard & Poor's will include an updated assessment of the company's near- and intermediate-term profit and cash flow potential in light of the difficult operating environment, competition, and slower-than- expected digital sales growth. Standard & Poor's evaluation will also consider the magnitude and use of proceeds from the potential sale of Kodak's Health group and the burden of the company's unfunded postretirement benefit obligations on its financial profile. EDGEWATER MEDICAL: Wins $13 Mil. Judgment Against Mgmt. Companies ----------------------------------------------------------------- The Hon. Bruce W. Black of the U.S. Bankruptcy Court for the Northern District of Illinois partly approved Edgewater Medical Center's request for summary judgment against Peter Rogan, Braddock Management L.P., Bainbridge Management L.P., and Bainbridge Management, Inc. The Debtor filed an adversary complaint against its former management companies and their sole partner asserting claims for: * breach of fiduciary duty, * breach of contract, and * indemnification. The Debtor moved for summary judgment, seeking: * forfeiture of all compensation paid to the management Companies, * attorneys fees, and * prejudgment interest. Defendants' Objections The Defendants argued that: -- the forfeiture damages on the Debtor's breach of contract and breach of fiduciary duty claims are duplicative and therefore may not support forfeiture or disgorgement remedies; -- Under Illinois law, the Moorman doctrine, otherwise known as the "economic loss doctrine," bars the Debtor's move for forfeiture because the basis of all the Defendants' duties to the Debtor is a contract and the contract prohibited Medicare fraud, which is the source of the Debtor's claim. The Moorman doctrine allows only contract damages to be awarded for the breach of a fiduciary duty pursuant to the contract; and -- the line of cases supporting complete forfeiture of a breaching fiduciary's compensation applies only to employees breaching fiduciary duties to their employers. The Debtor Responded The Debtor argued that: -- the Defendants miss the point of the Moorman doctrine because the Defendants refer to the breach of fiduciary duty cause of action as one sounding in tort. Illinois applies the economic loss doctrine exclusively to tort claims and not to breach of fiduciary duty; -- Under the Illinois law, any agent that breaches its fiduciary duty to its principal is subject to complete forfeiture of any compensation during the term of the breach. Specifically, the Debtor seeks forfeiture damages of: * "Monthly Fixed Fees" and "Annual Percentage Fees" amounting to $11,793,468.63 pursuant to the Defendants' breach of fiduciary duty entered prior for the period beginning in 1995 through 2000. Originally, the amount of those fees is $11,600,530.83, but the Debtor contended that the difference of $192,937.80 is due to a computation error by the Defendants; * "Administrative Manager Reimbursement" amounting to $9,198,536.91 pursuant to the management agreements; * "Exclusive Corporate Services" amounting to $1,488,837.98 pursuant to the management contracts during the period of breach; and * indemnification provision in the management agreements. Court's Decision In a decision published at 2006 WL 1793563, Judge Black held that: -- the Defendants waived their argument that the Debtor's claims against them for breach of contract and breach of fiduciary duty were duplicative and could not coexist where, on the Debtors' early summary judgment as to liability, the Defendants didn't argue that the two claims could not coexist; -- Under the Illinois law, the mere fact that a fiduciary duty has its roots in an underlying contract is itself no barrier to awarding forfeiture damages based on a breach of fiduciary duty; -- the economic loss doctrine did not bar the Debtor's request for forfeiture; and -- the complete forfeiture of all compensations the Defendants received during the period of breach, more than $13 Million, was warranted based on the Defendant's ongoing and severe breach of fiduciary duty to the Debtor. In addition, Judge Black: -- awarded the Debtor $11,600,530.83 for forfeiture of both "Monthly Fixed Fees" and "Annual Percentage Fees". The Court added that the Debtor might seek any discrepancy from that amount at the trial. -- denied forfeiture of "Administrative Manager Reimbursement" pursuant to the management contract because the parties dispute the meaning of the contract provision, and inappropriate for decision. The Court ruled that the parties should clarify the scope of their authority over these "Administrative Managers" and provide any facts related to whether the payments made to the Defendants pursuant to the contract provision constituted "compensation"; -- awarded the Debtor forfeiture of $1,488,837.98 in payments of "Exclusive Corporate Services"; and -- denied the Debtor's request for damages pursuant to the indemnification provision in the management agreements. Judge Black held that the language of the parties' indemnification agreement was not so clear as to require, on summary judgment, reimbursement of all expenditures caused by defendants' breach, including the compensation paid pursuant to the management contracts. In this litigation (Adv. Pro. No. 04-02327), Vincent J. Connelly, Esq., Phillip S. Reed, Esq., Debra L. Bogo-Ernst, Esq., and Sean Dailey, Esq., at Mayer, Brown, Rowe & Maw represented the Defendants, and Eugene Crane, Esq., and Arthur Simon, Esq., at Dannen, Crane, Heyman & Simon, represented the Trustee. Based in Chicago, Illinois, Edgewater Medical Center is a non-for-profit corporation that operates a hospital. The Company filed for chapter 11 protection on Feb. 25, 2002 (Bankr. N.D. Ill. Case No. 02-07378). Scott T. Mendeloff, Esq., Gabriel Aizenberg, Esq., Eric S. Pruitt, Esq., and Shelly A. DeRouse, Esq., at Sidley Austin Brown & Wood represents the Debtor. ENDURANCE SPECIALTY: Buys $235MM of Reinsurance from Shackleton --------------------------------------------------------------- Endurance Specialty Holdings Ltd.'s subsidiary, Endurance Specialty Insurance Ltd., acquired $235 million of multi-year, collateralized catastrophe reinsurance from Shackleton Re Limited, a Cayman Islands reinsurance company. This new reinsurance is designed to enhance Endurance's ability to manage risk related to large natural catastrophes in the United States. The reinsurance consists of three separate coverages. The first coverage is $125 million of reinsurance for earthquake risk in California over the next 18 months. The second coverage consists of $60 million of protection for hurricanes in the U.S. Northeast, Gulf Coast and certain inland states over the next two years. The final coverage provides $50 million of reinsurance for losses over the next two years resulting from hurricanes or California earthquakes following occurrence of a major hurricane or California earthquake during the same year. "These transactions provide Endurance with significant catastrophe reinsurance protection while continuing to optimize the use of our capital," Kenneth J. LeStrange, President, Chairman and Chief Executive Officer of Endurance, commented. "The $235 million of new protection provided by this multi-year collateralized reinsurance, when combined with our existing capital, reinsurance and retrocessional protection, provides us with significant capital strength to provide for our clients and to continue to build our business." On Aug. 1, 2006, Shackleton Re financed the reinsurance coverage through the issuance of a $125 million risk-linked catastrophe bond pursuant to Rule 144A under the Securities Act of 1933 and the entrance into a $110 million multi-year risk-linked credit facility. Goldman, Sachs & Co. acted as the initial purchaser for the catastrophe bond and as sole lead arranger, sole bookrunner, and administrative agent for the credit facility. About Endurance Specialty Based in Pembroke, Bermuda, Endurance Specialty Holdings Ltd. (NYSE: ENH) -- http://www.endurance.bm/-- is a provider of property and casualty insurance and reinsurance. Through its operating subsidiaries, Endurance currently writes property per risk treaty reinsurance, property catastrophe reinsurance, casualty treaty reinsurance, property individual risks, casualty individual risks, and other specialty lines. Headquarters: Wellesley House 90 Pitts Bay Road Pembroke HM 08, Bermuda Mailing Address: Endurance Specialty Holdings Ltd. Suite No. 784, No. 48 Par-la-Ville Road Hamilton HM 11, Bermuda. * * * As reported in the Troubled Company Reporter on Jan. 31, 2006, Standard & Poor's Ratings Services assigned its preliminary 'BBB' senior debt, 'BBB-' subordinated debt, 'BB+' junior subordinated, and 'BB+' preferred stock ratings to Endurance Specialty Holdings Ltd.'s (BBB/Positive/--) recently filed universal shelf. The new shelf has an undesignated notional amount in accordance with the new SEC rules effective Dec. 1, 2005. ENERGAS RESOURCES: Makes Final Payments to Double G Energy ---------------------------------------------------------- Energas Resources, Inc. has paid the final two payments to Double G Energy, Inc. The final payments complete the purchase of Double G's interest in the Pulaski County, Kentucky gas field and puts an end to the claims, disputes and pending litigation existing between Energas and Double G Energy, Inc. Going Concern Doubt Murrell, Hall, McIntosh & Co., PLLP, in Oklahoma City, Oklahoma, raised substantial doubt about Energas Resources, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Jan. 31, 2006. The auditor pointed to the Company's recurring operating losses and negative working capital. Based in Oklahoma City, Oklahoma, Energas Resources, Inc. (OTCBB:EGSR) -- http://www.energasresources.com/-- is involved in the exploration and development of oil and gas. The Company's activities are primarily dependent upon available financial resources to fund the costs of drilling and completing wells. The Company principally operates in the Arkoma Basin in Oklahoma, the Powder River Basin in Wyoming and the Appalachian Basin of Eastern Kentucky. FALCON AIR: Chapter 11 Trustee hires Katz Barron as Counsel ----------------------------------------------------------- Kenneth A. Welt, the Chapter 11 Trustee appointed in Falcon Air Express, Inc.'s chapter 11 case, obtained authority from the U.S. Bankruptcy Court for the Southern District of Florida to employ Katz Barron Squitero Faust, as his bankruptcy counsel. Katz Barron is expected to represent the trustee and perform ordinary and necessary legal services required in the administration of the Debtor's estate. Documents with the Court do not state how much the firm's professionals will be paid. Frank P. Terzo, Esq., a shareholder at Katz Barron, discloses that the firm continues to represent Florida Power & Light, a creditor, in matters unrelated to the Debtor's bankruptcy proceedings. Mr. Terzo says that the firm has not represented Florida Power in this case and that all outstanding issues with Florida Power have been resolved prior to Mr. Welt's appointment. Mr. Terzo assures the Court that his firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Terzo can be reached at: Frank P. Terzo, Esq. Katz Barron Squitero Faust 2699 South Bayshore Drive Seventh Floor Miami, Florida 33133-5408 Tel: (305) 856-2444 Fax: (305) 285-9227 http://www.katzbarron.com/ Headquartered in Miami, Florida, Falcon Air Express, Inc. -- http://www.falconairexpress.net/-- is a small and low-cost airline company that provides charter service and renders foreign and U.S. carriers sub-services on schedules routes. The Debtor and its affiliate, MAJEL Aircraft Leasing Corp., filed for chapter 11 protection on May 10, 2006 (Bankr. S.D. Fla. Case Nos. 06-11877 & 06-11878). Brian G. Rich, Esq., at Berger Singerman, P.A., represents the Debtors in their restructuring efforts. Peter D. Russin, Esq., and Michael S. Budwick, Esq., at Meland Russin & Budwick, P.A., represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. FALCON AIR: U.S. Trustee Reconstitutes Official Creditors Panel --------------------------------------------------------------- The U.S. Trustee for Region 21 reconstituted the Official Committee of Unsecured Creditors in Falcon Air Express, Inc.'s chapter 11 case. This is the third reconstitution of the Committee in the Debtor's bankruptcy proceedings. The Committee is currently composed of: 1. Pals I, Inc. c/o Pegasus Aviation, Inc. 4 Embarcadero Center, 35th Floor San Francisco, California 94111 Tel: (415) 743-0257 Fax: (415) 434-3912 2. David M. Sandri, President Commercial Jet, Inc. P.O. Box 668500 Miami, Florida 33166-8500 Tel: (305) 341-5150 Fax: (786) 265-7057 3. Fred Adarve, Manager Aviation Brake Services, Inc. 7274 Northwest 34th Street Miami, Florida 33122 Tel: (305) 594-4677 Fax: (305) 477-5799 4. David Leamon, Esq., Attorney-in-fact Aviation Refinancing Transaction, LLC c/o Curtis, Mallet-Prevost, Colt & Mosle, LLP 101 Park Avenue New York, NY 10178-0061 Tel: (212) 696-6936 Fax: (917) 368-8936 5. James Raff RPK Capital I, LLC 1640 West Hubbard Street Chicago, Illinois 60622 Tel: (312) 492-8710 Fax: (312) 492-8713 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in Miami, Florida, Falcon Air Express, Inc. -- http://www.falconairexpress.net/-- is a small and low-cost airline company that provides charter service and renders foreign and U.S. carriers sub-services on schedules routes. The Debtor and its affiliate, MAJEL Aircraft Leasing Corp., filed for chapter 11 protection on May 10, 2006 (Bankr. S.D. Fla. Case Nos. 06-11877 & 06-11878). Brian G. Rich, Esq., at Berger Singerman, P.A., represents the Debtors in their restructuring efforts. Peter D. Russin, Esq., and Michael S. Budwick, Esq., at Meland Russin & Budwick, P.A., represent the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. FIDELITY NATIONAL: Earns $1.02 Billion in Second Quarter of 2006 ---------------------------------------------------------------- Fidelity National Information Services Inc. reported consolidated revenue of $1.02 billion and net earnings of $66 million for the second quarter of 2006. "[The Company] generated another quarter of solid operating performance. Year-to-date pro forma revenue growth of 6.2% and EBITDA growth of 10.4% are in line with our original full year expectations," William P. Foley, II, the Company's chairman, said. "With strong sales growth in the first half of the year and the recent launch of our new item processing and BPO operation in Brazil, we are increasing our full year outlook to reflect pro forma revenue growth of 5% to 7% percent, EBITDA growth of 10% to 12% and cash earnings per diluted share of $2.06 to $2.12." Headquartered in Jacksonville, Florida, Fidelity National Information Services Inc. (NYSE: FIS) provides technology services to over 7,800 financial institutions worldwide. The Company is a majority-owned subsidiary of Fidelity National Financial, Inc. (NYSE: FNF), a provider of outsourced products and services to a variety of industries. * * * As reported in the Troubled Company Reporter on March 20, 2006, Moody's Investors Service concluded its rating reviews for Fidelity National Information Solutions and Certegy, which were initiated on Sept. 16, 2005, following the announcement that Fidelity National Information Services planned to merge with Certegy. The review has concluded with a downgrade of Certegy's senior unsecured bonds to Ba1 from Baa2, upgrade of Fidelity National Information Solutions' senior secured credit facility to Ba1 from Ba3, assignment of a corporate family rating for FIS of Ba1 and a speculative grade liquidity rating of SGL-1. The outlook is stable. FLEXTRONICS INT'L: Reports $4.1BB Net Sales for 1st Quarter 2006 ---------------------------------------------------------------- For the first quarter ended June 30, 2006, Flextronics International Ltd. reported net sales from continuing operations of $4.1 billion, which represents an increase of $236 million, or 6%, over the first quarter ended June 30, 2005. "There has been a reacceleration of significant growth in our core EMS business, which includes design, vertically-integrated manufacturing services, components and logistics," Mike McNamara, Flextronics' chief executive officer said. "Fiscal 2006 was a very strong year in terms of incremental business wins from both new and existing customers. As a result, we exceeded revenue and earnings expectations in the June quarter and have increased our revenue growth rate expectations for fiscal 2007 to approximately 25%." Excluding intangibles amortization, restructuring and other charges which includes stock based compensation, net income for the first quarter ended June 30, 2006 increased 4% to $104 million, compared to $100 million, in the year ago quarter. After-tax amortization, restructuring and other charges which includes stock based compensation amounted to $19 million in the current quarter compared to $41 million in the year ago quarter. GAAP net income amounted to $85 million, in the first quarter ended June 30, 2006, compared to $59 million, in the year ago quarter. Headquartered in Singapore, Flextronics International Ltd. -- http://www.flextronics.com/-- provides electronics manufacturing services through a network of facilities in over 30 countries worldwide. * * * As reported in the Troubled Company Reporter on Nov 16, 2004, Moody's Investors Service assigned a Ba2 rating to Flextronics International Ltd.'s new $500 million 6.25% senior subordinated notes, due 2014. At the same time, the company was assigned a liquidity rating of SGL-1, reflecting Flextronics' significant on-hand liquidity, unfettered access to the sizeable $1.1 billion revolver and the expectation for generating moderately positive free cash flow (pre-Nortel payments) over the next twelve months. As reported in the Troubled Company Reporter on Nov. 12, 2004, Standard & Poor's Ratings Services assigned its 'BB-' rating to Flextronics' private offering of $500 million, senior subordinated notes due 2014. The notes were offered under Rule 144A, with registration rights. Proceeds of the offering will be used to repay outstanding debt under its revolving credit facilities and for general corporate purposes. The company's 'BB+/Stable/--' corporate credit rating was affirmed. FOSS MANUFACTURING: Saves 400 American Jobs, Offers 200 Positions ----------------------------------------------------------------- Foss Manufacturing has gone from bankruptcy to profitability in three months with a sector of American industry that many wrote- off years ago -- manufacturing. While many Americans feel that all manufacturing will soon be performed outside the United States, Foss Manufacturing has proven that manufacturing companies can be profitable in the modern era and keep jobs and profits on American soil. Foss, after 52 years in business and annualized revenues of approximately $100 million, specializes in non-woven textiles for the automotive, household, and marine industries. The company continues to take pride with their slogan: "Made In America." Foss entered into bankruptcy in September 2005 and was acquired by Alinian Capital Group on May 5, 2006 with a major turn-around challenge. Poor management and leadership allowed the company's performance to suffer even though it had excellent products and multiple worldwide patents, including FossShield(R), a unique and highly effective anti-microbial textile which has numerous applications for the healthcare, hospitality, military, and marine sectors. Alinian installed A.J. Nassar as the new CEO who addressed three major priorities: -- Intense review of costs and controls; -- Focus on employee initiatives and morale; and -- Repair of customer, and former customer, relationships. "Foss Manufacturing had not been performing to its potential and we took steps to be more productive and profitable," Mr. Nassar. Those steps have resulted in the retention of almost 400 jobs and 200 new position offerings here at Foss. In addition there has been a huge collateral effect with direct and indirect suppliers in Hampton and throughout the Northeast." Alinian Capital Group, LLC, a Florida-based investment, merchant banking, and corporate finance advisory firm, has led the acquisition as advisor and made an equity investment into Foss Manufacturing, LLC. Alinian Capital Group's reorganization plan was accepted by the bankruptcy Trustee which included new equity capital investment into a newly emerged Foss Manufacturing, LLC, a wholly owned subsidiary of Foss Holdings, LLC, which is a portfolio company of Alinian Capital Group, LLC. "The acquisition of Foss Manufacturing is a compliment to Alinian's portfolio of companies and we're confident at this point that we are well on our way to revitalizing Foss into a financially sound business once again," said Paul Sallarulo, one of the principals. About Foss Manufacturing Headquartered in Hampton, New Hampshire, Foss Manufacturing Company, Inc. -- http://www.fossmfg.com/-- is a producer of engineered, non-woven fabrics and specialty synthetic fibers, for a variety of applications and markets. The Company filed for chapter 11 protection on Sept. 16, 2005 (Bankr. D. N.H. Case No. 05-13724). Andrew Z. Schwartz, Esq., at Foley Hoag LLP represented the Debtor. Beth E. Levine, Esq., at Pachlski, Stang, Zieh, Young, Jones & Weintraub represents the Official Committee of Unsecured Creditors. The Court appointed Patrick J. O'Malley as the Debtor's Chapter 11 Trustee and lawyers from Hanify & King, Perkins, Smith & Cohen, LLP, and Mintz, Levin, Cohn, Ferris represent the Chapter 11 Trustee. When the Debtor filed for protection from its creditors, it listed $49,846,456 in assets and $53,419,673 in debts. FOSTER WHEELER: S&P Rates Proposed $350 Million Facilities at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' bank loan rating and '1' recovery rating on Foster Wheeler Ltd.'s proposed five-year, $350 million senior secured credit facilities due 2011, reflecting a high expectation of full recovery of principal (100%) in the event of a payment default. The facilities are rated one notch higher than the company's corporate credit rating. The facilities are expected to consist of: 1) a $200 million revolving credit facility, the full amount of which is available for letters of credit, with $100 million available for borrowings aside from letters of credit; and 2) a $150 million synthetic letter of credit facility. Standard & Poor's will remove its ratings on the company's existing $250 million senior credit agreement once the refinancing has closed. The corporate credit rating on Clinton, New Jersey-headquartered Foster is B+/Stable/--. The corporate credit rating reflects the company's still weak business risk profile and highly leveraged financial risk profile. The company's business risk profile has strengthened during the past couple of years as new orders, backlog levels, risk management policies, and profitability have improved considerably. The ratings also reflect improvements in the company's financial risk profile, marked by the company's most recent leverage reduction initiatives in 2006. Ratings List: Foster Wheeler Ltd.: * Corporate credit rating: B+/Stable/-- Rating Assigned: * $350 million senior secured credit facility: BB- * Recovery rating: 1 GENERAL CABLE: Earns $41.5 Million in Second Qtr. Ended June 30 --------------------------------------------------------------- General Cable Corporation disclosed revenues and earnings for the second quarter. Revenues of $987.1 million were up 19% on a metal-adjusted basis. Net income for the second quarter of 2006 was $41.5 million compared to adjusted net income of $13.9 million in the second quarter of 2005. Included in the second quarter 2005 results were pre-tax charges of $3.5 million associated with the closure of certain of the Company's manufacturing facilities. Second Quarter Highlights: -- Achieved 13th consecutive quarter of positive year-over- year metal-adjusted revenue growth; -- Increased year-over-year second quarter operating margins by approximately 330 basis points, on a metal-adjusted basis. -- Continued the turnaround in North American industrial and networking businesses on the strength of market demand, operating execution and improved pricing. -- Results were achieved despite a 50% sequential increase in copper Comex prices. Second Quarter Results Net sales were up in all reported business segments in the second quarter of 2006 compared to metal-adjusted net sales in the second quarter of 2005. Net sales for the second quarter of 2006 were $987.1 million, and represent an increase in metal pounds sold of 22% versus the second quarter of 2005. Acquired businesses added $112.7 million of sales and accounted for 12.7 points of the volume growth in metal pounds sold in the second quarter of 2006. Second quarter 2006 operating income was $70.4 million compared to second quarter 2005 adjusted operating income of $31.5 million, an increase of $38.9 million or 123%. Operating earnings as a percent of metal-adjusted net revenues were 7.1% in the second quarter of 2006 compared to an adjusted operating earnings percentage of 3.8% in the second quarter of 2005, an increase of approximately 330 basis points. The improvement in operating earnings was driven by increased factory utilization, and a significantly improved pricing environment across most of the Company's product lines and geographies, including a reduction in the time to recover raw material inflation. Also, strong productivity gains in several of the Company's North American manufacturing facilities, as well as factory improvements in Europe and Asia Pacific from the application of LEAN manufacturing techniques, have led to improved earnings. In addition, during the second quarter, as a result of