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/raid1/www/Hosts/bankrupt/TCR_Public/061017.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, October 17, 2006, Vol. 10, No. 247 Headlines AAR CORP: S&P Upgrades Corporate Credit Rating to BB from BB- ACANDS INC: Wants Until February 9 to File Chapter 11 Plan ACE AVIATION: Air Canada Pilots Move for Injunction ACE AVIATION: Files Preliminary Prospectus for Air Canada IPO ACE SECURITIES: Moody's Slices Low-B Ratings of Class M Certs. ADELPHIA COMMS: Gets U.S. Patent Infringement Suit from Rembrandt AIR AMERICA: Case Summary & 20 Largest Unsecured Creditors AIR CANADA: Pilots Move for Injunction Against ACE Aviation AIR CANADA: Files Preliminary Prospectus for IPO AIRNET COMMS: Emerges from Chapter 11 Protection in Florida AK STEEL: Moody's Assigns Loss-Given-Default Rating ALPHA NATURAL: Moody's Assigns Loss-Given-Default Rating ARI NETWORK: Balance Sheet at July 31 Upside-Down by $300,000 ASARCO LLC: Court Sets January 31 as Intercompany Claims Bar Date ASARCO LLC: Court OKs Pact Allowing Seaboard Access to Discovery ATLAS AIR: Distributes 396,625 Shares to Unsecured Creditors ATLAS PIPELINE: Moody's Assigns Loss-Given-Default Ratings BALL CORP: To Close Two North American Manufacturing Facilities BANC OF AMERICA: Moody's Pares Junk Ratings on Class N & O Certs. BASELINE SPORTS: Voluntary Chapter 11 Case Summary BNC MORTGAGE: Moody's Assigns Ba1 Ratings to Class B Certificates BRANDON CREEK: Case Summary & 21 Largest Unsecured Creditors BUFFETS HOLDINGS: S&P Junks Rating on Proposed $330 Million Notes BURGER KING: Moody's Assigns Loss-Given-Default Rating CALIFORNIA STEEL: Moody's Assigns Loss-Given-Default Rating CCM MERGER: Moody's Assigns Loss-Given-Default Rating CHUKCHANSI ECONOMIC: Moody's Assigns Loss-Given-Default Rating COLLINS & AIKMAN: Proposes Severance Package for Laid-Off Workers COLLINS & AIKMAN: Wants Status Conference Held on October 26 COMPLETE RETREATS: Creditors Committee Hires Kramer as Advisor COMPLETE RETREATS: Seeks Court OK on First Insurance Premium Pact CONGOLEUM CORP: Continental Casualty Files Disclosure Statement CONGOLEUM CORP: Says Continental Casualty's Plan is Unconfirmable CONSECO INC: Completes $478 Million Credit Facility Refinancing CONSECO INC: Court of Appeals Says Insurance Pact Not Executory CONSOL ENERGY: Moody's Assigns Loss-Given-Default Rating CONSOLIDATED CONTAINER: Amends 2006 and 2005 Financial Statements CONSOLIDATED CONTAINER: Has $106.7 Mil. Equity Deficit at June 30 CONSTELLATION BRANDS: Restates Certificate of Incorporation CONTINENTAL AIRLINES: Accrues $100 Million Profit Sharing Pool COPANO ENERGY: Inks $100 Mil. Unsecured Term Loan Deal with BofA COPANO ENERGY: Moody's Assigns Loss-Given-Default Ratings C.R. STONE: Judge Hillman Says Settlement Won't Benefit Estate CROWN CASTLE: $5.8 Billion Global Merger Cues S&P's Negative Watch CST INDUSTRIES: Moody's Assigns Loss-Given-Default Rating CULLIGAN INTERNATIONAL: S&P Lifts $325 Mil. Loan's Rating to BB- CWABS ASSET: Moody's Assigns Ba1 Ratings to Class B Certificates DANA CORP: Court Approves Modification of DSI's Scope of Retention DANA CORP: Retiree Committee Brings In Stahl Cowen as Counsel DELTA MILLS: Organizational Meeting Scheduled for 9 a.m. Friday DEUTSCHE ALT-A: Moody's Assigns Ba2 Rating to Class M-8 Certs. DOLLAR GENERAL: Moody's Assigns Loss-Given-Default Rating DRUMMOND COMPANY: Moody's Assigns Loss-Given-Default Rating DYNAMIC TOOLING: Court Confirms Bettcher's Competing Plan EARLE M. JORGENSEN: Moody's Assigns Loss-Given-Default Rating EL PASO: Moody's Assigns Loss-Given-Default Ratings ENERGY PARTNERS: Terminates Merger Agreement with Stone Energy ENERGY PARTNERS: S&P Maintains Watch on B+ Corp. Credit Rating EURAMAX INT'L: Moody's Assigns Loss-Given-Default Rating EUROPEAN MICRO: Files 2001 Financials With Going Concern Opinion FOREST CITY: Fitzsimons Inks 160-Acre Denver Park Development Pact FOSTER WHEELER: Closes New $350 Million Credit Facility FOUNDATION PA: Moody's Assigns Loss-Given-Default Rating FREEPORT-MCMORAN: Moody's Assigns Loss-Given-Default Rating FV STEEL: Dist. Ct. Tells Bankr. Ct. to Estimate Clean-Up Claim GOLDEN NUGGET: Moody's Assigns Loss-Given-Default Rating GS MORTGAGE: Moody's Affirms Junk Rating on $6.6MM Class H Certs. HALO TECHNOLOGY: Mahoney Cohen Raises Going Concern Doubt HARD ROCK: Moody's Assigns Loss-Given-Default Rating HEXION SPECIALTY: Tenders Offer to Holders of its $625 Mil. Notes HOME EQUITY: Moody's Places Ba2 Rating on Class B-3 Certificates HUDBAY MINERALS: Moody's Assigns Loss-Given-Default Rating INFRASOURCE SERVICES: Board Appoints David Helwig as Chairman INSILCO TECHNOLOGIES: Free & Clear Sale Not Entirely Free & Clear INTELSAT BERMUDA: Fitch Junks Rating on $600 Million Sr. Facility ISLE OF CAPRI: To Own 13.8% Interest in Revised Eight Wonder Pact JACK IN THE BOX: Moody's Assigns Loss-Given-Default Rating JLG INDUSTRIES: Sells Business to Oshkosh for $3.2 Billion in Cash KARA HOMES: Organizational Meeting Scheduled for October 23 KINETEK INC: Moody's Junks Rating on $85 Mil. 2nd Lien Term Loan LIBERTY MEDIA: Moody's Affirms Ba2 Corporate Family Rating LINEAR LOGIC: Case Summary & 20 Largest Unsecured Creditors MEDIMEDIA USA: Moody's Junks Rating on $150 Mil. Sr. Sub. Notes MERIDIAN AUTOMOTIVE: Wants Foreign Unit Financing Period Extended MERIDIAN AUTOMOTIVE: Wants to Sell Michigan Property for $2.45 MM MESABA AVIATION: ALPA Balks at Court Ruling on CBA Rejection MOTHERS WORK: Moody's Assigns Loss-Given-Default Rating NATIONAL ENERGY: Chevron Wants Confidentiality Agreement Approved NATIONAL ENERGY: To Appeal Bankr. Court's Ruling on Lehman's Claim NORTH AMERICAN: CEO Neal Kaufman Can Buy 4.2 Million More Shares NUTRO PRODUCTS: Moody's Assigns Loss-Given-Default Ratings O&M STAR: Moody's Places Ba3 Rating on $278 Mil. Debt Facilities OCCAM NETWORKS: Earns $203,000 in Third Quarter Ended September 24 ONEIDA LTD: Panel Selects CCA Strategies as Actuarial Consultants OPEN SOLUTIONS: Inks $1.3 Billion Purchase Deal with Carlyle Group OPEN TEXT: Acquires Hummingbird Ltd. for $489 Million in Cash PA MEADOWS: Moody's Junks Rating on $70 Mil. 2nd Lien Term Loan PARKWAY HOSPITAL: Automatic Stay Doesn't Halt False Claims Suit PARMALAT: Court Permits Citibank to Pursue Actions from October 31 PARMALAT GROUP: Regains Sequestered Newlat and Carnini Units POWER2SHIP INC: Sherb & Co. Raises Going Concern Doubt PROXIM CORP: Files Disclosure Statement in Delaware PROXIM CORP: Court Sets Disclosure Statement Hearing on Nov. 16 QUEEN'S SEAPORT: Trustee Taps Jeffer Mangles as Appellate Counsel QUINTEK TECH: Kabani & Company Raises Going Concern Doubt RADNOR HOLDINGS: Hires Wilmer Cutler as Investigative Counsel RAMBUS INC: Appoints David Shrigley as an Independent Director REFCO INC: Case Summary & 53 Largest Unsecured Creditors RIVERSTONE NETWORKS: Court Okays Alan Miller as Interim President SACRED HEART: Moody's Chips $47.9MM Debt Rating to Ba3 from Ba1 SAINT VINCENTS: Taps Weiser to Conduct Cancer Center Fund Analysis SAINT VINCENTS: Tort Panel to File New Counsel Retention Motion SALOMON BROS: Moody's Pares Junk Rating on $3.4MM Class N Certs. SCHLOTZSKY'S INC: Committee's Suit Against Auditors Survives SEA CONTAINERS: Provides Update on Chapter 11 Filing SECUNDA INTERNATIONAL: S&P Revises B- Ratings' Watch Implication SOUTHERN STAR: Moody's Assigns Loss-Given-Default Ratings SPECTRX INC: June 30 Balance Sheet Upside-Down by $9 Million STANDARD PARKING: Board Allows Share Repurchase of Up to $20 Mil. STAR GAS: Moody's Assigns Loss-Given-Default Ratings STELLAR TECHNOLOGIES: Malone & Bailey Raises Going Concern Doubt STONE ENERGY: Terminates Merger Agreement with Energy Partners STONE ENERGY: S&P Holds B+ Corp. Credit Rating on Negative Watch STRUCTURED ADJUSTABLE: S&P Puts Class M-3 Cert. Rating on Default SUBURBAN PROPANE: Moody's Assigns Loss-Given-Default Ratings SUPERVALU INC: Inks Restricted Stock Unit Award Pact with CEO SURETY CAPITAL: Payne Falkner Raises Going Concern Doubt TRANS ENERGY: Issues 4,247,461 Shares as Debt and Services Payment TRANSCONTINENTAL GAS: Moody's Assigns Loss-Given-Default Ratings UNITEDHEALTH GROUP: CEO Resigns in the Wake of Stock Option Probe WENDY'S INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating WILLIAMS COS: Moody's Assigns Loss-Given-Default Ratings WINN-DIXIE: Court Approves Pact Resolving Anderson News' Claim WINN-DIXIE: Court Approves Rejection of 26 Contracts & Leases WINN-DIXIE: Judge Funk Defers Ruling on Joint Plan * AlixPartners Completes Recapitalization * Large Companies with Insolvent Balance Sheets ********* AAR CORP: S&P Upgrades Corporate Credit Rating to BB from BB- ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Dale, Illinois-based aviation support services provider AAR Corp., including the corporate credit to 'BB' from 'BB-'. The outlook is stable. About $300 million of debt is outstanding (excluding $30 million of nonrecourse debt). "The upgrade is based on improved credit protection measures, benefiting from generally better industry environment, expanding scope of services, and increasing operating efficiency," said Standard & Poor's credit analyst Roman Szuper. The global airline industry continues to recover in 2006, spurred by a healthy economy and growing air traffic, although high oil prices have constrained gains at many air carriers. Profit increases in 2005 and 2006 and conversion of debt to equity strengthened credit protection measures to levels overall appropriate for the rating. ACANDS INC: Wants Until February 9 to File Chapter 11 Plan ---------------------------------------------------------- ACandS Inc. asks the U.S. Bankruptcy Court for the District of Delaware to further extend until Feb. 9, 2007, the period within which it has the exclusive right to file a chapter 11 plan. The Debtor also wants its exclusive period to solicit acceptances of that plan extended to March 19, 2007. The Court previously extended its plan filing period to Oct. 12, 2006. To date, the Debtor, together with the Official Committee of Asbestos Personal Injury Claimants and Lawrence Fitzpatrick as legal representative of the future asbestos claimants, have further discussed how to advance the Debtor's goal of reaching consensus on the terms of a new Plan. The Debtor believes that the extension will be beneficial to the Debtor's estate and its creditors, and will result in more efficient use of estate assets and resources by maximizing the Debtor's chances for obtaining a negotiated and consensual plan. Headquartered in Lancaster, Pennsylvania, ACandS, Inc., was an insulation contracting company, primarily engaged in the installation of thermal and mechanical insulation. In later years, the Debtor also performed a significant amount of asbestos abatement and other environmental remediation work. The Company filed for chapter 11 protection on Sept. 16, 2002 (Bankr. Del. Case No. 02-12687). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, P.C., represents the Debtor in its restructuring efforts. Kathleen Campbell Davis, Esq., and Marla Rosoff Eskin, Esq., at Campbell & Levine, LLC, represent the Official Committee of Asbestos Personal Injury Claimants. When the Company filed for protection from its creditors, it estimated debts and assets of over $100 million. Chapter 11 Plan Update The Hon. Judith K. Fitzgerald approved the adequacy of the Debtor's Amended Disclosure Statement explaining their proposed Plan of Reorganization on Oct. 3, 2003. On Jan. 26, 2004, Judge Fitzgerald entered Proposed Findings of Fact and Conclusions of Law Re Chapter 11 Plan Confirmation (Doc. 979), recommending that the U.S. District Court deny confirmation of the Debtor's Plan. On Feb. 5, 2004, the Debtor and the Creditors Committee jointly filed with the U.S. District Court for the District of Delaware an objection to the Bankruptcy Court's Proposed Findings. In that filing, the Debtor and the Committee asked the District Court to reject the Bankruptcy Court's Findings and Conclusions and confirm the proposed chapter 11 plan. ACE AVIATION: Air Canada Pilots Move for Injunction --------------------------------------------------- Air Canada's pilots moved for an injunction with the Ontario Superior Court to prevent ACE Aviation Holdings Inc. from distributing up to $2 billion to shareholders until the court has had sufficient time to hear the lawsuit filed against the company on Oct. 4. "We are proceeding as planned," says Capt. Andy Wilson, president of the Air Canada Pilots Association. "Our case is strong and we are confident that the courts in Ontario will see the $2-billion distribution by ACE as unfairly disregarding the interests of creditors." The company has until Friday, Oct. 20, to file materials with the Ontario Superior Court of Justice responding to ACPA's request for an injunction. Capt. Wilson says last week's Quebec court proceeding on ACE's corporate arrangement was an internal mechanical step to simply allow ACE's directors to make multiple distributions without having to seek shareholder approval each time. The Quebec court did not assess whether or not the size of the distribution would have any affect on the economic future of ACE or any of its subsidiaries. The court action filed against ACE by Air Canada's pilots under the CBCA, commonly known as the 'oppression remedy,' states that the proposed return of up to $2-billion to shareholders is oppressive and unfairly disregards the interests of Air Canada's creditors. Air Canada's pilots are creditors for the about $1-billion in pension obligations that remain outstanding following the company's emergence from insolvency in 2004 as well as for other continuing obligations. "Air Canada has shown it can prosper. But we are concerned that if this distribution goes ahead, the company would then be on very tenuous financial footing and unable to weather a downturn in the economy," Capt. Wilson says. ACPA is the largest professional pilot group in Canada, representing 3,100 pilots who operate Air Canada's mainline fleet. ACE Aviation Holdings Inc. -- http://www.aceaviation.com/-- is the parent holding company of Air Canada, Aeroplan, Jazz, Air Canada Technical Services, Air Canada Vacations, Air Canada Cargo, and Air Canada Ground Handling Services. * * * As reported in the Troubled Company Reporter on April 24, 2006, Standard & Poor's Ratings Services raised the long-term corporate credit rating on ACE Aviation Holdings Inc. to 'B+' from 'B', while affirming the 'B' long-term corporate credit rating on its wholly owned subsidiary, Air Canada. The outlook on both entities remains stable. ACE AVIATION: Files Preliminary Prospectus for Air Canada IPO ------------------------------------------------------------- ACE Aviation Holdings Inc. and Air Canada disclosed Monday that a preliminary prospectus will be filed with all securities regulatory authorities throughout Canada qualifying the offering of Class A variable voting shares and Class B voting shares in the capital of Air Canada. The offering will be comprised of a treasury offering by Air Canada for gross proceeds of $200 million and a secondary offering by ACE of Air Canada shares for an undetermined offering size. ACE is Air Canada's parent company and current sole shareholder. ACE will retain control of Air Canada through a majority interest. Air Canada will use its proceeds from the treasury offering for general corporate purposes, including the funding of its fleet renewal program. Air Canada will not receive any of the proceeds from the secondary offering of Air Canada shares by ACE or from the exercise of the underwriters' over-allotment option, if any. The syndicate of dealers is being co-led by RBC Dominion Securities Inc., Citigroup Global Markets Canada Inc. and TD Securities Inc. and also includes BMO Nesbitt Burns Inc. and CIBC World Markets Inc. "Following on our announcement in August, the launch of Air Canada's initial public offering represents a major milestone in ACE's strategy of maximizing shareholder value by surfacing the underlying value of its subsidiaries," said Robert Milton, Chairman, President and CEO of ACE. "Since Aeroplan and Jazz became publicly-traded companies in June 2005 and February 2006, both businesses have developed well as stand-alone companies with outside investors and delivered strong financial results. We expect Air Canada to benefit in a similar way as we move ahead." Following the completion of the offering and the pre-closing transactions referred to in the preliminary prospectus, management expects that Air Canada will have cash and cash equivalents in excess of $2 billion. In addition, Air Canada will also have access to a $400 million senior secured revolving credit facility pursuant to an amended and restated credit agreement entered into with a syndicate of lenders with Bank of Montreal acting as the administrative agent. The facility will be used by Air Canada for working capital and general corporate purposes and will become effective upon the satisfaction of certain customary conditions, including the completion of the offering. ACE and Air Canada also reported that, in advance of the initial public offering of Air Canada, management of Air Canada and Aeroplan Limited Partnership, with the assistance of independent actuaries, have re-estimated the remaining number of Aeroplan miles expected to be redeemed pursuant to accumulations up to Dec. 31, 2001 from 103 billion miles to 112 billion miles. The Aeroplan program was operated by Air Canada until its transfer to Aeroplan Limited Partnership on January 1, 2002. By agreement with Aeroplan Limited Partnership, Air Canada has assumed responsibility for the redemption of up to 112 billion miles and, as a result, will be recording a special non-cash charge of $102 million in the third quarter of 2006. Aeroplan Limited Partnership has assumed responsibility for any redemptions in excess of 112 billion miles. ACE Aviation Holdings Inc. -- http://www.aceaviation.com/-- is the parent holding company of Air Canada, Aeroplan, Jazz, Air Canada Technical Services, Air Canada Vacations, Air Canada Cargo, and Air Canada Ground Handling Services. * * * As reported in the Troubled Company Reporter on April 24, 2006, Standard & Poor's Ratings Services raised the long-term corporate credit rating on ACE Aviation Holdings Inc. to 'B+' from 'B', while affirming the 'B' long-term corporate credit rating on its wholly owned subsidiary, Air Canada. The outlook on both entities remains stable. ACE SECURITIES: Moody's Slices Low-B Ratings of Class M Certs. -------------------------------------------------------------- Moody's Investors Service downgraded two tranches of securitized debt issued by Ace Securities. The collateral in the deal being downgraded consists of fixed-rate and adjustable-rate, subprime residential mortgage loans. This action is being taken based on high severities on liquidated loans as well as a constant deterioration of credit enhancement, even though performance triggers are passing. These are the rating actions: * Issuer: Ace Securities Corp. Home Equity Loan Trust Series 2002-HE1 -- Class M-4, Downgraded to Ca, previously B3. -- Class M-3, Downgraded to B2, previously B1. ADELPHIA COMMS: Gets U.S. Patent Infringement Suit from Rembrandt ----------------------------------------------------------------- Rembrandt Technologies, LP, charges Adelphia Communications Corporation; Century-TCI California, LP; Century-TCI California Communications, LP; Century-TCI Distribution Company, LLC; Century-TCI Holdings, LLC; Parnassos, LP; Parnassos Communications, LP; Parnassos Distribution Company I, LLC; Parnassos Distribution Company II, LLC; Parnassos Holdings, LLC; and Western NY Cablevision, LP, of postpetition infringement of United States Patent Nos. 5,710,761; 5,778,234; 6,131,159 and 6,950,444 under 35 U.S.C. Section 271. Rembrandt states that the infringement occurred after the date of filing for chapter 11 protection of ACOM, et al. -- either on June 25, 2002, or Oct. 6, 2005, as applicable -- and before the acquisition by Time Warner Cable NY, LLC, and Comcast Corporation, on July 31, 2006. Rembrandt is the owner of all right, title and interest, including the right to sue, enforce and recover damages for all infringements, in the Patents, which were duly and legally issued by the United States Patent and Trademark Office on these dates, after full and fair examination: U.S. Patent No. Date Issued --------------- ----------- 5,710,761 Jan. 20, 1998 5,778,234 July 7, 1998 6,131,159 Oct. 10, 2000 6,950,444 Sept. 27, 2005 Rembrandt relates that during the postpetition period, ACOM, et al., have infringed the Patents by practicing or causing others to practice the inventions claimed in each Patents, in the Southern District of New York and otherwise within the United States. Rembrandt cites as an example ACOM, et al.'s act of providing high-speed cable modem Internet products and services to subscribers. Vineet Bhatia, Esq., at Susman Godfrey L.L.P., in New York, asserts that Rembrandt suffered substantial damage due to ACOM, et al.'s infringement. The infringement was willful, entitling Rembrandt to increased damages and reasonable attorneys' fees pursuant to 35 U.S.C. Sections 284 and 285. Accordingly, Rembrandt asks the U.S. Bankruptcy Court for the Southern District of New York to: (1) determine that ACOM, et al., have infringed the patents- in-suit; (2) award it: * damages for the infringement; * increased damages pursuant to 35 U.S.C. Section 284; and * all costs of the adversary proceeding, including attorneys' fees and interest. Based in Coudersport, Pa., Adelphia Communications Corporation (OTC: ADELQ) -- http://www.adelphia.com/-- is the fifth-largest cable television company in the country. Adelphia serves customers in 30 states and Puerto Rico, and offers analog and digital video services, high-speed Internet access and other advanced services over its broadband networks. The Company and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. PricewaterhouseCoopers serves as the Debtors' financial advisor. Kasowitz, Benson, Torres & Friedman, LLP, and Klee, Tuchin, Bogdanoff & Stern LLP represent the Official Committee of Unsecured Creditors. Adelphia Cablevision Associates of Radnor, L.P., and 20 of its affiliates, collectively known as Rigas Manged Entities, are entities that were previously held or controlled by members of the Rigas family. In March 2006, the rights and titles to these entities were transferred to certain subsidiaries of Adelphia Cablevision, LLC. The RME Debtors filed for chapter 11 protection on March 31, 2006 (Bankr. S.D.N.Y. Case Nos. 06-10622 through 06-10642). Their cases are jointly administered under Adelphia Communications and its debtor-affiliates chapter 11 cases. (Adelphia Bankruptcy News, Issue No. 149; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). AIR AMERICA: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Piquant LLC dba Air America Radio 641 Sixth Avenue, 4th Floor New York, NY 10011 Bankruptcy Case No.: 06-12423 Type of Business: The Debtor is a full-service radio network and program syndication service in the United States. See http://www.airamerica.com/ Chapter 11 Petition Date: October 13, 2006 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtor's Counsel: Tracy L. Klestadt, Esq. Klestadt & Winters, LLP 292 Madison Avenue, 17th Floor New York, NY 10017 Tel: (212) 972-3000 Fax: (212) 972-2245 Total Assets: $4,331,265 Total Debts: $20,266,056 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Citibank N.A. $2,500,000 153 East 53rd Street New York, NY 10043 Clear Channel Communications $558,333 KTLK 1150-AM 3400 W. Olive Ave. Suite 550 Burbank, CA 91505 Multicultural Radio $550,245 Broadcasting, Inc. 449 Broadway New York, NY 10013 Diamond Broadcasting $500,000 a California Corp. 1017 Front St. 2nd Flloor Sacramento, CA 95814 Alan Franken, Inc. Wage, severance, $360,750 573 S. 10th Street and/or vacation Minneapolis, MN 55404 claim ICBC Broadcast Holdings Inc. $293,386 3 Park Avenue 41st Floor New York, NY 10016 Gary Krantz Wage, severance, $245,641 48 Dimmig Road and/or vacation Upper Saddle River, NJ 07458 claim Jackson Hole Group Wage, severance, $220,485 100 Spear Street, Suite 935 and/or vacation San Francisco, CA 94105 claim Arbitron Inc. $161,345 2538 Collections Center Drive Chicago, IL 60693 Spero Media Inc. $150,350 301 East 22nd St. Suite 15F New York, NY 10010 Danny Goldberg Wage, severance, $133,333 121 Washington Place and/or vacation New York, NY 10014 claim Mike Malloy Wage, severance, $114,679 4640 Cedar Keys Lane and/or vacation Stone Mountain, GA 30083 claim Envision Radio Network, Inc. $100,000 23425 Commerce Park Cleveland, OH 44122 Real Networks $85,100 P.O. Box 60000 San Francisco, CA 94160 Billy Kimball Wage, severance, $84,893 331 2nd Avenue South and/or vacation Suite 703 claim Minneapolis, MN 55401 Jones Media America, Inc. $62,283 Lockbox #3796, P.O. Box 8500 Attn: Finance Dept Philadelphia, PA 19178 Sprint $52,810 P.O. Box 88026 Chicago, IL 60680 Douglas Kreeger Loan $50,000 665 Milton Road Rye, NY 10580 Douglas Durst Loan $50,000 Durst Organization 1155 Sixth Avenue New York, NY 10036 Cornick, Garber & Sandler, $45,654 LLP 630 Third Avenue New York, NY 10017 AIR CANADA: Pilots Move for Injunction Against ACE Aviation ----------------------------------------------------------- Air Canada's pilots moved for an injunction with the Ontario Superior Court to prevent ACE Aviation Holdings Inc. from distributing up to $2-billion to shareholders until the court has had sufficient time to hear the lawsuit filed against the company on Oct. 4. "We are proceeding as planned," says Capt. Andy Wilson, president of the Air Canada Pilots Association. "Our case is strong and we are confident that the courts in Ontario will see the $2-billion distribution by ACE as unfairly disregarding the interests of creditors." The company has until Friday, Oct. 20, to file materials with the Ontario Superior Court of Justice responding to ACPA's request for an injunction. Capt. Wilson says last week's Quebec court proceeding on ACE's corporate arrangement was an internal mechanical step to simply allow ACE's directors to make multiple distributions without having to seek shareholder approval each time. The Quebec court did not assess whether or not the size of the distribution would have any affect on the economic future of ACE or any of its subsidiaries. The court action filed against ACE by Air Canada's pilots under the CBCA, commonly known as the 'oppression remedy,' states that the proposed return of up to $2-billion to shareholders is oppressive and unfairly disregards the interests of Air Canada's creditors. Air Canada's pilots are creditors for the about $1-billion in pension obligations that remain outstanding following the company's emergence from insolvency in 2004 as well as for other continuing obligations. "Air Canada has shown it can prosper. But we are concerned that if this distribution goes ahead, the company would then be on very tenuous financial footing and unable to weather a downturn in the economy," Capt. Wilson says. ACPA is the largest professional pilot group in Canada, representing 3,100 pilots who operate Air Canada's mainline fleet. About Air Canada Air Canada -- http://www.aircanada.com/-- together with Air Canada Jazz and other business units of parent company ACE Aviation Holdings Inc., provides scheduled and charter air transportation for passengers and cargo to more than 150 destinations, vacation packages to over 90 destinations, as well as maintenance, ground handling and training services to other airlines. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On Sept. 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising C$1.1 billion of new equity capital. Canada's flag carrier is recognized as a leader in the global air transportation market by pursuing a strategy based on value-added customer service, technical excellence and passenger safety. * * * As reported in the Troubled Company Reporter on April 24, 2006, Standard & Poor's Ratings Services raised the long-term corporate credit rating on ACE Aviation Holdings Inc. to 'B+' from 'B', while affirming the 'B' long-term corporate credit rating on its wholly owned subsidiary, Air Canada. The outlook on both entities remains stable. AIR CANADA: Files Preliminary Prospectus for IPO ------------------------------------------------ ACE Aviation Holdings Inc. and Air Canada disclosed Monday that a preliminary prospectus will be filed with all securities regulatory authorities throughout Canada qualifying the offering of Class A variable voting shares and Class B voting shares in the capital of Air Canada. The offering will be comprised of a treasury offering by Air Canada for gross proceeds of $200 million and a secondary offering by ACE of Air Canada shares for an undetermined offering size. ACE is Air Canada's parent company and current sole shareholder. ACE will retain control of Air Canada through a majority interest. Air Canada will use its proceeds from the treasury offering for general corporate purposes, including the funding of its fleet renewal program. Air Canada will not receive any of the proceeds from the secondary offering of Air Canada shares by ACE or from the exercise of the underwriters' over-allotment option, if any. The syndicate of dealers is being co-led by RBC Dominion Securities Inc., Citigroup Global Markets Canada Inc. and TD Securities Inc. and also includes BMO Nesbitt Burns Inc. and CIBC World Markets Inc. "Following on our announcement in August, the launch of Air Canada's initial public offering represents a major milestone in ACE's strategy of maximizing shareholder value by surfacing the underlying value of its subsidiaries," said Robert Milton, Chairman, President and CEO of ACE. "Since Aeroplan and Jazz became publicly-traded companies in June 2005 and February 2006, both businesses have developed well as stand-alone companies with outside investors and delivered strong financial results. We expect Air Canada to benefit in a similar way as we move ahead." Following the completion of the offering and the pre-closing transactions referred to in the preliminary prospectus, management expects that Air Canada will have cash and cash equivalents in excess of $2 billion. In addition, Air Canada will also have access to a $400 million senior secured revolving credit facility pursuant to an amended and restated credit agreement entered into with a syndicate of lenders with Bank of Montreal acting as the administrative agent. The facility will be used by Air Canada for working capital and general corporate purposes and will become effective upon the satisfaction of certain customary conditions, including the completion of the offering. ACE and Air Canada also reported that, in advance of the initial public offering of Air Canada, management of Air Canada and Aeroplan Limited Partnership, with the assistance of independent actuaries, have re-estimated the remaining number of Aeroplan miles expected to be redeemed pursuant to accumulations up to Dec. 31, 2001 from 103 billion miles to 112 billion miles. The Aeroplan program was operated by Air Canada until its transfer to Aeroplan Limited Partnership on January 1, 2002. By agreement with Aeroplan Limited Partnership, Air Canada has assumed responsibility for the redemption of up to 112 billion miles and, as a result, will be recording a special non-cash charge of $102 million in the third quarter of 2006. Aeroplan Limited Partnership has assumed responsibility for any redemptions in excess of 112 billion miles. About Air Canada Air Canada -- http://www.aircanada.com/-- together with Air Canada Jazz and other business units of parent company ACE Aviation Holdings Inc., provides scheduled and charter air transportation for passengers and cargo to more than 150 destinations, vacation packages to over 90 destinations, as well as maintenance, ground handling and training services to other airlines. Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher, serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from their creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On Sept. 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising C$1.1 billion of new equity capital. Canada's flag carrier is recognized as a leader in the global air transportation market by pursuing a strategy based on value-added customer service, technical excellence and passenger safety. * * * As reported in the Troubled Company Reporter on April 24, 2006, Standard & Poor's Ratings Services raised the long-term corporate credit rating on ACE Aviation Holdings Inc. to 'B+' from 'B', while affirming the 'B' long-term corporate credit rating on its wholly owned subsidiary, Air Canada. The outlook on both entities remains stable. AIRNET COMMS: Emerges from Chapter 11 Protection in Florida ----------------------------------------------------------- The plan of reorganization of AirNet Communications Corporation was approved by the U.S. Bankruptcy Court for the Middle District of Florida on Oct. 2, 2006, allowing AirNet to emerge from Chapter 11. In addition, TECORE Wireless Systems and AirNet Communications also reported that it completed its acquisition of AirNet by acquiring all of re-organized AirNet's new stock; and provided exit financing to further strengthen AirNet's balance sheet. AirNet's operation will remain in Melbourne, Florida. "We are extremely pleased to have concluded our reorganization while simultaneously retaining our valuable customers and our core technical personnel and assets," said Glenn Ehley, AirNet's emeritus CEO. The plan approved by the court maximizes creditor recovery and affords the company a new opportunity to compete in the wireless telecom environment. As long time strategic partners, the acquisition of AirNet by TECORE enhances the existing relationship by building on the best of both companies to form an advanced, wireless systems provider. "TECORE's network expertise coupled with AirNet's advanced radio technologies make this combination stronger than just the sum of the parts," said Jay Salkini, President and CEO of TECORE. "We are now not only a full-line supplier, but AirNet's latest IP- based product offerings strategically coordinated with TECORE's SoftMSC(R) provide the most advanced network architectures available. Focusing our specific strengths will allow us to penetrate new markets while continuing to support and expand our existing customers' networks." Headquartered in Melbourne, Florida, AirNet Communications Corporation -- http://www.aircom.com/-- designs, manufactures, and markets wireless infrastructure products and offers infrastructure solutions for commercial GSM customers, and government, defense, homeland security based agencies. The Debtor filed for chapter 11 protection on May 22, 2006 (Bankr. M.D. Fla. Case No. 06-01171). R. Scott Shuker, Esq., at Gronek & Latham, LLP, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed total assets of $15,701,881 and total debts of $21,615,346. AK STEEL: Moody's Assigns Loss-Given-Default Rating --------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its B1 Corporate Family Rating for AK Steel Corporation. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $450 Million 7.875% Senior Unsecured Notes due 2009 B1 B2 LGD4 59% $550 Million 7.75% Senior Unsecured Notes due 2012 B1 B2 LGD4 59% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Middletown, Ohio-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. ALPHA NATURAL: Moody's Assigns Loss-Given-Default Rating -------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its B1 Corporate Family Rating for Alpha Natural Resources LLC. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $249 Million Gtd. Senior Secured Term Loan B due 2012 B1 B1 LGD3 42% $275 Million Gtd. Senior Secured Revolving Facility due 2010 B1 B1 LGD3 42% $175 Million 10% Gtd. Senior Unsecured Notes due 2012 B2 B3 LGD5 89% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Abingdon, Virginia, Alpha Natural Resources, LLC, is engaged in the mining and marketing of steam and metallurgical coal. ARI NETWORK: Balance Sheet at July 31 Upside-Down by $300,000 ------------------------------------------------------------- ARI Network Services Inc. reported increased revenues and net income for the fiscal year ended July 31, 2006. Full Year Fiscal 2006 Highlights -- Revenues were $14 million for fiscal 2006, compared to revenues of $13.7 million in fiscal 2005. -- Operating income was $2.07 million for fiscal 2006, compared to operating income of $2.15 million in the prior fiscal year. -- Net income was $3.2 million for fiscal 2006, compared to net income of $2.8 million in fiscal 2005. Fourth Quarter Fiscal 2006 Highlights -- Revenues were $3.4 million for the fourth quarter of fiscal 2006, compared to revenues of $3.6 million for the same period in the prior year. -- Operating income was $540,000 for the fourth quarter of fiscal 2006, compared to operating income of $524,000 for the fourth quarter of fiscal 2005. -- Net income was $725,000 for the fourth quarter of fiscal 2006, compared to net income of $1.4 million for the comparable prior period. The Company's balance sheet at July 31, 2006 showed total assets of $9.4 million and total liabilities of $9.7 million, resulting in a total shareholders' deficit of $300,000. Brian E. Dearing, chairman and chief executive officer, said the fourth quarter results were affected by a number of one-time events including revenue reversals, recognition of deferred tax assets based on updated forecasts of the Company's U.S. operations, recognition of a gain related to a vendor contract settlement, and reversal of accrued long-term bonuses related to the departure of an executive. "Excluding these events, our results for the fourth quarter were basically flat," Mr. Dearing said. ARI Network Services Inc. (OTCBB:ARIS) builds and supports a full suite of multi-media electronic catalog publishing and viewing software for the Web or CD and provides expert catalog publishing and consulting services to 71 equipment manufacturers in the U.S. and Europe and approximately 29,000 dealers and distributors in 89 countries in a dozen segments of the equipment market including outdoor power, power sports, ag equipment, recreation vehicle, floor maintenance, auto and truck parts aftermarket, marine and construction. ASARCO LLC: Court Sets January 31 as Intercompany Claims Bar Date ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi established Aug. 1, 2006, as the general bar date, and Sept. 30, 2006, as the Asbestos Bar Date in ASARCO LLC and its debtor-affiliates' Chapter 11 cases. Each of the Debtors may have claims against each other. The Debtors and their professionals are still in the process of reviewing and identifying all Intercompany Claims. Thus, they need more time to identify and accurately report the Intercompany Claims. Accordingly, in a Court-approved stipulation, the Debtors, the Official Committee of Unsecured Creditors for ASARCO LLC and the Asbestos Subsidiary Debtors, and Robert C. Pate, as future claims representative, agree that: (a) Pending further Court order, the Bar Dates are extended solely with respect to Intercompany Claims; (b) The Bar Dates applicable to claims asserted by any party other than one of the Debtors are not modified and remains in full force; (c) Upon completion of the Intercompany Claims' investigation, the Debtors and the ASARCO Committee may file a supplemental bar date notice with the Court establishing a new bar date with respect to the Intercompany Claims, provided that the notice must be filed at least 30 days before that Intercompany Claims Bar Date; (d) The complaints filed by the Asbestos Committee and the FCR in the Derivative Asbestos Claims Adversary Proceeding constitute a proof of claim by the Asbestos Debtors against ASARCO. The amounts asserted in the Asbestos Debtors' Proofs of Claim will be determined by the Court pursuant to the Asbestos Claims Estimation Motion, which amount will be incorporated by ASARCO in its plan of reorganization; and (e) Any other Intercompany Claims asserted by the Asbestos Debtors will be filed by the Asbestos Committee by Jan. 31, 2007. The Asbestos Subsidiary Debtors are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor's five affiliates filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ASARCO LLC: Court OKs Pact Allowing Seaboard Access to Discovery ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi approved a stipulation between ASARCO LLC and Seaboard Surety Company. As reported in the Troubled Company Reporter on Sept. 14, 2006, Seaboard Surety Company is a plaintiff in a lawsuit against Grupo Mexico, S.A. de C.V., pending in the United States District Court for the District of Arizona. The Lawsuit relates to the enforcement and scope of a written guaranty given by Grupo Mexico in connection with certain surety bonds Seaboard issued on ASARCO LLC's behalf. ASARCO is not a party to the Arizona Action. In connection with the Arizona Action, Seaboard served a third- party subpoena duces tecum on ASARCO in July 2006. ASARCO did not immediately comply with the Subpoena, asserting that Seaboard's discovery request against it was subject to the automatic stay. Seaboard disputed that third-party discovery and the Subpoena it issued to ASARCO is not subject to the automatic stay. The parties have resolved their dispute and ASARCO has agreed to provide discovery to Seaboard. Accordingly, the parties stipulate that: (a) the automatic stay is modified to permit Seaboard access to third-party discovery from ASARCO; (c) ASARCO will promptly produce certain documents specified by Seaboard as being a subset of the materials requested in the Subpoena; and (d) ASARCO will produce other documents responsive to the Subpoena that it locates with the use of reasonable diligence no later than Sept. 30, 2006. About ASARCO LLC Based in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor's five affiliates filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos- driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ATLAS AIR: Distributes 396,625 Shares to Unsecured Creditors ------------------------------------------------------------ Atlas Air Worldwide Holdings Inc. distributed 396,625 shares of the Company's new common stock to holders of allowed general unsecured claims against the Company and certain of its subsidiaries pursuant to the terms of a joint plan of reorganization under which the Company and its subsidiaries emerged from Chapter 11 bankruptcy protection on July 27, 2004. The current issuance of shares under the Plan follows an initial pro rata distribution of 16,095,776 shares of new common stock of the Company to holders of allowed general unsecured claims in July 2005 and subsequent interim distributions to eligible claimholders of 40,940 shares in October 2005, 7,493 shares in January 2006, and 40,824 shares in April 2006. Distributions from the remaining 621,008 shares of new common stock reserved for issuance to holders of allowed general unsecured claims by the Plan will take place on a periodic basis. Altogether, the Plan allocates a total of 17,202,666 shares of the Company's new common stock to holders of allowed general unsecured claims against the bankruptcy estates of the Company, Atlas Air, Inc., Airline Acquisition Corp I, and Atlas Worldwide Aviation Logistics, Inc. Under the Plan, these shares will be issued to holders of allowed claims in the same proportion as each holder's allowed claim bears to the total amount of allowed claims. The exact number of shares that each claimholder ultimately receives pursuant to the Plan is dependent on the final total of allowed claims and other factors, such as unclaimed distributions and fractional share interests. Should any distribution of new common stock result in a claimholder being entitled to the receipt of a fractional share, the Company's disbursing agent will retain the fractional share until a distribution would result in a whole number of shares being distributed to the claimholder on the next applicable distribution date. For purposes of a final share distribution under the Plan, fractions of new common stock will not be issued. Instead, fractions of new common stock will be rounded up or down to the nearest whole number, with fractions equal to or less than 0.5 of a share rounded down. Any remaining undistributed shares on the final distribution date will be released from the Company's new common stock reserve and become authorized, unissued common stock of the Company. As of Sept. 30, 2006, $607 million of general unsecured claims against the Company and the named subsidiaries had been allowed and claims of $22.7 million remained in dispute. The latter figure, however, has been and continues to be reduced by virtue of the ongoing claims reconciliation process. Following the current distribution of shares to holders of allowed unsecured claims, the remaining balance of shares of new common stock authorized for issuance under the Plan will be reserved for issuance to holders of disputed general unsecured claims against the bankruptcy estates of AAWW and the named subsidiaries, in the event such disputed claims are subsequently determined to be allowed claims. To the extent that any of the disputed claims become disallowed claims, the shares of new common stock reserved for issuance to the holders of the disputed claims will be distributed pro rata to holders of allowed general unsecured claims previously receiving shares of new common stock. Including the current distribution, the Company will have a total of approximately 20.5 million shares of common stock outstanding. About Atlas Air Worldwide Holdings Based in Purchase, New York, Atlas Air Worldwide Holdings, Inc. (Nasdaq: AAWW) -- http://www.atlasair.com/-- is an all-cargo carrier which operates fleets of Boeing 747 freighters. The Company filed for chapter 11 protection (Bankr. S.D. Fla. Case No. 04-10794) on Jan. 30, 2004. The Honorable Robert A. Mark presided over Atlas' restructuring proceeding. Jordi Guso, Esq., at Berger Singerman, represents the debtor. Atlas Air emerged from bankruptcy on July 27, 2004. When the Company filed for bankruptcy, it listed $1,451,919,000 in assets and $1,425,156,000 in debts. ATLAS PIPELINE: Moody's Assigns Loss-Given-Default Ratings ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its B1 corporate family rating on Atlas Pipeline Partners, L.P. At the same time, the rating agency downgraded its B1 probability- of-default rating on the Company's 8.125% senior unsecured Global Notes due 2015 to B2, and attached an LGD5 rating on these notes, suggesting noteholders will experience a 71% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Atlas America, Inc. (NASDAQ:ATLS) -- http://www.atlasamerica.com/ -- the parent company of Atlas Pipeline Partners, L.P.'s general partner and owner of 1,641,026 units of limited partner interest of APL, is an energy company engaged primarily in the development and production of natural gas in the Appalachian Basin for its own account and for its investors through the offering of tax advantaged investment programs. BALL CORP: To Close Two North American Manufacturing Facilities --------------------------------------------------------------- Ball Corporation will close two manufacturing facilities in North America by the end of the year. The closure is part of the Company's realignment of its Metal Food & Household Products and Americas segment following its acquisition of the U.S. Can Corporation. As reported in the Troubled Company Reporter on March 29, 2006 Ball Corporation completed its acquisition of the U.S. and Argentinean operations of U.S. Can Corporation, adding to Ball's portfolio of packaging products and making Ball the largest supplier in the U.S. of aerosol cans, primarily for food and household products. The Company will close a leased facility in Alliance, Ohio, one of 10 manufacturing locations in the U.S. acquired from U.S. Can Equipment in the facility will be relocated to its other plants in Ohio and Georgia. The Company's Canadian subsidiary will close a metal food can manufacturing plant in Burlington, Ontario. Some equipment from the plant will be relocated to its other facilities and the rest will be sold or scrapped. The closure of the Alliance plant will be treated as an opening balance sheet item related to the U.S. Can acquisition. The Company also disclosed that it will record a fourth quarter after- tax charge of approximately $25 million related to equipment disposal and the Burlington closure. John A. Friedery, senior vice president and chief operating officer, Ball Packaging Products, Americas, said the Alliance and Burlington closure costs will be cash flow neutral after tax benefits and proceeds from the sale of fixed assets and will reduce operating costs by $8 million annually commencing in 2007. "The opportunity to consolidate manufacturing operations into fewer facilities is critical to us realizing the synergies we knew were achievable following the acquisition," Mr. Friedery said. "We are carefully studying our entire manufacturing structure and expect there will be other opportunities to improve efficiencies by further realigning production capacities. We anticipate work on our realignment plan to be completed during the fourth quarter, with implementation continuing in 2007." Mr. Friedery said employees at the facilities being closed will be paid severance and offered transition services. The Alliance plant has approximately 40 employees and the Burlington plant has approximately 300 employees. Headquartered in Broomfield, Colorado, Ball Corporation (NYSE:BLL) -- http://www.ball.com/-- is a supplier of high-quality metal and plastic packaging products and owns Ball Aerospace & Technologies Corp., which develops sensors, spacecraft, systems and components for government and commercial customers. Ball reported 2005 sales of $5.7 billion and the company employs 13,100 people worldwide. * * * Moody's Investors Service assigned ratings to Ball Corp's $500 million senior secured term loan D, rated Ba1, and $450 million senior unsecured notes due 2016-2018, rated Ba2. It also affirmed existing ratings, which include Ba1 Ratings on $1.475 billion senior secured credit facilities and $550 million senior unsecured notes due Dec. 12, 2012. The ratings outlook is stable. Fitch affirmed Ball Corp.'s 'BB' issuer default rating, 'BB+' senior secured credit facilities, and 'BB' senior unsecured notes. Standard & Poor's Ratings Services also affirmed its 'BB+' corporate credit rating on Ball Corp. All ratings were placed in March 2006. BANC OF AMERICA: Moody's Pares Junk Ratings on Class N & O Certs. ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of two classes, affirmed the ratings of 12 classes and downgraded the ratings of two classes of Banc of America Commercial Mortgage Inc., Commercial Mortgage Pass-Through Certificates, Series 2001-1: -- Class A-2, $505,200,871, Fixed, affirmed at Aaa -- Class A-2F, $47,858,063, Floating, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $35,576,642, Fixed, affirmed at Aaa -- Class C, $21,345,985, Fixed, upgraded to Aa2 from Aa3 -- Class D, $18,974,209, Fixed, upgraded to A1 from A2 -- Class E, $9,487,105, Fixed, affirmed at A3 -- Class F, $9,487,105, Fixed, affirmed at Baa1 -- Class G, $18,974,209 Fixed, affirmed at Baa2 -- Class H, $14,230,657, Fixed, affirmed at Baa3 -- Class J, $13,281,946, Fixed, affirmed at Ba1 -- Class K, $23,480,584, Fixed, affirmed at B1 -- Class L, $2,134,598, Fixed, affirmed at B2 -- Class M, $5,538,842, Fixed, affirmed at B3 -- Class N, $6,788,329, Fixed, downgraded to Caa3 from Caa2 -- Class O, $5,883,218, Fixed, downgraded to C from Ca As of the Sept. 15, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 21.6% to $743.6 million from $948.1 million at securitization. The Certificates are collateralized by 154 mortgage loans ranging from less than 1% to 11.7% of the pool, with the top 10 loans representing 35% of the pool. The largest loan in the pool is shadow rated investment grade. Eighteen loans, representing 11.7% of the pool, have defeased and are secured by U.S. Government securities. Sixteen loans have been liquidated from the pool resulting in aggregate realized losses of approximately $18.2 million. Three loans, representing 2.2% of the pool, are in special servicing. Moody's has estimated aggregate losses of approximately $5.3 million for the specially serviced loans. Thirty nine loans, representing 21.5% of the pool, are on the master servicer's watchlist. Four of the pool's top 10 loans are included on the watchlist. Moody's was provided with year-end 2005 operating results for 94.2% of the pool's performing loans. Moody's loan to value ratio for the conduit pool, excluding the defeased loans, is 87.9%, compared to 91.4% at Moody's last full review in December 2004 and compared to 87.4% at securitization. Moody's is upgrading Classes C and D due to increased credit support, defeasance and stable pool performance. Classes B and C were upgraded on Aug. 2, 2006 and Class C was placed on review for a further possible upgrade based on a Q tool based portfolio review. Moody's is downgrading Classes N and O due to realized and expected losses from the specially serviced loans and LTV dispersion. Based on Moody's analysis, 28.8% of the conduit pool has a LTV greater than 100%, compared to 25.5% at last review and compared to 4.1% at securitization. The shadow rated loan is the 315 Park Avenue Loan ($86.7 million - 11.7%), which is secured by a 320,000 square foot Class B office building located in the Midtown South submarket of New York City. The largest tenant is Credit Suisse (Moody's LT issuer rating Aa3; stable outlook), which currently occupies 73.8% of the net rentable area (lease expiration April 2017). The building is currently 92.4% occupied, compared to 88.0% at last review. Moody's current shadow rating is Baa3, the same as last review. The top three conduit loans represent 10.6% of the pool. The largest conduit loan is the 701 Gateway Loan ($32.1 million - 4.3%), which is secured by a 170,000 square foot office building located in San Francisco, California. The property is 100.0% leased, the same as at last review. The largest tenants are Actuate Corporation (43.4%; lease expiration February 2008) and San Mateo Health (17.3%; lease expiration December 2010). Although the property has maintained a stable occupancy, rental income has decreased as tenants have renewed or executed new leases at lower market rents. Moody's anticipates that the property's cash flow may decrease further as current leases expire and new leases are executed at market rents. Moody's LTV is in excess of 100%, compared to 90.6% at last review. The second largest conduit loan is the PSC Holding Corp. Office Building Loan ($22.7 million - 3%), which is secured by a 328,900 square foot office building and a 26,000 square foot free-standing conference center. The property is located in Scottsdale, Arizona and is 100% leased to PCS Health Systems (lease expiration September 2021). Moody's LTV is 72.8%, compared to 74.2% at last review. The third largest conduit loan is the Talley Plaza Loan ($17 million - 2.3%), which is secured by a 223,400 square foot Class B office complex located in Phoenix, Arizona. The complex was built in phases from 1980 to 1985 and was 68.7% occupied at year-end 2005, compared to 59.% at year-end 2004. At securitization the complex was 95.0% occupied. The property financial performance has been impacted by weak office market conditions. The loan is on the master servicer's watchlist due to low occupancy and low debt service coverage. Moody's LTV is in excess of 100%, the same as at last review. The pool's collateral is a mix of office (40.2%), multifamily (24.9%), industrial and self storage (12.9%), U.S. Government securities (11.7%), retail (7%) and lodging (3.3%). The collateral properties are located in 29 states. The top five state concentrations are California (19.7%), New York (14.3%), Georgia (8.1%), Washington (7.4%) and Arizona (7.3%). All of the loans are fixed rate. BASELINE SPORTS: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Baseline Sports, Inc. 1309 Raleigh Avenue Norfolk, VA 23507 Tel: (757) 626-1520 Fax: (757) 626-1522 Bankruptcy Case No.: 06-71505 Type of Business: The Debtor develops products featuring professional sports, college sports and entertainment licensed properties targeted at individuals and family's active life styles. See http://www.blsports.com/ Chapter 11 Petition Date: October 16, 2006 Court: Eastern District of Virginia (Norfolk) Debtor's Counsel: Christopher A. Jones, Esq. LeClair Ryan, P.C. Riverfront Plaza, East Tower 951 East Byrd Street P.O. Box 2499 Richmond, VA 23218-2499 Tel: (804) 916-7104 Fax: (804) 916-7204 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million The Debtor did not file a list of its 20 largest unsecured creditors. BNC MORTGAGE: Moody's Assigns Ba1 Ratings to Class B Certificates ---------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by BNC Mortgage Loan Trust, Series 2006-1 and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by BNC Mortgage, Inc. originated, adjustable-rate (78%) and fixed-rate (22%), subprime mortgage loans acquired by Lehman Brothers Holdings Inc. The ratings are based primarily on the primary mortgage insurance provided by Mortgage Insurance Guaranty Corporation and PMI Mortgage Insurance Co. The ratings also benefit from the credit quality of the loans and on protection against credit losses by subordination, excess spread, and overcollateralization. The ratings also benefit from both interest-rate swap and interest-rate cap agreements, both provided by HSBC Bank USA, National Association. After taking into account the benefit from the mortgage insurance, Moody's expects collateral losses to range from 4.05% to 4.55%. Wells Fargo Bank, N.A. and Aurora Loan Services LLC will service the loans in this deal and Aurora Loan Services LLC (Aurora) will act as master servicer of the mortgage loans. Moody's has assigned Aurora its servicer quality rating of SQ1- as a master servicer of mortgage loans. These are the rating actions: Issuer: BNC Mortgage Loan Trust 2006-1 Securities: Mortgage Pass-Through Certificates, Series 2006-1 * Class A1, Assigned Aaa * Class A2, Assigned Aaa * Class A3, Assigned Aaa * Class A4, Assigned Aaa * Class M1, Assigned Aa1 * Class M2, Assigned Aa2 * Class M3, Assigned Aa3 * Class M4, Assigned A1 * Class M5, Assigned A2 * Class M6, Assigned A3 * Class M7, Assigned Baa1 * Class M8, Assigned Baa2 * Class M9, Assigned Baa3 * Class B, Assigned Ba1 BRANDON CREEK: Case Summary & 21 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Brandon Creek Apartments, Ltd. 3509 Pointsettia Avenue West Palm Beach, FL 33407 Bankruptcy Case No.: 06-15248 Debtor-affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- White Oak Brandon Creek, Inc. 06-15251 Chapter 11 Petition Date: October 16, 2006 Court: Southern District of Florida (West Palm Beach) Judge: Paul G. Hyman, Jr. Debtor's Counsel: Thomas M. Messana, Esq. Genovese, Joblove & Battista, P.A. 200 East Broward Boulevard, Suite 1110 Fort Lauderdale, FL 33301 Tel: (954) 453-8017 Estimated Assets Estimated Debts ---------------- --------------- Brandon Creek $1 Million to $1 Million to Apartments, Ltd. $100 Million $100 Million White Oak Brandon Less than $10,000 $1 Million to Creek, Inc. $100 Million A. Debtors' Consolidated List of their 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ White Oak Real Estate Developer's Fee $3,000,000 Development Corp. 422 7th Street, Suite 2 West Palm Beach, FL 33401 Floor Proz Int'l. Inc. $8,328 12749 West Hillsborough Avenue, Suite C Tampa, FL 33635 Capital Contractors, Inc. $7,603 P.O. Box 3079 Huntington Station, NY 11746 Peoples Choice Maintenance Inc. $7,138 2257 Vista Parkway, Suite 22 West Palm Beach, FL 33411 Hillsborough County Board of $5,474 County Commissioners 3402 North 22nd Street, Suite 223 Tampa, FL 33605 Butler Capital Corporation $4,003 Copyco Inc. $3,811 Coastal Event Services $3,543 Crest Property $3,328 Teco Tampa Electric $3,308 Hillsborough County $3,152 Luz Maid Services $2,035 Premium Assignment Corp. $1,364 Liberty Waste & Recycling $1,216 Prevail Pest Control Inc. $1,114 Lifestyle Carpets $1,021 The Home Depot Supply $996 Boring Business Systems $959 C&C Enterprises $600 Empire Paint Mfg. Company $551 B. White Oak Brandon Creek, Inc.'s Additional Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Fannie Mae Unknown c/o Foley & Lardner LLP 111 North Orange Avenue Suite 1800 Orlando, FL 32802-2193 BUFFETS HOLDINGS: S&P Junks Rating on Proposed $330 Million Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services took these actions for Eagan, Minnesota-based Buffets Holdings Inc.: -- assigned a 'B-' rating to the company's proposed $610 million bank facility with a recovery rating of '3', indicating the expectation of meaningful recovery of principal in the event of a payment default; -- assigned a 'CCC' rating to the proposed $330 million of fixed-rate senior unsecured notes due 2013 and floating-rate notes due 2014; -- affirmed the 'B-' corporate credit rating; and -- removed the ratings from CreditWatch Negative. These actions follow the company's recapitalization and intention to acquire Ryan's Restaurant Group Inc. for roughly $835 million. Pro forma for this transaction, the company's balance sheet will be very highly leveraged, with 2006 lease-adjusted debt to EBITDA of over 8.5x. The borrower under the $610 million bank facility is Buffets Inc., a subsidiary. "The negative outlook reflects Buffets Holdings' weak credit metrics and expectations that it may take time for credit metrics to improve significantly to levels more consistent with current ratings," said Standard & Poor's credit analyst Stella Kapur. The ratings on Buffets reflect its highly leveraged balance sheet, weak credit metrics, limited free cash flow generation, inconsistent operating track record, and the highly competitive nature of the restaurant industry. Additionally, rising interest rates and still relatively high gasoline prices are expected to place greater pressure on consumer demand. While Standard & Poor's anticipates that Buffets will benefit from some cost savings and synergies over the next 18 months, these are not anticipated to be material enough to result in a significant improvement in the company's financial profile. As a result, credit metrics are likely to remain weak for current ratings for the next few years. Buffets is the largest operator of buffet-style restaurants in the U.S. with four core brands, Old Country Buffet, HomeTown Buffet, Ryan's Grill Buffet Bakery, and Fire Mountain. While it will have a sizable share (40%) of the $4 billion buffet/cafeteria business following this transaction, the sector is a very small part of the overall restaurant industry, with family, casual, and quick- service restaurants providing intense competition. BURGER KING: Moody's Assigns Loss-Given-Default Rating ------------------------------------------------------ In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the restaurant sector, the rating agency revised its Corporate Family Rating for Burger King Corporation to Ba3 from Ba2. Additionally, Moody's held its Ba2 ratings on the company's $150 million Senior Secured Revolver Due 2011 and $250 million Senior Secured Term Loan A Due 2011. Moody's assigned those loan facilities an LGD3 rating suggesting lenders will experience a 35% loss in the event of default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). About Burger King Miami, FL-based The Burger King -- http://www.burgerking.com/-- operates more than 11,000 restaurants in more than 60 countries and territories worldwide. Approximately 90% of Burger King restaurants are owned and operated by independent franchisees, many of them family owned operations that have been in business for decades. Burger King Holdings Inc., the parent company, is private and independently owned by an equity sponsor group comprised of Texas Pacific Group, Bain Capital and Goldman Sachs Capital Partners. CALIFORNIA STEEL: Moody's Assigns Loss-Given-Default Rating ----------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its Ba2 Corporate Family Rating for California Steel Industries, Inc., and its Ba3 rating on the company's $150 million issue of 6.125% senior unsecured global notes due 2014. Moody's also assigned an LGD5 rating to those loans, suggesting noteholders will experience a 71% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Fontana, California, California Steel Industries produces flat rolled steel products in the western United States based on tonnage billed, with a broad range of products, including hot rolled, cold rolled, and galvanized sheet and electric resistant welded pipe. CCM MERGER: Moody's Assigns Loss-Given-Default Rating ----------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the gaming, lodging and leisure sectors, the rating agency confirmed its B1 Corporate Family Rating for CCM Merger Inc. Moody's also revised or held its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Five Year Senior Secured Revolver B1 Ba3 LGD3 35% Seven Year Senior Secured Term Loan B B1 Ba3 LGD3 35% 8% Senior Unsecured Notes B3 B3 LGD5 88% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). CCM Merger Inc. owns and operates MotorCity Casino in Detroit, Michigan. CHUKCHANSI ECONOMIC: Moody's Assigns Loss-Given-Default Rating -------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the gaming, lodging and leisure sectors, the rating agency revised its Corporate Family Rating for Chukchansi Economic Development Authority to B1 from B2. Additionally, Moody's held its B2 ratings on the company's 8% Senior Notes Due 2013 and Floating Rate Notes Due 2012 and assigned those debentures an LGD4 rating suggesting a projected loss-given default of 65%. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Coarsegold, California, Chukchansi Economic Development Authority operates resorts and casinos. COLLINS & AIKMAN: Proposes Severance Package for Laid-Off Workers ----------------------------------------------------------------- Collins & Aikman Corporation and its debtor-affiliates seek authority from the U.S Bankruptcy Court for the Eastern District of Michigan to pay severance benefits in connection with their planned reduction-in-force. As part of their ongoing efforts to cut costs and increase operational efficiency, the Debtors have determined, in consultation with JPMorgan Chase Bank, N.A., the administrative agent for their senior, secured prepetition lenders, and the Official Committee of Unsecured Creditors, to implement the RIF. In particular, the Debtors plan to reduce the number of salaried employees by approximately 125, representing approximately $7,600,000 in annual base salaries. The Debtors want to provide severance benefits to employees affected by the RIF. For these employees, the Debtors intend to give, upon execution of a release acceptable to the Debtors: (a) a severance package equivalent to (i) up to four weeks of base salary and (ii) any accrued and unused vacation; and (b) continued employee benefits for up to four weeks. The base salary component of the Severance Benefits would be subject to an aggregate limit of $650,000. The cap does not include any payments to employees of non-debtors that may be affected by the RIF. Should additional reductions-in-force become necessary to complete their restructuring process, the Debtors intend to return to the Court for approval of severance-related benefits. Although the Severance Benefits may impose certain short-term costs, these costs are appreciably less than the operating losses associated with maintaining the corporate employees, Ray C. Schrock, Esq., at Kirkland & Ellis LLP, in Chicago, Illinois, tells Judge Rhodes. Furthermore, Mr. Schrock continues, the Debtors believe that failing to provide the Severance Benefits would only diminish employee morale at this critical time in their Chapter 11 cases, which in turn would hinder their efforts to efficiently carry out and complete the restructuring process. Mr. Schrock assures the Court that the Severance Benefits have been carefully structured to avoid unnecessary or excessive expenditure. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and US$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COLLINS & AIKMAN: Wants Status Conference Held on October 26 ------------------------------------------------------------ Collins & Aikman Corporation and its debtor-affiliates strongly believe that it is appropriate to update the U.S. Bankruptcy Court for the Eastern District of Michigan regarding the status of several negotiations with their six principal customers regarding the global resolutions necessary to satisfy certain conditions to confirmation and for the Debtors to emerge from Chapter 11. Accordingly, the Debtors ask the Court to schedule a conference on Oct. 26, 2006, at 2:00 p.m., with the Official Committee of Unsecured Creditors; JPMorgan Chase Bank, N.A., the administrative agent for both their senior, secured prepetition lenders, and senior secured postpetition lenders; and the United States trustee. Given the sensitive and confidential nature of the information to be discussed, consistent with Section 107 of the Bankruptcy Code, the Debtors propose that the status conference take place in chambers or in a sealed courtroom. The Debtors tell Hon. Steven Rhodes that they filed a Joint Plan of Reorganization and an accompanying Disclosure Statement on Aug. 30, 2006. In September 2006, the Debtors obtained an extension of their exclusive right to (a) propose and file a plan to Oct. 27, 2006, and (b) solicit and obtain acceptances of that plan to Dec. 27, 2006. The Debtors continue to be engaged in the negotiations. In addition, the Debtors and the unofficial steering committee for the Debtors' senior secured prepetition lenders continue to be engaged in a dialogue with the Official Committee of Unsecured Creditors regarding a consensual plan. Headquartered in Troy, Michigan, Collins & Aikman Corporation -- http://www.collinsaikman.com/-- is a global leader in cockpit modules and automotive floor and acoustic systems and is a leading supplier of instrument panels, automotive fabric, plastic-based trim, and convertible top systems. The Company has a workforce of approximately 23,000 and a network of more than 100 technical centers, sales offices and manufacturing sites in 17 countries throughout the world. The Company and its debtor-affiliates filed for chapter 11 protection on May 17, 2005 (Bankr. E.D. Mich. Case No. 05-55927). Richard M. Cieri, Esq., at Kirkland & Ellis LLP, represents C&A in its restructuring. Lazard Freres & Co., LLC, provides the Debtor with investment banking services. Michael S. Stammer, Esq., at Akin Gump Strauss Hauer & Feld LLP, represents the Official Committee of Unsecured Creditors Committee. When the Debtors filed for protection from their creditors, they listed $3,196,700,000 in total assets and US$2,856,600,000 in total debts. (Collins & Aikman Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMPLETE RETREATS: Creditors Committee Hires Kramer as Advisor -------------------------------------------------------------- The Official Committee of Unsecured Creditors in Complete Retreats LLC and its debtor-affiliates' chapter 11 cases obtained permission from the U.S. Bankruptcy Court for the District of Connecticut to retain Kramer Capital Partners, LLC, as its financial advisor, nunc pro tunc to Aug. 7, 2006. The Court directed Kramer Capital Partners LLC to render professional services to the Creditors Committee consistent with the Committee's powers and duties as defined by Section 1103 of the Bankruptcy Code. As reported in the Troubled Company Reporter on Sept. 7, 2006, Joel S. Lawson III, chair of the Creditors Committee, told the Court that Kramer is particularly well suited for the type of representation required by the Committee. The principals and professionals of Kramer have extensive experience working with financially troubled entities in complex financial reorganizations, both in Chapter 11 cases and in out-of-court restructuring situations. As the Committee's financial advisor, Kramer will: (a) evaluate the Debtors' assets and liabilities; (b) analyze the Debtors' financial and operating statements; (c) analyze the Debtors' business plans and forecasts; (d) evaluate the Debtors' liquidity, DIP financing, cash collateral usage and adequate protection, and the prospects for any exit financing in connection with any plan of reorganization and any budgets; (e) provide specific valuation or other financial analyses; (f) assess the financial issues and options concerning the sale of the Debtors or their assets and structure a plan of reorganization; and (g) provide testimony in Court on the Committee's behalf. The Debtors will pay Kramer: (1) a $100,000 monthly advisory fee; and (2) upon the effective date of a confirmed Chapter 11 plan or the closing of any other Transaction, a $500,000 transaction fee, payable in either cash or in the securities or consideration received by the unsecured creditors of the Debtors. Kramer will also be reimbursed for its out-of-pocket expenses, provided that the amount will not exceed $25,000 in the aggregate for any one monthly period without the prior written consent of the Committee. Furthermore, the Debtors will indemnify and will hold harmless Kramer and its affiliates from and against all losses, claims or liabilities in connection with Kramer's provision of services to the Committee or any transactions contemplated. Derron S. Slonecker, a managing director at Kramer, disclosed that the firm provides services, or has in the past provided services, to entities, which may be creditors of the Debtors or have interests adverse to the Debtors or the Committee in matters unrelated to the Debtors or their bankruptcy cases. A five-page list of the Interested Parties that Kramer currently represents in matters unrelated to the Debtors' bankruptcy cases is available for free at http://researcharchives.com/t/s?1129 Kramer will not be representing any of the Interested Parties in the Chapter 11 cases, Mr. Slonecker assured the Court. Moreover, Kramer's representation of the Parties has not resulted in the firm having knowledge of any facts or information that would adversely affect the Parties' rights, obligations or treatment in the bankruptcy cases or in any related proceedings. Aside from the Interested Parties, Kramer does not hold or represent any interests materially adverse to those of the Committee and is disinterested as defined in Section 101(14) of the Bankruptcy Code, Mr. Slonecker said. 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. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. 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. 11; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: Seeks Court OK on First Insurance Premium Pact ----------------------------------------------------------------- Complete Retreats LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Connecticut for authority to execute a Premium Finance Agreement and Disclosure Statement with First Insurance Funding Corp. for the financing of coverage essential for the operation of its business operations, including umbrella, general liability, and property insurance policies. In the ordinary course of business, the Debtors maintain insurance coverage for themselves and their properties. To reduce the burden of funding the premiums of their insurance policies, the Debtors have in the past routinely entered into various financing agreements. Pursuant to the FIFC Premium Finance Agreement, FIFC will provide financing to the Debtors for the purchase of three Policies: Policy Effective Policy Number Insurance Company Date Premium ------ ----------------- --------- ------- NHA036341 RSUI Indemnity Company 8/29/2008 $36,000 FIN TXS/FEES 0 ERN TXS/FEES 0 GL000302-02 Aspen Specialty Insurance 8/29/2008 56,330 FIN TXS/FEES 2,906 ERN TXS/FEES 1,800 7522791 Lexington Insurance Co. 8/29/2006 293,149 FIN TXS/FEES 15,032 ERN TXS/FEES 7,500 The premium to be financed pursuant to the Premium Finance Agreement is $302,563, which is in addition to the $110,154 cash down payment delivered upon purchase of the Policies. By virtue of the Premium Finance Agreement, the Debtors will be obligated to pay FIFC $313,059, which includes a financing charge of $10,495 in nine monthly installments of $34,784 each. The Premium Finance Agreement provides FIFC with various rights to act against the Policies. To secure the repayment of the indebtedness due under the Premium Finance Agreement, the Debtors would grant FIFC a security interest in, among other things, the unearned premiums of the Policies. The Debtors would appoint FIFC as their attorney-in- fact with the irrevocable power to cancel the Policies and to collect the unearned premium in the event that they are in default of their obligations under the Premium Finance Agreement. To grant adequate protection to FIFC, the parties also agree that the Debtors would be authorized and directed to timely make all payments due under the Premium Finance Agreement and FIFC would be authorized to receive and apply those payments to the indebtedness owed by the Debtors to FIFC as provided in the Premium Finance Agreement. The parties further agree that if the Debtors do not make any of the payments due under the Premium Finance Agreement as they become due, the automatic stay would automatically lift and be vacated to enable FIFC and any insurance companies providing the coverage under the Policies to take all steps necessary and appropriate to: -- cancel the Policies, -- collect the collateral, and -- apply that collateral to the indebtedness owed to FIFC by the Debtor; provided that in exercising those rights, FIFC and insurance companies would be required to comply with the notice and other relevant provisions of the Premium Finance Agreement. The Debtors believe that the terms of the Finance Agreement are commercially fair and reasonable. Without the Policies, the Debtors would be forced to cease operations and would be in default under their postpetition credit agreements, Jeffrey K. Daman, Esq., at Dechert LLP, in Hartford, Connecticut, asserts. 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. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. 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. 11; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CONGOLEUM CORP: Continental Casualty Files Disclosure Statement --------------------------------------------------------------- Continental Casualty Company and Continental Insurance Company filed a Second Modified Joint Plan of Reorganization and a Disclosure Statement explaining that plan with the Honorable Kathryn C. Ferguson of the U.S. Bankruptcy Court for the District of New Jersey in Trenton in Congoleum Corporation and its debtor- affiliates' chapter 11 cases. The CNA Plan provides for the issuance of injunctions under Sections 105(A), 1123(B) and 1141 of the Bankruptcy Code that result in the channeling of all asbestos related claims of the Debtors into a trust. Senior Note Claims, Rejection Damages Claims, Asbestos Personal Injury Claims, Asbestos Property Damage Claims, Insurance Company Claims, and Congoleum Interests are impaired under the CNA Plan. The Claims of Congoleum's other Creditors and Interest Holders are not impaired under the CNA Plan. Distributions under the CNA Plan to creditors of the Debtors will be the responsibility of the Reorganized Debtors. Distributions under the CNA Plan to holders of Plan Trust Asbestos Claims will be the responsibility of the Plan Trust, and the Reorganized Debtors will have no liability for it. CNA Plan vs. Debtors' 10th Modified Plan Equity in Reorganized Congoleum: Under the CNA Plan 80% of Congoleum's New Common Stock will be placed in the Plan Trust and used to fund distributions to holders of Asbestos Personal Injury Claims. New Common Stock will have full voting rights and the remaining 20% of New Common Stock will be issued to existing management as part of a management incentive program. Under the Debtors' Tenth Modified Plan, if holders of Senior Note Claims accept the Plan, then 3.8 million shares of New Class A Common Stock will be issued to the Plan Trust. The Insurers contend that this doesn't provide the Plan Trust with control over Congoleum. Rather, control will remain with the current equity owners. The Debtors' Modified Plan also calls for issuance to the Plan Trust of a New Convertible Security in the form of a $2.74 million promissory note. However, if Senior Note holders accept the Plan, the promissory note will not have any voting rights at the time of confirmation. If the Senior Note holders reject the Plan, a new category of common stock will be issued to the Plan Trust. The Insurers argue that even in this instance, the Plan Trust still won't receive a majority interest in Reorganized Congoleum. The allocation of Reserved Common Stock between the Plan Trust and the Senior Note holders will be determined at an "Allocation Proceeding" and depending on the Bankruptcy Court's ruling, the Plan Trust may receive less than a majority interest in Reorganized Congoleum, the Insurers relate. Discriminatory Treatment of Certain Asbestos Personal Injury Claims: Under the CNA Plan, Secured Asbestos Claimants will be treated pari passu with all other Asbestos Personal Injury Claimants. Any Secured Asbestos Claimant who does not elect this treatment will be subject to litigation seeking subordination, avoidance or transfer of any security interests to the Congoleum estate and avoidance, subordination, or disallowance of any obligation of Congoleum under the Claimant or Pre-Petition Settlement Agreements. The Insurers say that the avoidance and other relief are designed to eliminate the discriminatory treatment afforded by the Debtors to Secured Asbestos Claimants and is a condition to the confirmation of the CNA Plan. Under the Debtors' Plan, two settlements, Class 2 and the Class 3 and 11 settlements, serves to perpetuate the discriminatory treatment afforded under the Claimant Agreement and the prepackaged plan to certain secured asbestos claimants. The Insurers complain that the Class 2 Settlement provides a substantially greater recovery to certain asbestos claimants than recoveries available to other similarly situated asbestos claimants. Under either settlement, the Insurers say that Secured Asbestos Claimants may be able to continue to assert their fully secured or partially secured claims against Congoleum, and any Plan Trust Bankruptcy Cause of Action is transferred to the Plan Trust for adjudication after the effective date of the Debtors' Modified Plan. Trust Distribution Procedures: The Insurers tell the Court that their Plan provides for a set of trust distribution procedures designed to provide for a fair allocation of available Plan Trust Assets among Asbestos Personal Injury Claimants holding valid Claims and, conversely, barring dilution of their position by holders of invalid Claims. Their TDP also require that claimants prove exposure to asbestos from a product manufactured, made, supplied, distributed, marketed, handled, fabricated, stored, sold, installed, removed, used, specified, or released by any Debtor and/or any of its Affiliates that contained asbestos. The Insurers contend that the Debtors' current TDP, filed on Sept. 15, 2006, incorporate extremely lax medical verification criteria, provide for openended exceptions to this criteria and will result in distributions to medically unimpaired claimants. The Debtors' current TDP also continues to discriminate between and among claimants and only require "minimum exposure" to a Congoleum Asbestos-Containing Product. Furthermore, the Insurers relate, the Debtors' TDP do not require that a Claimant actually be exposed to asbestos fibers released from a Congoleum Asbestos-Containing Product, and do not define exposure, the duration of any such exposure or those activities that would create exposure. Absolute Priority Issue: The CNA Plan distributes 80% of all New Common Stock to the Plan Trust, with existing equity maintaining no interest in property of Reorganized Congoleum by reason of its former equity interest. Under the Debtors' Modified Plan, to the extent the Senior Note holders accept the Debtors' new Plan, and in the event any impaired Class of Claims rejects the Debtors' Modified Plan and receives less than full payment, this Class may object to the retention by existing equity of its stock and voting control over Reorganized Congoleum. Conflicts: The Insurers tell the Court that the CNA Plan places control over the Plan Trust Bankruptcy Causes of Action in the Plan Trust or an independent estate representative appointed by the Bankruptcy Court. The two Entities will be completely neutral parties not subject to the control of the Plaintiffs' asbestos bar. The Debtors' Modified Plan and related Plan Trust Agreement however, the Insurers say, continue to place control over the Plan Trust Bankruptcy Causes of Action in the Trust Advisory Committee. The Trust Advisory Committee consists of the two Claimants' Representatives and other members of the plaintiffs' asbestos bar, creating obvious conflicts of interest arising from the contingency fees these lawyers may receive. Contributions to the Plan Trust: The Insurers argue that under their Plan 80% of the New Common Stock will be contributed to the Plan Trust, thus insuring the evergreen source of funding contemplated by controlling case law. Unlike the Debtors' Tenth Modified Plan, the Plan Trust will also be funded by all proceeds Disgorgement/Conduct Causes of Action The CNA Plan does not require the Plan Trust to provide loans Reorganized Congoleum to fund its operations. The Insurers disclose that the Debtors' Modified Plan does not provide for the Plan Trust to have voting control over Reorganized Congoleum. The Debtors' Modified Plan also requires the Plan Trust to become a financier of the Debtors through: (a) a partially secured Plan Trust Note with a principal amount of approximately $14 million and (b) a $5 million "escrow" loan to pay the holders of Senior Note claims. Kevin Coughlin, Esq.; William J. Metcalf, Esq.; and Mark Silver, Esq., at Coughlin Duffy, LLP; Steven P. Handler, Esq.; Derek J. Meyer, Esq.; and Jason J. DeJonker, Esq., at McDermott Will & Emery LLP; John R. Gerstein, Esq., Charles I. Hadden, Esq., and Sheila R. Caudle, Esq., at Ross, Dixon & Bell L.L.P.; and Lewis S. Rosenbloom, Esq.; David D. Cleary, Esq.; and Dean C. Gramlich, Esq., LeBoeuf, Lamb, Greene & MacRae LLP represent Continental Casualty Company and Continental Insurance Company. A full-text copy of CNA's Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=061012020702 About Congoleum Corp. Based in Mercerville, New Jersey, Congoleum Corporation (AMEX: CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennanat, Esq., at Pillsbury Winthrop Shaw Pittman LLP represent the Debtors in their restructuring efforts. Elihu Insulbuch, Esq., at Caplin & Drysdale, Chartered, represents the Asbestos Claimants' Committee. R. Scott Williams serves as the Futures Representative, and is represented by lawyers at Orrick, Herrington & Sutcliffe LLP, and Ravin Greenberg PC. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Bondholders. When Congoleum filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At June 30, 2006. Congoleum Corporation's balance sheet showed a $44,013,000 stockholders' deficit compared with a $44,960,000 deficit at Dec. 31, 2005. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX: ABL). CONGOLEUM CORP: Says Continental Casualty's Plan is Unconfirmable ---------------------------------------------------------------- Congoleum Corporation and its debtor-affiliates and the Official Committee of Unsecured Asbestos Claimants ask the Honorable Kathryn C. Ferguson of the U.S. Bankruptcy Court for the District of New Jersey in Trenton for summary judgment that the Second Modified Joint Plan of Reorganization of Continental Casualty Company and Continental Insurance Company is unconfirmable as a matter of law, pursuant to Rule 56 of the Federal Rules of Civil Procedure and Rule 7056 of the Federal Rules of Bankruptcy Procedure. The Debtors and the Asbestos Committee said that the CNA Plan: (a) cannot be confirmed because CNA does not have standing to propose or solicit the CNA Plan due to the Eleventh Plan's insurance neutrality; (b) impermissibly circumvents the requirements of Section 524(g) of the Bankruptcy Code through the application of Section 105(a) of the Bankruptcy Code; (c) fails to meet the feasibility requirement of Section 1129(a)(11) of the Bankruptcy Code that confirmation of the CNA Plan is not likely to be followed by liquidation or the need for further financial reorganization; and (d) fails to provide for the classification or treatment of claims for damages arising from the rejection of the Claimant Agreement, the Collateral Trust Agreement, the Pre-Petition Settlement Agreements, and the Security Agreement. Based in Mercerville, New Jersey, Congoleum Corporation (AMEX: CGM) -- http://www.congoleum.com/-- manufactures and sells resilient sheet and tile floor covering products with a wide variety of product features, designs and colors. The Company filed for chapter 11 protection on Dec. 31, 2003 (Bankr. N.J. Case No. 03-51524) as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago. Richard L. Epling, Esq., Robin L. Spear, Esq., and Kerry A. Brennanat, Esq., at Pillsbury Winthrop Shaw Pittman LLP represent the Debtors in their restructuring efforts. Elihu Insulbuch, Esq., at Caplin & Drysdale, Chartered, represents the Asbestos Claimants' Committee. R. Scott Williams serves as the Futures Representative, and is represented by lawyers at Orrick, Herrington & Sutcliffe LLP, and Ravin Greenberg PC. Michael S. Stamer, Esq., at Akin Gump Strauss Hauer & Feld LLP represent the Official Committee of Unsecured Bondholders. When Congoleum filed for protection from its creditors, it listed $187,126,000 in total assets and $205,940,000 in total debts. At June 30, 2006. Congoleum Corporation's balance sheet showed a $44,013,000 stockholders' deficit compared with a $44,960,000 deficit at Dec. 31, 2005. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX: ABL). CONSECO INC: Completes $478 Million Credit Facility Refinancing --------------------------------------------------------------- Conseco Inc. completed the refinancing of its credit facility, increasing the principal amount outstanding under the credit facility from $478 million to $675 million and extending the maturity from 2010 to 2013. The Company disclosed that interest rate on the amended facility will be 200 basis points over LIBOR, an increase of 25 basis points over the prior facility and that it is using approximately $200 million of the proceeds from the refinancing to strengthen the capital of its insurance subsidiaries. Headquartered in Carmel, Indiana, Conseco, Inc. (NYSE:CNO) -- http://www.conseco.com/-- through its subsidiaries, engages in the development, marketing, and administration of supplemental health insurance, annuity, individual life insurance, and other insurance products throughout the United States. The company operates in two segments, Bankers Life and Conseco Insurance. The Bankers Life segment markets and distributes Medicare supplement insurance, life insurance, long term care insurance, and certain annuity products to the senior market. CONSECO INC: Court of Appeals Says Insurance Pact Not Executory --------------------------------------------------------------- The U.S. Court of Appeals for the Seventh Circuit affirmed District Court Judge Robert W. Gettleman's decision upholding the U.S. Bankruptcy Court for the Northern District of Illinois' decision to disallow claims arising out of Conseco, Inc.'s alleged breach of four prepetition "split-dollar" agreements with Stephen Hilbert, its former chief executive officer. Alleged Breach Prior to its bankruptcy filing, Conseco was party to four "split- dollar" agreements under which it agreed to contribute premiums toward life insurance policies with a total death benefit of approximately $87.5 million. Pursuant to the agreements, Conseco agreed to pay virtually all of the annual premiums due on each of the insurance policies. When the death payments were to be paid, the Debtor was entitled to be reimbursed for all the premium payments it had made. The two Trusts would get the remaining balance from the policies after Conseco was reimbursed. Only two events would terminate the agreements before the death benefits came due -- a bankruptcy filing by Conseco or Mr. Hilbert's failure to pay his share of the annual premiums. Conseco stopped paying premiums on the policies in December 2001. Mr. Hilbert's employment with the Debtor had ended approximately a year and half prior to that time. On December 2002, Conseco filed for bankruptcy. Two months after, the Trusts filed their claims, seeking recoveries for Conseco's alleged breaches under the agreements. Conseco's Defense When it moved to dismiss the Hilbert Trusts' claims, Conseco argued that the filing of its bankruptcy petition triggered the early termination provision of the contract. Section 365 of the Bankruptcy Code commonly invalidates early termination provisions of contracts. However, the provision only applies to executory contracts and the Debtor claimed that since the agreements were not executory contracts, then its bankruptcy ended all payment obligations by virtue of the early termination clause. The Hilbert Trusts presented two alternative arguments to bolster their claims. First, the Trusts said Conseco failed to waive its rights upon termination by failing to exercise them in reasonable time. The Trusts claimed the Debtor's notice in September 2004 if its intent to exercise its termination rights amounted to a two-year period of silence, giving rise to a factual issue of reasonableness. Second, the Trusts argued that Conseco could not exercise its early termination rights because it had breached the agreements by discontinuing payments one year before its bankruptcy filing. Court's Decision The Bankruptcy Court, and ultimately the Court of Appeals, agreed with the Debtor's arguments. The Court of Appeals concurred that Conseco's obligations under the agreements stopped when it filed for bankruptcy. The Court of Appeals explained that a contract is executory if "each party is burdened with obligations which if not performed would amount to a material breach." The Court said this element was not present in the Debtor's agreements with Mr. Hilbert. In a decision published at 2006 WL 2328635, the Court of appeals held that: -- the contractual obligations remaining on the petition date were not significant and, thus, the agreements were not executory, and their early-termination clauses were not invalidated by the Bankruptcy Code; -- the Debtor did not waive its termination rights; and -- even if debtor breached the agreements by discontinuing the insurance payments a year before filing for bankruptcy, the Trusts were not entitled to any damages as a result. William L. O'Connor, Esq., at Dann, Pecar, Newman & Kleiman, PC, represented the Trusts. Timothy D. Elliott, Esq., at Rathje & Woodward, LLC, represented Conseco. About Conseco Headquartered in Carmel, Indiana, Conseco, Inc. (NYSE:CNO) -- http://www.conseco.com/-- through its subsidiaries, engages in the development, marketing, and administration of supplemental health insurance, annuity, individual life insurance, and other insurance products throughout the United States. The company operates in two segments, Bankers Life and Conseco Insurance. The Bankers Life segment markets and distributes Medicare supplement insurance, life insurance, long term care insurance, and certain annuity products to the senior market. Conseco and its affiliates filed for Chapter 11 protection on December 17, 2002 (Bankr. N.D. Ill. Case No. 02-49672). On September 9, 2003, the Bankruptcy Court entered an order confirming Conseco's plan of reorganization, and the plan became effective the following day. * * * As reported in the Troubled Company Reporter on Sept. 21, 2006, Standard & Poor's Ratings Services assigned its 'BB-' senior debt rating to Conseco Inc.'s $675 million senior secured term loan due 2013. CONSOL ENERGY: Moody's Assigns Loss-Given-Default Rating -------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its Ba2 Corporate Family Rating for CONSOL Energy Inc. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $250 Million 7.875% Guaranteed Senior Secured Notes due 2012 Ba2 Ba1 LGD2 28% $45 Million 8.25% Guaranteed Senior Secured MTNs due 2007 Ba2 Ba1 LGD2 28% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Pittsburgh, Pennsylvania, CONSOL Energy Inc. produces coalbed methane. CONSOLIDATED CONTAINER: Amends 2006 and 2005 Financial Statements ----------------------------------------------------------------- Consolidated Container Company, LLC, delivered its amended financial statements on Form 10-K/A for the fiscal year ended Dec. 31, 2005, and on Form 10-Q/A for the three months ended March 31, 2006, to the Securities and Exchange Commission. The amended annual and quarterly reports restate the Company's financial statements, updated its disclosures contained to reflect events that occurred at a later date. Restated Annual Financials The Company incurred a $22.2 million net loss on $844.5 million of net revenues for the fiscal year ended Dec. 31, 2005, compared to a $24 million net loss on $758.6 million of net revenues for the year ended Dec. 31, 2004. At Dec. 31, 2005, the Company's balance sheet showed total assets of $701.1 million and total liabilities of $811.1 million, resulting in a $109.9 million stockholders' deficit. Restated Quarterly Financials For the three months ended March 31, 2006, the Company reported $353,000 of net income on $222.9 million of net revenues compared to a $12.1 million net loss on $204.5 million of net revenues for the three months ended March 31, 2004. At March 31, 2006, the Company's balance sheet showed total assets of $685.4 million and total liabilities of $795 million, resulting in a $109.5 million stockholders' deficit. A full-text copy of the Company's Restated Financial Report for the Year Ended Dec. 31, 2005, is available for free at http://researcharchives.com/t/s?1378 A full-text copy of the Company's Restated Financial Report for the Quarter Ended March 31, 2006 is available for free at http://researcharchives.com/t/s?1379 Going Concern Doubt Deloitte & Touche LLP expressed substantial doubt about Consolidated Container's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec 31, 2005. The auditing firm pointed to the Company's inability to obtain a waiver for covenant violations on its Senior Credit Facility. Headquartered in Atlanta, Georgia, Consolidated Container Company LLC -- http://www.cccllc.com/-- which was created in 1999, develops, manufactures and markets rigid plastic containers for many of the largest branded consumer products and beverage companies in the world. CCC has long-term customer relationships with many blue-chip companies including Dean Foods, DS Waters of America, The Kroger Company, Nestle Waters North America, National Dairy Holdings, The Procter & Gamble Company, Coca-Cola North America, Quaker Oats, Scotts and Colgate-Palmolive. CCC serves its customers with a wide range of manufacturing capabilities and services through a nationwide network of 61 strategically located manufacturing facilities and a research, development and engineering center. Additionally, the company has 4 international manufacturing facilities in Canada, Mexico and Puerto Rico. CONSOLIDATED CONTAINER: Has $106.7 Mil. Equity Deficit at June 30 ----------------------------------------------------------------- Consolidated Container Company LLC reported $2.4 million of net income on $218.3 million of net revenues for the three months ended June 30, 2006, compared to a $2.3 million net loss on $213.8 million of net revenues for the three months ended June 30, 2005. At June 30, 2006, the Company's balance sheet showed total assets of $682.5 million and total liabilities of $789.2 million, resulting in a $106.7 million stockholders' deficit. The Company's June 30 balance sheet also showed strained liquidity with $188.9 million in total current assets and $374.3 million in total current liabilities. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?137a Going Concern Doubt Deloitte & Touche LLP expressed substantial doubt about Consolidated Container's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec 31, 2005. The auditing firm pointed to the Company's inability to obtain a waiver for covenant violations on its Senior Credit Facility. Headquartered in Atlanta, Georgia, Consolidated Container Company LLC -- http://www.cccllc.com/-- which was created in 1999, develops, manufactures and markets rigid plastic containers for many of the largest branded consumer products and beverage companies in the world. CCC has long-term customer relationships with many blue-chip companies including Dean Foods, DS Waters of America, The Kroger Company, Nestle Waters North America, National Dairy Holdings, The Procter & Gamble Company, Coca-Cola North America, Quaker Oats, Scotts and Colgate-Palmolive. CCC serves its customers with a wide range of manufacturing capabilities and services through a nationwide network of 61 strategically located manufacturing facilities and a research, development and engineering center. Additionally, the company has 4 international manufacturing facilities in Canada, Mexico and Puerto Rico. CONSTELLATION BRANDS: Restates Certificate of Incorporation ----------------------------------------------------------- Constellation Brands Inc. filed a Certificate of Elimination with the Secretary of State for the State of Delaware effecting the elimination from the Company's Restated Certificate of Incorporation of all matters relative to its 5.75% Series A Mandatory Convertible Preferred Stock set forth in the Certificate of Designations. The Company disclosed that no shares of the Preferred Stock were issued and are outstanding following its automatic conversion into shares of the Company's Class A Common Stock on Sept. 1, 2006. The Company also disclosed that on Oct. 11, 2006 and following the filing and effectiveness of the Certificate of Elimination, it filed a Restated Certificate of Incorporation with the Secretary of State of the State of Delaware, restating and integrating, without further amending, the Company's Certificate of Incorporation. A full text-copy of the Certificate of Elimination of the 5.75% Series A Mandatory Convertible Preferred Stock may be viewed at no charge at http://ResearchArchives.com/t/s?1372 A full text-copy of the Restated Certificate of Incorporation of Constellation Brands may be viewed at no charge at http://ResearchArchives.com/t/s?1373 Based in Fairport, New York, Constellation Brands, Inc. (NYSE:STZ, ASX:CBR) -- http://www.cbrands.com/-- produces and markets beverage alcohol brands with a broad portfolio across the wine, spirits and imported beer categories. Well-known brands in Constellation's portfolio include: Almaden, Arbor Mist, Vendange, Woodbridge by Robert Mondavi, Hardys, Nobilo, Kim Crawford, Alice White, Ruffino, Kumala, Robert Mondavi Private Selection, Rex Goliath, Toasted Head, Blackstone, Ravenswood, Estancia, Franciscan Oakville Estate, Inniskillin, Jackson-Triggs, Simi, Robert Mondavi Winery, Stowells, Blackthorn, Black Velvet, Mr. Boston, Fleischmann's, Paul Masson Grande Amber Brandy, Chi- Chi's, 99 Schnapps, Ridgemont Reserve 1792, Effen Vodka, Corona Extra, Corona Light, Pacifico, Modelo Especial, Negra Modelo, St. Pauli Girl, Tsingtao. * * * As reported in the Troubled Company Reporter on Aug. 14, 2006, Moody's Investors Service assigned a (P)Ba2 rating to Constellation Brands, Inc.'s new shelf and concurrently, a Ba2 rating to Constellation's new $500 million senior unsecured note, due 2016. Constellation's existing ratings are not affected by these actions, and have been affirmed. The ratings outlook remains negative. As reported in the Troubled Company Reporter on Sept. 26, 2006 Moody's Investors Service's, in connection with its implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. beverage company sector, affirmed its Ba2 Corporate Family Rating for Constellation Brands Inc., and downgraded its Ba3 probability-of-default rating to B1. The rating agency also assigned its LGD6 loss-given-default ratings on the Company's $250 million 8.125% Senior Subordinated Notes due Jan. 15, 2012, suggesting noteholders will experience a 95% loss in the event of a default. CONTINENTAL AIRLINES: Accrues $100 Million Profit Sharing Pool -------------------------------------------------------------- Larry Kellner, chairman and chief executive officer, and Jeff Smisek, president, of Continental Airlines Inc., will be hosting a series of employee meetings, where they will provide company update. At the meetings, Mr. Kellner and Mr. Smisek will report a profit for the third quarter of 2006 and that, through Sept. 30, 2006, it has accrued an employee profit sharing pool of over $100 million. The actual amount of profit sharing to be distributed to employees on Feb. 14, 2007, depends on its full-year financial results. Accordingly, the final profit sharing pool may exceed or be less than $100 million, depending on its financial performance in the fourth quarter of 2006. Continental Airlines Inc. (NYSE: CAL) -- http://continental.com/ -- is the world's fifth largest airline. Continental, together with Continental Express and Continental Connection, has more than 3,200 daily departures throughout the Americas, Europe and Asia, serving 154 domestic and 138 international destinations. More than 400 additional points are served via SkyTeam alliance airlines. With more than 43,000 employees, Continental has hubs serving New York, Houston, Cleveland and Guam, and together with Continental Express, carries approximately 61 million passengers per year. Continental consistently earns awards and critical acclaim for both its operation and its corporate culture. * * * As reported in the Troubled Company Reporter on May 29, 2006, Standard & Poor's Ratings Services assigned its 'AAA' preliminary rating to Continental Airlines Inc.'s (B/Negative/B-3) $190 million Class G pass-through certificates, and its 'B+' preliminary rating to the $130 million Class B pass-through certificates. As reported in the Troubled Company Reporter on May 26, 2006, Moody's Investors Service assigned Aaa rating to the Class G Certificates and B1 rating to the Class B Certificates of Continental Airlines, Inc.'s 2006-1 Pass Through Trusts Pass Through Certificates, Series 2006-1. COPANO ENERGY: Inks $100 Mil. Unsecured Term Loan Deal with BofA ---------------------------------------------------------------- Copano Energy, L.L.C., entered into a $100 million unsecured term loan facility with Banc of America Securities LLC and its affiliates on Sept. 29, 2006. The maturity date of the new term loan is Nov. 1, 2010. The proceeds of the loan were used to reduce outstanding indebtedness under Copano's senior secured revolving credit facility from $150 million to $50 million. Copano concurrently requested a reduction in the commitment amount under the senior credit facility from $350 million to $200 million, which was effective Sept. 29, 2006. Headquartered in Houston, Texas, Copano Energy, L.L.C. -- http://www.copanoenergy.com/-- is a midstream natural gas company with natural gas gathering, intrastate pipeline and natural gas processing assets in the Texas Gulf Coast region and in Central and Eastern Oklahoma. COPANO ENERGY: Moody's Assigns Loss-Given-Default Ratings --------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its B1 corporate family rating on Copano Energy, LLC. At the same time, the rating agency held its B2 probability-of- default rating on the Company's 8.125% Senior Unsecured Global Notes due 2016, and attached an LGD5 rating on these notes, suggesting noteholders will experience a 72% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Houston, Texas, Copano Energy, L.L.C. -- http://www.copanoenergy.com/-- is a midstream natural gas company with natural gas gathering, intrastate pipeline and natural gas processing assets in the Texas Gulf Coast region and in Central and Eastern Oklahoma. C.R. STONE: Judge Hillman Says Settlement Won't Benefit Estate -------------------------------------------------------------- The Hon. William C. Hillman, of the U.S. Bankruptcy Court for the District of Massachusetts, denied the request of Joseph G. Butler, Esq., the Chapter 7 trustee appointed in C.R. Stone Concrete Contractors, Inc.'s to enter into stipulations compromising and settling estate claims: * against John Marini Management Company, The Framing Company, and Lenox-Norwood LLC for $25,000; and * against Dalton Builders and Plumb House for $35,000. Under the stipulations, in exchange for the cash payments, the Chapter 7 Trustee agreed to dismiss complaints against the companies and release all estate claims against them. The Debtor had filed adversary proceedings against the parties before its case was converted to a chapter 7 liquidation, alleging tortuous interference with the Debtor's contracts and conspiring to steal the Debtor's business. Factors to Consider Judge Hillman stated that in considering whether to approve a settlement, a bankruptcy court must balance the value of the claim against the value of the proposed settlement. The specific factors in which a bankruptcy court considers when making this determination include: (i) the probability of success in the litigation being compromised; (ii) the difficulties, if any, to be encountered in the matter of collection; (iii) the complexity of the litigation involved, and the expense, inconvenience and delay attending it; and, (iv) the paramount interest of the creditors and a proper deference to their reasonable views in the premise. Judge Hillman's Decision Judge Hillman said that, for a number of reasons, he couldn't characterize the Chapter 7 Trustee's investigation as diligent, and thus accorded little weight to the Trustee's determination that the Stipulations are in the best interest of the estate, and examined the Stipulations using the four factors on his own. In a decision published at 2006 WL 2079139, Judge Hillman related that the Debtor's complaint, though by no means certain to bear fruit, has at least a modest chance of providing a recovery to the estate far in excess of that provided by the Stipulations. Litigating the claims contained in the Complaint will not subject the Trustee to any extraordinary costs, or, in fact, to any considerable costs at all. Judge Hillman concluded that the Stipulations provide little to no benefit to creditors considering the opportunities for recovery that they would forfeit if the Stipulations were approved. Headquartered in Franklin, Massachusetts, C.R. Stone Concrete Contractors, Inc., operated a business performing concrete contracting, design and installation in all phases of construction. The Debtor filed for Chapter 11 protection on Feb. 18, 2005 (Bankr. D. Mass. Case No. 05-11119). Alan L. Braunstein, Esq., at Riemer & Braunstein, LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it estimated assets and debts between $1 million and $10 million. On August 17, 2005, the Court converted the Debtor's case to a chapter 7 liquidation. Joseph G. Butler, Esq., at Barron & Stadfeld, P.C., was appointed as Chapter 7 Trustee. CROWN CASTLE: $5.8 Billion Global Merger Cues S&P's Negative Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed the ratings of Houston, Texas-based wireless tower operator Crown Castle International Corp. and its related entities on CreditWatch with negative implications, including its 'BB' corporate credit rating and the 'BBB-' secured bank loan rating of intermediate holding company Crown Castle Operating Co. However, the '3' recovery rating for this bank loan is not on CreditWatch. The action followed the company's agreement to acquire wireless tower operator Global Signal Inc. for $5.8 billion in a transaction that is expected to close in the first quarter of 2007. The purchase includes a cash component and assumed debt. Pro forma for the transaction, the company is expected to have $5.4 billion of total debt and $338 million of preferred stock. As a result, Crown Castle's pro forma debt to EBITDA as of June 30, 2006, is above 8x (before adjustments for preferred stock and operating leases), compared to the low-7x area that was previously expected for 2006. "We will evaluate prospects for the business over the next few years as well as management's prospective financial policy in light of this more-aggressive leverage to resolve the CreditWatch listing," said Standard & Poor's credit analyst Catherine Cosentino. CST INDUSTRIES: Moody's Assigns Loss-Given-Default Rating --------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its B2 Corporate Family Rating for CST Industries, Inc. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $20 Million Senior Secured 1st Lien Bank Facility due 2011 B2 B1 LGD3 34% $100 Million Senior Secured 1st Lien Bank Facility due 2013 B2 B1 LGD3 34% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Kansas City, Kansas, CST Industries manufactures and erects pre-engineered factory coated sectional metal storage tanks, as well as aluminum geodesic domes, and agricultural feed and waste storage systems. CST serves end markets including municipal water and wastewater, fire protection, oilfield, agriculture, industrial liquid, plastics, chemicals, minerals, food, construction materials and energy. CULLIGAN INTERNATIONAL: S&P Lifts $325 Mil. Loan's Rating to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its loan and recovery ratings on Culligan International Co.'s $325 million senior secured credit facility. The secured loan rating was raised to 'BB-' from 'B+' and the recovery rating was revised to '1', indicating a high expectation for full recovery of principal in the event of a payment default, from the previous recovery rating of '3'. At the same time, Standard & Poor's affirmed its other ratings on Culligan, including the 'B+' corporate credit rating. The rating outlook is stable. Total debt outstanding at Northbrook, Illinois-based Culligan was approximately $453.9 million at June 30, 2006, excluding operating leases. "The upgrade to the loan and recovery ratings reflects Culligan's recent $40 million repayment of term loan debt and the increased likelihood that the enterprise value of the company under a payment default scenario would provide senior lenders with full recovery of principal," explained Standard & Poor's credit analyst Mark Salierno. The ratings on Culligan reflect ongoing concerns regarding the company's underperforming North American operations, a highly competitive operating environment, and a leveraged financial profile. These factors are partly mitigated by the company's extensive distribution network, recurring revenue streams, and global presence. Culligan, a leading global provider of water treatment products and services for household and commercial applications, participates in a highly competitive industry with modest growth prospects. Volume growth remains particularly slow in the North American market. Within the home-office-delivery market, competition continues to intensify, driven by mass merchandisers and other retail outlets offering competitively priced in-home water coolers, eroding the market share for equipment rentals. Standard & Poor's believes that Culligan will be challenged to increase the level of services provided in the North American market to mitigate the declining HOD business, which represents just less than one-quarter of the company's total sales. CWABS ASSET: Moody's Assigns Ba1 Ratings to Class B Certificates ---------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by CWABS Asset-Backed Certificates Trust 2006- 19 and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by Countrywide Home Loans, Inc. originated, adjustable-rate and fixed-rate, subprime mortgage loans acquired by Countrywide Financial Corporation. The ratings are based primarily on the credit quality of the loans and on protection against losses by subordination, excess spread, and overcollateralization. The rating also benefits from an interest- rate swap agreement provided by Lehman Brothers Special Financing Inc. Moody's expects collateral losses to range from 5.00% to 5.50%. Countrywide Home Loans Servicing LP will act as master servicer. These are the rating actions: Issuer: CWABS Asset-Backed Certificates Trust 2006-19 Asset-Backed Certificates, Series 2006-19 * Class 1-A, Assigned Aaa * Class 2-A-1, Assigned Aaa * Class 2-A-2, Assigned Aaa * Class 2-A-3, Assigned Aaa * Class A-R, Assigned Aaa * Class M-1, Assigned Aa1 * Class M-2, Assigned Aa2 * Class M-3, Assigned Aa3 * Class M-4, Assigned A1 * Class M-5, Assigned A2 * Class M-6, Assigned A3 * Class M-7, Assigned Baa1 * Class M-8, Assigned Baa2 * Class M-9, Assigned Baa3 * Class B, Assigned Ba1 Class B has been sold in a privately negotiated transaction without registration under the Securities Act of 1933 under circumstances reasonably designed to preclude a distribution thereof in violation of the Act. The issuance has been designed to permit resale under rule 144A. DANA CORP: Court Approves Modification of DSI's Scope of Retention ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved the modification of Development Specialists, Inc.'s scope of retention as financial advisor to the Official Committee of Non-Union Retirees in Dana Corporation and its debtor-affiliates' chapter 11 cases. Trent P. Cornell, Esq., at Stahl Cowen Crowley, LLC, in Chicago, Illinois, tells the Court that the modification relates to Development Specialists' previous retention application, which utilized portions of the retention applications submitted on behalf of the Retiree Committee's legal professionals. Accordingly, as financial advisor, DSI will: (a) independently evaluate the Debtors' assets and liabilities, business plan, forecasts and other financial data required to be analyzed and understood by the Retiree Committee and its legal professionals; (b) provide financial analysis as required by the Retiree Committee, including but not limited to: -- analyzing and evaluating the Debtors' financial and operating statements; -- evaluating issues associated with understanding the Debtors' financial conditions; -- assisting in the evaluation and analysis of any offers made by the Debtors to modify retiree benefits; -- assisting in the creation of any counter-offers to the Debtors in response to any efforts to modify retiree benefits, analysis of the impact of the Debtors with respect to any retiree benefits modifications, and evaluation and analysis as to the financial impact on the Debtors with respect to positions taken by potential agreements between the Debtors and committees or other bankruptcy constituents; (c) assist, and to the extent necessary, participate with the Retiree Committee and its legal professionals with respect to all negotiations with the Debtors and other bankruptcy constituencies; (d) analyze and support of any transactions outside the Debtors' ordinary course of business and DIP financing issues, which may materially impact the retirees; (e) support in litigation, including, but not limited to, the preparation of expert reports and assisting in analysis of other reports submitted by any other financial professionals that may impact the retirees represented by the Retiree Committee; (f) prepare and provide expert testimony in court or depositions on behalf of the Retiree Committee with respect to any motion by the Debtors to modify any retiree benefits; (g) analyze any proposed plans of reorganization, negotiations relating to it, and assisting in the drafting of any plan; (h) analyze the measures taken by the Debtors to achieve cost savings outside of the savings the Debtors may seek to obtain through modification of retiree benefits; (i) analyze of any proposed sale of all or substantially all of the Debtors' assets and its impact on the retirees; and (j) provide all other assistance and consulting required by the Retiree Committee or its legal professionals otherwise requested that are consistent with the role of a financial advisor. In the Retiree Committee's original application, as reported in the Troubled Company Reporter on Oct. 5, 2006, DSI was expected to: (a) counsel the Retiree Committee with respect to the administration of the Debtors' bankruptcy estate, advise the Retiree Committee members with respect to their fiduciary duties, and communicate with the retiree constituency and the like; (b) investigate the acts, conduct, assets, liabilities and financial condition of the Debtors and their non-debtor affiliates, the operation of the Debtors' businesses, and any other matters relevant to the case or to the formulation of a plan of reorganization or liquidation; (c) analyze any proposals made by the Debtors with respect to their assertions as to the necessity and extent of reduction of retiree benefits and developing counter- offers to those proposals; (d) negotiate and litigate with respect to the rights and interests of the Retiree Committee regarding any modifications by the Debtors of any prepetition retiree benefits provided to their non-union retirees who are constituents of the Retiree Committee; (e) prepare all necessary motions, answers, orders, reports and other legal papers in connection with the Retiree Committee's interests in the Debtors' estates; (f) participate in the formulation of a disclosure statement and a plan and advise the Retiree Committee as to the effects and consequences that may result from any plan formulated; (g) work with other professionals, likely to include financial advisors and an actuarial firm, to examine the Debtors' financial condition, the projections and analysis of the Debtors' financial advisors, their business plans and any revisions of it, health coverage information, actuarial analysis of the retiree group and the usage and cost of health care coverage; (h) assist the Retiree Committee in evaluating and implementing alternative health care plans and their mechanisms for establishing, funding and maintaining; (i) submit all necessary retention and compensation filings for professionals retained by the Retiree Committee; (j) represent the Retiree Committee's interests in any sale by the Debtors of any or all of their assets; and (k) represent the Retiree Committee's interests in all matters otherwise necessary to protect its interests. DSI will be paid based on its customary hourly rates: Professional Hourly Rates ------------ ------------ Senior Consultants $390 to $525 Consultants $295 to $370 Junior Consultants $95 to $290 These professionals will have primary responsibility of providing services to the Retirees Committee: Professional Hourly Rate ------------ ----------- R. Brian Calvert $425 Bradley D. Sharp $450 DSI will also be reimbursed for all necessary expenses it will incur in providing services to the Retiree Committee. R. Brian Calvert, Esq., vice president and senior consultant of Development Specialists, Inc., assured the Court that his firm does not hold any interest adverse to the Debtors and the Retiree Committee, and is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About Dana Corporation Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. Stahl Cowen Crowley, LLC serves as counsel to the Official Committee of Non-Union Retirees. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DANA CORP: Retiree Committee Brings In Stahl Cowen as Counsel ------------------------------------------------------------- The Official Committee of Non-Union Retirees in Dana Corporation and its debtor-affiliates' chapter 11 cases obtained the U.S. Bankruptcy Court for the Southern District of New York's authority to retain Stahl Cowen Crowley, LLC, as its counsel, nunc pro tunc to Sept. 5, 2006. As reported in the Troubled Company Reporter on Oct. 5, 2006, Stahl Cowen is expected to: (a) counsel the Retiree Committee with respect to the administration of the Debtors' bankruptcy estates, advise the Retiree Committee members with respect to their fiduciary duties, and communicate with the retiree constituency and the like; (b) investigate the acts, conduct, assets, liabilities and financial condition of the Debtors and their non-debtor affiliates, the operation of the Debtors' businesses, and any other matters relevant to the case or to the formulation of a plan of reorganization or liquidation; (c) analyze any proposals made by the Debtors with respect to their assertions as to the necessity and extent of reduction of retiree benefits and developing counter- offers to those proposals; (d) negotiate and litigate with respect to the Retiree Committee's rights and interests regarding any modifications by the Debtors of any prepetition retiree benefits provided to their non-union retirees who are constituents of the Retiree Committee; (e) prepare all necessary motions, answers, orders, reports and other legal papers in connection with the Retiree Committee's interests in the Debtors' estates; (f) participate in the formulation of a disclosure statement and a plan and advise the Retiree Committee as to the effects and consequences that may result from any plan formulated; (g) work with other professionals, likely to include financial advisors and an actuarial firm, to examine the Debtors' financial condition, the projections and analysis of the Debtors' financial advisors, their business plans and any revisions of it, health coverage information, actuarial analysis of the retiree group and the usage and cost of health care coverage; (h) assist the Retiree Committee in evaluating and implementing alternative health care plans and their mechanisms for establishing, funding and maintaining; (i) submit all necessary retention and compensation filings for professionals retained by the Retiree Committee; (j) represent the Retiree Committee's interests in any sale by the Debtors of any or all of their assets; and (k) represent the Retiree Committee's interests in all matters otherwise necessary to protect its interests. Stahl Cowen will be paid based on its customary hourly rates: Professional Hourly Rates ------------ ------------ Partners $260 to $450 Associates $185 to $280 Legal Assistants/Paralegals $100 to $175 These professionals will have primary responsibility of providing services to the Retiree Committee: Professional Hourly Rate ------------ ----------- Jon D. Cohen $415 Trent P. Cornell $395 Scott N. Schreiber $435 Stahl Cowen will also be reimbursed for all necessary expenses it will incur in providing services to the Retiree Committee. Jon David Cohen, Esq., an equity member of Stahl Cowen Crowley, LLC, informed the Court that his firm is not owed any money by the Debtors prepetition and does not represent any interest adverse to the Retiree Committee, its members and its constituents. Mr. Cohen assured the Honorable Burton R. Lifland that Stahl Cowen is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. About SCC Headquartered in Chicago, Illinois, Stahl Cowen Crowley LLC -- http://www.stahlcowen.com/-- provides legal counsel to organizations ranging from the entrepreneurial to large, publicly traded corporations and municipalities. The firm's practice areas include Bankruptcy & Restructuring, Corporate, Mergers & Acquisitions, Litigation, Local Government, Real Estate and Trusts & Estates. About Dana Corporation Toledo, OH-based Dana Corp. -- http://www.dana.com/-- designs and manufactures products for every major vehicle producer in the world, and supplies drivetrain, chassis, structural, and engine technologies to those companies. Dana employs 46,000 people in 28 countries. Dana is focused on being an essential partner to automotive, commercial, and off-highway vehicle customers, which collectively produce more than 60 million vehicles annually. The company and its affiliates filed for chapter 11 protection on Mar. 3, 2006 (Bankr. S.D.N.Y. Case No. 06-10354). Corinne Ball, Esq., and Richard H. Engman, Esq., at Jones Day, in Manhattan and Heather Lennox, Esq., Jeffrey B. Ellman, Esq., Carl E. Black, Esq., and Ryan T. Routh, Esq., at Jones Day in Cleveland, Ohio, represent the Debtors. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor and investment banker. Ted Stenger from AlixPartners serves as Dana's Chief Restructuring Officer. Thomas Moers Mayer, Esq., at Kramer Levin Naftalis & Frankel LLP, represents the Official Committee of Unsecured Creditors. Fried, Frank, Harris, Shriver & Jacobson, LLP serves as counsel to the Official Committee of Equity Security Holders. When the Debtors filed for protection from their creditors, they listed $7.9 billion in assets and $6.8 billion in liabilities as of Sept. 30, 2005. (Dana Corporation Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). DELTA MILLS: Organizational Meeting Scheduled for 9 a.m. Friday --------------------------------------------------------------- The U.S. Trustee for Region 3 will hold an organizational meeting to appoint an official committee of unsecured creditors in Delta Mills Inc.'s chapter 11 case at 9:00 a.m., on Oct. 20, 2006, at Room 2112, J. Caleb Boggs Federal Building, 844 King Street in Wilmington, Delaware. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. 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 that the reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Delta Mills Inc. manufactures and sells textile products for the apparel industry. The Company, its parent, Delta Woodside Industries, Inc., and an affiliate, Delta Mills Marketing, Inc., filed for chapter 11 protection on Oct. 13, 2006 (Bankr. D. Del. Case No. 06-11144). Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnell, represents the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $1 million to $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Feb. 10, 2007. DEUTSCHE ALT-A: Moody's Assigns Ba2 Rating to Class M-8 Certs. -------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by Deutsche Alt-A Securities Mortgage Loan Trust, Series 2006-AR4, and ratings ranging from Aa1 to Ba2 to subordinate certificates in the deal. The securitization is backed by Countrywide Home Loans, Inc. (49%), MortgageIT, Inc. (15%), and other mortgage lenders (36%, none individually originating over 10%) originated, adjustable- rate, Alt-A mortgage loans acquired by DB Structured Products, Inc. The ratings are based primarily on the credit quality of the loans and on the protection against credit losses provided by subordination, excess spread, and overcollateralization. The ratings also benefit from interest-rate swap and cap agreements provided by The Bank of New York. Moody's expects collateral losses to range from 0.95% to 1.15%. Countrywide Home Loans Servicing LP, GMAC Mortgage Corporation, and other mortgage servicers will service the loans, and Wells Fargo Bank, N.A. will act as master servicer. Moody's has assigned Wells Fargo its top servicer quality rating of SQ1 as a master servicer of mortgage loans. These are Moody's complete rating actions: Deutsche Alt-A Securities Mortgage Loan Trust Series 2006-AR4 Mortgage Pass-Through Certificates Class A-1, Assigned Aaa Class A-2, Assigned Aaa Class A-3, Assigned Aaa Class M-1, Assigned Aa1 Class M-2, Assigned Aa2 Class M-3, Assigned Aa3 Class M-4, Assigned A1 Class M-5, Assigned A2 Class M-6, Assigned A3 Class M-7, Assigned Baa2 Class M-8, Assigned Ba2 DOLLAR GENERAL: Moody's Assigns Loss-Given-Default Rating --------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the US and Canadian Retail sector, the rating agency confirmed its Ba1 Corporate Family Rating for Dollar General Corporation and downgraded its Ba1 rating on the Company's $200 million 8-5/8% senior unsecured notes to Ba2. In addition, Moody's assigned an LGD4 rating to notes, suggesting noteholders will experience a 66% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Goodlettsville, Tennessee, Dollar General Corporation -- http://www.dollargeneral.com/-- is a Fortune 500(R) discount retailer with 7,821 neighborhood stores as of Oct. 28, 2005. Dollar General stores offer convenience and value to customers by offering consumable basic items that are frequently used and replenished, such as food, snacks, health and beauty aids and cleaning supplies, as well as a selection of basic apparel, housewares and seasonal items at everyday low prices. DRUMMOND COMPANY: Moody's Assigns Loss-Given-Default Rating ----------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its Ba3 Corporate Family Rating for Drummond Company, Inc. Additionally, Moody's held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $500 Million Five-Year Revolving Credit Facility Ba3 Ba3 LGD4 54% $200 Million Term Loan Facility due 2011 Ba3 Ba3 LGD4 54% $400 Million 7.375% Senior Unsecured Notes due 2016 Ba3 Ba3 LGD4 54% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Birmingham, Alabama, Drummond Company, Inc., is engaged in the mining and marketing of coal. DYNAMIC TOOLING: Court Confirms Bettcher's Competing Plan --------------------------------------------------------- After acquiring a secured claim and several unsecured claims in Dynamic Tooling Systems, Inc.'s chapter 11 case, Bettcher Industries, Inc., proposed a chapter 11 plan of reorganization dated July 10, 2006, for DTS. The U.S. Bankruptcy Court for the District of Kansas approved the disclosure statements explaining Bettcher's plan and a chapter 11 plan proposed by Dynamic Tooling on July 21, 2006. The competing plans went to creditors for a vote. The Honorable Robert E. Nugent convened a confirmation hearing on Aug. 22, 2006. On the eve of the confirmation hearing, Bettcher and DTS announced a settlement under which DTS would withdraw its plan and its opposition to Bettcher's plan. Bettcher's plan provides for an aggregate distribution capped at $700,000 for all Allowed Claims, backed by a $750,000 letter of credit issued by Fifth Third Bank, and a transfer of all DTS assets to Bettcher's subsidiary, R & F Intellectual Property Acquisition, Inc. R & F, in turn, will acquire, free and clear of any liens or interests, DTS's assets, including any intellectual property it owned. R & F would be designated as an estate representative under 11 U.S.C. Sec. 1123(b)(2) to retain any claims or interests of the debtor and pursue them post- confirmation. The Plan also gives R & F 30 days after the effective date of the plan in which to assume or reject any executory contracts or unexpired leases. DTS manufactures knives and knife blades for sale to the meat packing industry. In particular, DTS makes a replacement circular blade for a hand-held power knife used for deboning animal carcasses. Hantover, Inc., is DTS's principal distributor of these blades. Bettcher makes a hand-held power knife and blades and holds several patents on their designs. DTS's replacement blades fit into Bettcher's knives, making DTS and Bettcher competitors. DTS's principal, Dennis Ross, also holds several patents relating to these circular knives. Hantover was the debtor's principal customer and is a competitor of Bettcher. Hantover claims that by virtue of its Exclusive Distributorship Agreement with DTS, it has a perpetual, irrevocable license to use debtor's intellectual property in the manufacture of knives used in the meat packing industry. Hantover filed its timely objection to confirmation of the Bettcher plan, complaining about the provision allowing an estate representative to make contract assumption and rejection decisions. In a decision published at 2006 WL 2666010, Judge Nugent says Hantover's complaints don't stand in the way of confirming Bettcher's plan for DTS, but the post-Effective Date decision about the disposition of Hantover's contract won't fly. Dynamic Tooling Systems, Inc., filed for chapter 11 protection (Bankr. D. Kan. Case No. 04-15900) on October 25, 2004. EARLE M. JORGENSEN: Moody's Assigns Loss-Given-Default Rating ------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its Ba3 Corporate Family Rating for Earle M. Jorgensen Company and its Ba3 rating on the Company's $250 million issue of 9.75% senior secured global notes due 2012. Moody's also assigned an LGD4 rating to those loans, suggesting noteholders will experience a 59% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Lynwood, California, Earle M. Jorgensen Company -- http://www.emjmetals.com/-- distributes metal products in North America with 39 service and processing centers. EMJ inventories more than 25,000 different bar, tubing, plate, and various other metal products, specializing in cold finished carbon and alloy bars, mechanical tubing, stainless bars and shapes, aluminum bars, shapes and tubes, and hot-rolled carbon and alloy bars. EL PASO: Moody's Assigns Loss-Given-Default Ratings --------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency revised the corporate family rating on El Paso Corporation to B2. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Sr. debs, 6.375% through 10.75%, due 2008 through 2037 B2 B2 LGD4 52% Sr. notes, 5.75% through 10.75%, due 2006 through 2037 B2 B2 LGD4 52% Nts, 6.50% through 7.875%, due through 2018 B2 B2 LGD4 52% Medium-term Nts, 6.95% through 9.0%, due through 2032 B2 B2 LGD4 52% $1.25 billion Revolving Credit Facility B1 Ba3 LGD2 26% $500 Mil. Deposit Loan Facility B1 Ba3 LGD2 26% In connection with implementing LGD for the midstream sector, Moody's also assigned multiple Corporate Family Ratings for El Paso Corp. in which there is believed to be very low correlation of default probability among related legal entities in a single consolidated organization. This situation is likely to occur in organizations comprised of multiple legal entities, whose stand- alone credit risk is substantially insulated by regulatory or structural factors. In El Paso's case, the CFR of B1 was changed to B2, redefining the scope of legal entities covered by this CFR as encompassing only the holding company level and excluding its core pipeline and E&P operating subsidiaries. El Paso Exploration & Production Company's CFR changed from B1 to Ba3, which has been redefined to reflect that subsidiary on a standalone basis. A CFR of Ba1 was assigned to each of El Paso's five pipeline subsidiaries: Tennessee Gas Pipeline Company, Southern Natural Gas Company, El Paso Natural Gas Company, ANR Pipeline Company, and Colorado Interstate Gas Company. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Houston, Texas, El Paso Corporation (NYSE:EP) -- http://www.elpaso.com/-- provides natural gas and related energy products in a safe, efficient, and dependable manner. ENERGY PARTNERS: Terminates Merger Agreement with Stone Energy -------------------------------------------------------------- Energy Partners, Ltd. and Stone Energy Corporation have agreed to terminate their June 22, 2006 merger agreement. EPL also disclosed that, as the Company is now free from the merger agreement with Stone, its Board of Directors has directed the Company, assisted by its financial advisors Evercore Group L.L.C., Banc of America Securities LLC, Petrie Parkman & Co, Inc., and UBS Securities LLC, to explore strategic alternatives to maximize stockholder value, including the possible sale of the Company. EPL issued this statement: "EPL has been, and remains, fully committed to acting in the best interests of our stockholders. While the EPL Board believed that the addition of Stone's complementary properties and assets would have been an excellent strategic fit for us, the Board has concluded that the exploration of strategic alternatives is in the best interests of EPL stockholders. The Board recommends that EPL's stockholders reject the unsolicited tender offer of ATS, Inc., which the Board determined to be inadequate and not in the best interests of EPL's stockholders. EPL's solid track record of operational success and the strong potential of our attractive Gulf of Mexico properties and prospects place us in a strong position to explore strategic alternatives to maximize value for our stockholders." There is no assurance that the exploration of strategic alternatives will result in any agreements or transactions. The Company does not intend to disclose developments with respect to the exploration of strategic alternatives unless and until its Board of Directors has made a decision regarding a specific course of action. In connection with the termination of the merger agreement with Stone, EPL has agreed to pay Stone an $8 million termination payment and EPL and Stone have agreed to release all claims between them relating to the merger agreement. The $8 million payment represents a $17.6 million discount from the fee that would have been payable by EPL to Stone under certain circumstances. About Stone Headquartered in Lafayette, Louisiana, Stone Energy Corporation (NYSE: SGY) -- http://www.stoneenergy.com/-- is an independent oil and gas company and is engaged in the acquisition and subsequent exploration, development, operation and production of oil and gas properties located in the conventional shelf of the Gulf of Mexico, deep shelf of the GOM, deep water of the GOM, Rocky Mountain Basins and the Wiliston Basin. About EPL Headquartered in New Orleans, Louisiana Energy Partners Ltd. (NYSE:EPL) -- http://www.eplweb.com/-- is an independent oil and natural gas exploration and production company. Founded in 1998, the Company's operations are focused along the U. S. Gulf Coast, both onshore in south Louisiana and offshore in the Gulf of Mexico. * * * As reported in the Troubled Company Reporter on Sept. 25, 2006, In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. and Canadian Exploration and Production sector last week, the rating agency confirmed its B2 Corporate Family Rating for Energy Partners, Ltd., and changed its rating on the company's 8.75% Senior Unsecured Guaranteed Global Notes due 2010 to B3. Additionally, Moody's assigned an LGD5 rating to those bonds, suggesting noteholders will experience a 73% loss in the event of a default. ENERGY PARTNERS: S&P Maintains Watch on B+ Corp. Credit Rating -------------------------------------------------------------- Standard & Poor's Ratings Services 'B+' corporate credit rating on exploration and production company Energy Partners Ltd. remained on CreditWatch with developing implications. The ratings on New Orleans, Louisiana-based Energy Partners were placed on CreditWatch Developing on Aug. 29, 2006. In addition, the 'B+' corporate credit rating on Stone Energy Corp. remained on CreditWatch with negative implications (where it was placed on June 28, 2006), following the announcement that Energy Partners has terminated its merger agreement with Stone and will be exploring strategic alternatives to maximize shareholder value. This could include the potential sale of the company. Standard & Poor's also notes that ATS Inc., a wholly owned subsidiary of Woodside Petroleum Ltd. (A-/Stable/--), currently has an unsolicited offer outstanding to acquire control of Energy Partners for $23 per share. As of June 30, 2006, Energy Partners had $270 million of debt. The CreditWatch with developing implications listing on Energy Partners reflects the likelihood that ratings could be raised, affirmed, or lowered. "The CreditWatch Negative listing on Stone reflects the likelihood that ratings could be either lowered or affirmed," said Standard & Poor's credit analyst Jeffrey B. Morrison. "As Energy Partners has now terminated its agreement with Stone, we will likely resolve the CreditWatch listing following a meeting with management, barring any unforeseen developments," he continued. Key issues to be considered in the resolution of the CreditWatch listing for Stone, and whether ratings will be affirmed at the current level or further lowered, include: -- the strategic direction of Stone on a stand-alone basis; Creeping per barrel leverage (now above $6 on a total proved basis) over the past two years; -- the likelihood of debt reduction in the near to intermediate term; -- management's ability to improve operating metrics (namely, demonstrating consistent organic reserve replacement and production growth) after a rocky 2005; and -- rising finding development costs in core areas of operations (namely the U.S. Gulf of Mexico) that have continued to trend above historical averages over the past several years. EURAMAX INT'L: Moody's Assigns Loss-Given-Default Rating -------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its B2 Corporate Family Rating for Euramax International, Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Issuer: Euramax International, Inc. Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $80 Million Senior Secured First Lien Bank Facility due 2011 B2 B1 LGD3 34% $319.3 Million Senior Secured First Lien Bank Facility due 2012 B2 B1 LGD3 34% $190 Million Senior Secured Second Lien Bank Facility due 2013 Caa1 Caa1 LGD5 81% Issuer: Euramax Holdings Limited Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- EUR 71.3 Million Senior Secured First Lien Bank Facility due 2012 B2 B1 LGD3 34% GBP $14.9 Million Senior Secured First Lien Bank Facility due 2012 B2 B1 LGD3 34% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Norcross, Georgia, Euramax International Inc. is an international producer of value-added aluminum, steel, vinyl, and fiberglass products. EUROPEAN MICRO: Files 2001 Financials With Going Concern Opinion ---------------------------------------------------------------- European Micro Holdings, Inc., filed its annual report for the year ended June 30, 2001, with the Securities and Exchange Commission on Oct. 12, 2006. The 2001 Annual Report carries Weinberg & Company P.A.'s going concern opinion about the company's ability to continue as a going concern after the firm audited its consolidated financial statements for the year ended June 30, 2001. The auditor pointed to the Company's net losses, working capital deficiency, and accumulated deficit. For the year ended June 30, 2001, the Company reported an $8,976,000 net loss on $94,093,000 of total net sales compared with a $3,207,000 net loss on $115,493,000 of total net sales for the same period in 2000. At June 30, 2001, the Company's balance sheet showed $14,068,000 in total assets, $12,001,000 in total current liabilities, and $2,067,000 in total shareholders' equity. The Company had a $6,556,000 accumulated deficit at June 30, 2001. A full-text copy of the Company's 2001 Annual Report is available for free at http://ResearchArchives.com/t/s?1371 European Micro Holdings, Inc., was an independent distributor of microcomputer products, including personal computers, memory modules, disc drives and networking products, to customers mainly in Western Europe and to customers and related parties in the United States and Asia. The Company's customers consisted of value-added resellers, corporate resellers, retailers, direct marketers and distributors. During July 2001, the management approved a plan for the liquidation and eventual sale or dissolution of the Company. Accordingly, it is engaged in an ongoing orderly liquidation of its assets. FOREST CITY: Fitzsimons Inks 160-Acre Denver Park Development Pact ------------------------------------------------------------------ Forest City Enterprises Inc. reported that Forest City Fitzsimons, Inc. signed an agreement with the Fitzsimons Redevelopment Authority to develop a 160-acre life sciences office park near Denver. The new park, to be built on the site of the former Fitzsimons Army Medical Center, will include offices and research and development facilities for the life sciences industry. Build-out will occur over the next 20 years or more, with the first buildings expected to be completed by the end of 2008. The Fitzsimons site is located next to the University of Colorado's new Health Sciences Center campus and is adjacent to Forest City's Stapleton mixed-used project. "Fitzsimons is our fifth science and technology development, building on our success at University Park at MIT near Boston, which has been followed by life sciences projects in Baltimore, Chicago and Philadelphia" Charles A. Ratner, Forest City president and chief executive officer, said. "Our experience with large mixed-use projects for the life sciences industry will enable us to develop a state-of-the-art office and research campus at Fitzsimons. This project will feature a critical mass of technology companies and is destined to become one of the premier life sciences communities in the nation." Forest City's track record in developing real estate for the life sciences industry includes the award-winning University Park at MIT, which involved the transformation over two decades of a 27-acre industrial site into a mixed-used community with more than 2.3 million square feet of office and lab space - combined with residential, retail and hotel components. In addition, Forest City has completed a 123,000-square-foot research facility at the University of Pennsylvania in Philadelphia, and currently has two other life sciences projects under construction: the 22-acre Illinois Science + Technology Park in suburban Chicago; and a mixed-use community adjacent to the Johns Hopkins University medical campus in East Baltimore, Maryland. Headquartered in Cleveland, Ohio, Forest City Enterprises, Inc. is a $5.9 billion NYSE-listed real estate company. The Company is principally engaged in the ownership, development, acquisition and management of commercial and residential real estate throughout the United States. The Company's portfolio includes interests in retail centers, apartment communities, office buildings and hotels in 20 states and the District of Columbia. * * * As reported on the Troubled Company Reporter on Oct. 6, 2006, Standard & Poor's Ratings Services affirmed its 'BB+' rating on Forest City Enterprises Inc. The rating affirmation affects roughly $550 million in rated senior notes. The outlook remained stable. FOSTER WHEELER: Closes New $350 Million Credit Facility ------------------------------------------------------- Foster Wheeler Ltd. has successfully closed on a new $350 million five-year senior secured domestic credit facility, effective Oct. 13, 2006. The Company will be able to utilize the facility by issuing letters of credit up to the full $350 million limit. The Company will also have the option to use up to $100 million of the $350 million limit for revolving borrowings, an option which the Company has no immediate plans to use. "This new agreement provides the increased bonding capacity and financial flexibility that we require to support our growing operations and increased volume of business and, at current usage levels, will also reduce our bonding costs by approximately $8 million per year," said John T. La Duc, executive vice president and chief financial officer. About Foster Wheeler With operational headquarters in Clinton, New Jersey, Foster Wheeler Ltd. -- http://www.fwc.com/-- offers a broad range of engineering, procurement, construction, manufacturing, project development and management, research and plant operation services. Foster Wheeler serves the refining, upstream oil and gas, LNG and gas-to-liquids, petrochemical, chemicals, power, pharmaceuticals, biotechnology and healthcare industries. * * * As reported in the Troubled Company Reporter on Aug 7, 2006, 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. As reported in the Troubled Company Reporter on May 30, 2006, Moody's Investors Service upgraded Foster Wheeler's corporate family rating to B1 from B3 and assigned a Ba3 rating to the Company's $250 million senior secured bank revolving credit facility. The rating outlook is changed to Positive. FOUNDATION PA: Moody's Assigns Loss-Given-Default Rating -------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its Ba2 Corporate Family Rating for Foundation PA Coal Company and its Ba3 rating on the Company's $300 million issue of 7.25% guaranteed senior unsecured notes due 2014. Moody's also assigned an LGD5 rating to those loans, suggesting noteholders will experience a 83% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in Linthicum Heights, Maryland, Foundation PA Coal Company, LLC, is engaged in the mining and marketing of coal. FREEPORT-MCMORAN: Moody's Assigns Loss-Given-Default Rating ----------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its Ba3 Corporate Family Rating for Freeport-McMoran Copper & Gold Inc. Additionally, Moody's held its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $340 Million 6.875% Senior Unsecured Notes due 2014 B1 B1 LGD5 80% $272 Million 10.125% Senior Unsecured Notes due 2010 B1 B1 LGD5 80% $55 Million 7.5% Senior Unsecured Notes due 2006 B1 B1 LGD5 80% $200,000 7.20% Senior Unsecured Notes due 2026 B1 B1 LGD5 80% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in New Orleans, Louisiana, Freeport-McMoRan Copper & Gold, Inc. -- http://www.fcx.com/-- through its subsidiaries, engages in the exploration, mining, and production of copper, gold, and silver. FV STEEL: Dist. Ct. Tells Bankr. Ct. to Estimate Clean-Up Claim --------------------------------------------------------------- In April 1989, the Environmental Protection Agency named the Glidden Company, the Sherman Wire Company (one of FV Steel and Wire Company's debtor-affiliates) and other entities as potentially responsible parties with respect to a hazardous waste site, the Chemical Recycling, Inc. site in Wylie, Texas. In May 1989, a number of PRPs, including Glidden and Sherman, entered into an agreement to manage the cleanup in compliance with the EPA's remedial plan. Participation in the Agreement was voluntary, and the PRPs could withdraw from it at any time. The Agreement created the CRI Steering Committee to coordinate the efforts of the participating PRPs and assess costs to participants related to their potential liability. With the committee's agreement, the EPA issued a Consent Order governing cleanup of the site. Since 1989, the participants have contributed significant amounts to the cleanup. On Feb. 24, 2004, Sherman filed for chapter 11 protection. The committee and Glidden filed claims against Sherman seeking to collect the costs of cleanup remaining to be performed at the Site. In February 2005, Sherman withdrew from the Agreement. Neither when it withdrew from the Agreement nor when it filed for bankruptcy did Sherman owe any unpaid assessments under the Agreement. Subsequently, Sherman and claimants filed cross- motions for summary judgment in the bankruptcy court. The EPA did not file its own claim against Sherman but filed a "Statement of Position" in support of claimants' summary judgment motion. The bankruptcy court granted Sherman's motion and denied claimants'. The Claimants moved for reconsideration and moved to amend their claim to assert a timely-filed claim on behalf of the EPA or to file a new late claim on behalf of the EPA. The bankruptcy court denied their motions. The Claimants appealed to the U.S. District Court for the Eastern District of Wisconsin. In a decision published at 2006 WL 2724049, the Honorable Lynn Adelman tells the Bankruptcy Court that it was required to assign a value to the contingent environmental clean-up claim and take into account the likelihood that the Environmental Protection Agency might bring a civil action against the claimants in the future. Headquartered in Dallas, Texas, Keystone Consolidated Industries, Inc., makes carbon steel rod, fabricated wire products, including fencing, barbed wire, welded wire and woven wire mesh for the agricultural, construction and do-it-yourself markets. The Company and its debtor-affiliates filed for chapter 11 protection on February 26, 2004, (Bankr. E.D. Wisc. Case No. 04-22421). The Bankruptcy Court confirmed the Debtors' Third Amended Plan on August 10, 2005. David L. Eaton, Esq., at Kirkland & Ellis LLP, and Bruce G. Arnold, Esq., Daryl L. Diesing, Esq., Patrick B. Howell, Esq., and Daniel J. McGary, Esq., at Whyte Hirschboeck Dudek S.C., represent the Reorganized Debtors. When the Debtors filed for protection from their creditors, they listed $196,953,000 in total assets and $365,312,000 in total debts. GOLDEN NUGGET: Moody's Assigns Loss-Given-Default Rating -------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the gaming, lodging and leisure sectors, the rating agency confirmed its B2 Corporate Family Rating for Golden Nugget Inc. and revised its rating on the company's $155 million 8.75% Senior Secured Notes Due 2011 to B3 from B2. Moody's assigned the debentures an LGD4 rating suggesting noteholders will experience a 62% loss in the event of default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). GS MORTGAGE: Moody's Affirms Junk Rating on $6.6MM Class H Certs. ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of three classes and affirmed the ratings of six classes of GS Mortgage Securities Corporation II, Commercial Mortgage Pass-Through Certificates, Series 1999-C1: -- Class A-2, $334,651,335, WAC, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $42,303,000, WAC, affirmed at Aaa -- Class C, $44,529,000, WAC, affirmed at Aaa -- Class D, $57,888,000, WAC, upgraded to Aaa from Aa2 -- Class E, $13,359,000, WAC, upgraded to Aa1 from A3 -- Class F, $46,756,000, Fixed, upgraded to Baa3 from Ba2 -- Class G, $28,944,000, Fixed, affirmed at B3 -- Class H, $6,679,000, Fixed, affirmed at Caa1 As of the Sept. 18, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 34% to $587.8 million from $890.6 million at securitization. The Certificates are collateralized by 212 loans ranging in size from less than 1% to 3.1% of the pool with the top ten loans representing 20.2% of the pool. Nineteen loans, representing 18% of the pool, have defeased and are collateralized by U.S. Government securities. Twenty-six loans have been liquidated from the trust, resulting in aggregate realized losses of approximately $16.2 million. Six loans, representing 2.7% of the pool, are in special servicing. Moody's has estimated losses of approximately of approximately $2 million for the specially serviced loans. Fifty-three loans, representing 26.8% of the pool, are on the master servicer's watchlist. Moody's was provided with full year 2005 operating results for approximately 97% of the performing loans. Moody's weighted average loan to value ratio is 80.1%, compared to 84.3% at Moody's last full review in September 2005 and compared to 90.7% at securitization. Moody's is upgrading Classes D, E and F due to increased credit support, improved overall pool performance and defeasance. Classes D and E were upgraded on Aug. 2, 2006 and placed on review for further possible upgrade based on a Q tool based portfolio review. The top three non-defeased exposures represent 6.3% of the outstanding pool balance. The largest exposure is the Granada Apartments Loan ($17 million - 2.9%), which is secured by a 746-unit multifamily property located in Erie, Pennsylvania. The property is 89.7% occupied, compared to 87.6% at last review. Performance has been stable since Moody's last review. The loan is on the master servicer's watchlist due to low debt service coverage. Moody's LTV is 99.4%, compared to in excess of 100% at last review. The second largest exposure is the Salter Healthcare Portfolio ($10 million - 1.7%), which is secured by three nursing centers totaling 384 beds. All of the properties are located in Massachusetts. Performance has been stable since last review. Moody's LTV is 54.4%, compared to 55.1% at last review. The third largest exposure is the Atrium Hotel Loan ($9.9 million - 1.7%), which is secured by a 214-room full service hotel located in Irvine, California. RevPAR for calendar year December 2005 was $63.16, compared to $49.19 for calendar year 2004. Moody's LTV is 95.6%, compared to 98.2% at last review. The pool collateral is a mix of multifamily (29.4%), retail (19.8%), U.S. Government securities (18.0%), office (12.4%), industrial and self storage (9.0%), lodging (8.7%), healthcare (2.1%) and credit tenant leases (0.6%). The collateral properties are located in 33 states. The highest state concentrations are Texas (15.6%), California (10.2%), New York (8.1%), Arizona (7.4%) and Maryland (5.1%). All of the loans are fixed rate. HALO TECHNOLOGY: Mahoney Cohen Raises Going Concern Doubt --------------------------------------------------------- Mahoney Cohen & Company, CPA, P.C., in New York, raised substantial doubt about Halo Technology Holdings, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended June 30, 2006, and 2005. The auditor pointed to the Company's recurring operating losses and working capital deficiency. For the year ended June 30, 2006, Halo Technology Holdings, Inc., reported a net income available to common stockholders of $17,853,875 on $25,208,995 of total revenues compared with a $72,762,528 net loss on $5,123,922 of total revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $59,703,538 in total assets, $60,295,220 in total liabilities, and $7,750,000 in redeemable preferred stock, resulting in an $8,341,682 stockholders' deficit. The Company had a $44,092,340 deficit at June 30, 2005. The Company's current balance sheet also showed strained liquidity with $5,946,178 in total current assets available to pay $29,150,731 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's Annual Report is available for free at http://ResearchArchives.com/t/s?137e Halo Technology Holdings, Inc., fka Warp Technology Holdings, Inc., is a holding company whose subsidiaries operate enterprise software and information technology businesses. Halo's existing subsidiaries are Gupta Technologies, LLC; Warp Solutions, Inc.; Kenosia Corporation; Tesseract Corporation; DAVID Corporation; Process Software; ProfitKey International; Empagio; and ECI. HARD ROCK: Moody's Assigns Loss-Given-Default Rating ---------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the gaming, lodging and leisure sectors, the rating agency confirmed its B2 Corporate Family Rating for Hard Rock Hotel Inc. and revised its rating on the company's 8-7/8 % Senior Secured Second Lien Notes Due 2013 from B3 to B2. Moody's assigned those debentures an LGD3 rating with a projected loss-given default of 45%. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Hard Rock Hotel Inc. owns and operates the Hard Rock Hotel & Casino in Las Vegas, Nevada, which is located one mile east of the Las Vegas Strip. Revenues for the last twelve months ended March 31, 2006 were approximately $182 million. HEXION SPECIALTY: Tenders Offer to Holders of its $625 Mil. Notes ----------------------------------------------------------------- Hexion Specialty Chemicals, Inc., is offering to purchase for cash any and all of the outstanding: (i) $150,000,000 principal amount at maturity of Second- Priority Senior Secured Floating Rate Notes due 2010, (ii) $150,000,000 principal amount at maturity of Second- Priority Senior Secured Floating Rate Notes due 2010; and (iii) $325,000,000 principal amount at maturity of 9% Second- Priority Senior Secured Notes due 2014 The Notes were issued by Hexion U.S. Finance Corp. and Hexion Nova Scotia Finance, ULC on the terms and subject to the conditions in the Offer to Purchase and Consent Solicitation Statement dated Oct. 12, 2006 and the accompanying Letter of Transmittal and Consent. The Company is also soliciting consents to eliminate most of the restrictive covenants and the Liens in the indentures under which the Notes were issued. The Company disclosed that it expects to enter into a new $2 billion term loan facility and a new $50 million synthetic letter of credit facility, which will replace its May 2006 term loan and synthetic letter of credit facilities. The Company will continue to have access to its current five-year $225 million revolving credit facility. In addition the Company expects to raise $825 million of senior secured debt in connection with its offer to purchase the Notes. It intends to use $500 million of the additional cash available under its new credit facilities and from the Secured Debt Financing to pay a common stock dividend to its shareholders and the balance of the proceeds to pay for the Notes repurchased in the Tender Offers. The Company has also filed an application with the Securities and Exchange Commission for the withdrawal of its registration statement on Form S-1, relating to its planned initial public offering. The total consideration for each $1,000 principal amount of the 2005 Floating Rate Notes tendered and accepted for purchase pursuant to the tender offer will be $1,023. The total consideration for each $1,000 principal amount of the 2004 Floating Rate Notes will be $1,022.50. The total consideration for the 9% Notes tendered and accepted for purchase will be determined based on a yield to the first redemption date equal to the sum of the yield of the 3.625% U.S. Treasury Security due July 15, 2009, as calculated by Credit Suisse Securities LLC plus a fixed spread of 50 basis points. The Company will pay accrued and unpaid interest up to, but not including, the applicable payment date. Each holder who tenders its Notes and delivers consents on or prior to Oct. 24, 2006 will be entitled to a consent payment of $30 for each $1,000 principal amount of Notes. Noteholders who tender after the Consent Date, but prior to the Expiration Date, will receive the total consideration minus the consent payment. Holders who tender Notes are required to consent to the proposed amendments to the indentures and the collateral agreements. The tender offers will expire at midnight, New York City time, on Nov. 8, 2006, and the consent solicitations will expire on Oct. 24, 2006. The tender offer is subject to the conditions set forth in the Offer Documents including the receipt of consents of the noteholders representing a majority in aggregate principal amount of the Notes and of the Company obtaining the financing necessary to pay for the Notes and consents. Credit Suisse Securities (USA) LLC act as Dealer Manager of the tender offers and consent solicitations. Questions about the tender offers and consent solicitations may be directed to Credit Suisse Securities (USA) LLC at (800) 820-1653 (toll free) or (212) 325-7596 (collect). Copies of the Offer Documents and other related documents may be obtained from D.F. King & Co., Inc., the information agent for the tender offers and consent solicitations, at (800) 290-6426 (toll free) or (212) 269-5550 (collect). Based in Columbus, Ohio, Hexion Specialty Chemicals Inc. -- http://hexionchem.com/-- makes thermosetting resins (or thermosets). Thermosets add a desired quality (heat resistance, gloss, adhesion) to a number of different paints and adhesives. Hexion also makes formaldehyde and other forest product resins, epoxy resins, and raw materials for coatings and inks. The Company has 86 manufacturing and distribution facilities in 18 countries. * * * As reported in the Troubled Company Reporter on May 4, 2006, Standard & Poor's Ratings Services assigned its 'B+' rating and its recovery rating of '3' to Hexion Specialty's $1.675 billion senior secured term loan and synthetic letter of credit facilities. The rating on the existing $225 million revolving credit facility was lowered to 'B+' with a recovery rating of '3', from 'BB-' with a recovery rating of '1', to reflect the similar security package as the new term loan and synthetic letter of credit facility. The ratings on the existing senior second secured notes were raised to 'B', with a recovery rating of '3', from 'B-' with a recovery rating of '5'. The ratings on the senior second secured notes reflect the amount of priority claims of the revolving facility and the first-lien term loan lenders. At the same time, Standard & Poor's affirmed its 'B+' corporate credit rating on Hexion and revised the outlook to stable from negative. HOME EQUITY: Moody's Places Ba2 Rating on Class B-3 Certificates ---------------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by Home Equity Asset Trust 2006-7 and ratings ranging from Aa1 to Ba2 to the subordinate certificates in the deal. The securitization is backed by Encore Credit Corp. (24%), OwnIt Mortgage Solution, Inc. (24%), Lime Financial Services (20%), Accredited Home Lenders Inc. (11%), and various mortgage lenders (21%) originated, adjustable-rate (82%) and fixed-rate (18%), subprime mortgage loans acquired by DLJ Mortgage Capital, Inc. The ratings are based primarily on the credit quality of the loans and on protection against credit losses by subordination, excess spread, and overcollateralization. The ratings also benefit from the interest-rate swap agreement provided by Credit Suisse International. Moody's expects collateral losses to range from 4.80% to 5.30%. Wells Fargo Bank, N.A. and Select Portfolio Servicing, Inc. will service the mortgage loans. Moody's has assigned Wells Fargo its servicer quality rating of SQ1 as a servicer of subprime mortgage loans. Moody's has assigned SPS its servicer quality rating of SQ2- as a servicer of subprime mortgage loans. These are the complete rating actions: Home Equity Asset Trust 2006-7 Home Equity Pass-Through Certificates, Series 2006-7 Cl. 1-A-1, Assigned Aaa Cl. 2-A-1, Assigned Aaa Cl. 2-A-2, Assigned Aaa Cl. 2-A-3, Assigned Aaa Cl. 2-A-4, Assigned Aaa Cl. M-1, Assigned Aa1 Cl. M-2, Assigned Aa2 Cl. M-3, Assigned Aa3 Cl. M-4, Assigned A1 Cl. M-5, Assigned A2 Cl. M-6, Assigned A3 Cl. M-7, Assigned Baa1 Cl. M-8, Assigned Baa2 Cl. B-1, Assigned Baa3 Cl. B-2, Assigned Ba1 Cl. B-3, Assigned Ba2 HUDBAY MINERALS: Moody's Assigns Loss-Given-Default Rating ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the North American Metals & Mining sectors, the rating agency confirmed its B1 Corporate Family Rating for HudBay Minerals, Inc., and its Ba3 rating on Hudson Bay Mining & Smelting Co., Ltd.'s $55 million issue of 9.625% guaranteed senior secured notes due 2012. Moody's also assigned an LGD3 rating to those loans, suggesting noteholders will experience a 40% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). HudBay Minerals is engaged in the mining and processing of zinc, copper and other by-product metals. INFRASOURCE SERVICES: Board Appoints David Helwig as Chairman ------------------------------------------------------------- The Board of Directors of InfraSource Services Inc. appointed David R. Helwig, the Company's president and chief executive officer, as the Chairman of the Board of Directors, and J. Michal Conaway has been appointed as Lead Independent Director. Mr. Helwig succeeds Ian Schapiro who has been serving as Interim Chairman since June 2005. Mr. Conaway, who will continue to serve as the chair of the Audit Committee, is the first director named to the position of Lead Independent Director. The Company also disclosed the resignation of Mr. Schapiro and Michael P. Harmon from the Board of Directors effective Oct. 31, 2006. Messrs. Schapiro and Harmon are affiliated with funds managed by GFI Energy Ventures LLC and Oaktree Capital Management, LLC. "On behalf of everyone at InfraSource, I want to thank Ian and Mike for their dedication and service to the Company and for ensuring a smooth transition following the recently completed secondary offering in which the GFI and OCM funds sold almost all of their remaining shares in the Company," Mr. Helwig commented. "While we will miss their continued involvement on our Board, I am extremely pleased by the recent additions of Terry Winter and Fred Buckman as Directors and the designation of Michal Conaway as Lead Independent Director. I believe that we are well positioned for effective oversight and governance. I look forward to the continuation of effective interactions with our Board." "It has been a pleasure and a privilege to have served on the InfraSource Board for the past three years, and most recently as Interim Chairman of the Board," Mr. Schapiro remarked. "I am most grateful for the opportunity to have worked on behalf of the Company and all its shareholders. I believe the Board and the Company are in very good hands under the capable leadership of Dave Helwig as Chairman and Michal Conaway as Lead Independent Director, and I wish the Company continued success." Headquartered Media, Pennsylvania, InfraSource Services, Inc. (NYSE: IFS) -- http://www.infrasourceinc.com/-- is one of the largest specialty contractors servicing electric, natural gas and telecommunications infrastructure in the United States. InfraSource designs, builds, and maintains transmission and distribution networks for utilities, power producers, and industrial customers. * * * Standard & Poor's assigned BB- long-term foreign and local issuer credit ratings to the Company on May 7, 2004 INSILCO TECHNOLOGIES: Free & Clear Sale Not Entirely Free & Clear ----------------------------------------------------------------- During the course of Insilco Technologies, Inc.'s chapter 11 proceeding, Amphenol Corporation and Amphenol Technical Products International Co., purchased, among other assets, all of the Debtor's capital stock in Precision Cable de Mexico (a non-debtor Insilco subsidiary), under the terms of a Stock and Asset Purchase Agreement dated Dec. 15, 2002. The Bankruptcy Court entered an Order approving the Sale Agreement on March 7, 2003, pursuant to 11 U.S.C. Sec. 363. On Dec. 14, 2004, Chad Shandler, the Trustee for the Insilco Liquidating Trust commenced an adversary proceeding against Precision Cable de Mexico (Bankr. D. Del. Adv. Pro. No. 04-57713) seeking to recover payments totaling $1,176,582.10 allegedly made by Insilco to PCM. Amphenol, in turn, commenced its own adversary proceeding (Bankr. D. Del. Adv. Pro. No. 05-52403) seeking, inter alia, to enjoin the trustee's lawsuit. Amphenol asserts that the Sale Agreement and the Sale Order preclude the trustee's claim. The sale documents, Amphenol points out, say that the transaction was free and clear of all liens, claims and other interests and preference payments are specifically included in the definition of interests. In a decision published at 2006 WL 2683355, the Honorable Kevin J. Carey sides with the Trustee. Judge Carey says that the "free and clear of" language only protected Amphenol -- the third party that acquired the subsidiary's stock -- not the subsidiary itself, and the named defendant in the preference proceeding is the subsidiary, and not the third-party purchaser of its stock. Insilco Technologies, Inc., a leading global manufacturer and developer of highly specialized electronic interconnection components and systems, serving the telecommunications, computer networking, electronics, automotive and medical markets, filed for chapter 11 petition on Dec. 16, 2002 (Bankr. Del. Case No. 02- 13672). Pauline K. Morgan, Esq., Sharon M. Zieg, Esq., Maureen D. Luke, Esq., at Young, Conaway, Stargatt & Taylor and Constance A. Fratianni, Esq., Scott C. Shelley, Esq., at Shearman & Sterling represent the Debtors. When the Debtors filed for protection from their creditors, they listed $144,263,000 in total assets and $611,329,000 in total debts. INTELSAT BERMUDA: Fitch Junks Rating on $600 Million Sr. Facility ----------------------------------------------------------------- Fitch Ratings assigned a 'CCC+' rating and 'RR6' Recovery Rating to the $600 million senior unsecured credit facility of Intelsat (Bermuda), Ltd., which is a subsidiary of Intelsat, Ltd. The proceeds from the facility were used to fund Intelsat (Bermuda)'s acquisition of PanAmSat Holding Corporation on July 3, 2006. The Rating Outlook is Stable. The rating reflects the similar position of the credit facility in the capital structure as Intelsat (Bermuda)'s 11-1/4% senior unsecured non-guaranteed notes due 2016 (the 2016 notes) previously rated 'CCC+/RR6' by Fitch. The senior unsecured credit facility contains substantially the same covenants and events of default as the 2016 notes. If any borrowings under the credit facility remain outstanding on the one-year anniversary date of the closing of the credit facility, the initial loans will automatically be exchanged for senior unsecured notes that will mature on the tenth anniversary of the closing of the credit facility. If issued, the notes will have a fixed interest rate of 11-1/4%. Liquidity is provided by cash on hand and credit facilities. Cash on hand amounted to $475 million at the end of the second quarter of 2006 for Intelsat, and $73 million at Intelsat Corporation (formerly PanAmSat Corporation). A portion of cash on hand was used to finance the acquisition of PanAmSat Holding Corporation on July 3, 2006. Credit facilities consist of an undrawn $300 million, six-year credit facility located at Intelsat (Bermuda)'s indirect subsidiary Intelsat Subsidiary Holding Company, Ltd. and a $250 million six-year facility at indirect subsidiary Intelsat Corporation. The Intelsat Sub Holdco facility has a financial covenant restricting pro forma senior secured leverage to no greater than 1.5x at the end of each fiscal quarter, and the Intelsat Corporation facility requires pro forma senior secured leverage to be no greater than 4.25x at the end of each fiscal quarter. ISLE OF CAPRI: To Own 13.8% Interest in Revised Eight Wonder Pact ----------------------------------------------------------------- Isle of Capri Casinos Inc. revised its agreement in connection the proposal of Eighth Wonder, a privately held company engaged in resort development and based in Las Vegas, to build an integrated resort complex on Sentosa Island in Singapore. The Company disclosed that under the terms of the new agreements it will own a 13.8% interest in Eighth Wonder's proposed Sentosa Island project. Should Eighth Wonder be the successful bidder in the Sentosa Island RFP, the Company's equity contribution will be $65 million. It will also receive a payment equal to 2% of casino gross revenues for a 15-year period. Timothy Hinkley, president and chief operating officer, said, "Isle of Capri is pleased to continue our existing relationship with Eighth Wonder as we move through the RFP process in Singapore. The addition of Melco PBL brings significant Asian market gaming and hospitality expertise to the proposal and we look forward to presenting an exciting proposal to the Government of Singapore." About PBL PBL is a diversified media and entertainment group in Australia. The group's core businesses are gaming and entertainment; television production and broadcasting; magazine publishing and distribution; and strategic investment in key digital media and entertainment businesses. Led by Executive Chairman James Packer, PBL owns and operates the Crown Casino in Melbourne and Burswood Casino in Perth. It also owns the free-to-air television network, the Nine Network, and the largest magazine publisher, ACP Magazines. About Melco International Melco International Development Limited under the leadership of Chairman & CEO Lawrence Ho, is a conglomerate with a major business focus in Leisure, Gaming & Entertainment. The Group also operates the Jumbo Kingdom, with two other supporting lines of business in Technology and Investment Banking. Based in Biloxi, Miss., Isle of Capri Casinos, Inc. (Nasdaq: ISLE) -- http://www.islecorp.com/-- develops and owns gaming and entertainment facilities. 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. * * * Isle of Capri Casinos Inc.'s 'BB-' corporate credit rating is on Standard & Poor's Ratings Services' CreditWatch with negative implications. Moody's Investors Service affirmed its Ba3 Corporate Family Rating on Isle of Capri Casinos in connection with its implementation of the new Probability-of-Default and Loss-Given-Default rating methodology for the Gaming, Lodging & Leisure sector. Moody's assigned LGD ratings to four of the Company's debts including a LGD5 rating on its 9% Sr. Sub. Notes, suggesting debt holders will experience a 76% loss in the event of a default. JACK IN THE BOX: Moody's Assigns Loss-Given-Default Rating ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the restaurant sector, the rating agency revised its Corporate Family Rating for Jack in the Box Inc. from Ba2 to Ba3. Moody's also revised its ratings on the company's $200 million Senior Secured Revolver Due 2008 and $275 million Senior Secured Term Loan Due 2011 from Ba2 to Ba1. Moody's assigned those debentures an LGD2 rating suggesting lenders will experience a 17% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in San Diego, California, Jack in the Box Inc. -- http://www.jackinthebox.com/-- engages in the ownership, operation, and franchising of Jack in the Box quick-service hamburger restaurants and Qdoba Mexican Grill fast-casual restaurants. JLG INDUSTRIES: Sells Business to Oshkosh for $3.2 Billion in Cash ------------------------------------------------------------------ Oshkosh Truck Corporation has signed a definitive agreement to acquire JLG Industries, Inc. Oshkosh will acquire all outstanding shares of JLG for $28 per share. Total consideration, including transaction costs and assumed debt, is $3.2 billion in cash on a fully diluted basis. This transaction will create a $6 billion global specialty vehicle manufacturer. "We have consistently executed strategies to grow this company, creating significant shareholder value during the last decade," said Robert G. Bohn, Oshkosh's chairman, president and chief executive officer. "The acquisition of JLG is the latest broad- based initiative in the continuing transformation of Oshkosh Truck Corporation. It is aligned with our historic acquisition strategy as we expand into complementary markets and it will be instrumental in building our global focus and scale that are increasingly needed to continue to be successful. It also meets our major acquisition criteria, which include market leadership, strong management, double digit growth opportunities and the expectation of earnings in excess of our cost of capital." JLG had $2.3 billion in revenues during fiscal 2006 and has estimated a 20 to 25 percent increase in sales in fiscal 2007. It has the top market position in North America and Europe for aerial work platforms and is the top producer of telehandlers in the United States. JLG placed 22nd on FORTUNE magazine's 2006 list of the 100 Fastest-Growing Companies. The ranking was based on three-year profit and sales growth through the first quarter of 2006 and three-year total return to shareholders. "This transaction is a good fit for JLG," stated William M. Lasky, chairman, president and chief executive officer of JLG. "Oshkosh has a similar philosophy of offering premier products, creating strong market positions and delivering after-sales service and support. For the JLG team, this combination offers additional growth opportunities. For our customers, JLG will become an even stronger partner in their future success. We look forward to working with the Oshkosh management team to ensure a rapid and seamless transition." "We are excited about the addition of this market-leading, global company and expect a smooth integration into the Oshkosh family. At the same time, we expect to realize substantial purchasing and logistical synergies, while benefiting from JLG's already outstanding manufacturing operations. We have a long history of successful acquisitions and expect to build on that history," Bohn added. Details of the Transaction The transaction is expected to be modestly accretive to Oshkosh's earnings per share in fiscal 2007 after giving effect to estimated non-cash charges relating to amortization of acquired intangibles and other one-time accounting and transaction related costs. Oshkosh will finance the transaction with a $3.5 billion senior credit facility provided by Bank of America, N.A. and JPMorgan Chase Bank, N.A. and retire most of JLG's currently outstanding debt. The acquisition has been approved by the Board of Directors of each company and is subject to customary closing conditions, including approval under Hart-Scott-Rodino and similar laws outside the U.S. and the approval by the shareholders of JLG. The transaction is expected to be completed within ninety days. Upon completion of the transaction, JLG will become the largest of four business segments of Oshkosh. It continues the diversification of the company. In fiscal 2008, the first full fiscal year of Oshkosh's expected ownership of JLG, Oshkosh estimates that JLG will represent approximately 40 percent of its consolidated sales and operating income. "We are pleased to be bringing a solid company like JLG into Oshkosh Truck. Their product leadership and innovative culture will be a great fit with our approach. It is evident from the strong reactions of both Boards that we have an opportunity to do something very special," added Mr. Bohn. About Oshkosh Bases in Oshkosh, Wisconsin, Oshkosh Truck Corp. -- http://www.oshkoshtruckcorporation.com/-- designs, manufactures, and markets various specialty commercial, fire and emergency, and military trucks; truck bodies; mobile and stationary compactors, and transfer stations; and portable and stationary concrete batch plants worldwide. About JLG Industries JLG Industries, Inc. -- http://www.jlg.com/-- produces access equipment (aerial work platforms and telehandlers) and highway- speed telescopic hydraulic excavators. JLG's manufacturing facilities are located in the United States, Belgium, and France, with sales and service operations on six continents. * * * As reported in the Troubled Company Reporter on May 24, 2006, Moody's Investors Service upgraded the debt ratings of JLG Industries, Inc. -- Corporate Family Rating to Ba3 from B1, Senior Unsecured Notes to B1 from B2, and Senior Subordinate Notes to B2 from B3. The outlook is changed to stable from positive. KARA HOMES: Organizational Meeting Scheduled for October 23 ----------------------------------------------------------- The U.S. Trustee for Region 3 will hold an organizational meeting to appoint an official committee of unsecured creditors in Kara Homes Inc. and its debtor-affiliates' chapter 11 cases at 11:00 a.m., on Oct. 23, 2006, at The Essex Room, Hilton Newark Penn Station, 1 Gateway Center in Newark, New Jersey. The sole purpose of the meeting will be to form a committee or committees of unsecured creditors in the Debtors' cases. The meeting is not the meeting of creditors pursuant to Section 341 of the Bankruptcy Code. However, a representative of the Debtors will attend and provide background information regarding the cases. Creditors interested in serving on a Committee should complete and return to the U.S. Trustee a statement indicating their willingness to serve on an official committee. Official creditors' committees, constituted under Section 1102 of the Bankruptcy Code, ordinarily consist of the seven largest creditors who are willing to serve on a committee. In some Chapter 11 cases, the U.S. Trustee is persuaded to appoint multiple creditors' committees. 