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/raid1/www/Hosts/bankrupt/TCR_Public/061027.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, October 27, 2006, Vol. 10, No. 256 Headlines ACS MEDIA: Moody's Places B1 Ratings on $140 Million Senior Loans ADELPHIA COMMS: Twelve Groups of Creditors Object to Disclosure ADELPHIA COMMS: Judge Gerber Lets Exclusivity Period Continue ADVENTRX PHARMA: Licenses ANX-211 U.S. Rights to Theragenex AFFINITY GROUP: Moody's Assigns Loss-Given-Default Ratings AK STEEL: Board Okays 4th Quarter Pension Payment of $75 Million ALLIED HOLDINGS: Inks CDN$5.7 Mil. Purchase Deal for Canadian Lots AMERCO: S&P Raises Corporate Credit Rating to BB from B+ AMEREN CORP: May Cut Jobs by 25% if Electricity Rate Freeze Stays AMERICA CAPITAL: Court Approves Scott Feder as Litigation Counsel AMERICAN CASINO: Moody's Cuts Rating on $215 Mil. Sr. Notes to B3 AMERICAN COMMERCE: Posts $367,000 Net Loss in Qtr. Ended Aug. 31 AMERICAN ENTERTAINMENT: Moody's Withdraws Junk $250MM Notes Rating ANEAL MAHARAJ: Case Summary & 16 Largest Unsecured Creditors ASHA DISTRIBUTING: Case Summary & 20 Largest Unsecured Creditors ASPEON INC: Larry O'Donnell Raises Going Concern Doubt ASSET BACKED: Fitch Junks Rating on Class M-4 Certificates BALLY TECH: Presents Preliminary Restated Results for 2003 to 2005 BANTA CORP: Moody's Rates Proposed Senior Credit Facility at Ba2 BARE ESCENTUALS: Completed IPO Cues S&P to Lift Corp. Rating to B BOMBARDIER INC: Wins $3.4 Billion French Railway Contract BRISTOW GROUP: S&P Rates $230 Mil. Mandatory Preferred Stock at B CARRAWAY METHODIST: Wants to Sell All Assets in Nov. 7 Auction CARRAWAY METHODIST: Bids for Assets Must be Received by November 3 CBRL GROUP: Earns $116.2 Million in Fiscal Year Ended July 28 CELLSTAR CORP: Earns $972,000 in 3rd Fiscal Quarter Ended Aug. 31 CHARYS HOLDING: Reports $3.5 Mil. Net Loss in First Fiscal Quarter CHC HELICOPTER: S&P Affirms Senior Subordinated Debt Ratings at B CITIGROUP COMMERCIAL: S&P Cuts Rating of Class L Certs. to BB CLFX CORPORATION: Moody's Assigns Loss-Given-Default Rating COMM 2006-FL12: Fitch Rates $1.9 Million Class AH4 Certs. at BB+ COMPLETE RETREATS: Creditors Committee Objects to Ableco Financing COMPLETE RETREATS: Patriot & LPP Mortgage Balk at Ableco Financing COMPLETE RETREATS: U.S. Trustee Opposes Terms in Ableco Loan Deal COMSTOCK HOMEBUILDING: Disputes Bank of America's Default Notice CONSECO FINANCE: Good Performance Cues Fitch to Raise Ratings CORONELLA PROPERTIES: Case Summary & 14 Largest Unsec. Creditors COUDERT BROTHERS: Hires Wilson Elser as Litigation Counsel CPI INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating CREDIT SUISSE: Moody's Junks Ratings on Two Certificate Classes CRESCENT RESOURCES: Moody's Rates New $1.425 Billion Loan at Ba2 CRUM & FORSTER: S&P Affirms BB Counterparty Credit Ratings DANA CORP: Court Defers Hearing on Reclamation Claims to Feb. 28 DANA CORP: Inks Pact Resolving SKF, et. al's Reclamation Claims DOE RUN: Earns $22.1 Million in 2006 Third Quarter DUANE READE: Moody's Assigns Loss-Given-Default Ratings EMDEON BUSINESS: Moody's Junks Rating on $170 Million Term Loan EMDEON BUSINESS: S&P Rates Planned $805MM First-Lien Loan at B+ ENTECH ENVIRONMENTAL: June 30 Balance Sheet Upside-Down by $1.5MM ENTERGY NEW ORLEANS: Classes & Treatment of Claims Under Plan ENTERGY NEW ORLEANS: FGIC Wants Exclusivity Periods Terminated EYE CARE: Moody's Assigns Loss-Given-Default Ratings FAIRFAX FINANCIAL: S&P Affirms BB Counterparty Credit Ratings FAREPORT CAPITAL: Revises Financing and Debt Restructuring Terms FOAMEX INTERNATIONAL: Classification of Claims Under Amended Plan FOAMEX INTERNATIONAL: Noteholders Panel Seeks Hearing Adjournment G+G RETAIL: Judge Drain Approves Disclosure Statement G+G RETAIL: Plan Confirmation Hearing Scheduled on December 6 GENERAL CABLE: Moody's Assigns Loss-Given-Default Rating GETTY IMAGES: Earns $37.6 Million in Quarter Ended September 30 GREGG APPLIANCES: Moody's Assigns Loss-Given-Default Rating HOME DIRECTOR: Judge Jellen Confirms Joint Chapter 11 Plan HONS TRUCKING: Voluntary Chapter 11 Case Summary ICON HEALTH: Moody's Assigns Loss-Given-Default Rating ITRON INC: Moody's Assigns Loss-Given-Default Rating JEMSEK CLINIC: Case Summary & 20 Largest Unsecured Creditors JO-ANN STORES: Posts $21.2 Million Net Loss in 2006 Second Quarter JOHN MANEELY: Atlas Merger Deal Cues S&P's Developing Rating Watch JOHN MANEELY: $1.5 Bil. Atlas Deal Prompts Moody's Ratings Review KAYDON CORPORATION: Moody's Assigns Loss-Given-Default Rating KB HOME: Late 10-Q Filing Cues S&P to Place Ratings on Neg. Watch LEVEL 3: Selling $600MM 9.25% Senior Notes Due 2014 at 100% of Par LEVEL 3 FINANCING: Moody's Rates New $600 Million Sr. Notes at B2 MAVERICK TUBE: Tenaris Buyout Prompts Moody's to Withdraw Ratings MERIDIAN AUTOMOTIVE: Gets Court Approval of Disclosure Statement MICHAEL'S STORES: Moody's Holds Proposed $2.4 Bil. Sr. Loan at B2 MORGAN STANLEY: Fitch Junks Rating on Class B-1 Issue NATIONAL WARRANTY: Liquidators Call for Eligible Claims NORD RESOURCES: Amends Pact with Coyote Springs and Mimbres Owners NORTEL NETWORKS: Doubles Network Capacity Through Wireless Tech. NORTEL NETWORKS: Nortel Government Bags Elite Improvement Rating PACIFIC NORTHWEST: Voluntary Chapter 11 Case Summary PARMALAT: Meeting of Parmalat Capital Creditors Set for November 9 PARMALAT SPA: 35,000 Plaintiffs to Join Parma Civil Suit PITTSBURGH BREWING: Files Disclosure Statement in Pennsylvania PITTSBURGH BREWING: Judge McCullough Says Plan is Unworkable QWEST COMMS: Moody's Places BB (low) Rating on Senior Notes RADIOSHACK CORP: Lackluster Performance Cues S&P to Whip Ratings ROPER INDUSTRIES: Moody's Assigns Loss-Given-Default Rating SAFESCRIPT PHARMACIES: Court Converts Chapter 11 Case to Chapter 7 SALLY HOLDINGS: Moody's Rates $1.07 Billion Sr. Sec. Loan at B2 SEARS HOLDINGS: Moody's Assigns Loss-Given-Default Rating STARWOOD HOTELS: Fitch Lifts Ratings One Notch to BBB- from BB+ SUPERCLICK INC: July 31 Balance Sheet Upside-Down by $2.4 Million SUSSER HOLDINGS: Successful IPO Cues S&P to Lift Ratings to B+ TECHNICAL OLYMPIC: S&P Junks Senior Subordinated Note Rating TIG HOLDINGS: S&P Affirms BB- Counterparty Credit Rating TRANS-INDUSTRIES INC: Chapter 11 Case Converted to Chapter 7 TRAPEZA CDO: Fitch Holds BB Rating on $4.5 Million Class E Notes TSA STORES: Moody's Assigns Loss-Given-Default Rating UNITED AUTO: Moody's Assigns Loss-Given-Default Ratings UNITED SUBCONS: Moody's Withdraws Junk Rating on $200 Mil. Loan UNIVERSAL COMPRESSION: Inks $500 Mil. Senior Secured Credit Pact VULCAN ENERGY: Moody's Affirms Senior Secured Rating at Ba2 WESCO INT'L: S&P Rates Proposed $250 Million Sr. Unsec. Notes at B WINN-DIXIE: Wants Five Alabama Power Agreements Approved WINN-DIXIE: Wants to Assume GE Consumer Products Agreement WR GRACE: Earns $741.4 Million in Third Quarter Ended 2006 XEROX CORPORATION: Moody's Assigns Loss-Given-Default Ratings * BOOK REVIEW: Leveraged Management Buyouts: Causes and Consequences ********* ACS MEDIA: Moody's Places B1 Ratings on $140 Million Senior Loans ----------------------------------------------------------------- Moody's Investors Service assigned a B2 first time Corporate Family rating to ACS Media LLC. Details of the rating assignment: * $10 million senior secured revolving credit facility, due 2012 -- B1, LGD 3, 39% * $130 million senior secured term loan B, due 2013 -- B1, LGD 3, 39% * Corporate Family rating -- B2 * PDR -- B2 The rating outlook is stable. The ratings reflect the company's high leverage, the relatively small scale of its operations, the limited size and growth potential of its market, the formidable competition posed by rival directory publishers, its vulnerability to economic conditions in Alaska, and the company's reliance upon one outsourcing company for its advertising, marketing, sales, production and distribution of its publications. Ratings are supported by ACS Media's dominant market share, its reputation in Alaska as the "official yellow pages", its high margins and cash flow conversion rates, and the diversity of its customer base. The stable outlook incorporates the predictability of ACS Media's top line and cash flow generation and the value conferred by its exclusive 50-year publishing and trademark agreement with Alaska's largest local telephone company. On Sept, 24, 2006, Caribe Acquisition Holdings LLC, a company owned by funds managed and controlled by Welsh, Carson Anderson & Stowe, concluded an agreement to acquire the assets of ACS Media Income Fund for approximately $203 million. The acquisition will be funded from the proceeds of the proposed senior secured term loan, $35 million in unrated intermediate holding company senior unsecured debt, and $48 million in cash common equity contributed by the WCAS. Moody's analysis reviewed the financial statements of ACS Media Income Fund prepared in accordance with Canadian GAAP, based upon management's representation that these financial statements reflect no material differences from the financial statements of ACS Media LLC, prepared in accordance with US GAAP. The B1 senior secured debt reflects an LGD 3 loss given default assessment as senior secured debt is secured by a pledge of substantially all of the company's assets and ranks ahead of a significant amount of junior debt. 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. Holdco senior unsecured noteholders will receive no subsidiary guarantees. Moody's reviewed a summary term sheet for the senior secured facilities and subordinated notes with the understanding that final documentation will incorporate financial covenants set at levels providing no more than an approximately 20% covenant compliance cushion to management projections and a limitation of cash distributions, until leverage is substantially lowered. Headquartered in Anchorage, Alaska, ACS Media LLC publishes yellow page directories. The company recorded sales of $38 million for the twelve months ended June 30, 2006. ADELPHIA COMMS: Twelve Groups of Creditors Object to Disclosure --------------------------------------------------------------- Brian Rosen, Esq., Weil, Gotshal & Manges LLP, in New York, argues that the disclosure in the revised Second Supplemental Disclosure Statement regarding the global settlement embodied in the revised Fifth Amended Plan of Reorganization of Adelphia Communications Corporation is misleading. Mr. Rosen represents Aurelius Capital Management, LP; Banc of America Securities LLC; Catalyst Investment Management Co., LLC; Drawbridge Global Macro Advisors LLC; Drawbridge Special Opportunities Advisors LLC; Elliott Associates, LP; Farallon Capital Management, L.L.C.; Noonday Asset Management, L.P.; Perry Capital LLC; and Viking Global Investors LP, holders or investment advisors to certain holders of notes and debentures issued by the Company and aggregating over $1,081,000,000. Mr. Rosen notes that the Global Settlement is touted as resulting in a transfer of $1,080,000,000 in value for the benefit of the Company's unsecured creditors. However, since the initial publication of the $1,080,000,000 figure, the ACC Settling Parties, namely: Tudor Investment Corporation; Highfields Capital; and any ACC Senior Noteholders that agreed to be bound by the provisions of the Global Settlement as and are represented by Goodwin Procter LLP, in connection with the ACOM Debtors' Chapter 11 Cases, have made a series of concessions to other parties-in- interest that effectively reduce the amount to less than $1,000,000,000. Among others, concessions have been made to the Banks, holders of Olympus Parent Notes and holders of FPL Notes, Mr. Rosen states. Mr. Rosen asserts that it is imperative that full disclosure be made that: -- in each discussion of the Global Settlement, the $1,080,000,000 has already been reduced and may be further reduced if additional concessions are made; -- the Plan authorizes Tudor and Highfields, on behalf of all ACC unsecured creditors, to waive the requirement that a minimum of $1,080,000,000 be made available and to do so without notice or an opportunity to be heard; -- neither Tudor nor Highfields agreed to the Global Settlement as fiduciaries, but instead did so in their individual capacities; and -- neither the ACOM Debtors nor the Official Committee of Unsecured Creditors considered the merits of the intercreditor disputes when deciding to support the Global Settlement or to propose the Plan based on the Global Settlement. Mr. Rosen further argues that: (a) the disclosure regarding the broad exculpation and release provisions available under the Plan and the necessity of those provisions is incomplete and inconsistent; and (b) the disclosure regarding the valuation and distribution of TWC Class A Common Stock is inadequate and misleading. OZ Management, L.L.C., Chesapeake Partners L.P., and Satellite Asset Management, L.P., holders of ACC Senior Notes having an aggregate principal amount of approximately $625,000,000 -- or approximately $12.7% of the ACC Senior Notes -- and unrestricted members of the Ad Hoc Committee of ACC Senior Noteholders, state that they oppose the Global Settlement embodied in the Plan. 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. 150; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADELPHIA COMMS: Judge Gerber Lets Exclusivity Period Continue ------------------------------------------------------------- The Honorable Robert E. Gerber, U.S. Bankruptcy Court for the Southern District of New York, denied the Adelphia Communications Corporation Bondholder Group's request to terminate the Debtors' exclusive periods. The Court notes that since the plan solicitation process is underway, this time is the "wrong time" to terminate the Debtors' exclusivity. The ACC Bondholder Group, Judge Gerber recounts, argued that the Debtors involuntarily waived exclusivity by co-proposing their plan of reorganization with the Official Committee of Unsecured Creditors. The ACC Bondholder Group also argued that an extension of the Debtors' exclusivity is unwarranted at this time, and that the plan process should now be opened up to competing plans. "Joint plans are proposed for good reason; they are reflective of the consensus building that's the goal in chapter 11, and give the creditors who are asked to vote on the plan comfort that those who've been following the case and share their interests believe that the plan should be solicited. I am not going to penalize [the ACOM] Debtors for having done likewise," Judge Gerber says. Judge Gerber notes that the Joint Plan now appears to have very considerable, but not total, support. "Its supporters include Tudor and Highfields, which had been participants in the settlement process from the very outset, and were at various times the representatives or among the representatives of the ACC Parent bondholders. But the members of the ACC Bondholder Group (some of whom were also participants in the settlement process, at least toward the end) don't like the Joint Plan." According to Judge Gerber, terminating the Debtors' exclusivity, just a few weeks before the Debtors might be in a position to confirm a plan, would be at odds with moving the case forward, and could be disastrous. Judge Gerber also expressed concern that some creditor constituencies might file their own "wish list" plans. "A competing plans battle now might well jeopardize current fragile agreements between various stakeholders, re-ignite intercreditor disputes, and push this process back to square one. A competing plans battle would also likely drag out the solicitation process, subjecting the estate to substantial extra costs that might otherwise be avoided, including huge IPO costs associated with making Time Warner stock freely tradable," Judge Gerber says. Judge Gerber notes that the Joint Plan has secured very substantial, but not universal, indications of potential approval. "I believe that the proposed plan plainly deserves to be put up for a vote. . . . I disagree with the contentions that the process that led up to the term sheet that underlies it was in any way unlawful or illegitimate." "The proposed plan will go out for a vote," Judge Gerber reiterates, "Many creditors, particularly bondholders at the ACC Parent level, have not been heard from, one way or the other. And at least for the relatively brief period of 6 to 8 weeks during which we'll ascertain whether the Joint Plan has the requisite support and is confirmable, I will keep exclusivity in place." A full-text copy of Judge Gerber's 24-page Bench Decision is available for free at http://ResearchArchives.com/t/s?11f3 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. 150; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ADVENTRX PHARMA: Licenses ANX-211 U.S. Rights to Theragenex ----------------------------------------------------------- ADVENTRX Pharmaceuticals Inc. has licensed its U.S. rights to ANX-211, one of its proprietary antiviral products, to Theragenex. Under the terms of the license, the Company will receive a licensing fee of $1 million, a milestone payment of $1 million for the launch of the first licensed product and $1 million for the launch of each additional licensed product, as well as royalty payments of 15% to 20% on licensed product sales. Theragenex intends to launch the first licensed product during 2007. "We are pleased to have entered into this agreement with Theragenex and are confident in their strategy to maximize the value of ANX-211," Evan M. Levine, chief executive officer, said. "Theragenex has an experienced respiratory specialty sales force that made them a particularly attractive commercialization partner." About ANX-211 ANX-211 is an intranasal/topical antiviral used against viruses responsible for the common cold, influenza and other respiratory tract viral infections. ANX-211 was acquired by ADVENTRX in April 2006 as a part of its acquisition of SD Pharmaceuticals. About Theragenex Theragenex -- http://www.theragenex.com/-- is a life science and technology company focused on acquiring and licensing intellectual property and healthcare assets addressing a wide range of therapeutic approaches. The Company continually seeks new technologies and product opportunities to commercialize through its subsidiary companies. About ADVENTRX Pharmaceuticals ADVENTRX Pharmaceuticals (Amex: ANX) -- http://www.adventrx.com/ -- is a biopharmaceutical research and development company focused on commercializing low development risk pharmaceuticals for cancer and infectious disease that enhance the efficacy and/or safety of existing therapies. ADVENTRX Pharmaceuticals, Inc.'s balance sheet at June 30, 2006, showed total assets of $20 million and total liabilities of $31 million, resulting to an $11 million total shareholders' deficiency. AFFINITY GROUP: 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 US and Canadian Retail sector, the rating agency confirmed its B1 Corporate Family Rating for Affinity Group Holding, 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 ---------- ------- ------- ------ ---------- $35MM Gtd. Sr. Sec. Revolving Credit Facility Ba3 Ba1 LGD2 13% $140MM Gtd. Sr. Sec. Term Loan Ba3 Ba1 LGD2 13% $200MM 9% Gtd. Sr. Sub. Notes B3 B2 LGD4 61% $88.2MM 10.875% Sr. Notes Caa1 B3 LGD6 90% 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 Ventura, California, Affinity Group Inc. -- http://www.affinitygroup.com/-- and its affiliated companies serve the safety, security, comfort, and convenience needs of the North American recreational vehicle market. AK STEEL: Board Okays 4th Quarter Pension Payment of $75 Million ---------------------------------------------------------------- AK Steel Corporation's board of directors has authorized the early contribution of $75 million to its pension trust fund. Following the early contribution, which will be made during the 2006 fourth quarter, the Company will have made nearly $360 million in early and voluntary pension fund contributions in the last two years. James L. Wainscott, chairman, president and chief executive officer, said "AK Steel's board of directors remains committed to funding our pension legacy obligation for the 32,000 retirees, and their beneficiaries, who served this company for many years," The company said that while it has continued to fund retiree health care and pension legacy costs, most of its steel industry competitors have reduced or eliminated their legacy obligations through the bankruptcy process. 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. * * * As reported in the Troubled Company Reporter on Oct. 17, 2006 Moody's Investors Service, in connection with the implementation of its new Probability-of-Default and Loss-Given-Default rating methodology, confirmed its B1 Corporate Family Rating for AK Steel Corporation. ALLIED HOLDINGS: Inks CDN$5.7 Mil. Purchase Deal for Canadian Lots ------------------------------------------------------------------ Allied Systems (Canada) Company, a subsidiary of Allied Holdings, Inc., owns 51.77 acres of real property located at 1790 Provincial Road, City of Windsor, in Ontario, Canada. Allied Systems has marketed the Lot for sale since 2001. In 2004, Allied Systems received expressions of market interest for 15.11 acres of the Lot. Allied Systems also obtained an independent appraisal of CDN$5,700,000, and a second appraisal of CDN$5,720,000 for the Lot. To identify and contact all third party purchasers that might be interested in the 15.11-acre property, Allied Systems sought and obtained approval from the U.S. Bankruptcy Court for the Northern District of Georgia to retain Cushman & Wakefield LePage, Inc., as its real estate broker, Harris B. Winsberg, Esq., at Troutman Sanders LLP, in Atlanta, Georgia, recounts. Mr. Winsberg says Cushman & Wakefield's efforts resulted in a purchase and sale agreement between Allied Systems and 1659579 Ontario Ltd. The Purchase Agreement offers Allied Systems a purchase price of CDN$2,250,000, which amount exceeds the appraised value of the Property. Other salient terms of the Purchase Agreement include: * a deposit of CDN$100,000 tendered in two installments and applied towards the Purchase Price; * Ontario Ltd. will accept the Property on an entirely "as is, where is" basis; and * Cushman & Wakefield will receive a commission that is 5% of the Purchase Price. A full-text copy of the Purchase Agreement is available for free at http://researcharchives.com/t/s?13fe Mr. Winsberg informs the Court that the city of Windsor consents to the severance of the Property from the Lot provided that Allied Systems transfers 0.19 acres of the Lot to Windsor for a road- widening project. Allied Systems owes Windsor CDN$53,409 for 2005 property taxes on the Lot. Accordingly, Allied Systems seeks the Court's permission to pay the Taxes out of the sale proceeds at closing. Bidding Procedures The Debtors also ask the Court to approve proposed bidding procedures to afford Allied Systems adequate opportunity to evaluate competing offers and the bidders' financial ability. According to Mr. Winsberg, any interested third party, other than the Purchaser, must submit an "Initial Overbid" on or before October 26, 2006, which must, among other things, contain a signed definitive bid for purchase with: -- substantially identical terms and conditions as the Purchase Agreement, except with higher and better consideration; -- a purchase price equal to, or greater than, the sum of the Purchase Price and CDN$100,000; and -- must not be subject to any contingency or any conditions precedent to the overbidder's obligation to purchase the Property other than any similar conditions included in the Purchase Agreement. If Allied Systems timely receives a conforming Initial Overbid from a prospective purchaser, it will conduct an auction for the Property's sale on November 1, 2006, at its counsel's office. At the Auction, Qualified Bidders or the Purchaser may submit successive bids in increments of at least CDN$50,000 greater than the prior bid for the Property's purchase until Allied Systems determines the highest or best offer. All bidding for the Property will be concluded at the Auction. If there are no conforming Initial Overbid received at, or prior to, the Bid Deadline, the Auction will not be held and the hearing on the proposed sale order will proceed as scheduled. All competing bids must be in writing and received by: (1) the Seller: Allied Systems (Canada) Company c/o Allied Holdings, Inc. 160 Clairemont Avenue, Suite 200 Decatur, Georgia 30030 Attention: Thomas M. Duffy, Esq. Telecopy: (404) 370-4206 with a copy to: Troutman Sanders LLP 600 Peachtree Street, N.E. Suite 5200 Atlanta, Georgia 30308 Attention: Harris B. Winsberg, Esq. Telecopy: (404) 962-6719 (2) the Buyer: 1659579 Ontario Ltd c/o Yorkdale Homes Ltd./ Medd Development Group Ltd. 12300 Tecumseh Road Tecumseh, Ontario N8H 1M4 Attention: Iyman Meddoui, President Telecopy: (519) 739-0543 with a copy to: Ohler Law Firm 101 Tecumseh Road W Windsor, Ontario N8X 1E8 Attention: John Ohler Telecopy: (519) 256-1492 Sale is Warranted Allied Systems believes it can obtain consent to the sale of the Property from any creditors who might assert a security interest in the Property, Mr. Winsberg relates. Specifically, the Debtors' debtor-in-possession facility lenders have consented to the proposed sale in connection with the Fifth Amendment to the DIP Facility. Mr. Winsberg maintains that the request should be granted because, among other things, the proposed sale process and the bidding procedures have been designed to create a fair, open and level playing field. Headquartered in Decatur, Georgia, Allied Holdings, Inc. -- http://www.alliedholdings.com/-- and its affiliates provide short-haul services for original equipment manufacturers and provide logistical services. The Company and 22 of its affiliates filed for chapter 11 protection on July 31, 2005 (Bankr. N.D. Ga. Case Nos. 05-12515 through 05-12537). Jeffrey W. Kelley, Esq., at Troutman Sanders, LLP, represents the Debtors in their restructuring efforts. Henry S. Miller at Miller Buckfire & Co., LLC, serves as the Debtors' financial advisor. Anthony J. Smits, Esq., at Bingham McCutchen LLP, provides the Official Committee of Unsecured Creditors with legal advice and Russell A. Belinsky at Chanin Capital Partners, LLC, provides financial advisory services to the Committee. When the Debtors filed for protection from their creditors, they estimated more than $100 million in assets and debts. (Allied Holdings Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc. http://bankrupt.com/newsstand/ or 215/945-7000) AMERCO: S&P Raises Corporate Credit Rating to BB from B+ -------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on AMERCO, including raising the corporate credit rating to 'BB' from 'B+'. The ratings were removed from CreditWatch, where they were placed with positive implications on June 23, 2006. The outlook is stable. "The upgrade reflects AMERCO's improved financial profile since its March 2004 emergence from Chapter 11 bankruptcy protection, resulting from good cost controls and improved profitability at its insurance operations," Standard & Poor's credit analyst Betsy Snyder said. Ratings on Reno, Nev.-based AMERCO reflect the company's aggressive financial profile, partially offset by its position as the largest consumer truck rental company in North America and its major position in self storage. AMERCO is a holding company for four operations. Its primary operating subsidiary is U-Haul International Inc. This segment includes the company's consumer truck rental operations and self- storage facilities, accounting for approximately 90% of AMERCO's consolidated revenues. Other operating entities include two insurance companies-Republic Western Insurance Co. (property and casualty) and Oxford Life Insurance Co. - and SAC Holding II (self-storage properties that are managed by U-Haul in which AMERCO is considered the primary beneficiary of these contractual interests). With a rental fleet of approximately 93,000 trucks, 80,675 trailers, and 33,500 tow devices operating out of approximately 15,400 locations, U-Haul is the largest participant, by far, in consumer truck rentals in North America. The company focuses on do-it-yourself movers and competes with Budget (owned by Avis Budget Car Rental LLC) and Penske Truck Leasing (owned by General Electric Capital Corp.), both of which are also large, national competitors (albeit substantially smaller than AMERCO). Other competitors include numerous small regional/local renters, full-service van lines, and do-it-yourself movers who either own or borrow equipment. Although consumer truck rentals are seasonal, they are somewhat recession-resistant, since consumers actually tend to move more in economic downturns to follow new employment opportunities or to relocate to less expensive locations. U-Haul was not included in AMERCO's bankruptcy filing, which was due to AMERCO's inability to refinance debt at the holding company level. U-Haul also rents out storage space, typically on a month-to-month basis, with more than 377,750 rooms covering approximately 33 million square feet in approximately 1,045 facilities. The self- storage industry provides low-cost, flexible storage space for consumers and small businesses. Although AMERCO's revenues and earnings are expected to strengthen modestly over the near to intermediate term, improvement in its credit ratios will be constrained by a heavy capital spending program. If AMERCO's earnings and cash flow were to improve materially to offset the capital spending program, the outlook could be revised to positive. An outlook revision to negative is considered less likely. AMEREN CORP: May Cut Jobs by 25% if Electricity Rate Freeze Stays ----------------------------------------------------------------- Ameren Corp. is ready to cut jobs at its Illinois utilities by up to 25% and lay off about 700 independent contractors working for its subsidiary companies if lawmakers extend the state's electricity rate freeze, Tony Reid of Herald & Review reports. The company's statement follows the Illinois Assembly's move to extend the electricity rate freeze to Dec. 31, 2009, from its current termination date of Dec. 31, 2006. Illinois imposed the rate freeze 10 years ago to promote a deregulated, competitive power marketplace. Scott Cisel, president of Ameren's Illinois units, told the Herald & Review that threats of major job losses and financial meltdowns are real and looming if the electricity rate freeze continues. Critics however say Ameren's predictions are not credible and are part of "scare tactics" to push through rate hikes that could escalate power bills by more than 50%, Herald & Review relates. Fitch Issues Rating Action on Illinois Units The heightened political rhetoric surrounding future utility rates in Illinois and uncertainty related to recovery of Ameren's Illinois subsidiaries' purchased power costs, according to Fitch, prompted it to place the ratings of Ameren Corp and its Illinois subsidiaries -- Central Illinois Light Company dba AmerenCILCO; CILCORP Inc., the Illinois Power Company, dba AmerenIP; and Central Illinois Public Service Company dba Ameren CIPS -- on negative watch. Fitch relates that as a result of the auctions held by the state in September 2006 to procure supply for 2007 and portions of 2008 and 2009 and thereby establish the cost of purchased power for the utilities, the Illinois Subsidiaries are contractually obligated to pay power purchase costs that are on average $64 per megawatt hour, which are up to 80% higher than costs assumed in current frozen rates. Ameren has recommended that the rate increases be phased-in over the next three years with deferred costs subsequently recovered. In Fitch's view, failure to pass through the costs in customer tariffs on a timely basis would significantly impair the credit quality of the Illinois Subsidiaries. Fitch currently placed AmerenIP's Preferred Stock and Individual Default Ratings at 'BB+'. Headquartered in St Louis, Missouri, Ameren Corporation -- http://www.ameren.com/-- through its subsidiaries, operates as a public utility company in Missouri and Illinois. It engages in the generation, transmission, and distribution of electricity; and distribution of natural gas, as well as engages in nonregulated electricity operations. AMERICA CAPITAL: Court Approves Scott Feder as Litigation Counsel ----------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of Florida gave America Capital Corporation authority to employ Scott Jay Feder, Esq., as its special litigation counsel. Mr. Feder is expected to: a) analyze strategy decisions and all necessary action from beginning to end; and b) pursue the Debtor's claims and defend against the claims against the Debtor, including its officers, directors and employees. Mr. Feder bills $400 per hour for this engagement. The firm's bill is at a rate equal to 2.5 times Mr. Feder's rate. Paralegals at the firm bill $100 per hour. Mr. Feder assures the Court he does not hold any interest adverse to the Debtor's estate. Mr. Feder can be reached at: Scott Jay Feder, Esq. Scott Jay Feder P.A. 4649 Ponce de Leon Boulevard, Suite 402 Coral Gables, Florida 33146 Tel: (305) 669-0060 Fax: (305) 669-4220 http://www.scottjayfederpa.com/ Headquartered in Miami, Florida, America Capital Corporation holds a 65.19% interest in TransCapital Financial Corporation. TransCapital Financial is a holding and management company that conducted substantially all of its operations through its wholly owned subsidiary, Transohio Savings Bank, FSB. Transohio Savings' key activities as a savings and loans institution were banking and lending and its primary lending activity was the originating and purchasing of loans secured by mortgages on residential properties. Transohio Savings also endeavored to generate residential loan originations through branch personnel and real estate brokers. Mobile home and home improvement loans were generated through dealers and contractors and additionally, Transohio Savings made construction loans generated by contractors that usually extended to not more than one year in length. America Capital filed for chapter 11 protection on June 19, 2006 (Bankr. S.D. Fla. Case No. 06-12645). Mindy A. Mora, Esq., at Bilzin Sumberg Baena Price & Axelrod LLP, represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $52,005,000 and total debts of $207,170,268. TransCapital Financial Corporation also filed for chapter 11 protection on June 19, 2006 (Bankr. S.D. Fla. Case No, 06-12644) and is represented by Paul J. Battista, Esq., at Genovese Joblove & Battista, P.A. AMERICAN CASINO: Moody's Cuts Rating on $215 Mil. Sr. Notes to B3 ----------------------------------------------------------------- Moody's Investors Service took several rating actions in relation to American Casino & Entertainment Properties LLC and American Entertainment Properties Corp. Moody's withdrawn all of its ratings and rating outlook on AEP because the previously announced offering of $250 million of senior floating rates notes has been withdrawn pursuant to a press release dated Oct. 19, 2006, issued by ACEP's ultimate parent, American Real Estate Partners, L.P. As a result, Moody's is assigning a corporate family rating to ACEP as well as applying the Loss Given Default analysis to ACEP. Ratings withdrawn: American Entertainment Properties Corp. * Corporate Family Rating at B2 * Probability-of-default rating at B2 * $250 million senior unsecured floating rate notes due 2014 at Caa1 * Stable rating outlook Ratings assigned: American Casino & Entertainment Properties LLC * Corporate Family Rating at B2 * Probability-of-default rating at B2 Ratings Changed: * $215 million 7.85% senior secured second lien notes due 2012 to B3 (LGD 4, 61%) from Ba3 (LGD 2, 29%) The downgrade of the 7.85% senior secured second lien notes reflects the absence of the structurally subordinate holdco notes that were not issued and the application of Moody's loss given default methodology. ACEP's rating outlook remains stable. Although the company maps to a higher rating pursuant to Moody's Global Gaming Methodology, Moody's does not anticipate a ratings upgrade due to the risk that the parent company may decide to recapitalize ACEP at some future date when market conditions are more favorable. The stable rating outlook encompasses this recapitalization event risk, the favorable demand outlook for gaming in Nevada, the absence of near term maturities and adequate liquidity. Headquartered in Las Vegas, Nevada, ACEP is a wholly-owned, indirect, unrestricted subsidiary of American Real Estate Partners, L.P., a publicly traded firm engaged in both real estate and non-real estate activities. Carl Icahn currently owns approximately 86% of AREP through non-AREP subsidiaries. ACEP had LTM June 2006 revenues of $342 million and owns/operates three gaming properties in the Las Vegas metropolitan area and one in Laughlin, Nevada. AMERICAN COMMERCE: Posts $367,000 Net Loss in Qtr. Ended Aug. 31 ---------------------------------------------------------------- American Commerce Solutions Inc. filed its second fiscal quarter financial statements for the three months ended Aug. 31, 2006, with the Securities and Exchange Commission on Oct. 13, 2006. The company reported a $367,073 net loss on $544,365 net sales for the quarter ended Aug. 31, 2006, compared to a $136,789 net loss on $665,450 net sales for the second quarter last year. At Aug. 31, 2006, the company's balance sheet showed $5,581,631 in total assets, $2,964,376 in total liabilities, and $2,617,255 in stockholders' equity. The company's balance sheet also showed strained liquidity with $456,043 in total current assets available to pay 2,217,851 in total current liabilities. Full-text copies of the company's second fiscal quarter financial statements for the three months ended Aug. 31, 2006, are available for free at http://researcharchives.com/t/s?13f9 Going Concern Doubt Pender Newkirk & Company LLP expressed substantial doubt about American Solutions' ability to continue as a going concern after auditing the company's financial statements for the fiscal year ending Feb. 28, 2006. The auditing firm pointed to the net loss of $922,351 incurred by the company during the year ended Feb. 28, 2006, and to the accumulated deficit of $15,764,302 and negative working capital of $1,566,762 at Feb. 28, 2006. About American Commerce American Commerce Solutions, Inc. -- http://www.aacssymbol.com/-- is primarily a holding company with two wholly owned subsidiaries; International Machine and Welding Inc. is engaged in the machining and fabrication of parts used in industry, and parts sales and service for heavy construction