certain customer shipments being delayed into the third quarter, the Company benefited from copper hedge positions that were closed in June prior to the recognition of the hedged sale transactions. The Company also benefited from the forward purchase of a small portion of its copper requirements due to concerns over supply tightness. Combined, the Company estimated the incremental operating profit realized in the second quarter from these items was about $8.5 million. "For the first time in several years, all of our product lines are in the black, including the North American industrial and local area networking businesses, which have been dilutive to earnings for the last few years," said Gregory B. Kenny, President and Chief Executive Officer of General Cable. "The early recognition of the long-term need for fresh investment in energy exploration, production, transmission and distribution infrastructure around the world and our related decision to acquire BICC in 1999 and Silec last year are starting to pay real dividends for our shareholders. We continue to look globally for additional investment opportunities in this sector which now represents approximately 45% to 50% of our annual revenues." "Asia Pacific's financial performance is benefiting from strong demand in Australia and the Pacific Islands. We are also seeing positive demand and stronger pricing trends in Portugal, Brazil, Angola, and Canada. The French market is also improving, particularly for power and industrial cables. At the same time we are seeing improved project pricing and demand in the global high- voltage market for underground cables, connectors, and systems engineering. As a result, our Silec acquisition is on track to be marginally accretive this year with significant opportunity for improvement in 2007," Mr. Kenny continued." "I am especially proud of our efforts to manage our working capital and liquidity during the quarter which helped offset the traditionally higher working capital requirements during the peak building season and the continuing funding of higher copper costs in our receivables. As a result, our strong earnings based cash flows resulted in a reduction in net debt of $23 million during the second quarter," Mr. Kenny concluded. Segment Results The Energy segment metal-adjusted revenues were up 32%, or 12% before the impact of acquisitions. This increase was led by North American aluminum overhead transmission cable growth of 37%, measured by metal pounds sold, as interconnection project activity increased. Industry lead times for new projects have increased to several months. Operating income in the Energy segment was up $9.8 million to $25.2 million, and operating margin improved approximately 130 basis points from the second quarter of 2005, primarily as a result of the additional leverage of fixed costs on incremental volume, recovery of raw material price inflation, and increased market pricing. This result includes $55 million in Silec revenues at low operating margins, which the Company expects to improve over time through accelerating marketing and manufacturing synergies, improved pricing, and the implementation of LEAN initiatives. Industrial & Specialty cables metal-adjusted revenue was up 20% in the second quarter of 2006 compared to the second quarter of 2005. Before the impact of acquisitions, metal pounds sold increased 12.3% due to strong demand in North America for marine, mining, oil and gas exploration and production products as well as strong European end markets. Favorable manufacturing volume productivity, particularly for marine and mining products, continues to drive incremental operating profits. In addition, the pricing environment for industrial cables in Europe and North America has improved compared to the second quarter of 2005. Operating earnings for the second quarter were $30.8 million, up $20.6 million or three times greater than the second quarter of 2005 and resulted in an improvement in operating margins of 420 basis points to 7%. This result includes $51.3 million in acquired revenues with minimal operating contribution. "Utilization levels across all energy and industrial businesses are quite high and industry-wide lead times have lengthened in Europe and North America. Demand for medium and high voltage power cables is particularly strong, driven by the interconnection of generating plants, alternative energy, and grid reinforcement in populous metropolitan areas," Mr. Kenny said. Communication cables segment revenues declined about 3% on a metal-adjusted basis without the impact of acquisitions. Networking sales globally were up approximately 30%. The increase in networking sales is a result of strong demand for higher performance cables and warranted systems as well as accelerating pricing in the market. The Company's products supporting the General Cable-Panduit alliance have gained wide acceptance in the marketplace, particularly by the Fortune 1000 in North America. This quarter represents the fourth consecutive quarter of year over year metal-adjusted revenue growth for networking cable in excess of 20%. Specialty military and private network fiber optics business is also contributing to profit growth, partially due to the consolidation of the manufacturing facility into the Helix/Hitemp platform acquired last year from Draka. Partially offsetting these increases was continued lower unit demand for outside plant telecommunications cables. With manufacturing capacity for telecommunications cables coming out of the market faster than declines in demand, capacity utilization has been increasing which has helped drive spot and contractual pricing higher. At the same time, the lag between recognition of raw material increases and price increases for the Company's products in the market was significantly shortened. In addition, the Company continues to benefit from cost savings from its 2005 plant rationalization, and improved factory floor productivity with respect to labor, scrap and throughput. In all, segment operating earnings were up $8.5 million to $14.4 million, an increase of 144%. Selling, general and administrative expenses in the second quarter of 2006 were $59.1 million compared to $43.3 million in the second quarter of 2005. The increase in expenses is due principally to the addition of Silec and Beru, acquired in late 2005, higher commissions and other selling costs resulting from increased sales, as well as an increase in performance based incentive compensation. Selling, general and administrative expenses were 6% and 5.2% of metal-adjusted net sales in the second quarter of 2006 and 2005, respectively. The Company's effective tax rate for the second quarter of 2006 was 29.7%; lower than the statutory rate due to a reduction in deferred state tax valuation allowances of approximately $3.7 million and a reduction in the expected full-year effective rate to 36.5%. Headquartered in Highland Heights, Kentucky, General Cable Corporation (NYSE: BGC) -- http://www.generalcable.com/-- makes aluminum, copper, and fiber-optic wire and cable products. It has three operating segments: industrial and specialty (wire and cable products conduct electrical current for industrial and commercial power and control applications); energy (cables used for low-, medium- and high-voltage power distribution and power transmission products); and communications (wire for low-voltage signals for voice, data, video, and control applications). Brand names include Carol and Brand Rex. It also produces power cables, automotive wire, mining cables, and custom-designed cables for medical equipment and other products. * * * As reported in the Troubled Company Reporter on Jan. 30, 2006, Standard & Poor's Rating Services revised its outlook on Highland Heights, Kentucky-based General Cable Corp. to positive from stable, and affirmed the 'B+' corporate credit rating, the 'BB' secured bank loan rating, and the 'B' senior unsecured debt rating. The revised outlook reflects improved financial leverage metrics stemming from improved profitability and reduced debt. GERDAU AMERISTEEL: USW and Manitoba Metals Ratify Labor Pact ------------------------------------------------------------ The United Steelworkers staff representative Tony Sproule, disclosed that its members at Gerdau Ameristeel's Manitoba Metals in St. Andrews have ratified a new five-year labor agreement by a 57 percent margin, covering 87 workers in the scrap prep facility that serves as a feeder for the company's Selkirk mill. Expired Agreements with Gerdau in the U.S. The USW also disclosed that seven labor agreements with the Company in the U.S. have expired. The expired labor agreements cover workers at Beaumont, Texas; Perth Amboy, N.J.; St. Paul, Minn.; Wilton, Iowa; and the three Sheffield Steel locations recently acquired at Joliet, Ill.; Sand Springs, Okla., and Kansas City, Mo. "It's time that Gerdau's chairman and CEO Jorge Johannpeter Gerdau come to the U.S. and get involved in negotiations before his Tampa management leads his company to ruin," Leo W. Gerard, USW International president, said. "We are not looking for a fight but Steelworkers will never run from one. Our negotiators have been very patient but our members at Gerdau are getting restless. It's time for Gerdau to push these union-busters out of the way so that we can settle the contracts, just like we did at St. Andrews." The United Steelworkers represents some 3,000 workers at 13 Gerdau locations in North America. Headquartered in Tampa, Florida, Gerdau Ameristeel Corporation -- http://www.gerdauameristeel.com/-- is a minimill steel producer in North America with annual manufacturing capacity of over 8.4 million tons of mill finished steel products. Through its vertically integrated network of 15 minimills (including one 50%-owned minimill), 16 scrap recycling facilities and 42 downstream operations, Gerdau Ameristeel primarily serves customers in the eastern two-thirds of North America. The Company's products are generally sold to steel service centers, steel fabricators, or directly to original equipment manufacturers (or "OEMs") for use in a variety of industries, including construction, automotive, mining, cellular and electrical transmission, metal building manufacturing and equipment manufacturing. * * * As reported in the Troubled Company Reporter on March 1, 2005, Standard & Poor's Ratings Services revised its outlook on Gerdau Ameristeel Corp. to positive from stable. At the same time, it affirmed its 'BB-' corporate credit rating on the company. As reported in the Troubled Company Reporter on May 1, 2006 Moody's Investors Service upgraded Gerdau Ameristeel corporate family and unsecured note ratings to Ba2 from Ba3. GLIMCHER REALTY: Incurs $43 Million Net Loss in Second Quarter -------------------------------------------------------------- Glimcher Realty Trust's net loss available to common shareholders in the second quarter ended June 30, 2006, was $43 million as compared to net loss of $1.1 million in the second quarter of 2005. Funds From Operations in the second quarter of 2006 was a loss of $26.9 million, compared to income of $19.3 million in the second quarter of 2005. Included in the results for the second quarter ended June 30, 2006 was $48.8 million of impairment charges recognized primarily on five non-core mall properties classified as held-for-sale as of June 30, 2006. Also included in the results for the second quarter ended June 30, 2005 was a $1.4 million non-cash impairment charge recognized on a community center property classified as held-for-sale as of June 30, 2005. For the first six months of 2006, net loss available to common shareholders was $39.1 million compared to net income of $400,000 in the first six months of 2005. FFO was a loss of $3.8 million in the first six months of 2006 compared to $39.2 million in the first six months of 2005. "Aggressively repositioning our portfolio through the selling of non-core assets is an integral part of our strategy to upgrade the quality of our assets," added Michael P. Glimcher, President and CEO. "As we continue to execute, the growth profile of the Company is expected to improve measurably." Highlights -- total revenues of $73.2 million in the second quarter of 2006 compared to revenues of $73.1 million for the second quarter of 2005. During the second quarter of 2006, the Company recognized $1.3 million of lease termination income while no lease termination income was recognized during the second quarter of 2005. Offsetting this increase were decreases in out-parcel sales activity, straight-line rents and percentage rents during the second quarter of 2006 from the second quarter of 2005. -- net loss available to common shareholders for the second quarter of 2006 was $43 million compared to a net loss of $1.1 million for the second quarter of 2005. Non-cash impairment charges of $48.8 million during the second quarter of 2006 were offset by a $2 million decrease in general and administrative expenses over the second quarter of 2005 and the $1.4 million impairment charge recognized during the second quarter of 2005. -- Same mall net operating income decreased in the second quarter of 2006 by 0.2% over same mall net operating income for the second quarter of 2005. When excluding mall properties classified as held-for-sale, net operating income increased 1%. The impact of prior year tenant reimbursement adjustments were not considered in making these comparisons. -- same mall store average rents were $25.27 per square foot at June 30, 2006, an increase of 2.3% from the $24.69 per square foot at June 30, 2005. Occupancy for the same mall stores at June 30, 2006, was 87.9%, in-line with occupancy levels at June 30, 2005. -- average retail sales for mall stores increased 2.1% to $341 per square foot for the twelve months ending June 30, 2006 compared to $334 per square foot at June 30, 2005. Comparable mall store sales increased 1% for the twelve months ending June 30, 2006, compared to the same period in 2005. -- debt-to-total-market capitalization at June 30, 2006, (including the Company's pro-rata share of joint venture debt) was 57.0% based on the common share closing price of $24.81, compared to 54.2% at March 31, 2006, based on the common share closing price of $28.40. Fixed rate debt represented approximately 86% of the Company's total outstanding borrowings at June 30, 2006, as compared to 84% as of March 31, 2006. -- the Company sold one community center property during the second quarter of 2006 (East Pointe Plaza in Columbia, S.C.) generating total proceeds of approximately $9.8 million. The Company has six remaining community centers, two of which are currently classified as held-for-sale. 2006 Outlook Changes in key assumptions from the Company's prior 2006 guidance include: -- same-mall net operating income growth estimated at 1% to 2% for the full year -- lease termination income and out-parcel sales estimated at $1.5 to $2.5 million for the remainder of the year -- sale of the five malls anticipated to occur at the end of November 2006 -- an average LIBOR rate of 5.6% for the remainder of 2006 All other significant assumptions from the previous guidance remain the same. 2007 Outlook Due to the prospective impact from the anticipated sales of the five malls, the Company elected to provide initial guidance for 2007 in May of this year. Management will be reviewing these ranges in connection with the annual budgeting process that will be finalized later in 2006. Glimcher Realty Trust (NYSE: GRT) is a real estate investment trust and is a recognized leader in the ownership, management, acquisition and development of regional and super-regional malls. At June 30, 2006, the Company's mall portfolio, including assets held through our strategic joint venture, consisted of 26 properties located in 16 states with gross leasable area totaling approximately 23.7 million square feet. The community center and single tenant portfolio is comprised of six properties representing approximately 1.3 million square feet. Glimcher Realty Trust's common shares are listed on the New York Stock Exchange under the symbol "GRT." Glimcher Realty Trust's Series F and Series G preferred shares are listed on the New York Stock Exchange under the symbols "GRT.F" and "GRT.G,". Glimcher Realty Trust is a component of both the Russell 2000(R) Index, representing small cap stocks, and the Russell 3000(R) Index, representing the broader market. * * * As reported in the Troubled Company Reporter on July 12, 2006, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit and 'B' preferred stock ratings on Glimcher Realty Trust. The affirmations affect $210 million in outstanding rated preferred stock. S&P said the outlook is stable. GREENPARK GROUP: Wants Irell & Manella as Bankruptcy Counsel ------------------------------------------------------------ GreenPark Group, LLC, asks the U.S. Bankruptcy Court for the Central District of California for authority to employ Irell & Manella LLP, as its bankruptcy counsel. Irell & Manella will: a. advise the Debtor with respect to its powers and duties as debtor-in-possession in the continued management and operation of its affairs and properties; b. attend meetings and negotiate with representatives of the Debtor's creditors and other parties-in-interest; c. take necessary actions to protect and preserve the Debtor's estate, including the prosecution of actions on the Debtor's behalf, the defense of any action commenced against the Debtor, negotiate on behalf of the Debtor with respect to all litigation in which the Debtor is involved, and object to claims that are filed against the Debtor's estate; d. prepare all motion, applications, answers, orders, reports, and papers on behalf of the Debtor that are necessary to the administration of its case; e. negotiate and prepare a plan of reorganization , disclosure statement, and all related agreement or documents, and take all necessary actions on behalf of the Debtor to obtain confirmation of the plan; f. represent the Debtor in connection with its postpetition financing needs, if any; g. advise the Debtor in connection with any potential sale of assets; h. appear before the Court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtor's estate before the courts and the U.S. Trustee; and i. perform all other necessary legal services and provide all other necessary legal advice to the Debtor in connection with its chapter 11 case. Alan J. Friedman, Esq., a partner at Irell & Manella, tells the Court that the firm received a $300,000 retainer on or about May 8, 2006. Mr. Friedman says that the firm was paid $116,692.18 from the retainer for services rendered prior to the Debtor filing for bankruptcy. Mr. Friedman discloses that he will bill $675 per hour for this engagement. Mr. Friedman says that the firm's other professionals who are expected to render their services in the Debtor's case bill: Professional Designation Hourly Rate ------------ ----------- ----------- Jeffrey M. Reisner, Esq. Partner $685 Anthony Pierotti, Esq. Partner $640 Michael G. Ermer Esq. Partner $630 Regine Rutherford, Esq. Associate $425 Andres G. Romay, Esq. Associate $370 Lori S. Gauthier Senior Legal Assistant $200 Mr. Friedman assures the Court that his firm does not represent any interest adverse to the Debtor, its estate or its creditors. Mr. Friedman can be reached at: Alan J. Friedman, Esq. Irell & Manella LLP 840 Newport Center Drive, Suite 400 Newport Beach, California 92660-6324 Tel: (949) 760-0991 Fax: (949) 760-5200 http://www.irell.com/ Headquartered in Seal Beach, California, GreenPark Group LLC, is a real estate developer and building contractor. The Company and its affiliates, California/Nevada Developments LLC, filed for chapter 11protection on June 23, 2006 (Bankr. C.D. Calif. Case Nos. 06-10988 & 06-10989). Alan J. Friedman, Esq., at Irell & Manella, LLP, represents the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. GREENPARK GROUP: Files Schedules of Assets and Liabilities ---------------------------------------------------------- GreenPark Group LLC, and its debtor-affiliate California/Nevada Developments LLC, delivered to the U.S. Bankruptcy Court for the Central District of California their schedules of assets and liabilities, disclosing: GreenPark Group --------------- Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $10,229,703 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $389,174 Unsecured Nonpriority Claims ---------- -------- Total $10,229,703 $389,174 California/Nevada Developments ------------------------------ Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $1,549 C. Property Claimed as Exempt D. Creditors Holding Secured Claims E. Creditors Holding Unsecured Priority Claims F. Creditors Holding $10,046,066 Unsecured Nonpriority Claims ------- ----------- Total $1,549 $10,046,066 Headquartered in Seal Beach, California, GreenPark Group LLC, is a real estate developer and building contractor. The Company and its affiliates, California/Nevada Developments LLC, filed for chapter 11protection on June 23, 2006 (Bankr. C.D. Calif. Case Nos. 06-10988 & 06-10989). Alan J. Friedman, Esq., at Irell & Manella, LLP, represents the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. GS AUTO: S&P Assigns BB Rating to Class D Asset-Backed Note ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its ratings to GS Auto Loan Trust 2006-1's $848 million asset-backed notes. The ratings reflect: -- the credit support available to the notes; -- the credit quality of the underlying pool of automobile loans originated by Huntington National Bank, Ford Motor Credit (which will continue to service the loans as receivables servicers), and Ohio Savings Bank (which will be serviced by Systems & Services Technologies); and -- a sound transaction and legal structure. Credit support for the notes will be provided by overcollateralization, subordination, and excess spread. The overcollateralization is required to increase from 1.4% of the initial pool balance of receivables to a 3.0% target of the current pool balance, subject to a 1.0% initial pool balance floor. In addition: * the class A notes will benefit from the subordination of the class B, C, and D notes equal to 7.9% of the initial balance, with a 9.5% target of the current balance; * the class B notes will benefit from the subordination of the class C and D notes equal to 4.35% of the initial balance, with a 5.0% target of current balance; and * the class C notes will benefit from the subordination of the class D notes equal to 1.85% of the initial balance, with a 3.0% target of the current pool balance. Until the targeted enhancement levels are met, the subordinated notes will not amortize and all available excess spread will be used to turbo the class A notes. After the targeted enhancement levels are met and the class A-1 notes have been repaid in full, all classes of notes will receive, at a minimum, pro rata distributions in order to maintain their credit support targets. If pool performance triggers are breached, the payment structure will convert to a sequential basis. The payment structure also includes an interest reprioritization feature that subordinates the payment of subordinate note interest to that of senior principal payment to the extent needed to keep the senior note advance rate from exceeding 100% of the pool balance. Ratings Assigned: GS Auto Loan Trust 2006-1 Class Rating Amount ----- ------ ------ A-1 A-1+ $228.000 million A-2 AAA $184.036 million A-3 AAA $243.435 million A-4 AAA $125.369 million B A $30.562 million C BBB $21.523 million D BB $15.926 million HVHC INC: Completes Merger with ECCA Holdings --------------------------------------------- HVHC Inc., a subsidiary of Highmark Inc. and ECCA Holdings Corp. completed the merger of ECCA Holdings with a subsidiary of HVHC, resulting in ECCA Holdings becoming a wholly owned subsidiary of HVHC. Eye Care Centers of America, Inc., is owned by ECCA Holdings and as a result of the merger is now an indirect wholly-owned subsidiary of Highmark. Combined with its other two vision subsidiaries, Davis Vision and Viva Optique, HVHC has a comprehensive offering of optical retail products and services, vision benefits and services, and the design and distribution of eyewear. HVHC continues on its path of vertical integration and through its three vision subsidiaries will have combined pro forma revenue exceeding $900 million in 2006. Citigroup Corporate and Investment Banking acted as financial advisor to Highmark and along with PNC Capital Markets LLC arranged financing for HVHC. Buchanan Ingersoll & Rooney PC served as Highmark's legal advisor and Bingham McCutchen LLP represented the majority selling stockholder in the acquisition and ECCA with respect to the Change of Control Offer for ECCA's Notes. The completion of the acquisition of ECCA Holdings on Aug. 1, 2006 constitutes the "Change of Control" described in ECCA's Change of Control Notice and Offer to Purchase of its outstanding 10-3/4% Senior Subordinated Notes due 2015 dated July 12, 2006 and under the Indenture dated February 4, 2005 between ECCA and the Bank of New York, as trustee, covering the Notes. The terms of the Change of Control Offer specify that it will expire at 5:00 PM, New York City time, on a date that is ten days following the consummation of the Change of Control, which is Aug. 11, 2006, and that the Change of Control Payment Date for holders of Notes validly tendered and accepted for payment prior to the expiration will occur not more than one business day after such expiration, which is Aug. 14, 2006. Headquarters in Pittsburgh, Pennsylvania, HVHC Inc., owns Davis Vision, Inc and Viva Optique, Inc. Davis administers employee vision care benefit programs and operates 89 retail stores, while Viva distributes eyeglass frames in more