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 that the 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 East Brunswick, New Jersey, Kara Homes, Inc., aka Kara Homes Development LLC, builds single-family homes, condominiums, town homes, and active-adult communities. The Company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D. N.J. Case No. 06-19626). David L. Bruck, Esq., at Greenbaum, Rowe, Smith, et al., represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $350,179,841 and total debts of $296,840,591. On Oct. 9, 2006, nine affiliates filed separate chapter 11 petitions in the same Bankruptcy Court. On Oct. 10, 2006, 12 more affiliates filed chapter 11 petitions. Kara Homes' exclusive period to file a chapter 11 plan expires on Feb. 2, 2007. KINETEK INC: Moody's Junks Rating on $85 Mil. 2nd Lien Term Loan ---------------------------------------------------------------- Moody's Investors Service assigned Kinetek, Inc.'s Corporate Family Rating a B2 following The Resolute Fund L.P.'s agreement to purchase the company. Moody's assigned B1 ratings to the company's $50 million first lien revolver and $215 million term loan B, and a Caa1 rating to its $85 million second lien term loan. Ratings on the company's existing credit facilities will be withdrawn. The ratings for the facilities reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B2 and a loss given default of LGD 3 for the first lien secured facilities and LGD 5 for the second lien term loan. The rating outlook has been changed from negative to stable. The ratings remain subject to review of the final financing documentation. The approximate $450 million acquisition plus fees and expenses will be financed with approximately $216 million of first lien bank debt, $85 million second lien debt, and $160 million of sponsor equity. The transaction resolves questions surrounding Kinetek's pending debt maturities and ownership. The B2 Corporate Family Rating reflects Kinetek's high 5.3x adjusted debt to EBITDA financial leverage, modest 1.8x interest coverage, and historically weak to negative free cash flow. Kinetek remains exposed to cyclical demand and competition from larger and better capitalized companies. The B2 rating is supported by Kinetek's leading domestic position in electrical motors that are used in a range of applications including elevators, commercial floor care, and consumer and commercial products. Kinetek enjoys cost and technical leadership in the markets it serves which is partially evidenced by above average operating margins. The stable outlook reflects Moody's expectation that the company's financial and operating profile will improve as -- Kinetek benefits from favorable demand dynamics in many of its end-markets; and, -- expected discretionary cash flow is used to reduce debt. Factors that could cause Moody's to consider a negative rating action include weak demand and substantial dividend or acquisitions that increase leverage. Factors that could cause Moody's to consider a positive rating action include sustained improvement in operating performance, demonstrated commitment to lower financial leverage and sustained strong cash flow generation. The B1 rating of the first lien senior secured credit facilities reflects an LGD 3 loss given default assessment as this facility is secured by a pledge of substantially all of the company's assets and benefits from the support of the junior debt and of the contributed equity. The Caa1 rating of the second-lien secured term loan reflects an LGD 5 loss given default assessment that reflects its contractual subordination to all of Kinetek's first lien secured creditors. These are Moody's rating actions: * Corporate family rating B2; * Probability-of-default rating B2; -- $50 million first priority senior secured revolver due 2012 at B1 (LGD 3, 35%); -- $215 million first priority senior secured term loan due 2013 at B1 (LGD 3, 35%); -- $85 million senior second lien secured term loan due 2014 at Caa1 (LGD 5, 83%). Based in Deerfield, Illinois, Kinetek Inc. manufactures specialty purpose electric motors, gearmotors, gearboxes, gears and electronic motion controls for a wide variety of consumer, commercial, and industrial markets. Revenues for the twelve month period ended June 30, 2006 were approximately $353 million. LIBERTY MEDIA: Moody's Affirms Ba2 Corporate Family Rating ---------------------------------------------------------- Moody's affirmed Liberty Media LLC's Ba2 Corporate Family and senior unsecured ratings following Liberty's establishment of a new $1.75 billion credit facility at QVC, Inc., Liberty's primary operating subsidiary. However, the rating outlook was changed to negative from stable. Outlook Actions: * Issuer: Liberty Media LLC * Outlook, Changed To Negative From Stable The change in the rating outlook to negative reflects Moody's concern over Liberty's more aggressive financial strategies and profile, and that QVC may utilize the approximate $2.3 billion of combined unused capacity on the new facility and the existing $3.5 billion credit agreement signed in March 2006 to upstream funds to Liberty for share repurchases and acquisitions that will increase leverage. Moody's believes there is little evident need for incremental external financing due to QVC's good cash generation and Liberty's sizable consolidated cash balance ($2.7 billion at June 30, 2006) and that the establishment of the new facility indicates that leverage could be higher than anticipated at the time of our May 18, 2006 rating action. Moody's is also concerned that the level of support for the Liberty Media bonds could decline through expansion in the level of subsidiary debt that would increase the degree of structural subordination to assets and cash flow of the operating subsidiaries, or material changes in the value or risk profile of cash and marketable securities (such as Liberty's News Corporation stake) through returning cash to shareholders or swaps for speculative operating assets. Liberty Media LLC is a holding company owning interests in a broad range of electronic retailing, communications, and entertainment businesses. The company maintains its headquarters in Englewood, Colorado. LINEAR LOGIC: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Linear Logic, Inc. 1233 Northgate Business Parkway Madison, TN 37115 Tel: (615) 868-1179 Bankruptcy Case No.: 06-05891 Chapter 11 Petition Date: October 13, 2006 Court: Middle District of Tennessee (Nashville) Judge: George C. Paine II Debtor's Counsel: Steven L. Kefkovitz Law Offices of Kefkovitz & Lefkovitz 618 Church Street, Suite 410 Nashville, TN 37219 Tel: (615) 256-8300 Fax: (615) 250-4926 Total Assets: $2,844,452 Total Debts: $3,033,303 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ New Life Inatl $450,000 103 Continental Place, Suite 2 Brentwood, TN 37027 Wilson Bank & Trust $350,000 P.O. Box 768 Lebanon, TN 37088 Ballentine Press $40,381 P.O. Box 1706 Hendersonville, TN 37077 Carthuplas $34,774 7 Shape Drive Kennebunk, ME 04043 Biltmore Press $29,434 P.O. Box 25 Asheville, NC 28802 Arion/Amalgated Fin. $26,125 VSG $25,947 American Express $24,439 Hanky America $18,151 G3 Mastering Solutions $16,560 Blackbourn Media PKG $15,047 PR Omni Digital $12,413 Blue Cross Blue Shield Health Insurance $12,027 Koninkliijke Philips Elec. $10,744 Robert W. Haley Wages $10,096 Watkins Motor Lines $9,181 Nashville Packaging $8,774 Singulus Technologies $8,672 Spectrum $8,262 Infiniti Media $8,029 MEDIMEDIA USA: Moody's Junks Rating on $150 Mil. Sr. Sub. Notes --------------------------------------------------------------- Moody's Investors Service assigned these first time ratings to MediMedia USA, Inc: * $50 million senior secured revolving credit facility, due 2012 -- Ba3, LGD 2, 29% * $200 million senior secured term loan, due 2013 -- Ba3, LGD 2, 29% * $150 million senior subordinated notes, due 2014 -- Caa1, LGD 5, 83% * Corporate Family Rating -- B2 * Probability of Default Rating -- B2 Outlook is stable. The B2 Corporate Family rating reflects MediMedia's high leverage, continuing event risk, the relatively small scale of its business lines and dependence upon the healthcare and pharmaceutical sector spending for most of its business. However, the ratings recognize MediaMedia's good business model, the value of its brands, its long established relationships (with medical associations, hospitals, physicians, health plan providers and pharmaceutical companies), and its government certification as an approved pharmaceutical sampling business (both of which present formidable barriers to new entrants). In addition, ratings are supported by the growth, predictability, and cash flow conversion of MediaMedia's sales complemented by its low capital requirements. The stable outlook reflects the defensibility of the company's niche businesses, as well as an expectation of continuing top line and EBITDA growth, in combination with positive free cash flow generation. On Oct. 5, 2006, the company was acquired by equity funds managed by Vestar Capital Management, in a transaction valued at $611 million, including approximately $165 million of cash equity. Proceeds from the proposed debt will take out bridge financing incurred to partly fund the acquisition. The proposed transaction will substantially increase MediMedia's debt to $353 million from $121 million at the end of June 2006, resulting in 8.6 times LTM June 2006 EBITDA (calculated in accordance with Moody's standard global adjustments). This debt represents a fully leveraged profile, based upon a valuation of 8-10 times EBITDA. Moody's expects that MediMedia will deploy its free cash flow generation to decrease debt, thereby resulting in a reduction of debt to EBITDA to approximately 7.4 times by the end of 2007. The Ba3 senior secured debt reflects an LGD 2 loss given default assessment as senior secured debt is secured by a pledge of substantially all of the company's assets and there is a significant amount of junior debt. The Caa1 rating of the senior subordinated notes reflects an LGD 5 loss given default assessment considering that the notes are subordinated to the secured credit facility. Senior secured lenders will receive upstream guarantees from substantially all operating subsidiaries, supported by a pledge of stock and a security interest in substantially all assets. Senior subordinated noteholders will receive subsidiary guarantees on a subordinated basis. Moody's considers that the company is weakly positioned within the B2 rating category and an inability to deleverage according to expectations could result in a downgrade. Headquartered in Chatham, New Jersey, MediMedia USA Inc. provides patient education content and applications sponsored by pharmaceutical companies, employers, hospitals, health plans, physicians and patients. The company posted $245 million in revenue for the last twelve months ending June 2006. MERIDIAN AUTOMOTIVE: Wants Foreign Unit Financing Period Extended ----------------------------------------------------------------- Meridian Automotive Systems Inc. and its debtor-affiliates previously obtained permission from the U.S. Bankruptcy Court for the District of Delaware to advance up to $9,700,000 to their non- debtor Foreign Subsidiaries over a 14-month period ending on June 26, 2006. Under the terms of the Foreign Funding Order, the Debtors were authorized to advance: -- up to $8,500,000 to Meridian Automotive System, S. de MR. de C.V., -- up to $200,000 to Voplex of Canada; and -- up to $1,000,000 to Meridian Automotive Systems-DO Brazil LTDA. As of Oct. 5, 2006, the Debtors have advanced approximately $3,500,000 to the Foreign Subsidiaries pursuant to the Foreign Funding Order, Edward J. Kosmowski, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, notes. Accordingly, the Debtors ask the Court to modify the terms of the Foreign Funding Order to: (a) extend the time in which they may advance funds to their Foreign Subsidiaries to the earlier of: (i) the effective date of a plan of reorganization, or (ii) June 26, 2007; and (b) allow them to reallocate $750,000 of the $8,500,000 that was previously allocated to Meridian Mexico to Meridian Brazil. The Foreign Subsidiaries generally have been able to generate positive cash flow from their operations and as a result, the Debtors have only advanced approximately $3,500,000 to the Foreign Subsidiaries, Mr. Kosmowski says. The Debtors, however, require the continued ability to advance additional funds to the Foreign Subsidiaries up to the $9,700,000 cap to ensure that the Foreign Subsidiaries can operate their business without interruption. Mr. Kosmowski argues that it is necessary for the Debtors to continue advancing funds to their Foreign Subsidiaries to: (i) safeguard the Debtors' investment in the Foreign Subsidiaries; and (ii) ensure that the Foreign Subsidiaries continue to manufacture parts that the Debtors use to make end-product component parts to sell to OEMs. The advances are necessary to permit the Foreign Subsidiaries to, among other things, continue their production and manufacturing operations, Mr. Kosmowski relates. Mr. Kosmowski points out that if the Foreign Subsidiaries ceased operations: (i) the value of the Debtors' interest in the Foreign Subsidiaries would be significantly reduced; (ii) any incremental revenue produced by the Foreign Subsidiaries would be eliminated; (iii) the Debtors' market share in the automotive parts industry would be reduced; and (iv) the Debtors' relationship with numerous OEM customers would be materially and adversely affected. "The Debtors are not seeking authority to increase the aggregate amount of the funds that they may advance to the Foreign Subsidiaries, but are merely seeking to reallocate the amounts that can be advanced to the Foreign Subsidiaries up to the aggregate amount previously authorized by the Court and extend the period of time during which they may continue to advance such funds," Mr. Kosmowski clarifies. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MERIDIAN AUTOMOTIVE: Wants to Sell Michigan Property for $2.45 MM ----------------------------------------------------------------- Pursuant to Sections 105(a), 363(b) and 363(f) of the Bankruptcy Code, Meridian Automotive Systems, Inc., and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for permission to: (a) sell a parcel of real property located at 3225 32nd Street Southeast, in Kentwood, Michigan, referred to as the GR1 Plant, to Roskam Baking Company for $2,450,000, free and clear of all liens, claims and encumbrances; and (b) pay the commission earned by real estate broker NAI West Michigan in accordance with the listing agreement between the parties from the proceeds of the Sale. The Property spans approximately 11.3 acres of land, which contains an industrial building that was used by the Debtors as a manufacturing facility in connection with their interiors division. In December 2005, as a part of their ongoing restructuring efforts and in an effort to streamline their business, the Debtors ceased all production at the Property, Edward J. Kosmowski, Esq., at Young Conaway Stargatt & Taylor, LLP, in Wilmington, Delaware, tells the Court. The Property is currently being used solely for storing unused equipment. The Debtors do not anticipate using the Property as part of their business operations in the future. In August 2006, the Debtors listed the Property for sale with NAI West. The Property was listed for several weeks, during which time the Debtors received three offers from prospective buyers, including Roskam's. The other two offers were for $1,900,000. After thoroughly reviewing each of the offers, the Debtors determined that Roskam's offer was the highest and best offer. Accordingly, the Debtors and Roskam entered into a real estate sale agreement and addendum effective Sept. 19, 2006. In accordance with the terms of the Sale Agreement, Roskam deposited $25,000 into an escrow account to be applied to the Purchase Price on the closing date. The parties contemplate closing on the Sale on or before Nov. 1, 2006, subject to the Court's approval. The Property is currently subject to the security interests of the Debtors' postpetition DIP lenders, the prepetition lenders under the first lien and second credit agreements and the Series B subordinated noteholders. Upon closing, the Secured Parties' liens, claims and encumbrances, if any, will attach to the net proceeds of the sale in the order of their priority, with the same validity, force and effect which they now have against the Property. For its services, NAI West will receive a commission equal to 6% of the Purchase Price paid from the proceeds of the Sale, which will be split equally with Roskam's broker. Mr. Kosmowski contends that the Debtors should be allowed to sell the Property to Roskam for these reasons: -- The Property, which has been sitting idle for the last 10 months, is of little or no value to the Debtors' business operations; -- The Debtors are fully capable of maintaining their current levels of production and satisfying the needs of their customers without the use of the Property; -- By ceasing and transferring production from the Property to their other manufacturing locations, and selling the Property, the Debtors are able to streamline their business operations and eliminate the unnecessary overhead costs associated with the Property; -- The Purchase Price, which is payable in cash on the closing date of the Sale, is consistent with the market in the Kentwood, Michigan area for similar properties and represents a fair and reasonable purchase price for the Property; and -- According to NAI West, marketing the Property for an additional period of time is unlikely to yield any higher or better offers than Roskam's offer. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MESABA AVIATION: ALPA Balks at Court Ruling on CBA Rejection ------------------------------------------------------------ Mesaba Aviation Inc. pilot union leaders vowed to continue their fight to protect the careers of their members in the wake of the October 16 Bankruptcy Court decision once again granting management's 1113(c) motion to reject labor's collective bargaining agreements. The pilots, represented by the Air Line Pilots Association, Int'l, say this decision takes them closer to a potential strike or exodus of employees at the airline. ALPA will aggressively appeal the ruling. ALPA firmly believes that Mesaba pilots have the right to strike and they intend to use that right when management imposes its terms instead of negotiating a mutually acceptable agreement. If the court also approves Mesaba's motion for an injunction to stop a strike, ALPA intends to forcefully litigate on that issue as well. "Mesaba labor won the appeal of this court's initial 1113(c) decision because management did not meet the nine requirements set forth by bankruptcy law to allow for the imposition of new terms," said Captain Tom Wychor, head of the ALPA unit at Mesaba. "And in our estimation, they failed to meet those requirements again." "If the company's economics have changed to the extent that it now requires less than the original 19.4% concessions from employees, as evidenced by their new request to impose 17.5% over 5.5 years, then the unions have a right to all the information that led to that decision, but that didn't occur," Captain Wychor said. ALPA recognizes Mesaba's need for cost savings, which is why the pilots' last proposal to management offered a 15% labor cost reduction -- a savings that by the company's own financial model would guarantee it a six percent profit margin. "Our Negotiating Committee worked around the clock over the weekend using the extra time Judge Kishel gave us to try to come to terms with management on a consensual deal," said Captain Wychor. "We have made some progress, and we are committed to continuing our efforts, but we can not meet the new management target of 17.5%. The cuts are simply too deep." Mesaba's ALPA leaders are planning a job fair for Mesaba pilots to assist them in finding better employment opportunities where pilots can expect professional wages and benefits in accordance with their extensive experience and responsibilities as airline pilots. They have also been in constant contact with their counterparts at many other ALPA carriers to secure preferential hiring for Mesaba pilots should management impose new terms. "It's a matter of survival, and being able to earn a living that provides for your family," Captain Wychor said. "And I'm sure that our passengers would prefer that the pilots at the helm of any aircraft are compensated fairly, instead of knowing that a pilot has to hold down two jobs just to make ends meet. If this airline imposes its terms, or if pilots strike, liquidation is nearly a foregone conclusion. Management will have sealed the fate of our airline." About ALPA Founded in 1931, Air Line Pilots Association, International -- http://www.alpa.org/-- represents 62,000 pilots, including 850 Mesaba pilots, at 40 airlines in the U.S. and Canada. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. MOTHERS WORK: Moody's Assigns Loss-Given-Default Rating ------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the US and Canadian Retail sector, the rating agency confirmed its B3 Corporate Family Rating for Mothers Work, Inc. and its Caa1 rating on the Company's $125 million 11.25% senior notes. In addition, Moody's assigned an LGD4 rating to notes, suggesting noteholders will experience a 64% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha-numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Philadelphia-based Mothers Work Inc. is a designer and retailer of maternity apparel. Mothers Work operates 1,540 maternity locations and 725 leased departments. NATIONAL ENERGY: Chevron Wants Confidentiality Agreement Approved ----------------------------------------------------------------- Chevron U.S.A. and Chevron Energy Solutions, Inc., and Energy Services Ventures, Inc., ask the U.S. Bankruptcy Court for the Middle District of Maryland to approve a stipulated confidentiality agreement in connection with the disclosure and discovery activity relating to the proof of claim filed by Chevron. Chevron has obtained the agreement of a third party to allow Chevron to produce documents and provide information, and for ESV to receive those, in connection with an arbitration and a settlement agreement, on the condition that Chevron disclose the documents and information to ESV pursuant to a protective order. The parties acknowledge that the order and the protection it affords extends only to the limited information or items the parties have agreed to treat as confidential. The parties agree that the Confidential Information or Material refer to all items or information, regardless of the medium or manner generated, stored, or maintained, that are produced or generated in disclosures, in response to discovery in this matter, in depositions or other sworn testimony or in pretrial proceedings, that relate to an arbitration between Chevron and PG&E Corporation. Patricia A. Borenstein, Esq., at Miles & Stockbridge P.C., in Baltimore, Maryland, counsel to Chevron, states that the protection conferred by the stipulation covers not only Confidential Information or Material, but also any information copied or extracted from there, as well as copies, excerpts, summaries, or compilations thereof, plus testimony, conversations, or presentations by the parties or counsel to or in Court or in other settings that might reveal Confidential Information or Material. Confidential Information or Materials will be sealed and marked "Confidential", Ms. Borenstein adds. Inadvertent failure to designate qualified information or items as "Confidential", if corrected within the later of 14 days after it is entered as an exhibit in any sworn statement or pretrial proceeding or the close of fact discovery, does not, standing alone, waive Chevron's right to secure protection for such material. The order will remain in effect until Chevron agrees otherwise in writing or a Court order otherwise directs. Any non-party from whom discovery is sought may be informed of and may obtain the protection of the order. Dennis J. Shaffer, Esq., at Whiteford Taylor Preston LLP, in Baltimore, Maryland, counsel for ESV, tells that ESV may use Confidential Information or Material that is disclosed or produced by another party or by a non-party in connection with this case only for prosecuting, defending, or attempting to settle the litigation arising exclusively out of the contested matter or the related adversary proceeding between the parties pending in the Court. Mr. Shaffer states that ESV may disclose any information or item designated "Confidential", if reasonably necessary to disclose the information for the litigation, only to: (a) ESV's attorneys in this action, as well as employees of the attorneys; (b) the officers, directors, principals, managing directors and employees of ESV; (c) experts, defined as a person with specialized knowledge or experience in a matter pertinent to the case, who has been retained by a party or its counsel to serve as expert witness or consultant, including a professional jury or trial consultant, of ESV, who have signed a nondisclosure agreement; (d) the Court and its personnel; (e) the court reporters, their staffs and professional vendors; (f) any person who ESV's attorney believes is a potential witness in the case, subject to the condition that no "Confidential" information or item is provided to or shared orally or in any other form with any potential witness who has not signed a nondisclosure agreement; (g) the author or recipient of the document or the original source of the information; and (h) any person whom Counsel for the parties agree should have access to the materials and who agrees to be bound by the terms of the order. According to Mr. Shaffer, within 60 days after judgment in or dismissal or other resolution of the contested matter and adversary proceeding become final and non-appealable, the attorneys of ESV will: (a) return to Chevron all copies of Confidential Information or Material produced by the person; (b) destroy all documents and copies containing or based upon Confidential Information or Material; (c) provide a certification of compliance. Counsel may, however, retain court papers, deposition, hearing and trial transcripts and attorney work product, including Confidential Information or Material referred to or attached to it, but may not disclose them to any other persons. Ms. Borenstein further states that nothing in the Order will prevent Chevron from agreeing to release any of the Confidential Information or Material from the requirements of the Order. Littleton Seeks Summary Judgment Littleton Electric Light Department asks the Court to issue a summary judgment pursuant to Rule 56(c) of the Federal Rules of Civil Procedure on the issue of whether its proofs of claim were timely filed against NEGT Energy Trading - Power, L.P., and NEGT Energy Trading Holdings Corporation. Littleton also seeks summary judgment on the issue of whether the deadline for claim objections under the ET Debtors' Plan of Liquidation and its confirmation is what it purports to be -- a deadline that is binding on the ET Debtors. Nathan F. Coco, Esq., at McDermott Will & Emery LLP, in Chicago, Illinois, argues that if a claim objection is to serve any substantive purpose in bankruptcy -- other than a mere placeholder -- then the Court should not consider the ET Debtors' new legal arguments and objections. Mr. Coco notes that one of the Debtors' arguments is that Littleton's contracts were automatically terminated on the Petition Date by exercising Section 556 of the Bankruptcy Code because the Debtors qualify as "forward contract merchants" under Section 101(26). However, Section 556 by its express terms applies only to a counterparty of a debtor, not the debtor itself. Accordingly, the Section 556 safe harbor would only come into play if Littleton was a forward contract merchant, which it is not, he states. Furthermore, Littleton contends that the ET Debtors' arguments fail to address the fundamental issues of fairness and equity that underlie its request for summary judgment. Mr. Coco relates that Littleton was listed among the parties holding executory contracts in ET Power's schedules of assets and liabilities. As a result, Littleton was not required to file a proof of claim before the general claims bar date. Mr. Coco points out that at no point during their Chapter 11 cases did the ET Debtors amend the Schedule as required by Rule 1009(a) of the Federal Rules of Bankruptcy Procedure and Rule 1009-1(b) of the Local Bankruptcy Procedures to reflect their nuanced view that the Littleton Contracts were actually terminated on the Petition Date. Mr. Coco explains that the reason why the rules require a debtor to promptly amend its schedules upon learning of an error or inaccuracy is to avoid the very type of trap the ET Debtors are seeking to spring on Littleton. It is also the reason, he says, that courts have held that information in bankruptcy schedules, executed and filed under oath, constitute binding admissions. About National Energy Bethesda, MD-based PG&E National Energy Group Inc. nka National Energy & Gas Transmission Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and six of its affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). 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. NEGT's affiliates -- NEGT Energy Trading Holdings Corp., NEGT Energy Trading - Gas Corporation, NEGT ET Investments Corp., NEGT Energy Trading - Power, L.P., Energy Services Ventures, Inc., and Quantum Ventures -- filed their First Amended Plan and Disclosure Statement on March 3, 2005, which was confirmed on Apr. 19, 2005. Steven Wilamowsky, Esq., and Jessica S. Etra, Esq., at Willkie Farr & Gallagher LLP represent the ET Debtors. (PG&E National Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) NATIONAL ENERGY: To Appeal Bankr. Court's Ruling on Lehman's Claim ------------------------------------------------------------------ PG&E National Energy Group Inc. nka National Energy & Gas Transmission Inc. and its debtor-affiliates take an appeal from the U.S. Bankruptcy Court for the Middle District of Maryland order allowing Lehman Brothers, Inc.'s claim for $7,217,000 to the U.S. District Court for the District of Maryland. Kevin G. Hroblak, Esq., at Whiteford, Taylor & Preston LLP, in Baltimore, Maryland, asks the District Court to find whether the Bankruptcy Court erred in granting summary judgment in favor of Lehman Brothers and denying summary judgment in favor of the Debtors where: (a) conditions precedent in a contract giving rise to claims by Lehman were not satisfied, thereby barring recovery under the contract by Lehman; (b) performance of the contract giving rise to claims by Lehman was legally impossible and its purpose frustrated, thereby relieving the parties from performance under the Contract and barring recovery by Lehman; (c) a mutual mistake of the parties relieved performance under the contract giving rise to Lehman's claims, thereby barring recovery under the contract by Lehman; and (d) the operative provision of a contract giving rise to Lehman's claims is void as against public policy, thereby relieving performance by the parties and barring recovery by Lehman. About National Energy Bethesda, MD-based PG&E National Energy Group Inc. nka National Energy & Gas Transmission Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. The Company and six of its affiliates filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). 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. NEGT's affiliates -- NEGT Energy Trading Holdings Corp., NEGT Energy Trading - Gas Corporation, NEGT ET Investments Corp., NEGT Energy Trading - Power, L.P., Energy Services Ventures, Inc., and Quantum Ventures -- filed their First Amended Plan and Disclosure Statement on March 3, 2005, which was confirmed on Apr. 19, 2005. Steven Wilamowsky, Esq., and Jessica S. Etra, Esq., at Willkie Farr & Gallagher LLP represent the ET Debtors. (PG&E National Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) NORTH AMERICAN: CEO Neal Kaufman Can Buy 4.2 Million More Shares ---------------------------------------------------------------- The compensation committee of the Board of Directors of North American Technologies Group Inc. granted to Neal Kaufman, chief executive officer, options to purchase up to 4,200,000 shares of Company common stock under the 2005 Stock Option Plan at the current market price of $0.34 per share. The Company also entered into a Stock Compensation Plan Agreement with Mr. Kaufman pursuant to which it agreed to issue $420,000 worth of shares of Company common stock, in such amounts, at such times and under the conditions set forth in the Agreement. Mr. Kaufman and the Company entered into an Employment Agreement, effective Jan. 1, 2006, pursuant to which Mr. Kaufman would serve as chief executive officer of the Company. As part of his compensation, Mr. Kaufman was granted options under the Plan to purchase an aggregate of 4,800,000 shares of the Company's common stock, 2,400,000 shares of which had an exercise price of $0.18 per share and 2,400,000 shares of which had an exercise price of $0.30 per share. The Company disclosed that it was the agreement and intent of the Company and Mr. Kaufman that Mr. Kaufman receive options to purchase a number of shares equal to 4% of the outstanding shares of common stock of the Company on a fully diluted basis as of the effective date of the Employment Agreement, which should have resulted in the grant to him of options to purchase an aggregate of 9,000,000 shares of the Company's common stock on the basis of the approximately 225,000,000 shares of common stock outstanding on a fully diluted basis at that time. After it was discovered that the January Options represented only 2.13% of the shares outstanding on a fully diluted basis, the Company agreed to correct this error in calculation by granting to Mr. Kaufman options to purchase an additional 4,200,000 shares, to equal a total of 9,000,000 shares subject to option. The additional options under the Plan will have the same terms and provisions and subject to the same vesting schedule as the January Options, but with an exercise price of $0.34 per share, the fair market value of the Company's common stock on Oct. 6, 2006. A full text-copy of the Stock Compensation Plan Agreement between the Company and Neal Kaufman may be viewed at no charge at http://ResearchArchives.com/t/s?1376 North American Technologies Group, Inc., (OTCBB: NATK) -- http://www.natk.com/-- through its TieTek subsidiary manufactures and sells composite railroad crosstie known as TieTek(TM) made from recycled composite materials that is a direct substitute for wood crossties, but with a longer life and with several environmental advantages. Going Concern Doubt In June 2006, Ham, Langston & Brezina, LLP, in Houston, Texas, raised substantial doubt about North American Technologies Group, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's recurring losses from operations and debt service and working capital requirements that reach beyond its current available cash. NUTRO PRODUCTS: Moody's Assigns Loss-Given-Default Ratings ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. Consumer Products sector, the rating agency confirmed its B2 Corporate Family Rating for Nutro Products, Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on the company's loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $100 million Sr. Secured Revolving Credit Facility Due Jan. 26, 2012 B1 Ba3 LGD2 29% $470 million Sr. Sec. Term Loan Due July 26, 2013 B1 Ba3 LGD2 29% $165 million Sr. Flt. Rt. Global Notes Due Oct. 15, 2013 B3 B3 LGD5 75% $150 million 10.750% Sr. Sub. Global Notes Due April 15, 2014 Caa1 Caa1 LGD6 91% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Based in City of Industry, California, Nutro Products, Inc. -- http://www.nutroproducts.com/-- formulates and manufactures dry and canned food, biscuits, and treats for dogs and cats. The company's brand names include Natural Choice, MAX, and Gourmet Classics. Its products are available in feed stores and pet supply shops, such as Petco and PetSmart, across the US and Canada. Nutro's products are also distributed worldwide. O&M STAR: Moody's Places Ba3 Rating on $278 Mil. Debt Facilities ---------------------------------------------------------------- Moody's Investors Service assigned a Ba3 rating to the senior secured credit facilities of O&M Star Generation LLC. The facilities are comprised of a $259 million senior secured term loan facility due 2014 and a $19 million senior secured, pre-funded letter of credit facility, also due in 2014. The rating outlook is stable. Proceeds from the term loan were used to fund a series of transactions, including the acquisition of certain equity interests in Orange Cogeneration Limited Partnership that owns a 103 MW natural gas-fired cogeneration facility in Bartow, Florida; and, Polk Power Partners, L.P. that owns a 120 MW dual-fuel natural, gas and oil) cogeneration facility located near Bartow, Florida, from certain subsidiaries of Arroyo Energy Investors, LP, an indirect subsidiary of the Bear Stearns Companies, Inc. In addition, proceeds from the term loan were also used in a separate transaction to acquire from certain indirect subsidiaries of General Electric Company: $48 million senior secured loan facility to Mulberry (Mulberry Loan); a preferred limited partnership interest in PPLP, which provides for an equity interest in Mulberry and associated preferred limited partner capital payments (Preferred Capital Payments); and, the right to receive certain payments from OCLP equal to 5% of OCLP's distributable cash. The $19 million pre-funded letter of credit facility supports a six-month debt service reserve fund and O&M Star's share of letter of credit commitments for the Orange and Mulberry Projects. O&M Star is a 50/50 joint venture between AIG Highstar Capital II, L.P. and its affiliated funds, which are sponsored by AIG Global Investment Group, and OTPPB US Power, LLC, a subsidiary of Ontario Teacher's Pension Plan Board (Teachers, together with AIG Highstar, the Sponsors). The Sponsors are experienced owners of contracted, power generation assets in the US market. The total consideration paid for the acquisitions was $326 million, including fees and expenses. The Sponsors have contributed $67 million of cash equity toward the acquisition, with the remainder financed with the proceeds from the senior secured term loan facility. The ratings for the credit facilities of O&M Star considers these strengths: -- Cash flow stability provided by the long term power purchase agreements (93% of total capacity is currently contracted, 79% of total capacity is contracted through 2015, and 69% is contracted through 2024) between the underlying projects and high quality, investment grade utility counterparties, consisting of Progress Energy Florida, Inc. (A3 senior unsecured) and Tampa Electric Company (Baa2 senior unsecured); -- Large proportion of capacity revenues as percent of total PPA revenues (over 70% of total PPA revenues through 2015); -- Tested and proven technology and strong historical operational performance; -- The remaining equity ownership in the projects is held through another affiliate of the Sponsors, giving the Sponsors 100% management control; -- A funded letter of credit facility providing for 6 months of debt service; -- Ownership of the Mulberry Loan and Preferred Capital Payments that provides senior collateral position and priority payments; -- Currently favorable fuel supply arrangements; and -- A highly experienced and proven management team. The ratings also reflect these areas of credit concern: -- Limited geographic diversity of the sources of cash flow; -- The normal operating risk associated with power project assets; -- The relatively high leverage; -- The structurally subordinated position of the lenders to the holding company, in relation to debt at the Orange project; -- The limited hard asset security that is available to the lenders; -- A significant amount of refinancing risk; and -- Uncertainty associated with the extension or replacement of the currently favorable gas supply arrangements upon their expiration in 2014 and 2015. The facilities will be secured by all of the assets of the borrower, including the acquired equity ownership interests and partnership interests in the projects; the borrower accounts; and, through the ownership of the Mulberry Loan and Preferred Capital Payments, an indirect security interest in the assets of Mulberry. The Mulberry Loan also conveys to the Borrower all rights and remedies provided for under the Mulberry Loan credit agreement. In assigning the rating, Moody's also considered structural features in the term loan agreement, including: -- a cash sweep of 75% of available cash flow after scheduled debt service; -- a pre-funded 6 month debt service reserve covering forward interest and scheduled debt service; and, -- a set of financial and other covenants that restrict the business and financial activities of the borrower. The transaction provides for only a 1% required amortization, with additional amortization to be based upon the cash flow sweep mechanism. The stable outlook reflects the expectation that O&M Star will experience relatively stable cash flows due to the predominantly contractural nature of the underlying cash flow streams. The stable outlook also assumes stability in the credit quality of the contractual off-takers and anticipates that the projects will continue to be operated in a manner that allows them to achieve historically high availability factors. Positive trends that could lead Moody's to consider an upgrade would include extension or replacement of gas supply contracts on terms that eliminate or mitigate the uncertainty surrounding market gas prices upon their current expiration dates in 2014 and 2015, and better than projected financial performance such as FFO to consolidated debt in excess of 20% on a sustainable basis. Negative trends that could lead Moody's to consider a downgrade would include credit deterioration by key contractual off-takers, substantial operating performance difficulties that result in meaningful loss of capacity payments, poor market conditions in combination with disadvantageous gas supply contract extensions, and financial performance that is below expectations such as FFO to consolidated debt in the low teens or below. O&M Star Generation LLC is a holding company that owns equity interests in two electric power projects located in Florida. O&M Star is a 50/50 joint venture between AIG Highstar Capital II, L.P. and a subsidiary of Ontario Teacher's Pension Plan Board. OCCAM NETWORKS: Earns $203,000 in Third Quarter Ended September 24 ------------------------------------------------------------------ Occam Networks Inc. reported third quarter 2006 revenue of $18.1 million, which represented a 69% increase over the same period in 2005 and an increase of 12% over the second quarter of 2006. The Company's balance sheet at Sept. 24, 2006, showed total assets of $33 million, total liabilities of $13 million and redeemable preferred stock of $36 million resulting in a total stockholders' deficit of $16 million. At Dec. 25, 2005, the Company's total stockholders' deficit stood $20 million. For the three months ended Sept. 24, 2006, the Company reported net income of $203,000 from sales of $18 million, compared to net income of $358,000 from sales of $16 million for the prior quarter ended June 25, 2006. For the comparable quarter in 2005, the Company reported a net loss of $2.9 million from $10 million in sales. For the nine months ended Sept. 24, 2006, the Company's net loss was $2.7 million from $48 million in sales, versus a net loss of $9.7 million from sales of $26 million, for the prior year. "It was another substantial growth quarter for Occam on many fronts," Bob Howard-Anderson, president and chief executive officer, said. "Our 10Gigabit Ethernet and FTTP products showed a strong increase in shipments during the quarter and we are pleased with the growing market acceptance of these products." "Continuing our double digit new customer capture rate, we grew our customer base to more than 180 telephone service providers," added Mr. Howard-Anderson. Additional highlights for the third quarter of 2006 includes: -- The Start of shipment of the BLC 6244 and BLC 6246 24-port combination POTS and ADSL2Plus Blades, which extend the BLC 6000 System family to serve lower density subscriber applications; -- Selection of the Company's BLC 6314 10GigE Transport and Optical Line Termination (OLT) Blade as a 2006 Innovation Award winner from INTERNET TELEPHONY magazine; and -- Disclosure of the interoperability with the Siemens(R) SURPASS(R) hiQ 8000 softswitch. Based in Santa Barbara, Calif., Occam Networks Inc. (OTCBB:OCNW) -- http://www.occamnetworks.com/-- develops and markets innovative Broadband Loop Carrier networking equipment that enable telephone companies to deliver voice, data and video services. Based on Ethernet and Internet Protocol technologies, Occam's equipment allows telecommunications service providers to profitably deliver traditional phone services, as well as advanced voice-over-IP, residential and business broadband, and digital television services through a single, all-packet access network. Going Concern Doubt PriceWaterhouseCoopers, LLP, expressed substantial doubt about Occam Networks, Inc.'s ability to continue as a going concern after auditing the Company's financial statements for the years ended Dec. 31, 2005 and 2004. The auditing firm pointed to the Company's continued incurrence significant operating losses and negative cash flows from operations since inception. ONEIDA LTD: Panel Selects CCA Strategies as Actuarial Consultants ----------------------------------------------------------------- The Official Committee of Equity Security Holders in Oneida Ltd. and its debtor-affiliates' chapter 11 bankruptcy cases, asks the U.S. Bankruptcy Court of the Southern District of New York for permission to employ CCA Strategies LLC as its actuarial consultant. CCA Strategies will: a) undertake a review of certain documents by and between Harbridge Consulting Group LLC and the Debtors, including such formal actuarial valuation reports and related correspondence for the past three or more years as may be necessary and appropriate to understand the nature of the calculation of certain actuarial liabilities of the Debtors related to the Debtors' Pension Plan and the liability claims of the Pension Benefit Guaranty Corporation; b) meet with the Equity Committee to discuss its review and the impact on the Chapter 11 case; c) provide a written report to the Equity Committee, including reasonably detailed supporting documentation, expressing the firm's conclusions related to the actuarial assumptions and methods used in the actuarial valuation of the Debtors' Pension Plan, and the firm's conclusions related to the accuracy and appropriateness of the calculations of both current and forecasted contribution requirements and liability measurements for the Debtors' Pension Plan; d) assist the Equity Committee in evaluating any additional correspondence related to the actuarial liabilities of the Debtors regarding the Pension Plan; e) provide testimony through deposition to the Bankruptcy Court concerning PBGC claims in the Chapter 11 cases, the report, and other matters related thereto as requested by the