equipment; Chariot Manufacturing Company, Inc., which was acquired on Oct. 11, 2003, from a related party, manufactures motorcycle trailers with fiberglass bodies. AMERICAN ENTERTAINMENT: Moody's Withdraws Junk $250MM Notes Rating ------------------------------------------------------------------ Moody's Investors Service took several rating actions in relation to American Casino & Entertainment Properties LLC and American Entertainment Properties Corp. Moody's withdrawn all of its ratings and rating outlook on AEP because the previously announced offering of $250 million of senior floating rates notes has been withdrawn pursuant to a press release dated Oct. 19, 2006 issued by ACEP's ultimate parent, American Real Estate Partners, L.P. As a result, Moody's is assigning a corporate family rating to ACEP as well as applying the Loss Given Default analysis to ACEP. Ratings withdrawn: American Entertainment Properties Corp. * Corporate Family Rating at B2 * Probability-of-default rating at B2 * $250 million senior unsecured floating rate notes due 2014 at Caa1 * Stable rating outlook Ratings assigned: American Casino & Entertainment Properties LLC * Corporate Family Rating at B2 * Probability-of-default rating at B2 Ratings Changed: * $215 million 7.85% senior secured second lien notes due 2012 to B3 (LGD 4, 61%) from Ba3 (LGD 2, 29%) The downgrade of the 7.85% senior secured second lien notes reflects the absence of the structurally subordinate holdco notes that were not issued and the application of Moody's loss given default methodology. ACEP's rating outlook remains stable. Although the company maps to a higher rating pursuant to Moody's Global Gaming Methodology, Moody's does not anticipate a ratings upgrade due to the risk that the parent company may decide to recapitalize ACEP at some future date when market conditions are more favorable. The stable rating outlook encompasses this recapitalization event risk, the favorable demand outlook for gaming in Nevada, the absence of near term maturities and adequate liquidity. Headquartered in Las Vegas, Nevada, ACEP is a wholly-owned, indirect, unrestricted subsidiary of American Real Estate Partners, L.P., a publicly traded firm engaged in both real estate and non-real estate activities. Carl Icahn currently owns approximately 86% of AREP through non-AREP subsidiaries. ACEP had LTM June 2006 revenues of $342 million and owns/operates three gaming properties in the Las Vegas metropolitan area and one in Laughlin, Nevada. ANEAL MAHARAJ: Case Summary & 16 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Aneal V. Maharaj aka Neal Maharaj 9775 South Maryland Parkway, Suite F-50 Las Vegas, NV 89123 Bankruptcy Case No.: 06-13075 Chapter 11 Petition Date: October 24, 2006 Court: District of Nevada (Las Vegas) Judge: Linda B. Riegle Debtor's Counsel: Michael J. Dawson, Esq. 515 S. Third Street Las Vegas, NV 89101 Tel: (702) 384-1777 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 16 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Peggy Charles and Alfred McNair $700,000 c/o Patrick O. King, Esq. King & Taggart 108 North Minnesota Street Carson City, NV 89703 Kamla Maharaj $178,000 11757 Magnolia Park Court Las Vegas, NV 89141 Kushmira Prasad $48,000 10624 South Eastern Avenue Suite A-382 Henderson, NV 89052 Arun Maharaj $15,000 9926 Whispa Court Las Vegas, NV 89183 Sprint Embarg $14,949 P.O. Box 660068 Dallas, TX 75266 Tiburon Financial, LLC $10,923 218A 108th Avenue Omaha, NE 68154 Holland & Hart, LLP $9,079 3960 H. Hughes Pkwy., Suite 300 Las Vegas, NV 89169 Chase Cardmember Service $6,999 P.O. Box 9001074 Louisville, KY 40290 JP Drafting $6,247 2421 Tech Center Court #100 Las Vegas, NV 89128 Bank of America Visa $2,619 P.O. Box 60502 City of Industry, CA 91716 SST Card Services $1,809 P.O. Box 23060 Columbus, GA 31902 Shalen Maharaj $1,800 11757 Magnolia Park Court Las Vegas, NV 89141 Capital One $1,480 P.O. Box 60067 City of Industry, CA 91716 Lolita T. Rondolos $1,000 P.O. Box 2174 Silverdale, WA 98383 Dominic Gentile, Esq. $945 Genttle & DePalma, Ltd. 3960 H. Hughes Pkwy, #850 Las Vegas, NV 89169 Walch & Smurthwaite, LLP $940 503 West 2600 South Suite 200 Bountiful, UT 84010 ASHA DISTRIBUTING: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: ASHA Distributing, Inc. dba ASHA Wholesale Distributors 1201 Nicholas Street Omaha, NE 68102 Tel: (888) 289-2742 Bankruptcy Case No.: 06-81701 Debtor-affiliate filing separate chapter 11 petition: Entity Case No. ------ -------- ASHA Distributing of K.C., Inc. 06-81702 Chapter 11 Petition Date: October 26, 2006 Court: District of Nebraska (Omaha) Judge: Timothy J. Mahoney Debtors' Counsel: Joseph H. Badami, Esq. Woods & Aitken LLP 301 South 13th Street, Suite 500 Lincoln, NE 68508 Tel: (402) 437-8500 Fax: (402) 437-8558 Estimated Assets: Less than $10,000 Estimated Debts: $1 Million to $100 Million Debtors' Consolidated List of 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Goodman Sales Co. $3,299,101 fka GMC Sales Corp. 1501 Seamist Drive Houston, TX 77008 First National Bank $2,341,505 One First National Center Omaha, NE 68102 John W. Smith $900,000 14330 North 72nd Street Omaha, NE 68122 Haier America Trading LLC $670,312 1356 Broadway New York, NY 10018 Haier Corp. $667,398 P.O. Box 90445 Chicago, IL 60693 Laughlin Peterson & Lang $74,345 JP Morgan $60,200 Barrington Manufacturing Corp. $36,572 JMF Manufacturing LLC $20,183 Diversitech Corp. $12,923 McMillen & Associates P.C. $10,066 PB Heat, LLC $10,000 General Filters Inc. $7,897 Honeywell Wire $7,446 White-Rodgers Division $6,295 JP Lamborn Co. $5,785 William W. Odgen $4,711 Union Central Life Insurance $3,755 Manhattan Properties Inc. $3,606 Haier America Parts $2,914 ASPEON INC: Larry O'Donnell Raises Going Concern Doubt ------------------------------------------------------ Larry O'Donnell CPA, PC, expressed substantial doubt about Aspeon Inc.'s ability to continue as a going concern after auditing the company's financial statements for the fiscal years ended June 30, 2006 and 2005. The auditor pointed to the company's significant losses from operations, net capital deficit, and no ongoing source of income. At June 30, 2006, the company's balance sheet showed $8.1 million in stockholders' deficit, compared with a $7.9 million deficit at June 30, 2005. "As of June 30, 2006, we had $7 cash on hand, $195 of assets, no operating business or other source of income, outstanding liabilities of approximately $8.1 million, a stockholders' deficit of approximately $8.1 million and a lawsuit brought against us by certain of our shareholders," the company disclosed in a regulatory filing with the U.S. Securities and Exchange Commission. The company said it is dependent on raising additional equity or debt to fund any negotiated settlements with its outstanding creditors and meet its ongoing operating expenses. Bankruptcy Threat "If we were to be subject to any further appeal, which may be made in respect of the lawsuit brought against us by certain of our shareholders, it is unlikely that the proceeds from our Directors' and Officers' insurance policy would be sufficient to meet the damages assessed and we would have no alternative but to file for bankruptcy," the company warned. BAsed in Irvine, Calif., Aspeon, Inc. -- http://www.aspeon.com/-- designs, manufactures and markets open system touch screen point- of-sale computers. During the year, the company established subsidiaries in United Kingdom, Singapore and Australia. ASSET BACKED: Fitch Junks Rating on Class M-4 Certificates ---------------------------------------------------------- Fitch Ratings has taken various rating actions on these Asset Backed Securities Corporation mortgage pass-through certificates: Series 1999-LB1 Group 1 -- Class A affirmed at 'AAA'; -- Class B1F remains at 'CCC/DR1'. Series 1999-LB1 Group 2 -- Class A affirmed at 'AAA'; -- Class B1A remains at 'CCC/DR2'. Series 2001-HE1 -- Class M-1 affirmed at 'AAA'; -- Class M-2 downgraded to 'BBB-' from 'BBB+'; -- Class B downgraded to 'B+' from 'BB'. Series 2002-HE2 -- Class M2 upgraded to 'AA' from 'AA-'; -- Class B downgraded to 'CCC' from 'BB-'/ assigned 'DR2' Distressed Recovery (DR) rating. Series 2003-HE1 -- Class M-1 upgraded to 'AAA' from 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 downgraded to 'BB-' from 'BB'; -- Class M-4 downgraded to 'C' from 'BB-'/ assigned 'DR5' Distressed Recovery rating. The collateral for all transactions consists of 15- to 30-year fixed-rate and adjustable-rate sub-prime mortgages secured by first liens on one- to four-family residential properties. The servicers include Ocwen Financial Corp. (rated 'RPS2' by Fitch), Select Portfolio Servicing ('RPS2' by Fitch), and Long Beach Mortgage Company ('RPS2' by Fitch). The upgrades reflect an improvement in the relationship between credit enhancement (CE) and future expected losses, and affect approximately $46.88 million in outstanding certificates. The affirmations reflect a stable relationship between CE and future expected losses, and affect approximately $102.43 million in outstanding certificates. The downgrades reflect deterioration in the relationship between CE and future expected losses, and affect approximately $70.71 million in outstanding certificates. For series 1999-LB1, the affirmations on the class A certificates reflect the current financial strength and 'AAA' rating of MBIA as the certificate insurer. Class B-1 is made up of two component classes, B-1F and B-1A, which support two groups (Group 1 and Group 2). Each component is backed by a separate mortgage pool. Although each mortgage group performs differently, since the component bonds are not severable, each component bond reflects the performance of the weakest of all the components. The B-1A component is performing worse than the B-1F component and as such, determines the ratings of all related components and the bond itself. For series 2001-HE1, the overcollateralization has been off its target and the transaction has been failing its delinquency trigger for over one year. Over the past 12 months, average monthly realized losses have exceeded monthly excess spread by approximately $122,850. As a result, CE has been rapidly decreasing. The upgrade in series 2002-HE2 is a result of the failing cumulative loss trigger (which will fail for life). As a result of the failed trigger, the principal generated by the pool is being allocated to the certificates sequentially. This is speeding up the reduction of the M2 bond balance. Class B, though, is being downgraded due to monthly realized losses exceeding monthly excess spread for 11 of the past 12 months, and the OC amount being off target for over one year. The upgrade of class M-1 in series 2003-HE1 is also due to a failing cumulative loss trigger that is expected to fail for life. Fitch expects this class to pay off in the next 10 months. As was the case with the prior transactions, the downgrades of the subordinates are due to high collateral losses relative to CE. The pool factors (current collateral balance as a percentage of original collateral balance) range from 3% (1999-LB1 G2) to 11.9% (2003-HE1), and the transactions are seasoned in range of 47 months (2003-HE1) to 91 months (1999-LB1). The cumulative losses as a percentage of the original balance range from 1.62% (2003- HE1) to 3.84% (2001-HE1). The percentage of collateral in the 60+ buckets (including foreclosure, bankruptcy, and real estate owned) ranges from 25.5% (1999-LB1) to 45% (2001-HE1). BALLY TECH: Presents Preliminary Restated Results for 2003 to 2005 ------------------------------------------------------------------ Bally Technologies Inc. announced preliminary restated results for the fiscal years ended June 30, 2005, 2004, and 2003. The Company had earlier disclosed that the previously issued financial statements for those periods, their related auditors' reports, and the quarterly financial information reported for the years ended June 30, 2005, and 2004, should no longer be relied upon and would require restatement. The data represents the Company's preliminary estimate of the impact of the restatement for the fiscal years ended June 30, 2005, 2004, and 2003. These amounts are subject to change until the filing of the Company's amended 2005 Form 10-K, which is expected to be filed in October 2006. These amounts indicated the total revenues as previously reported and the preliminary impact of the restatement. Previously Restatement Reported Adjustments ---------- ----------- Total revenues for the Fiscal year ended: June 30, 2003 $363,200,000 ($3,900,000) June 30, 2004 $480,400,000 ($1,700,000) June 30, 2005 $484,000,000 $1,100,000 The restatement also includes certain inventory adjustments related to the Company's computation of variances between actual and standard costs for games produced. The restatement also includes other non-revenue related items including, but not limited to, expense accrual adjustments, depreciation expense and other expenses, none of which are significant individually or in the aggregate. Robert Caller, the Company's chief financial officer, commented, "The process of the restatement has been long and arduous for the Company and investors, and we look forward to completing this over the next few weeks. We will also continue to focus on completing our reporting for fiscal year 2006." Upon filing its amended 2005 Form 10-K, the Company plans to file its Form 10-Qs for each of the quarters within fiscal year 2006, and the 2006 Form 10-K, before Dec. 31, 2006. The Company has requested an amendment to its bank loan agreement, to extend the deadline for delivery of the 2006 audited financial statements from Nov. 3, 2006, to Dec. 31, 2006. While the Company believes it can achieve this filing schedule, there can be no assurance that the schedule will be met, or that the amendment to the credit agreement will be successfully obtained. As previously disclosed, the Company did not achieve its fiscal 2006 profitability objectives due to: -- lower gross margins on game sales related to introductory pricing and the manufacturing costs of its newly commercialized slot machine platforms introduced in fiscal 2006, -- high legal and accounting costs associated with ongoing litigation and restatement activities, -- increased interest costs, -- inventory obsolescence charges, and -- the acceleration of depreciation on legacy daily-fee games. Las Vegas, Nev.-based Bally Technologies, Inc. (NYSE: BYI) -- http://www.BallyTech.com/-- designs, manufactures, operates, and distributes advanced gaming devices, systems, and technology solutions worldwide. Bally's product line includes reel-spinning slot machines, video slots, wide-area progressives and Class II lottery and central determination games and platforms. Bally Technologies also offers an array of casino management, slot accounting, bonus, cashless, and table management solutions. The Company also owns and operates Rainbow Casino in Vicksburg, Miss. The Company's South American operations are located in Argentina. The Company also has operations in Macau, China, and India. * * * As reported in the Troubled Company Reporter on Aug. 16, 2006, Standard & Poor's Ratings Services held its ratings on Bally Technologies Inc., including the 'B' corporate credit rating, on CreditWatch with negative implications. BANTA CORP: Moody's Rates Proposed Senior Credit Facility at Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned a Ba2 rating to the proposed senior secured bank credit facility of Banta Corporation. The majority of the proceeds of the proposed facility will fund an approximately $390 million special shareholder dividend. Moody's also assigned a Ba2 corporate family rating, a Ba3 probability of default rating, and an SGL-1 speculative grade liquidity rating to Banta. The outlook is stable. Summary of actions. * Assigned Ba2 Corporate Family Rating * Assigned Ba3 Probability of Default Rating * Assigned Ba2 Senior Secured Bank Rating, LGD 3, 39 * Assigned SGL-1 Speculative Grade Liquidity Rating * Outlook: Stable The Ba2 corporate family rating reflects relatively high leverage at closing, weak industry prospects, modest EBITDA margins and event risk. The rating also reflects relatively good liquidity, including expectations for positive free cash flow; a fairly restrictive credit agreement that somewhat mitigates event risk; and the company's meaningful scale in comparison to other industry participants. The credit agreement consists of a $465 million senior secured term loan and a $50 million revolving credit facility, expected to be undrawn at close. Pro forma for the transaction, Moody's estimates Banta's leverage will rise to 3.9x debt-to-EBITDA. Expectations for continued positive free cash flow support the stable outlook. Moody's anticipates Banta will apply a portion of its free cash flow to debt repayment, resulting in a decline in leverage to approximately 3x debt-to-EBITDA by year end 2007. The SGL-1 rating indicates very good liquidity, based on: i) Moody's expectation of positive free cash flow over the next 12 months, ii) full availability under the planned $50 million revolver, and iii) covenant cushion of at least 15%. Moody's would consider a downgrade or negative outlook if Banta increased leverage to fund a shareholder reward beyond the announced $16 special dividend and modest share repurchase. Deterioration in margins to the single digit level, whether the result of an inability to cut costs as projected, poor execution of proposed initiatives in its supply chain management segment, or industry conditions could also pressure the rating down. The company is the subject of a hostile bid by Cenveo, and concerns over event risk limit upward ratings momentum. Evidence of moderating event risk and the ability and willingness to repay debt with free cash flow could over time result in an upgrade or positive outlook. Banta Corporation provides a combination of printing and digital imaging solutions to publishers and direct marketers through its printing services segment, and a range of outsourcing capabilities through its supply-chain management services. With headquarters in Menasha, Wisconsin, the company generates approximately $1.5 billion of annual revenue, deriving about three-fourths of that amount from its printing services segment. BARE ESCENTUALS: Completed IPO Cues S&P to Lift Corp. Rating to B ----------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating and senior secured bank loan rating on Bare Escentuals Beauty Inc. to 'B' from 'B-'. The '2' recovery rating on the first-lien credit facility was affirmed and the ratings on the second-lien credit facility have been withdrawn. The ratings were removed from CreditWatch with positive implications where they were placed on Sept. 29, 2006, following successful completion of its IPO and intention to use IPO proceeds to repay debt. The outlook is positive. The company had about $343 million total debt outstanding at Oct. 3, 2006. "The upgrade reflects substantial debt repayment following the successful completion of the company's IPO and stronger pro forma credit measures and reduced debt leverage," Standard & Poor's credit analyst Alison Sullivan said. Bare Escentuals repaid its: -- $125 million 15% senior subordinated notes (unrated), -- $234 million second-lien term loan, and -- $6.6 million of its first lien term loan. This improved lease-adjusted leverage from about 6.2x debt to EBITDA prior to the IPO to about 3.1x post-IPO. The ratings on Bare Escentuals reflect its narrow product focus and participation in the highly competitive and fragmented cosmetics industry, relatively small sales base, the risks associated with expanding and upgrading its operating platforms, and an aggressive financial policy. BOMBARDIER INC: Wins $3.4 Billion French Railway Contract --------------------------------------------------------- Bombardier Transportation has been selected by SNCF, French National Railways, to supply the future Ile-de-France commuter train, after a call for tenders launched in February 2004. The contract is for the delivery of a total of 372 trains that will operate on the Greater Paris / Ile-de-France suburban network, and includes an initial order of 172 trains valued at an estimated $1.7 billion. The total value of the contract is estimated at $3.4 billion. SNCF announced its decision at the conclusion of its Board meeting on 25 October 2006, convened to review the opinion of its contract committee. Contract signing is expected to take place in the near future. Delivery of the first trains is scheduled to begin in November 2009 and continue until 2015. The new train will be designed, manufactured and built at the Bombardier Transportation facility in Crespin, in the Valenciennes region, France. Bombardier Transportation's future Ile-de-France commuter train is an articulated train featuring extra-wide carriages which provide an unusually large internal volume for passengers, wide seats and especially wide doors to increase the ease and speed of passenger movement. Each train consists of seven or eight carriages in a single unit and can also be operated as a double or triple unit. The capacity of the trains will vary from 800 to 1,000 passengers, depending on the configuration and layout. The new train is designed for maximum comfort, safety and security and is based on Bombardier's proven technology already in commercial service, offering a high level of reliability. Commenting on the announcement, Andre Navarri, President of Bombardier Transportation, said: "We believe that this new train will transform the travelling experience for passengers in Ile-de- France and we are delighted to support the ambitious policy of STIF (transport authority of Ile-de-France) and SNCF to renew the Ile-de-France rolling stock." Jean Berge, President Bombardier Transportation, France, said: "We are particularly proud of the confidence that SNCF has shown in us. This success confirms the role that Bombardier Transportation is currently playing in the field of regional railway transport in France. It is also a source of pride for the national railway industry". In France, Bombardier Transportation operates primarily at its Crespin factory in the Valenciennes region, which employs 1,600 people and is the leading French manufacturing site in the railway industry. Bombardier Transportation is involved in all TGV programs. The group manufactures a wide range of rolling stock for public transport. Among these products are the MF2000 vehicles for the Paris metro, the Marseille, Nantes and Saint- Etienne tramways, and the recent RER (commuter train) vehicles. Bombardier is a major player in regional transportation with its TER2N NG railcars and the AGC (Autorail Grande Capacit,/high- capacity rail liner) which 21 French regions have ordered to date. Bombardier Transportation is recognized as a global partner of the transport authorities in France. Bombardier Transportation has its global headquarters in Berlin, Germany with a presence in over 60 countries. It has an installed base of approximately 97,000 vehicles worldwide. The company offers the broadest product portfolio and is recognized as the leader in the global rail sector. Headquartered in Valcourt, Quebec, Bombardier Inc. (TSX: BBD) -- http://www.bombardier.com/-- manufactures transportation solutions, from regional aircraft and business jets to rail transportation equipment. * * * Bombardier Inc.'s 6.3% Notes due 2014 carry Moody's Investor Service's Ba2 rating and Standard & Poors' and Fitch Ratings' BB ratings. BRISTOW GROUP: S&P Rates $230 Mil. Mandatory Preferred Stock at B ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to the helicopter service company Bristow Group Inc.'s $230 million 5.5% mandatory preferred convertible stock. At the same time, Standard & Poor's affirmed the 'BB' corporate credit rating on the company. The outlook is negative. As of June 30, 2006, Lafayette, La.-based Bristow Group had $261.5 million of debt. The ratings on Bristow reflect the company's weak business risk profile. Bristow is subject to the cyclicality and volatility of the oil and gas offshore exploration and production industry. Flight hours are highly correlated with levels of offshore production, as well as changes in the offshore rig count. The offshore rig count, in turn, is heavily influenced by commodity prices, although this is offset by flight activity in support of offshore production, which tends to be more stable through the industry cycle. Revenue stability is provided by multiyear contracts that include a fixed monthly fee for dedicating specific aircraft to customers, as well as a variable fee based on flight hours. While most contracts include provisions allowing for early termination with short notice, Bristow has historically experienced high renewal rates due to ongoing relationships with customers, its safety performance, knowledge of site characteristics, and an understanding of the customer's cost structure. "The negative outlook reflects the ongoing SEC investigation regarding improper activities in Nigeria and Brazil, as well as a Department of Justice investigation regarding possible antitrust activities in the Gulf of Mexico," Standard & Poor's credit analyst Aniki Saha-Yannopoulos said. CARRAWAY METHODIST: Wants to Sell All Assets in Nov. 7 Auction -------------------------------------------------------------- Carraway Methodist Health Systems and its debtor-affiliates ask the Honorable Tamara O. Mitchell of the U.S. Bankruptcy Court for the Northern District of Alabama for authority to sell substantially all of their assets free and clear of all liens, claims, and encumbrances through an auction on Nov. 7, 2006. The Debtors also want to assume and assign some executory contracts and unexpired leases to the highest bidder. The Debtors further ask the Court's approval on the Sale following the Auction. Written objections to the sale motion must be submitted by 12:00 p.m. on Nov. 6, 2006, and served to: a. the Debtors' counsel Patrick Darby, Esq. Chris Hawkins, Esq. Bradley Arant Rose & White LLP 1819 Fifth Avenue North Birmingham, AL 35203-2104 Tel: (205) 521-8000 Fax: (205) 521-8500 b. the Office of the Bankruptcy Administrator J. Thomas Corbett, Esq. U.S. Bankruptcy Court Robert S. Bance Federal Building 1800 5th Avenue North Birmingham, AL 35203 Fax: (205) 714-3845 c. AmSouth's counsel Jayna Partain Lamar, Esq. Maynard Cooper & Gale, P.C. 1901 Sixth Avenue North 2400 AmSouth/Harbert Plaza Birmingham, AL 35203 Fax: (205) 254-1999 d. Ambac's counsel William P. Smith, Esq. Miles W. Hughes, Esq. McDermott Will & Emery LLP 227 West Monroe Street Chicago, IL 60606-5096 Fax: (312) 984-7700 e. counsel to the Official Committee of Unsecured Creditors James R. Sacca, Esq. John D. Elrod, Esq. Greenberg Traurig LLP The Forum, Suite 400 3290 Northside Parkway, N.W. Atlanta, GA 30327 Fax: (678) 553-2686 Judge Mitchell will convene a sale hearing at 9:00 a.m. on Nov. 8, 2006. Based in Birmingham, Alabama, Carraway Methodist Health Systems, dba Carraway Methodist Medical Center -- http://www.carraway.org/ -- is a major teaching hospital, referral center and acute care hospital that serves Birmingham and north central Alabama. The Company and its affiliates filed for chapter 11 protection on Sept. 18, 2006 (Bankr. N.D. Ala. Case No. 06-03501). Christopher L. Hawkins, Esq., Helen D. Ball, Esq., and Patrick Darby, Esq., at Bradley Arant Rose & White LLP, represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $10 million and $50 million and estimated debts of more that $100 million. The Debtor's exclusive period to file a chapter 11 plan expires on Jan. 16, 2007. CARRAWAY METHODIST: Bids for Assets Must be Received by November 3 ------------------------------------------------------------------ The Honorable Tamara O. Mitchell of the U.S. Bankruptcy Court for the Northern District of Alabama approved Carraway Methodist Health Systems and its debtor-affiliates' bidding procedures for the auction of substantially all of their assets. Bids must be actually received no later than 12:00 p.m. on Nov. 3, 2006. The auction will be conducted at 10:00 a.m. on Nov. 7, 2006, at the offices of Bradley Arant Rose & White LLP. Based in Birmingham, Alabama, Carraway Methodist Health Systems, dba Carraway Methodist Medical Center -- http://www.carraway.org/ -- is a major teaching hospital, referral center and acute care hospital that serves Birmingham and north central Alabama. The Company and its affiliates filed for chapter 11 protection on Sept. 18, 2006 (Bankr. N.D. Ala. Case No. 06-03501). Christopher L. Hawkins, Esq., Helen D. Ball, Esq., and Patrick Darby, Esq., at Bradley Arant Rose & White LLP, represent the Debtors. When the Debtors filed for protection from their creditors, they listed estimated assets between $10 million and $50 million and estimated debts of more that $100 million. The Debtor's exclusive period to file a chapter 11 plan expires on Jan. 16, 2007. CBRL GROUP: Earns $116.2 Million in Fiscal Year Ended July 28 ------------------------------------------------------------- CBRL Group Inc. filed its financial statements for the fiscal year ended July 28, 2006, with the Securities and Exchange Commission. The Company reported $116.2 million of net income on $2.6 billion of net revenues for the full year ended July 28, 2006, compared to $126.6 million of net income on $2.5 billion of net revenues in the prior year. The Company's July 28 balance sheet also showed strained liquidity with $270.0 million in total current assets available to pay $295.6 million in total current liabilities. A full-text copy of the Company's annual report on Form 10-K is available for free at http://researcharchives.com/t/s?1401 Lebanon, TN-based CBRL Group Inc. -- http://www.cbrlgroup.com/-- through its subsidiaries, engages in the operation and development of the restaurants and retail concepts in the United States. * * * As reported in the Troubled Company Reporter on Oct. 18, 2006, Moody's Investors Service held its Ba2 Corporate Family Rating for CBRL Group in connection with the Moody's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the restaurant sector. Additionally, Moody's held its Ba2 ratings on the Company's $800 million issue of guaranteed senior secured term loan b due 2013, $250 million issue of guaranteed senior secured revolver due 2011, and $422 million issue of 3% xero-coupon convertible senior notes due 2032. Moody's also assigned an LGD4 rating to those loans, suggesting noteholders will experience a 52% loss in the event of a default. CELLSTAR CORP: Earns $972,000 in 3rd Fiscal Quarter Ended Aug. 31 ----------------------------------------------------------------- CellStar Corp. reported income from continuing operations of $993,000 compared with a loss of $1.962 million in 2005. For the third fiscal quarter ended Aug. 31, 2006, the Company reported consolidated net income of $972,000 compared with a consolidated net loss of $7.573 million in 2005. The net loss in the third quarter of 2005 included a loss from discontinued operations of $5.6 million related to the Company's operations in the Asia-Pacific Region. The Company also reported revenues in the third quarter of 2006 of $237.8 million compared with $277.7 million in 2005. Revenues increased $900,000 in the Latin American Region and were offset by a decline in the North American Region of $40.8 million. "All of our Regions were profitable this quarter, resulting in our third consecutive profitable quarter this year," chairman of the board and chief executive officer Robert Kaiser said. "Despite a drop in revenues, gross profit and margins have improved and operating expenses are down on a year-to-date basis compared to last year." As of Aug. 31, 2006, the Company reported year-to-date income from continuing operations of $5.2 million compared with a loss of $7.2 million in 2005. Year-to-date through Aug. 31, 2006, the Company reported consolidated net income of $5.8 million compared with a consolidated net loss of $21.3 million in 2005. The net income in 2006 includes income from discontinued operations, related to the Company's operations in the Asia- Pacific Region, of $600,000 compared with a loss of $14.2 million in 2005. The Company reported year-to-date revenues through Aug. 31, 2006, of $660.3 million compared with $766.5 million in 2005. Revenues declined in the North American Region by $23.0 million and $83.3 million in the Latin American Region. The drop in revenues in the North American Region was due primarily to the loss of a portion of the region's insurance replacement business in April 2006 and a decline in its indirect channel business. These reductions were partially offset by an increase in the Region's regional carrier group. The decline in revenues in the Latin American Region was primarily in the Miami operations as a result of reduced handset sales to Telefonica Moviles S.A., a carrier customer in Colombia. During 2005, Telefonica ran aggressive promotions and initiated a technology transition from CDMA to GSM. The Miami operations supported this transition throughout 2005 by supplying Telefonica with low-end handsets. The Company believes the transition was substantially completed in 2005. "In the U.S., year-to-date revenues in the regional carrier channel are approximately 19% ahead of last year when we reported record revenues in that channel," Mr. Kaiser said. "In our Latin American operations, we are experiencing a boost in revenues from America Movil's aggressive rollout in Chile. We are also pleased to report record activations in our Mexico operations this quarter." Revenues for the third quarter of 2006 in the North American Region were $88.7 million, compared with $129.5 million in 2005. The decrease in revenues was primarily due to the loss of a portion of the region's insurance replacement business and a decline in its indirect channel business. The North American Region represented 37% of the Company's total revenues compared with 47% in the third quarter of 2005. The Company's North American Region generated operating income of $2.6 million in the third quarter, compared with $1 million for the same period in 2005. The increase in operating income was due to an overall margin improvement in the region as well as a reduction in selling, general and administrative expenses. The Company's operations in the Latin American Region provided $149.1 million of revenues in the third quarter of 2006, compared with $148.2 million in 2005. Revenues increased in the operations in Chile and Miami and were partially offset by a decline in revenues in the Company's Mexico operations. Revenues in the Company's operations in Chile increased from $3.7 million in the third quarter of 2005 to $12.5 million in 2006. In late 2005, America Movil purchased Smartcom, the third largest carrier in Chile and the Company's largest customer in Chile, and has launched aggressive promotions consisting of primarily low-end handsets. The Company expects to continue to experience upside in the near future and revenues for future quarters are expected to be higher than the prior year comparable quarter. The Miami operations reported revenues of $61.7 million in the third quarter of 2006 compared with $59.8 million in the third quarter of 2005. Revenues in Mexico declined to $74.8 million compared with $84.7 million in 2005. During 2005, the operations in Mexico benefited from the launch of new handset models. Despite the drop in revenues, activations in the Mexico operations have grown 50%, from 101,000 in the third quarter of 2005 to 152,000 this quarter. The Latin American Region represented 63% of the Company's total revenues in the third quarter, compared with 53% in 2005. Operating income in the Company's Latin American Region was $4.7 million in the third quarter of 2006, compared with $2.9 million in 2005. Consolidated gross profit increased to $16.4 million in the third quarter of 2006 compared with $12.8 million in 2005. Gross profit as a percentage of revenues was 6.9% compared with 4.6% in the third quarter of 2005. The increase in gross profit and the gross profit percentage was primarily in the operations in Mexico and in the North American Region. The increase in Mexico was a result of the Company's joint venture, which generates revenues from retail activations and has higher margins than the operations' traditional distribution business. The improvement in North America was due to overall margin improvements in the region. SG&A expenses were relatively flat, $12.4 million in the third quarter of 2006 compared with $12.6 million in the third quarter of 2005. SG&A expenses declined by $1.7 million in the North American and Corporate segments as a result of the Company's efforts to align overhead expenses with its remaining operations. These decreases were partially offset by increases in the Mexico operations as a result of the Company's joint venture. Interest expense was $0.6 million in the third quarter compared with $1.1 million in the third quarter 2005. The loss on sales of accounts receivable was $900,000 compared with $1.1 million in the third quarter of 2005. Income tax expense was $800,000 in 2006 compared with a zero tax expense in 2005. Although the Company had a loss before income taxes in 2005, the Company did not recognize a benefit for the operating losses as the Company did not consider it more likely than not that the benefit of the operating losses would be realized. For 2006, the Company expects to utilize net operating tax loss carryforwards to offset any 2006 tax liability, except for certain minimum taxes, withholding taxes and taxes relating to the Company's joint venture in Mexico. Taxes are provided on the joint venture at the statutory rate as the Company does not have net operating loss carryforwards related to the joint venture. Discontinued Operations During the third quarter of 2005, the Company recorded a loss from discontinued operations, related to the Company's operations in the Asia-Pacific Region, of $5.6 million compared with a loss of $21,000 in the third quarter of 2006. Consolidated Balance Sheet At Aug. 31, 2006, the Company's balance sheet showed $190.993 million, $175.406 million, and $15.587 million. Cash and cash equivalents increased to $26.5 million from $18.2 million at May 31, 2006. The balance sheet changes led to a usage of cash from operating activities of $5.4 million in the third quarter of 2006. Accounts receivable increased $6.7 million from $65.4 million at May 31, 2006, to $72.1 million at Aug. 31, 2006. Accounts receivable in the Company's Latin American Region increased by $5.8 million and the North American Region increased by $900,000. Accounts receivable days sales outstanding for the period ended Aug. 31, 2006, based on monthly accounts receivable balances, were 27.0 compared to 31.7 at May 31, 2006. Inventory declined $14.5 million to $71.8 million at Aug. 31, 2006, compared with $86.3 million at May 31, 2006. Inventory in the Latin American Region declined by $10.8 million while inventory in the North American Region declined by $3.7 million. Inventory turns for the period ended Aug. 31, 2006, based on monthly inventory balances were 10.3 turns, compared with 10.0 turns for the period ended May 31, 2006. Accounts payable declined to $120.0 million at Aug. 31, 2006, compared with $139.7 million at May 31, 2006. Accounts payable declined in the Company's Latin American operations by $15.6 million and $4.1 million in the North American operations. "So far this year, we have accomplished two strategically important objectives," executive vice president of finance and chief administrative officer Mike Farrell said. "The Company is profitable and we have secured financing to redeem our $12.4 million Senior Subordinated Notes prior to the January 2007 due date. To date, we have purchased $10.5 million of the outstanding Notes at a 1% discount and plan to redeem or purchase the remaining notes by the end of the year. "The term note matures in 2009, giving us the opportunity to focus on our commitment to restore the Company to profitability." As of Aug. 31, 2006, the Company had borrowed $24.0 million under its domestic revolving credit facility compared to $9.9 million at May 31, 2006. On Aug. 31, 2006, the Company entered into a term loan and security agreement with CapitalSource Finance LLC to provide financing to purchase and redeem its $12.4 million of 12% Senior Subordinated Notes due January 2007. As of Sept. 29, 2006, the Company had borrowed $10.4 million and had an additional borrowing availability of $1.9 million under its new term loan and security agreement. Full-text copies of the Company's third fiscal quarter financials are available for free at http://ResearchArchives.com/t/s?140f About CellStar Corp. Coppell, Texas-based CellStar Corp. (OTC Pink Sheets: CLST) -- http://www.cellstar.com/-- provides logistics and distribution services to the wireless communications industry. CellStar has operations in North America and Latin America, and distributes handsets, related accessories and other wireless products from manufacturers to a network of wireless service providers, agents, MVNOs, insurance/warranty providers and big box retailers. CellStar specializes in logistics solutions, repair and refurbishment services, and in some of its markets, provides activation services. * * * CellStar Corp.'s 5% Convertible Subordinated Notes due 2002 carry Moody's Investors Service's Ca2 rating. CHARYS HOLDING: Reports $3.5 Mil. Net Loss in First Fiscal Quarter ------------------------------------------------------------------ Charys Holding Company Inc. filed its first quarter financial statements for the three months ended July 31, 2006, with the Securities and Exchange Commission. The company incurred a $3,550,538 net loss before income taxes on $25,045,404 of net revenues for the quarter ended July 31, 2006, compared to a $1,200,117 net income on $6,055,196 of net revenues for the first quarter last year. At July 31, 2006, the company's balance sheet showed $286,366,109 in total assets, $151,698,134 in total liabilities, and $134,667,975 in stockholders' equity. The company's July 31 balance sheet also showed strained liquidity with $88,484,341 in total current assets available to pay $136,240,510 in total current liabilities. Full-text copies of the company's first fiscal quarter financial statements for the three months ended July 31, 2006, are available for free at http://researcharchives.com/t/s?13f3 About Charys Holding Headquartered in Atlanta, Georgia, Charys Holding Company, Inc. -- http://www.charys.com/-- is pursuing a growth opportunity in the Technology Infrastructure Support and Services market through an acquisitions strategy, focusing on companies that have strong individual reputation, proven and underleveraged growth capability, and significant management commitment tied to Charys- wide synergies. Charys seeks to acquire stable, cash flow positive, small to medium-sized private companies engaged in providing direct services, outsourced services and infrastructure to medium and large enterprise businesses. Charys intends to operate these companies as independent subsidiaries, improving aggregate financial performance by influencing its subsidiaries to develop and leverage beneficial synergistic relationships. Going Concern Doubt As reported in the Troubled Company Reporter on Aug 31, 2006, Miller Ray Houser & Stewart LLP expressed substantial doubt about Charys Holding Company's ability to continue as a going concern after it audited the company's financial statements for the fiscal years ended April 30, 2006 and 2005. The auditing firm pointed to the Company's significant working capital deficit at April 30, 2006 and limited borrowing capacity. CHC HELICOPTER: S&P Affirms Senior Subordinated Debt Ratings at B ----------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Vancouver, B.C.