than 60 countries. The company, a wholly-owned subsidiary of Highmark Inc., is acquiring Eye Care Centers of America, Inc. Revenue for the twelve months ending March 31, 2006 was approximately $500 million. * * * As reported in the Troubled Company Reporter on July 18, 2006, Moody's Investors Service rated the proposed new bank loan of HVHC Inc. at Ba3 and assigned a liquidity rating of SGL-2. Moody's also assigned a corporate family rating of Ba3. HVHC is a holding company that distributes eyeglass frames, operates optical retail stores, and administers employee vision care benefit programs through operating subsidiaries. As reported on the Troubled Company Reporter on July 14, 2006, Standard & Poor's Ratings Services assigned its 'BB' counterparty credit rating to HVHC Inc. The outlook is stable. IGIA INC: May 31 Balance Sheet Upside-Down by $14.6 Million ----------------------------------------------------------- IGIA, Inc., disclosed its financial results for 2007 first fiscal quarter ended May 31, 2006, including quarterly revenue of $3,458,885, an 89.5% increase compared to $1,825,208 in revenues for the quarter ended May 31, 2005. Gross profit for the quarter was $2,689,377, a 138.3% increase compared with gross profit of $1,128,721 for the quarter ended May 31, 2005. IGIA significantly increased its purchases of television and Internet advertising to generate the increases in quarterly revenue and gross profit. IGIA's quarterly net income was $16,377,174 compared with a net loss of $2,879,886 for the quarter ended May 31, 2005. Primarily contributing to IGIA's net income was $13,989,024 in income realized from the extinguishment of liabilities of IGIA's Tactica International, Inc., subsidiary, in connection with its business restructuring and reorganization plan. Net income also included a $6,091,309 unrealized gain resulting from a change in IGIA's common stock value which effects the valuation of securities underlying IGIA's outstanding note and warrant obligations. At May 31, 2006, the Company's balance sheet showed $1,554,162 in total assets and $16,161,669 in total liabilities, resulting in a $14,607,507 stockholders' deficit. The Company's May 31 balance sheet also showed strained liquidity with $1,359,463 in total current assets available to pay $12,607,176 in total current liabilities coming due within the next 12 months. Full-text copies of the Company's first quarter financials are available for free at http://ResearchArchives.com/t/s?eeb IGIA, Inc. (OTCBB: IGAI) -- http://www.igia.com/-- through its wholly owned subsidiaries, designs, develops, imports, and distributes personal care and household products through direct marketing and major retailers. Its globally recognized portfolio of brands includes IGIA(R) and the registered proprietary As Seen On TV(TM) logo. The IGIA name ranks amongst the most recognizable personal care brands as cited by an industry publication. In addition, IGIA markets and sells products through TV infomercials, mass-market retailers, specialty retailers, and catalogs. INDUSTRIAL DEVELOPMENT: S&P Lowers $27 Million Bonds' Rating to BB ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its rating to 'BB' from 'BB+' on the Industrial Development Authority of the City of West Plains, Missouri's $27.010 million (series 1997B and 1999A) hospital revenue bonds, issued for Ozarks Medical Center. The rating action is based on OMC's drastically weakened liquidity position and its capital expenditure expectations. The outlook is negative. "OMC has a significantly weakened liquidity position, which is largely the result of delays in billing caused by a Meditech implementation. This is highlighted by OMC having days' cash equal to only 20 days, and unrestricted cash to debt of only 19% at the fiscal 2005 year-end," Standard & Poor's credit analyst Kevin Holloran said. "Additionally, OMC has continued capital expenditures for infrastructure upgrades and growth needs of up to $16 million in fiscal 2006." Factors supporting the 'BB' rating include OMC's consistent operating and excess incomes, highlighted by 4.4% and 5.1% operating and excess margins, respectively, in fiscal 2005, and OMC's adequate market position largely due to its rural location and lack of competition, and improving patient volumes. OMC is a 114-bed sole community provider and the largest employer in West Plains, a town in rural southwestern Missouri. INDEPENDENCE TAX: June 30 Balance Sheet Upside-Down By $992,092 --------------------------------------------------------------- Independence Tax Credit Plus LP, fka Independence Tax Credit Plus Program, delivered its financial results for the first quarter ended June 30, 2006, to the Securities and Exchange Commission on July 31, 2006. The Partnership's financial statements include the accounts of 28 other limited partnerships owning affordable apartment complexes that are eligible for the low-income housing tax credit. Results of operations for the three months ended June 30, 2006, consist primarily of the results of the investment in the 28 local partnerships. Overall Results Independence Tax Credit incurred a $1,460,007 net loss on $5,947,728 of total revenues for the three months ended June 30, 2006, compared with a $1,516,242 net loss on $5,803,650 of total revenues for the same period in 2005. At June 30, 2006, the Partnership's balance sheet showed $129,639,433 in total assets, $125,327,758 in total liabilities, and $5,303,767 in minority interest, resulting in a $992,092 partners' deficit. At March 31, 2006, the Partnership's balance sheet showed a $467,915 partners' capital. Full-text copies of the Partnership's first quarter financials are available for free at http://ResearchArchives.com/t/s?ec5 Opa-Locka's Going Concern Doubt As reported in the Troubled Company Reporter on Nov. 4, 2005, Creative Choice Homes II LP, aka Opa-Locka is a member of the Partnership. Opa-Locka, is in default on its third and fourth mortgage notes and continues to incur significant operating losses. Opa-Locka's net losses amounted to approximately $465,000, $1,550,000 and $173,000 for the 2004, 2003 and 2002 fiscal years, respectively. Opa-Locka's net income amounted to approximately $8,000 and $3,000 for the three months ended June 30, 2006, and fiscal year ended March 31, 2006, respectively. Management says the default raises substantial doubt about Opa-Locka's ability to continue as a going concern. Opa-Locka is under new management and the managers are implementing a strategy to reduce overall operating expenses. Independence Tax Credit's investment in Opa-Locka at June 30, 2006, and March 31, 2006, was approximately $2,980,000 and $2,972,000, respectively. Habif, Arogeti & Wynn, LLP, expressed substantial doubt about Opa- Locka's ability to continue as a going concern after auditing the subsidiary's financial statements for the year ended Dec. 31, 2004. The auditing firm pointed to the subsidiary's default and significant operating losses. Independence Tax Credit Plus LP, fka Independence Tax Credit Plus Program, is composed of 28 limited partnerships owning affordable apartment complexes that are eligible for the low-income housing tax credit. IPC ACQUISITION: Silver Lake Merger Spurs S&P's Negative Watch -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit and first-lien senior secured debt ratings, along with its 'B-' second-lien senior secured debt rating, on New York, New York-based IPC Acquisition Corp. on CreditWatch with negative implications. The CreditWatch listing follows the announcement that Silver Lake Partners will acquire IPC from its existing owner, GS Capital Partners, for approximately $800 million. "The CreditWatch listing reflects uncertainty surrounding the inancing plans for this acquisition," said Standard & Poor's credit analyst Ben Bubeck. While the terms of the acquisition are not currently known, operating lease-adjusted leverage will likely increase from current levels in the mid-5x area. The transaction is expected to close in September 2006, and the existing credit facilities will likely be refinanced. Standard & Poor's will meet with management to discuss financing plans for the transaction and IPC's operating performance to resolve the CreditWatch listing. ISLE OF CAPRI: Completes $240 Mil. Sale of Properties to Legends ---------------------------------------------------------------- Isle of Capri Casinos, Inc., completed the sale of its Vicksburg, Miss. and Bossier City, La. properties to Legends Gaming, LLC, for $240 million cash subject to closing adjustments. Based in Biloxi, Miss., Isle of Capri Casinos, Inc. (Nasdaq: ISLE) -- http://www.islecorp.com/-- a developer and owner of gaming and entertainment facilities, operates 16 casinos in 14 locations. The Company owns and operates riverboat and dockside casinos in Biloxi, Vicksburg, Lula and Natchez, Miss.; Bossier City and Lake Charles (two riverboats), La.; Bettendorf, Davenport and Marquette, Iowa; and Kansas City and Boonville, Mo. The Company also owns a 57% interest in and operates land-based casinos in Black Hawk (two casinos) and Cripple Creek, Colorado. Isle of Capri's international gaming interests include a casino that it operates in Freeport, Grand Bahama, and a 2/3 ownership interest in casinos in Dudley, Walsal and Wolverhampton, England. The company also owns and operates Pompano Park Harness Racing Track in Pompano Beach, Fla. * * * As reported in the Troubled Company Reporter on Feb. 16, 2006, Moody's Investors Service confirmed Isle of Capri, Inc.'s Corporate family rating at Ba3; $400 million senior secured revolver due 2010 at Ba2; $300 million senior secured term loan due 2011 at Ba2; $500 million 7% senior subordinated debt due 2014 at B2; and $200 million 9% senior subordinated debt due 2012 at B2. Moody's assigned a negative ratings outlook. As reported in the Troubled Company Reporter on Dec. 26, 2005, Standard & Poor's Ratings Services affirmed its ratings on Isle of Capri Casinos Inc., including its 'BB-' corporate credit rating. At the same time, all ratings were removed from CreditWatch with negative implications where they were placed on Sept. 1, 2005. S&P said the outlook is negative. KAISER ALUMINUM: Court Approves $77.7MM Accord with CNA Insurers ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved Kaiser Aluminum Corporation and its debtor-affiliates' settlement agreement with: -- Continental Casualty Company; -- Columbia Casualty Company; -- Transcontinental Insurance Company; and -- Continental Insurance Company and the formerly related Harbor Insurance Company. Terms of the Settlement Agreement As reported in the Troubled Company Reporter on June 28, 2006, the CNA Related Companies agree to make a $77,750,000 settlement payment. The CNA Related Companies will deliver $7,775,000 not later than June 1 each year from 2007 to 2016. Payment will be made to U.S. Bank National Association, as settlement account agent, unless a Trigger Date has occurred, in which case, payment will be made to the Funding Vehicle Trust. The Trigger Date is the day that the last of these events has occurred: * the order approving the Settlement Agreement becomes a Final Order; and * the occurrence of the Plan Effective Date. Other terms of the Settlement Agreement are: (a) The CNA Related Companies, their parents, affiliates and employees will receive all the benefits of being designated as a Settling Insurance Company in the Plan, including the benefits of the Personal Injury Channeling Injunctions; (b) The KACC Parties will release all their claims under the Subject Policies and certain other rights under the Other CNA Parties Policies; (c) Effective on the Trigger Date, the KACC Parties will have no insurance coverage from any of the CNA Parties under the Subject Policies or the Other CNA Parties Policies with respect to any past, present or future tort claims; (d) If any claim is brought against any of the CNA Related Companies that is subject to a PI Channeling Injunction, the Funding Vehicle Trust will establish that the claim is enjoined as to the CNA Parties; and (e) The CNA Parties will not seek from any entity other than its reinsurers or retrocessionaires: * reimbursement of any payments that they are obligated to make under the Settlement Agreement; or * any other payments the CNA Related Companies have made to or for the benefit of KACC or, upon its creation, the Funding Vehicle Trust, under the Subject Policies, whether by way of contribution, subrogation, indemnification or otherwise. In no event will the CNA Parties make any claim for or relating to insurance, reinsurance or retrocession against any KACC Party. About Kaiser Aluminum Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on Feb. 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. Lazard Freres & Co. serves as the Debtors' financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III, Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes represent the Debtors' Official Committee of Unsecured Creditors. The Debtors' Chapter 11 Plan became effective on July 6, 2006. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 101; Bankruptcy Creditors' Service, Inc., 609/392-0900) KL INDUSTRIES: Files Schedules of Assets and Liabilities -------------------------------------------------------- KL Industries, Inc., delivered to the U.S. Bankruptcy Court for the Northern District of Illinois its schedules of assets and liabilities, disclosing: Name of Schedule Assets Liabilities ---------------- ------ ----------- A. Real Property B. Personal Property $10,462,451 C. Property Claimed as Exempt D. Creditors Holding $6,029,650 Secured Claims E. Creditors Holding $721,738 Unsecured Priority Claims F. Creditors Holding $5,147,525 Unsecured Nonpriority Claims ----------- ----------- Total $10,462,451 $11,898,913 Headquartered in Addison, Illinois, KL Industries, Inc., manufactures springs, assemblies and other products for the automotive and electronic markets. The Company does business as KL Spring & Stamping Division, KL Spring Division, KL Stamping Division, KL Assembly Division and American Metal Forming Division. The Company filed for bankruptcy protection on May 2, 2006 (Bankr. N.D. Ill. Case No. 06-04882). Peter J. Roberts, Esq., and Steven B. Towbin, Esq., at Shaw Gussis Fishman Glantz Wolfson & Towbin LLC represent the Debtor in its restructuring efforts. The Official Committee of Unsecured Creditors has retained Winston & Strawn LLP, to represent it in the Debtor's case. CM&D Capital Advisors LLC is the Debtor's financial Advisor. When the Debtor filed for bankruptcy protection, it reported assets totaling between $1 million and $10 million and debts amounting between $10 million to $50 million. LAZARD LTD: June 30 Balance Sheet Upside-Down By $745 Million ------------------------------------------------------------- Lazard Ltd reported its financial results for the first six months and second quarter ended June 30, 2006. At June 30, 2006, the Company's balance sheet showed $2.1 billion in total assets and $2.8 billion in total liabilities resulting in $745 million stockholders' deficit. For the second quarter of 2006, pro forma net income, assuming full exchange of outstanding exchangeable interests, increased 97% to $62.9 million from $32 million for the second quarter of 2005. Financial Advisory revenue increased 24% compared to the second quarter of 2005 and increased 18% compared to the first quarter of 2006. Asset Management revenue increased 19% compared to the second quarter of 2005. Operating revenue for the second quarter of 2006 increased 24% to $410.8 million compared to $330.1 million for the second quarter of 2005. Operating income increased 49% to $84.7 million for the second quarter of 2006, including a gain of approximately $5.3 million from the termination of our joint venture relationship in Italy, compared to pro forma $57 million for the second quarter of 2005. Net income before exchange of outstanding exchangeable interests increased 97% to $23.5 million for the second quarter of 2006 compared to pro forma income from continuing operations of $12.0 million for the second quarter of 2005. Pro forma net income, assuming full exchange of outstanding exchangeable interests, increased 82% to $115.4 million for the first six months of 2006 from $63.3 million for the first six months of 2005. For the first six months of 2006, operating revenue increased 28% to $762 million compared to $595.7 million for the first six months of 2005, resulting from growth in both Financial Advisory and Asset Management businesses. For the first six months of 2006 compared to the first six months of 2005, Financial Advisory revenue increased 31% and Asset Management revenue increased 15%. Operating income increased 72% to $162.8 million for the first six months of 2006, including a gain of approximately $5.3 million from the termination of our joint venture relationship in Italy, compared to pro forma $94.5 million for the comparable 2005 period. Net income before exchange of outstanding exchangeable interests increased 82% to $43.2 million compared to pro forma income from continuing operations of $23.7 million for the first six months of 2005. "Lazard's strong results reflect our leadership position in Financial Advisory, as we continue to advise on some of the most complex and important transactions" said Bruce Wasserstein, Chairman and Chief Executive Officer of Lazard Ltd. "Our results also show the steady progress of our Asset Management business, as we continue to win new mandates with expanded product offerings. We are focused on creating value for our shareholders. Our approach is to apply intellectual rigor and creativity to all parts of our business." "We are pleased to report another strong quarter and record financial performance year-to-date," noted Steven J. Golub, Lazard's Vice Chairman. "Lazard's success is a result of continued demand for world-class, independent advice, our retention and attraction of top talent, momentum in our Asset Management business and our continued focus on cost containment. We believe we continue to be positioned for long-term growth." The Company's quarterly revenue and profits can fluctuate materially depending on the number, size and timing of completed transactions on which it advised, as well as seasonality and other factors. Accordingly, the revenue and profits in any particular quarter may not be indicative of future results. As such, Lazard management believes that annual results are the most meaningful. (a) Operating revenue excludes interest expense relating to financing activities and revenue relating to the consolidation of LAM General Partnerships, each of which are included in net revenue. (b) Operating income is after interest expense and before income taxes and minority interests. Lazard Ltd. -- http://www.lazard.com/-- one of the world's preeminent financial advisory and asset management firms, operates from 29 cities across 16 countries in North America, Europe, Asia, Australia and South America. With origins dating back to 1848, the firm provides services including mergers and acquisitions advice, asset management, and restructuring advice to corporations, partnerships, institutions, governments, and individuals. LEVEL 3 COMMS: Posts $201 Million Net Loss in 2nd Quarter 2006 -------------------------------------------------------------- Level 3 Communications Inc. recorded a $201 million net loss for the second quarter of 2006, compared to a net loss of $168 million in the previous quarter. The Company also recorded a loss of $55 million in the second quarter, attributable to the amendment and restatement of Level 3 Financing, Inc.'s $730 million credit agreement. The Company reported consolidated revenue of $1.53 billion for the second quarter 2006, compared to $1.27 billion for the first quarter 2006. Communications revenue was $819 million in the second quarter, versus $804 million for the previous quarter. Information services revenue was $695 million in the second quarter, compared to $445 million for the previous quarter and $504 million for the same quarter last year. "During the second quarter, our margins in the communications business increased and the company generated positive free cash flow," James Q. Crowe, Level 3's chief executive officer, said. "Additionally, the communications business saw positive contributions from the benefit of the WilTel integration, recent acquisitions and continuing demand for our Core Communications Services." Level 3 Communications Inc. -- http://www.Level3.com/-- (Nasdaq: LVLT) is an international communications and information services company, providing Internet connectivity to broadband subscribers. * * * As reported in the Troubled Company Reporter on June 20, 2006, Standard & Poor's Ratings Services assigned its 'B-' rating and '1' recovery rating to Level 3 Financing Inc.'s amended and restated $730 million secured nonamortizing first-lien term loan credit facility maturing 2011. As reported in the Troubled Company Reporter on June 6, 2006, Moody's Investors Service assigned a Caa3 rating to Level 3 Communications, Inc.'s proposed $150 million convertible note issue maturing 2012. Moody's also upgraded Level 3's corporate family rating to Caa1 from Caa2, reflecting the company's improved leverage profile pro forma in the secondary equity issuance of 125 million shares. As reported in the Troubled Company Reporter on June 2, 2006, Fitch Ratings assigned a rating of 'CCC-' to Level 3's proposed issuance of $150 million of convertible senior notes due 2012, as well as a Recovery Rating of 'RR5'. LONE STAR: Earns $32.2 Million in Second Quarter of 2006 -------------------------------------------------------- Lone Star Technologies Inc. reported net income of $32.2 million for the second quarter of 2006, compared to net income of $41.3 million for the first quarter of 2006. Total revenues were up 1% to $355.8 million in the second quarter of 2006 from the first quarter of 2006. Lone Star's balance of cash and short-term investments at the end of the second quarter of 2006 was $236.8 million. In addition, Lone Star's $125 million revolving credit facility remains available. Rhys J. Best, Lone Star's Chairman and Chief Executive Officer, stated, "Our second quarter performance reflected a slight shift in product mix resulting from increased line pipe shipments and low levels of drilling activity in the Gulf of Mexico. We are still experiencing strong demand for our higher-margin premium oilfield products used in unconventional land-based gas drilling applications and expect this trend to continue into the second half of the year as our customers seek to increase their production and reserves through the implementation of new drilling and recovery methods." Lone Star Technologies Inc.'s principal operating subsidiaries manufacture, market and provide custom services related to oilfield casing, tubing, couplings, and line pipe, specialty tubing products used in a variety of applications, and flat rolled steel and other tubular products. * * * In October 2005, Moody's Investors Service assigned Lone Star Technologies' senior subordinate debt and long-term corporate family ratings at B2 and Ba3 respectively. The ratings were placed with a stable outlook. In the same year, Standard & Poor's placed the company's long-term foreign and local issuer credit ratings at BB- with a stable outlook. MARSH SUPERMARKETS: May Not Pursue Any Cardinal/Drawbridge Offer ---------------------------------------------------------------- The Hamilton Superior Court issued its ruling in the declaratory judgment action that Marsh Supermarkets, Inc. filed in June against MSH Supermarkets Holding Corp., MS Operations, Inc., a subsidiary of MSH Supermarkets, Cardinal Paragon, Inc. and Drawbridge Special Opportunities Advisors LLC. In May 2006, Marsh signed a merger agreement with MSH Supermarkets for an acquisition of the Company at a price of $11.125 per share of Marsh common stock. Cardinal and Drawbridge subsequently indicated their interest in acquiring Marsh for $13.625 per share, subject to completion of due diligence. The Court declared that, because of the merger agreement, Marsh may not, under any circumstances, pursue any proposal from Cardinal and Drawbridge. "We appreciate the Court's prompt response in this matter," said Don E. Marsh, Chairman of the Board and Chief Executive Officer with Marsh Supermarkets, Inc. "We expect to file revised proxy materials with the SEC as quickly as possible so that we can call a special meeting of shareholders for next month to consider and vote on the all cash offer from MSH Supermarkets." A full-text copy of the Court's order and judgment is available for free at http://ResearchArchives.com/t/s?ef8 About Marsh Supermarkets, Inc. Headquartered in Indianapolis, Indiana, Marsh Supermarkets, Inc. (Nasdaq: MARSA & MARSB) -- http://www.marsh.net/-- is a regional supermarket chain with stores primarily in Indiana and western Ohio, operating 69 Marsh(R) supermarkets, 38 LoBill(R) Food stores, eight O'Malias(R) Food Markets, 154 Village Pantry(R) convenience stores, and two Arthur's Fresh Market(R) stores. The Company also operates Crystal Food Services(SM) which provides upscale catering, cafeteria management, office coffee, coffee roasting, vending and concessions, and Primo Banquet Catering and Conference Centers; Floral Fashions(R), McNamara(R) Florist and Enflora(R) -- Flowers for Business. * * * As reported in the Troubled Company Reporter on May 8, 2006, Moody's Investors Service placed the ratings of Marsh Supermarkets, Inc., including the B3 Corporate Family Rating and Caa2 rating of 8.875% Senior Subordinated Notes due 2007 on review-direction uncertain. As reported in the Troubled Company Reporter on April 25, 2006, Standard & Poor's Ratings Services held its 'B-' corporate