Equity Committee or its counsel; and f) provide the Equity Committee other and further services as may be reasonably requested. The Committee discloses that the firm's professionals will bill between $205 and $535 per hour and that the firm's expenses will not exceed $5,000. To the best of the Committee's knowledge, the firm does not hold any interest adverse to the Debtor's estate. The firm can be reached at: CCA Strategies LLC 437 Madison Avenue Suite 32BC New York, NY 10022-7001 Tel: (212) 209-5335 Fax: (212) 906-0104 http://www.ccastrategies.com/ Headquartered in Oneida, New York, Oneida Ltd. (OTC: ONEI) -- http://www.oneida.com/-- manufactures stainless steel and silverplated flatware for both the Consumer and Foodservice industries, and supplies dinnerware to the foodservice industry. Oneida also supplies a variety of crystal, glassware and metal serveware for the tabletop industries. The Company and eight debtor-affiliates filed for Chapter 11 protection on March 19, 2006 (Bankr. S.D. N.Y. Case Nos. 06-10489 through 06-10496). Douglas P. Bartner, Esq., at Shearman & Sterling LLP represents the Debtors. Credit Suisse Securities (USA) LLC is the Debtors' financial advisor. Scott L. Hazan, Esq., and Lorenzo Marinuzzi, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represent the Official Committee of Unsecured Creditors. Robert J. Stark, Esq., at Brown Rudnick Berlack Israels LLP represents the Official Committee of Equity Security Holders. When the Debtors filed for protection from their creditors, they listed $305,329,000 in total assets and $332,227,000 in total debts. On May 12, 2006, Judge Gropper approved the Debtors' disclosure statement. The pre-negotiated plan of reorganization of Oneida Ltd. was confirmed, on Aug. 31, 2006. The Company emerged from Chapter 11 on Sept. 15, 2006, as a privately held company. OPEN SOLUTIONS: Inks $1.3 Billion Purchase Deal with Carlyle Group ------------------------------------------------------------------ Open Solutions Inc., The Carlyle Group and Providence Equity Partners have signed a definitive agreement under which The Carlyle Group and Providence Equity Partners will acquire Open Solutions in a transaction valued at over $1.3 billion. Under terms of the agreement, The Carlyle Group and Providence Equity Partners will acquire all of Open Solutions' outstanding shares of common stock. Open Solutions' stockholders will receive $38.00 in cash for each share of Open Solutions common stock, representing an approximately 32 percent premium over the average closing price of Open Solutions' stock for the last thirty trading days. The enterprise value of the transaction, including assumption of debt, is more than $1.3 billion. As a result of this acquisition, Open Solutions' convertible notes will become convertible into the merger consideration payable to their underlying shares of common stock and Open Solutions' other currently outstanding indebtedness will be retired. "This is yet another exciting chapter for Open Solutions as we continue our efforts to revolutionize the financial services sector", said Louis Hernandez, Jr., Open Solutions Chairman and CEO. "With this announced transaction we fulfill our desire to deliver an excellent value for our stockholders and at the same time ready Open Solutions to enter the next stage in our history of continually striving to provide innovative and enabling technology solutions and services to our clients and the marketplace. We are pleased to be partnering with two industry leading firms in The Carlyle Group and Providence Equity Partners, and we look forward to working with them to further serve our clients and the industry and build on the success of our company." Bud Watts, Managing Director of The Carlyle Group, stated, "Louis Hernandez and the talented employees of Open Solutions have built a remarkable company with best-in-class technology and an impressive client list. Both Providence and Carlyle bring substantial financial resources to Open Solutions, and in partnership with Louis and his team, we intend to support the continued growth and expansion of Open Solutions with aggressive investment in internal R&D, customer service, and complementary acquisitions." "Since its founding in 1992, Open Solutions has utilized its unique, best-in-class core processing technology to become a premier provider of information services to the financial community," said Julie Richardson, Managing Director at Providence Equity Partners. "We look forward to partnering with Louis and his team and The Carlyle Group to support Open Solutions' growth as a private company and the expansion of its leadership as a critical technology provider to the financial services industry." Open Solutions' board of directors and a special committee of the board comprised solely of disinterested directors have unanimously approved the transaction and recommended to Open Solutions' stockholders that they adopt the merger agreement and approve the merger. The transaction is expected to be completed during the first quarter of 2007 and is subject to various conditions, including approval by the stockholders of Open Solutions, the expiration of the applicable waiting period under the Hart-Scott- Rodino Act, the absence of the occurrence of a material adverse effect on Open Solutions and other customary closing conditions. The transaction is not subject to a financing condition. A special meeting of Open Solutions' stockholders will be scheduled as soon as practicable following the preparation and filing of definitive proxy materials with the Securities and Exchange Commission. The acquisition will be financed through a combination of equity contributed by investment funds affiliated with The Carlyle Group and Providence Equity Partners and debt financing provided by affiliates of Wachovia, JPMorgan, and Merrill Lynch & Co. Wachovia Securities acted as financial advisor to Open Solutions. Simpson, Thacher & Bartlett LLP acted as legal advisor to Open Solutions. SunTrust Robinson Humphrey acted as financial advisor to the special committee of the board of directors of Open Solutions and provided the committee with a fairness opinion in connection with the transaction. Morris, Nichols, Arsht & Tunnell LLP acted as legal advisor to the special committee of the board of directors of Open Solutions. Merrill Lynch & Co. acted as financial advisor to The Carlyle Group and Providence Equity Partners. Latham & Watkins LLP and Weil, Gotshal & Manges LLP acted as legal advisors to The Carlyle Group and Providence Equity Partners. About The Carlyle Group The Carlyle Group -- http://www.carlyle.com/-- is a private equity firm with $44.3 billion under management. Carlyle invests in buyouts, venture & growth capital, real estate and leveraged finance in Asia, Europe and North America, focusing on aerospace & defense, automotive & transportation, business services, consumer & retail, energy & power, healthcare, industrial, technology and telecommunications & media. In the aggregate, Carlyle portfolio companies have more than $68 billion in revenue and employ more than 300,000 people around the world. About Providence Equity Providence Equity Partners Inc. is a private investment firm specializing in equity investments in media and entertainment, communications and information companies around the world. The principals of Providence Equity manage funds with over $9 billion in equity commitments and have invested in more than 80 companies operating in over 20 countries since the firm's inception in 1990. About Open Solutions Open Solutions Inc. -- http://www.opensolutions.com/-- offers a product platform that integrates core data processing applications built on a single centralized Oracle relational database, with Internet banking, cash management, CRM/business intelligence, financial accounting tools, imaging, digital documents, Check 21, interactive voice response, network services, Web hosting and design, and payment and loan origination solutions. * * * As reported in the Troubled Company Reporter on March 6, 2006, Moody's Investors Service assigned to Open Solutions Inc., a B2 Corporate Family Rating, a B1 rating to its $320 million first lien secured credit facilities, and a B3 to its $60 million second lien secured term loan. The rating outlook is stable. OPEN TEXT: Acquires Hummingbird Ltd. for $489 Million in Cash ------------------------------------------------------------- Open Text Corporation and Hummingbird Ltd. closed the transaction pursuant to which all of Hummingbird's common shares were acquired by a wholly owned subsidiary of Open Text. Open Text, through its wholly owned subsidiary 6575064 Canada Inc., acquired all of the issued and outstanding common shares of Hummingbird at a cash price of $27.85 per common share which, together with the 764,850 common shares of Hummingbird owned by Open Text prior to the transaction, represent all of the issued and outstanding shares of Hummingbird. The transaction is valued at approximately $489 million and was disclosed by Open Text on Aug. 4, 2006. The transaction was completed pursuant to a plan of arrangement under section 192 of the Canada Business Corporations Act and an arrangement agreement made as of Aug. 4, 2006, which was amended on Sept. 19, 2006, among 6575064 Canada Inc., Open Text and Hummingbird. Under the plan of arrangement Hummingbird's shareholders are entitled to receive $27.85 in cash for each Hummingbird common share. About Hummingbird Based in Toronto, Ontario, Hummingbird Ltd. (NASDAQ:HUMC, TSX:HUM) -- http://www.hummingbird.com/-- provides enterprise software solutions. The Company's enterprise software solutions fall into two principal categories: enterprise content management solutions, and network connectivity solutions. Founded in 1984, Hummingbird employs over 1,400 people and serves more than 33,000 customers, including 90% of Fortune 100. Hummingbird solutions are sold directly from 40 offices worldwide and through an Alliance Network of partners and resellers. About Open Text Headquartered in Waterloo, Ontario, Open Text Corporation (NASDAQ:OTEX, TSX:OTC) -- http://www.opentext.com/-- provides Enterprise Content Management solutions that bring together people, processes and information in global organizations. The company supports approximately 20 million seats across 13,000 deployments in 114 countries and 12 languages worldwide. * * * As reported in the Troubled Company Reporter on Sept. 18, 2006, Moody's Investors Service assigns a first-time Ba3 rating to the senior secured facilities and B1 rating to the corporate family of Open Text Corp., a leading provider of enterprise content management software. The ratings reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B2, and a loss-given-default of LGD-2 for the senior secured facilities. Moody's also assigned a SGL-1 speculative grade liquidity rating, reflecting very good liquidity. The ratings outlook is stable. PA MEADOWS: Moody's Junks Rating on $70 Mil. 2nd Lien Term Loan --------------------------------------------------------------- Moody's Investors Service assigned a B3 corporate family rating and stable ratings outlook to PA Meadows, LLC. The associated loss given default rating is LGD4, 50%, and the probability of default rating is B3. At the same time, a B2 (LGD3, 34%) was assigned to the company's $25 million 1st lien revolver and $180 million 1st lien term loan, and a Caa2 (LGD5, 84%) to its $70 million 2nd lien term loan. The ratings outlook is stable. Proceeds from the new bank facilities along with a cash equity contribution from one of the equity partners, slot financing, and a partial revolver draw will be used primarily to repay acquisition debt, pay a license fee, fund an interest reserve, construct a temporary casino, and purchase slot machines. The B3 corporate family rating reflects the largely debt-financed and start-up nature of PA Meadows temporary casino project as well as the uncertainty associated with the market demand, future competition, and win per unit performance of the Pennsylvania gaming market which has no casino gaming history. The rating also acknowledges that the company is required to open a permanent casino two years after opening its temporary casino. The planned temporary casino opening is May 2007, thus by May 2009 opening of the permanent facility will be required. Failure to open the permanent facility on time could result in the loss of its gaming license and an event of default under the 1st and 2nd lien bank facilities which expire in 5 years and 6 years, respectively. Positive ratings consideration is given to the population density and favorable demographics of PA Meadows' primary market area and the expectation that the company's temporary casino facility will be constructed on time and on budget. Ratings could improve if the project is completed as planned and ramps up at a pace that meets or exceeds management's current projections. Material construction delays and/or a weak ramp-up could have a negative ratings impact. The stable ratings outlook acknowledges that PA Meadows will be the first casino to be constructed in its Pennsylvania market area, but also recognizes that it will ultimately face competition. Also considered is the company's adequate liquidity including a nine month interest reserve. PA Meadows, LLC was recently approved to receive a Class 1 conditional Pennsylvania gaming license and will be constructing a temporary casino aside its existing harness racing track in Washington County, Pennsylvania. The casino is scheduled to open by May 2007. PA Meadows is a wholly owned subsidiary of Cannery Casino Resorts, LLC. CCR will be owned 58% by Millenium Gaming Inc. and 42% by an entity managed by Oaktree Capital Management, LLC. In addition to PA Meadows, CCR owns and operates three casinos in Las Vegas, Nevada, none of which is part of the PA Meadows borrowing group. PARKWAY HOSPITAL: Automatic Stay Doesn't Halt False Claims Suit --------------------------------------------------------------- Anthony Fullington, in the name of the United States of America, pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. Secs. 3729-33, brought an action (Dist. E.D.N.Y. No. 98-CV- 3618) against Parkway Hospital, Inc. The complaint alleges, inter alia, that Parkway wrongfully included certain non-covered costs in annual reports submitted to the Medicare Program for reimbursement, and received payment for those costs. The United States elected to intervene and proceed with one count in the action. Parkway Hospital is in the midst of a Chapter 11 bankruptcy proceeding, and contends that the automatic stay arising under section 362 of the Bankruptcy Code serves to stay the action. In a decision published at 2006 WL 2766075, the Honorable Joseph F. Bianco finds that the government may proceed with its FCA claim against Parkway under the police and regulatory powers exception to the automatic stay, pursuant to 11 U.S.C. Sec. 362(b)(4). However, Judge Bianco directs that the action will be stayed with respect to claims maintained solely by the relator against Parkway because the relator is not a "governmental unit" for the purposes of the Sec. 362(b)(4) exception. The Parkway Hospital, Inc., operates a 251-bed proprietary, acute care community hospital located in Forest Hills, New York. The Company filed for chapter 11 protection on July 1, 2005 (Bankr. S.D.N.Y. Case No. 05-14876). Timothy W. Walsh, Esq., at DLA Piper Rudnick Gray Cary US LLP, represents the Debtor in its restructuring efforts. The firm of Alston & Bird LLP serves as substitute bankruptcy counsel to the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $28,859,000 in total assets and $47,566,000 in total debts. Parkway's exclusive period to file a chapter 11 plan expires on Aug, 30, 2006. Parkway has told Judge Beatty that it thinks its Creditors' Committee is close to signing a term sheet describing a consensual plan. PARMALAT: Court Permits Citibank to Pursue Actions from October 31 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved the stipulation between Citibank, N.A., and Citibank, N.A. International Banking Facility, on one hand, and Dr. Enrico Bondi, extraordinary administrator of Parmalat Finanziaria S.p.A. and certain of its affiliates and CEO of Reorganized Parmalat, on the other hand, stating that: a. at 5:00 p.m. New York time on Oct. 31, 2006, the Preliminary Injunction Order will automatically be deemed modified to permit Citibank to take any action to enforce its rights against Parmalat Paraguay S.A. or otherwise with respect to the obligations of Parmalat Paraguay to Citibank in Paraguay; b. during the Standstill Period, Reorganized Parmalat will provide Citibank, concerning Parmalat Paraguay and its subsidiaries, with: -- access to company management; -- access to their Paraguayan advisers; -- access to their books and records; and -- copies of and access to forecasts, budgets, restructuring plans, term sheets relating to a sale or other disposition of the assets, purchase and sale agreements, and correspondence relating to a sale or other disposition of assets or the restructuring of indebtedness; and c. during the Standstill Period, Reorganized Parmalat will not sell, transfer, encumber or incur new debt on any of the assets or shares of any of the Parmalat Paraguay Entities without Citibank's prior written consent. The Court approves the parties' stipulation. About Parmalat Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) PARMALAT GROUP: Regains Sequestered Newlat and Carnini Units ------------------------------------------------------------ In September 2006, the Court of Parma lifted the protective sequestration orders over the partnership capital of Newlat S.r.l. and the shares of Carnini S.p.A. The Court issued these orders on Jan. 27, 2004 and Feb. 2, 2004, respectively. The orders were issued in the context of an investigation conducted by the Court of Parma into fictitious disposals involving the two companies. The purpose of these fictitious transactions, which impaired the asset value of the old Parmalat S.p.A. under Extraordinary Administration, was to circumvent antitrust laws. As a result of the decision, the new Parmalat S.p.A. has regained full ownership of Newlat S.r.l. and Carnini S.p.A. at no cost to the Company. Newlat S.r.l, which is based in Reggio Emilia, manufactures and distributes dairy products. In 2005, it had revenues of approximately EUR150 million. Carnini S.p.A., which is based in Villa Guardia (CO), is also a manufacturer and distributor of dairy products. In 2005, it reported revenues of approximately EUR45 million. Regaining full title to the partnership capital of Newlat S.r.l. will enable Parmalat S.p.A. to comply with the ruling issued on 30 June 2005 by the Italian Antitrust Authorities with reference to the breach of the Antitrust regulation by the "old" Parmalat in 1999. The measures prescribed by the Antitrust Authority, which call for the Company to relinquish its dominant position in the fresh-milk market and restore truly competitive conditions in that market, require Parmalat S.p.A. to sell the matese and torre in pietra brands on the open market, along with certain production facilities owned by Newlat S.r.l. About Parmalat Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04-11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, represent the Debtors. When the U.S. Debtors filed for bankruptcy protection, they reported more than $200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. (Parmalat Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 215/945-7000, http://bankrupt.com/newsstand/) POWER2SHIP INC: Sherb & Co. Raises Going Concern Doubt ------------------------------------------------------ Sherb & Co., LLP, Boca Raton, Fla., raised substantial doubt about Power2Ship, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended June 30, 2006. The auditor pointed to the Company's net losses and working capital deficiencies. For the year ended June 30, 2006, Power2Ship, Inc., reported a $5,675,329 net loss available to common shareholders on $29,995,265 of total revenues compared with a $6,645,320 net loss on $9,247,633 of total revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $5,251,709 in total assets and $8,224,941 in total liabilities, resulting in a $2,973,232 stockholders' deficit. The Company's June 30 balance sheet also showed strained liquidity with $3,267,351 in total current assets available to pay $8,117,138 in total current liabilities coming due within the next 12 months. Subsequent Events Consulting Services In August, David S. Brooks and Kevin Yates, the Company's current chief executive officer and chief operating officer, respectively, entered into a consulting agreement to provide the Company with business advisory services including strategic evaluation, planning and advice, fund-raising support, sales and marketing support, contract negotiation, and business development. The term of the agreement was 12 months with an optional six-month extension. Subject to the successful completion of various financing activities the Company is pursuing, the Company agreed to pay each of them an annual fee of $100,000. In August, Mr. Brooks and Mr. Yates were unanimously elected directors at a special meeting of the board of directors of the Company attended by all members of the board. Conversion Extension In September, the Company reached an agreement with a holder of $1,750,000 of its 5% Series B secured convertible debentures, which matured in September 2006, and $350,000 of its 14.25% secured convertible debentures due Dec. 31, 2006. The holder has agreed not to exercise its rights of conversion under the debentures until Nov. 1, 2006, for which the Company paid $100,000 in accrued interest, and not to exercise its rights of conversion under the debentures from November 1 until Jan. 1, 2007, upon the Company paying the holder an additional $100,000 on Nov. 1, 2006, to be applied as determined by the holder to accrued interest or principal. In addition, the Company agreed to amend the conversion price of the $350,000 principal amount of 14.25% secured convertible debenture to make it identical to the conversion provision of the 5% Series B secured convertible debentures, which is equal to the lesser of: i) $0.456 per share, representing 120% of the closing bid price of the Company's common stock as quoted by Bloomberg, LP, on June 28, 2004, or ii) 100% of the average of the three lowest closing bid prices for the Company's common stock, as quoted by Bloomberg, LP, for the 30 trading days immediately preceding any conversion date. A full-text copy of the Company's Annual Report is available for free at http://ResearchArchives.com/t/s?137d Power2Ship, Inc., specializes in providing pertinent, real-time information to the worldwide transportation and security industries. Specific applications of the Company's technology include: vehicle tracking, inventory/asset visibility, secure trucking, and matching available freight with available trucks. PROXIM CORP: Files Disclosure Statement in Delaware --------------------------------------------------- Proxim Corp. and its debtor-affiliates delivered its Disclosure Statement explaining its Chapter 11 Plan of Liquidation to the U.S. Bankruptcy Court for the District of Delaware. Plan Funding The Plan contemplates that the Debtors will use the net cash proceeds from the liquidation of the Estate Assets which consists of: a) the remaining proceeds of approximately $4.5 million from the sale of the Debtors' assets; b) potential litigation and settlement recoveries from Rights of Action; c) any other remaining assets excluded from the sale. Asset Sale The Debtors remind the Court that at an auction for held on July 18, 2005, they determined that Terabeam had the highest bid at a purchase price of $28 million. The Court approved the sale on July 20, 2005. As part of the sale, the Debtors resolved an objection to the assumption and assignment of a lease with Winthrop Resources Corporation by allowing Winthrop to retain the proceeds of a $1.45 million letter of credit in exchange for Winthrop forfeiting all right, title and interest in equipment leased by the Debtors from Winthrop. This enabled the Debtors to sell the equipment to Terabeam. Warburg Deficiency Claim Subsequent to the sale, the Official Committee, the Warburg Group, and the Debtors, reached a global settlement that was approved by the Court. Under the settlement agreement, Warburg was granted an allowed secured claim of $10.7 million, of which the Debtors had previously paid $8 million. The Debtors were required to pay an additional $2.7 million to Warburg in full and final satisfaction of the secured claim. Warburg was also allowed a partially subordinated general unsecured deficiency claim against the Debtors in an amount equal to unpaid interest through Aug. 1, 2005, principal, reasonable expenses, and a change in control premium equal to $5 million provided in the loan documents. Warburg's deficiency claim was partially subordinated in which Warburg is not permitted to recover the deficiency claim until either: a) in the event that third party releases are obtained in a plan in favor of the Warburg Parties, recoveries by other holders of allowed general unsecured claims meet or exceed 25%; or b) in the event the contemplated third party releases are not obtained, recoveries by other holders of allowed general unsecured claims meet or exceed 20%. Except for the obligations created under the settlement agreement, the parties mutually released each other from any claims relating the Debtors or their Estates. Treatment of Claims Administrative Claims, Professional Fees, and Priority Tax Claims, totaling $1,225,000 will be paid in full. On or before the date of distribution to each holder of an Allowed Miscellaneous Secured Claim, the Debtors will elect to, either abandon or surrender to the holder the property securing the claim, in full satisfaction and release of the claim, or pay the amount equal to the claim in cash. Holders of General Unsecured Claims, totaling $3.3 million, will receive their pro rata share of any available cash provided that Warburg will only be entitled to a distribution on account of the Warburg Deficiency Claim once the claim threshold is reached, pursuant to the Warburg Settlement Agreement. Holders of Equity Interests will receive nothing under the Plan. A full-text copy of the Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=061012040615 Proxim Corporation Headquartered in San Jose, California, Proxim Corporation -- http://www.proxim.com/-- designs and sells wireless networking equipment for Wi-Fi and broadband wireless networks. The Debtors provide wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. The Debtor along with its affiliates filed for chapter 11 protection on June 11, 2005 (Bankr. D. Del. Case No. 05-11639). Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub represent the Debtors in their restructuring efforts. Andrew J. Flame, Esq., and Howard A. Cohen, Esq, at Drinker Biddle & Reath LLP represent the Official Commitee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $55,361,000 in assets and $101,807,000 in debts. PROXIM CORP: Court Sets Disclosure Statement Hearing on Nov. 16 --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware will convene at 11:00 a.m. on Nov. 16, 2006, in the U.S. District Court, 844 King Street, Courtroom #2B in Wilmington, Delaware, to consider the adequacy of the Disclosure Statement explaining the Chapter 11 Plan of Liquidation of Proxim Corporation and its debtor-affiliates. Objections are due by Nov. 9, 2006. Headquartered in San Jose, California, Proxim Corporation -- http://www.proxim.com/-- designs and sells wireless networking equipment for Wi-Fi and broadband wireless networks. The Debtors provide wireless solutions for the mobile enterprise, security and surveillance, last mile access, voice and data backhaul, public hot spots, and metropolitan area networks. The Debtor along with its affiliates filed for chapter 11 protection on June 11, 2005 (Bankr. D. Del. Case No. 05-11639). Bruce Grohsgal, Esq., and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub represent the Debtors in their restructuring efforts. Andrew J. Flame, Esq., and Howard A. Cohen, Esq, at Drinker Biddle & Reath LLP represent the Official Commitee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed $55,361,000 in assets and $101,807,000 in debts. QUEEN'S SEAPORT: Trustee Taps Jeffer Mangles as Appellate Counsel ----------------------------------------------------------------- Howard M. Ehrendberg, Esq., the chapter 11 trustee appointed in Queen's Seaport Development Inc.'s bankruptcy cases, asks the U.S. Bankruptcy Court for the District of California for permission to employ Jeffer Mangles Butler & Marmaro LLP as his transitional counsel and special appellate counsel. Jeffer Mangels will: i) assist in the transition of matters from that the firm was handling as counsel for the Debtor to the trustee's professionals, including the proposed general counsel SulmeyerKupetz and ii) represent the estate with respect to the ongoing appeal of the denial of the objection to the claim of Portfolio Financial Servicing Company, which currently pending in the Bankruptcy Appellate Panel for the Ninth Circuit. The Trustee tells the Court that the firm's fees will be limited to $50,000. Joseph E. Eisenberg, Esq., assures the Court that his firm does not hold any interest adverse to the Debtor's estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Court. Mr. Eisenberg can be reached at: Joseph E. Eisenberg, Esq. 1900 Avenue of the Stars, 7th Floor Los Angeles, California 90067 Tel: (310) 203-8080 Fax: (310) 203-0567 http://www.jmbm.com/ About Queen's Seaport Headquartered in Long Beach, California, Queen's Seaport Development, Inc. -- http://www.queenmary.com/-- operates the Queen Mary ocean liner, various attractions and a hotel. The Company filed for chapter 11 protection on March 15, 2005 (Bankr. C.D. Calif. Case No. 05-15175). Joseph A. Eisenberg, Esq., at Jeffer Mangles Butler & Marmaro LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed estimated assets and debts of $10 million to $50 million. QUINTEK TECH: Kabani & Company Raises Going Concern Doubt --------------------------------------------------------- Kabani & Company, Inc., in Los Angeles, Calif., raised substantial doubt about Quintek Technologies, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the years ended June 30, 2006, and 2005. The auditor pointed to the Company's significant operating losses and insufficient capital. For the year ended June 30, 2006, the Company reported net loss applicable to common shareholders of $2,961,767 on $2,307,402 of net revenues compared with a $7,434,262 net loss on $1,547,923 of net revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $1,417,374 in total assets and $2,225,156 in total liabilities, resulting in an $807,702 stockholders' deficit. The Company's June 30 balance sheet showed $637,628 in total current assets available to pay $2,196,415 in total current liabilities. A full-text copy of the Company's 2006 Annual Report is available for free at http://ResearchArchives.com/t/s?1370 Lyons Circle, CA-based Quintek Technologies Inc. provides out- sourcing/in-sourcing services, consulting services, and solution sales. RADNOR HOLDINGS: Hires Wilmer Cutler as Investigative Counsel ------------------------------------------------------------- The Honorable Peter J. Walsh of the U.S. Bankruptcy Court for the District of Delaware gave Radnor Holdings Corporation and its debtor-affiliates authority to employ Wilmer Cutler Pickering Hale and Dorr LLP as special investigative counsel, acting through a special committee of Radnor Holdings' board of directors, nunc pro tunc to Aug. 25, 2006. As reported in the Troubled Company Reporter on Sept. 15, 2006, Wilmer Cutler will investigate and analyze the validity and priority of the Prepetition Term Loan Lenders' claims and liens against the Debtors and investigate, analyze and advise the Special Committee of any facts or circumstances that would otherwise warrant re-characterization or equitable subordination of the Prepetition Term Loan Lenders' claims or liens. The current hourly rates for Wilmer Cutler's professionals are: Designation Hourly Rate ----------- ----------- Partners $425 - $805 Junior Partners $420 - $495 Counsels $375 - $600 Associates $240 - $445 Attorneys/Specialists $200 - $400 Paraprofessionals $65 - $250 The Debtors assured the Court that Wilmer Cutler does not hold any interests adverse to the Debtors or their estates. Section 327(e) of the Bankruptcy Code does not require Wilmer Cutler to be a "disinterested person" under Section 101(14). Headquartered in Radnor, Pennsylvania, Radnor Holdings Corporation -- http://www.radnorholdings.com/-- manufactures and distributes a broad line of disposable food service products in the United States, and specialty chemicals worldwide. The Debtor and its affiliates filed for chapter 11 protection on Aug. 21, 2006 (Bankr. D. Del. Case No. 06-10894). Gregg M. Galardi, Esq., and Mark L. Desgrosseilliers, Esq., at Skadden, Arps, Slate, Meagher, represent the Debtors. Victoria Watson Counihan, Esq., at Greenberg Traurig, LLP, represents the Official Committee of Unsecured Creditors. When the Debtors filed for protection from their creditors, they listed total assets of $361,454,000 and total debts of $325,300,000. RAMBUS INC: Appoints David Shrigley as an Independent Director -------------------------------------------------------------- Rambus Inc. appointed David Shrigley as an independent director to its board of directors. Mr. Shrigley was also appointed to the compensation committee of the Board. "Dave brings exceptional sales and marketing expertise to the Rambus board and we are delighted to have the benefit of his insight," Kevin Kennedy, chairman of the board of directors, said. "Dave's accomplishments include helping Intel emerge as a leading semiconductor company as well as being a key leader in Bay Networks' rise in the networking space. We look forward to his input as execute on our strategy of bringing world-class technology solutions to the marketplace." Mr. Shrigley served as a general partner at Sevin Rosen Funds, a venture capital firm, from 1999 to 2005. Prior to which, he held the position of executive vice president, Marketing, Sales and Service at Bay Networks. Mr. Shrigley served in various executive positions during his 18 years at Intel, including vice president and general manager of Asia Pacific Sales and Marketing Operations based in Hong Kong, and vice president and general manager, Corporate Marketing. Mr. Shrigley holds a bachelor's degree from Franklin University in Columbus, Ohio. He also serves on the board of SPI Lasers PLC. Headquartered in Los Altos, California, Rambus Inc., (NASDAQ: RMBS) -- http://www.rambus.com/--is a technology licensing company specializing in the invention and design of high-speed chip interfaces. The Company has regional offices in North Carolina, India, Germany, Japan and Taiwan. Rambus, Inc., on Sept. 8, 2006, received a notice of purported defaults from U.S. Bank National Association, trustee for the Company's Zero Coupon Convertible Senior Notes due 2010. The Notice asserted that the Company's failure to file its Form 10-Q for the quarter ended June 30, 2006 constituted defaults under Sections 7.2 and 14.1 of the Indenture between the Company and the Trustee governing the Notes. The Notice indicated that if the Company does not cure these purported defaults under the Indenture within sixty days of Aug. 17, 2006 an Event of Default would occur. The Company believes that it is not in default under the terms of the Indenture. REFCO INC: Case Summary & 53 Largest Unsecured Creditors -------------------------------------------------------- Lead Debtor: Refco Inc. One World Financial Center 200 Liberty Street, Tower A New York, New York 10281 Bankruptcy Case No.: 05-60006 Debtor-affiliate filing separate chapter 11 petitions on October 16, 2006: Entity Case No. ------ -------- Refco Commodity Management, Inc. 06-12436 Debtor-affiliates that filed separate chapter 11 petitions on June 5, 2006: Entity Case No. ------ -------- Westminster-Refco Management LLC 06-11260 Refco Managed Futures LLC 06-11261 Lind-Waldock Securities LLC 06-11262 Debtor-affiliates that filed separate chapter 11 petitions on Oct. 17, 2005: Entity Case No. ------ -------- Refco Global Finance Ltd. 05-60007 Refco Information Services LLC 05-60008 Bersec International LLC 05-60009 Refco Capital Management LLC 05-60010 Refco Global Capital Management LLC 05-60011 Marshall Metals LLC 05-60012 Refco Financial LLC 05-60013 New Refco Group Ltd., LLC 05-60014 Refco Regulated Companies LLC 05-60015 Refco Finance Inc. 05-60016 Refco Capital Holdings LLC 05-60017 Refco Capital Markets, Ltd. 05-60018 Kroeck & Associates, LLC 05-60019 Refco Administration, LLC 05-60020 Refco Mortgage Securities, LLC 05-60021 Refco Capital LLC 05-60022 Refco F/X Associates LLC 05-60023 Refco Global Futures LLC 05-60024 Summit Management LLC 05-60025 Refco Capital Trading LLC 05-60026 Refco Group Ltd., LLC 05-60027 Refco Global Holdings LLC 05-60028 Refco Fixed Assets Management LLC 05-60029 Type of Business: The Debtors constitute a diversified financial services organization with operations in 14 countries and a global institutional and retail client base. Refco Inc.'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, Paris and Singapore. In addition to its futures brokerage activities, Refco Inc. and its affiliates are major brokers 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.. Chapter 11 Petition Date: October 17, 2005 Court: Southern District of New York (Manhattan) Judge: Robert D. Drain Debtors' Counsel: J. Gregory Milmoe, Esq. Sally M. Henry, Esq. Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Tel: (212) 735-3770 Fax: (917) 777-3770 Lead Debtor's Financial Condition as of August 31, 2005: Total Assets: $16,500,000,000 Total Debts: $16,800,000,000 Financial condition of debtor-affiliates that filed on June 5, 2006: Entity Total Assets Total Debts ------ ------------ -------------- Westminster-Refco Management LLC $1,918,030 $1,032,386,039 Refco Managed Futures LLC $0 $1,035,345,960 Lind-Waldock Securities LLC $0 $1,032,000,000 Financial condition of Refco Commodity Management, Inc.: Estimated Assets: $1 Million to $10 Million Estimated Debts: $50,000 to $100,000 A. Refco Commodity Management, Inc.'s 3 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Affiliates and subsidiaries Intercompany Unliquidated of Refco Inc. One World Financial Center 200 Liberty Street - Tower A New York, New York 10281 Attn: Eric Simonsen Gary L. Franzen, as Trustee Litigation Unliquidated of the Gary L. Franzen Declaration of Trust, et al. Wachovia Securities, LLC Trade Debt $9,000 901 East Byrd Street, WS2055 Richmond, Virginia 23219 Attn: Leah R. Wehinger B. Debtors' Consolidated List of 50 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Bawag International Finance $451,158,506 BAWAG P.S.K. Bank fur Arbeit und Wirtschaft und Osterreichische Postsparkasse Aktiengesellschaft Sietzergasse 2-4 A-1010 Vienna, Austria P: +43/1/534 53/3 12 10 F: +43/1/534 53/ 2284 Wells Fargo $390,000,000 Corporate Trust Services Mac N9303-120 Sixth & Marquette Minneapolis, MN 55497 P: 612-3 16-47727 Attn: Julie J. Becker VR Global Partners, LP $380,149,056 Avora Business Park 77 Sadovnicheskaya NAB. Building 1 Moscow, Russia 115035 Rogers Raw Materials Fund $287,436,182 c/o Beeland Management 141 West Jackson Boulevard, Suite 1340 Chicago, IL 60604 P: (312) 264-4375 Bancafe International Bank Ltd. $176,006,738 Carrera 11 82-76 Segundo 2 Bogota, Colombia P: 636-4349 - and - Bancafe International Bank Ltd. 801 Brickell Avenue Ph1 Miami, FL 33131 P: 305-372-9909 F: 305-372-1797 Markwood Investments $110,056,725 Via Lovanio #19 00198 Rome, Italy Capital Management Select Fund $109,009,282 Lynford Manor, Lynford Cay Nassau, Bahamas Leuthold Funds Inc $107,264,868 Leuthold Industrial Metals, LP 100 North 6th Street Suite 412A Minneapolis, MN 55403 P: 612-332-9141 F: 612-332-0797 Attn: David Cragg Rietumu Banka $100,860,048 JSC Rietumu Banka Reg. No. 40003074497 VAT No. LV40003074497 54 Brivibas str Riga, LV-1011 LATVIA P: +371-7025555 F: +371-7025588 Cosmorex Ltd. $91,393,820 CP 8057 28080 Madrid, Spain P: +34-607-745-555 F: +34-667-706-622 BCO Hipotecario Inv. Turistic $85,807,030 (Fidelicomiso Federal Forex Invest) Av Venezuela Torre Cremerca, Piso 2 Ofici B2 El Rosal Caracas, VENEZUELA VR Argentina Recovery Fund $77,710,311 Avrora Business Park 77 Sadovnicheskayanab BLDG 1 Moscow, 115035 Russia Rogers International Raw Materials $75,213,814 c/o Beeland Management 141 West Jackson Boulevard, Suite 1340 Chicago IL 60604 P: (312) 264-4375 Creative Finance Limited $65,111,071 Marcy Building, Purcell Estate P.O. Box 2416 Road Town, British Virgin Islands Cargill $67,000,000 PO Box 9300 Minneapolis, MN 55440-9300 P: (952) 742-7575 F: (952) 742-7393 JWH Global Trust $50,576,912 c/o Refco Commodity Management Inc. One World Financial Center 200 West Liberty St., 22nd Floor New York, NY 10281 RB Securities Limited $50,661,064 54 Brivibas Street LV-1011 Riga, Lativa P: + 371 702-52-84 F: + 371 702-52-26 Premier Trust Custody $49,365,415 Abraham De Veerstraat 7-A Curacao, Netherlands Antilles London & Amsterdam Trust Company $47,560,980 P.O. Box 10459 APO 3rd Floor Century Yard Cricket Square, Elgin Ave. Grand Cayman, Cayman Island Stilton International Holdings Trident Chambers, Wickhams Cay P.O. Box 146 Road Town, British Virgin Islands $46,820,415 Refco Advantage Multi-Manager Fund Futures Series $41,713,723 c/o Refco Alternative Investments Group One World Financial Center 200 West Liberty St., 22nd Floor New York, NY 10281 Banesco NY Banesco Banco Universal C.A. $39,596,609 Av Urdaneta, Esquina El Chorre, Torre Untbanca Caracas Venezuela Josefina Franco Sillier $32,862,419 Carretera Mexico-Toluca No. 4000 Col. Cuajimalpa D.R. 0500 Mexico Rovida $32,831,461 London & Amsterdam Trust Company P.O. Box 10459 APO 3rd Floor Century Yard, Cricket Sq. Caja S.A. $30,950,115 Sarmiento 299 1 Subsuelo (1353) Buenos Aires, Argentina P: (54 11) 4317-8900 F: (54 11) 4317-8909 Global Management Worldwide $28,976,612 Trident Corp. Service Floor 1 Kings Court Bay St. PO Box 3944 Nassau, Bahamas Abadi & Co. Securities $28,046,904 375 Park Avenue, Suite 3301 New York, NY 10152 P: (212) 319 -4135 Refco Winton Diversified Futures Fund $27,226,697 c/o Refco Global Finance One World Financial Center 200 West Liberty Street, 22nd Floor New York, NY 10281 Pioneer Futures, Inc. $25,932,000 One North End Ave., Suite 1251 New York, NY 10282 Daichi Commodities Co., Ltd. $24,894,833 10-10 Shinsen Cho, Shibuya-Ku Tokyo, I5O-0045 JAPAN GS Jenkins Portfolio LLC. $24,631,959 c/o Refco Capital Markets One World Financial Center 200 West Liberty Street, 22nd Floor New York, NY 10281 Winchester Preservation $23,349,765 c/o Joseph D, Freney Christiana Bank & Trust Co. 3801 Kennett Pike, Suite 200 Greenville, DE 19807 Banco Agri Banco Agricola (PANAMA) S.A. $22,314,386 Edificio Global Bank #17, Local F, Calle 50 PANAMA, PA - and - Banco Agricola, S.A. 1RA. Cakke Pte. Y 67 AV. Norte Final Blvd Constitucion #100 San Salvador, ES Peak Partners Offshore Master Fund Limited $22,205,344 P.O. Box 2199 GT Grand Pavilion Commercial Center 802 West Bay Road Grand Cayman, Cayman Islands Arbat Equity Arbitrage Fund $19,106,989 Trident Corporate Services 1st Floor Kings Court Bay Street P.O. Box N3944 Nassau, Bahamas Renaissance Securities (Cyprus) Ltd. $17,820,709 2-4 Arch Makarios 111 Avenue Capital Center, 9th Floor 1505 Nicosia Cyprus AQR Absolute Return $17,482,100 c/o Caledonian Bank & Trust Ltd. P.O. Box 1043 GT Caledonian House Grand Cayman, Cayman Islands Geshoa Fund $17,319,494 Corporate Center West Bay Road Po Box 31106 Smb GRAND CAYMAN RK Consulting $14,074,345 7, Kountouriotou Street 14563 Kifissia Greece VR Capital Group Ltd. $13,690,549 Avrora Business Park Calendonian House Mary Street NAB 77 Building 1 MOSCOW, RUSSIA 115035 P: +358 600 41 902 GTC Bank, INC. $12,971,439 Calle 55 Este Torre World Trade Center Piso 7 PANAMA GUATEMALA P: (507) 265-7371 F: (507) 265-7396 Inversiones Concambi $12,799,137 c/o AEROCAV 1029 P.O. BOX 02-5304 MIAMI, PL 33102 Miura Financial Services $12,150,213 AV. Francisco De Miranda TORRE LA PRIMERA PISO 3 CARACAS VENEZUELA NKB Investments Ltd. $11,699,430 199 Arch Makarios Ave 196 Makarios III Avenue Ariel Corner 3rd Floor Office 301 3030 Limassol CYPRUS Tokyo Forex Financial Inc $11,689,354 Shinjyuku Oak Tower, 35th Floor 6-8-1 Nishishinjyuku Shinjyuku-Ku, Tokyo JAPAN Birmingham Merchant S.A. $11,215,413 AV. ARGENTINA 4793 PISO 3 CALLAO PERU BAC International $10,906,506 Calle 43 Qnquillo De Laguar PANAMA P: (507) 265-8289 F: 507-205-4031 Total Bank $10,657,732 Calle Guaicaipuro Entre Av.Principalde Ias Mercedes Torre Alianza Piso 9 EL ROSAL, CAACAS, VENEZUELA P: (0212) 264.72.54/49.42 F: (0212) 266.58.12 Reserve Invest (Cypress) Limited $10,499,733 Maximos Plaza 3301 Block 3 3035 LIMASSOL CYPRUS Refco Commodity Futures Fund $10,166,045 c/o Refco Alternative Investments Group One World Financial Center 200 Liberty Street, 22nd Floor New York, New York 10281 P: 877 538 8820 F: 877 229 0005 RIVERSTONE NETWORKS: Court Okays Alan Miller as Interim President ----------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave Riverstone Network Inc. and its debtor-affiliates permission to employ Alan B. Miller, Esq., as interim president and chief executive officer. The Debtors sought immediate employment of Mr. Miller following Noah Mesel's decision to step down as the Debtor's interim president. Mr. Miller will be the sole executive with the power to bind the Debtors' estates. The Debtor's application did not disclose Mr. Miller's compensation fees. To the best of the Debtor's knowledge, Mr. Miller does not hold any interest adverse to the estate. Based in Santa Clara, California, Riverstone Networks Inc. nka Wind Down Corporation -- http://www.riverstonenet.com/-- provides carrier Ethernet infrastructure solutions for business and residential communications services. The company and four of its affiliates filed for chapter 11 protection on Feb. 7, 2006 (Bankr. D. Del. Case Nos. 06-10110 through 06-10114). Edmon L. Morton, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP, represent the Debtors. Kerri K. Mumford, Esq., at Landis Rath & Cobb LLP, represents the Official Committee of Unsecured Creditors. The firm Brown Rudnick Berlack Israels LLP serves as counsel to the Official Committee of Equity Security Holders. The Debtors' Joint Plan of Reorganization and Liquidation was confirmed on Sept. 12, 2006. As of Dec. 24, 2005, the Debtors reported assets totaling $98,341,134 and debts totaling $130,071,947. SACRED HEART: Moody's Chips $47.9MM Debt Rating to Ba3 from Ba1 --------------------------------------------------------------- Moody's