-based CHC Helicopter Corp. to stable from positive. At the same time, Standard & Poor's affirmed its 'BB-' long-term corporate credit and 'B' senior subordinated debt ratings on the company. "The outlook revision reflects the likelihood that CHC's financial profile will not materially improve beyond that of its current rating category in the near to medium term, given the company's focuses on expansion and growth initiatives," Standard & Poor's credit analyst Jamie Koutsoukis said. "Although CHC's debt levels are at the high end for the ratings category, we expect the company will benefit from the robust market for its services and the significant investment it is making in new aircraft, such that the incremental revenue generation from its expanded fleet should improve its current coverage metrics," Ms. Koutsoukis added. The ratings on CHC reflect the company's reliance on the cyclical offshore oil and gas industry, competition within the helicopter services to the oil and gas industry, large capital spending requirements, and aggressive leverage. These factors, which hamper CHC's current credit profile, are partially offset by the company's strong cost position as the world's largest commercial helicopter services company, as well as its comparatively large and modern fleet of medium and heavy helicopters. The stable outlook reflects Standard & Poor's expectations that the company will continue to benefit from high oil prices and strong demand for helicopter services in the markets it services, and resultantly support the company's current financial profile. In addition, the incremental cash flows generated by the company's expanding fleet should somewhat offset its current elevated debt levels. S&P does not expect, however, that CHC's balance sheet will materially improve in the near to medium term. An outlook revision to positive would depend on CHC's ability to significantly reduce its debt, combined with improvements in free cash flow generation, which is unlikely in the near term. Conversely, if CHC does not realize the expected improvements in operating cash flow generation, and credit metrics continue to deteriorate, a negative ratings action could occur. CITIGROUP COMMERCIAL: S&P Cuts Rating of Class L Certs. to BB ------------------------------------------------------------- Standard & Poor's Ratings Services raised its rating on one class of commercial mortgage pass-through certificates from Citigroup Commercial Mortgage Trust 2004-FL1. Concurrently, the rating on one class from the same transaction is lowered, and the ratings on the remaining two classes are affirmed. The raised and affirmed ratings reflect our analysis of the remaining loans in the pool, as well as increased credit enhancement levels resulting from loan payoffs. The lowered ratings reflect credit concerns regarding the second-largest loan in the pool. As of Oct. 16, 2006, the pool consisted of three floating-rate interest-only loans with an outstanding in-trust principal balance of $13.7 million, down from 34 loans with an outstanding balance of $613.8 million at issuance. The loans are indexed to one-month LIBOR. The remaining loans each have subordinate interests that are held outside of the trust. One loan has mezzanine financing in place for a total of $1.75 million. Two of the three loans mature within the next three months, and all of the loans have extension options remaining. While the operating performance of the properties backing the loans in the pool has been stable, there are concerns regarding high vacancy at the collateral property securing the second- largest loan, the Sprayberry Square Shopping Center. The Sprayberry Square Shopping Center has a trust principal balance of $5.3 million and a whole-loan balance of $7.02 million. In addition, there is $1.75 million of mezzanine financing in place. The loan is secured by a 134,000-sq.-ft. anchored retail center built in 1987 in Marietta, Ga. The master servicer, Capmark Finance Inc., placed this loan on the watchlist because the anchor tenant, Kroger Co. (BBB-/Stable/A-3), which occupied 59,134 sq. ft., vacated the property. The current physical occupancy of the property is 35%; however, the economic occupancy is 76%, as Kroger has continued to make payments on its lease, which expires July 31, 2007. According to the master servicer, negotiations with a nationally recognized tenant for the vacant space are underway. Nearby competitors to the collateral property include Publix (not rated) and Wal-Mart (AA/Stable/A-1+) stores. Using the financial statements for the year ended Dec. 31, 2005, Standard & Poor's adjusted the net operating income for tenant improvements, leasing commissions, and capital replacement reserves to arrive at an adjusted net cash flow (NCF) which is 25% below its level at issuance. The adjusted loan-to-value ratio is 100%. The loan matures in January 2007 and has two 12-month extension options remaining. Jamestown Mall is the largest loan in the pool, with a trust principal balance of $5.3 million and a whole-loan balance of $7.0 million. A portion of a 1.1 million-sq.-ft. regional mall in Florissant, Mo., secures the loan. The property was built in 1973 and renovated in 1998. Shadow anchors at the property include J.C. Penney (BBB-/Stable/--), Sears (BB+/Stable/--), and Macy's (part of Federated Department Stores Inc.; BBB/Stable/A-2). Occupancy was 88% as of June 30, 2006. Year-end 2005 NCF was $1.4 million, up from $864,848 at issuance. The loan was extended in June 2006 to June 2007 and has one 12-month extension option remaining. The remaining loan, Hensley Distribution Center, has a trust balance of $3.1 million and a whole-loan balance of $4.1 million. A 125,000-sq.-ft. warehouse industrial property built in 1980 and renovated in 1995 in Tempe, Ariz., secures the loan. Hensley & Co., a wholesaler for Anheuser-Busch, is the property's sole tenant and pays under a triple-net lease that expires in March 2008. Year-end 2005 NCF was $318,663, down from $484,264 at issuance. The decline in NCF was due to an increase in tenant improvements. The loan matures in January 2007 and has two 12-month extension options remaining. Rating Raised Citigroup Commercial Mortgage Trust 2004-FL1 Commercial mortgage pass-through certificates series 2004-FL1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ K BBB+ BBB- 22.40% Rating Lowered Citigroup Commercial Mortgage Trust 2004-FL1 Commercial mortgage pass-through certificates series 2004-FL1 Rating ------ Class To From Credit enhancement ----- -- ---- ------------------ L BB BBB- N/A Ratings Affirmed Citigroup Commercial Mortgage Trust 2004-FL1 Commercial mortgage pass-through certificates series 2004-FL1 Class Rating Credit enhancement ----- ------ ------------------ X2-GMAC AAA N/A X3-GMAC MU AAA N/A N/A - Not applicable. CLFX CORPORATION: 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 U.S. manufacturing sector, the rating agency confirmed its Ba3 Corporate Family Rating for CLFX Corporation. The rating on the company's $50 million revolver due 2008 was revised to Ba1 from Ba3. This debenture was assigned an LGD2 rating suggesting creditors will experience a 20% loss in the event of default. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these loan and bond debt obligations of the company: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $125m term loan B due 2011 Ba3 Ba1 LGD2 20% $27m term loan C due 2011 Ba3 Ba1 LGD2 20% 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 Richmond, Virginia, CLFX Corporation is engaged in pipeline distribution and operations. COMM 2006-FL12: Fitch Rates $1.9 Million Class AH4 Certs. at BB+ ---------------------------------------------------------------- COMM 2006-FL12, which closed Oct. 24, 2006, commercial mortgage pass-through certificates are rated by Fitch: -- $217,035,000 class A-1 'AAA'; -- $1,300,765,000class A-2 'AAA'; -- $2,570,145,824 class X-1 'AAA'; -- $2,570,145,824 class X-2 'AAA'; -- $48,500,000 class X-3-BC 'AAA'; -- $2,372,545,824 class X-3-DB 'AAA'; -- $149,100,000 class X-3-SG 'AAA'; -- $2,570,145,824 class X-4 'AAA'; -- $48,500,000 class X-5-BC 'AAA'; -- $2,372,545,824 class X-5-DB 'AAA'; -- $149,100,000 class X-5-SG 'AAA'; -- $507,000,000 class A-J 'AAA'; -- $111,000,000 class B 'AA+'; -- $78,000,000 class C 'AA+'; -- $86,000,000 class D 'AA'; -- $64,000,000 class E 'AA-'; -- $64,000,000 class F 'A+' -- $61,000,000 class G 'A+'; -- $38,000,000 class H 'A'; -- $43,345,824 class J 'A-'; -- $41,000,000 class CN1 'BBB'; -- $28,000,000 class CN2 'BBB'; -- $27,754,225 class CN3 'BBB-'; -- $75,500,000 class KR1 'BBB+'; -- $23,500,000 class KR2 'BBB'; -- $66,500,000 class KR3 'BBB-'; -- $6,800,000 class IP1 'BBB+'; -- $11,200,000 class IP2 'BBB'; -- $11,000,000 class IP3 'BBB-'; -- $5,000,000 class HDC1 'BBB+'; -- $7,363,000 class FSH1 'BBB+'; -- $9,818,000 class FSH2 'BBB'; -- $10,309,000 class FSH3 'BBB-'; -- $4,200,000 class CA2 'BBB'; -- $4,800,000 class CA3 'BBB-'; -- $5,300,000 class CA4 'BBB-'; -- $6,300,000 class AN3 'BBB-'; -- $5,000,000 class AN4 'BBB-'; -- $4,762,597 class SR1 'BBB+'; -- $3,300,000 class MSH1 'BBB+'; -- $2,900,000 class MSH2 'BBB'; -- $4,800,000 class MSH3 'BBB-'; -- $4,000,000 class MSH4 'BB+'; -- $5,900,000 class FG1 'AA'; -- $6,100,000 class FG2 'A+'; -- $4,300,000 class FG3 'A-'; -- $5,500,000 class FG4 'BBB'; -- $7,200,000 class FG5 'BBB-'; -- $2,500,000 class LS1 'BBB+'; -- $2,700,000 class LS2 'BBB'; -- $2,600,000 class LS3 'BBB-'; -- $2,900,000 class TC1 'BBB'; -- $2,400,000 class TC2 'BBB-'; -- $2,300,000 class LB1 'BBB+'; -- $1,600,000 class LB2 'BBB'; -- $1,600,000 class LB3 'BBB-'; -- $1,800,000 class ES1 'BBB+'; -- $1,700,000 class ES2 'BBB'; -- $1,500,000 class ES3 'BBB-'; -- $1,300,000 class AH1 'BBB+'; -- $1,300,000 class AH2 'BBB'; -- $1,500,000 class AH3 'BBB-'; -- $1,900,000 class AH4 'BB+'; -- $1,300,000 class CM1 'A-'; -- $2,500,000 class CM2 'BBB-'. The $2,700,000 class CA1, $2,800,000 class AN1 and $3,900,000 class AN2 are not rated by Fitch. All classes are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 17 floating rate loans having an aggregate principal balance of approximately $3,011,052,646, as of the cutoff date. COMPLETE RETREATS: Creditors Committee Objects to Ableco Financing ------------------------------------------------------------------ Complete Retreats LLC and its debtor-affiliates delivered a draft of its proposed $80,000,000 debtor-in-possession financing facility from Ableco Finance LLC on Oct. 16, 2006. A full-text copy of the Ableco DIP Financing Facility Draft is available for free at: http://researcharchives.com/t/s?1403 The Ableco DIP Financing Facility Draft is subject to continuing negotiations among the parties and to further revision. Committee Objects The Official Committee of Unsecured Creditors informs the U.S. Bankruptcy Court for the District of Connecticut that its ongoing investigation of the lenders' prepetition liens, conduct, and relationship with the Debtors has disclosed facts that warrant further investigation, and may justify the assertion of claims against the lenders or other related or affiliated parties. Accordingly, the Committee objects to the use of proceeds from the Ableco DIP Facility to repay in full the $53,000,000 of prepetition loans purportedly owing to The Patriot Group, LLC, and LPP Mortgage Ltd. Patriot and LPP Mortgage are the lenders of the Debtors' existing DIP Credit Facility. "Given the likelihood of potential claims against the [l]enders, repayment in full of the [existing loans] at this juncture inequitably shifts the burden upon the Debtors' estates to seek disgorgement, or other affirmative recovery later on, against the [l]enders in the event that the claims prove successful," Jonathan B. Alter, Esq., at Bingham McCutchen LLP in Hartford, Connecticut, argues. "Unsecured creditors . . . should not be forced to shoulder this burden where there is a possibility that the [l]enders themselves may be participants in the Debtors' financial problems and may be liable to the estates." To maintain an equitable status quo while the Committee completes its investigation, Mr. Alter asserts, the Debtors should be permitted to holdback $20,000,000 of the amount purportedly owed under the Existing Loans subject to the condition that they provide the [l]enders with adequate protection for the holdback in the form of: (a) first priority liens on the Debtors' Nevis properties, which has a July 2006 appraised value of approximately $20,170,000; (b) springing liens against the assets that secure the Ableco DIP Facility; and (c) a superpriority administrative claim under Section 507(b) of the Bankruptcy Code subordinate to the Ableco DIP Facility obligations and the Carve-Out. The Adequate Protection Arrangement not only provides the Lenders with adequate protection regarding the unpaid balance of the Existing Loans but also conserves the resources of the Debtors' estates and the Committee's ability to complete its investigation of the Lenders for the benefit of unsecured creditors, Mr. Alter contends. Ableco does not object to the Adequate Protection Arrangement, Mr. Alter tells the Court. By reducing the amount of the Existing Loans that must be repaid through the Ableco DIP Facility, the Adequate Protection Arrangement will be an important component of financing for the Debtors' reorganization efforts, Mr. Alter maintains. It would enhance the Debtors' liquidity by approximately $7,000,000. The Committee thus asks the Court to: (a) deny the Debtors' request for authority to use the Ableco DIP Facility proceeds to satisfy all of their Existing Loan obligations; and (b) permit only partial repayment of the Existing Loans subject to the Adequate Protection Arrangement. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. 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. 12; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMPLETE RETREATS: Patriot & LPP Mortgage Balk at Ableco Financing ------------------------------------------------------------------ Complete Retreats LLC and its debtor-affiliates delivered a draft of its proposed $80,000,000 debtor-in-possession financing facility from Ableco Finance LLC on Oct. 16, 2006. A full-text copy of the Ableco DIP Financing Facility Draft is available for free at: http://researcharchives.com/t/s?1403 The Ableco DIP Financing Facility Draft is subject to continuing negotiations among the parties and to further revision. Patriot & LPP Mortgage Object The Patriot Group LLC and LPP Mortgage Ltd, the lenders of the Complete Retreats LLC and its debtor-affiliates' existing DIP Credit Facility, object to the Proposed Ableco DIP Financing to the extent that the Debtors seek to incur any indebtedness under the Ableco DIP Facility without contemporaneously satisfying in full their secured claims. On LPP Mortgage's behalf, Lynnette R. Warman, Esq., at Jenkens & Gilchrist, in Dallas, Texas, notes that the Proposed Ableco DIP Financing: -- provides that the Debtors reserve the right to prime the Lenders' liens; -- is silent as to when the Lenders will receive payment of their secured claims; -- is silent as to whether the Lenders will be required to release their liens prior to receiving payment in full of all outstanding obligations; -- is unclear as to whether the Debtors will have sufficient cash to pay the Lenders in full; -- does not include a Budget upon which the advances under the Ableco DIP Facility are based; and -- does not provide the Lenders with adequate protection for costs and expenses relating to the Official Committee of Unsecured Creditors' potential investigation of the Lenders' claims and liens and any potential resulting litigation. The provisions of the Ableco Replacement Financing propose to alter the terms of the Final DIP Order, Ms. Warman contends. The Lenders remind the U.S. Bankruptcy Court for the District of Connecticut that the Final DIP Order provides that the Debtors will: -- pay in full, by October 31, 2006, the Lenders' prepetition secured claim and postpetition financing; -- pay for the Lenders' postpetition interest and expenses; -- not seek postpetition financing on terms that are not acceptable to the Lenders; and -- not propose a plan that does not provide for payment in full to the Lenders upon consummation. The Debtors cannot now contest the terms of the Final DIP Order, LPP Mortgage argues. The Debtors' attempt to renegotiate or alter the Final DIP Order is barred by res judicata and claim preclusion, Ms. Warman asserts. Accordingly, the Lenders ask the Court to deny the Debtors' request. Alternatively, the Lenders ask the Court to grant the Debtors' request only if the order provides for: (a) payment in full of the Lenders' secured claims prior to the advance of any other funds under the Ableco DIP Facility; (b) no requisite release of the Lenders' liens or rights under the Final DIP Order prior to receiving payment in full; (c) adequate protection of the Lenders' contingent and unliquidated secured claims under the existing DIP Credit Facility; and (d) adequate protection for the legal and other expenses the Lenders may incur as a result of the Committee's investigation of their claims and liens. In a separate pleading, Patriot and LPP Mortgage ask the Court to overrule the Committee's Objection. The Lenders note that the holdback and the Committee's purported need for further investigation is a pretext to obtain $7,000,000 in additional liquidity for the Debtors' estates at their expense. The Lenders assert that the Committee's request is fundamentally inconsistent with, and barred by, the terms of the Final DIP Order. The replacement and springing liens suggested by the Committee do not provide adequate protection, the Lenders argue. Patriot emphasizes that absent its consent, which is not forthcoming, subordination of the Lenders' Section 507(b) claims to the "professional fee Carve-Out" negotiated with Ableco is impermissible. If the Court nonetheless rules that some holdback is appropriate, Patriot asks the Court to: (a) reduce the Debtors' maximum borrowings under the Ableco DIP Facility by 125% of the amount held back in order to provide an adequate reserve for interest, fees, indemnification costs, and other costs and expenses associated with the holdback; (b) direct Ableco to advance the holdback to the Lenders upon the resolution of the Lenders' claims; (c) permit the Lenders to continue to hold all of their liens pending indefeasible payment in full; and (d) grant the Lenders adequate protection. 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. 12; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMPLETE RETREATS: U.S. Trustee Opposes Terms in Ableco Loan Deal ----------------------------------------------------------------- Complete Retreats LLC and its debtor-affiliates delivered a draft of its proposed $80,000,000 debtor-in-possession financing facility from Ableco Finance LLC on Oct. 16, 2006. A full-text copy of the Ableco DIP Financing Facility Draft is available for free at: http://researcharchives.com/t/s?1403 The Ableco DIP Financing Facility Draft is subject to continuing negotiations among the parties and to further revision. U.S. Trustee Responds Diana G. Adams, the Acting United States Trustee for Region 2, opposes certain provisions contained in the Ableco DIP Financing Facility: * Ableco Finance, LLC, and the participating lenders are granted a lien on recoveries from third parties pursuant to Chapter 5 of the Bankruptcy Code. * None of the funds received from the Ableco Lenders, including the Carve Out, can be used to investigate the Debtors' indebtedness or liens granted to the Ableco Lenders. * The Ableco Lenders are granted a super-priority administrative expense claim that will continue in the event the Debtors' cases are converted to a Chapter 7 bankruptcy case. * No administration costs or expenses will be charged against the Ableco Lenders under Section 506(c) or otherwise. * The appointment of a Chapter 11 trustee or an examiner with enlarged powers in the Chapter 11 cases, or the conversion of the Debtors' cases to Chapter 7, constitute events of default. * The Ableco Lenders will have no liability to the Debtors, the Committee, or any third party, and will not be deemed to be in control of the operations of the Debtors or act as a "controlling person", "responsible person" or "owner or operator" with respect to the Debtors' operation or management." Mr. James asserts that administrative expenses incurred in a superseding Chapter 7 case have priority over administrative claims incurred in a prior Chapter 11 proceeding. The U.S. Trustee asks the Court to sustain her objections. Bar-K and D.G. Capital Support Bar-K, Inc., the loan servicing agent for R.E. Loans, LLC, and D.G. Capital, L.L.C., note that proceeds of the Ableco DIP loans will be used to satisfy amounts outstanding under the Debtors' existing secured financing arrangements, including the debts the Debtors owe to R.E. Loans and D.G. Capital. The amounts the Debtors intend to pay R.E. Loans and D.G. Capital, however, are unclear, Michael R. Enright, Esq., at Robinson & Cole LLP, in Hartford, Connecticut, points out, on D.G. Capital's behalf. Bar-K and D.G. Capital object to any attempt by the Debtors to prime their liens, or to pay less than the full amounts due under the terms of their respective loan documentation. R.E. Loans and D.G. Capital are entitled to collect all amounts due under their Loans pursuant to Section 506(b) of the Bankruptcy Code, Mr. Enright contends. On May 18, 2006, Distinctive Retreats, LLC, borrowed $2,850,000 from D.G. Capital to finance the purchase of a condominium on Maui. The loan was fully secured by a mortgage on the condominium and by a pledge of membership interests in Distinctive. On May 20, 2005, Distinctive borrowed $1,365,000 from R.E. Loans and secured the loan with, among other things, a mortgage on real property located at #2, 116 Howard Drive, in Ketchum, Idaho and a security interest in the personal property located at the Real Property. The value of the Real Property is greater than the balance due under the Loan, Bar-K says. As of October 25, 2006, Distinctive owes $1,378,875 to R.E. Loans. Stevens Wants $729,625 Payment Protected Christopher Stevens relates that he prepaid the Debtors $729,625 for membership in Distinctive Retreats, a destination club operated by Distinctive Retreats, LLC. Prior to the execution of Mr. Steven's membership documentation, however, the Debtors filed for bankruptcy. Mr. Stevens opposes the Debtors' request to the extent that it encumbers the amount he paid to the Debtors. The $729,625 payment is held in trust for Mr. Stevens and is not property of the Debtors' estates pursuant to Section 541(d) of the Bankruptcy Code, Michael S. Wrona, Esq., at Halloran & Sage, LLP, in Hartford, Connecticut, contends. 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. 12; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) COMSTOCK HOMEBUILDING: Disputes Bank of America's Default Notice ---------------------------------------------------------------- Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) and Comstock Bellemeade, L.C., a wholly owned subsidiary of CHCI, disclosed that on Oct. 18, 2006, they received a letter from Bank of America, NA, purporting to be a Notice of Default under a Deed of Trust Note and Loan Agreement dated Sept. 18, 2005 regarding the Company's Commons at Bellemeade project in Leesburg, Virginia. The purported Notice results from a claim by the Lender that the Company failed to make a $2.7 million cash curtailment which the Lender asserted was due on Sept. 30, 2006. The Company promptly informed the Lender that it disputed the validity of the Notice and of its intent to compel arbitration to resolve the dispute. Pursuant to ongoing discussions with the Lender, the Company asserts that the payment was not currently due and payable as demanded by the Lender based on the fact that the Note had not been fully funded by the Lender pursuant to its terms and conditions. Specifically, the dispute results from a provision in the Note that stipulates what the maximum outstanding commitments of the Lenders would be to the Project on certain established dates. The Note outlines approximately $12.5 million of cash curtailments required by Sept. 30, 2006 to reduce the outstanding commitment of the Note to $33,775,000 predicated on the Company having drawn the approximately $46 million of total funding available for acquisition and improvements at the Project. To date, the Company has only drawn approximately $43 million for acquisition and improvements and has made corresponding principal reductions in excess of $10 million, thus bringing the outstanding balance at Sept. 30, 2006 below the maximum outstanding commitment. As such, the Company believes that the Lenders' Notice is invalid. "Comstock has consistently met and satisfied every legitimate banking obligation we have had and we have always worked closely with our lenders to ensure the security of their loans," said Christopher Clemente, Chairman and CEO. "We are disappointed in the direction that Bank of America has chosen to take our long standing relationship but we are confident that we will prevail in the resolution of this matter." About Comstock Homebuilding Companies Based in Reston, Virginia, Comstock Homebuilding Companies Inc. (Nasdaq: CHCI) -- http://www.comstockhomebuilding.com/-- is a diversified real estate development firm with a focus on moderately priced for-sale residential products. Established in 1985, Comstock builds and markets single-family homes, townhouses, mid-rise condominiums, high-rise condominiums, mixed-use urban communities and active adult communities. The Company currently markets its products under the Comstock Homes brand in the Washington, D.C., Raleigh, North Carolina, Atlanta, Georgia and parts of the Carolinas. Comstock develops mixed-use, urban communities and active-adult communities under the Comstock Communities brand. * * * As reported in the Troubled Company Reporter on Sept. 20, 2006, Standard & Poor's Ratings Services revised its outlook on Comstock Homebuilding Cos. Inc. to negative and affirmed its 'B+' corporate credit rating. Comstock has no publicly rated debt outstanding. CONSECO FINANCE: Good Performance Cues Fitch to Raise Ratings ------------------------------------------------------------- Fitch Ratings has taken rating action on these Conseco Finance/Green Tree Finance manufactured housing transactions: Green Tree, series 1992-2 -- Class B affirmed at 'CCC/DR1'. Green Tree, series 1993-1 -- Class B affirmed at 'CCC/DR1'. Green Tree, series 1993-2 -- Class B affirmed at 'CCC/DR2'. Green Tree, series 1993-4 -- Class B-2 affirmed at 'CC/DR2'. Green Tree, series 1994-1 -- Class A-5 affirmed at 'AAA'; -- Class B-2 affirmed at 'C/DR2'. Green Tree, series 1994-2 -- Class A-5 affirmed at 'AA+'; -- Class B-2 affirmed at 'C/DR2'. Green Tree, series 1994-3 -- Class A-5 affirmed at 'AA+'; -- Class B-2 affirmed at 'C/DR2'. Green Tree, series 1994-5 -- Class A-5 affirmed at 'AA+'; -- Class B-2 affirmed at 'C/DR2'. Green Tree, series 1994-6 -- Class M-1 affirmed at 'AA+'; -- Class B-1 upgraded to 'AA' from 'AA-'; -- Class B-2 affirmed at 'CC/DR1'. Green Tree, series 1994-7 -- Class M-1 affirmed at 'AA+'; -- Class B-1 upgraded to 'AA' from 'A+'; -- Class B-2 affirmed at 'C/DR2'. Green Tree, series 1994-8 -- Class M-1 affirmed at 'AA+'; -- Class B-1 affirmed at 'A+'; -- Class B-2 affirmed at 'C/DR2'. Green Tree, series 1995-1 -- Class M-1 affirmed at 'AA+'; -- Class B-1 affirmed at 'A+'; -- Class B-2 affirmed at 'C/DR2'. Green Tree, series 1995-2 -- Class M-1 affirmed at 'AAA'; -- Class B-1 affirmed at 'A+'; -- Class B-2 affirmed at 'C/DR3'. Green Tree, series 1995-3 -- Class M-1 affirmed at 'AA+'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 affirmed at 'C/DR4'. Green Tree, series 1995-4 -- Classes A-5 & A-6 affirmed at 'AAA'; -- Class M-1 affirmed at 'A-'; -- Class B-1 affirmed at 'B'; -- Class B-2 affirmed at 'C/DR4'. Green Tree, series 1995-5 -- Class A-6 affirmed at 'AAA'; -- Class M-1 affirmed at 'BBB-'; -- Class B-1 affirmed at 'B-/DR2'; -- Class B-2 affirmed at 'C/DR5'. Green Tree, series 1995-6 -- Classes A-5 & A-6 affirmed at 'AAA'; -- Class M-1 affirmed at 'B-/DR1'; -- Class B-1 affirmed at 'CCC/DR2'; -- Class B-2 affirmed at 'C/DR6'. Green Tree, series 1995-7 -- Classes A-5 & A-6 affirmed at 'AAA'; -- Class M-1 affirmed at 'BBB-'; -- Class B-1 affirmed at 'CCC/DR2'; -- Class B-2 affirmed at 'C/DR6'. Green Tree, series 1995-8 -- Class A-6 affirmed at 'AAA'; -- Class M-1 affirmed at 'A'; -- Class B-1 affirmed at 'CCC/DR2'; -- Class B-2 affirmed at 'C/DR6'. Green Tree, series 1995-9 -- Class A-6 affirmed at 'AAA'; -- Class M-1 affirmed at 'B'; -- Class B-1 affirmed at 'CCC/DR2'; -- Class B-2 affirmed at 'C/DR6'. Green Tree, series 1995-10 -- Class A-6 affirmed at 'AAA'; -- Class M-1 affirmed at 'BBB-'; -- Class B-1 affirmed at 'CCC/DR2'; -- Class B-2 affirmed at 'C/DR6'. Green Tree, series 1996-1 -- Classes A-4 & A-5 upgraded to 'AA+' from 'AA'; -- Class M-1 affirmed at 'B-/DR2'; -- Class B-1 affirmed at 'CC/DR3'; -- Class B-2 affirmed at 'C/DR6'. Green Tree, series 1996-2 -- Classes A-4 & A-5 affirmed at 'AA-'; -- Class M-1 affirmed at 'CCC/DR2'; -- Class B-1 affirmed at 'C/DR4'. Green Tree, series 1996-3 -- Classes A-5 & A-6 affirmed at 'AA-'; -- Class M-1 affirmed at 'CC/DR3'; -- Class B-1 affirmed at 'C/DR4'. Green Tree, series 1996-4 -- Classes A-6 & A-7 affirmed at 'AA-'; -- Class M-1 affirmed at 'CCC/DR2'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1996-5 -- Classes A-6 & A-7 affirmed at 'AA'; -- Class M-1 affirmed at 'CCC/DR2'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1996-6 -- Class A-6 affirmed at 'AA'; -- Class M-1 affirmed at 'CCC/DR2'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1996-7 -- Class A-6 affirmed at 'AA'; -- Class M-1 affirmed at 'B-/DR2'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1996-8 -- Classes A-6 & A-7 affirmed at 'AA'; -- Class M-1 affirmed at 'CCC/DR2'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1996-9 -- Classes A-5 & A-6 affirmed at 'AA'; -- Class M-1 affirmed at 'CCC/DR2'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1996-10 -- Classes A-5 & A-6 affirmed at 'AAA'; -- Class M-1 affirmed at 'B'; -- Class B-1 affirmed at 'C/DR4'. Green Tree, series 1997-1 -- Classes A-5 & A-6 affirmed at 'AA-'; -- Class M-1 affirmed at 'CCC/DR2'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1997-2 -- Classes A-6 & A-7 affirmed at 'A'; -- Class M-1 affirmed at 'CCC/DR3'; -- Class B-1 affirmed at 'C/DR6'. Green Tree, series 1997-3 -- Classes A-5 through A-7 affirmed at 'A-'; -- Class M-1 affirmed at 'CC/DR3'; -- Class B-1 affirmed at 'C/DR6'. Green Tree, series 1997-4 -- Classes A-5 through A-7 affirmed at 'A+'; -- Class M-1 affirmed at 'CCC/DR3'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1997-5 -- Classes A-5 through A-7 affirmed at 'A+'; -- Class M-1 affirmed at 'CCC/DR2'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1997-6 -- Classes A-6 through A-10 affirmed at 'A'; -- Class M-1 affirmed at 'CCC/DR3'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1997-8 -- Class A-1 affirmed at 'BBB+'; -- Class M-1 affirmed at 'CC/DR3'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1998-1 -- Classes A-4 through A-6 affirmed at 'A-'; -- Class M-1 affirmed at 'CCC/DR3'; -- Class B-1 affirmed at 'C/DR5'. Green Tree, series 1998-3 -- Classes A-5 & A-6 affirmed at 'BB+'; -- Class M-1 affirmed at 'CC/DR4'; -- Class B-1 affirmed at 'C/DR6'. Green Tree, series 1998-4 -- Classes A-5 through A-7 affirmed at 'BB+'; -- Class M-1 affirmed at 'CC/DR4'; -- Class B-1 affirmed at 'C/DR6'. Green Tree, series 1998-6 -- Class A-6 affirmed at 'AAA'; -- Class A-7 affirmed at 'BBB'; -- Class A-8 affirmed at 'BBB-'; -- Class M-1 affirmed at 'CC/DR4'; -- Class M-2 affirmed at 'C/DR5'. Green Tree, series 1998-7 -- Class A-1 affirmed at 'BB+'; -- Class M-1 affirmed at 'CC/DR4'; -- Class M-2 affirmed at 'C/DR5'; -- Class B-1 affirmed at 'C/DR6'. Green Tree, series 1999-1 -- Class A-5 upgraded to 'BBB' from 'BBB-'; -- Class A-6 affirmed at 'B'; -- Class A-7 affirmed at 'CCC/DR3'; -- Class M-1 affirmed at 'C/DR5'; -- Class M-2 affirmed at 'C/DR5'. Green Tree, series 1999-2 -- Class A-4 upgraded to 'BBB+' from 'BBB-'; -- Class A-5 affirmed at 'CCC/DR2'; -- Class A-6 affirmed at 'CCC/DR2'; -- Class A-7 affirmed at 'CCC/DR2'; -- Class M-1 affirmed at 'C/DR5'; -- Class M-2 affirmed at 'C/DR5'. Green Tree, series 1999-3 -- Class A-5 upgraded to 'AAA' from 'AA'; -- Class A-6 upgraded to 'BBB+' from 'BBB-'; -- Class A-7 affirmed at 'CCC/DR2'; -- Class A-8 affirmed at 'CCC/DR2'; -- Class A-9 affirmed at 'CCC/DR2'; -- Class M-1 affirmed at 'C/DR5'; -- Class M-2 affirmed at 'C/DR6'. Green Tree, series 1999-4 -- Class A-5 upgraded to 'A-' from 'BBB-'; -- Class A-6 affirmed at 'BB'; -- Class A-7 affirmed at 'CCC/DR2'; -- Class A-8 affirmed at 'CCC/DR2'; -- Class A-9 affirmed at 'CCC/DR2'; -- Class M-1 affirmed at 'C/DR5'. Green Tree, series 1999-5 -- Class A-4 affirmed at 'AAA'; -- Class A-5 affirmed at 'CCC/DR2'; -- Class A-6 affirmed at 'CCC/DR2'; -- Class M-1 affirmed at 'C/DR5'. Conseco, series 2000-1 -- Class A-5 affirmed at 'CC/DR2'; -- Class M-1 affirmed at 'C/DR6'. Conseco, series 2000-2 -- Class A-4 affirmed at 'B-/DR1'; -- Class A-5 affirmed at 'CC/DR2'; -- Class A-6 affirmed at 'CC/DR2'; -- Class M-1 affirmed at 'C/DR6'. Conseco, series 2000-4 -- Class A-4 upgraded to 'B-/DR1' from 'CCC/DR2'; -- Class A-5 affirmed at 'CC/DR2'; -- Class