credit and 'CCC' subordinated debt ratings on Marsh Supermarkets Inc. on CreditWatch with developing implications. MAVERICK OIL: Board Appoints James Watt as Chairman and CEO ----------------------------------------------------------- The Board of Directors of Maverick Oil and Gas, Inc., has appointed James A. Watt as Chairman of the Board and CEO of the company. Mr. Watt recently served in similar positions with Remington Oil and Gas, Corp., which was acquired by Helix Energy Solutions Group, Inc. in a cash and stock transaction valued at approximately $1.4 billion. Over a nine year period, Mr. Watt led Remington, formerly Box Energy Corporation, through a major capital restructuring, implemented a successful exploration program, built a full operations staff and instituted an incentive program which aligned all employees' interest with those of the shareholders. V. Ray Harlow has resigned his position as CEO of Maverick as well as his Board position for personal reasons and to pursue other business opportunities. "Our first challenge is to capitalize the company in a format that will allow us to fully evaluate the exploration potential of approximately 125,000 acres in the Fayetteville Shale Play" James A. Watt, Maverick's new Chairman and CEO stated. "As soon as practical, operations will be consolidated in Dallas, Texas. I look forward to working with the Maverick team to develop a long term business plan for the company." The Board of Directors of Maverick is excited to have Mr. Watt join the team and feel his extensive background in oil and gas operations throughout the U.S. will be very beneficial to Maverick. Mr. Watt received a B.S. in Physics from Rensselaer Polytechnic Institute in 1971 and worked with Amoco, Union Texas Petroleum Corporation, Nerco Oil and Gas, Corp., and Seagull Energy prior to joining Remington Oil and Gas in 1997. About Maverick Oil and Gas Based in Fort Lauderdale, Florida, Maverick Oil & Gas, Inc. -- http://www.maverickoilandgas.com/-- is an early stage independent energy company engaged in oil and gas exploration, exploitation, development and production. The Company currently participates in these activities through the interests it holds in oil and gas exploration and development projects in Arkansas, Texas and Colorado. The Company's strategy is to continue the development of its current exploration projects and to expand its operations by acquiring additional exploration opportunities and properties with existing production, taking advantage of the industry experience of its management team and modern techniques such as horizontal drilling and 3D seismic analysis. At Feb. 28, 2006, The Company's balance sheet showed a stockholders' deficit of $3,599,040, compared to a $12,701,715 positive equity at Aug. 31, 2005. MERITAGE HOMES: Discloses Second Quarter Financial Results ---------------------------------------------------------- Meritage Homes Corporation's second-quarter home closings and revenue and net earnings for the period ended June 30, 2006, each set second quarter records for Meritage, and were second only to fourth quarter 2005 results as the best quarter in Meritage history. Closings this quarter largely reflected orders taken last year during a period of more robust demand and a stronger pricing environment. Record second quarter home closing revenue resulted from a 30% increase in homes closed and a 7% increase in average selling price over the second quarter 2005, as Meritage closed 2,722 homes at an average price of $332,000, compared to 2,095 at an average price of $311,000 in the same period a year ago. Second quarter net earnings and diluted earnings per share reflect this increase in revenue and an increase in gross margins, partially offset by additional selling, general and administrative expenses. Home closing gross margins increased to 24.3% from 23.4% in the second quarter 2005, reflecting the favorable pricing environment last year when most of these homes were sold. Margins increased despite write-offs of $7.3 million included in cost of sales for certain deposits and land acquisition costs. In addition, second quarter 2006 pre-tax earnings were reduced by $11.7 million in expenses related to severance and other employee departure related costs, and an additional $2.4 million of stock-based compensation expense related to the 2006 implementation of SFAS 123R. For the first half of 2006, total home closings increased 35% and related revenue increased 45% over the first half of 2005. Net earnings increased 88%, or 52% excluding a $19.7 million after-tax charge for refinancing debt in the first half of 2005. "We face difficult comparisons to last year's sales, when strong demand drove total orders to an all-time high in the second quarter 2005, and rapid price appreciation combined to drive a 44% quarter-over-quarter increase in total order value," said Steven J. Hilton, Meritage chairman and chief executive officer. "We did very well selling into high demand at the time, but those conditions were not sustainable long-term." Overall slower demand and increased cancellations reduced home sales by 28% in the second quarter and homes in backlog declined 10% year-over-year. The strong underlying economy and relative affordability in Texas contributed to increases of 10% in both home sales and ASPs, and resulted in a 21% increase in total order value there compared to a year ago. These increases were offset by significant declines in home sales in Arizona, California, Nevada and Florida, reflecting recent weaker demand in those areas. "While our Texas markets are strong and represented a larger component of our total home orders this quarter, we experienced much softer conditions in other areas, as have other homebuilders," explained Mr. Hilton. "Demand from investors and speculative buyers has decreased dramatically; inventories are up; and price concessions have increased. These conditions not only increase competition for homebuilders, but make it more difficult for our buyers to sell their existing homes, resulting in higher order cancellations. While gross orders for the second quarter of 2006 were down 17% compared to the previous year's quarter, higher cancellation rates reduced net orders by 28% for the same period." "Our Northern California markets, which first began slowing in the fall of 2005, appear to have begun to stabilize, with cancellation rates decreasing," Mr. Hilton continued. "However, Arizona, Nevada and Florida began weakening early in 2006 and are still in transition. The changing conditions in many of our markets make it challenging to accurately predict order demand going forward." "In response to these conditions, we are actively re-assessing our land positions in every market and have reduced our total lot supply since the beginning of the year. We're carefully managing lot take-downs, reducing overhead in markets experiencing slower sales to more closely match projected revenue, and constantly monitoring changing market conditions to ensure that we are able to compete successfully and maximize our operating profits," said Mr. Hilton. The Company maintained a strong balance sheet and liquidity throughout the quarter, reporting a net debt-to-capital ratio of 42% at June 30, 2006, despite the repurchase of one million shares of stock in the quarter. The Company has repurchased approximately 7% of its outstanding stock in the first half of 2006. Meritage increased its bank credit facility by $250 million to a total of $850 million, and at quarter-end, had remaining borrowing capacity of $496 million, after considering the most restrictive covenants. After-tax return on assets improved year-over-year to approximately 17% from 13%, and return on equity improved to approximately 40% from 31%, based on trailing four quarters' results this year compared to one year ago. "Our earnings performance for the first half of 2006 surpassed our expectations and position us to achieve our 19th consecutive year of record revenue and net earnings," concluded Mr. Hilton. "However, demand continued to slow during the second quarter in many of our markets, and we therefore expect that earnings trends will be weaker for the next several quarters. Based on our reduced backlog, higher cancellations and slower order trends, we now expect total revenue of $3.5-3.6 billion in 2006, and diluted EPS of $10.00-10.25, including third quarter revenues of approximately $875-900 million and earnings of $2.15-2.40 per diluted share. This implies a full year increase of 5-7% in earnings per share (excluding the 2005 refinancing charge) and approximately a 25% return on equity for our stockholders in 2006. While the market transitions to more sustainable sales levels, we remain committed to growing our market share while carefully managing our balance sheet to produce superior returns for our stockholders." About Meritage Homes Corp. Headquartered in Scottsdale, Arizona, Meritage Homes Corporation (NYSE: MTH) -- http://www.meritagehomes.com/-- is a leader in the consolidating homebuilding industry. Meritage operates in fast- growing states of the southern and western United States, including six of the top 10 single-family housing markets in the country, and has reported 18 consecutive years of record revenue and net earnings. * * * Meritage Homes Corp.'s 7% Senior Notes due 2014 carry Moody's Investors Service's Ba2 rating, Fitch Ratings' BB rating and Standard & Poors' BB- rating. MOTHERS WORK: Earns $8.8 Million in Third Quarter of Fiscal 2006 ---------------------------------------------------------------- For the third quarter ended June 30, 2006, Mothers Work Inc. reported net income after stock option expense of $8.8 million and net income before stock option expense of $9.3 million. The Company's net income after stock option expense for the first nine months of fiscal 2006 was $9.7 million while net income before stock option expense for the first nine months of fiscal 2006 was $10.7 million. Net sales for the third quarter of fiscal 2006 increased 7.3% to $163.9 million from $152.7 million in the same quarter of the preceding year. For the first nine months of fiscal 2006, the Company's net sales increased 7.9% to $459.9 million from $426.4 million for the same nine months of the preceding year. Commenting on the results, Rebecca Matthias, the Company's president and chief operating officer said, "We are extremely pleased with our strong sales, earnings and cash flow performance for the third quarter of fiscal 2006, strengthening our conviction that we will deliver significantly improved financial results in fiscal 2006, as evidenced by the increase in our earnings guidance for the year." Philadelphia-based Mothers Work Inc. is a designer and retailer of maternity apparel. As of June 30, 2006, Mothers Work operates 1,540 maternity locations and 725 leased departments. * * * As reported in the Troubled Company Reporter on May 23, 2006, Standard & Poor's Ratings Services revised its outlook on Mothers Work Inc. to positive from negative. All ratings, including the 'B-' corporate credit rating were affirmed. Mothers Work had total funded debt outstanding of about $129 million as of March 31, 2006. As reported in the Troubled Company Reporter on Feb. 2, 2005, Moody's Investors Service downgraded the long-term debt ratings of Mothers Work, Inc. The outlook was stable. The downgrade reflected Moody's expectations that there will be no near term turnaround in the company's operating performance given the competitive pressures in the maternity apparel market and the growth in its store overhead cost structure. MSGI SECURITY: Balks at Reporter's Insinuations of Nondisclosure ---------------------------------------------------------------- MSGI Security Solutions, Inc.'s chairman and CEO, Jeremy Barbera, expressed surprise over an article reported in SmartMoney.com on Friday, July 28, 2006, written by Lawrence Carrel Mr. Barbera said "[I]t appears to be a continuation of the negative attacks begun last September. "We were asked a series of questions by Mr. Carrel, the majority of which, if answered, would cause MSGI to violate client confidentiality, non-disclosure agreements, and the fair disclosure rules of the Securities and Exchange Commission -- commonly known as Rule FD. We stand by all of our previous statements with respect to our projects and contracts in process for Federal agencies of the United States as well as our initiatives in Europe and the Middle East. "The going concern language referred to by Mr. Carrel has been in our filings for several quarters -- there is no news here. Such language is standard 'boiler-plate' for auditors whenever a company is under-capitalized. We have openly acknowledged the need to complete an equity financing and all of our efforts are focused on closing this financing so that the company has adequate working capital for the future. "As a gesture of good faith and in an effort to educate Mr. Carrel about MSGI, we offered to meet him in person so that he could learn about the vital services that we provide to our domestic and international clients. Mr. Carrel declined our offer. We offered a confidentiality agreement to Mr. Carrel so that he might have an opportunity to review our client agreements directly and see for himself exactly what we do and for whom. However, Mr. Carrel declined our offer, citing company policy. We finally offered several other means of third-party confidential and independent verification of the validity of every client engagement, but again he declined. "It is unfortunate that we and our shareholders have been distracted by the insinuations contained in the SmartMoney article," Mr. Barbera concluded. "Rather than devote any more time or attention to it, we are concentrating on the business and the work we perform for our clients, establishing MSGI as the premier provider of encrypted surveillance products and services. We trust that our shareholders will agree with this decision and thank them for their patience while we finalize our financing arrangements and prepare for the August 31 meeting with Nasdaq. If asked for an interview by Mr. Carrel in the future; we will regrettably have to decline." "Not So Secure" Article According to Mr. Carrel's Smartmoney.com article, over the past nine months, the Company reported that it signed contracts from unverified deals worth up to $28 million in sales. Mr. Carrel added that the Company disclosed business transactions that were made in foreign countries like Turkey, Italy, Jordan, and Trinidad and Tobago; and client companies that were described in vague terms. In most cases, investors don't have to verify to make sure companies are doing their due diligence, but MSGI in the past have overstated client relationships, Mr. Carrel reports. Mr. Carrel's article also mentioned that the company claims its clients include the U.S. Department of Homeland Security and U.S. Department of Justice. Yet, there were no records of contracts for MSGI or any of its five subsidiaries after a search of the federal procurement data system, which contains all contracts reported by federal agencies greater than $2,500. Mr. Carrel disclosed that according to the financial statements filed with the Security and Exchange Commission, the Company hasn't had a profit in five years, has been issued a going concern statement by its auditor and posted a net loss of $7.6 million, nearly double from last year's $3.9 million loss. Mr. Carrel also declared that the Company's shares dropped after the Nasdaq Stock Market rejected an appeal from the Company to regain compliance with the exchange's listing requirements. "Of course, investors can't estimate what the financial impact of closing all the projects would be, since the company won't provide details," Mr. Carrel concludes. About MSGI Security Headquartered in New York City, MSGI Security Solutions, Inc. (Nasdaq: MSGI) -- http://www.msgisecurity.com/-- provides proprietary security products and services to commercial and governmental organizations worldwide, including the U.S. Department of Homeland Security and U.S. Department of Justice, with a focus on cutting-edge encryption technologies for surveillance, intelligence monitoring, and data protection. From its offices in the U.S. and Europe, the company serves the needs of counter-terrorism, public safety, and law enforcement agencies. Going Concern Doubt As reported in the Troubled Company Reporter on Oct. 26, 2005, Amper, Politzner & Mattia P.C. expressed substantial doubt about MSGI Security Solutions, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended June 30, 2005. The auditing firm points to the Company's recurring losses from operations; negative cash flow from operations; and significant deficit in working capital. MUSICLAND HOLDING: Wants to Walk Away from 30 Contracts & Leases ---------------------------------------------------------------- Musicland Holding Corp. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York's authority to reject 16 executory contracts and 14 unexpired leases pursuant to the Court-approved Expedited Rejection Procedures. The Leases to be rejected are: Proposed Shopping Center/Mall Rejection Date -------------------- -------------- 58 The Crossings 7/31/006 614 Silver Bridge Plaza 7/31/006 Albemarle Plaza 7/31/006 Auburn Plaza 7/31/006 Germantown Shopping Ctr 19-A 7/31/006 Grand Vue Plaza 7/31/006 Jackson Park Shopping Ctr 7/31/006 Lincoln Plaza 7/31/006 MT Pleasant S/C 7/31/006 Pinecrest Plaza S/C 7/31/006 Shallotte Crossing 7/31/006 Sky View Plaza 7/31/006 The Plaza 7/31/006 Vincennes Plaza 7/31/006 The Contracts to be rejected are: Rejection Counter Party Description Date ------------- ----------- --------- ADP, INC. Service Agreement 7/18/06 MCI WorldCom Comm. Inc. Service Agreement 7/18/06 MCI WorldCom Comm. Inc. Service Agreement 7/18/06 AT&T Corporation Service Agreement 7/21/06 Eventis Telecom, Inc. Service Agreement 7/21/06 Attachmate Corporation License Agreement 7/31/06 Chicagosoft License Agreement 7/31/06 Computer Associates Int'l License Agreement 7/31/06 Compuware Corporation License Agreement 7/31/06 First National Technology Service Agreement 7/31/06 GEAC AP AP Agreement 7/31/06 GEAC Payroll Payroll Agreement 7/31/06 Innovation Data Processing License Agreement 7/31/06 OMI International, Inc. License Agreement 7/31/06 Sterling Software License Agreement 7/31/06 Verispace, LLC Service Agreement 7/31/06 Headquartered in New York, New York, Musicland Holding Corp., is a specialty retailer of music, movies and entertainment-related products. The Debtor and 14 of its affiliates filed for chapter 11 protection on Jan. 12, 2006 (Bankr. S.D.N.Y. Lead Case No. 06-10064). James H.M. Sprayregen, Esq., at Kirkland & Ellis, represents the Debtors in their restructuring efforts. Mark T. Power, Esq., at Hahn & Hessen LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Musicland Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONAL ENERGY: Lehman Says Fees Must Be Paid Despite Bankruptcy ----------------------------------------------------------------- Lehman Brothers Inc. asks the U.S. Bankruptcy Court for the Middle District of Maryland to overrule the objection of National Energy & Gas Transmission Inc. and its debtor-affiliates on the allowance of its $7,217,000 claim. Lehman Brothers pursued claims against the Debtors asserting an unliquidated claim for services performed and for damages arising out of the Debtors' rejection of an investment banking agreement the Debtors entered into with Lehman before their bankruptcy filing. Under the Agreement, Lehman provided advisory services to the Debtors concerning the potential sale of some of NEGT's assets. Marcell Solomon, Esq., at Marcell Solomon & Associates, P.C., in Greenbelt, Maryland, asserts that Lehman Brothers, Inc.'s provision of the list of its contacted entities is not a condition precedent to National Energy & Gas Transmission, Inc.'s obligation to pay Lehman's compensation fee. The Debtors asserted in its objection that Lehman forfeited its right to compensation because it failed to provide NEGT with the list of the entities contacted with respect to any transaction contemplated by the parties' investment banking agreement. Mr. Solomon asserts that NEGT knew that Lehman not only contacted TransCanada Corporation but also procured its bid for one of NEGT's assets, the North Baja Pipeline, and the requirement for the provision of the list must be excused. The Debtors also stated that Lehman was not a disinterested party that could be retained by the Debtors under the Bankruptcy Code. The impossibility of Lehman's retention, according to the Debtors, excused or nullified NEGT's obligations under the Agreement to pay the compensation fee to Lehman. The Debtors' legal impossibility argument misconstrues the basis for NEGT's obligation to pay the compensation fee, Mr. Solomon argues. He notes of these "undisputed" facts: (1) the Agreement provided for the compensation under the "tail" if it was terminated; (2) the Debtors obtained the rejection of the Agreement after filing for bankruptcy, stating that Lehman's services were no longer necessary and admitting that the tail compensation provision "may survive termination" of the Agreement; (3) the TransCanada and GTNC transaction was announced within the 12-month tail period; and (4) Lehman timely filed its proof of claim that it amended to quantify the compensation amount owed by NEGT. The Agreement contained a "tail" provision, whereby Lehman be entitled to receive its success fee if, within 12 months of NEGT's elective termination of the Agreement, NEGT were to announce a transaction with any of the entities listed by Lehman on the notice given by Lehman to NEGT as required under the Agreement. The Debtors have not satisfied the strict elements of the impossibility defense because it is narrowly applied and its relevance is not appropriate in the dispute, Mr. Solomon also contends. Mr. Solomon points out that the bankruptcy law regarding the retention of investment bankers already existed at the time NEGT and Lehman entered in the Agreement and remained unchanged when the Debtors invoked the protections of the bankruptcy law. The Debtors' bankruptcy filings and subsequent rejection of the Agreement neither excused nor nullified the Debtors' obligation to pay the compensation fee. About National Energy Headquartered in Bethesda, Maryland, PG&E National Energy Group, Inc. -- http://www.pge.com/-- (n/k/a National Energy & Gas Transmission, Inc.) develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. NEGT received bankruptcy court approval of its reorganization plan in May 2004, and emerged from bankruptcy on Oct. 29, 2004. (PG&E National Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 215/945-7000) NAVISTAR INT'L: Gets Approval to Amend $1.5 Billion Senior Loan --------------------------------------------------------------- Navistar International Corporation obtained the required consent to amend its three year senior unsecured term loan facility totaling $1.5 billion to provide it with the additional flexibility to borrow the remaining balance of the loan facility and place such funds in escrow to repay, discharge or otherwise cure by December 21, 2006 any existing default under its outstanding 2.50 percent senior convertible notes. Navistar further announced that it gave an irrevocable notice to borrow on August 8, 2006 the remaining balance of the loan facility in an aggregate amount of $195,028,048.61. The funds will be placed in escrow and used to repay, discharge or otherwise cure defaults in connection with its 2.5 percent senior convertible notes. "Borrowing the remaining balance available under the term loan facility and placing the funds in escrow provides Navistar additional flexibility to cure the existing defaults under the 2.50 percent senior convertible notes" Robert C. Lannert, vice chairman and chief financial officer of Navistar said. "This amendment to the facility also ensures that the defaults under the final remaining series of notes from the old capital structure will be eliminated no later than mid-December 2006, well in advance of the Navistar Financial Corporation bank revolver waiver maturity." 