Investors Service downgraded the long term bond rating for Sacred Heart Health System to Ba3 from Ba1 and has, simultaneously, placed the rating on WatchList for further downgrade. The rating action affects approximately $47.9 million of rated debt outstanding, including approximately $10.3 million of variable rate debt backed by an LOC provided by Wachovia Bank (Aa2). The rating downgrade is primarily due to a weakened financial profile reflected in poor operating performance, a decline in liquidity, and uncertainty surrounding the upcoming renewal of a letter of credit which would dilute the System's already modest liquidity. The LOC backed debt is rated under a "two party pay" analysis that incorporates both SHHS' and Wachovia's rating. The LOC-backed bonds are rated Aa1/VMIG1. The WatchList reflects the short-term liquidity risk associated with the possible expiration of the current LOC on Feb. 28, 2007, potentially creating a liquidity crisis. SHHS is in violation of certain financial covenants under the terms of the LOC agreement that could permit Wachovia to accelerate the debt at any time and also creates a cross-default to the parity (they are all rated) bonds. Legal security. The Series 2005 bonds are secured by a gross revenue pledge of the Obligated Group, which is comprised of Sacred Hearth Health System and Sacred Heart Hospital of Allentown, the flagship facility and a member of the SHHS. Additionally, the Hospital's obligations will be secured by a mortgage of SHH's main building in Allentown. The bonds are secured by a fully funded debt service reserve fund equal to maximum annual debt service of the Series 2005 bonds. Interest rate derivatives: none. Strengths. * New president and CEO recently installed with a focus on physician relationships. After four consecutive years of declining operating performance, Moody's believes the change in management will provide a fresh perspective; * Total admissions increased for the first time after four consecutive years of decline, although acute care admissions were down 0.9%; * No significant debt plans for several years; and, * Operating revenues grew 4.5% in FY 2006 due to renegotiated contracts and improved payer mix. Challenges. * Uncertainty surrounding the ability of SHHS to secure an extension of the LOC provided by Wachovia or another bank; * Temporary 4 month closure of the cardiac catheterizations lab stemming from technological difficulties with cardiac equipment, leading to a 0.9% decrease in acute care volume; * Declining market share in a difficult competitive environment with two larger competitors in the immediate service area; * System performance worsened to weakest levels since FY 2000, with a $9.7 million operating loss, causing SHHS to violate its coverage ratio, resulting in the engagement of a consultant; * Average age of plant has increased in recent years to 14.1 years; and * Deferred maintenance remains an ongoing concern. Recent developments. The rating downgrade to Ba3 from Ba1 reflects the fourth consecutive year of operating decline and weaker than expected operating performance. SHHS reported negative cash flow in FY 2006 with an operating loss of $9.7 million (-7.5% operating margin), down from an operating loss of $5 million (-4.1% operating margin) in FY 2005. The large losses were driven by a 0.9% decline in acute care volumes due to the departure of a cardiologist and a four-month closure of the cardiac catheterization lab stemming from technological and equipment difficulties, resulting in cost overruns. Although management reports that the unit is now up and operational, Moody's believes that the loss in market share could have a more marked long term impact due to the competitive environment of the Lehigh Valley market, with A1-rated Lehigh Valley Health System (617 beds, 44% market share) and Baa1-rated St. Luke's Hospital and Health Network (350 beds, 32% market share) located within ten miles of SHHS. In addition, Moody's views SHHS' demographics unfavorably, with below average household income of $32,000, well below the state median of $40,000. Due to ongoing operating challenges, the board has recently appointed a new president and CEO to provide a fresh new management perspective. The new CEO is a physician, reflecting a renewed focus on strengthening relations with the medical staff in addition to continue ramping up new service lines in the areas of bariatric services, behavioral health, geriatric medicine, hospice care, and a wound care center, where SHHS continues to enjoy growing volumes. Management has reported a return to operating stability in the first quarter of FY 2007. Due to expense containment, the age of plant has increased in recent years as capital spending levels have fallen below depreciation levels. In light of operational difficulties, SHHS' liquidity position declined, with days cash on hand falling to 63 days from 73 days, although cash-to-debt improved to 47.3% from 46.9% due to a rapid amortization schedule. Although SHHS has maintained a cash cushion of 63 days at FYE 2006, concerns remain as the organization has begun to stretch accounts payables. In addition, debt to cash flow worsened to -35.3 from 9.4, and MADS coverage fell to 0.32 times from 1.54 times in FY 2006 and FY 2005, respectively. As a result, SHHS is in violation of the 1.2 times debt service coverage covenant and has engaged a consultant. Due to this event of default, there is uncertainty as to whether SHHS will be able to secure an extension on the LOC from Wachovia, with whom management is currently undergoing negotiations, or another bank. The current LOC, which backs $10.3 million of rated debt, expires on February 28, 2007. In the event that the LOC provider elects not to extend, notice must be provided by Dec. 1, 2006. If any creditors were to accelerate their debt, such a development would almost certainly result in a downgrade of the current bond rating and a potential liquidity crisis. However, if SHHS is successful in extending the LOC for an intermediate term, we believe current operations can sustain the organization at the current rating level. Outlook The WatchList reflects the short-term liquidity risk associated with the extension of the current LOC, which expires on February 28, 2007 What could change the rating--up Sustained financial recovery including return to profitability, as well as a recovery in volume growth. What could change the rating--down Further declines in liquidity due to continued operational losses, further losses in market share, or failure to secure a LOC. Key indicators. Assumptions & Adjustments: * Based on financial statements for Sacred Heart HealthCare System * First number reflects audit year ended June 30, 2005 * Second number reflects audit year ended June 30, 2006 * Investment returns normalized at 6% unless otherwise noted * Inpatient admissions: 8,298; 8,547 * Total operating revenues: $122,056; $127,487 * Moody's-adjusted net revenue available for debt service: $8229; $1,701 * Total debt outstanding: $51,357; $47,892 * Maximum annual debt service (MADS): $5,360; $5,360 * MADS Coverage with reported investment income: 1.43 times; 0.25 times * Moody's-adjusted MADS Coverage with normalized investment income: 1.54 times; 0.32 times * Debt-to-cash flow: 9.42; -35.28 * Days cash on hand: 73 days; 63 days * Cash-to-debt: 46.9%; 47.3% * Operating margin: -4.1%; -7.6% * Operating cash flow margin: 3.6%; -0.3% Rated debt (debt outstanding as of 10/5/06) Sacred Heart HealthCare System * Series 1998 A, $7.5 million outstanding; fixed rate; rated Ba2 * Series 1998 B, $10.3 million outstanding; rated Aa1/ VMIG 1 jointly supported by Direct Pay Letter of Credit and SHHS (expires February 28, 2007) * Series 2005, $25.6 million outstanding; fixed rate; rated Ba2 SAINT VINCENTS: Taps Weiser to Conduct Cancer Center Fund Analysis ------------------------------------------------------------------ Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Southern District of New York to retain Weiser LLP, nunc pro tunc to April 18, 2006, to analyze certain expenses and the distribution of funds related to, and generated in connection with, the operation of Saint Vincent's Catholic Medical Centers' Comprehensive Cancer Center. Guy Sansone, chief executive officer of SVCMC, asserts that Weiser is well-qualified to perform the services required by the Debtors due to the firm's extensive experience in the accounting, auditing, and tax advisory aspects of Chapter 11 cases and familiarity with the health aid industry and with both not-for-profit and for-profit accounting. Mr. Sansone explains that Weiser's engagement will benefit the Debtors' estates considering that the Debtors have paid $381,093,707 to Aptium W. New York, Inc., formerly known as Comprehensive Cancer Centers of New York, for services Aptium provided under a services agreement with SVCMC. SVCMC has received $17,604,277 in connection with the operation of SVCCC. Utilizing Weiser's services will ensure that the amounts that Aptium calculated and paid to, or charged against, the Debtors were proper and that SVCCC is being operated effectively and efficiently, Mr. Sansone asserts. Weiser will analyze SVCCC's operations and the propriety of the management services provided to SVCMC by Aptium, pursuant to procedures set forth in an engagement letter, a free copy of which is available for free at: http://researcharchives.com/t/s?1374 Weiser will be paid based on its standard hourly rates: Partners $375 - $525 Managers $275 - $350 Seniors $175 - $250 Staff Accountants $100 - $150 For each time Weiser incurs fees of $50,000, it will cease work to request and obtain written authorization from SVCMC to continue further work on SVCMC's behalf. Simultaneously, Weiser will provide SVCMC and the Official Committee of Unsecured Creditors with a status report of all work performed prior to the request being made. Mr. Sansone discloses that Weiser's fees are capped at $100,000 for the duration of the engagement. However, Weiser is entitled to apply for compensation above $100,000, if, within the scope of the work contemplated by the Engagement Letter, Weiser has provided advance reasonable notice to SVCMC. The Debtors will also reimburse Weiser for necessary expenses incurred. In 2005, Weiser provided some preliminary services to SVCMC relating to the SVCMC Foundation. This engagement was discontinued prior to the Petition Date, and Weiser was paid $1,916 in full satisfaction of all prepetition services, Mr. Sansone explains. Stuart A. Gollin, CPA, CIRA, a partner at Weiser, assures the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code, and neither Weiser nor its professionals hold any interest materially adverse to the Debtors within the meaning of Section 327(a). Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 36 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SAINT VINCENTS: Tort Panel to File New Counsel Retention Motion --------------------------------------------------------------- Kronish Lieb Weiner & Hellman LLP has merged with Cooley Godward, LLP to form Cooley Godward Kronish LLP, effective Oct. 1, 2006. Richard S. Kanowitz, Esq., at Cooley Godward Kronish LLP, in New York, notifies the U.S. Bankruptcy Court for the Southern District of New York that the Official Committee of Tort Claimants appointed in Saint Vincents Catholic Medical Centers of New York and its debtor-affiliates' chapter 11 cases will file a supplemental retention application with the Court seeking authority to retain Cooley Godward Kronish as its counsel. As reported in the Troubled Company Reporter on July 4, 2006, the Court authorized the Debtors to retain Kronish Lieb as its counsel, nunc pro tunc to May 17, 2006. Kronish Lieb's hourly rates are: Professional Status Hourly Rate ------------ ------ ----------- James A. Beldner Partner $650 Richard S. Kanowitz Partner $585 Jeffrey L. Cohen Associate $380 Seth Van Aalten Associate $290 Noah Falk Associate $245 Headquartered in New York, New York, Saint Vincents Catholic Medical Centers of New York -- http://www.svcmc.org/-- the largest Catholic healthcare providers in New York State, operate hospitals, health centers, nursing homes and a home health agency. The hospital group consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The Company and six of its affiliates filed for chapter 11 protection on July 5, 2005 (Bankr. S.D.N.Y. Case No. 05-14945 through 05-14951). Gary Ravert, Esq., and Stephen B. Selbst, Esq., at McDermott Will & Emery, LLP, filed the Debtors' chapter 11 cases. On Sept. 12, 2005, John J. Rapisardi, Esq., at Weil, Gotshal & Manges LLP took over representing the Debtors in their restructuring efforts. Martin G. Bunin, Esq., at Thelen Reid & Priest LLP, represents the Official Committee of Unsecured Creditors. As of Apr. 30, 2005, the Debtors listed $972 million in total assets and $1 billion in total debts. (Saint Vincent Bankruptcy News, Issue No. 36 Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SALOMON BROS: Moody's Pares Junk Rating on $3.4MM Class N Certs. ---------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes, downgraded the rating of one class and affirmed the ratings of eight classes of Salomon Brothers Commercial Mortgage Trust 2000-C3, Commercial Mortgage Pass-Through Certificates, Series 2000-C3: -- Class A-1, $62,723,507, Fixed, affirmed at Aaa -- Class A-2, $523,600,000, Fixed, affirmed at Aaa -- Class X, Notional, affirmed at Aaa -- Class B, $43,446,000, WAC, upgraded to Aaa from Aa2 -- Class C, $36,586,000, WAC, upgraded to Aa1 from A2 -- Class D, $13,720,000, WAC, upgraded to Aa2 from A3 -- Class E, $13,720,000, WAC, upgraded to A1 from Baa1 -- Class F, $13,720,000, WAC, upgraded to Baa1 from Baa2 -- Class G, $13,720,000, WAC, affirmed at Baa3 -- Class J, $6,860,000, Fixed, affirmed at Ba3 -- Class K, $5,716,000, Fixed, affirmed at B1 -- Class L, $10,290,000, Fixed, affirmed at B3 -- Class M, $4,574,000, Fixed, affirmed at Caa1 -- Class N, $3,430,000, Fixed, downgraded to Caa3 from Caa2 As of Sept. 18, 2006, the transaction's aggregate certificate balance has decreased by approximately 14.4% to $783.1 million from $914.7 million at securitization. The Certificates are collateralized by 161 mortgage loans secured by commercial and multifamily properties. The current pool is 100.0% conduit since the one shadow rated investment grade loan, One Financial Place ($113.1 million - 14.4% of the pool) was defeased. The conduit loans range in size from less than 1.0% of the pool to 14.4% of the pool, with the top 10 exposures representing 37.4% of the pool. Twenty-one loans, representing 31.3% of the pool, have defeased and been replaced by U.S. Government Securities. Six loans have been liquidated from the pool, resulting in aggregate realized losses of approximately $13.6 million. Four loans, representing 4.1% of the pool, are in special servicing. Moody's estimates aggregate losses of approximately $2.5 million for all of the specially serviced loans. Moody's was provided with year-end 2005 and partial-year 2006 operating results for approximately 95.7% and 21.9%, respectively, of the performing loans in the pool. Moody's loan to value ratio is 84.1%, compared to 88.5% at last review and compared to 83.6% at securitization. Moody's is upgrading Classes B, C, D, E and F primarily due to a large percentage of defeased loans and increased subordination levels. Moody's is downgrading Class N due to realized losses, expected losses from the specially serviced loans and LTV dispersion. Based on Moody's analysis, 12.0% of the pool has a LTV greater than 100.0%, compared to 11.4% at last review. The top three conduit loans represent 8.1% of the outstanding pool balance. The largest conduit loan is the Jorie Plaza Loan ($21.7 million - 2.8%), which is secured by a 190,000 square foot office building located in Oak Brook, Illinois, 15 miles southwest of the Chicago CBD. The property is 100.0% occupied with the largest two tenants occupying 75.0% of the premises. Moody's LTV is 78.8%, compared to 79.3% at last review and compared to 91.5% at securitization. The second largest conduit loan is the Westland Meadows Loan ($21.5 million - 2.8%), which is secured by a 774-pad manufactured housing community located approximately 15 miles southwest of the Detroit CBD in Westland, Michigan. Performance has weakened since 2003 due to occupancy loss and declines in base rent. The loan is on the master servicer's watchlist due to a decline in debt service coverage. Moody's LTV is in excess of 100.0% compared to 81.7% at last review and compared to 88.5% at securitization. The third largest conduit loan is the Stonegate One Loan ($19.9 million - 2.5%), which is secured by a 142,000 square foot office building located in the Westfields Office Park in Chantilly, Virginia, 25 miles west of Washington, DC. The property is 100.0% occupied by Lockheed Martin (Moody's senior unsecured rating Baa1; stable outlook) with a lease expiration date of December 2007. Moody's LTV is 81.9%, compared to 93.2% at last review and compared to 88.5% at securitization. The collateral properties are located in 33 states, Washington, D.C., and Puerto Rico. The highest state concentrations are California (18.5%), Illinois (17.0%), Michigan (6.8%), Massachusetts (5.4%) and New Hampshire (4.9%). All of the properties located in Illinois are situated within the Chicago MSA. The pool's collateral is a mix of office (31.5%), U.S. Government securities (31.3%), retail (14.1%), multifamily (13.4%), industrial and self storage (7.4%), hotel 1.4%) and other (0.9%). All of the loans are fixed rate. SCHLOTZSKY'S INC: Committee's Suit Against Auditors Survives ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Schlotzsky's, Inc., sued Grant Thornton, L.L.P. (Bankr. W.D. Tex. Adv. Pro. No. 05-5109), the Debtor's prepetition auditor, asserting claims for, inter alia, professional negligence, breach of contract, equitable subordination, and avoidance of preferential transfers. Grant Thornton filed motion to abstain or, in the alternative, motion to dismiss for failure to state a claim. In a decision published at 2006 WL 2663010, the Honorable Leif M. Clark held that: (1) permissive abstention was not warranted; (2) under Texas law, the committee's breach of contract claim, which depended on the same exact allegations as did its negligence and malpractice claims, could not stand as currently pleaded; (3) the committee's claim for aiding and abetting breach of fiduciary duty could not stand as currently pleaded; and (4) the committee's claim for exemplary damages was adequately pleaded. Although the committee had chosen federal court as its preferred forum, as was its right, there was no evidence of impermissible forum shopping, Judge Clark says. The court was familiar with the context of the litigation and the debtor's general background. While some of the committee's claims were governed by state law and even involved relatively unsettled legal issues, Judge Clark concludes that it is not unjust for the bankruptcy court, which has previously entertained a similar cause of action and which often deals with legal issues grounded in state law, to retain the matter. The Lawsuit The Committee wants money from Grant Thornton for alleged auditing failures relating to the firm's handling of the debtor's pre- petition acquisition of certain Area Developer Agreements from NS Associates. Schlotzsky's entered into area developer agreements with persons or entities who were charged with both recruiting new franchisees and handling some of the management tasks for existing franchisees within a certain area, in exchange for a portion of the franchise revenue. One of the largest of these ADA's involved NS Associates, covering Dallas, Houston and San Antonio. That agreement was entered into in 1996. A few years later, Schlotzsky's initiated a strategy of either re- negotiating the terms of some of these area developer agreements or buying them out outright, with the goal of obtaining a new source of financing by securitizing the franchise revenue stream. The reacquisition transaction with NS Associates forms the basis of this lawsuit, as the committee alleges that Grant Thornton improperly characterized the debtor's exercise of the option in the agreement as an "acquisition of intangible assets," thereby impermissibly permitting the offset of 100% of the Option price. The Committee maintains that the transaction should have been recorded as an expense because it was more properly characterized as a contract termination fee. According to the Committee, accounting for the transaction as did Grant Thornton allegedly caused the Debtor's financial statements to falsely show an increase in intangible assets of more than $25 million offsetting the $23 million liability recorded, artificially masking the company's insolvency. The Committee also alleges that the assets were worth substantially less than $25 million, evidenced by the major write-down by the Debtor after filing. Grant Thornton was hired to perform a fiscal year 2002 audit. It was re-engaged for the following fiscal year as well. The Committee in its complaint charges that Grant Thornton failed to abide by Generally Accepted Accounting Standards as it had promised to do in its audit engagement letters. The Committee alleges that Grant Thornton failed to abide by the AICPA standards, also in breach of the engagement letter, for quarterly audits it performed. The Committee says that these failures caused Schlotzsky's to become more insolvent because, had the companies directors and officers known the Debtor's real financial condition they would not have allowed it to incur additional debt. Headquartered in Austin, Texas, Schlotzsky's, Inc., nka SI Restructuring, Inc. -- http://www.schlotzskys.com/-- was a franchisor and operator of restaurants. The Debtors filed for chapter 11 protection on August 3, 2004 (Bankr. W.D. Tex. Case No. 04-54504). Amy Michelle Walters, Esq., and Eric Terry, Esq., at Haynes & Boone, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $111,692,000 in total assets and $71,312,000 in total debts. On Dec. 8, 2004, the Court approved the sale of substantially all of the Debtors' assets to Bobby Cox Companies for $28 million. Schlotzsky's and its debtor-affiliates emerged from chapter 11 on April 21, 2006, under the terms of their confirmed Joint Plan of Liquidation. SEA CONTAINERS: Provides Update on Chapter 11 Filing ---------------------------------------------------- In order to achieve a financial restructuring, Sea Containers Ltd. and two subsidiaries, Sea Containers Services Ltd. and Sea Containers Caribbean Inc., voluntarily filed for protection under Chapter 11 of Title 11 of the United States Bankruptcy Code. The filings were made on Oct. 15, 2006, in the U.S. Bankruptcy Court for the District of Delaware. A copy of the Company's chapter 11 case summary was published in yesterday's Troubled Company Reporter. "Although we have not paid the October 15 public notes, we are optimistic about the success of our restructuring program and our ability to reach agreement with creditors," Bob Mackenzie, President and Chief Executive Officer, said. "The prime reason for seeking protection is to prevent any individual creditor from taking action on its own, which would be against the interests of Sea Containers and the majority of creditors. The Chapter 11 process is very different from Administration in the U.K., because the directors remain in charge. We continue with our business strategy and for our key operating units it will be 'business as usual'. Chapter 11 will allow us the flexibility and the time needed to implement our reorganization plan and to move Sea Containers onto a sustainable financial footing. Much has already been achieved this year to improve Sea Containers' finances, including the sale of Silja, the reduction by more than 50% of group debt and the recent refinancing of our containers." Other than the two subsidiaries, no other subsidiary company within the group has filed for protection. Operating subsidiaries such as Great North Eastern Railway, the U.K. rail operator, and the SeaStreak ferry services in New Jersey, will continue their normal day-to-day operations. GE SeaCo, the joint venture container leasing business, is a completely separate business and is completely unaffected. The filing companies have sought Chapter 11 protection because their directors concluded that a court-supervised reorganization will better enable the companies to restructure their debt, working co-operatively with creditors to place the respective companies on a sound and sustainable financial footing. On Aug. 11, 2006, the Company stated that it would not pay the $115 million principal amount of the 10-3/4 % senior notes due on Oct. 15, 2006, unless it concluded that it could pay in full the other public notes maturing in 2008, 2009 and 2012 and all other unsecured creditors, as well as retain sufficient working capital. Since then, the Company has outlined a restructuring proposal to the advisors representing the ad-hoc committee of note holders and has had a number of discussions with these advisors with the aim of restructuring the Company's public notes and other unsecured financial obligations. Sea Containers has also been in discussions with advisors to the trustees of Sea Containers' two principal U.K. pension schemes. Although Sea Containers believes that progress has been made in these discussions, it has not been able to reach agreements with the necessary stakeholders prior to the Oct. 15, 2006 maturity date of the 10-3/4 % notes. The Company has decided it cannot pay the October 15 notes at maturity, and is thus in payment default. The decision to seek Chapter 11 protection was taken by the directors of the filing companies by board action on Oct. 14, 2006. Sea Containers Ltd continues to operate under the direction of its Board and the Company's subsidiaries remain under the control of their respective managements and boards of directors. It is intended that the filing companies will continue to function normally, with minimal change to the way they conduct business and be able to fund their continuing operations during the reorganization process. Sea Containers fully expects that there will be no interruptions to the payment of salaries and benefits for employees and that the filing companies will continue to meet supplier obligations incurred during the Chapter 11 process. Sea Containers may initiate one or more complementary proceedings outside of the United States in order to facilitate the Chapter 11 process. Cash Position Sea Containers' total cash on Oct. 14, 2006 was $126 million of which approximately $59 million was either restricted as security for obligations to third parties or held in subsidiaries and could not be remitted back to the Company for various legal, regulatory or bank covenant reasons. The remaining free cash of $67 million compares to $80 million as at July 31, 2006. The main movements on free cash are the receipt of $40 million from the container refinancing and sale of containers, the repayment of secured debt of $9 million, a net $23 million to meet both the recurring and non-recurring operating needs of the business and $16 million of restructuring costs. The free cash balance of Sea Containers Ltd on Oct. 14, 2006 was $49 million, with the remaining $18 million held in subsidiaries available for group purposes. Pensions In light of the deficits relating to the Sea Containers 1983 and 1990 Pension Schemes in the U.K., Sea Containers has sought to ensure that the restructuring takes account of the pension liabilities. The directors of Sea Containers Services Ltd are in discussions with the trustees of the 1983 and 1990 Schemes and the U.K. Pension Regulator about the future of those Schemes. The trustees of the 1983 and 1990 schemes have issued certain demands and notices, pursuant to legal requirements and the pension scheme rules, to Sea Containers Ltd and participating employers including Sea Containers Services Ltd. The trustees have appointed professional advisors to support them. Active members of the 1983 Scheme were recently informed that the directors of Sea Containers Services Ltd, with the agreement of the trustees, had decided that active members should cease to accrue benefits for future service with effect from Sept. 30, 2006. These employees will be given an opportunity to join the Sea Containers Group Stakeholder Pension Plan in the U.K. Containers Sea Containers recently completed two transactions relating to its container operations. These transactions represent a further step in Sea Containers' strategy of simplifying its business and placing its finances on a sounder footing. The first transaction, as reported in the Company's SEC Form 8-K filed Oct. 10, 2006, is a $160.7 million refinancing of containers, representing the bulk of those containers owned by Sea Containers but managed by GE SeaCo. The new facility is for a term of three years. This transaction assigns and refinances the existing 2001 container securitization, as well as repaying all other existing credit facilities secured by Sea Containers' owned containers. This transaction achieves a number of objectives. Firstly, it rationalized and simplified the existing container financing structure. Secondly, it cured a number of existing covenant defaults in separate container financing facilities. Thirdly, it released approximately $16 million of cash liquidity to assist in the overall restructuring program. Fourthly, in connection with this transaction, certain containers and tanks were released from lien so that these units could be either sold or financed more efficiently. In the second transaction, Sea Containers sold on Oct. 13, 2006 its containers which are leased and managed outside GE SeaCo. This business lacked critical mass and could not be efficiently operated by Sea Containers. The sale of about 14,000 containers and tanks was made to Unitas Containers Limited, a global container leasing company based in Bermuda and London, delivering net proceeds of approximately $24 million to Sea Containers. As a result of the above refinancing transaction, these containers were sold free of debt. The overall liquidity released by the above two transactions amounts to approximately $40 million. In addition the refinancing released from lien an approximate $15 million of containers for future sale or financing. GE SeaCo The Company filed an SEC Form 8-K on Oct. 4, 2006 regarding the GE SeaCo joint venture. In addition to providing audited financial statements for GE SeaCo and its subsidiaries, it reported that the Company had received letters from GE, asserting that there had been a change of control at Sea Containers Ltd. around March 20, 2006 when James Sherwood, the founder of Sea Containers, resigned various positions including that of Chairman of the Board. Under the GE SeaCo joint venture agreements, a change of control at Sea Containers would enable GE to purchase its interest in the GE SeaCo joint venture, at an agreed or litigated valuation. On the basis of this assertion, GE also notified the Company that a valuation process should proceed. The Company believes these assertions have no merit and, if necessary, will defend the action vigorously to protect its investment in GE SeaCo in the interest of Sea Containers' shareholders and creditors. GE SeaCo continues to perform well, with both partners firmly focused on improving market competitiveness through cost reduction and improved technology. Outstanding Debt At Oct. 14, 2006, Sea Containers had $650 million of consolidated debt outstanding. This compares to $630 million (including shipyard debt) at July 31, 2006. The movement was an increase in container debt from the container refinancing of $29 million less a repayment of $9 million in relation to secured ferry debt. The $20 million unsecured liability owed to a shipyard payable on Sept. 30, 2006 was assigned to a financial investor and rescheduled for payment on Oct. 15, 2006 to align with the repayment date of the October 2006 public notes. This unsecured liability was also not paid on Oct. 15, 2006. GNER The Chapter 11 filings do not affect the control and operations of GNER, which is the rail franchise that runs the East Coast Main Line in the U.K. Sea Containers and GNER have kept the U.K. Government's Department for Transport abreast of developments, and GNER is not in breach of any of its franchise commitments. GNER's lines of credit and financial activities have been 'ring- fenced' from those of Sea Containers, apart from the standby credit and overdraft facilities mentioned in the Aug. 11, 2006 news release of Sea Containers. These facilities are provided by Sea Containers as a condition of the franchise agreement and remain undrawn. Employees of GNER and Sea Containers Railway Services Ltd do not participate in the Sea Containers U.K. pension schemes. They participate in separate U.K. schemes, the Railway Pension Scheme and an SCRS defined contribution scheme. About Sea Containers Ltd. Headquartered in Hamilton, Bermuda, Sea Containers Ltd. (Other OTC: SCRA.PK and SCRB.PK) -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). James F. Conlan, Esq., Larry J. Nyhan, Esq., and Jeffrey E. Bjork, Esq., at Sidley Austin LLP, and Robert S. Brady, Esq., Edwin J. Harron, Esq., Edmon L. Morton, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors. PricewaterhouseCoopers LLP serves as the Debtors' financial advisors. When the Debtors filed for protection from their creditors, they reported $1.7 billion in total assets and $1.6 billion in total debts. SECUNDA INTERNATIONAL: S&P Revises B- Ratings' Watch Implication ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch implications for its 'B-' long-term corporate credit and senior secured debt ratings on Nova Scotia-based Secunda International Ltd. to developing from positive. The rating action followed Secunda's announcement that it has terminated the IPO of its common shares in Canada and the consent solicitation for its outstanding senior secured floating rate notes due 2012. Secunda announced it would terminate the IPO of its common shares in Canada due to adverse market conditions. In conjunction with its decision to discontinue the IPO process, Secunda also announced that it has terminated the cash tender offer and consent solicitation for its senior secured floating rate notes due 2012. "As a result of Secunda's termination of its IPO in Canada, the company will be unable to reduce its leverage to the extent anticipated," said Standard & Poor's credit analyst Jamie Koutsoukis. "Although the company has demonstrated continued improvement in both its financial and business profiles on the strength of higher-than-historical utilization and day rates, and strong market conditions for its services, we will need to assess the company's near- and medium-term funding plans and the effect they will have on Secunda's overall credit profile," Ms. Koutsoukis added. Standard & Poor's intends to meet with Secunda's management to review its revised strategy following the termination of the IPO and tender offering. The rating agency will then determine whether the ratings could be raised, lowered, or affirmed. If Secunda adds further debt to its balance sheet to finance further vessel acquisitions and fund growth initiatives, the company's credit profile would likely weaken and consequently could have a negative effect on the ratings. Conversely, if Secunda is able reduce its leverage as a result of improved market conditions and increased internal cash flow generation, its credit profile will likely strengthen and could result in a positive rating action, although an upgrade higher than one notch is unlikely. If the company expects to remain with its current financial profile, the corporate credit rating might remain at its current level. Standard & Poor's will resolve the CreditWatch action further consultation with Secunda's management and an assessment of the company's financial policies following the termination of the IPO. SOUTHERN STAR: Moody's Assigns Loss-Given-Default Ratings --------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its Ba1 corporate family rating on Southern Star Central Corp. At the same time, the rating agency raised its Ba3 probability-of- default rating on the Company's 6.75% Sr. Unsec. Global Notes due 2016 to Ba2, and attached an LGD5 rating on these notes, suggesting noteholders will experience a 80% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Owensboro, Kentucky, Southern Star Central Corp. -- http://www.sscgp.com/-- owns Southern Star Central Gas Pipeline, Inc. an interstate natural gas transmission system spanning approximately 6,000 miles in the Midwest and Mid- continent regions of the United States. Southern Star's pipeline facilities are located throughout Kansas, Oklahoma, Nebraska, Missouri, Wyoming, Colorado and Texas. It serves major markets such as the Kansas City metropolitan area, Wichita, Kansas and the Joplin/Springfield, Missouri areas. SPECTRX INC: June 30 Balance Sheet Upside-Down by $9 Million ------------------------------------------------------------ SpectRx Inc. incurred a $1.5 million net loss on $207,000 of net revenues for the three months ended June 30, 2006, compared to a $1.3 million net loss on $269,000 of net revenues in 2005. At June 30, 2006, the Company's balance sheet showed $1.5 million in total assets and $10.5 million in total liabilities, resulting in a $9 million stockholders' deficit. A full-text copy of the Company's Quarterly Report is available for free at http://researcharchives.com/t/s?1377 Going Concern Doubt Eisner LLP expressed substantial doubt about SpectRx, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec 31, 2005. The auditing firm pointed to the Company's recurring losses, negative working capital position and a capital deficit. The Company is also in default on payments due under its settlement with Abbott Laboratories, Inc., regarding its redeemable preferred stock agreement. SpectRx, Inc. (OTCBB: SPRX) is a diabetes management company developing and providing innovative solutions for insulin delivery and glucose monitoring. SpectRx hosts three Web sites at http://www.spectrx.com/and http://www.mysimplechoice.com/and http://www.guidedtherapeutics.com/SpectRx markets the SimpleChoice(R) line of innovative diabetes management products, which include insulin pump disposable supplies. SpectRx also plans to develop a consumer device for continuous glucose monitoring. The company is commercializing its non-invasive cancer detection technology through subsidiary company Guided Therapeutics, Inc., which SpectRx intends to separately finance with private funds. STANDARD PARKING: Board Allows Share Repurchase of Up to $20 Mil. ----------------------------------------------------------------- Standard Parking Corporation's Board of Directors has increased the authorization to repurchase shares of its outstanding common stock during 2006 to $20 million from $7.5 million through a combination of open market purchases and private purchases from Steamboat Industries, LLC. The Company says, however, that it has reached its leverage targets, and is comfortable with its current leverage levels and is not expecting leverage to decline significantly from current levels. The Company further says that it will focus on aggressively pursuing various growth avenues, including acquisitions. The Company also noted that while its leverage may temporarily increase from time to time, particularly in connection with an acquisition or other attractive business opportunity, the its ability to consistently generate free cash flow enables it to support additional leverage. During the first half of 2006, the Company generated $10.8 million of free cash flow, and the Company continues to expect to generate at least $20 million of free cash flow for the full year 2006. Standard Parking Corporation (NASDAQ: STAN) -- http://www.standardparking.com/-- provides parking facility management services. The Company provides on-site management services at multi-level and surface parking facilities for all major markets of the parking industry. The Company manages over 1,900 parking facilities, containing over one million parking spaces in more than 300 cities across the United States and Canada, including parking-related and shuttle bus operations serving more than 60 airports. * * * Standard & Poor's Ratings Services raised Standard Parking Corp.'s corporate credit and senior secured debt ratings to 'B+' from 'B', and raised the senior subordinated debt rating to 'B-' from 'CCC+'. STAR GAS: Moody's Assigns Loss-Given-Default Ratings ---------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its Caa1 corporate family rating on Star Gas Partners, L.P. At the same time, the rating agency affirmed its Caa3 probability- of-default rating on the Company's 10.25% Sr. Unsecured Global Notes due 2013, and attached an LGD5 rating on these notes, suggesting noteholders will experience an 85% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Stamford, Connecticut, Star Gas Partners, L.P. -- http://www.star-gas.com/-- is a home energy distributor and services provider specializing in heating oil. STELLAR TECHNOLOGIES: Malone & Bailey Raises Going Concern Doubt ---------------------------------------------------------------- Malone & Bailey, PC, in Houston, Tex., raised substantial doubt about Stellar Technologies, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended June 30, 2006, and 2005. The auditor pointed to the Company's recurring losses from operations and negative working capital. For the year ended June 30, 2006, Stellar Technologies, Inc., reported a $5,098,029 net loss available to common stockholders on $870,964 of revenues compared with $3,586,459 of net income on $882,805 of revenues for the same period in 2005. At June 30, 2006, the Company's balance sheet showed $2,184,868 in total assets and $2,802,494 in total liabilities, resulting in a $617,626 stockholders' deficit. The Company had $946,317 in total stockholders' equity at June 30, 2005. The Company's current balance sheet also showed strained liquidity with $793,946 in total current assets available to pay $2,771,631 in total current liabilities coming due within the next 12 months. A full-text copy of the Company's Annual Report is available for free at http://ResearchArchives.com/t/s?1380 Stellar Technologies Inc. provides employee internet management products that enable businesses, government agencies, schools and other organizations to monitor, analyze and evaluate reports about employee computer use, including Internet access and instant messaging. The Company's products consist of Stellar IM Web Based Edition, Stellar IM Enterprise Edition, Stellar Internet GEM, and E-mail Shuttle. STONE ENERGY: Terminates Merger Agreement with Energy Partners -------------------------------------------------------------- Energy Partners, Ltd. and Stone Energy Corporation have agreed to terminate their June 22, 2006 merger agreement. As EPL is now free from the merger agreement with Stone, its Board of Directors has directed the Company, assisted by its financial advisors Evercore Group L.L.C., Banc of America Securities LLC, Petrie Parkman & Co, Inc., and UBS Securities LLC, to explore strategic alternatives to maximize stockholder value, including the possible sale of the Company. EPL issued this statement: "EPL has been, and remains, fully committed to acting in the best interests of our stockholders. While the EPL Board believed that the addition of Stone's complementary properties and assets would have been an excellent strategic fit for us, the Board has concluded that the exploration of strategic alternatives is in the best interests of EPL stockholders. The Board recommends that EPL's stockholders reject the unsolicited tender offer of ATS, Inc., which the Board determined to be inadequate and not in the best interests of EPL's stockholders. EPL's solid track record of operational success and the strong potential of our attractive Gulf of Mexico properties and prospects place us in a strong position to explore strategic alternatives to maximize value for our stockholders." There is no assurance that the exploration of strategic alternatives will result in any agreements or transactions. The Company does not intend to disclose developments with respect to the exploration of strategic alternatives unless and until its Board of Directors has made a decision regarding a specific course of action. In connection with the termination of the merger agreement with Stone, EPL has agreed to pay Stone an $8 million termination payment and EPL and Stone have agreed to release all claims between them relating to the merger agreement. The $8 million payment represents a $17.6 million discount from the fee that would have been payable by EPL to Stone under certain circumstances. About EPL Headquartered in New Orleans, Louisiana Energy Partners Ltd. (NYSE:EPL) -- http://www.eplweb.com/-- is an independent oil and natural gas exploration and production company. Founded in 1998, the Company's operations are focused along the U. S. Gulf Coast, both onshore in south Louisiana and offshore in the Gulf of Mexico. About Stone Headquartered in Lafayette, Louisiana, Stone Energy Corporation (NYSE: SGY) -- http://www.stoneenergy.com/-- is an independent oil and gas company and is engaged in the acquisition and subsequent exploration, development, operation and production of oil and gas properties located in the conventional shelf of the Gulf of Mexico, deep shelf of the GOM, deep water of the GOM, Rocky Mountain Basins and the Wiliston Basin. STONE ENERGY: S&P Holds B+ Corp. Credit Rating on Negative Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services 'B+' corporate credit rating on exploration and production company Energy Partners Ltd. remained on CreditWatch with developing implications. The ratings on New Orleans, Louisiana-based Energy Partners were placed on CreditWatch Developing on Aug. 29, 2006. In addition, the 'B+' corporate credit rating on Stone Energy Corp. remained on CreditWatch with negative implications (where it was placed on June 28, 2006), following the announcement that Energy Partners has terminated its merger agreement with Stone and will be exploring strategic alternatives to maximize shareholder value. This could include the potential sale of the company. Standard & Poor's also notes that ATS Inc., a wholly owned subsidiary of Woodside Petroleum Ltd. (A-/Stable/--), currently has an unsolicited offer outstanding to acquire control of Energy Partners for $23 per share. As of June 30, 2006, Energy Partners had $270 million of debt. The CreditWatch with developing implications listing on Energy Partners reflects the likelihood that ratings could be raised, affirmed, or lowered. "The CreditWatch Negative listing on Stone reflects the likelihood that ratings could be either lowered or affirmed," said Standard & Poor's credit analyst Jeffrey B. Morrison. "As Energy Partners has now terminated its agreement with Stone, we will likely resolve the CreditWatch listing following a meeting with management, barring any unforeseen developments," he continued. Key issues to be considered in the resolution of the CreditWatch listing for Stone, and whether ratings will be affirmed at the current level or further lowered, include: -- the strategic direction of Stone on a stand-alone basis; Creeping per barrel leverage (now above $6 on a total proved basis) over the past two years; -- the likelihood of debt reduction in the near to intermediate term; -- management's ability to improve operating metrics (namely, demonstrating consistent organic reserve replacement and production growth) after a rocky 2005; and -- rising finding development costs in core areas of operations (namely the U.S. Gulf of Mexico) that have continued to trend above historical averages over the past several years. STRUCTURED ADJUSTABLE: S&P Puts Class M-3 Cert. Rating on Default ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on class M-3 from Structured Adjustable Rate Mortgage Loan Trust Series 2005-5 to 'D' from 'CCC'. At the same time, the ratings on six classes from the same transaction were affirmed. The lowered rating is the result of a cumulative write-down of $38,508 to the class M-3 certificate. Although the transaction is only 16 months seasoned, it has paid down to less than 26% of its original issuance amount. The accelerated prepayments and the transaction's failure to produce any excess spread contributed to the write-down to the M-3 certificate. The affirmations are based on credit enhancement levels that are sufficient to maintain the current ratings. Credit support is provided by excess spread, overcollateralization, and subordination. The underlying collateral consists of conventional, fully amortizing, adjustable-rate mortgage loans, which are secured by first liens on one- to four-family residential properties. Rating Lowered: Structured Adjustable Rate Mortgage Loan Trust Mortgage loan asset-backed certificates Series Class To From ------ ----- -- ---- 2005-5 M-3 D CCC Ratings Affirmed: Structured Adjustable Rate Mortgage Loan Trust Mortgage loan asset-backed certificates Series Class Rating ------ ----- ------ 2005-5 A1, A2, A3, A-IO1 AAA 2005-5 M1 AA+ 2005-5 M2 A+ SUBURBAN PROPANE: Moody's Assigns Loss-Given-Default Ratings ------------------------------------------------------------ In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its Ba3 corporate family rating on Suburban Propane Partners, L.P. At the same time, the rating agency affirmed its B1 probability- of-default rating on the Company's 6.875% Sr. Unsec. Global Notes due 2013, and attached an LGD5 rating on these notes, suggesting noteholders will experience a 78% loss in the event of a default. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Whippany, New Jersey, Suburban Propane Partners, L.P. -- http://www.suburbanpropane.com/-- is a publicly traded Master Limited Partnership listed on the New York Stock Exchange. Suburban has been in the customer service business since 1928. The Partnership serves the energy needs of approximately 1,000,000 residential, commercial, industrial and agricultural customers through more than 370 customer service centers in 30 states. SUPERVALU INC: Inks Restricted Stock Unit Award Pact with CEO ------------------------------------------------------------- The Board of Directors of Supervalu Inc. entered into a Restricted Stock Unit Award Agreement, effective Oct. 12, 2006, with Jeffrey Noddle, its chief executive officer. The agreement grants Mr. Noddle 305,157 restricted stock units under the Company's 2002 Stock Plan, each of which represents the right to receive a share of the common stock of the Company, par value $1.00 per share, that will vest as follows: Percentage of Date RSUs Vested ---- ------------- Oct. 12, 2009 25% Oct. 12, 2010 50% Oct. 12, 2011 100% The Board of Directors of the Company has determined that it is in the best interests of the Company and its shareholders to retain the services of Mr. Noddle based on his solid performance as a leader during the past fiscal year and through the process of the Company's acquisition of certain operations of Albertson's, Inc., as well as the importance of his continued leadership through the process of combining the Company with such operations during the next several years. The stock option grant is to provide a retention incentive award for Mr. Noddle to remain in the employ of the Company for a period of up to five years. A full text-copy of the Restricted Stock Unit Award Agreement may be viewed at no charge at http://ResearchArchives.com/t/s?137b SUPERVALU Inc. (NYSE:SVU) -- http://www.supervalu.com/-- is one of the largest companies in the United States grocery channel with annual sales approaching $40 billion. SUPERVALU has approximately 2,500 retail grocery locations. Through SUPERVALU's nationwide supply chain network, the company provides distribution and related logistics support services to more than 5,000 grocery retail endpoints across the country, including SUPERVALU's own retail store network. SUPERVALU currently has approximately 200,000 employees. * * * Standard & Poor's Ratings Service assigned on June 5, 2006, SUPERVALU's long-term foreign and local issuer credit rating at BB-. As reported in the Troubled Company Reporter on Oct. 5, 2006 Moody's Investors Service in connection with the implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the U.S. and Canadian Retail sector, confirmed its Ba3 Corporate Family Rating for SUPERVALU Inc. SURETY CAPITAL: Payne Falkner Raises Going Concern Doubt -------------------------------------------------------- Payne Falkner Smith & Jones, P.C., expressed substantial doubt about Surety Capital Corporation's ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Dec 31, 2005. The auditing firm pointed to the Company's recurring losses. The Company is operating under a written agreement with the Federal Reserve Bank, and the Company's subsidiary is operating under a determination letter with the Texas Department of Banking. In its Form 10-KSB for the fiscal year ended Dec. 31, 2005, submitted to the Securities and Exchange Commission, Surety Capital incurred a $251,000 net loss on $3.9 million of net revenues for fiscal year 2006, compared to a $2.9 million net loss on $3.7 million of net revenues for the fiscal year 2005. A full-text copy of the Company's Annual Report is available for free at http://researcharchives.com/t/s?1375 Surety Capital Corporation is the holding company of its wholly owned subsidiary, Surety Bank. The Bank has full service offices in Converse, Fort Worth, New Braunfels, San Antonio, Schertz, Universal City, and Whitesboro, Texas. TRANS ENERGY: Issues 4,247,461 Shares as Debt and Services Payment ------------------------------------------------------------------ Trans Energy Inc. issued an aggregate of 4,247,461 shares of authorized, but previously unissued common stock to 13 persons in consideration for debt owed and for services rendered. The shares were authorized for issuance by the Company's Board of Directors and valued as follows: No. of shares Value per Share ------------- --------------- 554,199 $0.51 304,528 $0.53 200,000 $0.59 2,783,966 $0.60 404,768 $0.80 The shares were issued in an isolated, non-public transaction to persons having knowledge of the Company's business and were issued in reliance upon the exemptions from registration under the Securities Act of 1933 provided by Sections 4(2) and 3(a)(9). Trans Energy Inc. -- http://www.transenergy.com/-- has been in the business of production, transportation, transmission, sales and marketing of oil and natural gas in the Appalachian and Powder River basins since 1993. With interests in West Virginia, Ohio, Pennsylvania, Virginia, Kentucky, New York, and Wyoming; Trans Energy and its subsidiaries own and operate oil and gas wells, gas transmission lines, transportation systems and well construction equipment and services. Going Concern Doubt HJ & Associates, LLC, in Salt Lake City, Utah, raised substantial doubt about Trans Energy Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the Company's losses from operations, accumulated deficit and working capital deficit. TRANSCONTINENTAL GAS: Moody's Assigns Loss-Given-Default Ratings ---------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating revised or held its probability- of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations issued by Transcontinental Gas Pipe Line Corporation: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- 7.08% Sr. Unsec. Debentures due 2026 Ba1 Ba1 LGD3 35% 7.25% Sr. Unsec. Debentures due 2026 Ba1 Ba1 LGD3 35% 6.25% Sr. Unsec. Bonds due 2008 Ba1 Ba1 LGD3 35% 7% Sr. Unsec. Global Notes due 2011 Ba1 Ba1 LGD3 35% 8.875% Sr. Unsec. Notes due 2012 Ba1 Ba1 LGD3 35% Sr. Unsec. Flt Rt Global Notes due 2008 Ba1 Ba1 LGD3 35% 6.4% Sr. Unsec. Global Notes due 2016 Ba1 Ba1 LGD3 35% Sr. Unsec. Shelf (P)Ba1 (P)Ba1 LGD3 35% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Transcontinental Gas Pipe Line Corp -- http://www.tgpl.twc.com/-- aka Transco, is an interstate natural gas transmission company. Transco operates about 10,500 miles of natural gas pipeline extending from the Gulf of Mexico to New York. The company also operates gas compressor stations, underground storage fields, processing plants, and liquefied natural gas storage facilities. Transco is a subsidiary of Williams Gas Pipeline, itself a subsidiary of The Williams Companies. UNITEDHEALTH GROUP: CEO Resigns in the Wake of Stock Option Probe ----------------------------------------------------------------- The Special Review Committee of the Board of Directors of UnitedHealth Group and its independent counsel, Wilmer Cutler Pickering Hale and Dorr, have completed a review and report of UnitedHealth Group's stock option practices and reported the findings to the non-management directors. In accepting the report, the Board of Directors disclosed these actions and decisions: William W. McGuire, M.D., will leave the company on or before Dec. 1, 2006, and has stepped down as Chairman of the Board and as a Director. Prior to his departure, he will continue as Chief Executive Officer and will assist in an orderly transition to new leadership. The Board has elected Stephen J. Hemsley to succeed Dr. McGuire as CEO upon Dr. McGuire's departure from the company. Mr. Hemsley joined the company in 1997 and has been the company's President and COO since 1999. The Board has created the position of non-executive chairman of the UnitedHealth Group Board and elected Richard T. Burke, founding CEO of UnitedHealth Group, and a director since 1977, to the position of non-executive chairman, effective immediately. In addition, the Board has accepted the resignation of board member William G. Spears, who had remained with the Board for the past six months to see the review process through to completion. David J. Lubben will proceed with plans to retire and has stepped down as General Counsel and Secretary. He will remain with the company to effect an orderly transition of his responsibilities. The Board has instructed Mr. Hemsley to review the conduct of senior executives in the legal, human capital and accounting functions of the Company and recommend any additional personnel actions to the Board should they be necessary. Mr. Hemsley has voluntarily agreed to reprice all options awarded through 2002 to the annual high share price for each year, and to take any other appropriate action to eliminate any possible financial benefit from options-related issues identified in the report. The Board expects similar actions by Mr. Lubben and the company's most senior executives. Dr. McGuire has voluntarily agreed to reprice all options awarded to him from 1994 through 2002 to the annual high share price for each year to eliminate any possible financial benefit from options dating issues identified in the report. The company is engaged in discussions with Dr. McGuire concerning the terms of his departure from the company, including other options issues and financial benefits. The company expects to conclude the discussions on or before Dec. 1, 2006. The Board is taking these actions with respect to the corporate governance of UnitedHealth: -- The Board will have five board seats filled by new independent directors over the next three years in order to bring new experiences, expertise and perspectives into its membership. -- A new senior executive position of Chief Legal Officer will be established and a national search for candidates will be conducted. -- The position of Chief Ethics Officer will be made a senior executive position with responsibility for communicating and monitoring compliance with standards of ethical conduct and business integrity by all of the Company's employees. -- The position of Chief Administrative Officer will be made a senior executive position with responsibility for the Company's critical administrative functions and non- business operations, including human capital, personnel, compensation, compliance, internal audit and business risk management, and staff support functions. -- A separate position of Secretary to the Board, who will report to the Board with an administrative reporting line to the Chief Legal Officer, will be established. The sole responsibility of the Secretary will be to support the activities of the Board and of its Committees, including ensuring that the Board's activities and record keeping are in line with corporate best practices. The actions on corporate governance followed steps taken by the Board earlier this year to improve the Company's corporate governance and compensation practices. These include: Board Structure and Process -- Appointing co-lead directors. -- Recommending that the Shareholders amend the Company's Charter to eliminate the classified board, so that all directors would be elected annually. -- Recommending that the Shareholders amend the Company's Charter to remove supermajority approval requirements. -- Establishing a Public Responsibility Committee to focus on the Company's corporate social responsibility. -- Initiating the review and enhancement of the Company's director independence standards. -- Requiring all Audit Committee members to be financial experts as defined by the SEC. -- Limiting the number of boards on which directors may serve. -- Requiring that all directors attend ISS accredited director training. Director and Officer Compensation -- Reducing Board compensation by 40 percent, following a reduction of 20 percent in 2005. -- Discontinuing equity awards to a number of senior executives, including the CEO and President. -- Initiating the process of amending the employment agreements of the CEO and President to cap SERP benefits; require reimbursement to the Company for any personal use of corporate aircraft; eliminate any tax gross-ups payable in connection with the personal use of corporate aircraft; and eliminate certain perquisites including life insurance and disability premium payments not generally available to other employees and Company-funded post-retirement health insurance -- Initiating the process of amending the employment agreements of all senior executive officers to remove any enhanced severance payments upon a change of control. -- Establishing stock ownership guidelines for directors and executive officers. Controls Over Stock Options and Other Equity Awards -- Eliminating all delegated authority to management to make equity awards. -- Requiring that broad based equity awards to the Company's executives and employees occur annually and be approved at the Board meeting that generally coincides with the Company's Annual Meeting. -- Requiring that awards made to new hires, or for promotions or other important and valid business purposes, only be made and approved at a subsequent regularly scheduled quarterly meeting. -- Significantly enhancing the Company's approval processes and internal controls related to stock option granting and administration. The WilmerHale team was led by William R. McLucas, former Director of Enforcement of the Securities and Exchange Commission. During the inquiry, WilmerHale reviewed more than 26 million pages of materials and conducted more than 80 interviews of UnitedHealth employees, present and former directors and former auditors. Third Quarter 10-Q Likely to be Delayed No Decision on Restatement The Company reaffirmed its previously issued guidance for the remainder of 2006 and for 2007, and said that it would hold its regular quarterly earnings call on October 19 as scheduled. In addition, the Company indicated it was likely to delay filing of its Form 10-Q for the third quarter of 2006 in order to complete its analysis of adjustments to previously filed financial statements in light of the Report. The company has not yet determined whether any restatements of previously filed financial statements will be required. The company reiterated that it will not resume its stock repurchase program until it is current with regulatory filings. About UnitedHealth Group Headquartered in Minneapolis, Minnesota, UnitedHealth Group -- http://www.unitedhealthgroup.com/-- offers a broad spectrum of products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services and Ingenix. Through its family of businesses, UnitedHealth Group serves approximately 70 million individuals nationwide. * * * As reported in the Troubled Company Reporter on Aug. 31, 2006, UnitedHealth received a purported notice of default on Aug. 28 from persons claiming to hold certain of its debt securities alleging a violation of the Company's indenture governing its debt securities. The notice came following the Company's failure to file its quarterly report on Form 10-Q for the quarter ended June 30, 2006, with the U.S. Securities and Exchange Commission. The Company asserted it is not in default. The Company's indenture requires it to provide to the trustee copies of the reports the Company is required to file with the SEC, such as its quarterly reports, within 15 days of filing such reports with the SEC. The Company has delayed the filing of its financial results in light of an independent review of the company's stock option programs from 1994 to present. WENDY'S INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating ---------------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the restaurant sector, the rating agency held its Ba2 Corporate Family Rating for Wendy's International Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $200m 6.25% senior unsecured notes due 2011 Ba2 Ba2 LGD4 54% $225m 6.2% senior unsecured notes due 2014 Ba2 Ba2 LGD4 54% $100m 7% debentures due 2025 Ba2 Ba2 LGD4 54% Unsecured shelf Ba2 Ba2 LGD4 54% Subordinated shelf Ba3 B1 LGD6 97% Preferred shelf B1 B1 LGD6 97% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Dublin, Ohio, Wendy's International Inc. -- http://www.wendysintl.com/-- and its subsidiaries engage in the operation, development, and franchising of a system of quick service and fast casual restaurants in the United States, Canada, and internationally. WILLIAMS COS: Moody's Assigns Loss-Given-Default Ratings -------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its Ba2 corporate family rating on The Williams Companies, Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- 10.25% Sr. Unsec. Debentures due 2020 Ba2 Ba2 LGD4 59% 9.375% Sr. Unsec. Debentures due 2021 Ba2 Ba2 LGD4 59% 8.875% Sr. Unsec. Debentures due 2012 Ba2 Ba2 LGD4 59% 7.625% Sr. Unsec. Notes due 2019 Ba2 Ba2 LGD4 59% 7.5% Sr. Unsec. Bonds due 2031 Ba2 Ba2 LGD4 59% 5.935% Sr. Unsec. Notes due 2007 Ba2 Ba2 LGD4 59% 7.75% Sr. Unsec. Bonds due 2031 Ba2 Ba2 LGD4 59% 7.875% Sr. Unsec. Notes due 2021 Ba2 Ba2 LGD4 59% 7.125% Sr. Unsec. Notes due 2011 Ba2 Ba2 LGD4 59% 8.125% Sr. Unsec. Global Notes due 2012 Ba2 Ba2 LGD4 59% 8.75% Sr. Unsec. Global Bonds due 2032 Ba2 Ba2 LGD4 59% 8.625% Sr. Unsec. Notes due 2010 Ba2 Ba2 LGD4 59% Multiple Seniority Shelf (Senior Unsecured) (P)Ba2 (P)Ba2 LGD4 59% Multiple Seniority Shelf (Subordinate) (P)Ba3 (P)B1 LGD6 96% Multiple Seniority Shelf (Preferred) (P)B1 (P)B1 LGD6 97% In connection with implementing LGD for the midstream sector, Moody's also assigned multiple Corporate Family Ratings for The Williams Companies in which there is believed to be very low correlation of default probability among related legal entities in a single consolidated organization. This situation is likely to occur in organizations comprised of multiple legal entities, whose stand-alone credit risk is substantially insulated by regulatory or structural factors. For Williams, Moody's assigned a Ba1 CFR to Williams Gas Pipeline Company, LLC, the holding company for the rated debt issued by its gas pipeline subsidiaries Northwest Pipeline Corporation and Transcontinental Gas Pipeline. Moody's also redefined the scope of Williams' CFR to include the holding company and all subsidiaries except Williams Gas Pipeline Company. Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Tulsa, Oklahoma, Williams Companies, Inc. (NYSE:WMB) -- http://www.williams.com/-- through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. The company also manages a wholesale power business. Williams' operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, Southern California and Eastern Seaboard. WINN-DIXIE: Court Approves Pact Resolving Anderson News' Claim -------------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Florida approved a stipulation between Winn-Dixie Stores Inc. and its debtor-affiliates, and Anderson News LLC. As reported in the Troubled Company Reporter on Sept. 21, 2006, the Debtors and Anderson News LLC were parties to a supply and service contract dated July 29, 2004, under which Anderson provides the Debtors with magazines, similar merchandise, and services relating to the merchandise. After the Debtors filed for bankruptcy protection, they scheduled Claim No. 35573 to Anderson for $6,059,171. Anderson subsequently served a reclamation demand upon the Debtors for $3,803,745. Pursuant to a Court order dated Feb. 23, 2005, many of the goods delivered to the Debtors after their bankruptcy filing were returned to Anderson with the returned goods applied to reduce its prepetition claim. In September 2005, Anderson signed an agreement with the Debtors indicating that it originally had a substantial claim against the Debtors but the return of certain goods postpetition resulted in a net reclamation claim and net prepetition claim of zero. Pursuant to the Agreement, Anderson opted into the Court-approved stipulation between the Debtors and certain trade vendors regarding reconciliation and treatment of trade vendors' reclamation claims. Anderson is deemed to be a participating reclamation vendor. Anderson further gave the Debtors 21 days of credit in exchange for the consideration set forth in the Participating Vendor Stipulation. In June 2006, the Debtors sought to disallow the Anderson Claim in their Omnibus Motion. To resolve their dispute, the parties agree that: (1) the Anderson Claim is disallowed in its entirety. Anderson has no other or further claim against the Debtors arising before their bankruptcy filing due to the postpetition return of goods to Anderson for credit against Anderson's prepetition claim; (2) Anderson, as a participating reclamation vendor, is fully bound by the terms of the Participating Vendor Stipulation. Thus, any preference claims against Anderson have been waived; (3) The entry of the agreement and approval of the Court is without prejudice to: -- Anderson's entitlement to continue to receive payment in the ordinary course for the postpetition sale of goods and services to the Debtors; -- Anderson's right to seek allowance and payment of an administrative expense for any sales of goods and services arising postpetition if for any reason it is not continued to be paid in the ordinary course of business by the Debtors; and -- the Debtors' right to oppose Anderson's request for administrative expense payments; and (4) All claims between the parties are resolved other than the claims arising out of the postpetition sale of goods and services by Anderson to the Debtors. 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 527 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. 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. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WINN-DIXIE: Court Approves Rejection of 26 Contracts & Leases ------------------------------------------------------------- The Honorable Jerry A. Funk of the U.S. Bankruptcy Court for the Middle District of Florida authorizes Winn-Dixie Stores, Inc., and its debtor-affiliates to reject 26 executory contracts and unexpired leases effective as of Oct. 5, 2006. According to Judge Funk, all claims for any rejection damages resulting from the rejection of the contracts must be filed today, Oct. 16, 2006. As reported in Troubled Company Reporter on Sept. 25, 2006, the Contracts are for goods and services that are no longer necessary to the Debtors' businesses. A list of the 26 Rejected Contracts are available for free at http://ResearchArchives.com/t/s?122a 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 527 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. 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. 55; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). WINN-DIXIE: Judge Funk Defers Ruling on Joint Plan -------------------------------------------------- The Honorable Jerry A. Funk of the U.S. Bankruptcy Court for the Middle District of Florida heard arguments for and against the confirmation of Winn-Dixie Stores, Inc., and its debtor- affiliates' Joint Plan of Reorganization during an eight-hour hearing on Oct. 13, 2006. The Debtors stepped Judge Funk through the 13 requirements of Section 1129(a) of the Bankruptcy Code necessary to confirm their Plan. The Debtors maintain that the Plan meets the 13 statutory requirements of Section 1129(a): A. The Plan complies with Sections 1122 and 1123, therefore satisfying the requirements of Section 1129(a)(1): a. The Plan is dated and identified with the name of the Debtors in accordance with Rule 3016(a) of the Federal Rules of Bankruptcy Procedure; b. The Plan classifies all Claims and Interests in satisfaction of the requirements of Sections 1122 and 1123(a)(1); c. Each Claim within each Class provided for under the Plan is substantially similar to all other Claims within the Class in satisfaction of the requirements of Sections 1122 and 1123(a)(l); d. The Plan specifies the Classes of Claims and Interests that are impaired and those that are not impaired, and the treatment of the Claims, in satisfaction of the requirements of Sections 1123(a)(2) and 1123(a)(3); e. The Plan provides the same treatment for each Claim or Interest of a particular Class, unless the Holder of Claim or Interest has agreed to a less favorable treatment of that particular Claim or Interest in writing, therefore satisfying Section 1123(a)(4); f. The Plan provides adequate means for implementation of the Plan in satisfaction of the requirements of Section 1123(a)(5); g. The New Winn-Dixie Charter and New Winn-Dixie By-laws prohibit the issuance of nonvoting equity securities in a manner that satisfies the requirements of Section 1123(a)(6); h. The provisions of the Plan and the New Winn-Dixie Charter and New Winn-Dixie By-laws regarding the manner of selection of officers and directors of the Debtors are consistent with the interests of Claim and Interest holders and with public policy, thereby satisfying Section 1123(a)(7); i. The Plan impairs and leave unimpaired, as the case may be, each Class of Claims and Interests, in accordance with Section 1123(b)(1); j. Pursuant to Section 1123(b)(2), the Plan provides that each Debtor will be deemed to have rejected each prepetition executory contract or unexpired lease to which it is a party, unless the contract or lease (a) was previously assumed or rejected, by a final order of the Court, (b) previously expired by its own terms, (c) subject to any pending motion to assume or reject filed by the Debtors on or before the Confirmation Date; and k. The Plan provides for the satisfaction of default claims associated with each executory contract and unexpired lease to be assumed pursuant to the Plan, in accordance with Section 1123(d). B. As proponents of the Plan, they complied with the applicable provisions of the Bankruptcy Code, thus have satisfied the requirements of Section 1129(a)(2): a. They are proper debtors pursuant to Section 109 and are, collectively, proper proponents of the Plan pursuant to Section 1121(a); b. They have complied with applicable provisions of the Bankruptcy Code, except as otherwise provided or permitted by Court orders; c. They have complied with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules and the the Solicitation Procedures Order in transmitting notices and solicitation materials and in soliciting and tabulating votes on the Plan; and d. The Debtors, and each of their respective affiliates, agents, directors, officers, employees, investment bankers, financial advisors, attorneys, and other professionals have participated in "good faith" and in compliance with all applicable provisions of the Bankruptcy Code. C. The Plan is proposed in good faith and not by any means forbidden by law, and complies with the requirements of Section 1129(a)(3). The Court has examined the totality of the circumstances surrounding the formulation of the Plan and determined that it has been proposed with the legitimate and honest purpose of reorganizing the Debtors' business affairs and maximizing the returns available to Claim holders. Consistent with the overriding purpose of Chapter 11, the Plan is designed to allow the Debtors to reorganize by providing the Reorganized Debtors with capital structures that will allow them sufficient liquidity and capital resources to satisfy their obligations, to fund necessary capital expenditures, and to otherwise conduct their businesses. D. As required by Section 1129(a)(4), any payment made or promised by the Debtors for services or for costs and expenses in, or in connection with, their Chapter 11 cases or the Plan, has been approved by, or is subject to the approval of, the Court as reasonable. E. The Debtors' disclosure of the identity and principal affiliations of proposed directors of the reorganized Debtors and the manner in which the Initial Board will be chosen, satisfies the requirements of Section 1129(a)(5) and complies with the terms of the Plan. F. Section 1l29(a)(6) is not applicable to the Plan because the Plan does not contain any changes in rates subject to the jurisdiction of any governmental regulatory commission. G. The Plan satisfies the Best Interests of Creditors Test under Section 1129(a)(7)). The Liquidation Analysis contained in the Disclosure Statement and the other evidence related thereto that was presented at the Confirmation Hearing have not been controverted by other evidence. The methodology used and assumptions made in the Liquidation Analysis are reasonable. Each holder of a Claim or Interest in each Impaired Class either has accepted the Plan or will receive or retain under the Plan on account of the Claim or Interest property of a value, as of the Effective Date, that is not less than the amount that the holder would receive or retain if the Debtors were liquidated under Chapter 7. No Class has made an election under Section 1111(b)(2). H. Classes 1 to 6 are conclusively presumed to have accepted the Plan under Section 1126(f). Classes 7 to 9, and 11 to 17 have voted to accept the Plan in accordance with Section 1126(c). Class 10 contains subclasses that have voted to reject the Plan, and one subclass in Class 11 has voted to reject the Plan. The claim represented by the subclass in Class 11 that has voted to reject the Plan has been disallowed by order of the Court to the extent it alleges secured status, and the vote should be disregarded for that reason. Classes 18 through 21 are not entitled to receive or retain any property or interests under the, accordingly, are deemed to have rejected the Plan under Section 1126(g). The Debtors have thus requested that the Court confirm the Plan even though the requirements of Section 1129(a)(8) have not been satisfied as to the Rejecting Subclasses and Classes 18, 19, 20 and 21 in light of their deemed rejection of the Plan. I. The treatment of administrative, other priority, and priority tax claims under the Plan satisfy the requirements of Section 1129(a)(9). J. The Plan has been accepted by at least one Class of Impaired Claims, excluding votes cast by Insiders, in satisfaction of the requirements of Section 1129(a)(10). K. Based upon the information in the Disclosure Statement and the testimony given at the Confirmation Hearing, confirmation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of the Reorganized Debtors or any successor to the Debtors, thereby satisfying Section 1129(a)(11). L. All fees payable under 28 U.S.C. Section 1930 have been paid or will be paid as Administrative Claims on or before the Effective Date and will continue to be paid thereafter as required, thereby satisfying Section 1129(a)(12). M. In satisfaction of 1129(a)(13), the Plan provides for the payment of all benefits subject to Section 1114. Majority of Creditors Vote in Favor of Plan As reported in the Troubled Company Reporter on Oct. 11, 2006, the Debtors informed the Court that the requisite majority of creditors voted in favor of their Plan. Accordingly, the Plan complies with Section 1129(a)(8). According to Kathleen M. Logan, president of the Debtors' voting tabulation agent Logan & Company, Inc., majority of the holders of claims in these Classes have accepted the Plan. Class 7 - AmSouth Bank Collateralized Letter of Credit Claim Class 8 - Thrivent Lutheran Leasehold Mortgage Claim Class 9 - NCR Purchase Money Security Interest Claim Class 12 - Noteholder Claims Class 13 - Landlord Claims Class 14 - Vendor/Supplier Claims Class 15 - Retirement Plan Claims Class 16 - Other Unsecured Claims Class 17 - Small Claims Based on results of the tabulation of the properly executed and timely ballots, the Classes accepted the Plan in these percentages: Percentage Percentage Accepting Class Accepting Excluding Insiders ----- ----------------------- ----------------------- No. Holders Amt. Held No. Holders Amt. Held ----------- --------- ----------- --------- 7 100% 100% 100% 100% 8 100% 100% 100% 100% 9 100% 100% 100% 100% 12 98.19% 99.46% 98.19% 99.46% 13 76.96% 82.46% 76.96% 82.46% 14 92.82% 96.74% 92.82% 96.74% 15 96.20% 97.46% 96.05% 97.31% 16 77.78% 88.42% 76.67% 81.69% 17 92.96% 91.79% 92.92% 91.69% According to Ms. Logan, certain sub-classes within Classes 10 and 11 have not accepted the Plan. A schedule of the tabulation for ballots under Classes 10 and 11 is available for free at http://ResearchArchives.com/t/s?133f Debtors Address Objections Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, argued that the Plan was proposed in good faith in compliance with Section 1129(a)(3). She noted that the development of the Plan, including the Substantive Consolidation Compromise, involved the active participation of, and arm's- length negotiations among the Debtors, the Official Committee of Unsecured Creditors, the Ad Hoc Trade Committee, the Ad Hoc Retirees Committee, the Exit Facility lenders and other parties. The Debtors maintained that, in satisfaction of Section 1129(a)(7), the estimated recovery for Claims under the Plan is significantly greater than any value that would be distributed following a liquidation of the Debtors' assets. Several landlords with guarantees objected to the substantive consolidation of the Debtors' estates. Mark A. Kelley, Esq., at Kitchens, Kelley, Gaynes P.C., on behalf of over 20 landlords, including E&A Financing II, L.P., complained at the Confirmation Hearing that Winn-Dixie only agreed to pay some of the landlords' claims, wiping out the claims on the leases guaranteed by Winn- Dixie subsidiaries. Mr. Kelley pointed out that, while the Debtors admitted in their Disclosure Statement that holders of claims, such as Landlord Claims, that "bargained for credit-enhancing guarantees from separate legal entities entitling the holders to allowed claims against multiple Debtors" would be harmed by substantive consolidation because "these credit enhancing guarantees would likely become meaningless and the recoveries of these holders would be substantially lower," the Debtors provide no reason as to why these creditors should support the Plan. Mr. Kelley argued that that the "deemed" consolidation proposed by the Debtors is inequitable and cannot be approved. He said that the type of "deemed" consolidation proposed by the Debtors to wipe out the guaranteed claims of objecting creditors was expressly rejected in In re Owens Corning, 419 F.3d 195 (3d Cir. 2005). The Debtors, the Ad Hoc Trade Committee, and the Ad Hoc Retiree Committee responded that the Landlords' objections should be overruled. They note that the Objecting Landlords represented a small group of dissenters as holders of 80% of the landlord claims have voted in favor of the Plan. "The fact that there are a few creditors who would like to derail the global compromise embodied in the Plan in order to try to enhance their individual recoveries is irrelevant," Ms. Jackson said. "So long as creditors are receiving the liquidation value of their claims, the class vote is determinative," she continued, citing the best interests test under Section 1129(a)(7) and requirement for affirmative class vote in Section 1129(a)(8). The Debtors also asserted that preserving their corporate structure, as opposed to a potential liquidation of some affiliates in an unconsolidated plan, (i) is essential to their success after the Effective Date; (ii) will ultimately enhance creditor recovery; and (iii) will avoid potentially inaccurate valuations of entities that did not have historical stand-alone values. Moreover, the Debtors and Wachovia Bank, National Association, in its capacity as agent for the DIP Financing, contest certain Taxing Authorities' claims that the Plan is not feasible. While the objectors provided no basis for this inflammatory charge, Ms. Jackson noted, the Debtors met the standards of Section 1129(a)(11) that the confirmation of the Plan is not likely to be followed by liquidation or the need for further reorganization. Flip Huffard, senior managing director of The Blackstone Group LP, the Debtors' financial advisors, reiterated at the Hearing that, based on the financial projections, Winn-Dixie will continue to lose money through the 2007 fiscal year, but will have a positive net income by the 2008 fiscal year, and a $137,195,000 net income by 2011. The Debtors oppose shareholders' assertions that they should receive distributions under the Plan. According to Ms. Jackson, because the absolute priority rule under Section 1129(b)(2) does not allow for a distribution to shareholders when unsecured claim-holders are not being paid in full, no distribution is possible to shareholders. Winn-Dixie Modifies Plan The Debtors made few, non-material modifications to the Plan to take into account settlements resolving certain objections and to clarify other aspects of the Plan. Prior to the Confirmation Hearing, the Debtors, after consulting the Creditors Committee, modified: (a) Section 4.1(b) to provide that if they elect to provide deferred cash payments for priority tax claims, a holder will receive the amount of the allowed claim, with interest at 8% per annum, in equal quarterly payments. In the event of a default, a holder will have, among others, the right to exercise all rights and remedies under applicable non-bankruptcy law with respect to the allowed claim; (b) Section 4.3(d) to change the interest rate and to supplement the treatment of secured tax claims in response to objections that the 6% interest rate is inadequate. The Debtors amended the Plan to provide for a rate to be determined by the Court; (c) Section 8.11 to clarify that the Claims Resolution Procedures, including de minimis cash settlements up to the $2,500,000 aggregate, will remain extant after the Effective Date; and (d) Section 12.14 to include an additional subsection in response to objections received from the Department of Justice on behalf of the United States. The Plan is modified to clarify that the Plan does not affect the United States' set-off and recoupment rights. According to H. Jay Skelton, chairman of Winn-Dixie's board of directors, the modifications are not material and will not adversely impact the rights of any parties-in-interest, therefore compliance with Section 1125 of the Bankruptcy Code is not required with respect to the modifications. Furthermore, the modifications will not cause the Plan to fail to meet the requirements of Sections 1122 and 1123, Mr. Skelton says. Winn-Dixie Confident Plan Will be Confirmed Judge Funk has postponed ruling on the Debtors' Plan. Winn-Dixie expects the Court to enter a ruling in 10 to 15 days. "We're confident that the plan will be confirmed," the Debtors' co-counsel, Steve Busey, Esq., at Smith Hulsey & Busey, said. Winn-Dixie is then expected to emerge from bankruptcy within two weeks of the judge's final ruling, Mr. Busey told The Florida Times-Union. Winn-Dixie opposes any settlement with the Objecting Landlords' or additional shares or claims in their favor. Thomas Califano, Esq., representing the Ad Hoc Trade Committee, told the Times- Union that it would be unfair for the Objecting Landlords to negotiate a settlement after other creditors had already agreed to settlements provided in the Plan. Headquartered in Jacksonville, Florida, Winn-Dixie Stores, Inc. -- http://www.winn-dixie.com/-- is one of the nation's largest food retailers. The Company operates 527 stores in Florida, Alabama, Louisiana, Georgia, and Mississippi. 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. 56; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). * AlixPartners Completes Recapitalization ----------------------------------------- AlixPartners has completed a recapitalization in which affiliates of Hellman & Friedman LLC made a significant investment in the firm and AlixPartners' 81 managing directors, along with the remainder of its more than 500 employees, also gained a considerable stake in the enterprise. Together, they now hold a majority interest in the private firm. Jay Alix, who founded the firm in 1981, remains as co-chairman and continues to hold a substantial equity interest in the firm. The other co-chairman is Philip Hammarskjold of Hellman & Friedman. Michael Grindfors continues as CEO. Under terms of the agreement, each of AlixPartners' managing directors was 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. All elected to do so. In addition, all current employees other than managing directors will participate in a "phantom equity" program. "This transition in the firm's ownership will help prepare for the next phase of AlixPartners' growth and global expansion," said Grindfors. "I'm particularly pleased that every single MD has decided to join in the recapitalization. That demonstrates our team's strong commitment to our business and our future." At the time the recapitalization was announced, on August 4, the firm noted that it has enjoyed 25 years of uninterrupted revenue growth. In the last ten years, AlixPartners 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 has achieved organic growth averaging more than 30 percent annually 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. 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 superior 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. About AlixPartners AlixPartners LLP -- http://www.alixpartners.com/-- is a 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. * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Abraxas Petro ABP (21) 132 (6) AFC Enterprises AFCE (46) 172 5 Alaska Comm Sys ALSK (17) 565 24 Alliance Imaging AIQ (23) 682 26 AMR Corp. AMR (508) 30,752 (1,392) Atherogenics Inc. AGIX (124) 211 165 Biomarin Pharmac BMRN 49 469 307 Blount International BLT (123) 465 126 CableVision System CVC (2,468) 12,832 2,643 Centennial Comm CYCL (1,062) 1,436 23 Cenveo Inc CVO 24 941 128 Choice Hotels CHH (118) 280 (58) Cincinnati Bell CBB (705) 1,893 18 Clorox Co. CLX (156) 3,616 (123) Cogdell Spencer CSA 126 370 N.A. Columbia Laborat CBRX 10 29 23 Compass Minerals CMP (63) 664 161 Crown Holdings I CCK 144 7,287 174 Crown Media HL CRWN (393) 1,018 133 Deluxe Corp DLX (90) 1,330 (235) Denny's Corporation DENN (258) 500 (68) Domino's Pizza DPZ (609) 395 (4) Echostar Comm DISH (512) 9,105 1,589 Emeritus Corp. ESC (111) 721 (29) Emisphere Tech EMIS 2 43 19 Empire Resorts I NYNY (26) 62 (3) Encysive Pharm ENCY (64) 93 56 Foster Wheeler FWLT (38) 2,224 (93) Gencorp Inc. GY (88) 990 (28) Graftech International GTI (166) 900 250 H&E Equipment HEES 226 707 22 I2 Technologies ITWO (55) 211 (9) ICOS Corp ICOS (36) 266 116 IMAX Corp IMAX (21) 244 33 Incyte Corp. INCY (55) 375 155 Indevus Pharma IDEV (147) 79 35 J Crew Group Inc. JCG (83) 362 102 Koppers Holdings KOP (95) 625 140 Kulicke & Soffa KLIC 65 398 230 Labopharm Inc. DDS (92) 143 105 Level 3 Comm. Inc. LVLT (33) 9,751 1,333 Ligand Pharm LGND (238) 286 (155) Lodgenet Entertainment LNET (66) 262 15 Maytag Corp. MYG (187) 2,954 150 McDermott Int'l MDR 125 3,181 64 McMoran Exploration MMR (21) 434 (38) NPS Pharm Inc. NPSP (164) 248 168 New River Pharma NRPH 0 93 68 Omnova Solutions OMN (6) 366 67 ON Semiconductor ONNN (75) 1,423 279 Qwest Communication Q (2,826) 21,292 (2,542) Riviera Holdings RIV (29) 214 7 Rural/Metro Corp. RURL (93) 302 50 Sepracor Inc. SEPR (109) 1,277 363 St. John Knits Inc. SJKI (52) 213 80 Sulphco Inc. SUF 25 34 12 Sun Healthcare SUNH 10 523 (34) Sun-Times Media SVN (261) 965 (324) Tivo Inc. TIVO (33) 143 19 USG Corp. USG (313) 5,657 (1,763) Vertrue Inc. VTRU (16) 443 (72) Weight Watchers WTW (110) 857 (72) WR Grace & Co. GRA (515) 3,612 929 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com/ On Thursdays, the TCR delivers a list of recently filed chapter 11 cases involving less than $1,000,000 in assets and liabilities delivered to nation's bankruptcy courts. The list includes links to freely downloadable images of these small-dollar petitions in Acrobat PDF format. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland, USA. Marie Therese V. Profetana, Robert Max Victor M. Quiblat II, Shimero R. Jainga, Joel Anthony G. Lopez, Melvin C. Tabao, Rizande B. Delos Santos, Cherry A. Soriano-Baaclo, Christian Q. Salta, Jason A. Nieva, Lucilo M. Pinili, Jr., Tara Marie A. Martin, and Peter A. Chapman, Editors. Copyright 2006. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $725 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***