A-6 affirmed at 'CC/DR2'; -- Class M-1 affirmed at 'C/DR6'. Conseco, series 2000-5 -- Class A-5 upgraded to 'B-/DR1' from 'CCC/DR1'; -- Class A-6 affirmed at 'CCC/DR2'; -- Class A-7 affirmed at 'CC/DR2'; -- Class M-1 affirmed at 'C/DR5'. Conseco, series 2000-6 -- Class A-5 affirmed at 'B+'; -- Class M-1 affirmed at 'C/DR5'. Conseco, series 2001-1 -- Class A-IO affirmed at 'AAA'; -- Class A-4 upgraded to 'AAA' from 'AA'; -- Class A-5 affirmed at 'B+'; -- Class M-1 affirmed at 'C/DR5'. Conseco, series 2001-2 -- Class A-IO affirmed at 'AAA'; -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'C/DR5'. Conseco, series 2001-4 -- Class A-IO affirmed at 'AAA'; -- Class A-3 affirmed at 'AAA'; -- Class A-4 affirmed at 'BB+'; -- Class M-1 affirmed at 'C/DR4'; -- Class M-2 affirmed at 'C/DR5'. The upgrades, affecting approximately $266 million of the outstanding certificates, reflect an improved relationship between credit enhancement and expected loss. The affirmations, affecting approximately $8.6 billion of the outstanding certificates, reflect a stable relationship between credit enhancement and expected loss. Since Fitch's last review of the above transactions in April 2006, overall collateral performance has continued to improve. The improvement is driven by positive market conditions, including a reduction in the supply of new MH. In general, the annualized net loss rates and loss severities have declined for the Conseco/Green Tree MH portfolio. As a rule, transactions issued since 1999 have performed worse than transactions issued prior to 1999. For transactions issued prior to 1999, Fitch expects collateral performance to remain relatively stable. For transactions issued since 1999, although Fitch expects collateral performance to modestly improve, longer amortization terms, higher percentages of repo-refinances, and generally weaker collateral attributes will result in only modest decreases in the default rate over the next several years. Fitch expects final cumulative losses as a percentage of the original pool balance to range from 6% to 16% for transactions issued in years 1992 to 1995, 14% to 31% for transactions issued in years 1996 to 1999, and 31% to 36% for transactions issued in years 2000 and 2001. When analyzing the above transactions, Fitch considered each transaction's unique structural features. Transactions issued prior to Green Tree 1996-4 pay principal to the senior classes prior to paying any interest to mezzanine classes (IP-IP structure). IP-IP structures typically result in interest shortfalls to mezzanine classes when the deal is underperforming. The IP-IP structure does not feature a write-down mechanism to immediately account for the principal shortfalls; rather the classes become undercollateralized and remain outstanding for the life of the deal. Many IP-IP transactions prior to GT 1995-2 have experienced interest shortfalls. Transactions GT 1995-2 through GT 1996-3, however, have structural features that allow funds collected after the cut-off date, but prior to the distribution date, to be used to pay the current month's interest shortfalls. Available funds that, in other structures, would be used to pay principal in the subsequent month are used to pay interest in the current month. The result is that these transactions are more likely to avoid incurring interest shortfalls or shortfalls as large as other transactions. The redirection of funds, however, will ultimately result in larger principal balances that cannot be paid. An additional structural focus was the payment priority among the senior classes. For transactions issued after GT 1998-4, senior classes typically receive principal in sequential order. As a result, those senior classes that are expected to pay-off sooner are of lower credit risk than those senior classes that will be outstanding for a longer period of time. Certain senior classes expected to pay-off in the near future were upgraded. Also, Conseco 2001-2 class A is insured by a financial guarantee from Ambac Assurance Corp, which maintains an insurer financial strength (IFS) rating of 'AAA' with Fitch. Fitch has taken numerous rating actions on Conseco Finance Corp.'s MH bonds since the company filed for Chapter 11 bankruptcy in 2002. In June 2003, CFC's MH platform was sold to CFN Investment Holdings, LLC and the servicing platform was renamed Green Tree Servicing, LLC. Fitch will continue to closely monitor all the above MH transactions. CORONELLA PROPERTIES: Case Summary & 14 Largest Unsec. Creditors ---------------------------------------------------------------- Debtor: Coronella Properties, LLC P.O. Box 232 Cohasset, MA 02025 Bankruptcy Case No.: 06-13886 Chapter 11 Petition Date: October 26, 2006 Court: District of Massachusetts (Boston) Judge: Joan N. Feeney Debtor's Counsel: Stephen E. Shamban, Esq. Stephen E. Shamban Law Offices, P.C. 222 Forbes Road, Suite 208 P.O. Box 850973 Braintree, MA 02185-0973 Tel: (781) 849-1136 Fax: (781) 848-9055 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 14 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Shesky Architect $30,809 14 Franklin Street Quincy, MA 02169 Coler & Colantanio $29,670 101 Accord Park Drive Norwell, MA 02061 Town of Scituate - Public Works $5,536 Town Hall 600 Chief Justice Cushing Way Scituate, MA 02066 Town of Scituate Real Estate Taxes $4,838 Town Hall 600 Chief Justice Cushing Way Scituate, MA 02066 WPLM - FM $3,668 17 Columbus Road Plymouth, MA 02360 National Grid $3,200 South Shore Pool Supply $1,095 Verizon $877 Synxis $809 Hart Security Systems $567 Waste Management $465 Banner Systems $463 ACCU - Chem. $338 AAA Exterminating $320 COUDERT BROTHERS: Hires Wilson Elser as Litigation Counsel ---------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York approved the request of Coudert Brothers LLP to employ Wilson Elser Moskowitz Edelman & Dicker LLP as its special counsel, nunc pro tunc to Sept. 22, 2006. As reported in the Troubled Company Reporter on Oct. 4, 2006, Wilson Elser will continue representation of the Debtor in two separate pending actions: (i) Statek Corporation et al. v. Coudert Brothers LLP, and (ii) SenoRx, Inc. v. Coudert Brothers LLP. David L. Tillem, Esq. a partner at Wilson Elser, told the Court that the firm's professionals bill: Professional Hourly Rate ------------ ----------- Partners $400 Associates $125 - $275 Paralegals $100 Mr. Tillem assured the Court that his firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Coudert Brothers LLP was an international law firm specializing in complex cross border transactions and dispute resolution. The Debtor filed for Chapter 11 protection on Sept. 22, 2006 (Bankr. S.D.N.Y. Case No. 06-12226). John E. Jureller, Jr., Esq., and Tracy L. Klestadt, Esq., at Klestadt & Winters, LLP, represents the Debtor in its restructuring efforts. In its schedules of assets and debts, Coudert listed total assets of $29,968,033 and total debts of $18,261,380. The Debtor's exclusive period to file a chapter 11 plan expires on Jan. 20, 2007. CPI 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 U.S. manufacturing sector, the rating agency confirmed its B2 Corporate Family Rating for CPI, Inc., as well as its Caa1 rating on the company's $80 million Floating Rate Notes due 2015 LGD5, 89%. The debentures were assigned an LGD5 rating suggesting noteholders will experience a 89% loss in the event of default. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations of the company's subsidiary Communications & Power Industries, Inc: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $40 Million Sr. Sec. Revolver due 2010 B1 Ba2 LGD2 10% $90 Million Sr. Sec. Term Loan due 2010 B1 Ba2 LGD2 10% $125 Million 8.0% Sr. Sub. Notes due 2012 B3 B2 LGD4 52% 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 Santa Rosa, California, CPI International -- http://www.cpiinternational.com/-- manufactures technical analytical instrument components, high-purity standard solutions and reagents and other analytical testing products for the environmental, petrochemical, pharmaceutical, biotechnology and semiconductor industries. CREDIT SUISSE: Moody's Junks Ratings on Two Certificate Classes --------------------------------------------------------------- Moody's Investors Service upgraded the ratings of two classes, downgraded the ratings of two classes and affirmed or confirmed the ratings of 14 classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2001-CKN5: * Class A-2, $6,219,421, Fixed, affirmed at Aaa * Class A-3, $41,378,515, Fixed, affirmed at Aaa * Class A-4, $681,279,000, Fixed, affirmed at Aaa * Class A-X, Notional, affirmed at Aaa * Class A-CP, Notional, affirmed at Aaa * Class A-Y, Notional, affirmed at Aaa * Class B, $37,548,000, Fixed, affirmed at Aaa * Class C, $18,773,000, Fixed, confirmed at Aa1 * Class D, $24,138,000, upgraded to A1 from A2 * Class E, $10,728,000, Fixed, upgraded to A2 from A3 * Class F, $13,410,000, Fixed, affirmed at Baa1 * Class G, $18,773,000, Floating, affirmed at Baa2 * Class H, $12,069,000, Floating, affirmed at Baa3 * Class J, $14,751,000, Fixed, affirmed at Ba1 * Class K, $20,114,000, Fixed, affirmed at Ba2 * Class L, $5,364,000, Fixed, affirmed at Ba3 * Class N, $9,387,000, Fixed, downgraded to Caa2 from B3 * Class O, $8,046,000, Fixed, downgraded to Ca from Caa2 As of the October 15th 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 12.7% to $936.4 million from $1.1 billion at securitization. The Certificates are collateralized by 185 mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1% to 7.4% of the pool, with the top 10 loans representing 43.9% of the pool. The pool includes one investment grade shadow rated loan representing 7.4% of the pool. Nineteen loans, representing 18.8% of the pool, have defeased and have been replaced with U.S. Government securities. Six loans have been liquidated from the trust resulting in a realized loss of approximately $12.8 million. Two loans, representing 2.2% of the pool, are in special servicing. Moody's has estimated aggregate losses of approximately $2 million for all of the specially serviced loans. Moody's was provided with year-end 2005 operating results for 97.1% of the performing loans. Moody's loan to value ratio for the conduit component is 82%, compared to 87.5% at securitization. The pool has a 14.8% co-op loan component which includes the largest loan. Moody's is upgrading Classes D and E due to increased subordination levels, a large percentage of defeased loans and stable overall pool performance. Classes B and C were upgraded on Aug. 2, 2006, and Class C was placed on review for further possible upgrade based on a Q tool based portfolio review. Class C is confirmed. Moody's is downgrading Classes N and O due to realized and projected from the specially serviced loans, LTV dispersion and interest shortfalls. Based on Moody's analysis, 7.1% of the conduit pool has a LTV greater than 100%, compared to 6.4% at securitization. Thirteen loans, representing 9.4% of the pool, have a debt service coverage ratio of 1x or less based upon the borrowers' reported operating performance and the actual loan constant. Classes O and P have accrued but unpaid interest shortfalls totaling approximately $275,000 as of the most recent distribution date. The shadow rated loan is the Ocean Towers Loan, which is secured by a 317-unit luxury residential cooperative located in Santa Monica, California. Property performance has been stable. Moody's current shadow rating is Aa2, the same as at securitization. The top three non-defeased conduit exposures represent 13% of the outstanding pool balance. The largest conduit loan is the Macomb Mall Loan, which is secured by a 509,000 square foot retail center located in Roseville, Michigan. Major tenants include Crowley's Value City, Kohl's and Babies "R" Us. The mall is also anchored by Sears; however, it is not part of the collateral. The property is 94.4% occupied, compared to 93.1% at last review and compared to 98% at securitization. Moody's LTV is 83.6%, compared to 81.6% at last review and at securitization. The second largest conduit loan is the One Sugar Creek Place Loan, which is secured by a 509,400 square foot office building located in Sugar Land, Texas, which is approximately 20 miles southwest of Houston. The property is 100% leased to Union Oil Company, the same as at securitization. Moody's LTV is 90.9%, compared to 92.4% at last review and compared to 95.6% at securitization. The third largest conduit loan is the Bayshore Mall Loan, which is secured by a 430,000 square foot retail center located in Eureka, California. Major tenants include Sears, as well as Mervyn's and Gottschalk's, which are not part of the collateral. The property is 94% occupied, compared to 79% at last review and compared to 87% at securitization. Moody's LTV is 67.9%, compared to 67.9% at last review and compared to 78.6% at securitization. The pool's collateral is a mix of office and mixed use, multifamily and cooperative, retail, U.S. Government securities, industrial and self storage and lodging. The collateral properties are located in 28 states and the District of Columbia. The highest state concentrations are California, Texas, New York, Massachusetts, and Michigan. All of the loans are fixed rate. CRESCENT RESOURCES: Moody's Rates New $1.425 Billion Loan at Ba2 ---------------------------------------------------------------- Moody's Investors Services assigned a Ba2 rating to the new $1.425 billion bank credit facility of Crescent Resources, LLC. The ratings agency also assigned a Ba2 corporate family rating to Crescent Resources. This is the first time Moody's has rated Crescent Resources, which is a residential and commercial property development company with a focus on markets in the southeastern and southwestern USA. These ratings were assigned with a stable ratings outlook: Crescent Resources LLC: * guaranteed senior unsecured debt at Ba2; and * corporate family rating at Ba2. The company, formerly a wholly owned subsidiary of Duke Energy, is now owned and controlled by a recently formed joint venture between Duke Energy and Morgan Stanley Real Estate Fund. The bank credit facility consists of a $1.225 billion six-year term loan, and a $200 million three-year revolving credit facility. These facilities are collateralized by the firm's interests in all material subsidiaries, with various liquidity, earnings and leverage covenants. Proceeds from the $1.225 billion term loan have been distributed to Duke Energy as part of the recapitalization of the company following the formation of the joint venture. The rating outlook is stable. "The Ba2 rating reflects Crescent Resource's moderate leverage and coverage statistics, collateral, strength and expertise of its management, track record, good liquidity, as well as sponsorship by the company's owners, Duke Energy and MSREF," says Christopher Wimmer, analyst at Moody's. The key risks also considered in the rating, on the other hand, are the high volatility of Crescent Resource's earnings stream, efinancing risk at the end of the bank loan's term, significant exposure to development risk, concentration in markets in the southeastern USA, as well as development pipeline sourcing risk. The earnings of Crescent Resources exhibit a material degree of volatility -- typical for a development-driven property firm when compared to traditional real estate owner-operators. Sales of residential lots in the company's master planned communities, marketing of developed commercial properties and "legacy" land sales are highly dependent on economic and local market conditions. In addition, to maintain its business platform, Crescent Resources must source and obtain new development opportunities to refill its development pipeline. The company addresses these challenges by focusing on opportunities in high growth markets where it can apply its expertise in developing upscale master-planned communities with multiple amenities, and where it can leverage tenant relationships as well as its advanced knowledge of local commercial property market trends and tenant space needs. MSREF's capital resources and relationships should help the company to grow. The stable ratings outlook reflects Moody's expectation that Crescent Resources will continue to profitably develop land and commercial property projects in its current pipeline, while successfully sourcing new developments to fill its pipeline. A rating upgrade would require success in generating more stable earnings, as well as further growth and geographic diversification of company's development platform. Upward ratings movement would also require reduction in leverage as measured by the ratio of net debt to EBIDA to below 2.5X. A ratings downgrade would most likely result from negative earnings due to unsuccessful development projects. Downward ratings movement would result from coverage ratios being persistently below 2.5X, and leverage above 4X. Crescent Resources LLC is a private land and commercial property development company based in Charlotte, North Carolina, USA. The approximate book value of the company's assets at Sept. 30, 2006 was $2.1 billion. CRUM & FORSTER: S&P Affirms BB Counterparty Credit Ratings ---------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' counterparty credit ratings on Fairfax Financial Holdings Ltd. (NYSE:FFH) and Crum & Forster Holdings Corp. and removed them from CreditWatch, where they were placed on July 28, 2006. Standard & Poor's also said that it affirmed and removed from CreditWatch a number of ratings on FFH's related entities, including: -- the 'BBB' counterparty credit and financial strength ratings on FFH's core operating companies; -- the 'BB-' counterparty credit rating on TIG Holdings Inc.; -- the 'A-' counterparty credit and financial strength ratings on Odyssey America Reinsurance Corp., Clearwater Insurance Co., and Hudson Specialty Insurance Co.; and -- the 'BBB-' counterparty credit rating on Odyssey Re Holdings Corp. (NYSE:ORH). The outlook on all these companies is negative. The ratings had been placed on CreditWatch negative following the announcement by FFH of a delay of its second-quarter 2006 interim report to shareholders. The ratings on FFH and its related core entities are based on the group's good competitive position, improving earnings, good and improving capitalization, and strong liquidity. Reserves, recoverables, and financial leverage have all improved in the last few years and are not viewed as significant negative rating factors. "Offsetting these positive factors are FFH's qualitative areas of governance, risk controls, and enterprise risk management," explained Standard & Poor's credit analyst Damien Magarelli. "These areas are the reason for the assignment of a negative outlook." A downgrade is possible if FFH is unable to further improve its governance oversight, accounting risk controls, and overall risk management by October 2007. A revision of the outlook to stable outlook is possible if FFH meets these expectations, has a combined ratio of less than 100% at the consolidated continuing operations, reserve charges within expectations (although no large charges are expected), has a capital ratio consistent with the rating, and maintains holding-company cash at more than $250 million. DANA CORP: Court Defers Hearing on Reclamation Claims to Feb. 28 ---------------------------------------------------------------- Dana Corporation and its debtor-affiliates previously asked the U.S. Bankruptcy Court for the Southern District of New York to bifurcate its consideration of reclamation claim issues. The Debtors asserted, among others, that certain legal defenses to the reclamation claims based on the existence of prior liens on the goods to be reclaimed rendered all of the reclamation claims valueless. Air Hydro Power Inc. and 12 other parties objected to the request contending that it is not clear whether the Debtors are asserting that the prior lien defense applies to their Section 503(b)(9) claims and render them valueless. The Responding Parties assert that they would prefer to have the amounts of their Section 503(b)(9) claims determined before any reclamation claim litigation. Accordingly, the Honorable Burton R. Lifland rules that all litigation related to the fact-intensive defenses will be stayed and postponed until after it has: (a) ruled on the applicability of the Debtors' prior lien defense to the remaining reclamation claims; and (b) conducted the scheduling conferences. The Court will conduct a hearing with respect to the prior lien defense on Feb. 28, 2007, at 10:00 a.m., Eastern Time. The prior lien defense hearing may be adjourned, among other things, to accommodate any extensions of the briefing and discovery schedules. The Court establishes these schedules to govern discovery relating to the litigation of the prior lien defense: 1. Parties seeking to obtain discovery from the Debtors must serve requests for written discovery on the Debtors so that those requests are actually received by the Debtors' counsel no later than November 13, 2006, at 4:00 p.m., Eastern Time. 2. The Debtors must file any objections to any discovery with the Court no later than December 1, 2006, at 4:00 p.m., Eastern Time. 3. The Court will conduct a hearing on December 19, 2006, at 10:00 a.m., Eastern Time, to consider any Discovery Objections and any other related scheduling issues. 4. Unless otherwise directed by the Court at the Discovery Hearing, the Debtors must serve by January 10, 2007, at 4:00 p.m., Eastern Time, their responses to any Discovery Requests with respect to which the Debtors did not file a Discovery Objection or the Court directs the Debtors to respond to at the Discovery Hearing. 5. If the Court concludes at the Discovery Hearing that collateral valuation is a disputed issue relevant to the Prior Lien Defense, the Prior Lien Defense Hearing may be adjourned upon the request of the Debtors or the Official Committee of Unsecured Creditors or pursuant to a further Court order. The Court also establishes these schedules to govern the litigation of the prior lien defense: 1. The Debtors will file the Initial Brief in support of the Prior Lien Defense to the Remaining Reclamation Claims with the Court not later than October 23, 2006, at 4:00 p.m., Eastern Time. The Debtors' Initial Brief must contain the facts on which they are relying upon in support of their Prior Lien Defense. 2. The Objecting Claimants must file all Responsive Briefs with the Court not later than January 26, 2007, at 4:00 p.m., Eastern Time. 3. The Debtors must file any Reply Brief with the Court not later than February 16, 2007, at 4:00 p.m., Eastern Time. 4. If the Court extends the Discovery Deadline or adjourns the Prior Lien Defense Hearing at the Discovery Hearing or otherwise before the Response and Reply Deadlines, the Response and Reply Deadlines will be adjusted accordingly. Judge Lifland makes it clear that the ruling regarding the Prior Lien Defense will be generally applicable to all Objecting Claimants, regardless of whether that Objecting Claimant files a Responsive Brief. However, the Order will not prejudice the Official Committee of Unsecured Creditors or the Ad Hoc Committee of Noteholders' rights to challenge the prepetition liens of the Debtors' prepetition lenders, all of which are preserved in full, consistent with the terms of Final DIP Order. Judge Lifland adds that any Court ruling on the Prior Lien Defense or on any matter relating to reclamation claims will not effect the right or entitlement of any party to assert or obtain the allowance of a claim with a priority under Section 503(b)(9) of the Bankruptcy Code. The prior Court order establishing bar dates for filing those claims will continue to apply to those claims. About Dana Corporation Toledo, Ohio-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. 24; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DANA CORP: Inks Pact Resolving SKF, et. al's Reclamation Claims --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York previously authorized Dana Corporation and its debtor-affiliates, in their sole discretion, to seek an agreement with any reclaiming seller to resolve its reclamation claim and its treatment. Subsequently, the Debtors entered into separate settlement agreements with: * SKF USA, Inc., * Samuel, Son & Co., Inc., and * Oliner Fibre Co., Inc. The SKF Settlement provides that SKF is entitled an allowed administrative expense priority status pursuant to Section 503(b)(9) against these Debtors: Debtor Claim Amount ------ ------------ Dana Corporation $213,934 Torque-Traction Integration 59,297 Torque-Traction Manufacturing 7,063 The Samuel Son Settlement and the Oliner Fibre Settlement provides that Samuel Son and Oliner Fibre are also entitled to allowed administrative expense claims pursuant to Section 503(b)(1)(A): Vendor Claim Amount ------ ------------ Samuel Son $14,045 Oliner Fibre 8,280 The parties agree that any prepetition claims that SKF, Samuel Son and Oliner Fibre may have against the Debtors that are not satisfied by allowance of the Administrative Claims may be asserted against the Debtors through the claims process established by the Court. The parties preserve their rights with regard to the Disputed 503(b)(9) Claims. Toledo, Ohio-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. 24; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000) DOE RUN: Earns $22.1 Million in 2006 Third Quarter -------------------------------------------------- Doe Run Resources Corporation filed its third fiscal quarter report ended July 31, 2006, with the Securities and Exchange Commission. The company reported $22,146,000 of net income on $419,189,000 of net sales for the third fiscal quarter ended July 31,2006, compared with $9,540,000 of net income on $257,523,000 of net sales for the same period in 2005. At July 31, 2006 the Company's balance sheet showed total assets of $620,652,000, total liabilities of $691,047,000, and redeemable preferred stock of $31,165,000, resulting in a $101,560,000 shareholders' deficit, as compared to shareholders' deficit of $167,905,000 at Oct. 31, 2005. A full-text copy of the company's third quarter report is available for free at http://researcharchives.com/t/s?13eb Going Concern Doubt As reported in the Troubled Company Reporter on Mar 30, 2006, Crowe Chizek and Company LLC expressed substantial doubt about Doe Run Resources Corporation ability to continue as a going concern after auditing the Company's financial statements for the years ended October 31, 2005, and 2004. The auditing firm pointed to Doe Run's subsidiary, Doe Run Peru's significant capital requirements under environmental commitments, which, if not met, could result in defaults of Doe Run Peru's credit agreements. Crowe Chizek also noted Doe Run Peru's substantial contingencies related to tax and significant debt service obligations. About Doe Run Resources The Doe Run Resources Corporation provides premium lead and associated metals and services. The Company operates an integrated primary lead operation and a recycling operation located in Missouri, referred to as Buick Resource Recycling. DUANE READE: 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 US and Canadian Retail sector, the rating agency confirmed its Caa1 Corporate Family Rating for Duane Reade, 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 ---------- ------- ------- ------ ---------- $210MM Sr. Sec. Floating Rate Notes Caa1 B3 LGD3 37% $195MM 9.75% Sr. Sub. Notes Caa3 Caa3 LGD6 90% 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 York City, Duane Reade Inc., operates 250 drug stores principally in Manhattan and the outer boroughs of New York City. EMDEON BUSINESS: Moody's Junks Rating on $170 Million Term Loan --------------------------------------------------------------- Moody's Investors Service assigned to Emdeon Business Services a B1 first time rating to its proposed $755 million first lien term loan and $50 million six-year revolving credit facility and a Caa1 rating to its proposed $170 million second lien term loan. Moody's also assigned the company a B2 corporate family rating and the outlook is stable. Ratings assigned: * Corporate Family Rating -- B2 * $755 million First Lien Term Loan --B1, LGD-3, 41% * $50 million First Lien Revolving Credit Facility -- B1, LGD- 3, 41% * $170 million Second Lien Term Loan -- Caa1, LGD-6, 92% On September 26, 2006, Emdeon Corporation announced that it had reached a definitive agreement with General Atlantic LLC, a private equity firm, to acquire approximately 52% of the equity of EBS based on enterprise value of $1.5 billion. The $1.5 billion acquisition will be financed with these term loans, $319 million common equity from the private equity sponsor, and $294 million rollover management equity contributed by Emdeon Corporation. Subsequent to the transaction's closing, EBS will transition to be run as a stand alone entity, separate from former parent Emdeon Corporation. The B2 corporate family rating is driven by Emdeon Business Services' high financial leverage associated with the proposed acquisition of General Atlantic's ownership stake. Moody's also considered the company's favorable recurring transaction fee revenues, client diversity, operating profitability, and retained cash flows. In isolation, these factors and the company's asset returns would suggest a B1 corporate family rating. The rating outlook is stable, reflecting client use of the company's claims processing network and the expectation for cost and debt reduction. For further information, please refer to Moody's Credit Opinion for Emdeon Business Services on Moodys.com. The ratings reflect both the overall probability of default of the company at a 50% LGD rate, to which Moody's assigns a PDR of B2, and a loss-given-default of LGD-3 for the first lien facilities and an LGD-6 for the second lien term loan. With about $730 million LTM September 2006 revenues, Emdeon Business Services, headquartered in Nashville Tennessee, provides health care claims processing services to health benefits payers, healthcare providers, and to pharmacies. EMDEON BUSINESS: S&P Rates Planned $805MM First-Lien Loan at B+ --------------------------------------------------------------- Standard & Poor's Rating Services assigned Oct. 25, 2006, its 'B+' corporate credit rating to Nashville, Tenn. based-Emdeon Business Services. The outlook is negative. At the same time, S&P assigned a 'B+' rating and a recovery rating of '2' to the company's proposed first-lien loan, which amounts to $805 million (a term B loan of $755 million and an undrawn revolving credit facility of $50 million). The recovery rating on the first lien indicates expectations for substantial recovery (80% to 100%) of principal in the event of a payment default. The $170 million, second-lien term loan has been rated 'B-', with a recovery rating of '5'. The recovery rating on the second-lien loan reflects S&P's expectation of negligible (0%-25%) recovery of principal by creditors in the event of a payment default or bankruptcy. Proceeds of the facility, totaling $925 million in first- and second-lien term loans, in conjunction with $612 million in equity, will be used to fund the leveraged buyout between EBS and General Atlantic from Emdeon Corp., which will total about $1.5 billion. Emdeon Corp. retains a 48% share of EBS. The rating on EBS reflects the company's narrow business profile geared toward a still evolving market, limited track record as a separate company, as well as high leverage. These factors are partially offset by barriers to entry, a diversified customer base, a strong recurring revenue stream, and a market that has strong growth potential. ENTECH ENVIRONMENTAL: June 30 Balance Sheet Upside-Down by $1.5MM ----------------------------------------------------------------- Entech Environmental Technologies Inc. filed its financial statements for the three months period ended June 30, 2006, with the Securities and Exchange Commission. The company reported a net loss of $662,933 for the third quarter ended June 30, 2006, compared to a net loss of $48,690 for the comparable period in 2005. Net revenues slid to $963,625 for the current quarter compared to net revenues of $1,790,403 for the same quarter last year. At June 30, 2006, the company's balance sheet showed $1,662,399 in total assets, $3,252,834 in total liabilities, resulting in a stockholders' deficit of $1,590,435. The Company's June 30 balance sheet also showed strained liquidity with $1,196,315 in total current assets available to pay $3,064,186 in total current liabilities. Full-text copies of the Company's financial statements for the three months ended June 30, 2006, are available for free at: http://researcharchives.com/t/s?13ec Going Concern Doubt As reported in the Troubled Company Reporter on Feb. 27, 2006, Mendoza Berger & Company, LLP, expressed substantial doubt about Entech Environmental Technologies, Inc.'s ability to continue as a going concern after it audited the Company's financial statements for the fiscal year ended Sept. 30, 2005. The auditing firm pointed to the Company's significant losses. The Company's former auditors, Russell Bedford Steanou Mirchandani LLP, also expressed substantial doubt about Entech's ability to continue as a going concern after auditing the Company's financial statements for fiscal year 2004. About Entech Entech Environmental Technologies, Inc., fka Cyber Public Relations, Inc., through its H.B. Covey subsidiary, provides construction and maintenance services to petroleum service stations in the southwestern part of the United States of America, and provides installation services for consumer home products in Southern California. The HBC subsidiary is a 58-year old construction and maintenance company that specializes in construction and maintenance services for the retail petroleum industry, commercial and industrial users, municipal organizations, and in support of major equipment manufacturers. ENTERGY NEW ORLEANS: Classes & Treatment of Claims Under Plan ------------------------------------------------------------- Entergy New Orleans, Inc.'s Plan of Reorganization groups claims and interests into 12 classes: Class Claims Treatment ----- ------ --------- n/a Administrative Claims Unimpaired, to be paid in cash, in full. Estimated Allowed Claims: $41,000,000 n/a Professionals' Claims Unimpaired, to be paid in cash, in full. Estimated Allowed Claims: $1,000,000 n/a DIP Financing Claims Unimpaired, to be paid in cash, in full. Estimated Allowed Claims: $36,700,000 n/a Priority Tax Claims Unimpaired, to be paid in cash, in full. Estimated Allowed Claims: $2,026,703 1 Other Priority Claims Unimpaired, to be paid in cash, in full. Estimated Allowed Claims: $0 2 Capital One Secured Claim Unimpaired, to be paid in cash, in full. Estimated Allowed Claims: $960,000 3 Bond Claims Unimpaired, to be paid in cash, in full. Estimated Allowed Claims: $229,935,000 4 Other Secured Claims Impaired, to be paid in cash, in full. Estimated Allowed Claims: $0 5 General Unsecured Claims Impaired, to be paid in cash, in full. Estimated Allowed Claims: $26,000,000 6 Intercompany Claims Impaired, and each holder will receive an intercompany note as full payment. Estimated Allowed Claims: $67,000,000 7 Litigation Claims Unimpaired, to be paid in full, with the legal, equitable and contractual rights of the holder unchanged under the Plan. Estimated Allowed Claims: to range from $4,000,000 to $18,500,000 8 Workers Compensation Unimpaired, to be paid Claims in full. Estimated Allowed Claims: $1,500,000 9 Government Environmental Unimpaired, to be paid Claims in full. Claims Estimated Allowed Claims: $250,000 10 Odom Claim Impaired, to be paid in full. Since the Claim is a disputed claim, the Odom Claim will become an Allowed Class 5 Claim upon entry of a final judgment resolving the Claim. Estimated Allowed Claims: verdict was for $8,300,000 11 Preferred Interests Unimpaired, and holders will either: * be entitled to the same rights and privileges that existed on the effective date if the class vote in favor of the Plan; or * be cancelled if the class do not vote in favor of the Plan. 12 Equity Interests Unimpaired, and holders will retain their equity interests after the Effective Date. About Entergy Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) ENTERGY NEW ORLEANS: FGIC Wants Exclusivity Periods Terminated -------------------------------------------------------------- Pursuant to Section 1121(d) of the Bankruptcy Code, the Financial Guaranty Insurance Company, as insurer of certain secured bonds issued pursuant to the Mortgage and Deed of Trust dated as of May 1, 1987, asks the U.S. Bankruptcy Court for the Eastern District of Louisiana to terminate the exclusive periods within which Entergy New Orleans, Inc., may file and solicit acceptances to its proposed plan of reorganization. FGIC also seeks the Court's authorization to file and solicit acceptances for its proposed alternative plan of reorganization. According to Rudy J. Cerone, Esq., at Mcglinchey Stafford, PLLC, in New Orleans, Louisiana, ENOI and parent Entergy Corp. have steadfastly took the position that ENOI would not exit bankruptcy or meet its other prepetition financial obligations except pursuant to a plan of reorganization that provides: 1. Entergy Corp. and its affiliates would be paid immediately in full in cash the amount of all of their claims against ENOI, in the aggregate amount of about $66,000,000, plus an additional $26,500,000 to be paid on account of non- affiliate unsecured claims that otherwise would need to be paid before the Entergy Parties could justify paying themselves; 2. Entergy would retain more than $170,000,000 in equity in the Debtor through its common stock; 3. The Debtor's emergence from bankruptcy would be contingent upon its actual receipt of Community Development Block Grant monies; and 4. The bondholders' recovery would be limited to the pre- bankruptcy repayment terms on the bonds. Mr. Cerone says the Entergy Entities designed their plan with the primary goal of paying off Entergy's affiliate claims and maintaining Entergy's position as the holder of 100% of ENOI's equity, with little regard to ENOI's future liquidity. Essentially, a plan based upon the Entergy Entities' Original Proposed Plan Terms would sacrifice the long-term stability of ENOI, in favor of providing an immediate benefit to Entergy and its affiliates. FGIC and The Bank of New York, as successor trustee, advised the Entergy Entities of their strong objections to ENOI's Original Proposed Plan Terms, as well as their intention to object to ENOI's third request for an extension of its exclusive periods. As a result of the objections, the