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. NEIMAN MARCUS: Seeks Consents from Holders of 7.124% Debentures --------------------------------------------------------------- The Neiman Marcus Group, Inc. is soliciting consents from all holders of its 7.125% Senior Debentures due 2028, CUSIP No. 640204AB9, to a proposed amendment to the indenture, dated as of May 27, 1998, between the Company, as issuer, and The Bank of New York, as trustee, under which the Debentures were issued. The Company is soliciting consents from Debenture holders of record as of Aug. 1, 2006. The purpose of the amendment is to amend the reporting covenant in the indenture to make it consistent with the reporting covenant in the Company's other outstanding public debt indentures. Under the amendment, for so long as the Company's parent, Neiman Marcus, Inc. continues to be a guarantor of the Debentures, the Company's reporting obligations under the indenture will be satisfied, provided that NMI files specified reports with the SEC and NMI's filings include specified financial information concerning the Company. The amendment will become effective if holders of a majority in aggregate principal amount of the outstanding Debentures deliver their consent. The solicitation will expire at 5:00 p.m., New York City time, on Aug. 14, 2006, unless extended or terminated by the Company. Debenture holders will be able to revoke their consents until valid consents from holders of a majority in aggregate principal amount of the outstanding Debentures are received by the Company and the amendment becomes effective, which may occur before the expiration of the solicitation. If the amendment becomes effective and the conditions to the payment of the consent fee described in the consent solicitation statement relating to the solicitation are satisfied or waived, the Company will pay a consent fee of $1.25 in cash per $1,000 principal amount of the Debentures for which valid consents are received prior to the expiration of the solicitation and not revoked prior to the effectiveness of the amendment. Headquartered in Dallas, The Neiman Marcus Group, Inc. -- http://www.neimanmarcusgroup.com/-- operates Neiman Marcus and Bergdorf Goodman stores, in addition to both print and online retail businesses. * * * As reported on the Troubled Company Reporter on March 31, 2006, Fitch Ratings revised the Rating Outlook on The Neiman Marcus Group, Inc., to Positive from Stable. Fitch affirmed the B- Issuer Default Rating of the Company, the 'BB-/RR1' rating on its $600 million secured revolving credit facility, 'B/RR3' rating on the $1.875 billion secured term loan facility, 'B/RR3' rating on the $121 million secured debentures, 'CCC+/RR5' rating on the $700 million senior unsecured notes and 'CCC/RR6' rating on the $500 million senior subordinated notes. NORTEL NETWORKS: Declares Dividends for Class A Pref. Shares ------------------------------------------------------------ The board of directors of Nortel Networks Limited declared a dividend for the months of August and September on each of the outstanding Cumulative Redeemable Class A Preferred Shares Series 5 and the outstanding Non-cumulative Redeemable Class A Preferred Shares Series 7. The dividend amount for each series is calculated in accordance with the terms and conditions applicable to each respective series, as set out in the company's articles. The annual dividend rate for each series floats in relation to changes in the average of the prime rate of Royal Bank of Canada and The Toronto-Dominion Bank during the preceding month and is adjusted upwards or downwards on a monthly basis by an adjustment factor which is based on the weighted average daily trading price of each of the series for the preceding month, respectively. The maximum monthly adjustment for changes in the weighted average daily trading price of each of the series will be plus or minus 4.0% of Prime. The annual floating dividend rate applicable for a month will in no event be less than 50% of Prime or greater than Prime. The dividend on each series in respect of the month of August is payable on Sept. 12, 2006, to shareholders of record of such series at the close of business on Aug. 31, 2006. The dividend on each series in respect of the month of September is payable on Oct. 12, 2006, to shareholders of record of such series at the close of business on Sept. 29, 2006. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Corporation (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on July 10, 2006, Dominion Bond Rating Service confirmed the long-term ratings of Nortel Networks Capital Corporation, Nortel Networks Corporation, and Nortel Networks Limited at B (low) along with the preferred share ratings of Nortel Networks Limited at Pfd-5 (low). All trends are Stable. DBRS confirmed B (low) Stb Senior Unsecured Notes; B (low) Stb Convertible Notes; B (low) Stb Notes & Long-Term Senior Debt; Pfd-5 (low) Stb Class A, Redeemable Preferred Shares; and Pfd-5 (low) Stb Class A, Non-Cumulative Redeemable Preferred Shares. As reported in the Troubled Company Reporter on June 20, 2006, Moody's Investors Service affirmed the B3 corporate family rating of Nortel; assigned a B3 rating to the proposed US$2 billion senior note issue; downgraded the US$200 million 6.875% Senior Notes due 2023 and revised the outlook to stable from negative. Standard & Poor's also affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company, and assigned its 'B-' senior unsecured debt rating to the company's proposed $2 billion notes. The outlook is stable. NOVELIS INC: Obtains $2.855 Bil. Financing Pledge from Citigroup ---------------------------------------------------------------- Novelis Inc. obtained commitments for backstop financing facilities totaling $2.855 billion from Citigroup Global Markets Inc. As reported in the Troubled Company Reporter on July 27, 2006, Novelis received a notice of default from the trustee for its 7-1/4% Senior Notes due 2015. This action resulted from the financial restatement and review by Novelis and the subsequent delay in filing its financial statements, which created a breach of its bond covenants. The notice of default triggers a 60-day period within which the Company can cure the default by filing the delayed reports. Novelis stated that it is working towards this goal; however, there can be no assurance of achievement and, therefore, the Company has taken the step of securing commitments for the backstop agreement from Citigroup. As previously disclosed, the notice of default also accelerates the deadlines for filing the delayed reports under the Company's existing Credit Agreement waiver to 30 days from the date of receipt of the notice. Novelis will request a waiver from its Credit Agreement lenders to extend the deadline for filing these financial reports. In the event that Novelis is not able to file its delayed reports by the deadlines defined in the notice of default and in its Credit Agreement waiver, the backstop financing facilities would provide the funding necessary to retire the Senior Notes and, if needed, replace the Company's existing term loan and revolving credit facility. The commitments by Citigroup under the commitment letter are subject to the satisfaction of customary conditions precedent for financings of this type. About Novelis Based in Atlanta, Georgia, Novelis Inc. (NYSE: NVL) (TSX: NVL) -- http://www.novelis.com/-- provides customers with a regional supply of technologically sophisticated rolled aluminum products throughout Asia, Europe, North America, and South America. The company operates in 11 countries and has approximately 13,000 employees. Through its advanced production capabilities, the company supplies aluminum sheet and foil to the automotive and transportation, beverage and food packaging, construction and industrial, and printing markets. Novelis South America operates two rolling plants and primary production facilities in Brazil. The company's Pindamonhangaba rolling and recycling facility in Brazil is the largest aluminum rolling and recycling facility in South America and the only one capable of producing can body and end stock. The plant recycles primarily used beverage cans, and is engaged in tolling recycled metal for our customers. * * * As reported in the Troubled Company Reporter on May 18, 2006, Moody's Investors Service placed the ratings of Novelis Inc., and its subsidiary, Novelis Corp., under review for possible downgrade. In a related rating action, Moody's changed Novelis Inc's speculative grade liquidity rating to SGL-3 from SGL-2. Novelis Corporation's Ba2 senior secured bank credit facility rating was placed on review for possible downgrade. Novelis Inc.'s Ba3 corporate family rating; Ba2 senior secured bank credit facility and B1 senior unsecured regular bond/debenture were placed on review for possible downgrade. NVIDIA CORP: Strong Performance Prompts S&P to Raise Rating to BB- ------------------------------------------------------------------ Standard & Poor's Ratings Services removed its ratings on Santa Clara, California-based Nvidia Corp. from CreditWatch, where they were placed with positive implications on July 24, 2006, and raised its corporate credit rating to 'BB-' from 'B+'. The outlook is stable. The rating actions follow sustained strong operating performance and strong liquidity. "The ratings on Nvidia reflect a narrow business profile, challenging competitive landscape, and frequent product introductions," said Standard & Poor's credit analyst Lucy Patricola. These are only partly offset by the company's good technology position in high performance graphics markets and its good liquidity. Nvidia had no funded debt outstanding as of April 30, 2006. Nvidia competes in a small subsegment of the semiconductor industry, designing graphics processors used in desk-top and notebook computers and handheld devices. The components are sold to consumers, as an add-in card, to computer OEMs, or in partnership with Intel or AMD for an integrated chipset. About two-thirds of revenues and all of its operating income are generated from the sale of its processors to consumers and OEMs for desktop, notebook or professional workstations. Nvidia faces intense competition in this market across the performance spectrum. Intel Corp. (A+/Stable/A-1+) dominates the low performance, value end of the market and key competitor, ATI Technologies, Inc., has asserted technology leadership and delivered product to market ahead of Nvidia in the past. Given rapid technology evolution and product acceptance, a missed product opportunity has led to highly volatile revenue and earnings. O'SULLIVAN INDUSTRIES: Incurs $5.8 Mil. Net Loss in Third Quarter ----------------------------------------------------------------- On Aug. 2, 2006, O'Sullivan Industries Holdings, Inc., filed with the U.S. Securities and Exchange Commission its third quarter results for fiscal year 2006 ended March 31, 2006. The Company incurred a $5.8 million net loss on $52.5 million of net revenues for the three months ended March 31, 2006. As of March 31, 2006, the Company had $150.3 million in total assets and $401.8 million in total debts, resulting in a $251.5 million stockholders' deficit. A full-text copy of the company's Third Quarter Fiscal Year 2006 Report on Form 10-Q is available for free at: http://ResearchArchives.com/t/s?eed Headquartered in Roswell, Georgia, O'Sullivan Industries Holdings, Inc. -- http://www.osullivan.com/-- designs, manufactures, and distributes ready-to-assemble furniture and related products, including desks, computer work centers, bookcases, filing cabinets, home entertainment centers, commercial furniture, garage storage units, television, audio, and night stands, dressers, and bedroom pieces. O'Sullivan sells its products primarily to large retailers including OfficeMax, Lowe's, Wal-Mart, Staples, and Office Depot. The Company and its subsidiaries filed for chapter 11 protection on Oct. 14, 2005 (Bankr. N.D. Ga. Case No. 05- 83049). Joel H. Levitin, Esq., at Dechert LLP, represents the Debtors. Michael H. Goldstein, Esq., Eric D. Winston, Esq., and Christine M. Pajak, Esq., at Stutman, Treister & Glatt, P.C., represent the Official Committee of Unsecured Creditors. On Sept. 30, 2005, the Debtor listed $161,335,000 in assets and $254,178,000 in debts. (O'Sullivan Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 215/945-7000) OMI TRUST: S&P Puts Two Transaction Classes' Ratings on Default --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on class M-1 from OMI Trust 1999-D and class M-2 from OMI Trust 2002-C to 'D' from 'CC'. The lowered ratings reflect the nonpayment of timely interest on the write-down portion of the M-1 and M-2 classes and the unlikelihood that investors will receive complete repayment of their original principal investments. Each class experienced its initial principal write-down on the May 2006 payment date, which led to liquidation loss interest shortfalls on the June 2006 payment date. Standard & Poor's believes that interest shortfalls for these deals will continue to be prevalent in the future. This is a result of the adverse performance trends displayed by the underlying pools of manufactured housing retail installment contracts originated by Oakwood Homes Corp. and the location of write-down interest at the bottom of the transactions' payment priorities (after distributions of senior principal). Standard & Poor's will continue to monitor the outstanding ratings associated with these transactions in anticipation of future defaults. PULL'R HOLDINGS: Has Interim Access to $300,000 Loan From Merrill ----------------------------------------------------------------- The Honorable Richard M. Neiter of the U.S. Bankruptcy Court for the Central District of California in Los Angeles authorized, on an interim basis, Pull'R Holdings LLC and Maasdam Pow'r Pull Inc., its debtor-affiliate, to obtain letters of credit not to exceed $300,000 from Merrill Lynch Business Financial Services Inc. The debtor-in-possession facility will be secured by first priority security interests in and liens upon all of the Debtor's existing and acquired real property, personal property, and fixtures. Judge Neiter also allowed the Debtors to use cash collateral on an interim basis in accordance with an agreed budget. The Debtors are presently indebted to Merrill Lynch under the prepetition financing agreements in the principal amount of approximately $6,849,925. Judge Neiter further authorized the Debtors to ratify, adopt, and amend their prepetition financing agreements with Merrill Lynch. The Debtors granted Merrill Lynch a super-priority administrative claim status pursuant to Section 364(c)(1) of the Bankrutpcy Code to secure the obligations arising from the DIP loan and the use of cash collateral. The Debtors will use the cash collateral and the proceeds of the loan to continue their operations, sustain business value, pay Merrill Lynch for fees in connection with the letter of credit facility, and pay professional fees and expenses. David B. Shemano, Esq., at Peitzman, Weg & Kempinsky LLP, represents Merrill Lynch Business Financial Services Inc. Judge Neiter will convene a final hearing at 2:00 p.m., on Aug. 29, 2006, to consider final approval of the Debtors' DIP financing request. Headquartered in Santa Fe Springs, California, Pull'R Holdings LLC -- http://www.pullr.com/-- sell contractors' equipment and tools. The Company is known for brands such as Bucket Boss, Dead On Tools, and the Maasdam Pow'R-Pull line. The Company and its affiliate, Maasdam Pow'r Pull Inc., filed for bankruptcy protection on April 27, 2006 (Bankr. C.D. Calif. Case No. 06-11669). Lawrence Diamant, Esq., at Robinson, Diamant & Wolkowitz, APC, represent the Debtors in their restructuring efforts. Aram Ordubegian, Esq., and David R. Weinstein, Esq., at Weinstein, Weiss & Ordubegian represent the Official Committee of Unsecured Creditors. When the Debtors filed for bankruptcy, they reported $1 million to $10 million in total assets and $10 million to $50 million in total debts. PULL'R HOLDINGS: Exclusive Plan-Filing Period Stretched to Dec. 22 ------------------------------------------------------------------ The Honorable Richard M. Neiter of the U.S. Bankruptcy Court for the Central District of California in Los Angeles gave Pull'R Holdings LLC and its debtor-affiliate, Maasdam Pow'r Pull Inc., until: -- Dec. 22, 2006, to file a plan; and -- Feb. 21, 2007, to solicit acceptances of that plan. As reported in the Troubled Company Reporter on July 17, 2006, Ric Calder, the Debtors' chief financial officer, said that the Debtors have been in the process of determining the Debtors' reorganization. Mr. Calder noted that the Debtors will reorganize either through: * a sale of all or part of their stock; or * a sale of their businesses as going concerns. Mr. Calder said the extension will give the Debtors enough time to complete negotiations and formulate the terms of their plan. Headquartered in Santa Fe Springs, California, Pull'R Holdings LLC -- http://www.pullr.com/-- sell contractors' equipment and tools. The Company is known for brands such as Bucket Boss, Dead On Tools, and the Maasdam Pow'R-Pull line. The Company and its affiliate, Maasdam Pow'r Pull Inc., filed for bankruptcy protection on April 27, 2006 (Bankr. C.D. Calif. Case No. 06-11669). Lawrence Diamant, Esq., at Robinson, Diamant & Wolkowitz, APC, represent the Debtors in their restructuring efforts. Aram Ordubegian, Esq., and David R. Weinstein, Esq., at Weinstein, Weiss & Ordubegian represent the Official Committee of Unsecured Creditors. When the Debtors filed for bankruptcy, they reported $1 million to $10 million in total assets and $10 million to $50 million in total debts. QWEST CORP: Moody's Rates Proposed $500 Million Notes at (P)Ba3 --------------------------------------------------------------- Moody's Investors Service assigned a (P)Ba3 rating to Qwest Corporation's planned offering of $500 of million senior notes and placed the rating on review for possible upgrade. On Aug. 1, 2006, Moody's placed the B1 corporate family rating of Qwest Communications International Inc. and related entities on review for possible upgrade based on better than expected free cash flow in 2006 and through the first half of 2007 coupled with unexpected revenue strength. In particular, Qwest's ability to grow revenues and slow the cash burn at Qwest Communications Corp. has exceeded Moody's expectations and offset softness in Qwest's incumbent wireline revenue due to access line erosion. The review will focus on: 1) the company's plans for further debt reduction and capital structure simplification; 2) Qwest's revenue prospects and, 3) the profitability and cash flow generating capacity of Qwest's individual operating segments over the next few years. The implementation of a material common stock dividend or a share repurchase plan within the next 12 to 18 months would likely forestall any improvement in the current ratings. Moody's will also consider Qwest's long-term operating strategy, especially as it relates to network investment. Finally, Moody's will consider the on-going Department of Justice investigation and pending shareholder lawsuits. Even though these issues pose a credit risk, the magnitude and timing of cash payments associated with this litigation may be manageable should recent operating trends and balance sheet strengthening continue. Qwest is a RBOC and nationwide inter-exchange carrier headquartered in Denver, Colorado. REFCO INC: Chapter 7 Trustee Can Reimburse $749,579 to Refco Group ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of new York authorizes Albert Togut, the Chapter 7 Trustee appointed to oversee the liquidation of Refco, LLC's estate, to reimburse $747,579 to Refco Group Ltd., LLC, for payments made to holders of mechanic's lien claims. As reported in the Troubled Company Reporter on July 7, 2006, Mr. Togut, West Loop Associates LLC and the Contractors, Alps Construction, Inc., KCE Ltd. and Griswold, Heckel & Kelly Associates, Inc., reached a comprehensive settlement to resolve West Loop's request, the Mechanic's Liens and the Claims. In a Court-approved stipulation each of the Contractors agreed to: (i) reduce by 5% the outstanding principal amount of each of its Claim pertaining to the Properties; (ii) waive all attorney's fees and accrual of any interest to which each Contractor may be entitled; (iii) take the necessary steps to discharge and release the Mechanic's Liens so that the threatened default against West Loop may be averted; (iv) release Refco LLC from any further claims relating to the Contracts, the Mechanic's Liens, and their Claims; (v) withdraw their Claims against Refco LLC; and (vi) file no additional proofs of claim against Refco LLC. Refco Group will pay the Contractors $747,579 in the aggregate in full satisfaction of the Mechanic's Liens, the Claims, and any other amounts due in connection with the Contracts. West Loop's Motion to Compel West Loop had asked the Court to compel Refco Group to comply with its postpetition lease obligations. Refco Group leases seven floors of an 18-story office building owned by West Loop in the central business district of Chicago, Illinois. Refco, LLC, occupied some or all of the leased premises. Refco Group continues to occupy the Premises pursuant to a March 2006 Stipulated Order among Debtors, West Loop and Man Financial, Inc. The Stipulated Order contemplates rejection of the Lease effective August 15, 2006. Sidney P. Levinson, Esq., at Hennigan, Bennett & Dorman LLP, in Los Angeles, California, contends that until the effective rejection date, RGL is required "to timely perform all obligations under the Lease to the extent required by Section 365(d)(3) of the Bankruptcy Code. Among those obligations, Mr. Levinson said, is a Lease covenant to either discharge or bond any mechanic's liens filed against the Property as a result of work performed or alleged to have been performed on the Premises. Mr. Levinson noted that Refco LLC has entered into a series of agreements with Alps Construction, Inc., KCE Ltd. and Griswold, Heckel & Kelly Associates, Inc., for the construction work to be performed at the leased Premises. The Contractors have sought relief from the bankruptcy stay to commence a foreclosure action in Illinois against RGL, Refco LLC, and West Loop. The Contractors assert that Refco LLC or RGL failed to pay for the work, leaving a balance in excess of $700,000, including amounts owed for work that was not completed until nearly one month after RGL's bankruptcy filing. The Contractors have filed mechanic's liens of more than $700,000 against the Property. Although the Bankruptcy Court denied the Contractors' request, the ruling did not fully resolve the problems West Loop faced. Mr. Levinson relates that by letter dated April 19, 2006, West Loop's mortgage lender, Greenwich Capital Financial Products, Inc., issued a notice of default to West Loop based on the existence of the Mechanic's Liens. The notice of default provides that, unless the Mechanic's Liens are discharged or bonded, West Loop will be held in default under its purchase money loan agreement dated October 7, 2005. Unless the Court compels RGL to discharge or bond the Mechanic's Liens, West Loop and, by consequence, RGL's estate will suffer substantial damages that could and should otherwise be avoided if RGL complies with its lease obligations, Mr. Levinson told Judge Drain. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000). REFCO INC: Refco Capital Trustee Hires Skadden as Special Counsel ----------------------------------------------------------------- The Hon. Robert Drain of the United States Bankruptcy Court for the Southern District of New York permits the Refco Capital Markets, Ltd. Trustee, Marc Kirschner, to employ Skadden, Arps, Slate, Meagher & Flom LLP, as his special counsel for limited purposes under an engagement letter, pursuant to Section 327(e) of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure. If Skadden seeks a waiver to represent one or more of the other Chapter 11 Debtors on any matter in which Skadden would be adverse to RCM, and the RCM Trustee chooses not to grant the requested waiver, then: (i) Skadden may withdraw from further RCM representation and may represent one or more of the Other Chapter 11 Debtors on any matter; and (ii) neither RCM nor the RCM Trustee will assert that Skadden's prior representation of RCM should disqualify it from representing one or more of the Other Chapter 11 Debtors in any manner. Consistent with the Engagement Letter, Skadden may not represent RCM, but will represent one or more of the Other Chapter 11 Debtors, with respect to claims arising out of or related to intercompany transactions or allocation issues. Skadden may be compensated in accordance with the Engagement Letter, subject to applicable requirements for payment of fees and disbursements under the Court's orders. As reported in the Troubled Company Reporter on July 5, 2006, Mr. Kirschner, wants Skadden to continue providing some, but not all, of those services to RCM, including: (a) continuing advice with respect to the litigation matters that were stayed pursuant to the Court's November 28, 2005 order and the Refco Securities Lawsuit; (b) claims resolution where the claim has been asserted against one or more Other Refco Companies as well as RCM -- other than claims by other Chapter 11 Debtors against RCM; (c) matters involving ACM Advanced Currency Markets S.A., and RCM's ownership interest in ACM; (d) matters involving consolidated tax returns filed or to be filed by the Chapter 11 Debtors; (e) recoveries against third parties arising under "cross margin" agreements, whether or not involving the Other Chapter 11 Debtors; (f) pending litigation between Cargill, Incorporated and the Chapter 11 Debtors; (g) in consultation with Bingham McCutchen LLP, the Trustee's general bankruptcy counsel, the prospective settlement between the Refco Companies and BAWAG P.S.K. Bank fur Arbeit und Wirtschaft und Osterreichische Postsparkasse Aktiengesellschaft and its affiliates; (h) any matters remaining in the preference action -- or enforcement of the settlement -- against the SPhinX Funds; (i) continuing advice with respect to the pending investigations by the United States Department of Justice and the Securities and Exchange Commission; and (j) motions, applications, answers, orders, reports and papers necessary to the administration of the RCM estate other than in connection with matters with respect to which RCM wishes to take a position different than the position taken by the Other Chapter 11 Debtors. Among other things, Skadden will not be rendering services to RCM with respect to: (a) whether and on what terms RCM or its creditors participate in a Chapter 11 plan with the Other Chapter 11 Debtors; (b) claims between RCM and the Other Chapter 11 Debtors arising out of intercompany transactions; and (c) advice with respect to "corporate actions" that may be necessary or desirable relating to various securities held by RCM. With respect to intercreditor and intercompany issues in the Chapter 11 cases, Skadden will: -- not, without a waiver from RCM, represent the Other Chapter 11 Debtors in litigation against RCM; -- continue to provide information and analysis to the Chapter 11 Debtors regarding intercompany claims; -- continue to represent the Other Chapter 11 Debtors in formulating a plan of reorganization; and -- continue to investigate intercompany claims as provided in the Engagement Letter. Skadden and the Debtors have previously agreed that the firm's bundled rate structure will apply to these cases. Skadden's hourly rates under the bundled rate structure range from: $585 to $830 for partners; $560 to $640 for counsel; $295 to $540 for associates; and $90 to $230 for legal assistants and support staff. Skadden will allocate its fees and disbursements among the various Chapter 11 Debtors, including RCM, to charge each estate appropriately for the services provided on behalf of the estate. Skadden, RCM and the Other Refco Debtors have agreed that: * 2/3 of the fees and expenses Skadden incurred in connection with the "stockbroker" litigation culminating in the order appointing the RCM Trustee will be allocated to RCM and 1/3 to the Other Refco Debtors; and * Skadden's other fees incurred appropriately on behalf of all the Refco Companies will be allocated 40% to RCM and 60% to the Other Refco Debtors. J. Gregory Milmoe, a member of Skadden, assures the Court that the firm does not have any connection with the Debtors, their affiliates, their creditors, any other party-in-interest, their attorneys and accountants, and the United States Trustee or any person employed in the Office of the United States Trustee. Moreover, Skadden is a disinterested person as defined under Section 101(14) of the Bankruptcy Code and does not represent any interest that is adverse to the estates of the Chapter 11 Debtors, including RCM. About Refco Inc. Based in New York, Refco Inc. -- http://www.refco.com/-- is a diversified financial services organization with operations in 14 countries and an extensive global institutional and retail client base. Refco's worldwide subsidiaries are members of principal U.S. and international exchanges, and are among the most active members of futures exchanges in Chicago, New York, London and Singapore. In addition to its futures brokerage activities, Refco is a major broker of cash market products, including foreign exchange, foreign exchange options, government securities, domestic and international equities, emerging market debt, and OTC financial and commodity products. Refco is one of the largest global clearing firms for derivatives. The Company and 23 of its affiliates filed for chapter 11 protection on Oct. 17, 2005 (Bankr. S.D.N.Y. Case No. 05-60006). J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Luc A. Despins, Esq., at Milbank, Tweed, Hadley & McCloy LLP, represents the Official Committee of Unsecured Creditors. Refco reported $16.5 billion in assets and $16.8 billion in debts to the Bankruptcy Court on the first day of its chapter 11 cases. Refco LLC, an affiliate, filed for chapter 7 protection on Nov. 25, 2005 (Bankr. S.D.N.Y. Case No. 05-60134). Refco, LLC, is a regulated commodity futures company that has businesses in the United States, London, Asia and Canada. Refco, LLC, filed for bankruptcy protection in order to consummate the sale of substantially all of its assets to Man Financial Inc., a wholly owned subsidiary of Man Group plc. Albert Togut, the chapter 7 trustee, is represented by Togut, Segal & Segal LLP. On April 13, 2006, the Court appointed Marc S. Kirschner as Refco Capital Markets Ltd.'s chapter 11 trustee. Mr. Kirschner is represented by Bingham McCutchen LLP. RCM is Refco's operating subsidiary based in Bermuda. Three more affiliates of Refco, Westminster-Refco Management LLC, Refco Managed Futures LLC, and Lind-Waldock Securities LLC, filed for chapter 11 protection on June 6, 2006 (Bankr. S.D.N.Y. Case Nos. 06-11260 through 06-11262). (Refco Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 215/945-7000). REICHHOLD INDUSTRIES: S&P Rates $195MM Sr. Unsecured Notes at BB- ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Reichhold Industries Inc. At the same time, Standard & Poor's assigned a 'BB-' rating to $195 million of senior unsecured notes due 2014. The outlook is stable. Durham, North Carolina-based Reichhold produces unsaturated polyester resins for composite applications and resins for coatings and graphics arts customers. "The ratings on Reichhold reflect aggressive debt leverage, low operating margins, cyclicality of the company's markets, and a limited track record of earnings at the improved levels of recent years," said Standard & Poor's credit analyst Wes Chinn. "These weaknesses are tempered by meaningful market positions in its resins product lines, significant geographic diversity of sales, a good initial cash position, and management's commitment to reduction of debt-like obligations." A diverse customer base, long-standing customer relationships, a global production base, and new products should help sustain Reichhold's competitive positions. In particular, the geographic diversity of sales is considerable, as roughly 45% of demand is derived outside of North America, and customer concentration in the composites business is not a risk factor. Nevertheless, Standard & Poor's assessment of the company's weak overall business risk profile incorporates: * the relatively limited breadth of its primary product lines; * the vulnerability of its operating results to pricing pressures in a fragmented, competitive environment; and * subpar operating margins. The business profile also considers the potential vulnerability of operating results to increased raw-material costs in the event of an economic downturn. Most of sales and operating income should continue to be derived from the composites segment, where product substitution for traditional materials, such as wood, steel, or aluminum, in various applications is a key long-term demand driver. Composites demand in the U.S. and Europe is projected to grow moderately over the long run, subject to the cyclicality of primary markets, including marine/consumer recreation, building and construction, kitchen and bath, and transportation. International sales should continue to benefit from the focus on faster-growth regions of Eastern Europe, Asia-Pacific, and Latin America. The remainder-roughly 25%-of consolidated sales and operating income is derived from the coatings segment, which produces resins for paints, stains and other coatings, mostly for North American markets. Core competencies in various resins categories should help sustain this business, where the percentages of its contributions to overall results are not likely to change meaningfully, given in part the maturity of its markets. Consolidated operating income for 2005 was up sharply from dismal levels, primarily reflecting price increases. With generally favorable economic conditions aiding volume growth and composites industry capacity utilization high, another increase in profitability is likely for 2006. Management's aggressive focus on productivity initiatives should continue to prove beneficial, although there are still uncertainties regarding the ability of Reichhold's margins to weather difficult economic times. Ratings stability incorporates: * a gradual strengthening of operating margins through the extraction of cost savings; * the development of new products; and * ongoing expansion of international product sales. RIEFLER CONCRETE: Hires Jager Smith as Bankruptcy Counsel --------------------------------------------------------- Riefler Concrete Products, LLC, and Riefler Real Estate Corp. obtained authority from the U.S. Bankruptcy Court for the Western District of New York to employ Jager Smith P.C., as their bankruptcy counsel Jager Smith is expected to: a. give the Debtors legal advice with respect to their powers and duties as debtors-in-possession; b. prepare on behalf of the Debtors, all necessary schedules, statement, matrixes, applications, motions, objections, complaints, answers, orders, reports and other legal matters; and c. perform all other legal services for the Debtors as may be necessary. The Debtors tell the Court that Bruce F. Smith, Esq., a partner at Jager Smith, will bill $325 per hour for this engagement. Mr. Smith discloses that the firm has received a $21,000 retainer. Mr. Smith assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Smith can be reached at: Bruce F. Smith, Esq. Jager Smith P.C. 485 Madison Avenue, 2nd Floor New York, New York 10022 Tel: (212) 683-3520 Fax: (617) 951-2414 http://www.jagersmith.com/ Headquartered in Hamburg, New York, Riefler Concrete Products, LLC -- http://www.riefler.com/-- manufactures and distributes licensed concrete masonry products, and offers concrete construction and filling services. The Company and its affiliate, Riefler Real Estate Corp., filed for chapter 11 protection on June 12, 2006 (Bankr. W.D. N.Y. Case No. 06-01574). Bruce F. Smith, Esq., at Jager Smith P.C., represent the Debtors in their restructuring efforts. When they filed for bankruptcy, the Debtors reported assets and debts amounting between $10 million to $50 million. RIEFLER CONCRETE: U.S. Trustee Appoints Six-Member Creditors Panel ------------------------------------------------------------------ The U.S. Trustee for Region 2 appointed six creditors to serve on an Official Committee of Unsecured Creditors in Riefler Concrete Products, LLC, and Riefler Real Estate Corporation's chapter 11 cases: 1. Buffalo Crushed Stone Attn: Steve Detwiler 2544 Clinton Street Buffalo, New York 14224 2. Gernatt Asphalt Products Attn: Randy Best Taylor Hollow Road P.O. Box 400 Collins, New York 14034 3. Lafarge Corporation Attn: Charles Pillivant P.O. Box 13682 Newark, New Jersey 00718-8682 4. J&S Transportation Attn: Jeff Hornburg 8 Christy Street Silver Creek, New York 14136 5. St. Mary's Cement Attn: Rita Napier 55 Industrial Street Toronto Canada M4G 3W9 6. St. Lawrence Cement Attn: Mark McMullen 3 Columbia Circle Albany, New York 12203 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Headquartered in Hamburg, New York, Riefler Concrete Products, LLC -- http://www.riefler.com/-- manufactures and distributes licensed concrete masonry products, and offers concrete construction and filling services. The Company and its affiliate, Riefler Real Estate Corp., filed for chapter 11 protection on June 12, 2006 (Bankr. W.D. N.Y. Case No. 06-01574). Bruce F. Smith, Esq., at Jager Smith P.C., represent the Debtors in their restructuring efforts. When they filed for bankruptcy, the Debtors reported assets and debts amounting between $10 million to $50 million. RIEFLER CONCRETE: Committee Hires Goldstein Bulan as Counsel ------------------------------------------------------------ The Official Committee of Unsecured Creditors appointed in Riefler Concrete Products, LLC, and Riefler Real Estate Corporation's chapter 11 cases obtained authority from the U.S. Bankruptcy Court for the Western District of New York to retain Goldstein, Bulan & Chiari LLP, as its bankruptcy counsel. Goldstein Bulan is expected to: a. give the committee legal advice with respect to its powers and duties; b. prepare on behalf of the Committee all necessary applications, answers, orders, reports and other legal papers; c. monitor the activities of the Debtors and report to the Committee regarding that matter; d. represent the unsecured creditors in negotiating and implementing a plan of reorganization; and e. perform other legal services for the Committee which may be necessary in connection with the Debtors' bankruptcy proceedings. The Committee tells the Court that Harold P. Bulan, Esq., a member at Goldstein Bulan, will serve as the lead counsel. Mr. Bulan bills at $250 per hour. Mr. Bulan assures the Court that his firm is disinterested as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Bulan can be reached at: Harold P. Bulan, Esq. Goldstein, Bulan & Chiari, LLP Suite 1440 Rand Building Buffalo, New York 14203-1914 Tel: (716) 854-1332 Fax: (716) 854-1370 Headquartered in Hamburg, New York, Riefler Concrete Products, LLC -- http://www.riefler.com/-- manufactures and distributes licensed concrete masonry products, and offers concrete construction and filling services. The Company and its affiliate, Riefler Real Estate Corp., filed for chapter 11 protection on June 12, 2006 (Bankr. W.D. N.Y. Case No. 06-01574). Bruce F. Smith, Esq., at Jager Smith P.C., represent the Debtors in their restructuring efforts. When they filed for bankruptcy, the Debtors reported assets and debts amounting between $10 million to $50 million. SILICON GRAPHICS: Will Pay Up to $1.6MM Prepetition Custom Duties ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York authorizes Silicon Graphics, Inc., and its debtor-affiliates to pay all prepetition Delivery Charges up to an aggregate of $1,650,000. As reported in the Troubled Company Reporter on May 26, 2006, the Court authorized the Debtors to pay prepetition obligations up to an aggregate of $1,300,000. Shai Y. Waisman, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court that the Debtors have become aware of additional outstanding prepetition Delivery Charges for $350,000. Majority of the outstanding $350,000 is owed SSI on account of invoices billed to the Debtors after the Petition Date by several United Parcel Services entities, DHL Worldwide Express and Danzas DHL Freight, who each hold a significant portion of the Debtors' spare parts inventory in over 100 locations worldwide. Mr. Waisman asserts that the satisfaction of obligations owed in respect of the prepetition Delivery Charges will allow the Debtors to minimize costs and comply with customer deadlines. Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) SILICON GRAPHICS: Rosen Slome Hired as Panel's Conflicts Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in Silicon Graphics, Inc. and its debtor-affiliates' chapter 11 cases, obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to retain Rosen Slome Marder LLP as its conflict counsel, nunc pro tunc to June 7, 2006. As reported in the Troubled Company Reporter, July 3, 2006, RSM is expected to: a. represent the Committee in connection with the investigation of liens and claims of the Debtors' prepetition secured lenders against the Debtors' estates, and the pursuit of claims against the lenders; b. represent the Committee with regard to other matters, if any, related to the prepetition secured lenders; c. assist Winston and Strawn in matters relating to the Debtors' proposed debtor-in-possession financing; d. advise the Committee and represent it concerning any other matters with respect to which Winston & Strawn may have a potential conflict of interest; and e. perform other professional services at the request of the Committee, including without limitation, those set forth in Section 1103. RSM will be paid on an hourly basis in accordance with its customary hourly rates, subject to periodic adjustments to reflect economic and other conditions. The firm's current hourly rates are: Partners $325 to $380 Paralegals and Associates $100 to $285 Neither RSM nor its professionals hold or represent any other entity having an adverse interest with respect the proceedings, assures Thomas R. Slome, a partner of the firm. Headquartered in Mountain View, California, Silicon Graphics, Inc. (OTC: SGID) -- http://www.sgi.com/-- offers high-performance computing. SGI helps customers solve their computing challenges, whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense, enabling the transition from analog to digital broadcasting, or helping enterprises manage large data. The Debtor and 13 of its affiliates filed for chapter 11 protection on May 8, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10977 through 06-10990). Gary Holtzer, Esq., and Shai Y. Waisman, Esq., at Weil Gotshal & Manges LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed total assets of $369,416,815 and total debts of $664,268,602. (Silicon Graphics Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) TANGER FACTORY: Earns $4.9 Million in Second Quarter Ended June 30 ------------------------------------------------------------------ Tanger Factory Outlet Centers, Inc., reported funds from operations available to common shareholders, a widely accepted measure of REIT performance, for the three months ended June 30, 2006 increased 25.8% to $19.8 million as compared to FFO of $15.7 million for the three months ended June 30, 2005. For the six months ended June 30, 2006, FFO increased 27.8% to $38.6 million as compared to FFO of $30.2 million for the six months ended June 30, 2005. For the three months ended June 30, 2006, net income available to common shareholders increased 40.3% to $4.9 million as compared to $3.5 million for the second quarter of 2005. For the six months ended June 30, 2006, net income available to common shareholders was $18.5 million, compared to $551,000 for the first six months of 2005. Net income for the six months ended June 30, 2006 included a gain on the sale of real estate incurred during the first quarter of $13.8 million, while net income for the six months ended June 30, 2005 included a $4.7 million loss on sale of real estate incurred during the first quarter of 2005. Second Quarter Highlights -- 4.6% increase in same center net operating income; -- 12.2% average increase in base rental rates on signed renewals with the existing tenants for 1,258,721 square feet, or 71.5% of the square feet scheduled to expire during 2006; -- 96.2% occupancy rate for wholly owned properties, compared to 96.5% as of June 30, 2005; -- $330 per square foot in reported same-space tenant sales for the rolling twelve months ended June 30, 2006, up 4.1% compared to the twelve months ended June 30, 2005; -- newly constructed 264,900 square foot center in Wisconsin Dells, Wisconsin opening in August 2006; -- newly constructed 352,500 square foot center in Charleston, South Carolina opening in August 2006; -- 33.8% debt-to-total market capitalization ratio, 3.08 times interest coverage ratio. Stanley K. Tanger, Chairman of the Board and Chief Executive Officer, commented, "Our second quarter results were outstanding. Same center net operating income increased 4.6%, while average tenant sales increased 7.4% during the second quarter of 2006, continuing the positive momentum experienced in the first quarter. We are very excited to see our two new centers nearing completion and look forward to both grand openings in August of this year." Portfolio Operating Results During the second quarter of 2006, Tanger executed 113 leases, totaling 466,203 square feet within its wholly owned properties. Lease renewals for the second quarter of 2006 accounted for 316,120 square feet and generated a 14.0% increase in average base rental rates on a straight-line basis. Base rental increases on re-tenanted space during the second quarter averaged 36.7% on a straight-line basis and accounted for the remaining 150,083 square feet. For the first six months of 2006, 1,258,721 square feet of renewals generated a 12.2% increase in average straight-line base rental rates, and represented 71.5% of the 1,760,000 square feet originally scheduled to expire during 2006. Same center net operating income increased 4.6% for the second quarter of 2006 compared to the same period in 2005. Reported same-space sales per square foot for the rolling twelve months ended June 30, 2006, were $330 per square foot. This represents a 4.1% increase compared to the rolling twelve months ended June 30, 2005. For the second quarter of 2006, same-space sales increased by 7.4%, as compared to the same period in 2005. Same-space sales is defined as the weighted average sales per square foot reported in space open for the full duration of the comparative periods. Reported same-store sales increased 5.3% for the three months ended June 30, 2006, and increased 3.0% for the six months ended June 30, 2006. Same-store sales are defined as sales for tenants whose stores have been open from Jan. 1, 2005, through the duration of the comparison period. Investment and Other Activities During the second quarter of 2006, construction neared completion on the company's two new centers located in Wisconsin Dells, Wisconsin and Charleston, South Carolina. The 264,900 square foot center in Wisconsin Dells, Wisconsin is currently 97% leased with tenant commitments for an additional 2% of the leasable space. Tanger has scheduled a grand opening celebration for Aug. 18, 2006. Tenants in the center will include Polo Ralph Lauren, Abercrombie & Fitch, Hollister, Gap, Banana Republic, Old Navy, Liz Claiborne, Nike, Adidas, Tommy Hilfiger and many others. The Wisconsin Dells property, which was developed and is managed and leased by Tanger for a fee, is owned through a joint venture of which Tanger owns a 50% interest. Tanger's 352,500 square foot center in Charleston, South Carolina is currently 72% leased with tenant commitments for an additional 7% of the leasable space. The company has scheduled a grand opening celebration for Aug. 31, 2006. Tenants in the center will include Gap, Banana Republic, Liz Claiborne, Nike, Adidas, Tommy Hilfiger, Guess, Reebok and many others. The Charleston property is wholly owned by Tanger. Tanger continues the pre-development and leasing of two previously announced sites located in Pittsburgh, Pennsylvania and Deer Park (Long Island), New York. The company has contracted with Allegany Power to move certain power lines located on the Pittsburgh site and plans to close on the acquisition of the land later this year, with an expected delivery of the center in the first quarter of 2008. The Pittsburgh center will be wholly owned by Tanger. The company expects to begin demolition of the building located at the Deer Park site before the end of 2006 and currently expects this center will also be delivered in the first quarter of 2008. The Deer Park property is owned through a joint venture of which Tanger and two venture partners each own a one-third interest. Financing Activities and Balance Sheet Summary During the second quarter of 2006, Tanger received commitments from Branch Banking and Trust Co. and SunTrust Bank for additional unsecured lines of credit of $25 million each. Since the end of the second quarter, the company has closed on the BB&T line of credit and expects to close on the SunTrust Bank line of credit within the next few months, bringing Tanger's total unsecured line of credit capacity to $200 million. As of June 30, 2006 the company had $49.8 million outstanding on its unsecured lines of credit. Tanger's total market capitalization as of June 30, 2006 increased 38% from the same period in 2005 to approximately $1.9 billion, with $650.6 million of debt outstanding. The company's debt to total market capitalization improved to 33.8% as of June 30, 2006 from 35.0% as of June 30, 2005. As of June 30, 2006, $547.3 million, or 84% of Tanger's total debt, was at fixed interest rates. During the second quarter of 2005, the company continued to maintain a strong interest coverage ratio of 3.08 times. Tanger Factory Outlet Centers, Inc. (NYSE: SKT) -- http://www.tangeroutlet.com/-- is a fully integrated, self- administered and self-managed publicly traded REIT. The Company presently owns 29 centers in 21 states coast to coast, totaling approximately 8.0 million square feet of gross leasable area. Tanger also manages for a fee and owns a 50% interest in one center containing approximately 402,000 square feet and manages for a fee three centers totaling approximately 293,000 square feet. * * * Moody's Investors Service assigned a Ba1 rating on Tanger Factory's Preferred Stock in June 2005. TEMBEC INC: Incurs $6.6 Million Net Loss in Fiscal Third Quarter ---------------------------------------------------------------- Tembec Inc. generated a net loss of $6.6 million for the third quarter ended June 24, 2006, compared to a net loss of $142.5 million in the corresponding quarter ended June 25, 2005. Consolidated sales for the third quarter ended June 24, 2006, were $862.3 million, down from $937.7 million in the comparable period last year. Earnings before unusual items, interest, income taxes, depreciation, amortization and other non-operating expenses was $21.2 million, unchanged from EBITDA of $21.2 million a year ago and up from EBITDA of $4.9 million in the prior quarter. The June 2006 quarterly financial results include an after-tax gain of $44.9 million relating to the gain on translation of foreign debt. After adjusting for this item and certain specific items, the Company would have generated a net loss of $55.6 million. This compares to a net loss of $53.1 million in the corresponding quarter ended June 25, 2005 and a net loss of $109.5 million or per share in the previous quarter. Business Segment Results The Forest Products segment generated EBITDA of $100,000 on sales of $271.1 million. This compares to EBITDA of $13.7 million on sales of $287.9 million in the prior quarter. The sales decrease of $16.8 million was caused by lower selling prices for SPF lumber as well as lower volumes of third party log sales. The latter decrease is seasonal in nature as the March quarter represents a peak activity period for timber deliveries. US$ reference prices for random lumber decreased by approximately $23 per mfbm while stud lumber decreased by $21 per mfbm. Currency was unfavorable as the Canadian dollar averaged US$0.890, up 3% from US$0.867 in the prior quarter. The net effect was a decrease in EBITDA of $12.1 million or $32 per mfbm. SPF lumber margins were negatively impacted by higher timber costs, primarily in the province of Ontario. In the prior quarter, producers had benefited from government initiatives to reduce costs. The higher costs were offset by the seasonally higher profitability of the engineered wood business and lower lumber export duties. During the quarter, countervailing and antidumping duties totaled $9.5 million, compared to $10.7 million