Debtor recently advised FGIC of its intentions to make certain modifications to the Original Proposed Plan Terms. FGIC, however, is dissatisfied with the Modified Plan Terms because they do not address its concerns about the feasibility, timing and, ultimately, the confirmability of a plan. For FGIC, the Modified Plan Terms fail to protect the liquidity of ENOI, does not ensure that ENOI will be financially able to provide service in the future to the citizens of New Orleans, and will delay ENOI's exit from bankruptcy until at least the end of 2007. FGIC believes that ENOI's Plan is not feasible and cannot satisfy the requirements of section 1129(a) of the Bankruptcy Code. Rather than waiting for the Debtor to solicit acceptances of an unconfirmable plan, FGIC seeks to propose its own alternative plan of reorganization or alternative plan provisions for the Debtor. Mr. Cerone contends that ENOI's creditors should not be required to wait for the Proposed Plan to fail before having the option to consider alternative plans, especially since the FGIC can propose a plan that will (i) satisfy the requirements of Section 1129, (ii) expedite distributions to creditors, (iii) preserve the Debtor's liquidity, and (iv) treat creditors fairly. Mr. Cerone also asserts that the Debtor's inability to propose a confirmable plan constitutes sufficient "cause" to terminate exclusivity pursuant to Section 1121 of the Bankruptcy Code, citing In re Southwest Oil Co. of Jourdanton, Inc., 84 B.R. 448, 451 (Bankr. W.D. Tex. 1987). Terminating exclusivity at this time will not affect adversely the Debtor's coexisting right to file its plan, Mr. Cerone tells the Court. FGIC says it envisions a plan process in which creditors will have an opportunity to vote on the two competing plans, and that it is willing to work with the Debtor to create an agreed upon competing plan process that will be both efficient and economical, including the use of one disclosure statement for both plans. About Entergy Headquartered in Baton Rouge, Louisiana, Entergy New Orleans Inc. -- http://www.entergy-neworleans.com/-- is a wholly owned subsidiary of Entergy Corporation. Entergy New Orleans provides electric and natural gas service to approximately 190,000 electric and 147,000 gas customers within the city of New Orleans. Entergy New Orleans is the smallest of Entergy Corporation's five utility companies and represents about 7% of the consolidated revenues and 3% of its consolidated earnings in 2004. Neither Entergy Corporation nor any of Entergy's other utility and non-utility subsidiaries were included in Entergy New Orleans' bankruptcy filing. Entergy New Orleans filed for chapter 11 protection on Sept. 23, 2005 (Bankr. E.D. La. Case No. 05-17697). Elizabeth J. Futrell, Esq., and R. Partick Vance, Esq., at Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., represent the Debtor in its restructuring efforts. Carey L. Menasco, Esq., Philip Kirkpatrick Jones, Jr., Esq., and Joseph P. Hebert, Esq., at Liskow & Lewis, APLC, represent the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $703,197,000 and total debts of $610,421,000. (Entergy New Orleans Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) EYE CARE: 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 US and Canadian Retail sector, the rating agency confirmed its B2 Corporate Family Rating for Eye Care Centers of America, 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 ---------- ------- ------- ------ ---------- $25MM Gtd. Sr. Sec. Revolving Credit Facility B2 Ba2 LGD2 22% $165MM Gtd. Sr. Sec. Term Loan B B2 Ba2 LGD2 22% $152MM 10.75% Gtd. Senior Sub. Global Notes Caa1 Caa1 LGD5 77% 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 Antonio, Texas, Eye Care Centers of America, Inc. -- http://www.ecca.com/-- is a retail optical chain in the U.S. The company's brand names include EyeMasters, Binyon's, Visionworks, Hour Eyes, Dr. Bizer's VisionWorld, Dr. Bizer's ValueVision, Doctor's ValuVision, Stein Optical, Vision World, Doctor's VisionWorks, and Eye DRx. Founded in 1984, the company has 385 stores in 36 states. FAIRFAX FINANCIAL: S&P Affirms BB Counterparty Credit Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' counterparty credit ratings on Fairfax Financial Holdings Ltd. (NYSE:FFH) and Crum & Forster Holdings Corp. and removed them from CreditWatch, where they were placed on July 28, 2006. Standard & Poor's also said that it affirmed and removed from CreditWatch a number of ratings on FFH's related entities, including: -- the 'BBB' counterparty credit and financial strength ratings on FFH's core operating companies; -- the 'BB-' counterparty credit rating on TIG Holdings Inc.; -- the 'A-' counterparty credit and financial strength ratings on Odyssey America Reinsurance Corp., Clearwater Insurance Co., and Hudson Specialty Insurance Co.; and -- the 'BBB-' counterparty credit rating on Odyssey Re Holdings Corp. (NYSE:ORH). The outlook on all these companies is negative. The ratings had been placed on CreditWatch negative following the announcement by FFH of a delay of its second-quarter 2006 interim report to shareholders. The ratings on FFH and its related core entities are based on the group's good competitive position, improving earnings, good and improving capitalization, and strong liquidity. Reserves, recoverables, and financial leverage have all improved in the last few years and are not viewed as significant negative rating factors. "Offsetting these positive factors are FFH's qualitative areas of governance, risk controls, and enterprise risk management," explained Standard & Poor's credit analyst Damien Magarelli. "These areas are the reason for the assignment of a negative outlook." A downgrade is possible if FFH is unable to further improve its governance oversight, accounting risk controls, and overall risk management by October 2007. A revision of the outlook to stable outlook is possible if FFH meets these expectations, has a combined ratio of less than 100% at the consolidated continuing operations, reserve charges within expectations (although no large charges are expected), has a capital ratio consistent with the rating, and maintains holding-company cash at more than $250 million. FAREPORT CAPITAL: Revises Financing and Debt Restructuring Terms ---------------------------------------------------------------- Fareport Capital Inc. has substantially altered the terms on its financing and debt restructuring deals with its investors. As reported in the Troubled Company Reporter on Oct. 04, 2006, Fareport proposed to restructure its affairs, settle outstanding litigation, complete a conversion of substantially all of its current debt obligations, a consolidation of its issued and outstanding common shares, the creation of a new class of preference shares and a private placement financing of its common Shares. All of these are subject to shareholder and regulatory approval. Fareport Capital will enter into a financing transaction with arm's length investors whereby the Investors will make a $2,080,000 commitment to acquire new common shares of Fareport. Specifically, the Investors will first advance to Fareport $200,000 by way of an unsecured subordinated loan bearing interest at 12% per annum, evidenced by a promissory note, to be used as working capital. The Advance will be credited towards a subsequent private placement of $2,080,000 worth of Fareport common shares, subject to Fareport entering into debt settlement agreements with Fareport's creditors. The agreements will provide for a cash payment by Fareport of approximately $1,075,000 in the aggregate to be allocated amongst the creditors. The balance of Fareport's debt, being approximately $2,100,000, will be sold by the creditors to BG Capital Management Corp., an arm's-length third party, at a significant discount to face value for an aggregate of $460,000. The company then proposes to complete a 100:1 share consolidation, followed by the issuance of 1,300,000 post-consolidation common shares to the Investors at a price of $1.60 per common share -- for aggregate cash proceeds of $2,080,000, including the Advance. The company will pay a commission and financing fee of $46,000 to BG, which is the 10% of the $460,000 paid for the Debt Balance. The Debt Balance will be converted into 1,680,000 common shares, which is equal to 50% of Fareport's issued and outstanding common share capital following the completion of the transactions described herein. As a result of the above transactions, BG would become the controlling shareholder of Fareport. The terms of the transaction have been set out in a binding commitment letter and term sheet with BG, which, it is anticipated, will be superceded by definitive detailed documentation. In order to complete these transactions, the outstanding litigation must be settled and prior shareholder approval of: (a) the consolidation of Fareport's common shares on a one hundred "old" common shares for one "new" common share basis; (b) the change of Fareport's name; (c) the terms of conversion of the Debt Balance; and (d) the issuance of Common Shares from treasury. Prior TSX Venture Exchange approval is also required to complete the above transactions. The company covenants to hold a special meeting of its shareholders to approve these matters within 75 days of the Advance closing. These transactions are also subject to BG being satisfied with its due diligence investigations of Fareport, acting reasonably, such condition to be satisfied or waived by Nov. 17, 2006. The company will provide an update with regards to its compliance with Ontario Securities Commission Policy 57-603. In addition, and further to the press release of Sept. 22, 2006, the company is up-to-date with respect to its financial statements and management reporting. The temporary management and insider cease trade order imposed pursuant to OSC Policy 57-603 continues to be in effect. The MCTO prohibits present and certain past directors, officers and insiders of Fareport from trading in securities of Fareport. A partial revocation of the MCTO to permit the settlement of a portion of the Debt Balance with certain former management and Insiders of Fareport will be sought by Fareport. About Fareport Capital Fareport Capital Inc. (TSX-V: CAB) -- http://www.fareport.com/-- operates the Crown Taxi and Olympic Taxi brokerages and dispatch operations in the city of Toronto. The Crown Taxi division dispatches over 300 vehicles. In addition, through its Crown Transportation and Trax Shuttle Services divisions, the Company also offers charter transportation services. * * * Fareport Capital Inc.'s balance sheet at April 30, 2006, showed CDN$1.7 million in total assets, CDN$3.8 million in total liabilities, resulting in a CDN$2.1 million shareholders' deficit. The company's shareholders' deficit at July 31, 2005, stood at CDN$1.5 million. FOAMEX INTERNATIONAL: Classification of Claims Under Amended Plan ----------------------------------------------------------------- Under their First Amended Plan of Reorganization, Foamex International Inc. and its debtor-affiliates group claims and interests into these classes: Class Description Recovery Claim Treatment ----- ----------- -------- --------------- N/A Administrative 100% Except for the Professionals Fee Claims Claims, each holder will be paid in cash, in full. Unimpaired. Estimated Amount: $298,790. N/A Priority Tax 100% Each holder will be paid in cash, Claim in full, or be paid over a six- year period with interest at the statutory rate under applicable federal, state or local law. Unimpaired. Estimated Amount: $2,110,277. N/A DIP Financing 100% Except to the extent that the Claims claim holders and the Debtors agree to a different treatment, the claim holders will be paid in cash. Unimpaired. Estimated Amount: $130,313,400. 1 Other Priority 100% Each holder will be paid in cash, Claims in the full nominal amount. Unimpaired. Estimated Amount: $395,045. 2 Other Secured 100% Each of the claims will be: Claims (a) reinstated by curing all outstanding defaults; (b) paid in cash, in full; or (c) fully satisfied by delivery or retention of the collateral. Unimpaired. Estimated Amount: $1,011,940 3 Senior Secured 100% Each holder will be paid in Note Claims cash, in full. Unimpaired. Deemed Allowed for $312,452,083 4 Senior 100% Each holder will be paid in cash, Subordinated in full. Note Claims Unimpaired. Estimated Amount: $208,150,131 5 General 100% Each holder will be paid in cash, Unsecured in full. Claims Unimpaired. Estimated Amount: $13,038,668 6 Unliquidated 100% All Unliquidated Claims will be Claims liquidated, determined and satisfied in the Reorganized Debtors' ordinary course of business. Unimpaired. 7 Intercompany 100% All Claims will remain Claims outstanding, will not be discharged by the Plan or its confirmation, and will be settled in consistent with the historical practices of the Debtors. Unimpaired. Estimated Amount: $5,000,000. 8 Equity Interest 100% Holders of Equity in Surviving in Surviving Debtor Subsidiaries will retain Debtor their Equity Interests. Subsidiaries Unimpaired. 9 Existing 100% Each share of Existing Preferred Preferred Stock Stock in Foamex International to the extent still outstanding immediately prior to the Effective Date will be converted into 100 shares of Additional Common Stock. Impaired. 10 Existing Common 100% Common Stock will remain Stock outstanding after the Effective Date, subject to dilution as a result of the issuance of any Additional Common Stock. Impaired. 11 Other Common 100% Holders will retain their equity Equity Interests interests. in Foamex International Unimpaired. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) FOAMEX INTERNATIONAL: Noteholders Panel Seeks Hearing Adjournment ----------------------------------------------------------------- On Oct. 23, 2006, the Ad Hoc Committee of Senior Secured Noteholders filed a motion for an adjournment of the hearing on Foamex International Inc. and its debtor-affiliates' request to enter into commitment letters for a $790,000,000 debt exit financing and a $150,000,000 equity exit financing. The Senior Noteholders Committee complains that the terms of the Debtors' First Amended Plan of Reorganization were not negotiated with parties-in-interest, other than the existing shareholders of Foamex International, Inc. While the Amended Plan contemplates that the Debtors will use the proceeds of the $940,000,000 exit financing to, among others, repay all allowed creditor claims, including Senior Secured Note Claims plus accrued and unpaid postpetition interests, it excludes payment of any call premiums or any prepayment fees to the holders of Senior Secured Note Claims. John H. Knight, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, contends that there is no urgency for the Debtors to proceed with the hearing on the Motion on Oct. 30, 2006 because the Commitment Letters only require that the U.S. Bankruptcy Court for the District of Delaware to approve the terms by Nov. 30, 2006. Prompt approval of the Commitment Letters also places the Debtors at significant risk of incurring millions of dollars in obligations for commitments they may never able to access, Mr. Knight says. The Commitment Letters require the Debtors to pay up to $9,500,000 in a Put Option Premium, as well as millions of dollars in additional fees and expenses to the Significant Equityholders and the proposed exit lenders, Mr. Knight notes. He also points out that under the Commitment Letters, the Debtors will pay additional amounts to the Significant Equityholders and proposed exit lenders on the occurrence of a termination event, including: (a) failure to file the Proposed Amended Plan incorporating the treatment of various creditor classes, including the Senior Secured Notes; and (b) modifying the Proposed Amended Plan to provide terms that are adverse to the Significant Equityholders or materially inconsistent with the Commitment Letter or the term sheet negotiated by the Debtors and the Significant Equityholders. Despite the clear language of the Indenture and the Sixth Circuit Court of Appeals decision in In re Dow Corning Corporation, 456 F.3d 668 (6th Cir. 2006), which together mandate that the Senior Secured Noteholders receive payment of default rate interest and their prepayment premium, the First Amended Plan does not contemplate the payment of either, while common and other shareholders retain their interests in the Debtors, Mr. Knight notes. Hence, he says, the Amended Plan, on its face, violates the absolute priority rule of Section 1129(b)(2) of the Bankruptcy Code and cannot be confirmed under the Bankruptcy Code. Accordingly, if the Commitment Letters are approved, and thereafter, the Debtors are required to modify the treatment afforded to any class of creditors under the Proposed First Amended Plan, absent a waiver by each Significant Equityholder, a Termination Event will occur and the Debtors will be obligated to pay the Put Option Premium, as well as other fees and expenses, Mr. Knight avers. The Committee requests that, aside from the adjournment of the hearing on the Motion, the Debtors should: -- schedule a hearing on the adequacy of the disclosure statement accompanying the Plan for late November; and -- take the intervening time to negotiate with creditors, identify any issues that exists, and hopefully resolve them consensually including obtaining the necessary consents from the Significant Equityholders. Headquartered in Linwood, Pa., Foamex International Inc. -- http://www.foamex.com/-- is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high- performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries. The Company and eight affiliates filed for chapter 11 protection on Sept. 19, 2005 (Bankr. Del. Case Nos. 05-12685 through 05-12693). Attorneys at Paul, Weiss, Rifkind, Wharton & Garrison LLP, represent the Debtors in their restructuring efforts. Houlihan, Lokey, Howard and Zukin and O'Melveny & Myers LLP are advising the ad hoc committee of Senior Secured Noteholders. Kenneth A. Rosen, Esq., and Sharon L. Levine, Esq., at Lowenstein Sandler PC and Donald J. Detweiler, Esq., at Saul Ewings, LP, represent the Official Committee of Unsecured Creditors. As of July 3, 2005, the Debtors reported $620,826,000 in total assets and $744,757,000 in total debts. (Foamex International Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) G+G RETAIL: Judge Drain Approves Disclosure Statement ----------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York approved Oct. 18, 2006, the Disclosure Statement of G+G Retail Inc.'s Plan of Liquidation. Judge Drain determined that the Disclosure Statement contains adequate information -- the right amount of the right kind -- for creditors to make informed decisions when the Debtor asks them to vote to accept the Plan. Summary of the Plan As reported in the Troubled Company Reporter on Sept. 20, 2006, the Debtor's Plan provides for a distribution of cash to holders of allowed claims. In addition, the Plan also provides for the issuance of new common stock. The new common stock will be treated as Plan assets and any proceeds of the new common stock will be distributed as Plan proceeds to the holders of allowed claims. The Debtor will conduct no business after the effective date of the Plan other than the winding up of its affairs. Payments under the Plan will be funded from the proceeds of the sale of substantially all of the Debtors' assets to Max Rave, LLC, and the liquidation of all other assets not included in the sale. Max Rave purchased the Debtors assets for $35 million in cash plus payment of approximately $10.4 million of inventory purchased postpetition, assumption of $2.1 million in liabilities for gift certificates, assumption of certain leases and the payment of cure amount on the assigned leases. Treatment of Claims Priority Claims, totaling $135,000, will be paid in full and in cash on the effective date of the Plan. Convenience Claims, estimated to aggregate $744,000, will receive cash payment equal to 40% of the allowed amount of the claim. Holders of reclamation claims who agree to the Debtors' proposed treatment of their claims, will receive a cash payment equal to the reclamation settlement payment scheduled by the Debtor. Holders who elect not to avail of the settlement will be treated as general unsecured creditors. The Debtor estimates reclamation claims to total $850,000. Under the Plan, General Unsecured Creditors are anticipated to recover 50% of the allowed amount of their claims. Unsecured claims are estimated to total $41 million. Holders of an allowed unsecured claim will receive a pro rata share of net plan proceeds pursuant to the terms of the plan. Subordinated claims, totaling $750,000, will not receive distributions under the plan. Equity interest holders also get 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=060919052441 Headquartered in New York, New York, G+G Retail Inc. retails ladies wear and operates 566 stores in the United States and Puerto Rico under the names Rave, Rave Girl and G+G. The Debtor filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. S.D.N.Y. Case No. 06-10152). William P. Weintraub, Esq., Laura Davis Jones, Esq., David M. Bertenthal, Esq., and Curtis A. Hehn, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP. Scott L. Hazan, Esq.. at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets of more than $100 million and debts between $10 million to $50 million. G+G RETAIL: Plan Confirmation Hearing Scheduled on December 6 ------------------------------------------------------------- The Honorable Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York set 10:00 a.m. on Dec. 6, 2006, to consider confirmation of G+G Retail Inc.'s Plan of Liquidation. Objection Deadline Objection to confirmation of the Debtors' Plan, if any, must be submitted by 4:00 p.m. on Nov. 22, 2006. Objections must: -- be in writing; -- conform to the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules for the Southern District of New York; -- be filed with the U.S. Bankruptcy Court in accordance with General Order M-242 (as amended); -- be submitted in hard copy form directly to the chambers of Judge Drain; and -- be served to these parties: a. counsel for the Debtor Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP 780 Third Avenue, 36th Floor New York, NY 10017-2024 Attn: Laura Davis Jones, Esq. William P. Weintraub, Esq. Tel: (212) 561-7700 Fax: (212) 561-7777 b. counsel for the Official Committee of Unsecured Creditors Otterbourg, Steindler, Houston & Rosen, P.C. 230 Park Avenue New York, NY 10169-0075 Attn: Scott L. Hazan, Esq. Steven B. Soll, Esq. c. Office of the United States Trustee for the Southern District of New York 33 Whitehall Street, 21st Floor New York, NY 10004 Attn: Tracy Hope Davis, Esq. The record date for purposes of determining the parties entitled to vote on the plan was Oct. 18, 2006. All ballots must be received by Nov. 22, 2006. Additional information can be obtained at: Bankruptcy Services LLC FDR Station P.O. Box 5014 New York, NY 10150-5014 Attn: Laura Campbell Tel: (646) 282-2500 http://bsillc.com/ Headquartered in New York, New York, G+G Retail Inc. retails ladies wear and operates 566 stores in the United States and Puerto Rico under the names Rave, Rave Girl and G+G. The Debtor filed for Chapter 11 protection on Jan. 25, 2006 (Bankr. S.D.N.Y. Case No. 06-10152). William P. Weintraub, Esq., Laura Davis Jones, Esq., David M. Bertenthal, Esq., and Curtis A. Hehn, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub LLP. Scott L. Hazan, Esq.. at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it estimated assets of more than $100 million and debts between $10 million to $50 million. GENERAL CABLE: 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 U.S. manufacturing sector, the rating agency confirmed the B1 Corporate Family Rating for General Cable Corporation, as well as the B2 rating on the company's $285 million 9.5% senior unsecured notes due 2010. Those debentures were assigned an LGD4 rating suggesting that creditors will experience a 70% 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 Highland Heights, Kentucky, General Cable Corporation -- http://www.generalcable.com/-- is engaged in the manufacture and distribution of copper, aluminum and fiber optic wire and cable products for the energy, industrial, specialty, and communications markets. GETTY IMAGES: Earns $37.6 Million in Quarter Ended September 30 --------------------------------------------------------------- Getty Images, Inc., reported $37.6 million of net income for the third quarter ended Sept. 30, 2006, up 3% compared to $39.3 million in the third quarter of 2005. Revenue grew 7.4% to $198.1 million from $184.5 million in the third quarter of 2005. Excluding the effects of changes in currency exchange rates, revenue grew 5.3%. As a percentage of revenue, cost of revenue was 25.4% an improvement from 25.7% in the prior year. "Our third quarter results reflect the dynamic changes that are occurring in our industry, "said Jonathan Klein, co-founder and chief executive officer. "Today we are announcing a vision which will capitalize on the industry evolution, which is as exciting and as innovative as anything we have done in the past. We will manage aggressively through this transformation, directing resources to areas that provide the most compelling growth opportunities, thereby, setting the foundation for a new stage of growth. Sustained growth will be driven by continuous innovation and a dedication to serve our customers." Income from operations was $54.7 million, compared to $58.7 million in the third quarter of 2005. Excluding stock-based compensation, income from operations was $59 million in the third quarter of 2006, consistent with the third quarter of 2005. Excluding stock-based compensation, the operating margin was 29.8% compared to 32.0% in the third quarter last year. Net cash provided by operating activities was $181.5 million and the acquisition of property and equipment totaled $49.6 million in the first nine months of 2006. Cash balances were $290.7 million at Sept. 30, 2006, up from $259.5 million at June 30, 2006. For the fourth quarter of 2006, the company expects to report revenue of approximately $196 million. For 2006, the company expects to report revenue of approximately $800 million. The company has announced a realignment of resources that will result in a charge of approximately $5 million in the fourth quarter of the year for employee related costs and a possible additional charge for consolidating certain office space of approximately $4 million. Full year and fourth quarter guidance excludes these charges. Headquartered in Seattle, Washington, Getty Images, Inc. -- http://corporate.gettyimages.com/-- creates and distributes visual content. * * * As reported in the Troubled Company Reporter on June 13, 2006, Moody's Investors Service upgraded the credit ratings of Getty Images, Inc. and changed the ratings outlook to stable from positive. The upgrade in the corporate family rating to Ba1 from Ba2 reflected Getty's leading market position, improving credit metrics, impressive operating margins and good secular growth trends in the stock imagery market. Moody's also upgraded its rating on the company's $265 million series B convertible subordinated notes due 2023, to Ba2 from Ba3. GREGG APPLIANCES: 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 U.S. and Canadian retail sector, the rating agency confirmed its B2 Corporate Family Rating for Gregg Appliances, Inc., and its B2 rating on the company's 9% Sr. Notes. Additionally, Moody's assigned an LGD4 rating to those bonds, suggesting noteholders will experience a 57% 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 Indianapolis, Indiana, Gregg Appliances, Inc., -- http://www.hhgregg.com/-- is a specialty retailer of consumer electronics, home appliances and related services operating under the name HH Gregg. The Company operates 58 stores in six midwestern and southeastern states with revenues of approximately $753 million for the fiscal year ended March 31, 2004. HOME DIRECTOR: Judge Jellen Confirms Joint Chapter 11 Plan ---------------------------------------------------------- The Honorable Edward D. Jellen of the U.S. Bankruptcy Court for the Northern District of California in Oakland confirmed Home Director Inc. and its debtor-affiliates' Second Amended Joint Plan of Reorganization on Oct. 12, 2006. The Court determined that the Plan satisfies the 13 standards for Confirmation under Section 1129(a) of the Bankruptcy Code. The Plan took effect on Oct. 23, 2006. Under the Plan, the Debtors will be substantively consolidated, with HDI remaining as the Reorganized HDI. The Plan calls for the distribution of cash and securities, pursuant to Bankruptcy Code section 1145(a), with respect to allowed claims as provided under the Plan. Interest Holders will not receive any equity interests or distributions in the Reorganized Debtor. Treatment of Claims Administrative Claims held by parties other than Home Director Investors, LLC, estimated at $562,478, will be paid in cash on the effective date. Under the Plan, Home Director Investors' administrative claim will be satisfied in full by issuance of 6,500,000 shares of new common stock, representing approximately 90% ownership in the Reorganized Debtor. Home Director Investors' administrative claim is estimated to total $2.5 million. Priority Tax Claims totaling $166,295 will be either be paid in full on the effective date or over a six-year period from the date of assessment, as provided in Section 1129(a)(9)(C) of the Bankruptcy Code with interest payable at a rate of 8% per annum or as otherwise established by the Court. The $1.4 million prepetition secured claim by the Internal Revenue Service perfected against Debtors Home Director, Inc., and Home Director Technologies, Inc., will either be paid in full on the effective date or over a six-year period from the date of assessment with interest payable at a rate of 8% per annum or as otherwise established by the Court. The Secured Claim by the State of California, Employment Development Department, totaling $244,688, will also be accorded the same treatment. Pursuant to the compromise and settlement between the parties, Judgment Collection Specialists, Inc., will retain its Judgment Lien as an allowed secured claim against Debtor DHI, and the Reorganized Debtor will pay Judgment Collection $15,000 cash in full satisfaction of its secured claim. All other secured Claims are unimpaired and the Plan will leave unaltered the legal, equitable and contractual rights to which the claim entitles the holder Holders of general unsecured claims, totaling $4.2 million, are expected to recover approximately 14% of their claims. Each allowed general unsecured creditor will receive its pro rata share of: -- a $60,000 payment within 30 days of the effective date or as soon as practical; -- a $150,000 payment within 30 days of the first anniversary date of confirmation of the Plan; -- a $150,000 payment within 30 days of the second anniversary date of confirmation of the Plan; -- 750,000 shares of New Common Stock representing approximately 10% of the New Common Stock of the Reorganized Debtor; and -- Net Recoveries of any Litigation Claims. General Unsecured Claims of $5,000 or less and Claims within the range of $5,000 and $10,000, provided the holders of such claims reduce their claims to $5,000, will receive a cash payment equal to approximately 27% on account of its allowed convenience claim. Home Director Inc., Home Director Technologies Inc., and Digital Interiors Inc. common stock will be eliminated upon confirmation of the Plan and interest holders will not receive or retain any property or interest. A copy of the confirmed Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=061026044343 Headquartered in Fremont, California, Home Director, Inc. -- http://www.homedirector.com/-- designs, manufactures, sells and installs home networking solutions that connect audio systems, video and television services, security systems and utilities, personal computers and the Internet. The company and its debtor- affiliates filed separate chapter 11 petitions on Sept. 28, 2005. (Bankr. N.D. Calif. Lead Case No.: 05-45812). Tracy Green, Esq., and Elizabeth Berke-Dreyfuss, Esq., at Wendel, Rosen, Black and Dean, represent the Debtors. The Debtors estimated their assets at $10.6 million and Debts at $4.2 million when they filed for bankruptcy. HONS TRUCKING: Voluntary Chapter 11 Case Summary ------------------------------------------------ Debtor: Hons Trucking, Inc. 18490 Emerald Forest Drive New Caney, TX 77357 Bankruptcy Case No.: 06-35729 Chapter 11 Petition Date: October 26, 2006 Court: Southern District of Texas (Houston) Judge: Jeff Bohm Debtor's Counsel: Roger Harmon Broach, Esq. P.O. Box 56143 Houston, TX 77256-6143 Tel: (281) 435-7699 Fax: (713) 643-1041 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. ICON HEALTH: 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 U.S. manufacturing sector, the rating agency confirmed the Caa1 Corporate Family Rating for Icon Health & Fitness Inc. Moody's also revised its rating on the company's $155 million 11.25% Subordinate Notes due 2012 to Caa2 from Caa3. Those debentures were assigned an LGD5 rating suggesting that creditors will experience an 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 Logan, Utah, Icon Health & Fitness Inc. is a manufacturer and marketer of fitness equipment in the world. http://www.iconfitness.com ITRON INC: 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 U.S. manufacturing sector, the rating agency confirmed its Ba3 Corporate Family Rating for Itron Inc. The rating on the company's $55 million Senior Secured Revolver due 2009 was revised to Baa3 from Ba3. Those debentures were assigned an LGD1 rating suggesting creditors will experience a 3% loss in the event of default. Additionally, Moody's revised its ratings on the company's $125 million 7.875% Subordinate Notes due 2012 to Ba1 from B2. Moody's assigned those debentures an LGD2 rating suggesting a projected loss-given default of 25%. 