in the prior quarter. Since May 2002, the Company has incurred $336.9 million of duties, which remain subject to the resolution of the softwood lumber dispute. The Pulp segment generated EBITDA of $14.1 million on sales of $388.1 million for the quarter ended June 2006 compared to EBITDA of $1.8 million on sales of $355.7 million in the March 2006 quarter. The $32.4 million increase in sales was driven by higher shipments and prices for paper pulps. While US $ reference prices increased over the prior quarter, currency partially offset the increase as the Canadian $ averaged US $0.890, up 3% from US $0.867. The net price effect was an increase of $20 per tonne, increasing EBITDA by $12.1 million. Total downtime in the June quarter was 11,200 tonnes, compared to 15,500 tonnes in the prior quarter. The Paper segment generated EBITDA of $5.1 million on sales of $220.5 million. This compares to negative EBITDA of $11.7 million on sales of $202.3 million in the prior quarter. Sales increased by $18.2 million primarily as a result of higher shipments. US $ reference prices for newsprint and coated bleached board improved by US $14 per tonne and US $7 per short ton respectively while coated papers experienced a decline of US $21 per short ton. The stronger Canadian $, which averaged US $0.890, up 3% from US $0.867 in the prior quarter, more than negated the improvement in prices. The net price effect was a decrease of $20 per tonne, reducing EBITDA by $5.0 million. Manufacturing costs were positively impacted by lower energy costs, which decreased by $9.3 million over the prior quarter, as well as lower labour and maintenance costs, which were higher in the prior quarter because of the annual maintenance shutdown at the St. Francisville papermill. Total downtime in the June quarter was 1,200 tonnes, down from 12,400 tonnes in the prior quarter. Other items During the quarter, the Canadian and US governments completed the negotiation of an agreement to govern the flow of Canadian softwood lumber into the US. Before the agreement can come into effect, it requires approval by the Canadian parliament as well as acceptance by the Canadian lumber industry and the affected provinces. The current timetable calls for these approvals to be in place by October 1st, 2006. The agreement provides for the return of a substantial portion of duties deposited since May 2002, including accrued interest thereon. Current estimates are that the Company would receive a refund of approximately $250 million and that a substantial portion of the refund would be remitted in the December 2006 quarter. The Company had previously set an objective of generating between $100 and $150 million of funds from non-operating initiatives in fiscal 2006. Following a further review of the ongoing initiatives, the Company has increased the target to $200 million. This target includes the sale of the OSB business that was successfully completed in late February for $98 million. Outlook The improved operating results were driven by higher pricing in the pulp business and lower costs in the paper business. Going forward, we do not anticipate any significant currency relief as the Canadian $ continues to trade in the US $0.88-$0.90 range. The pulp market continues to improve, with a price increase implemented in July. However, lumber markets have softened over the last several months. The primary challenges faced by the industry are the strength of the Canadian $ and higher chemical, energy and wood costs, particularly in Eastern Canada. These issues are being addressed as part of the Company's aggressive cost reduction program. The recent mill closures as well as the restructuring of our coated paper operations in St. Francisville, Louisiana are having a positive impact on our results. The Company continues to work for a timely resolution of the lumber dispute with the United States and a refund of monies deposited. During the June 2006 quarter, the Company's joint venture Temlam Inc. completed the sale of its metal plates and webs operations located in Bolton, Ontario. Based on the Company's 50% ownership, consideration received amounted to $11.3 million including net working capital of $1.5 million. As a result of this transaction, the Company recorded a gain of $4.5 million. The after-tax effect of this gain was $3.1 million. During the March 2006 quarter, the Company recognized an impairment charge of $169 million related to the property, plant and equipment of the Smooth Rock Falls, Ontario pulpmill as the majority of its long-lived assets are no longer recoverable and exceed their fair value. The after-tax effect of this charge was $111.3 million. As a result of the ongoing restructuring of the St. Francisville, Louisiana papermill, the Company recorded an unusual charge of $7.1 million relating to additional severance and other related costs. As no tax recovery was recorded, the after-tax effect of the charge was $7.1 million. Based in Montreal, Quebec, Tembec Inc. -- http://www.tembec.com/ -- is a forest products company. With operations principally located in North America and in France, the Company employs approximately 10,000 people. Tembec's common shares are listed on the Toronto Stock Exchange under the symbol TBC. * * * As reported in the Troubled Company Reporter on June 26, 2006, Standard & Poor's Ratings Services affirmed its 'CCC-' corporate credit and senior unsecured debt ratings on Tembec Inc. and its subsidiary, Tembec Industries Inc. The outlook is negative. TIER TECHNOLOGIES: Nasdaq Listing Council Affirms Delisting ----------------------------------------------------------- Tier Technologies, Inc. was notified that the Nasdaq Listing Council had reviewed the company's appeal, but had affirmed the Panel's decision to delist the Company's securities from The Nasdaq National Market for failure to comply with the filing requirement, as set forth in Nasdaq Marketplace Rule 4310(c)(14). The Company disclosed it continues to work diligently with its auditors to complete the review and file its financial statements with the Securities and Exchange Commission and apply for re- listing with the Nasdaq. Headquartered in Reston, Virginia, Tier Technologies, Inc. -- http://www.tier.com/-- provides transaction processing and packaged software and systems integration services to more than 2,200 federal, state, and local governments, educational institutions, utilities and commercial clients in the U.S. and abroad. The Company, through its subsidiary, Official Payments Corp. -- http://www.officialpayments.com/-- designs, installs and maintains cutting-edge public sector software systems, and delivers fast, secure and convenient financial transaction processing solutions. Defaults As reported in the Troubled Company Reporter on March 21, 2006, the expected restatement, the delayed availability of Tier Technologies, Inc.'s financial statements for the fiscal year ended Sept. 30, 2005, and the anticipated loss for the quarter ended Sept. 30, 2005, constituted events of default under the revolving credit agreement between the Company and its lender, City National Bank. In addition, the Company incurred similar events of default for the quarter ended Dec. 31, 2005. TRANSAMERICA REAL: Case Summary & Largest Unsecured Creditor ------------------------------------------------------------ Debtor: TransAmerica Real Estate Group 155 West Main Street, Suite 100A Columbus, OH 43215-5073 Bankruptcy Case No.: 06-54058 Chapter 11 Petition Date: August 3, 2006 Court: Southern District of Ohio (Columbus) Debtor's Counsel: Grady L Pettigrew, Jr., Esq. Pettigrew & Associates, LLC 115 West Main, Suite 400 Columbus, OH 43215-5099 Tel: (614) 224-1113 Fax: (614) 228-0701 Estimated Assets: $1 Million to $10 Million Estimated Debts: $100,000 to $500,000 Debtor's Largest Unsecured Creditor: Entity Nature of Claim Claim Amount ------ --------------- ------------ Franklin County Real Estate Taxes $30,000 Richard Cordray Treasurer 373 South High Street, 17th Floor Columbus, OH 43215 TRANSWITCH CORP: Posts $1.3 Mil. Net Loss in 2006 Second Quarter ---------------------------------------------------------------- TranSwitch Corporation disclosed that it posted second quarter 2006 net revenues of approximately $10.3 million and a net loss of $1.3 million. This compares with second quarter 2005 net revenues of approximately $8.0 million and a net loss of $12.7 million. "The second quarter of 2006 was a strong quarter for TranSwitch from a revenue, margin, and design-win point of view and we enter the third quarter of 2006 with a strong confidence regarding the long-term prospects of TranSwitch Corporation. This is based on the fact that we have design-wins in key platforms of most of the Tier-1 customers, we have a product portfolio second to none, our balance sheet is strong and we have been successful in reducing our expenses systematically," commented Dr. Santanu Das, president and chief executive officer of TranSwitch Corp. "We have been consistently securing significant design-wins and the task at hand is to translate these design-wins to production volume and this is where we are focused on in our applications support," Dr. Das continued. The net loss for the second quarter of 2006 includes these non- cash items: -- Other income of approximately $1.8 million reflecting the change in the fair value of the derivative liability relating to the Company's 5.45% Convertible Plus Cash Notes(SM) due Sept. 30, 2007, compared with other expense of $4.7 million on the change in the fair value of the derivative liability in the second quarter of 2005; -- Interest expense of approximately $400,000 relating to the on-going amortization of the debt discount related to the Company's Plus Cash Notes compared to such amortization of $1.2 million in the second quarter, 2005; and -- Stock option expense of $700,000 as a result of the Company's adoption of FAS 123R, of which $200,000 is included in research and development, $200,000 is included in marketing and sales and $300,000 is included in general and administrative. For the six months ended June 30, 2006, the Company posted net revenues of approximately $20 million and a net loss of $6.9 million. This compares to net revenues of approximately $17.0 million and a net loss of $19 million in the comparable period of 2005. During the second quarter, 2006, the Company reported a gross margin on product revenues of $7 million or 71%. This margin was impacted by a cost of sales benefit totaling $800,000 from the sale of inventory that was previously written-off. "Based on our current visibility, we project revenue of around $10.3 million in the third quarter of 2006 with $9 million coming from product sales and $1.3 million from Mysticom I.P. business. For the second half of this year, Mysticom should be cash-flow and P&L neutral," Dr. Das continued. "Our opening product backlog was approximately $6.8 million for the third quarter. Our third quarter 2006 net loss is estimated to be in the range of negative $0.03 to $0.04 per basic and diluted common share. This net loss estimate for the third quarter of 2006 excludes any adjustment to the fair value of the derivative liability associated with our 5.45% Convertible Plus Cash Notes(SM). The non-cash adjustment to fair value is based on several estimates, including our common stock price during the quarter ending Sept. 30, 2006," Dr. Das concluded. Based in Shelton, Conn., TranSwitch Corporation (NASDAQ: TXCC) -- http://www.transwitch.com/-- designs, develops and markets innovative semiconductors that provide core functionality and complete solutions for voice, data and video communications network equipment. As a supplier to telecom, datacom, cable television and wireless markets, TranSwitch customers include the major OEMs that serve the worldwide public network, the Internet, and corporate Wide Area Networks. TranSwitch devices are inherently flexible; many incorporating embedded programmable microcontrollers to rapidly meet customers' new requirements or evolving network standards by modifying a function via software instruction. TranSwitch implements global communications standards in its VLSI solutions and is committed to providing high-quality products and services. TranSwitch is an ISO 9001: 2000 registered company. * * * TranSwitch Corp. carry Standard and Poor's Ratings Service's B- long-term foregn and local issuer credit ratings. TUESDAY MORNING: Earns $2.9 Mil. in Second Quarter Ended June 30 ---------------------------------------------------------------- Tuesday Morning Corporation reported net income of $2.9 million for the second quarter ended June 30, 2006, compared to $10.5 million for the second quarter of 2005, a decrease of $7.6 million. For the six-months ended June 30, 2006, the Company's net income was $9.4 million, compared to $17.2 million in the same period in 2005, a decrease of $7.8 million. Net sales for the second quarter of 2006 were $207.7 million, a decrease of 5.1% from $218.8 million for the second quarter last year. For the six-month period ended June 30, 2006, sales were $395.4 million, down 2.2%, compared to $404.4 million for the same prior- year period. "Our average ticket increased year-over-year, however, lower traffic in our stores as a result of well documented economic conditions impacted our comparables. Challenges remain in the near term, but we believe our product offerings are well positioned for the last six-months of the year," Kathleen Mason, the Company's president and chief executive officer, said. Tuesday Morning is a retailer of decorative home accessories and gifts in the United States. The Company opened its first store in 1974 and currently operates 762 stores in 46 states during periodic "sale events." * * * Tuesday Morning Corp. carry Moody's Investors Service's Ba3 issuer rating, Ba2 corporate family rating and Ba3 senior subordinated debt rating. US INVESTIGATIONS: Moody Holds $603MM Senior Loan's Rating at B2 ---------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to the proposed $30 million senior secured first lien term loan D of US Investigations Services, LLC and affirmed USIS's B2 corporate family rating. Moody's took these rating actions: * $60 million senior secured first lien revolver due Oct. 14, 2011, affirmed B2 * $395 million senior secured first lien term loan B due Oct. 14, 2011, affirmed B2 * $148 million senior secured first lien term loan C due Oct. 14, 2011, affirmed B2 * $30 million proposed senior secured first lien term loan D due Oct. 14, 2011, assigned B2 * Corporate Family Rating, affirmed B2 The ratings outlook is stable. In July 2006 USIS successfully rebid for its key U.S. government Office of Personnel Management contract to supply background investigation services. The government changed the structure of the contract, but the new contract essentially formalizes practices that have been in effect since January 2005 under which OPM awarded business under blanket purchasing agreements to a total of six competitors, which has been reduced to five under the new contract. Moody's expects USIS's network of field offices and staff of over 2,600 investigators will permit USIS to remain the leading provider of such services and to maintain its greater than 60% market share. USIS is increasing its revolver and adding the term loan D to cope with an expected increase in working capital required to service the OPM contract under its new terms. The government changed the terms of the new contract to eliminate the 50% up-front payment for investigative cases, replacing the up-front payment scheme with payment in arrears. Moody's expects the increased working capital burden on USIS to amount to about $85 million over the next year. The government also shortened the maximum case length from 180 days to less than 90 days and implemented a new structure with incentives and penalties that are designed to speed background investigations. The factor weighing most on the ratings is USIS's financial leverage. Moody's estimates that pro forma for the transaction and adjusted for operating leases total debt to EBITDA will be over 5x. Free cash flow is likely to be negative for fiscal years ending September 30, 2006 and September 30, 2007 due in the first instance to the effect of a $185 million dividend payment associated with a recapitalization in October 2005 and in the second instance to the working capital adjustment resulting from the change in terms of the OPM contract. Excluding the effects of the dividend and the change in working capital usage, Moody's estimates USIS's adjusted pro forma free cash flow to debt to be in the mid single digit range. Moody's expects USIS to achieve EBIT margins in the high single to low double digit range and to maintain EBIT interest coverage of over 1.5x. The stable outlook is predicated on USIS maintaining its present operating and competitive profile. The outlook or ratings could be raised if USIS exhibits consistent operating performance with adjusted total debt to EBITDA falling below 5 times and free cash flow to debt rising above 5% on a sustained basis. The ratings could be lowered if USIS were to pursue financial policies or encountered operational challenges that resulted in increased leverage, with adjusted total debt to EBITDA rising toward 6x, free cash flow to debt continuing to remain negative, or interest coverage falling to below 1x. US Investigations Services, LLC, with corporate headquarters in Falls Church, Virginia, is a leading provider of background investigation and security services to the United States Government and to the commercial sector. Total revenues for the twelve months ended March 31, 2006 were approximately $766 million. WASTE SERVICES: Posts $11.1 Million Net loss for 2nd Quarter 2006 ----------------------------------------------------------------- Waste Services Inc. incurred $11.1 million net loss from continuing operations for the three months ended June 30, 2006, compared to $14.2 million in the same period last year. The Company's revenue from continuing operations for the quarter was $101.6 million, an increase of $12.7 million, or 14.3% over the same period last year. For the six months ended June 30, 2006, the Company's revenue from continuing operations was $190.1 million, an increase of $18.3 million, or 10.7% over the comparable period last year. Net loss from continuing operations was $28.9 million for the six months ended June 30, 2006, compared to a net loss from continuing operations of $28.5 million for the comparable period last year. Commenting on the results, David Sutherland-Yoest, the Company's chairman and chief executive officer, stated "We are pleased to report record adjusted EBITDA of $20.2 million for the second quarter, which exceeded our internal expectations. The recent announcement of our entry into South Florida will allow us to expand further our largest market and increase disposal volumes at our JED Landfill. As a result of the strong performance in the second quarter, recent Florida acquisitions and entry into the Miami-Dade market, we are raising our 2006 adjusted EBITDA guidance to $77.0 million to $80.0 million from our previously provided guidance of $70.0 million to $75.0 million." Waste Services Inc. -- http://www.wasteservicesinc.com/-- is a multi-regional, integrated solid waste services company that provides collection, transfer, disposal and recycling services in the United States and Canada. * * * As reported in the Troubled Company Reporter on March 28, 2006, Moody's Investors Service affirmed the debt ratings of Waste Services: B2 rating on the $60 million guaranteed senior secured credit facilities due 2009; B2 rating on the $200 million guaranteed senior secured Term Loans due 2011; Caa2 rating on $160 million guaranteed senior subordinated notes due 2014; and B3 Corporate Family Rating. The ratings outlook remained stable. As reported Troubled Company Reporter on Aug. 20, 2004, Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on Waste Services Inc. to 'B-' from 'B+' and its senior subordinated debt rating to 'CCC' from 'B-'. At the same time, Standard & Poor's placed all the ratings on CreditWatch with negative implications. Scottsdale, Arizona-based Waste Services had approximately $320 million of total debt, including mandatorily redeemable preferred stock, outstanding at June 30, 2004. WINN-DIXIE STORES: Florida Court Approves Disclosure Statement -------------------------------------------------------------- On Aug. 4, 2006, the U.S. Bankruptcy Court for the Middle District of Florida approved the Disclosure Statement of Winn-Dixie Stores, Inc., filed, on Aug. 2, 2006, together with the Company's proposed Plan of Reorganization. The Court also authorized Winn-Dixie to begin soliciting approval from its creditors for the Plan of Reorganization. With these developments, Winn-Dixie remains on schedule to emerge from Chapter 11 protection as soon as late October. Winn-Dixie expects to emerge from its reorganization with sufficient financing and liquidity to make significant investments in its current store base, to develop new stores, and to take other actions to position the business to compete effectively in its markets over the next several years. The company also expects to emerge with only a minimal amount of long-term debt on its balance sheet. "Court approval of the Disclosure Statement and authorization to begin the solicitation of creditor approval of our Plan of Reorganization are two important steps on our path to emergence from bankruptcy," Winn-Dixie President and Chief Executive Officer Peter Lynch said. "Our momentum continues to build in our business. Our associates are energized and excited about the progress we have made in our turnaround, and our customers are responding favorably to our continued focus on providing outstanding service and products." At a hearing Friday in Jacksonville, the Honorable Jerry A. Funk ruled that Winn-Dixie's Disclosure Statement was adequate for the purposes of soliciting creditor approval for the Plan of Reorganization. A confirmation hearing for the Court to consider approval of the Plan of Reorganization has been scheduled for Oct. 13, 2006. Later this month Winn-Dixie will begin mailing notice of the proposed confirmation hearing and begin the process of soliciting approvals for the Plan of Reorganization from qualified claim holders. The official committee of unsecured creditors in Winn-Dixie's Chapter 11 proceedings has provided a letter to the company, to be mailed to creditors with the Disclosure Statement, recommending that creditors vote in favor of the Plan of Reorganization. Assuming the requisite approvals are received and the Court confirms the Plan under the company's current timetable, Winn-Dixie will emerge from Chapter 11 protection in late October or early November 2006. "The Plan of Reorganization and Disclosure Statement represent the culmination of a concerted effort by a large number of people to get Winn-Dixie out of Chapter 11 and maximize its value to creditors," H. Jay Skelton, Chairman of the Winn-Dixie Board of Directors, said. "The creditors committee has provided assistance in brokering the compromise of the 'substantive consolidation' dispute that is included in the Plan and, without which, our Chapter 11 case could be mired in expensive litigation for many years. We also appreciate that the creditors committee has lent its support to our emergence from Chapter 11 by recommending to creditors a vote in favor of the Plan." As reported in the Troubled Company Reporter on Aug. 3, 2006, Winn-Dixie has received a commitment for up to $725 million in exit financing from Wachovia Bank. The exit financing, which will replace the company's current debtor-in-possession credit facility on the effective date of a Plan of Reorganization, will increase Winn-Dixie's cash availability substantially. The Court approved the commitment letter for the exit financing on July 27. If the company's Plan of Reorganization is confirmed, current holders of Winn-Dixie's equity will not receive any distributions following emergence and their equity interests will be cancelled once the Plan of Reorganization becomes effective. Terms of the Revised Disclosure Statement In their second proposed Disclosure Statement, the Debtors have added information regarding: -- holders or potential holders of unsecured claims concerning claim classifications; -- holders of executory contracts and unexpired leases concerning contingent voting; -- their financial performance while under bankruptcy protection; -- the reconstitution of the Official Committee of Unsecured Creditors and its service post-effective date of the Plan; -- possible restrictions on transfer of new securities; and -- treatment of common stock reserve. According to Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, the Debtors have made the revisions as a result of additional negotiations with the Creditors Committee and to address objections and informal comments received from parties-in-interest. As previously reported, the estimated range of reorganization value of the reorganized Debtors for the purposes of the Plan is estimated to be about $625,000,000 to $890,000,000 as of the assumed emergence date of September 30, 2006. Ms. Jackson clarifies that the estimated range of reorganization value excludes any value for tax attributes that may or may not be available in the future. The Debtors have not made any changes to their pro forma financial projections, Ms. Jackson notes. Classification of Unsecured Claims According to the Revised Disclosure Statement, the Plan provides for five Classes of Unsecured Claims, namely Noteholder Claims in Class 12, Landlord Claims in Class 13, Vendor/Supplier Claims in Class 14, Retirement Plan Claims in Class 15, and Other Unsecured Claims in Class 16. Unsecured Claimants entitled to vote on the Plan will receive a ballot that identifies the Class in which the Debtors believes the claim belongs. Claimants who disagree with the classification are directed to follow instructions printed on the ballot on how to file a motion for determination of plan class with the Court. Holders of claims that are contingent, unliquidated, disputed, or late, will receive a Notice of Non-Voting Status and Temporary Allowance Procedures as well as a Claim Reduction Form, which identifies the type of Unsecured Claim the holder will have if the claim is allowed. The Claim Reduction Form also contains instructions on how to file a motion for determination of plan class. If no responses are filed, the unsecured claims will be treated for all purposes as the type of claim identified on the ballot or Class Reduction Form. Contingent Voting For parties to executory contracts or unexpired leases that have not yet been assumed or rejected, but if rejected would potentially give rise to a rejection damage claims, the Court has approved a procedure under which the parties will be permitted to cast a contingent vote. Contingent votes will only be counted if a motion to reject a contract or lease is filed before the hearing date to consider confirmation of the Plan. Under the Court-approved procedure, Claim Holders must: (a) file with the Bankruptcy Court a request for the temporary allowance of their rejection damage claims for voting purposes, (b) contemporaneously request a ballot in the amount of the possible rejection damage claims; or (c) properly complete and return the ballot before the Voting Deadline. If a Claim Holder receives a ballot with respect to a prepetition claim owing under a contract or lease, the prepetition claim amount will be aggregated with the rejection damage claim. Consequently, the claim holder will be counted as one vote for purposes of numerosity. The Debtors reserve their right to object to the asserted rejection damage claim amount and to ask the Court at the Confirmation Hearing to reduce the claim amount temporarily allowed for voting purposes. About Winn-Dixie Stores Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is a food retailer. 