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 Liberty Lake, Washington, Itron Inc. -- http://www.itron.com/-- offers products and services for energy and water providers around the world. JEMSEK CLINIC: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Jemsek Clinic, P.A. dba Jemsek Specialty Clinic, Lyme and Related Diseases, PLLC fka Jemsek Clinic, PLLC 14330 Oakhill Park Lane Huntersville, NC 28078 Tel: (704) 987-2111 Bankruptcy Case No.: 06-31766 Type of Business: The Debtor operates a center for the practice of internal medicine and infectious diseases. Its clinic staff specializes in general infectious disease diagnosis and treatment, with a primary focus on HIV/AIDS and Lyme Disease. See http://www.jemsekclinic.com/ Chapter 11 Petition Date: October 25, 2006 Court: Western District of North Carolina (Charlotte) Judge: J. Craig Whitley Debtor's Counsel: Travis W. Moon, Esq. Hamilton Fay Moon Stephens Steele & Martin, PLLC 2020 Charlotte Plaza 201 South College Street Charlotte, NC 28244-2020 Tel: (704) 344-1117 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Scottish Bank Bank Loan $1,220,012 325 South Sharon Amity Road Charlotte, NC 28211 First Citizens Bank Bank Loan $715,748 First Citizens Bank Plaza 128 South Tryon Street, 2nd Floor Charlotte, NC 28202 Quest Diagnostics Trade Debt $56,447 330 Billingsley Road Charlotte, NC 28211 Florida Infusion Pharmacy Trade Debt $43,612 4180 Corporate Court Palm Palm Harbor, FL 34663 MGMA Trade Debt $23,239 104 Inverness Terrace East Englewood, CO 80112-5306 David Chilman Trade Debt $22,301 Mecklenburg County Tax Collector Trade Debt $21,570 James A. Wilson Trade Debt $18,120 Physician Sales & Services, Inc. Trade Debt $8,504 American Express Trade Debt $6,799 SIM Trade Debt $7,062 Boch, Lindsey & Frame LLP Trade Debt $7,032 Inland Mid-Atlantic Trade Debt $4,849 Management Corp. Time Warner Telecom Trade Debt $4,362 Womble Carlyle Sandridge and Trade Debt $3,829 Rica, PLLC The Charlotte Observer Trade Debt $3,070 McGuire Woods, LLP Trade Debt $2,989 CD Capital Trade Debt $2,843 Pensys Trade Debt $1,290 Pitney Bowes - Purchase Power Trade Debt $1,449 JO-ANN STORES: Posts $21.2 Million Net Loss in 2006 Second Quarter ------------------------------------------------------------------ Jo-Ann Stores Inc. reported a net loss of $21,200,000 for the thirteen weeks ended July 29, 2006, compared to a net loss of $5,100,000 for the same period last year. Net sales for the current period was $363,200,000, compared to $383,800,000 in 2005. At July 29, 2006, the company's balance sheet showed total assets of $939,500,000, total liabilities of $563,800,000, and total shareholders' equity of $375,700,000. A full-text copy of the company's second quarter report is available for free at http://researcharchives.com/t/s?13e5 About Jo-Ann Stores, Inc. Hudson, Ohio-based Jo-Ann Stores, Inc. -- http://www.joann.com/-- is the leading U.S. fabric and craft retailer with locations in 47 states, operates 688 Jo-Ann Fabrics and Crafts traditional stores and 154 Jo-Ann superstores. * * * As reported in the Troubled Company Reporter on April 11, 2006, Standard & Poor's Ratings Services lowered its corporate credit rating on Jo-Ann Stores to 'B-' from 'B+'. The subordinated debt rating was lowered to 'CCC' from 'B-'. The outlook is negative. All ratings were removed from CreditWatch, where they were placed with negative implications on Oct. 6, 2005. As reported in the Troubled Company Reporter on Feb. 17, 2006, Moody's Investors Service lowered all ratings of Jo-Ann Stores, Inc., including the rating on a $100 million issue of 7.5% senior subordinated notes due 2012 to B3 from B2. The rating downgrade was prompted by the adverse impact that weak merchandising programs and a slowdown in several categories have had on sales, cash flow, and working capital. JOHN MANEELY: Atlas Merger Deal Cues S&P's Developing Rating Watch ------------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'B' corporate credit and its other ratings on John Maneely Co. on CreditWatch with developing implications following the announcement by its owner, The Carlyle Group, that it signed a definitive agreement to merge John Maneely with unrated Atlas Tube Inc. "A proposed merger with Atlas Tube would improve John Maneely's business risk profile by expanding the company's scope of operations and diversifying the company's product mix," Standard & Poor's credit analyst Dominick D'Ascoli said. Atlas Tube manufactures hollow structural sections, which are used in nonresidential and other applications predominantly as structural members, while John Maneely's currently product focus is on standard pipe (used for conveying fluids, gas, and air under pressure) and electrical conduit (used as an encasement of electrical wiring). The combined company is expected to have sales in excess of $2 billion and annual sales volumes of more than 2 million tons. Details of the financing have not been disclosed, and at this point it is unclear how an acquisition of this magnitude will be financed. "In resolving the CreditWatch, we will evaluate the improvement to John Maneely's business risk profile and the financing details," Mr. D'Ascoli said. JOHN MANEELY: $1.5 Bil. Atlas Deal Prompts Moody's Ratings Review ----------------------------------------------------------------- Moody's Investors Service placed the ratings Corporate Family Rating of B1 of John Maneely Company under review for possible downgrade. The review was prompted by John Maneely's announcement that it has entered into a definitive agreement to acquire Atlas Tube Inc. for approximately $1.5 billion including stock and debt. Moody's review will assess the impact of increased leverage on John Maneely's credit profile and capital structure, and the overall debt service capabilities of the company in light of the expanded business platform and higher debt levels. In addition, Moody's review will consider the amount of equity that might be contributed by the Carlyle Group, the company's equity sponsor, the strategic positioning of the combined companies in the markets served, and the potential for integration risks. On Review for Possible Downgrade: Issuer: John Maneely Company * Corporate Family Rating, Placed on Review for Possible Downgrade, currently B1 * Outlook, Changed To Rating Under Review From Stable Headquartered in Collingswood, New Jersey, John Maneely had net revenues of $713 million in its fiscal year ended September 30, 2005. Headquartered in Harrow, Ontario, Canada, Atlas Tube, a producer of structural tube, had revenues of CDN$1.3 billion in its fiscal year ended Dec. 31, 2005. KAYDON CORPORATION: 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 U.S. manufacturing sector, the rating agency confirmed its Ba2 Corporate Family Rating for Kaydon Corporation, as well as its Ba3 rating on the company's $200 million 4% Convertible Senior Subordinate Notes due 2023. Those debentures were assigned an LGD5 rating suggesting noteholders will experience a 75% 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%). Headquartered in Danville, Illinois, Kaydon Corporation -- http://www.kaydon.com/-- thru its subsidiary Tridan International Inc., supplies machinery for the production of evaporators and condensers commonly used in manufacturing air and refrigeration systems. KB HOME: Late 10-Q Filing Cues S&P to Place Ratings on Neg. Watch ----------------------------------------------------------------- Standard & Poor's Ratings Services placed its corporate credit, senior unsecured, and senior subordinated debt ratings on KB Home on CreditWatch with negative implications. The CreditWatch listings affect $1.65 billion of senior notes and $750 million of senior subordinated notes. The CreditWatch placements reflect: -- KB Home's late quarterly financial filing; -- The current independent review of its stock option practices, which has delayed the filing of its financials; and -- The recent notice of default related to its filing status and the likelihood that additional default notices will be filed, which could accelerate the maturity of some debt securities. KB Home has 60 days from the date a notice of default is filed to cure the event of default. The cure period extends through either: -- Dec. 17, 2006 (if the notice of default under the indenture relating to the 6.25% senior notes due 2015 purporting Oct. 18, 2006, as the default date is valid) or -- Dec. 24, 2006 (if Oct. 25, 2006, is the default date, as the indenture language indicates, and notices of default are sent, which should be expected). Although management expects to file its 10-Q within the cure period, the timing and outcome of the independent review of KB Home's stock option granting practices remains uncertain and ultimately drives KB Home's ability to file its 10-Q within the cure period. Furthermore, an informal Securities and Exchange Commission investigation related to the company's stock option practices could linger beyond the completion of the internal review, which may or may not affect the company's ability to file its 10-Q. KB Home recently received a one-time extension until Dec. 24, 2006, to deliver quarterly financials to its bank lenders. Furthermore, the company commenced a consent solicitation for its senior notes only to extend the period to cure the event of default until Feb. 23, 2007. This consent solicitation did not include the company's senior subordinated notes. S&P will continue to closely monitor these events. S&P will affirm the ratings and remove them from CreditWatch upon satisfactory resolution of the consent solicitation and the 10-Q filing and board options review. Alternatively, S&P will lower the ratings or revise its outlook on KB Home to negative if the potential refinancing of some debt securities results in a material component of floating-rate short- term debt or pressures debt protection metrics. Ratings Placed On CreditWatch Negative Rating ------ To From -- ---- Corporate credit BB+/Watch Neg/-- BB+/Stable/-- Senior unsecured notes BB+/Watch Neg BB+ Senior subordinated notes BB-/Watch Neg BB- LEVEL 3: Selling $600MM 9.25% Senior Notes Due 2014 at 100% of Par ------------------------------------------------------------------ Level 3 Communications Inc.'s subsidiary, Level 3 Financing, Inc., has agreed to sell $600 million aggregate principal amount of 9.25% Senior Notes due 2014 in a private offering to "qualified institutional buyers" as defined in Rule 144A under the Securities Act of 1933 and outside the United States under Regulation S under the Securities Act of 1933. The 9.25% Senior Notes due 2014 were priced to the investors at 100% of par. The senior notes have not been registered under the Securities Act of 1933 or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. The debt represented by the senior notes will constitute purchase money indebtedness under the indentures of Level 3. The net proceeds will be used solely to fund the cost of construction, installation, acquisition, lease, development or improvement of any assets to be used in the company's communications business, including the cash purchase price of any past, pending or future acquisitions. The offering is expected to be completed on Oct. 30, 2006, subject to customary closing conditions. Headquartered in Bloomfield, Colorado, Level 3 Communications, Inc (Nasdaq: LVLT) -- http://www.Level3.com/-- an international communications company, provides Internet connectivity for millions of broadband subscribers. The company provides a comprehensive suite of services over its broadband fiber optic network including Internet Protocol services, broadband transport and infrastructure services, colocation services, voice services and voice over IP services. At June 30, 2006, Level 3's balance sheet showed a stockholders' deficit of $33 million, compared to a deficit of $476 million at Dec. 31, 2005. * * * As reported in the Troubled Company Reporter on Oct. 20, 2006, Dominion Bond Rating Service placed the ratings of Level 3 Communications Inc.'s Senior Unsecured Notes (CCC) and Subordinated Notes (C) and Level 3 Financing Inc.'s Senior Secured Credit Facility (B(low)) and Senior Unsecured Notes (CCC) Under Review with Positive Implications after the announcement that Level 3 will acquire Broadwing Corporation for approximately $1.4 billion in cash and stock. Standard & Poor's Ratings Services affirmed its existing ratings on Broomfield, Colorado-based Level 3 Communications Inc., including the 'CCC+' long-term corporate credit and 'B-3' short- term credit ratings. The rating agency also affirmed the 'B-' bank loan and '1' recovery ratings on the $730 million secured nonamortizing first-lien credit facility issued by Level 3's wholly owned subsidiary, Level 3 Financing Inc. The outlook is stable. Fitch views the recent announcement by Level 3 Communications, Inc. to acquire Broadwing Corporation as a credit positive and consistent with its current rating rationale. Fitch most recently affirmed Level 3's Issuer Default Rating at 'CCC' on May 3, 2006 with a Positive Rating Outlook. LEVEL 3 FINANCING: Moody's Rates New $600 Million Sr. Notes at B2 ----------------------------------------------------------------- Moody's Investors Service assigned a B2 rating to Level 3 Financing, Inc.'s new $600 million fixed rate senior notes due 2014. The proceeds from new financing will be used to fund acquisitions and capital expenditures. Moody's affirmed Level 3 Communications, Inc.'s corporate family rating at Caa1 with a stable rating outlook, as the pro-forma leverage is expected to remain below the 10x level Moody's previously indicated could put downward pressure on the rating, and as the rating agency continues to expect the company to commence generating free cash flow in 2008. Moody's also affirmed the ratings of existing debt at Level 3 and Financing. Moody's took these ratings actions: Issuer: Level 3 Communications, Inc * Corporate Family Rating -- Affirmed Caa1 * Probability of Default Rating -- Affirmed Caa1 * Senior Notes -- Caa2 Affirmed; to LGD5-70% from LGD4-67% * Senior Euro Notes -- Caa2 Affirmed; to LGD5-70% from LGD4-67% * Convertible Senior Notes -- Caa2 Affirmed; to LGD5-70% from LGD4-67% * Convertible Subordinated Notes -- Affirmed Caa3, LGD6-94% * Outlook - Stable Issuer: Level 3 Financing, Inc * New $600 million Senior Notes -- Assigned B2, LGD3-30% * Senior Secured Term Loan -- Affirmed B1, LGD1-3% * Senior Floating Rate Notes --B2 Affirmed; to LGD3-30% from LGD2-28% * Senior Notes -- B2 Affirmed, to LGD3-30% from LGD2-28% * Outlook - Stable The Caa1 rating reflects the overall high business risk for the long-haul carrier industry, Level 3's high financial risk and continued cash burn, which is partly mitigated by its very good near-term liquidity. In addition, the company faces challenges in integrating the recently announced acquisitions. Broadwing is the sixth announced acquisition in the past year by Level 3, with the prior five recently closing. Although Broadwing offers primarily the same services as Level 3's core business, the recent acquisitions of metropolitan telecommunications companies represent a new line of business for Level 3, and it puts the company in competition with some of its larger customers, giving rise to potential channel conflicts. The stable outlook reflects Moody's views that Level 3 will continue to achieve synergies from its acquisitions as it focuses on the core telecommunications business, and the expectation that should acquisition activity continue, it will not materially impact the company's credit profile. Level 3 provides sales of $3 billion in the last twelve months ending 3Q 2006, excluding the revenues of Software Spectrum business which the company sold during third quarter 2006. The company's headquarters are located in Broomfield, Colorado. MAVERICK TUBE: Tenaris Buyout Prompts Moody's to Withdraw Ratings ----------------------------------------------------------------- Moody's Investors Service confirmed and will subsequently withdraw the ratings for Maverick Tube Corporation. Moody's will subsequently withdraw the Ba3 rated corporate family rating, the Ba3 LGD assessment, the B1and the LGD 5 (73%) ratings on the 1.875% convertible senior subordinated notes. The outlook is stable. Moody's does not rate the other notes of Maverick. The ratings are being confirmed and will subsequently be withdrawn because Maverick has been fully acquired by Tenaris S.A. and consequently, the notes are not expected to remain outstanding since they are expected to be converted to cash within the next month and receive a make-whole premium as per the terms of the indenture. Moody's also does not currently rate Tenaris or any of its subsidiaries. Headquartered Chesterfield, Missouri, Maverick Tube Corporation produces welded tubular steel products used in the oil and natural gas industry and for various electrical applications. The energy products line consists of oil country tubular goods, couplings and coiled tubing which are used in newly drilled oil and natural gas wells, line pipe used in transporting oil and natural gas and coiled tubing used in well workover and subsea applications throughout the United States, Canada, and Latin America. MERIDIAN AUTOMOTIVE: Gets Court Approval of Disclosure Statement ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the Disclosure Statement and proposed solicitation procedures of Meridian Automotive Systems, Inc., thereby allowing the company to enter the final stages of its exit from Chapter 11. Meridian will begin distributing balloting materials to all creditors in order to solicit their votes in support of its Plan of Reorganization. The company anticipates a confirmation hearing on Nov. 29, 2006 and that the Plan will become effective on or about Dec. 11, 2006. "We are pleased to have received the Bankruptcy Court's approval of our Disclosure Statement [on Oct. 25, 2006], which moves us closer to our ultimate emergence from Chapter 11," Richard E. Newsted, Meridian's President and CEO, said. Most important, our Plan has the support of our major secured creditor classes and the Official Committee of Unsecured Creditors." A full-text blacklined copy of the Company's Disclosure Statement is available for free at: http://ResearchArchives.com/t/s?1411 A full-text blacklined copy of Meridian Automotive's Fourth Amended Reorganization Plan is available for free at: http://ResearchArchives.com/t/s?1412 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. MICHAEL'S STORES: Moody's Holds Proposed $2.4 Bil. Sr. Loan at B2 ----------------------------------------------------------------- Moody's Investors Service affirmed the proposed $2.4 billion senior secured term loan for Michael's Stores Inc. at B2, the proposed $750 million senior note issue at B2, the proposed $400 million senior subordinated note issue at Caa1, the corporate family rating at B2, the default probability rating at B2, and the speculative grade liquidity rating at SGL-3. Moody's also assigned a Caa1 rating to a proposed $250 million issue of junior subordinated discount notes. Moody's does not rate the proposed $1 billion secured revolving credit facility. Proceeds from the new debt, together with incremental equity investment from the new owners Blackstone and Bain, will be used to finance the leveraged buyout of the company for total consideration of about $6 billion. Relative to the prior capital structure that was rated on September 28, 2006, the senior notes were upsized to $750 million from $700 million, the senior subordinated notes were downsized to $400 million from $700 million, and the $250 million issue of subordinated discount notes was newly created. The rating outlook is stable. Ratings assigned: * $250 million subordinated discount notes at Caa1 Ratings affirmed: * $2.4 billion senior secured term loan at B2; * $750 million senior notes at B2; * $400 million senior subordinated notes at Caa1; * Corporate family rating at B2; * Probability-of-default rating at B2; * Speculative Grade Liquidity Ratings of SGL-3. The affirmation of the corporate family rating at B2 reflects the balance of certain qualitative rating drivers that have low investment grade characteristics with important quantitative and qualitative attributes that are solidly non-investment grade. In particular, driving down the rating with Caa attributes are the weak post-transaction credit metrics reflecting high leverage, low fixed charge coverage, and minimal free cash flow. Also constraining the rating with a B characteristic is the company's aggressive financial policy in which forward financial flexibility is being severely diminished for the benefit of pre- transaction shareholders. Partially offsetting these risks are the history of low cyclicality and seasonality for Michael's stores compared to many other specialty retailers, the geographic diversity across the U.S. and Canada, and the strong market position relative to other traditional and non-traditional craft retailers. The affirmation of the Speculative Grade Liquidity Rating at SGL-3 recognizes that cash flows for capital investment are likely to be sizable in comparison with operating cash flow, and that the revolving credit facility will be meaningfully utilized at least for the next four quarters. The stable outlook anticipates that the company will steadily grow revenue and cash flow. The outlook also considers Moody's expectation that the company's policy with respect to uses of discretionary cash flow will be measured, resulting in balance sheet improvement. In addition, Moody's also expects that the company will maintain solid liquidity through moderation of planned growth capital investment if operating results fall below plan. Ratings could eventually move upward if the company continues the historical pattern of consistent sales growth at new and existing stores; if the company achieves a material part of anticipated post-merger operating synergies; and if financial flexibility sustainably strengthens such that EBIT coverage of interest expense approaches 1.5x, leverage falls toward 6x, and Free Cash to Debt approaches 5% on a sustainable basis. A permanent decline in revolving credit facility availability, inability to improve comparable store sales and operating margins, or an aggressive financial policy action could cause the ratings to be lowered. Specifically, ratings would to be lowered if operating performance falters such that debt to EBITDA is permanently above 8x, EBIT to interest expense remains near or below 1 time, or free cash flow to debt continues to be negative. Moody's applied its new Probability-of-Default and Loss-Given- Default rating methodology to Michael's. Moody's 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 disaggregates these two key assessments in long-term ratings. The LGD rating methodology also enhances the consistency in Moody's notching practices across industries and improves the transparency and accuracy of our ratings as our 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 to LGD6. Michael's Stores, Inc, with headquarters in Irving, Texas, operates the largest chain of craft superstores in North America with 1085 stores located in the U.S. and Canada. Revenue for the twelve months ending July 29, 2006 was $3.7 billion. MORGAN STANLEY: Fitch Junks Rating on Class B-1 Issue ----------------------------------------------------- Fitch Ratings has taken rating actions on these Morgan Stanley issues: Series 2001-AM1 -- Class M-1 affirmed at 'AAA'; -- Class M-2 downgraded from 'A-' to 'BBB+'; -- Class B-1 downgraded from 'B' to 'C' and assigned a Distressed Recovery rating of 'DR2'; Series 2001-NC1 -- Class M1 affirmed at 'AAA'; -- Class M2 affirmed at 'A+'; -- Class B1 affirmed at 'BBB-'; Series 2001-NC2 -- Class M-1 affirmed at 'AAA'; -- Class M-2 affirmed at 'AA-'; -- Class B affirmed at 'BBB-'; Series 2001-NC4 -- Class M-1 affirmed at 'AAA'; -- Class M-2 downgraded from 'AA' to 'AA-'; -- Class B-1 downgraded from 'BBB-' to 'B+'; Series 2002-AM2 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B-1, B-2 downgraded from 'B+' to 'C' and assigned a DR rating of 'DR6'; Series 2002-AM3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 downgraded from 'BB+' to 'B+'; Series 2002-HE1 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 affirmed at 'BB+'; Series 2002-HE2 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded from 'A' to 'A-'; -- Class B-1 downgraded from 'BBB' to 'B'; -- Class B-2 downgraded from 'BBB-' to 'C' and assigned a DR rating of 'DR5'; Series 2002-HE3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 downgraded from 'BBB-' to 'BB+'; Series 2002-NC2 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B-1 downgraded from 'BBB-' to 'BB-'; Series 2002-NC3 -- Class A affirmed at 'AAA'; -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 affirmed at 'BBB-'; Series 2002-NC4 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class B-1 downgraded from 'BBB' to 'BB'; -- Class B-2 downgraded from 'BB+' to 'B+'; Series 2002-NC5 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class B-1 downgraded from 'BBB' to 'BB'; -- Class B-2 downgraded from 'BBB-' to 'B+'; Series 2002-NC6 -- Class M-1 upgraded from 'AA' to 'AA+'; -- Class M-2 affirmed at 'A'; -- Class B-1 affirmed at 'BBB'; -- Class B-2 affirmed at 'BBB-'; Series 2002-OP1 -- Class M-1 affirmed at 'AA'; -- Class M-2 downgraded from 'A' to 'A-'; -- Class B-1 downgraded from 'BB+' to 'B'; -- Class B-2 downgraded from 'BB' to 'C' and assigned a DR rating of 'DR5'; Series 2003-HE1 -- Class M-1 upgraded from 'AA' to 'AA+'; -- Class M-2 upgraded from 'A' to 'A+'; -- Class M-3 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BBB-'; Series 2003-NC5 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 affirmed at 'BBB-'; Series 2003-NC6 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A'; -- Class M-3 affirmed at 'A-'; -- Class B-1 affirmed at 'BBB+'; -- Class B-2 affirmed at 'BBB'; -- Class B-3 downgraded from 'BBB-' to 'BB+'; Series 2003-NC3 -- Class M-1 affirmed at 'AA'; -- Class M-2 affirmed at 'A+'; -- Class M-3 affirmed at 'A'; -- Class B-1 affirmed at 'A-'; -- Class B-2 downgraded from 'BBB+' to 'BBB-'; -- Class B-3 downgraded from 'BBB' to 'BB'. The mortgage loans consist of fixed- and adjustable-rate; 15- and 30-year mortgages extended to subprime borrowers and are secured by first and second liens, primarily on one- to four-family residential properties. As of the September 2006 distribution date, the transactions are seasoned from a range of 39 (2003-HE1) to 64 (2001-NC1) months and the pool factors (current mortgage loan principal outstanding as a percentage of the initial pool) range from 5.00% (2001-NC1) to 16.20% (2003-HE1). The loans are serviced by various servicers, including Litton Loan Servicing (rated 'RPS1' by Fitch), Option One (rated 'RPS1' by Fitch), and Ocwen Bank (rated 'RPS2' by Fitch). The AM series are backed by collateral primarily originated or acquired by Aames Capital Corporation. The NC series are backed by collateral primarily originated or acquired by New Century Capital Corporation. The OP series is backed by collateral primarily originated or acquired by Option One Mortgage Corporation. The HE series are backed by collateral originated or acquired from multiple sellers. The affirmations reflect a stable relationship between credit enhancement and future loss expectations and affect approximately $983.76 million of outstanding certificates. The negative rating actions reflect deterioration in the relationship between available CE and future loss expectations and affect approximately $103.62 million of outstanding certificates. All of the transactions affected by negative actions are below their overcollateralization targets. The positive rating actions reflect an improvement in the relationship between CE and future loss expectations and affect approximately $148.65 million of outstanding certificates. Series 2001-AM1, aged 59 months, has a pool factor of approximately 5.8% and a current balance of approximately $20.64 million. It has sustained a cumulative loss to date of approximately 3.27%, and has serious delinquencies (defined as loans 60+ days delinquent, in bankruptcy, foreclosure, or real estate owned), that make up approximately 37.46% of the current balance. Series 2001-NC4, aged 57 months, has a pool factor of approximately 8% and a current balance of approximately $52.11 million. It has sustained a cumulative LTD of approximately 2.47%, and has serious delinquencies that make up approximately 45.82% of the current balance. Series 2002-AM2, aged 53 months, has a pool factor of approximately 6.9% and a current balance of approximately $29.6 million. It has sustained a cumulative LTD of approximately 1.92%, and has serious delinquencies that make up approximately 29.34% of the current balance. Series 2002-NC2, aged 53 months, has a pool factor of approximately 7.9% and a current balance of approximately $46.19 million. It has sustained a cumulative LTD of approximately 1.7%, and has serious delinquencies that make up approximately 23.32% of the current balance. Series 2002-HE2, aged 50 months, has a pool factor of approximately 9.5% and a current balance of approximately $59.23 million. It has sustained a cumulative LTD of approximately 1.88%, and has serious delinquencies that make up approximately 32.92% of the current balance. Series 2002-NC4, aged 48 months, has a pool factor of approximately 10.1% and a current balance of approximately $71.46 million. It has sustained a cumulative LTD of approximately 2%, and has serious delinquencies that make up approximately 29.47% of the current balance. Series 2002-OP1, aged 49 months, has a pool factor of approximately 8% and a current balance of approximately $33.06 million. It has sustained a cumulative LTD of approximately 1.59%, and has serious delinquencies that make up approximately 33.66% of the current balance. Series 2002-NC5, aged 47 months, has a pool factor of approximately 10.3% and a current balance of approximately $84.79 million. It has sustained a cumulative LTD of approximately 1.79%, and has serious delinquencies that make up approximately 24.76% of the current balance. Series 2002-AM3, aged 47 months, has a pool factor of approximately 12.6% and a current balance of approximately $92.26 million. It has sustained a cumulative LTD of approximately 2.02%, and has serious delinquencies that make up approximately 21.06% of the current balance. Series 2002-HE3, aged 46 months, has a pool factor of approximately 13.7% and a current balance of approximately $69.48 million. It has sustained a cumulative LTD of approximately 1.86%, and has serious delinquencies that make up approximately 27.55% of the current balance. Series 2003-NC3, aged 42 months, has a pool factor of approximately 10.6% and a current balance of approximately $74.04 million. It has sustained a cumulative LTD of approximately 1.06%, and has serious delinquencies that make up approximately 22.13% of the current balance. Series 2003-NC6, aged 39 months, has a pool factor of approximately 12.6% and a current balance of approximately $100.44 million. It has sustained a cumulative LTD of approximately 1.05%, and has serious delinquencies that make up approximately 20.73% of the current balance. NATIONAL WARRANTY: Liquidators Call for Eligible Claims ------------------------------------------------------- G.T.L. Bullmore and S.L.C. Whicker, the joint official liquidators of National Warranty Insurance Risk Retention Group are asking parties who wish to make a claim against NWIG with respect to vehicle service contracts backed by the company to turn in their claims. Parties who want to assert a claim are directed to download a claim form at National Warranty's Web site or call 1-877-750-6944 to request a copy of the form. All claim form must be submitted by Nov. 30, 2006, to: Joint Official Liquidators of NWIG c/o Suite 202 Grand Central Court 620 N 48th Street Lincoln, NE 68505-0846 The joint official liquidators will reviewe all claims filed. They caution that National Warranty is insolvent and accepted claims will probably not be paid in full. The liquidators add that the ability to claim of parties with vehicle warranties issued by SC&E Administrative Services Inc., American Prime Asset or Triad Marketing Group LLC, may have been affected by the certification of a class of creditors in litigation to which S&CE, Triad and APA are party. According to the liquidators, a claim will be submitted on behalf of these parties and they cannot directly lay a claim against National Warranty. Based in Lincoln, Nebraska and incorporated in the Cayman Islands, National Warranty Insurance Co. -- http://www.nwig.com/-- insured, reinsured, designed, and administered mechanical related warranties. In June 2004, the Grand Court of the Cayman Islands declared the company insolvent and appointed Theo Bullmore and Simon Whicker, partners of KPMG in the Cayman Islands, as Joint Official Liquidators. NORD RESOURCES: Amends Pact with Coyote Springs and Mimbres Owners ------------------------------------------------------------------ Nord Resources Corporation entered into amendments to its stock option agreements with the Coyote Springs Owners and the Mimbres Owners. The Company's stock option agreements with each of the Coyote Springs Owners and the Mimbres Owners did not contain any provisions with respect to the treatment of the options in the event of a merger or any other significant corporate transaction involving the Company. Coyote Spring Amendment The Coyote Springs Owners Amendment Agreement dated Oct. 17, 2006, amends the terms of the Agreement, among others, as follows: -- in the event of a merger of the Company, its obligation to Coyote Springs Owners will be satisfied by the payment of the greater of the cash amount payable or the value of the number of "Substitute Shares" equal to the number of common shares issuable at the time under the Option Agreement multiplied by the "Conversion Ratio"; -- the payment will be made, at the election of the "Successor," either in cash or by the issuance of the number of Substitute Shares; -- in the event of a Qualifying Merger, the Company's obligation will be satisfied, at the option of the Successor, by either issuing to each of the Coyote Springs Owners the equivalent number of "Substitute Options" multiplied by the Conversion Ratio or a cash amount equal to the value of such Substitute Options; -- the exercise price of each Substitute Option will be 15% below the market price of the Substitute Shares on the date of issuance of the Substitute Options; The Company acquired an exclusive option from Thornwell Rogers, South Branch Resources, LLC, and MRPGEO, LLC, the Coyote Springs Owners, to purchase the leasehold rights and mining claims located in the Safford mining district in Graham County, Arizona, described as "Coyote Springs". Mimbres Amendment The Mimbres Owners Amendment Agreement, amends the terms of the Option Agreement, among others, as follows: -- in the event of a Qualifying Merger, the Company's obligation to each of the Mimbres Owners will be satisfied by the payment of the greater of the cash amount payable at that time under the Option Agreement or the value of the number of "Substitute Shares" at that time under the Mimbres Option Agreement multiplied by the "Conversion Ratio"; -- the foregoing payment will be made, at the election of the "Successor," either in cash or by the issuance of the number of Substitute Shares as so calculated; -- in the event of a Qualifying Merger, the Company's obligation to each of the Mimbres Owners will be satisfied, at the option of the Successor, by either issuing to each of the Mimbres Owners "Substitute Options" equal to the number of Options issuable at the time under the Option Agreement multiplied by the Conversion Ratio or paying to each of the Mimbres Owners a cash amount equal to the value of the Substitute Options; -- the exercise price of each Substitute Option will be 15% below the market price of the Substitute Shares on the date of issuance of the Substitute Options; The Company acquired an exclusive option from Thornwell Rogers, South Branch Resources and MRPGEO, the Mimbres Owners, to purchase the leasehold rights and mining claims for a porphyry copper exploration target known as the Mimbres property, located near Silver City, New Mexico. A full text-copy of the Coyote Springs Amendment may be viewed at no charge at http://ResearchArchives.com/t/s?1408 A full text-copy of the Mimbres Amendment may be viewed at no charge at http://ResearchArchives.com/t/s?1409 Headquartered in Dragoon, Arizona, Nord Resources Corporation (Pink Sheets: NRDS) -- http://www.nordresources.com/-- is a natural resource company focused on near-term copper production from its Johnson Camp Mine and the exploration for copper, gold and silver at its properties in Arizona and New Mexico. The Company also owns approximately 4.4 million shares of Allied Gold Limited, an Australian company. In addition, the Company maintains a small net profits interest in Sierra Rutile Limited, a Sierra Leone, West African company that controls the world's highest-grade natural rutile deposit. * * * As reported in the Troubled Company Reporter on Sept. 8, 2006, Nord Resources Corporation's balance sheet at June 30, 2006, showed $4,214,657 in total assets and $8,430,713 in total liabilities, resulting in a $4,216,056 stockholders' deficit. The Company had a $3,120,573 deficit at March 31, 2006. NORTEL NETWORKS: Doubles Network Capacity Through Wireless Tech. ---------------------------------------------------------------- Nortel Networks has conducted the industry's first wireless transmission using Uplink Collaborative MIMO to demonstrate the ability for operators to serve up to double the number of mobile broadband subscribers supported in a cell site as current wireless technologies allow. For 4G wireless operators, MIMO enables the potential to substantially increase their subscription revenue with the same capital investment. Developed by Nortel, Collaborative MIMO is part of the WiMAX industry standard and is also being proposed for 3GPP WCDMA Long-Term Evolution (LTE) and 3GPP2 CDMA EV-DO Rev-C standards. "Uplink Collaborative MIMO creates a technological disruption that offers revolutionary improvement in wireless network capacity and provides a clear path to 4G Mobile Broadband - of which WiMAX is the first technology," said John Hoadley, chief technology officer, Mobility and Converged Core Networks, Nortel. "Nortel's latest demonstration confirms that subscriber count and capacity gains of OFDM-MIMO can be delivered even where individual devices are not MIMO-enabled with multiple transmit antennas. Collaborative MIMO provides the greater uplink capacity and spectral efficiency needed by operators to deliver a full mobile broadband experience which will include internet, video and VoIP cost-effectively across a wide range of devices," he said. The demonstration at Nortel's Advanced Wireless Lab in Ottawa, used Multiple-Input, Multiple-Output (MIMO), an emerging wireless antenna technology that will serve as the foundation of Nortel's 4G Mobile Broadband solutions. For the demonstration, Nortel used MIMO-enabled multiple antennas at the cell site and on 4G devices together with orthogonal frequency division multiplexing transmission technology. Previous Nortel and industry research has shown that a combination of these two technologies offers the ability to deliver the highest network bandwidth and greatest spectral efficiency capabilities at the lowest cost. With OFDM, a single channel within a spectrum band is divided into multiple, smaller sub-carriers that transmit information simultaneously without interference. MIMO allows multiple data streams to be transmitted at the same time and on the same sub- carriers through interference-free MIMO spatial channels. Due to unique spatial channels that result for each antenna path, interference between data streams is reduced. As a result, OFDM- MIMO substantially increases the bandwidth and spectral efficiency. Uplink Collaborative MIMO is a further enhancement that enables the use of the same channel sub-carriers by multiple devices and subscribers -- effectively allowing them to share the same sub- carrier without interference. Without Collaborative MIMO, the traffic being carried on a single sub-carrier would not be maximized across multiple subscribers. The result would be that the traffic would be severely limited, preventing users from having a true broadband experience and limiting VoIP capacity such that conversations would be unintelligible. In March 2005, Nortel was the first company to demonstrate OFDM- MIMO at 37 Mbps peak data rates in 5 MHz of spectrum in the downlink, with the transfer of a 128 MB file in just 30 seconds. Over the last eight years, Nortel has been making progressive investments in OFDM-MIMO technology and owns dozens of critical patents in these areas. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Limited (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on July 10, 2006, Dominion Bond Rating Service confirmed the long-term ratings of Nortel Networks Capital Corporation, Nortel Networks Corporation, and Nortel Networks Limited at B (low) along with the preferred share ratings of Nortel Networks Limited at Pfd-5 (low). All trends are Stable. DBRS confirmed B (low) Stb Senior Unsecured Notes; B (low) Stb Convertible Notes; B (low) Stb Notes & Long-Term Senior Debt; Pfd- 5 (low) Stb Class A, Redeemable Preferred Shares; and Pfd-5 (low) Stb Class A, Non-Cumulative Redeemable Preferred Shares. As reported in the Troubled Company Reporter on June 20, 2006, Moody's Investors Service affirmed the B3 corporate family rating of Nortel; assigned a B3 rating to the proposed US$2 billion senior note issue; downgraded the US$200 million 6.875% Senior Notes due 2023 and revised the outlook to stable from negative. Standard & Poor's also affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company, and assigned its 'B-' senior unsecured debt rating to the company's proposed $2 billion notes. The outlook is stable. NORTEL NETWORKS: Nortel Government Bags Elite Improvement Rating ---------------------------------------------------------------- Nortel Government Solutions, a U.S. company wholly owned by Nortel Networks, has attained an elite process improvement rating based on assessment of its performance in managing on-time delivery of high-quality services and products to U.S. Federal Government agencies. The Information Systems Solutions Sector of Nortel Government Solutions has achieved a Capability Maturity Model Integration Maturity Level 5 rating from a team of independent evaluators certified by the Carnegie Mellon Software Engineering Institute. Nortel Government achieved this rating, based on evaluation of software and systems engineering processes for mission-critical systems, in October. Only seven U.S. companies accomplished this in the 18-month period ending in June 2006. Empirical data from Carnegie Mellon indicates that organizations realize improved schedule, cost and quality performance, higher customer satisfaction, and higher return on investment as they achieve higher levels of maturity. "Key to this achievement was the predictive quality model we developed from three years of process and product measurement," said Satya Akula, president and general manager, Information Systems Solution Sector, Nortel Government Solutions. "Our ability to monitor and predict performance throughout the development lifecycle helps us to consistently meet or exceed customer expectations." "Our employees have become expert at monitoring and managing project performance, applying corrective actions when necessary, and recommending process improvements," said Chuck Saffell, chief executive officer, Nortel Government Solutions. "This rating confirms our commitment to high quality and high performance, and places Nortel Government Solutions among the elite U.S. companies serving the Federal Government market." CMMI is a process improvement approach that provides organizations with guidelines to establish effective project management and engineering processes. CMMI helps set process improvement goals and priorities and integrate traditionally separate organizational practices. It also provides a quality process framework and a point of reference for achieving best-in-class performance. About Nortel Government Solutions Based in Fairfax, Virginia, Nortel Government Solutions -- http://www.nortelgov.com/-- is a network-centric integrator, providing the services expertise, mission-critical systems and secure communications that empower government to ensure the security, livelihood, and well being of its citizens. The company is a provider for solutions designed to improve workforce productivity, reduce operating costs, and streamline inter-agency communications. About Nortel Networks Headquartered in Ontario, Canada, Nortel Networks Limited (NYSE/TSX: NT) -- http://www.nortel.com/-- delivers technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband. Nortel does business in more than 150 countries. * * * As reported in the Troubled Company Reporter on July 10, 2006, Dominion Bond Rating Service confirmed the long-term ratings of Nortel Networks Capital Corporation, Nortel Networks Corporation, and Nortel Networks Limited at B (low) along with the preferred share ratings of Nortel Networks Limited at Pfd-5 (low). All trends are Stable. DBRS confirmed B (low) Stb Senior Unsecured Notes; B (low) Stb Convertible Notes; B (low) Stb Notes & Long-Term Senior Debt; Pfd- 5 (low) Stb Class A, Redeemable Preferred Shares; and Pfd-5 (low) Stb Class A, Non-Cumulative Redeemable Preferred Shares. As reported in the Troubled Company Reporter on June 20, 2006, Moody's Investors Service affirmed the B3 corporate family rating of Nortel; assigned a B3 rating to the proposed US$2 billion senior note issue; downgraded the US$200 million 6.875% Senior Notes due 2023 and revised the outlook to stable from negative. Standard & Poor's also affirmed its 'B-' long-term and 'B-2' short-term corporate credit ratings on the company, and assigned its 'B-' senior unsecured debt rating to the company's proposed $2 billion notes. The outlook is stable. PACIFIC NORTHWEST: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Pacific Northwest Storage, LLC c/o Robert Stewart 745 Indianapolis Road Mooresville, IN 46158 Bankruptcy Case No.: 06-42582 Chapter 11 Petition Date: October 26, 2006 Court: Western District of Washington (Tacoma) Judge: Paul B. Snyder Debtor's Counsel: Arnold M. Willig, Esq. Hacker & Willig, Inc., P.S. 520 Pike Street, Suite 2510 Seattle, WA 98101-4006 Tel: (206) 340-1935 Total Assets: $1,875,000 Total Debts: $1,412,967 The Debtor did not file a list of its 20 largest unsecured creditors. PARMALAT: Meeting of Parmalat Capital Creditors Set for November 9 ------------------------------------------------------------------ Gordon I. MacRae and James Cleaver of Kroll (Cayman) Limited, the Joint Official Liquidators for Parmalat Capital Finance Limited, will convene a meeting of Parmalat Capital's creditors on Nov. 9, 2006, at 10:30 a.m. (U.S.) EDT. The meeting will be held at Kroll Cayman's offices, 4th floor, Bermuda House, Dr. Roy's Drive, George Town, Grand Cayman, Cayman Islands. The purpose of the meeting is to consider, and if applicable, adopt a resolution establishing a liquidation committee. The meeting is open to registered creditors of Parmalat Capital. All creditors are requested to attend the meeting. A registered creditor is one that will have provided the Liquidators with a complete proof of debt form and supporting documentation by Nov. 3, 2006. Registered creditors may vote in person or may appoint another person as their proxy to attend and vote in their place. Those who intend to appoint a proxy must complete a proxy form and return it to the Liquidators by November 8. Parmalat Capital is "under winding up proceedings " before the Grand Court of the Cayman Islands. About Parmalat Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- together with Milk Products of Alabama, LLC, and Farmland Dairies, LLC filed Chapter 11 petitions on Feb. 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 U.S. 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. The U.S. Debtors' parent company, Parmalat SpA and its Italian affiliates, filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. Dr. Bondi is represented by Mr. Holtzer and Ms. Goldstein at Weil Gotshal & Manges LLP in the Sec. 304 case. Parmalat has three financing arms: Parmalat Capital Finance Limited, Dairy Holdings, Ltd., and Food Holdings, Ltd. Dairy Holdings and Food Holdings are Cayman Island special-purpose vehicles established by Parmalat SpA. The Finance Companies are under separate winding up petitions before the Grand Court of the Cayman Islands. Gordon I. MacRae and James Cleaver of Kroll (Cayman) Limited serve as Joint Provisional Liquidators in the cases. On Jan. 20, 2004, the Liquidators filed Sec. 304 petition, Case No. 04-10362, in the United States Bankruptcy Court for the Southern District of New York. In May 2006, the Cayman Island Court appointed Messrs. MacRae and Cleaver as Joint Official Liquidators. Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP, and Richard I. Janvey, Esq., at Janvey, Gordon, Herlands Randolph, represent the Finance Companies in the Sec. 304 case. The Honorable Robert D. Drain presides over the Parmalat Debtors' U.S. cases. PARMALAT SPA: 35,000 Plaintiffs to Join Parma Civil Suit -------------------------------------------------------- The Hon. Judge Domenico Truppa of the Court of Parma, Italy is allowing 35,000 plaintiffs to participate in a civil case filed against Parmalat S.p.A., Agence France Presse says. Judge Truppa selected 35,000 plaintiffs from 42,000 applicants to represent some 135,000 investors who lost around EUR14 billion when Parmalat collapsed in December 2003. The civil case accuses 64 defendants, including Parmalat founder Calisto Tanzi, former Chief Financial Officer Fausto Tonna, accountants, auditors and bankers and former board members, of fraudulent bankruptcy and false accounting, AFP relates. The proceedings related to Parmalat's collapse began on June 5, 2006. Mr. Tanzi and his co-accused are also under trial in Milan for stock price manipulation and releasing false information. Judge Truppa slated the next preliminary hearing for Nov. 22. About Parmalat Headquartered in Milan, Italy, Parmalat S.p.A. -- http://www.parmalat.net/-- sells nameplate milk products that can be stored at room temperature for months. It also has 40- some brand product line, which includes yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices. The Company's U.S. operations filed for chapter 11 protection on Feb. 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 US$200 million in assets and debts. The U.S. Debtors emerged from bankruptcy on April 13, 2005. Parmalat S.p.A. and its Italian affiliates filed separate petitions for Extraordinary Administration before the Italian Ministry of Productive Activities and the Civil and Criminal District Court of the City of Parma, Italy on Dec. 24, 2003. Dr. Enrico Bondi was appointed Extraordinary Commissioner in each of the cases. The Parma Court has declared the units insolvent. On June 22, 2004, Dr. Bondi filed a Sec. 304 Petition, Case No. 04-14268, in the United States Bankruptcy Court for the Southern District of New York. PITTSBURGH BREWING: Files Disclosure Statement in Pennsylvania -------------------------------------------------------------- Pittsburgh Brewing Company Inc., together with Keystone Brewers Holding Co., filed a Disclosure Statement explaining their joint Chapter 11 Plan of Reorganization with the U.S. Bankruptcy Court for Southern District of Pennsylvania. Overview of the Plan The Plan contemplates that Keystone Brewers will merge into Pittsburgh Brewing along with the trademarks it owns. In addition, the Plan provides that the funding for the Plan will be obtained from financing and the Debtors' business operations. The Debtor expects subsequent financing of $7 million with a portion consisting of new investor equity and the balance coming in the form of a commercial loan. The $7 million infusion into the Company will allow it to pay administrative claims in full on the effective date of the Plan and commence all other payments provided for in the Plan. Treatment of Claims Under the Plan, secured claims of: (1) Jack P. Cerone, amounting to $8 million, will be paid pursuant to conversion of his debt to equity. Mr. Cerone will get additional 20% equity interest in the Debtor totaling to 40%. (2) Rexam Beverage Can Company will be satisfied in full payment of the remaining balance due in the approximate amount of $60,000, via payments of $2,500 per month commencing on the Effective Date of the Plan; (3) Pennsylvania Department of Revenue and the County of Allegheny is disputed by the Debtor and will be objected to. The Debtor believes the claims have been paid; (4) BMW Financial Services is disputed by the Debtor. (5) City of Pittsburgh will be satisfied in full payment of the remaining balance due via payments of $1,000 per month commencing on the Effective Date of the Plan; (6) United States Alcohol & Tobacco Tax & Trade Bureau is disputed as to the amount claimed by the Debtor. The Debtor believes the amount claimed is approximately $120,000 too high; (7) Pennsylvania Industrial Development Authority in the amount of $577,749 will be paid in full via payments of $5,000 per month for a 60-month period commencing on the Effective Date of the Plan, with the balance remaining to be paid via a balloon payment in the 61st month after the Effective Date of the Plan; and (8) Pittsburgh Water and Sewer Authority is disputed by the Debtor and will be objected to. Any allowed portion of this claim will be paid in full via monthly payments of $5,000 for a 60-month period commencing on the Effective Date of the Plan, with the balance remaining to be paid via a balloon payment in the 61st month after the Effective Date of the Plan. The Administrative Class 1 claims, which are in the estimated amount of $300,000, will be paid in accordance with the fee agreement with the Debtors on the Effective Date of the Plan. Holders of other allowed Administrative Claims will be paid in full on the Effective Date of the Plan. The tax and interest portion of any allowed portion of Priority Claims will be paid in full in equal monthly installments. Pursuant to the Plan, the creditors holding unsecured claims will be paid out of a fund in the amount of $2,000,000 created by the Debtor making payments of $400,000 per year for five years. These claimants will receive a pro rata share of the said fund on a yearly basis. If the allowed claims total $6 million as expected by the Debtor, these claimants will get 1/3 of their allowed claim amounts. In addition to Mr. Cerone, Joseph Piccirilli, who has incurred personal liability for $2 million related to or guaranteeing debts of the Debtor, will have his equity interest increased to 50%. The remaining equity security holders will share the remaining 10% of the Debtors' equity. A full-text copy of the Debtors' Disclosure Statement is available for a fee at: http://www.researcharchives.com/bin/download?id=061026042902 Headquartered in Pittsburgh, Pennsylvania, Pittsburgh Brewing Company, Inc. -- http://www.pittsburghbrewingco.com/-- manufactures malt liquors, such as beer and ale. Its products include Iron City Beer, IC Light Beer, and Augustiner Amber Lager. The Company filed for chapter 11 protection on Dec. 7, 2005 (Bankr. W.D. Penn. Case No. 05-50347). Robert O. Lampl, Esq., at Law Office Robert O. Lampl, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its assets and debts estimated $1 million to $10 million. PITTSBURGH BREWING: Judge McCullough Says Plan is Unworkable ------------------------------------------------------------ The Hon. M. Bruce McCullough of the U.S. Bankruptcy Court for the Western District of Pennsylvania expressed doubts that a chapter 11 plan of reorganization filed by Pittsburgh Brewing Company Inc. could work, The Associated Press reports. Judge McCullough said Tuesday the plan, which calls for $7 million in debt and equity to modernize the brewery's facilities and increase marketing, would probably need $12 million to survive. "That plan doesn't fly, because the brewery won't have any equity remaining after repaying its creditors," he added. According to the news, Judge McCullough commented about it during a hearing on $814,000 in unpaid federal excise taxes, a debt that could serve as grounds to close the brewery immediately. The Court delayed a decision on unpaid taxes to allow the Company to secure financing. Joe Napsha of Tribune-Review discloses that the Company's attorney, Robert O. Lampl, told Judge McCullough that it has identified an investor and asked the Court to give them until Nov. 7, 2006, to raise enough money to allow the Company to continue operating. Mr. Napsha says that hearing will also let the Court decide whether to approve the Company's request for $500,000 interim financing from Businessman Craig E. Newbold at East Liverpool, Ohio. The Company, Mr. Napsha adds, agreed with the U.S. Alcohol and Tobacco Tax and Trade Bureau's request that it forfeit a $500,000 surety bond and a $43,000 cash bond as partial payment for an excise tax debt of more than $745,000 on the production and shipment of beer. The debt stretched back to 2001. Headquartered in Pittsburgh, Pennsylvania, Pittsburgh Brewing Company, Inc. -- http://www.pittsburghbrewingco.com/-- manufactures malt liquors, such as beer and ale. Its products include Iron City Beer, IC Light Beer, and Augustiner Amber Lager. The Company filed for chapter 11 protection on Dec. 7, 2005 (Bankr. W.D. Penn. Case No. 05-50347). Robert O. Lampl, Esq., at Law Office Robert O. Lampl, represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, its assets and debts estimated $1 million to $10 million. QWEST COMMS: Moody's Places BB (low) Rating on Senior Notes ----------------------------------------------------------- Dominion Bond Rating Service changed the trend on the ratings of Qwest Communications International Inc.'s senior notes at BB (low)/B (high) and its affiliates, including its wholly owned incumbent fixed-line business, Qwest Corporation's senior notes at BB to Positive from Stable and confirmed the ratings of the group. The trend change is as a result of: -- improved EBITDA on a consolidated basis; -- sizable free cash flow being generated; and -- reduced debt levels, which has improved its consolidated credit metrics. Qwest continued to drive EBITDA growth over the past 18 months as a result of two factors. First, cost-cutting efforts in its long- haul business have significantly improved the EBITDA of this business. Second, the Company continues to pursue growth drivers including increasing penetration of long-distance and DSL services in its incumbent business. However, the local business continues to experience access line erosion at its incumbent telecom operations as a result of competition with cable operators selling voice services and technology substitution with wireless and DSL substituting for fixed-line connections. Qwest continues to defend against competition with bundles of fixed-line services and wireless. DBRS expects this trend to continue over the next 18 months with EBITDA growth rates likely to slow over this timeframe. As a result of the above factors, along with lower interest costs and reasonable capex levels, free cash flow has continued to improve and is now sizable on a consolidated basis at $1.1 billion. DBRS expects free cash flow to improve to roughly $1.5 billion for 2006 with further growth expected in 2007 and 2008. However, this sizable free cash flow has allowed Qwest to initiate a $2 billion share repurchase program that it plans to complete over the next two years. While DBRS anticipating some form of return to shareholders for some time, this program appears to be manageable given its free cash flow and its $1.7 billion cash position. While DBRS notes that additional cash needs may arise over this timeframe, DBRS believes that Qwest will still have the ability to further reduce its debt levels. Furthermore, DBRS notes that the cash needs of the non-Qwest Corp. entities have improved significantly with reduced debt levels and interest expense at the non-Qwest Corp. entities along with EBITDA improvement in its long-haul operation. This has allowed the free cash flow that Qwest Corp. generates to translate into improved free cash flow for the group. Finally, Qwest on a consolidated basis has continued to benefit from improved key credit metrics as debt levels continue to be reduced. Additionally, DBRS notes that key credit metrics at Qwest Corp. remain strong despite some pressure as EBITDA is experiencing some erosion due to competition and as growth businesses are not included this entity. DBRS expects that any rating improvement will be predicated on continued EBITDA growth, strong consolidated free cash flow and a further reduction in debt levels. RADIOSHACK CORP: Lackluster Performance Cues S&P to Whip Ratings ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered the corporate credit and senior unsecured ratings on Fort Worth, Texas-based RadioShack Corp. to 'BB' from 'BBB-'. At the same time, S&P lowered the short-term rating to 'B-1' from 'A-3'. The outlook is negative. Total debt was $610 million as of Sept. 30, 2006. "The downgrade reflects RadioShack's disappointing results so far in 2006," Standard & Poor's credit analyst Diane Shand said. "We expect that results will continue to be under pressure because of the company's inability to reverse trends in the wireless business." The ratings on RadioShack Corp. reflect the challenges of improving the sales and profits in its wireless business, exposure to short consumer electronics product cycles, and management's use of share buybacks to boost shareholder returns. These risks are partially mitigated by the company's dominant position in high- margin parts and accessories and the good cash flow generation capabilities of the RadioShack store network. ROPER 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 U.S. manufacturing sector, the rating agency confirmed the Ba2 Corporate Family Rating for Roper Industries Inc., as well as the B1 rating on the company's $230 million 3.75% Convertible Senior Subordinate Notes Due 2034. Those debentures were assigned an LGD6 rating suggesting noteholders will experience a 92% loss in the event of default. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations of the company: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $400m Sr. Sec. Revolver due Dec. 2009 Ba2 Ba1 LGD3 39% $655m Sr. Sec. Term loan due Dec. 2009 Ba2 Ba1 LGD3 39% 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 Duluth, Georgia, Roper Industries Inc. manufactures and distributes energy systems and controls, scientific and industrial imaging products and software. SAFESCRIPT PHARMACIES: Court Converts Chapter 11 Case to Chapter 7 ------------------------------------------------------------------ The Honorable Bill Parker of the U.S. Bankruptcy Court for the Eastern District of Texas, Tyler Division, has converted the Chapter 11 reorganization case of Safescript Pharmacies Inc. to a Chapter 7 liquidation proceeding. William T. Neary, the U.S. Trustee for Region 6, sought the conversion. Mr. Neary told the Court there is no prospect for reorganization of the Debtors' financial affairs. He also pointed out the Debtor's failure to pay quarterly fees to the U.S Trustee and the undue delay in the progress of the bankruptcy case. The Court has set a meeting of the Debtor's creditors at 10:15 a.m. on Nov. 27, 2006. Based in Longview, Texas, Safescript Pharmacies, Inc. operated drug stores that provided medication for patients with chronic pain. The Debtor sought protection from its creditors on March 19, 2004 (Bankr. E.D. Tex. Case No. 04-60600). William Sheehy, Esq., of the Wilson Law Firm, and Jerry S. Harris, Esq., represent the Debtor. The Court approved the sale of substantially all of the Debtors' assets to SS Acquisitions, LLC, on Aug. 12, 2004. When it filed for bankruptcy, the Debtor disclosed estimated assets of $500,000 to $1 million and debts of $1 Million to $10 million. SALLY HOLDINGS: Moody's Rates $1.07 Billion Sr. Sec. Loan at B2 --------------------------------------------------------------- Moody's Investors Service assigned first time ratings, including a corporate family rating of B2 and a speculative grade liquidity rating of SGL-2, to Sally Holdings, LLC. The rating outlook is stable. The ratings are conditional upon review of final documentation. Ratings assigned: * Corporate family rating at B2 * Probability-of-default rating at B2 * $400 million senior secured guaranteed bank revolving credit facility at Ba2 * $1.07 billion senior secured guaranteed term loans at B2 * $430 million senior unsecured guaranteed notes at B2 * $280 million unsecured senior subordinated guaranteed notes at Caa1 * Speculative Grade Liquidity Rating of SGL-2 Sally Holdings, LLC will own the beauty retail operations and the beauty distribution businesses currently owned by Alberto-Culver Company. Alberto-Culver is separating its consumer products business from its Sally/BSG operations, into two publicly-traded companies. Alberto-Culver shareholders will receive from New Sally Holdings, Inc. one share of each New Alberto-Culver and New Sally stock and a special cash dividend of $25 share. New Sally will fund the special dividend with debt and with $575 million of equity invested by Clayton, Dubilier & Rice Fund VII, L.P. At the conclusion of the transaction, New Sally will be owned approximately 52.5% by Alberto-Culver shareholders and 47.5% by CD&R, on a fully-diluted basis. New Sally, through intermediate holding companies including Sally Holdings, will own Sally and BSG. The B2 corporate family rating of Sally Holdings reflects post- transaction credit metrics that will be weak, especially very high leverage and low cash flow coverage. Scale, in terms of revenues, is commensurate with Ba rated companies. The ratings are further constrained by sales concentrations in hair care products, vendor concentrations, and wide-ranging competition. Offsetting these high yield attributes are the company's investment grade characteristics -- including extensive geographic diversification, leading positions in defined subsectors of retail, low seasonality and cyclicality, and generally robust comparable store sales increases. The ratings clearly benefit from the leading position of both Sally and BSG in their respective market segments and the quality and depth of their merchandise assortments. The speculative grade liquidity rating of SGL-2 reflects Sally Holding's comfortable liquidity profile and incorporates Moody's expectation that over the next four quarters Sally Holdings will fund its ordinary working capital, capital expenditures and mandatory debt amortization with cash generated from operations; however, the cushion of excess free cash flow will not be large in comparison to Sally Holdings' scale. The SGL rating also incorporates Moody's belief that the company will have access to its new $400 million asset-based revolving credit facility and that the facility's single covenant will not be tested. Given that all assets will be pledged to lenders, there is no alternative liquidity other than the sale of a business, which would impair enterprise value. The stable outlook reflects Moody's expectation that the company will continue to grow comparable store revenues, improve operating margins and generate positive free cash flow which will be applied heavily to debt reduction. Given the magnitude of Sally Holdings' post-transaction leverage, an upgrade is unlikely in the intermediate term. Over the longer term, an upgrade would require continuing solid operating performance coupled with debt reduction such that debt to EBITDA falls below 6x and free cash flow to debt is above 5% on a sustainable basis. Conversely, negative rating pressure would develop if operating performance were to be weaker than expected or if overall comparable store sales were to become negative. Quantitatively, ratings would be lowered if normalized annual reported EBITDA is not a minimum of $260 million, or if free cash flow to debt becomes negative. New Sally, through intermediate holding company Sally Investment Holdings, LLC, will own Sally Holdings. Sally Holdings will own the operating subsidiaries and Sally Capital Inc. Sally Holdings will be a borrower under a $400 million senior secured Asset Backed revolving credit facility and $1.07 billion in senior secured Term Loans, and a co-issuer, with Sally Capital, of $430 million senior unsecured notes and $280 million unsecured senior subordinated notes. The $400 million senior secured revolving credit facility will benefit from borrowing base governance and expected full collateral coverage in a hypothetical default scenario. The revolving credit facility is secured by a first-priority lien on accounts receivable, inventory and other assets, and a second priority lien on all other tangible and intangible assets of the company. The $1.07 billion senior secured term loans will be secured by a first priority lien on all tangible and intangible assets other than ABL Collateral, including property, plant, and equipment and capital stock of subsidiaries, as well as a second priority lien on the ABL Collateral. Moody's believes that there will be relatively little collateral coverage on the term loans during a hypothetical default scenario. Sally Holdings will be a borrower under the ABL and the Term Loans; if there are additional borrowers, all will be jointly and severally liable. Both the revolving credit facility and the term loans will have guarantees from the direct parent of each borrower, and from each direct and indirect domestic subsidiary of Sally Holdings. The $430 million senior unsecured notes and the $280 million unsecured senior subordinated notes reflect their unsecured status. Sally Holdings and co-Issuer Sally Capital will be jointly and severally liable. These issues will be guaranteed by Sally Holdings' direct and indirect operating subsidiaries. New Sally Holdings, Inc., headquartered in Denton, Texas, retails and distributes beauty supplies with operations under its Sally Beauty Supply and Beauty Systems Group businesses. For the fiscal year ended Sept. 30, 2005, New Sally's revenues exceeded $2.2 billion. SEARS HOLDINGS: 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 U.S. and Canadian retail sector, the rating agency confirmed its Ba1 Corporate Family Rating for Sears Holdings Corporation, and its Baa3 rating on the company's $4 billion Sr. Sec. Revolving Credit Facility. Additionally, Moody's assigned an LGD2 rating to the facility, suggesting creditors will experience a 24% 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%). Hoffman Estates, Illinois-based Sears Holdings Corporation (NASDAQ: SHLD) -- http://www.searsholdings.com/-- is a broadline retailer, with 3,800 full-line and specialty retail stores in the United States and Canada. Sears is a home appliance retailer as well as a retailer of tools, lawn and garden, home electronics, and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including well-known labels as Lands' End, Jaclyn Smith, and Joe Boxer, as well as the Apostrophe and Covington brands. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. STARWOOD HOTELS: Fitch Lifts Ratings One Notch to BBB- from BB+ --------------------------------------------------------------- Fitch Ratings has upgraded Starwood Hotels & Resorts Worldwide Inc.'s credit ratings: -- Issuer Default Rating (IDR) to 'BBB-' from 'BB+'; -- Bank credit facility to 'BBB-' from 'BB+'; -- Senior unsecured notes to 'BBB-' from 'BB+'. The ratings apply to roughly $2.5 billion of outstanding debt as of June 30. The Rating Outlook has been revised to Stable from Positive as the likelihood for significant continued share repurchase activity and the potential for strategic acquisitions are likely to limit further upside to Starwood's credit ratings over the next 12 months. The upgrade is based on the company's continued execution on its plan to sell assets in order to improve its balance sheet, its business mix reorganization and the continued strength of lodging fundamentals. The ratings reflect Starwood's leading brands, high quality assets, substantial product and geographic diversification, and its solid position in the timeshare business. Potential credit quality deterioration could come from capital deployment decisions (a higher than expected level of share repurchase or a heavily debt-financed acquisition) and contingent commitments such as loans and equity contributions to partners, third-party guarantees and potential timeshare commitments. However, Fitch believes Starwood's investment grade profile with its improved balance sheet and increased financial flexibility mitigates these concerns and allows for some flexibility in credit metrics. In April 2006, the company completed the sale of 33 properties to Host Hotels for $4.1 billion. Following that transaction, Starwood improved its business mix as it significantly increased the amount of cash flow from its managed/franchise business. The greater mix of fee business results in a more capital efficient company with stronger margins, higher returns on capital, less cyclicality and increased financial flexibility. Initial data points for the 2007 demand picture indicate the robust lodging operating environment should continue. Earlier this month, initial outlooks for 2007 RevPAR growth were given by Marriott (+7% to +8%) and Host (+6% to +8%). Marriott also indicated that it expects compound annual RevPAR growth of 4%-8% from 2007-2009; this outlook allows for some continued slowdown beyond 2007 but is still a very healthy revenue environment for the industry over the next few years. Given the additional backdrop of tame supply growth of 1%-2% over the next two-three years, the lodging industry remains poised to perform well in an environment of low-single digit economic growth. Due to the strong lodging operating environment and asset sales, Starwood has continued to improve its credit profile and reduce leverage since Fitch changed the Rating Outlook to Positive in November 2005 following the announcement of the asset sale to Host. From the beginning of 2005 to second quarter 2006, Starwood has sold 49 properties for $4.9 billion (roughly $2 billion of which was in cash) and retained long-term management contracts on most of the properties, thereby locking in a future cash flow stream. As a result, LTM leverage (lease-adjusted debt to EBITDAR) as of June 30, 2006 has improved to 2.8 times (x) from 3.7x at the end of 2005 and 4.6x at the end of 2004. Debt has been reduced by more than $1.3 billion to $2.82 billion as of June 30, 2006 from $4.15 billion as of Dec. 30, 2005. Much of the debt reduction in 2006 was a reduction of secured debt, and Starwood plans to raise capital on an unsecured basis going forward. As a result, Starwood has significantly increased its unencumbered asset base. Starwood used much of the proceeds from the Host transaction earlier this year to repurchase shares. Over the next couple of years Fitch believes Starwood will continue to be shareholder friendly with respect to share buybacks and Starwood could consider potential strategic acquisitions. The current investment grade profile could be maintained despite these potential leveraging transactions because Fitch believes that over the next 12 months-18 months Starwood will continue to selectively sell owned hotel assets and in many cases retain long-term management contracts. It should be noted that as a result of the improved balance sheet, reduction in secured debt robust operating environment and solid cash flow generation ability, Starwood could be considered an attractive leveraged buyout candidate in a very active current LBO environment. Accordingly, if a transaction were to materialize, the absence of a change of control put and covenants limiting leverage in Starwood's bond indentures exposes bondholders to price risk in the event of a leveraged transaction. The bonds do have covenants requiring that any security be shared equally and ratably with the unsecured bonds. However, due to the Starwood board of directors' ability to designate restricted and unrestricted subsidiaries, this covenant does little to protect bondholder security status. SUPERCLICK INC: July 31 Balance Sheet Upside-Down by $2.4 Million ----------------------------------------------------------------- Superclick Inc. delivered its third quarter financial statements for the three months ended July 31, 2006, to the Securities and Exchange Commission. The company reported a $450,996 net loss on $909,901 of net revenues for the three months ended July 31, 2006, compared to a $431,450 net loss on $459,599 of net revenues for the third quarter last year. At July 31, 2006, the company's balance sheet showed $1,410,941 in total assets and $3,856,893 in total liabilities, resulting in a $2,445,952 stockholders' deficit. The company's July 31 balance sheet also showed strained liquidity with $1,110,511 in total current assets available to pay $3,824,228 in total current liabilities. Full-text copies of Superclick's third fiscal quarter financial statements for the three months ended July 31, 2006, are available for free at http://researcharchives.com/t/s?13ef About Superclick, Inc. Superclick, Inc. -- http://www.superclick.com/-- and its wholly owned Montreal-based subsidiary, Superclick Networks, Inc., develops, manufactures, markets and supports the Superclick Internet Management System in worldwide hospitality, multi-tenant unit and hospital markets. Superclick provides hotels, MTU residences and hospital patients and visitors with cost-effective Internet access and IP-based services utilizing high-speed DSL, CAT5 wiring, wireless and dial-up modem technologies. Over 100 InterContinental Hotels Group properties have Superclick systems including Candlewood Suites, Crowne Plaza, Holiday Inn, Holiday Inn Express, Holiday Inn SunSpree, InterContinental and Staybridge Suites in Canada and the United States. Going Concern Doubt As reported in the Troubled Company Reporter on Feb. 20, 2006, Bedinger & Company expressed substantial doubt about Superclick, Inc.'s ability to continue as a going concern after it audited the company's financial statements for the fiscal year ended Oct. 31, 2005. The auditing firm points to the company's recurring losses from operations. SUSSER HOLDINGS: Successful IPO Cues S&P to Lift Ratings to B+ -------------------------------------------------------------- Standard & Poor's Ratings Services raised the corporate credit and senior unsecured ratings on Corpus Christi, Tex.