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: Changes Under Amended Joint Plan of Reorganization -------------------------------------------------------------- Winn-Dixie Stores, Inc., and its debtor-affiliates presented their revised Joint Plan of Reorganization and its accompanying Disclosure Statement to the U.S. Bankruptcy Court for the Middle District of Florida on Aug. 2, 2006. Under the amended plan, the Debtors change the estimated allowed amounts for certain classes of claims: Estimated Allowed Claims ------------------------ Class Claims Original Amended ----- ------ -------- ------- n/a Administrative Claims $76,600,000 66,500,000 n/a Priority Tax Claims 14,900,000 6,000,000 8 Thrivent/Lutherans 395,864 375,000 Leasehold Mortgage Claim (6/30/06) (7/31/06) 10 Secured Tax Claims 31,300,000 25,500,000 20 Non-Compensatory 10,000,000 11,000,000 Damages Claims The Debtors will have additional obligations arising on the Effective Date, as a consequence of the implementation of the Plan, which obligations include, without limitation, -- the potential success fees earned by advisors to the Debtors and the Creditors Committee -- estimated to be $11,500,000; -- fees and expenses payable to the exit lender in connection with the closing of the Exit Facility -- estimated to be $6,500,000; and -- the costs of acquiring a D&O tail insurance policy -- estimated to be $10,000,000. No application seeking payment of an Administrative Claim need be filed with respect to Cure owing under an executory contract or unexpired lease if the amount of Cure is fixed or proposed to be fixed by order of the Bankruptcy Court pursuant to a motion to assume and fix the amount of Cure filed by the Debtors and a timely objection asserting an increased amount of Cure filed by the non-Debtor party to the subject contract or lease. The Debtors indicate that Class 3 Workers Compensation Claims will continue to be paid in ordinary course. The estimated allowed claims for Class 11 Other Secured Claims are pending determination through the claims process. The Debtors have not identified any claim under Class 11 as of Aug. 2, 2006. On the initial Distribution Date, each holder of an Allowed Noteholder Claim will receive in full satisfaction the claim, 62.69 shares of New Common Stock for each $1,000 of Allowed Claim. The revised Plan defines a Small Claim under Class 17 as a claim arising before the Debtors filed for bankruptcy against any of the Debtors that is not a secured claim and that asserts an amount greater than $100 but lesser than $3,000. Class 19 Subordinated Claims are characterized as unliquidated. The Debtors dispute the validity of all Subordinated Claims. Subordinated Claims include the claims of plaintiffs in several putative class action lawsuits filed in February to April 2004 against Winn-Dixie and certain present and former executive officers alleging claims under the federal securities laws or Employee Retirement Income Security Act relating to the company's 401(K) Plan. The Plan provides that each holder of an Allowed Secured Tax Claim will receive the amount of the Allowed Claim over a period of six years from the Effective Date, with interest at the rate of 6% per annum, in equal quarterly payments. The Amended Plan provides that, if the holder of an Allowed Secured Claim makes a written offer to obtain alternative payment terms, which may include an offer to discount the amount of the Allowed Claim, and if the Reorganized Debtors accept the offer, the Reorganized Debtors will make a lump sum payment equal to the discounted amount no later than 15 days after the date of acceptance. 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. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000). * Fried Frank Names Alter, Arnott, and Beaudreau as Partners ------------------------------------------------------------ Fried, Frank, Harris, Shriver & Jacobson LLP disclosed that seven lawyers have been elected to the partnership of the firm. As of Sept. 1, 2006, the new partners are Michael J. Alter, Craig Arnott, Tommy P. Beaudreau, Brian Kniesly, Brian T. Mangino, Rob McBride, and David L. Shaw. Attorneys elected to partner: Michael J. Alter, an attorney in the Washington DC Tax Department, focuses his practice on federal income taxation, with particular emphasis on the structuring and negotiation of taxable and tax- free corporate acquisitions, reorganizations, spinoffs and dispositions of ongoing business enterprises, the development of partnership and other joint-venture arrangements and tax planning for financings and other capital formation transactions. Mr. Alter joined the firm in 2000. He received his JD, with honors, from George Washington University Law School and his BA, magna cum laude, from Union College. He is admitted to the bar in the District of Columbia and Massachusetts. Craig Arnott, based in London, heads the firm's European Antitrust team. He has a particular focus on European, UK and multi- national merger approvals for major private and listed companies, as well as private equity transactions, joint ventures and the application of competition law to commercial strategies. Mr. Arnott joined the firm in 2004. He attended Balliol College, Oxford as a Rhodes Scholar and received his D. Phil and Bachelor of Civil Law from the University of Oxford. He received his LL.B., first class honors, and B.A., first class honors, degrees from the University of Queensland, respectively. He has taught at the University of Oxford and University of Sydney. He is admitted to practice in England and Wales. Tommy P. Beaudreau, an attorney in the Washington DC Litigation Department, focuses his practice on a wide variety of criminal and civil litigation matters, including white-collar criminal defense, internal corporate investigations, monitoring of the District of Columbia Metropolitan Police Department, defense of False Claims Act suits brought by the United States and qui tam relators, securities fraud and enforcement matters, counseling of government contractors and commercial litigation. Mr. Beaudreau joined the firm in 1997. He received his JD, cum laude, from the Georgetown University Law Center, where he was a member of the Georgetown International Environmental Law Review and a law clerk at the National Treasury Employees Union. He received his BA, with distinction, from Yale University. He rejoined the firm in 2001 after a yearlong clerkship with Judge Jerome B. Friedman, United States District Court for the Eastern District of Virginia. He is licensed to practice in the District of Columbia and Virginia and is admitted to the bars of the United States District Courts for the Eastern District of Virginia and the District of Columbia. Brian Kniesly, an attorney in the New York Tax Department, focuses his practice on taxation issues of hedge funds, real estate transactions, REITS, private equity funds and partnerships. Mr. Kniesly joined the firm in 2001. He received his JD from University of Pennsylvania Law School in 1998 and his BA from Ohio State University in 1992. He is admitted to the bar in New York and Connecticut. Brian T. Mangino, an attorney in the Washington DC Corporate Department, focuses his practice on private equity transactions and mergers and acquisitions representing both private equity firms and public and private corporations. In addition, he regularly advises clients on issues of corporate governance and securities law compliance. Mr. Mangino joined the firm's London office in 2000 and transferred to the Washington office in 2003. He received his JD from the University of Virginia and his BA from the University of Virginia. He is admitted to the bar in the District of Columbia and Virginia. Rob McBride, an attorney in the London Corporate Department, focuses his practice on a wide range of financing transactions including international debt offerings, project financings, derivatives, securitizations and other structured finance transactions. He joined the firm in 2005. Mr. McBride received his MA from Gonville & Caius College, Cambridge University and completed his CPE and LPC at The College of Law, Guildford, UK. Prior to his legal studies, Mr. McBride studied at the Konservatorium fur Musik, Biel/Bienne in Switzerland. He is admitted to the Supreme Court of England and Wales. David L. Shaw, an attorney in the New York Corporate Department, focuses his practice on the representation of public and private companies in mergers and acquisitions, private equity and financing transactions. Mr. Shaw joined the firm in 1998. He received his JD from New York University School of Law, his MBA from New York University and his BBA from Emory University. Mr. Shaw is admitted to the bar in New York. Fried, Frank, Harris, Shriver & Jacobson LLP -- http://www.friedfrank.com/-- is an international law firm with more than 550 attorneys in offices in New York, Washington, D.C., London, Paris and Frankfurt. Fried Frank lawyers regularly represent major investment banking firms, private equity houses and hedge funds, as well as many of the largest companies in the world. The firm offers legal counsel on M&A and corporate finance matters, white-collar criminal defense and civil litigation, securities regulation, compliance and enforcement, government contracts, real estate, tax, bankruptcy, antitrust, benefits and compensation, intellectual property and technology, international trade, and trusts and estates. * Hellman & Friedman Gains Majority Stake in AlixPartners --------------------------------------------------------- AlixPartners LLC has agreed to a recapitalization of the firm by which affiliates of Hellman & Friedman LLC will make a significant investment in AlixPartners. AlixPartners' 78 managing directors, along with the remainder of its more than 500 employees, also will gain a considerable equity stake in the enterprise. Together, they will hold a majority interest in the private firm. Michael Grindfors, will continue as CEO of the firm. The transaction puts the total enterprise value of the firm in excess of $800 million. Other terms of the transaction were not disclosed. Jay Alix, who founded the firm in 1981, said he is transferring a substantial portion of his interest but will remain with the firm as co-chairman and will be its largest individual shareholder. The other co-chairman will be Philip Hammarskjold of Hellman & Friedman LLC. "This recapitalization accomplishes three things," said Mr. Alix. "It fulfills my long-held objective of an orderly succession from an entrepreneurial firm to a self-perpetuating institution. It gives our employees, who have worked very hard to build our firm, a significant equity ownership and an important stake in our future. And, it gives us an incredibly valuable currency - equity in the form of stock - to attract and retain the best talent in our industry." "Long ago we institutionalized our 'magic.' What makes us unique among professional services firms is that we have always been a firm with more than just one or two 'stars,'" said Mr. Grindfors. "Not only are we credited with inventing the term 'turnaround,' but we also are widely recognized as a pioneer in the industry, creating innovations such as our turnaround-team model, our share- the-risk 'success-fee' model and taking our hands-on approach into performance improvement for financially sound companies. Our success has been based on creating real value for our clients over the last 25 years, and we are committed to continuing that tradition." AlixPartners has enjoyed 25 years of uninterrupted revenue growth. In the last ten years, the firm has grown from two offices in the U.S. to 12 offices in North America, Europe and Asia, with affiliations in South America and Australia, and it has achieved organic average annual growth of more than 30 percent during that time. More than half of its revenue today comes from providing services to healthy companies seeking performance improvement, IT transformation and financial advisory services. "We are thrilled at the opportunity to support Michael Grindfors and the managing directors and employees at AlixPartners in this recapitalization transaction," said Mr. Hammarskjold. "We have been active investors in the professional services industry for many years, and our experience and diligence indicate that by almost any measure, AlixPartners sets the standard for outstanding performance and brand recognition in the global consulting industry. "AlixPartners' commitment to getting results for its clients will continue to drive the firm's growth, particularly in today's uncertain economic environment," Mr. Hammarskjold continued. "By providing the managing directors and employees of the firm with a greater economic stake in its future success, we believe this recapitalization will serve as a catalyst to help the firm grow and support its clients worldwide." AlixPartners' present or past clients include General Motors Corp. (U.S.), BP PLC (U.K.), Toys "R" Us Inc. (U.S.), Henkel KgaA (Germany), Karstadt Quelle AG (Germany) and Bruno Magli Spa (Italy), as well as some of the largest restructurings of all time, including WorldCom Inc., Kmart Corp., Enron Corp., Refco LLC and Calpine Corp. Under terms of the agreement, each of AlixPartners' managing directors will be given the opportunity to roll over some of the value of his or her existing interests in the firm into new equity in the recapitalized organization. In addition, employees other than managing directors will participate in a "phantom equity" program. Alix said the recapitalization was expected to close within the next 90 days. About Hellman & Friedman Hellman & Friedman LLC is a private equity investment firm with offices in San Francisco, New York and London. The Firm focuses on investing in business franchises and as a value-added partner to management in select industries including financial services, professional services, asset management, software and information, media and energy. Since its founding in 1984, the Firm has raised and, through its affiliated funds, managed over $8 billion of committed capital. Recent investments include: Activant Solutions Inc., Artisan Partners Limited Partnership, DoubleClick, Inc., GeoVera Insurance Group Holdings, Ltd., LPL Holdings, Inc., Mondrian Investment Partners, Ltd., The Nasdaq Stock Market, Inc., Texas Genco LLC, Vertafore, Inc. and VNU N.V. About AlixPartners AlixPartners LLC -- http://www.alixpartners.com/-- is a global performance improvement, corporate turnaround and financial advisory services firm. The AlixPartners' "one-stop-shop" suite of services range from financial restructuring and operational performance improvement across all major corporate disciplines (manufacturing, supply chain, IT, sales & marketing, working capital, etc.), to financial advisory services (including financial reporting, corporate governance and investigations) to technology-enabled restructuring and claims management. The firm has more than 500 employees, with offices in Chicago, Dallas, Detroit, Dusseldorf, London, Los Angeles, Milan, Munich, New York, Paris, San Francisco and Tokyo. * BOND PRICING: For the week of July 31 - August 4, 2006 -------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Comm. 3.250% 05/01/21 1 Adelphia Comm. 6.000% 02/15/06 0 Adelphia Comm. 7.500% 01/15/04 55 Adelphia Comm. 7.750% 01/15/09 59 Adelphia Comm. 7.875% 05/01/09 58 Adelphia Comm. 8.125% 07/15/03 44 Adelphia Comm. 8.375% 02/01/08 59 Adelphia Comm. 9.250% 10/01/02 58 Adelphia Comm. 9.375% 11/15/09 61 Adelphia Comm. 9.500% 02/15/04 54 Adelphia Comm. 9.875% 03/01/05 57 Adelphia Comm. 9.875% 03/01/07 59 Adelphia Comm. 10.250% 06/15/11 62 Adelphia Comm. 10.250% 11/01/06 57 Adelphia Comm. 10.500% 07/15/04 58 Adelphia Comm. 10.875% 10/01/10 58 Albertson's Inc 6.520% 04/10/28 75 Allegiance Tel. 11.750% 02/15/08 47 Allegiance Tel. 12.875% 05/15/08 44 Amer & Forgn Pwr 5.000% 03/01/30 67 Amer Plumbing 11.625% 10/15/08 18 Ames Dept. Stores 10.000% 04/15/06 0 Antigenics 5.250% 02/01/25 64 Anvil Knitwear 10.875% 03/15/07 57 Armstrong World 6.350% 08/15/03 70 Armstrong World 6.500% 08/15/05 69 Armstrong World 7.450% 05/15/29 68 Armstrong World 9.000% 06/15/04 69 At Home Corp. 0.525% 12/28/18 2 At Home Corp. 4.750% 12/15/06 0 ATA Holdings 12.125% 06/15/10 2 Atherogenics Inc 1.500% 02/01/12 74 Autocam Corp. 10.875% 06/15/14 60 Banctec Inc 7.500% 06/01/08 73 Bank New England 8.750% 04/01/99 5 Bank New England 9.500% 02/15/96 10 BBN Corp 6.000% 04/01/12 0 Big V Supermarkets 11.000% 02/15/04 0 Budget Group Inc 9.125% 04/01/06 0 Burlington North 3.200% 01/01/45 55 Calpine Corp 4.000% 12/26/06 25 Calpine Corp 4.750% 11/15/23 47 Calpine Corp 6.000% 09/30/14 38 Calpine Corp 7.625% 04/15/06 71 Calpine Corp 7.750% 04/15/09 72 Calpine Corp 7.750% 06/01/15 37 Calpine Corp 7.875% 04/01/08 73 Calpine Corp 8.500% 02/15/11 49 Calpine Corp 8.625% 08/15/10 49 Calpine Corp 8.750% 07/15/07 72 Calpine Corp 10.500% 05/15/06 74 Cell Therapeutic 5.750% 06/15/08 58 Charter Comm Hld 10.000% 05/15/11 68 Charter Comm Hld 11.125% 01/15/11 72 CIH 9.920% 04/01/14 63 CIH 10.000% 05/15/14 64 CIH 11.125% 01/15/14 66 Collins & Aikman 10.750% 12/31/11 16 Color Tile Inc 10.750% 12/15/01 0 Columbia/HCA 7.050% 12/01/27 73 Columbia/HCA 7.500% 11/15/95 71 Comcast Corp 2.000% 10/15/29 41 Cray Research 6.125% 02/01/11 12 Curagen Corp 4.000% 02/15/11 75 Dal-Dflt09/05 9.000% 05/15/16 25 Decode Genetics 3.500% 04/15/11 72 Delco Remy Intl 9.375% 04/15/12 57 Delco Remy Intl 11.000% 05/01/09 60 Delphi Trust II 6.197% 11/15/33 64 Delta Air Lines 2.875% 02/18/24 26 Delta Air Lines 7.541% 10/11/11 38 Delta Air Lines 7.700% 12/15/05 24 Delta Air Lines 7.900% 12/15/09 26 Delta Air Lines 8.000% 06/03/23 26 Delta Air Lines 8.270% 09/23/07 75 Delta Air Lines 8.300% 12/15/29 26 Delta Air Lines 8.540% 01/02/07 73 Delta Air Lines 8.950% 01/12/12 66 Delta Air Lines 9.200% 09/23/14 73 Delta Air Lines 9.250% 03/15/22 25 Delta Air Lines 9.375% 09/11/07 63 Delta Air Lines 9.480% 06/05/06 58 Delta Air Lines 9.750% 05/15/21 26 Delta Air Lines 9.875% 04/30/08 68 Delta Air Lines 10.000% 06/01/11 58 Delta Air Lines 10.000% 08/15/08 27 Delta Air Lines 10.060% 01/02/16 70 Delta Air Lines 10.125% 05/15/10 26 Delta Air Lines 10.375% 02/01/11 25 Delta Air Lines 10.375% 12/15/22 26 Delta Air Lines 10.500% 04/30/16 69 Deutsche Bank NY 8.500% 11/15/16 66 Dov Pharmaceutic 2.500% 01/15/25 58 Dura Operating 9.000% 05/01/09 29 Dura Operating 9.000% 05/01/09 30 Eagle-Picher Inc 9.750% 09/01/13 72 Encysive Pharmac 2.500% 03/15/12 72 Epix Medical Inc. 3.000% 06/15/24 70 Federal-Mogul Co. 7.375% 01/15/06 56 Federal-Mogul Co. 7.500% 01/15/09 57 Federal-Mogul Co. 8.160% 03/06/03 53 Federal-Mogul Co. 8.370% 11/15/01 53 Federal-Mogul Co. 8.800% 04/15/07 56 Finova Group 7.500% 11/15/09 28 Ford Motor Co 6.500% 08/01/18 73 Ford Motor Co 6.625% 02/15/28 72 Ford Motor Co 7.125% 11/15/25 72 Ford Motor Co 7.400% 11/01/46 71 Ford Motor Co 7.500% 08/01/26 73 Ford Motor Co 7.700% 05/15/97 69 Ford Motor Co 7.750% 06/15/43 72 Ford Motor Cred 5.650% 12/20/11 75 Ford Motor Cred 5.750% 02/20/14 73 Ford Motor Cred 6.000% 02/20/15 75 Ford Motor Cred 6.050% 02/20/15 72 Ford Motor Cred 6.050% 12/22/14 74 Ford Motor Cred 6.050% 12/22/14 75 Ford Motor Cred 6.150% 12/22/14 72 Ford Motor Cred 7.500% 08/20/32 72 Gateway Inc. 2.000% 12/31/11 72 GB Property Fndg 11.000% 09/29/05 51 Graftech Intl 1.625% 01/15/24 71 Gulf Mobile Ohio 5.000% 12/01/56 73 HNG Internorth 9.625% 03/15/06 33 Home Prod Intl 9.625% 05/15/08 64 Inland Fiber 9.625% 11/15/07 55 Insight Health 9.875% 11/01/11 48 Iridium LLC/CAP 10.875% 07/15/05 29 Iridium LLC/CAP 11.250% 07/15/05 29 Iridium LLC/CAP 13.000% 07/15/05 26 Iridium LLC/CAP 14.000% 07/15/05 26 Isolagen Inc. 3.500% 11/01/24 75 K&F Industries 9.625% 12/15/10 70 Kaiser Aluminum 9.875% 02/15/02 49 Kaiser Aluminum 10.875% 10/15/06 58 Kaiser Aluminum 12.750% 02/01/03 14 Kellstrom Inds 5.500% 06/15/03 0 Kitty Hawk Inc 9.950% 11/15/04 2 Kmart Corp 8.540% 01/02/15 23 Kmart Funding 8.800% 07/01/10 30 Liberty Media 3.250% 03/15/31 75 Liberty Media 3.750% 02/15/30 59 Liberty Media 4.000% 11/15/29 64 Lifecare Holding 9.250% 08/15/13 75 Macsaver Financl 7.600% 08/01/07 1 Merisant Co 9.500% 07/15/13 67 Merrill Lynch 10.000% 08/15/12 72 MHS Holdings Co 16.875% 09/22/04 0 Missouri Pac RR 5.000% 01/01/45 75 MSX Int'l Inc. 11.375% 01/15/08 70 Muzak LLC 9.875% 03/15/09 55 New Orl Grt N RR 5.000% 07/01/32 66 Northern Pacific RY 3.000% 01/01/47 55 Northern Pacific RY 3.000% 01/01/47 55 Northwest Airlines 6.625% 05/15/23 47 Northwest Airlines 7.248% 01/02/12 14 Northwest Airlines 7.625% 11/15/23 47 Northwest Airlines 7.875% 03/15/08 49 Northwest Airlines 8.700% 03/15/07 50 Northwest Airlines 8.875% 06/01/06 49 Northwest Airlines 9.875% 03/15/07 50 Northwest Airlines 10.000% 02/01/09 47 Northwest Stl&Wir 9.500% 06/15/01 0 NTK Holdings Inc 10.750% 03/01/14 69 Nutritional Src 10.125% 08/01/09 68 NWA Trust 11.300% 12/21/12 69 Oakwood Homes 8.125% 03/01/09 7 Oscient Pharm 3.500% 04/15/11 64 Osu-Dflt10/05 13.375% 10/15/09 0 Outboard Marine 7.000% 07/01/02 0 Outboard Marine 10.750% 06/01/08 3 Overstock.com 3.750% 12/01/11 73 Owens Corning 7.000% 03/15/09 64 Owens Corning 7.500% 05/01/05 65 Owens Corning 7.500% 08/01/18 64 Owens Corning 7.700% 05/01/08 65 Owens-Corning Fiber 9.375% 06/01/12 75 PCA LLC/PCA Fin 11.875% 08/01/09 21 Pegasus Satellite 9.625% 10/15/49 11 Pegasus Satellite 12.375% 08/01/06 9 Pegasus Satellite 12.500% 08/01/07 12 Pixelworks Inc 1.750% 05/15/24 71 Pliant Corp 13.000% 06/01/10 43 Pliant Corp 13.000% 06/01/10 45 Polaroid Corp. 6.750% 01/15/02 0 Polaroid Corp. 7.250% 01/15/07 0 Polaroid Corp. 11.500% 02/15/06 0 Primus Telecom 3.750% 09/15/10 48 Primus Telecom 8.000% 01/15/14 61 Primus Telecom 12.750% 10/15/09 72 PSINET Inc 10.500% 12/01/06 0 Radnor Holdings 11.000% 03/15/10 17 Railworks Corp 11.500% 04/15/09 1 Read-Rite Corp. 6.500% 09/01/04 18 RJ Tower Corp. 12.000% 06/01/13 54 Startec Global 12.000% 05/15/08 0 Tekni-Plex Inc. 12.750% 06/15/10 70 Tom's Foods Inc 10.500% 11/01/04 9 Toys R Us 7.375% 10/15/18 71 Tribune Co 2.000% 05/15/29 65 Triton Pcs Inc. 9.375% 02/01/11 74 Twin Labs Inc. 10.250% 05/15/06 2 United Air Lines 7.270% 01/30/13 56 United Air Lines 7.870% 01/30/19 57 United Air Lines 9.020% 04/19/12 58 United Air Lines 9.350% 04/07/16 30 United Air Lines 9.560% 10/19/18 58 United Air Lines 10.020% 03/22/14 45 United Air Lines 10.125% 03/22/15 50 United Homes Inc 11.000% 03/15/05 0 US Air Inc. 10.250% 01/15/49 5 US Air Inc. 10.250% 01/15/49 11 US Air Inc. 10.300% 07/15/49 6 US Air Inc. 10.550% 01/15/49 45 US Air Inc. 10.680% 06/27/08 2 US Air Inc. 10.700% 01/01/49 22 US Air Inc. 10.700% 01/15/49 23 US Air Inc. 10.700% 01/15/49 44 US Air Inc. 10.700% 01/15/49 45 US Air Inc. 10.700% 01/15/49 45 US Air Inc. 10.700% 01/15/49 45 US Air Inc. 10.750% 01/15/49 25 US Air Inc. 11.200% 03/19/05 0 US Leasing Intl 6.000% 09/06/11 75 Venture Holdings 9.500% 07/01/05 1 Venture Holdings 11.000% 06/01/07 1 Vesta Insurance Group 8.750% 07/15/25 34 Werner Holdings 10.000% 11/15/07 22 Westpoint Steven 7.875% 06/15/05 0 Westpoint Steven 7.875% 06/15/08 0 Wheeling-Pitt St 6.000% 08/01/10 69 Winsloew Furniture 12.750% 08/15/07 26 Winstar Comm 14.000% 10/15/05 0 World Access Inc. 13.250% 01/15/08 4 Xerox Corp. 0.570% 04/21/18 34 Ziff Davis Media 12.000% 07/15/10 40 ********* 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. Rizande B. Delos Santos, Shimero Jainga, Joel Anthony G. Lopez, Tara Marie A. Martin, Jason A. Nieva, Emi Rose S.R. Parcon, Lucilo M. Pinili, Jr., Marie Therese V. Profetana, Robert Max Quiblat, Christian Q. Salta, Cherry A. Soriano-Baaclo, 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 ***