-based convenience store operator Susser Holdings LLC to 'B+' from 'B.' Ratings were removed from CreditWatch with positive implications, where they were placed on July 20, 2006. The outlook is stable. "The upgrade follows Susser's successful initial public offering of its common stock that raised about $114 million," said Standard & Poor's credit analyst Jackie Oberoi. Susser will use the IPO proceeds to redeem $50 million of its 10.625% senior notes due 2013, and $11.4 million to pay down borrowings from its revolving credit facility. Remaining proceeds will be used for general corporate purposes, including growth capital. As a result, pro forma debt leverage will improve, with lease-adjusted total debt to EBITDA declining to about 4.8x, from about 5.8x for the 12 months ended July 2, 2006. The ratings reflect Susser's vulnerable business profile as a relatively small regional player in the competitive and slow- growth convenience store/gas retail industry. The company is concentrated in a few key markets in South Texas and is heavily dependent on fuel--a mature, thin-margin business. Originally a family business, Susser has an acquisitive history, purchasing networks of convenience stores and consolidating them into its current portfolio. The highly fragmented convenience store industry includes oil companies that operate retail chains, grocers, big-box discounters, and independent operators. Susser's retail component operates 325 convenience stores in Texas and Oklahoma, while its wholesale component distributes motor fuel to other similar locations. The company is in the midst of a rebranding its convenience stores to the name "Stripes" from "Circle K." In addition, Susser is rebranding existing CITGO gas stations to the Valero name to reflect a new long-term motor fuel supply contract. TECHNICAL OLYMPIC: S&P Junks Senior Subordinated Note Rating ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit rating assigned to Technical Olympic USA Inc. to 'B' from 'B+'. At the same time, the senior unsecured note rating is lowered to 'B-' from 'B+', and the senior subordinated note rating is lowered to 'CCC+' from 'B-', both of which reflect structural subordination relative to senior secured creditors. The outlook on the company remains negative. "The downgrades reflect our anticipation of a material impairment charge caused by an ill-timed investment in the troubled Transeastern joint venture, combined with our expectation that ongoing challenges in Technical Olympic's key Florida markets will negatively affect credit metrics in the near term," credit analyst Tom Taillon said. Mr. Taillon added that negative outlook reiterates Standard & Poor's opinion that weaker homebuilding conditions, specifically in Technical Olympic's core Florida markets, will continue to challenge the company in the near term. It also reflects uncertainty with regard to ongoing distractions related to the restructuring of the Transeastern debt. Stability in the key Florida markets and reduced debt levels from inventory liquidation would be required for the outlook to return to stable. TIG HOLDINGS: S&P Affirms BB- Counterparty Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' counterparty credit ratings on Fairfax Financial Holdings Ltd. (NYSE:FFH) and Crum & Forster Holdings Corp. and removed them from CreditWatch, where they were placed on July 28, 2006. Standard & Poor's also said that it affirmed and removed from CreditWatch a number of ratings on FFH's related entities, including: -- the 'BBB' counterparty credit and financial strength ratings on FFH's core operating companies; -- the 'BB-' counterparty credit rating on TIG Holdings Inc.; -- the 'A-' counterparty credit and financial strength ratings on Odyssey America Reinsurance Corp., Clearwater Insurance Co., and Hudson Specialty Insurance Co.; and -- the 'BBB-' counterparty credit rating on Odyssey Re Holdings Corp. (NYSE:ORH). The outlook on all these companies is negative. The ratings had been placed on CreditWatch negative following the announcement by FFH of a delay of its second-quarter 2006 interim report to shareholders. The ratings on FFH and its related core entities are based on the group's good competitive position, improving earnings, good and improving capitalization, and strong liquidity. Reserves, recoverables, and financial leverage have all improved in the last few years and are not viewed as significant negative rating factors. "Offsetting these positive factors are FFH's qualitative areas of governance, risk controls, and enterprise risk management," explained Standard & Poor's credit analyst Damien Magarelli. "These areas are the reason for the assignment of a negative outlook." A downgrade is possible if FFH is unable to further improve its governance oversight, accounting risk controls, and overall risk management by October 2007. A revision of the outlook to stable outlook is possible if FFH meets these expectations, has a combined ratio of less than 100% at the consolidated continuing operations, reserve charges within expectations (although no large charges are expected), has a capital ratio consistent with the rating, and maintains holding-company cash at more than $250 million. TRANS-INDUSTRIES INC: Chapter 11 Case Converted to Chapter 7 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, has issued an order converting Trans-Industries Inc. and its debtor-affiliates' Chapter 11 reorganization cases to liquidation proceedings under Chapter 7 of the Bankruptcy Code. The Honorable Thomas J. Tucker converted the Debtors' cases after they failed to file a Plan of Reorganization on their Oct. 16, 2006 plan-filing deadline. Judge Tucker had ordered the Debtors to appear in Court on Sept. 13, 2006, in order to show cause why their bankruptcy cases should not be dismissed or converted. A meeting of the Debtors' creditors is scheduled at 1:00 p.m. on Nov. 15, 2006 at Room 315, 211 W. Fort St. Bldg. in Detroit, Michigan. About Trans-Industries Headquartered in Auburn Hills, Michigan, Trans-Industries, Inc. -- http://www.transindustries.com/-- provides bus lighting systems, source extraction systems for the environmental market, and electronic systems for the display of information. The Company and its debtor-affiliates filed for chapter 11 protection on April 5, 2006 (Bankr. E.D. Mich. Case No. 06-43993). Kenneth Flaska, Esq., at Dawda, Mann, Mulcahy & Sadler, PLC, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed estimated assets and debts between $1 million and $10 million. TRAPEZA CDO: Fitch Holds BB Rating on $4.5 Million Class E Notes ---------------------------------------------------------------- Fitch affirms seven classes of notes issued by Trapeza CDO III, LLC. These affirmations are the result of Fitch's review process and are effective immediately: -- $108,497,331 class A1A notes affirmed at 'AAA'; -- $71,500,000 class A1B notes affirmed at 'AAA'; -- $25,000,000 class B notes affirmed at 'AA+'; -- $31,250,000 class C-1 notes affirmed at 'A'; -- $31,250,000 class C-2 notes affirmed at 'A'; -- $11,974,741 class D notes affirmed at 'BBB'; -- $4,571,426 class E notes affirmed at 'BB'. Trapeza III is a collateralized debt obligation managed by Trapeza Capital Management, LLC which closed June 25, 2003. Trapeza III is composed of bank and thrift trust preferred securities. Included in this review, Fitch performed an analysis of the collateral included in the portfolio. Since the last review, the collateral has continued to perform, with a relatively stable weighted average bank score as determined by the Fitch Bank Scoring Model. As of the Oct. 2, 2006 trustee report, both the class A/B and class C/D overcollateralization ratios remain stable, and continue to pass their performance test triggers of 141.25% and 103.0%, respectively, with ratios of 146.3% and 107.3%, respectively. There are currently no deferring or defaulted securities in the portfolio. The ratings on the class A1A, A1B and B notes address the likelihood that investors will receive timely payment of interest and ultimate payment of principal by the stated maturity date. The ratings on the class C-1, C-2, D and E notes address the likelihood that investors will receive ultimate payment of interest and ultimate payment of principal by the stated maturity date. TSA STORES: 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 U.S. and Canadian retail sector, the rating agency confirmed its B2 Corporate Family Rating for The Sports Authority, Inc., and its B2 rating on the company's Sr. Sec. Term Loan B. Additionally, Moody's assigned an LGD3 rating to those bonds, suggesting noteholders will experience a 46% 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%). The Sports Authority Inc., headquartered in Englewood, Colorado, is a retailer of sporting goods in the United States, with 398 stores in 45 states. UNITED AUTO: 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 US and Canadian Retail sector, the rating agency confirmed its B1 Corporate Family Rating for United Auto Group 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 ---------- ------- ------- ------ ---------- $300 Million Sub. Notes B3 B3 LGD5 81% $375 Mil. Sr. Sub. Conv. Notes B3 B3 LGD6 92% 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 Detroit, Michigan, United Auto Group Inc. -- http://www.unitedauto.com/-- is an automotive retailer in the U.S. and operates about 270 franchises. UNITED SUBCONS: Moody's Withdraws Junk Rating on $200 Mil. Loan --------------------------------------------------------------- Moody's Investors Service affirmed United Subcontractors, Inc. corporate family rating at B2 following the company's recent announcement to withdraw its proposed $550 million debt refinancing. Proceeds from the debt offering were to refinance existing debt and fund a $125 million dividend to shareholders. Rating affirmed: * Corporate family rating, affirmed at B2; * Probability of default assessment, affirmed at B2. These ratings were assigned to existing debt instruments: * $295 million first lien term loan, due 2012, rated B1 * $40 million revolving credit facility, due 2011, rated B1 * $65 million second lien term loan, due 2013, rated Caa1 These ratings were withdrawn: * $300 million first lien term loan B, due 2013, rated Ba3; * $35 million revolving credit facility, due 2011, rated Ba3; * $15 million synthetic LC facility, due 2013, rated Ba3; * $200 million second lien term loan, due 2014, rated Caa1. The ratings outlook remains stable. The ratings and or outlook may deteriorate if free cash flow to total debt was to turn negative or be projected to be negative for at least two consecutive quarters, or if debt to EBITDA were projected to increase to over 6 times. The ratings may improve if free cash flow to debt were projected to improve to above 9% annually and the company were conservative in regards to future balance sheet management. The company's previously contemplated dividend highlights the importance of balance sheet discipline. A significant improvement in the Florida homebuilding and renovation market would be considered a ratings positive. Moody's previous rating action was on Sept. 11, 2006 when the company's planned credit facilities to finance a $125 million dividend and refinance existing debt were rated. United Subcontractors, Inc., is headquartered in Minneapolis, Minnesota. Revenues for 2005 were $483 million. UNIVERSAL COMPRESSION: Inks $500 Mil. Senior Secured Credit Pact ---------------------------------------------------------------- Universal Compression Holdings Inc. entered into a five-year $500 million senior secured credit agreement. The lead banks in the syndicate for the facility are Wachovia Capital Markets LLC and Deutsche Bank Securities Inc. The Company used approximately $330 million under the new senior secured credit facility, together with debt assumed by Universal Compression Partners, L.P. and proceeds from the sale of UCLP equity interests pursuant to the exercise of the over-allotment option in the UCLP initial public offering, to repay all balances under the prior senior secured credit facility. The new facility will be used for working capital, acquisitions and general corporate purposes. Headquartered in Houston, Texas, Universal Compression Holdings Inc., (NYSE: UCO) provides a full range of contract compression, sales, operations, maintenance and fabrication services to the domestic and international natural gas industry. * * * As reported in the Troubled Company Reporter on Oct. 24, 2006, Moody's Investors Service assigned a Ba1, LGD 3 (36%) rating to Universal Compression Inc.'s $500 million senior secured bank credit facility. At the same time, Moody's affirmed Universal's Ba2 Corporate Family Rating, its Ba2 Probability of Default Rating and its B1, LGD5 (88%) ratings on its $175 million 7 1/4% Senior Notes. Universal Compression Inc. is a wholly owned subsidiary of Universal Compression Holdings Inc. VULCAN ENERGY: Moody's Affirms Senior Secured Rating at Ba2 ----------------------------------------------------------- Moody's Investors Service assigned Baa3 ratings to Plains All American Pipeline, L.P.'s new senior unsecured notes, including $400 million of 6.125% notes due 2017 and $600 million of 6.650% notes due 2037. Moody's affirmed PAA's current Baa3 senior unsecured note rating, Vulcan Energy's Ba2 senior secured rating, and stable rating outlook subject to PAA acting to reduce leverage. Note proceeds will fund the cash portion of PAA's pending $2.4 billion acquisition of Pacific Energy Partners, L.P., along with a roughly $1 billion unit-for-unit exchange and assumption of $425 million in PPX debt. If the acquisition does not close by February 15, 2007, PAA must redeem the new notes at 101% of par. Using the Loss Given Default methodology, Moody's affirmed Vulcan Energy Corporation's Ba1 Probability of Default Rating, Ba2 senior secured Term Loan rating, and Ba2 secured revolving credit facility rating. With the PPX acquisition, for both of the secured debt facilities the LGD assessment changed to LGD 6 (95%) from LGD 6 (94.78%). PPX's notes will remain under review for upgrade until the merger is completed. PPX, the parent obligor for its notes, will be merged into PAA. All PAA subsidiaries and PPX's non-regulated subsidiaries will guarantee the PAA and PPX notes. PPX has a Ba2 corporate family rating, attached at the LB Pacific general partner level, a Ba2 senior unsecured rating, and LB Pacific has a B1 senior secured rating. Upon the merger, PPX's notes would be upgraded to Baa3 while LB Pacific's debt would be retired and its ratings withdrawn. The rating outlook is stable. However, pro-forma leverage on EBITDA exceeds the range Moody's deems compatible with PAA's Baa3 rating. PAA's ability to retain its stable outlook depends upon a substantial equity offering by first quarter 2007 to both fulfill its stated intention for 50% equity funding for the PPX acquisition and to further reduce leverage on expected EBITDA. At PAA's long-term leverage target of 50% Debt/Capital, its leverage tendencies are generally not conservative for the ratings. The outlook and possibly the ratings are also dependent on PAA's not expanding its credit intensive merchant marketing and trading activity or its proprietary hedged contango trading and borrowing activity before core leverage reduction. Moody's views the PPX merger to be favorable strategic moves for each firm and it reduces the proportion of PAA's assets and cash flow in the merchant business. However, the acquisition is expensive, neither the scale or timing of merger synergies is assured, and each firm faces substantial capital spending for major growth projects. Coupled with constant very heavy cash distributions basic to master limited partnerships, this reduces the likelihood of organically reduced leverage during 2007. PAA's general partner has agreed to forego $20 million of incentive distributions in 2007 and a total of $65 in incentive distributions through 2011. Over time, Moody's found PAA's general partner to have been consistently supportive of sound long-term business and financial policies. In a two step acquisition, PAA will acquire LB Pacific's interests in PPX for $700 million in cash, including its 2% general partnership interest, incentive distribution rights, 2.6 million of PPX common units, and 7.8 million PPX subordinated units. PAA will also acquire PPX's remaining equity in a tax free unit-for-unit exchange, in which each PPX unit holder will receive 0.77 newly issued PAA common units in exchange for each PPX unit. PAA will also assume approximately $425 million of PPX's senior notes and repay the existing $213 million of PPX revolving credit debt with the proceeds from the new note offering. PAA's financing strategy has historically included pre-funding a portion of equity requirements for acquisitions. At the closing date, the acquisition will have initially been roughly 42% equity funded. However, PAA considers roughly 50% of its most recent equity offering of July and August 2006 to be pre-funding for the PPX acquisition. To issue the remaining equity needed to bring the funding total to 50%, PAA has stated its intention to issue significant equity before the end of first quarter 2007. PAA's pro-forma long-term debt to total capital would be roughly 49% and pro-forma total debt to total capital would be roughly 59%. Total pro-forma long-term debt would be in the $2.6 billion range. Pro-forma second quarter 2006 LTM EBITDA would in the $586 million range. Moody's expect pro-forma LTM interest expense to be roughly $175 million and 2006 pro-forma capital spending to be roughly $460 million, including portions of the $64 million phase II St. James Terminal expansion and $48 million phase VI Cushing terminal expansion. In addition to approximately $30 million of available cash, PAA has adequate funding capability for the remaining portion of its roughly $535 million 2006-7 proforma capital program. Though PAA has successfully controlled its large merchant marketing and trading business this decade, Moody's has frequently stated that it views such credit intensive earnings to have limited debt capacity; that the activity contains significant potential event risk; and that a higher proportion of fee and tariff income would be ratings supportive. Since PPX conducts a small level of such activity, the merger substantially boosts the fee and tariff component of PAA's pro-forma cash flow mix to almost 70%. Greater visibility on any durable fee-based gathering cash flows within the merchant and gathering segment of PAA's business would enable a more specific dimensioning of its total more durable core cash flows. PPX's principal assets are 4,000 miles of crude oil pipelines, 550 miles of refined products pipelines, 13.5 million barrels of crude oil storage capacity, and 7.5 million barrels of refined products storage capacity. PAA will benefit from several forms of strategic advantages and diversification with the PPX merger, as well as from the larger pro-forma capitalization and business scale. PAA will be a major participant in the growing crude oil import markets along the West Coast, Gulf Coast, and the north-to- south movement of conventional and synthetic crude oil from Canada to the U.S. PPX also provides PAA with immediate scale entry into the West and East Coast refined products market via its refined product storage and terminal assets in the San Francisco Bay Area and Philadelphia areas, with the latter injecting PAA into to the major Atlantic Basin refined products market. PPX's Long Beach Harbor storage tank and terminal assets give PAA with direct access to growing crude oil imports into Southern California that are replacing falling California and Alaskan production. PPX brings its pending Port of Los Angeles Pier 400 deepwater terminal project, awaiting final review and environmental and project approvals from the Port and the City of Los Angeles. PPX has long-term agreements with both Valero and ConocoPhillips, and expects the total 250,000 bpd of crude oil capacity to be fully subscribed when operational in 2008. PPX augments and integrates PAA's California All-American Pipeline business, giving direct access to integrated pipelines south of the Los Angeles refining region. PPX intensifies PAA's system serving imported Canadian crude oil to the Rocky Mountain and Midwest markets and integrates rising imported Canadian crude oil with the strategic Cushing storage hub where PAA is a major player. Plains All-American Pipeline, L.P. is headquartered in Houston, Texas. WESCO INT'L: S&P Rates Proposed $250 Million Sr. Unsec. Notes at B ------------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' rating to WESCO International Inc.'s proposed $250 million convertible senior unsecured notes 2026. Proceeds from the offering will be used to help finance WESCO's acquisition of Communications Supply Holdings Inc. for $525 million. WESCO International is the parent company of WESCO Distribution Inc., its main operating subsidiary. Standard & Poor's also affirmed its 'BB-' corporate credit rating on the electrical distributor. The outlook is stable. "The speculative-grade ratings on WESCO reflect its somewhat aggressive financial policies, which more than offset the company's satisfactory business-risk profile as a leading distributor of electrical construction products; maintenance, repair, and operating supplies; and integrated supply and outsourcing services," Standard & Poor's analyst Clarence Smith said. WINN-DIXIE: Wants Five Alabama Power Agreements Approved -------------------------------------------------------- Winn-Dixie Stores Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to approve their Agreements with Alabama Power Company. The Debtors and the Alabama Power Company are parties to five contracts under which APCO provides electricity to nearly 63 of the Debtors' operating locations in Alabama: (a) Master Contract for Electric Service between APCO and Winn-Dixie Stores, Inc., dated May 16, 2002; (b) Master Contract for Electric Power Service between APCO and Winn-Dixie Montgomery, Inc., dated Feb. 23, 1996; (c) Master Contract for Electric Power Service between APCO and WD Montgomery dated Aug. 8, 1997, and associated Electric System Lease Agreement and Standby Generator Program Agreement each dated Sept. 3, 1997; (d) Contract for Electric Power between APCO and WD Montgomery dated April 15, 1997; and (e) Contract for Electric Power between APCO and WD Montgomery dated Nov. 5, 1996. The Debtors previously sought to assume the May 2002 Contract in an Omnibus Motion, but APCO objected to the proposed assumption. The Court continued the hearing to give the parties an opportunity to resolve their differences. According to Cynthia C. Jackson, Esq., at Smith Hulsey & Busey, in Jacksonville, Florida, the parties have resolved their dispute with respect to the May 2002 Contract, and have also negotiated the terms pursuant to which all of the Contracts will be assumed, except for the November 1996 Contract. The negotiations have resulted in these agreements: (1) The Debtors will assume the February 1996, April 1997, September 1997, and May 2002 Contracts, as amended; (2) APCO will facilitate the assumption of the four Contracts by agreeing to (i) amend the May 2002 and February 1996 Contracts by virtue of two separate contracts dated October 12, 2006, and (ii) accept $861,747 as cure for the four Contracts; (3) The Debtors' cure obligations will be limited to the payment of the $861,747 cure with APCO waiving any additional requirements under Section 365(b)(1) of the Bankruptcy Code as they relate to any prepetition defaults under the Contracts; (4) APCO's Agreements will not negate the impact of assumption on any claims held by the Debtors against APCO or otherwise expose APCO to potential preference actions with respect to payments made on account of the Contracts; (5) APCO will be entitled to an administrative claim for cure if any amounts become owing to it pursuant to Section 502(h) of the Bankruptcy Code upon assumption of the Contracts; (6) The Omnibus Motion as it pertains to the May 2002 Contract and APCO's Objection will be deemed withdrawn; and (7) The Debtors will reject the November 1996 Contract as of October 25, 2006, and APCO will have a prepetition non- priority unsecured rejection damages claim for $51,876. According to Ms. Jackson, the Debtors' assumption of the Contracts will result in immediate savings of nearly $1,000,000 associated with certain charges that would otherwise have been due under the Contracts. The Debtors will also save an estimated $1,000,000 annually by avoiding service price increases that they would otherwise have to incur if they pursued a rejection and entered into new service contracts with APCO, Ms. Jackson adds. The November 1996 Contract relates to the provision of electricity to one of the Debtors' closed stores in Montgomery, Alabama. The Debtors say that the contract's rejection is still in their best interest although it will result in a $51,876 rejection of damages in favor of APCO, since that amount reflects minimum charges that they are required to pay under the contract. By rejecting the November 1996 Contract, the Debtors will ensure that the charges are treated as a prepetition non-priority unsecured claim rather than as an administrative claim to be paid in cash, Ms. Jackson explains. 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. 57; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WINN-DIXIE: Wants to Assume GE Consumer Products Agreement ---------------------------------------------------------- Winn-Dixie Stores Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Florida to approve the negotiated assumption of their agreement with GE Consumer Products. Winn-Dixie Stores, Inc., and GE are parties to a Program Agreement dated Sept. 12, 2003, as amended. Under the Contract, GE supplies the Debtors with various lighting products that are sold in their stores. The Debtors have negotiated with GE as to the terms pursuant to which the Contract will be assumed, including the payment of cure and the treatment of GE's Claim No. 7385 related to the Contract. The parties agreed that: (a) The Debtors will assume the Contract effective as of the Plan Effective Date; (b) GE's claim for $630,461 will be disallowed in its entirety; (c) None of the Debtors will be required to pay any cure amount and any prepetition defaults under the Contract will be waived in full by GE; (d) The waiver of cure payments and other concessions by GE will not negate the impact of assumption on any claims held by the Debtors against GE or otherwise expose GE to potential preference actions with respect to payments made on account of the Contract. Upon assumption of the Contract, GE will be entitled to an administrative claim for cure in the event that any amounts become owing to GE pursuant to Section 502(h) of the Bankruptcy Code for sums relating to the Contract that may be required to be paid pursuant to Section 550; (e) In the event that the Effective Date does not occur, GE will be granted an allowed prepetition non-priority unsecured claim for $531,108, without prejudice to GE's right to seek allowance of the Claim in an increased amount or the Debtors' right to challenge the allowance of the Claim in any increased amount; and (f) The Debtors will continue to timely perform all postpetition obligations under the Contract until otherwise ordered by the Court. 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. 57; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) WR GRACE: Earns $741.4 Million in Third Quarter Ended 2006 ---------------------------------------------------------- W. R. Grace & Co. reported its financial results for the third quarter and nine months ended Sept. 30, 2006. The highlights are: -- Sales for the third quarter were $741.4 million compared with $653.4 million in the prior year quarter. The increase was attributable primarily to added sales volume in all geographic regions, higher selling prices in response to cost inflation, and improved product mix. Sales increased 17.2% for the Grace Davison operating segment and 9.5% for the Grace Performance Chemicals operating segment. -- Net income for the third quarter was $18.4 million compared with net income of $32.1 million in the prior year quarter. The third quarter of 2006 was favorably affected by the resolution of certain tax matters at amounts lower than previously estimated ($12 million), and unfavorably affected by costs of Chapter 11, litigation and other matters not related to core operations ($38 million). Excluding non-core costs and income, net income would have been $40.3 million for the third quarter of 2006 compared with $30.4 million calculated on the same basis for the third quarter of 2005, a 32.6% increase. -- Pre-tax income from core operations was $71.1 million in the third quarter compared with $59.1 million last year. Pre-tax operating income of the Grace Davison segment was $45.6 million, up 23.9% compared with the third quarter of 2005, attributable principally to double-digit sales increases across all product groups; the 2005 third quarter was adversely affected by hurricanes Katrina and Rita in the Gulf of Mexico. Pre-tax operating income of the Grace Performance Chemicals segment was $51.9 million, up 14.1% compared with the third quarter of 2005, attributable primarily to higher sales of construction products in all geographic regions. Corporate operating costs were $3.2 million higher than the third quarter of 2005 due primarily to an increase in performance-based compensation reflecting the better year-over-year results, partially offset by reduced pension expense from recent cash contributions to Grace's pension plans. -- Sales for the nine months ended Sept. 30, 2006 were $2,129.1 million compared with $1,933.1 million for the prior period. Grace recorded net income for the nine months ended Sept. 30, 2006, of 13.3 million compared with net income in the comparable period of 2005 of $67.9 million. The lower net income was principally caused by: 1) a $30 million increase in the estimated costs to reimburse the U.S. Government for environmental remediation in Montana; 2) a $35.4 million increase in defense costs for the criminal proceeding related to Grace's former operations in Montana; and 3) a $12.3 million increase in Chapter 11-related expenses. Excluding non-core and Chapter 11-related costs and income, net income would have been $96.3 million for the nine months ended Sept. 30, 2006, compared with $73.6 million calculated on the same basis for 2005, a 30.8% increase. Pre-tax income from core operations was $189.6 million for the nine months ended Sept. 30, 2006, a 22% increase over 2005, primarily attributable to higher sales volume in all geographic regions and higher selling prices to offset cost inflation, and from lower overall pension costs. "We delivered good growth and profitability in the third quarter even as residential construction activity in the U.S. began to moderate," said Grace's President and Chief Executive Officer Fred Festa. "Steady economic activity globally, and our focus on delivering innovative value-added products to a diversified customer base, continue to help us achieve higher sales and operating profits in 2006." Cash Flow And Liquidity Grace's net cash flow from operating activities for the first nine months of 2006 was $49.4 million, compared with $14.8 million for the comparable period of 2005. The difference in cash flow from operating activities is principally attributable to improved operating results in 2006. Other major factors include the non-recurring payment of $119.7 million to settle tax and environmental contingencies in 2005 and an increase in 2006 of $76.7 million to fund defined benefit pension arrangements. Year-to-date pre-tax income from core operations before depreciation and amortization was $275.3 million, 11.6% higher than in the prior period, a result of the higher pre-tax income from core operations. Cash used for investing activities was $95 million for the first nine months of 2006, primarily reflecting the expansion of production facilities for hydroprocessing catalysts and waterproofing membranes, the acquisition of catalyst assets and technology, and routine capital for maintaining facilities. At Sept. 30, 2006, Grace had available liquidity in the form of cash and cash equivalents ($453.7 million), net cash value of life insurance ($86.9 million) and available credit under its debtor- in-possession facility ($192.8 million). Grace believes that these sources and amounts of liquidity are sufficient to support its business operations, strategic initiatives and Chapter 11 proceedings for the foreseeable future. Interest And Income Taxes Interest expense was $18.8 million for the quarter ended September 30, 2006, and $54.5 million year-to-date, compared with $13.4 million and $41.3 million, respectively, for the comparable periods in 2005. The increases are principally attributable to a change in annual interest rate on pre-petition bank debt from a negotiated fixed rate of 6.09% in 2005 to the prime rate (compounded quarterly) in 2006; the weighted average interest rate on pre-petition bank debt for the first nine months of 2006 was 7.86%. In the third quarter of 2006 Grace reached a resolution with taxing authorities in the United States concerning a tax position that was the subject of dispute. Also in the third quarter, the German legislature issued a clarification of a new tax law that will permit Grace to continue to receive the benefit of interest deductions on an inter-company loan that the new law would have otherwise prohibited. Grace recorded a $12 million reduction in third quarter tax expense to account for such resolutions. Excluding these adjustments and non-deductible Chapter 11 expenses, the effective tax rate for the nine months ended Sept. 30, 2006, and 2005 was approximately 35% on consolidated taxable income. Headquartered in Columbia, Maryland, W.R. Grace & Co. (NYSE:GRA) -- http://www.grace.com/-- supplies catalysts and silica products, especially construction chemicals and building materials, and container products globally. The Company and its debtor-affiliates filed for chapter 11 protection on April 2, 2001 (Bankr. D. Del. Case No. 01-01139). James H.M. Sprayregen, Esq., at Kirkland & Ellis, and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, P.C., represent the Debtors in their restructuring efforts. The Debtors hired Blackstone Group, L.P., for financial advice. PricewaterhouseCoopers LLP is the Debtors' accountant. Stroock & Stroock & Lavan LLP represent the Official Committee of Unsecured Creditors. The Creditors Committee tapped Capstone Corporate Recovery LLC for financial advice. David T. Austern, the legal representative of future asbestos personal injury claimants, is represented by Orrick Herrington & Sutcliffe LLP and Phillips Goldman & Spence, PA. Anderson Kill & Olick, P.C., represent the Official Committee of Asbestos Personal Injury Claimants. The Asbestos Committee of Property Damage Claimants tapped Martin W. Dies, III, Esq., at Dies & Hile L.L.P., and C. Alan Runyan, Esq., at Speights & Runyan,to represent it. Lexecon, LLP, provided asbestos claims consulting services to the Official Committee of Equity Security Holders. XEROX CORPORATION: 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. Technology Hardware sector, the rating agency confirmed its Ba1 Corporate Family Rating for Xerox Corp. Additionally, Moody's revised its probability-of-default ratings and assigned loss-given-default ratings to these securities: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- US$700 million Sr. Notes due 2016 Ba2 Ba1 LGD3 48% US$620 million 9.75% Sr. Notes due 2009 Ba2 Ba1 LGD3 48% US$688 million 7.125% Sr. Notes due 2010 Ba2 Ba1 LGD3 48% US$542 million 7.625% Sr. Notes due 2013 Ba2 Ba1 LGD3 48% US$50 million 6.875% Sr. Notes due 2011 Ba2 Ba1 LGD3 48% US$1.25 billion Unsec. Revolving Credit Facility Ba2 Ba1 LGD3 48% US$752 million Sr. Notes due 2011 Ba2 Ba1 LGD3 48% US$251 million Notes due 2016 Ba2 Ba1 LGD3 48% US$255 million Yen Notes due 2007 Ba2 Ba1 LGD3 48% US$75 million Notes due 2012 Ba2 Ba1 LGD3 48% US$60 million Notes due 2013 Ba2 Ba1 LGD3 48% US$50 million Notes due 2014 Ba2 Ba1 LGD3 48% US$25 million Notes dye 2018 Ba2 Ba1 LGD3 48% US$27 million Notes due 2008 Ba2 Ba1 LGD3 48% US$260 million Euro Senior Notes due 2009 Ba2 Ba1 LGD3 48% Medium Term Notes US$166 million Ba2 Ba1 LGD3 48% Trust Preferred Ba3 Ba2 LGD6 94% Shelf-Sr. Unsec. (P)Ba2 (P)Ba1 LGD3 48% Shelf-Subordinated (P)Ba3 (P)Ba2 LGD6 94% Shelf-Preferred (P)B1 (P)Ba2 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 our notching practices across industries and will improve the transparency and accuracy of our ratings as our 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, Xerox Corp. -- http://www.xerox.com/-- develops, manufactures, markets, services and finances a range of document equipment, software, solutions and services. Xerox operates in over 160 countries worldwide and distributes products in the Western Hemisphere through divisions, wholly owned subsidiaries and third-party distributors. In Europe, Xerox maintains operations in Albania, Austria, Cyprus, Estonia, France, Germany, Turkey, Italy, The Netherlands, the United Kingdom, among others. * BOOK REVIEW: Leveraged Management Buyouts: Causes and Consequences ------------------------------------------------------- Author: Yakov Ahihud, editor Publisher: Beard Books Softcover: 284 pages List Price: $34.95 Order your personal copy at http://amazon.com/exec/obidos/ASIN/1587981386/internetbankrupt This book is the outcome of a 1988 conference organized by the Salomon Brothers Center for the Study of Financial Institutions at the Stern School of Business of New York University. It consists of 12 papers presented at that conference, papers that represented the first ever in-depth study of leveraged management buyouts (MBO). MBOs were a hot topic in the late 1980s, as a rapidly growing reorganization phenomenon closely tied to junk bonds. Debate over MBOs centered around two uncertainties: fairness to shareholders and possible conflicts of interest between management/acquirer and shareholders, and doubts about the future performance of companies acquired through MBOs. The authors' objective was to expand the understanding of academics, practitioners, and policymakers of the causes and consequences of MBOs and to contribute to data on appropriate policies for legislation and regulation regarding them. The first of three sections reviews characteristics and consequences of MBOs. The first chapter, by the editor, Yakov Ahihud, surveys the empirical evidence on the effects of MBO announcements on stock and bond prices. He considers arguments for and against mandating an auction of the MBO target firm and analyzes points of view about and evidence on conflicts of interest between management and shareholders. He evaluates motivations for MBOs, such as tax benefits and improved incentives. The second chapter compares and contrasts the characteristics of corporations subject to MBOs with other corporations. Two authors then look into performance of target firms before and after buyouts. One interviewed CEOs of corporations acquired by MBO about their motivations for and changes in managerial strategy after the MBO. Both authors found that buyouts were followed by significant improvements in firms' performance. The focal points of the second section were legal and tax issues. The first chapter discusses the role of management in MBOs, potential conflict with shareholder interests, and the matter of fairness. They analyzed court decisions and the proposed remedies, and evaluated the legal consequences of various business practices applied in MBOs. The second chapter discusses the sources of tax benefits and various financing methods, with a focus on employee stock option plans. The final chapter concluded that other reorganization strategies could yield the same tax benefits as MBOs. The final section presents a lively debate on policy and legislative options to resolve issues that arise from MBOs. Authors include a U.S. congressman, an SEC commissioner and professors from Harvard Law School and the School of Law at Stanford University. Their viewpoints are discussed compellingly and are often in opposition. One author avowed that MBOs were already over-regulated while another argued for the need of an auction for the corporation once an MBO proposal was announced. Opinion on the two main questions addressed by the book was varied. With regard to fairness, while shareholders received an average of 30-40 percent over market price for their shares, some were prevented from reaping the benefits of shrewd post-buyout strategies. With regard to future performance clouded by heavy debt, some MBOs failed, those that "may well have encountered difficulties as a result of the financial pressures imposed by leveraged transactions." More were successful, however, becoming "reinvigorated companies that have regained a sharp competitive edge as a result of an MBO." Anecdotal evidence suggested the successes were due to management's desisting from "managing so they can get to the country club by 3:00 p.m." Yakov Amihud is the Ira Leon Rennert Professor of Entrepreneurial Finance at the Stern School of Business, New York University. ********* 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, Ronald C. Sy, 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 ***