/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/061106.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, November 6, 2006, Vol. 10, No. 264 Headlines ADVENTURE PARKS: Court Approves Fowler Holley as Accountant ALASKA AIR: Moody's Holds B1 Rating and Changes Outlook to Stable ANDREW CORP: Posts $59.7 Mil. Net Loss in Quarter Ended Sept. 30 ANR PIPELINE: Moody's Assigns Loss-Given-Default Rating ANVIL KNITWEAR: Proof of Claims Filing Period Ends Wednesday AQUA SOCIETY: Posts $1,571,110 Net Loss in 2006 Third Quarter ASARCO LLC: Wants Dept. of Interior's Claim #10744 Disallowed ASARCO LLC: Wants Tract I Mining Leases Declared Dischargeable BOFA-FUNB: Fitch Raises Rating on $14.2 Mil. Class N Certs. to BB BUCKEYE TECHNOLOGIES: S&P Affirms BB- Corporate Credit Rating CEP HOLDINGS: Taps BMC Group as Claims and Balloting Agent CHARLES BONNELL: Case Summary & 19 Largest Unsecured Creditors CHARMING CASTLE: Creditors Meeting Scheduled on November 15 CITIZENS COMMS: Appoints Michael Dugan to its Board of Directors CKE RESTAURANTS: Earns $14.2 Million in Quarter Ended August 14 COFFEE PACIFICA: Posts $1,017,000 Net Loss in 2006 Second Quarter COMPLETE RETREATS: Wants to Walk Away from 14 Contracts and Leases COMPLETE RETREATS: U.S. Trustee Balks at Donlin Recano Retention CONSOLIDATED CONTAINER: S&P Affirms 'B-' Corporate Credit Rating COZZOLINO FURNITURE: Case Summary & 20 Largest Unsecured Creditors CREDIT SUISSE: Fitch Assigns B- Rating on $2.1MM Class O Certs. CREDIT SUISSE: Fitch Lifts Rating on Ten 2003-C5 Securities CREDIT SUISSE: Moody's Assigns Junk Ratings to $19-Million Certs. CROWN HOLDINGS: Sept. 30 Stockholders' Deficit Narrows to $107MM CUMMINS INC: Earns $171 Mil. in Third Fiscal Quarter Ended Oct. 1 DANA CORP: Amends Trailer Sale Pact, Cuts Purchase Price to $33MM DAVITA INC: Earns $94 Million During Quarter Ended September 30 DELPHI CORP: Court Approves EDS and HP Outsourcing Agreements DENNY'S HOLDINGS: Moody's Assigns Loss-Given-Default Rating DILLON READ: Fitch Places BB Rating on $10-Mil. Mezzanine Notes DURA AUTOMOTIVE: Seeks Court Nod to Obtain $300 Mil. DIP Financing DURA AUTOMOTIVE: Seeks Court Nod to Use All Cash Collateral EDINA DEVELOPMENT: Case Summary & 54 Largest Unsecured Creditors EL PASO NATURAL: Moody's Assigns Loss-Given-Default Rating ENERGY TRANSFER: Fitch Rates Planned $1.3 Bil. Senior Loan at BB ENERGY TRANSFER: Moody's Rates Proposed $1.3 Billion Loan at Ba2 ENRON CORP: To Get $144 Million Cash Settlement from Barclays PLC ENRON CORP: Allows AT&T's Administrative Claim for $1,763,928 ENRON CORP: Allows Aegis Ltd. Claims for $16,716,768 ENTERGY NEW: Class Action Plaintiffs Oppose Disclosure Statement ENTERGY NEW ORLEANS: Court Extends Exclusivity Periods ENTERPRISE PRODUCTS: Fitch Holds BB+ Rating on Jr. Sub. Notes FAIRCHILD SEMICONDUCTOR: Moody's Assigns LGD Ratings FIRST FRANKLIN: Moody's Rates Class B Certificates at Ba1 FLYI INC: Court Delays Disclosure Statement Hearing to Nov. 17 FLYI INC: U.S. Bank and QVT Object to Disclosure Statement FOAMEX INT'L: Sigma Capital Discloses 2,300,000 Shares Ownership FOAMEX INTERNATIONAL: Trade Creditors Sell 30 Claims FRESH DEL MONTE: S&P Places BB Rating on Negative CreditWatch GIFT LIQUIDATORS: Posts $31,312 Net Loss in 2006 Second Quarter HANGER ORTHOPEDIC: Moody's Assigns Loss-Given-Default Ratings HEALTHCARE PARTNERS: Moody's Assigns Loss-Given-Default Ratings HEALTHWAYS INC: S&P Places BB Corporate Credit Rating HUNTSMAN CORP: Expects to Raise $708MM in Sr. Subor. Notes Issue HYPPCO FINANCE: Fitch Affirms CCC- Rating on $40-Million Notes INLAND FIBER: Court OKs Perkins to Assist in Oregon Asset Sale INFONXX INC: S&P Rates Proposed $125MM 2nd-Lien Facility at CCC+ INTERDENT SERVICE: Moody's Assigns Loss-Given-Default Ratings INVERNESS MEDICAL: Good Performance Cues S&P's Positive Watch ITC HOMES: Wants to Hire Century 21 First as Broker JAMES VAUGHN: Case Summary & Largest Unsecured Creditor JP MORGAN: Credit Enhancement Cues S&P to Affirm Low-B Ratings JP MORGAN: Fitch Lifts Rating on $8.7MM Class L Certs. to BB KAISER ALUMINUM: Chris Parks Represents PI Claimants KARA HOMES: Section 341 Meeting of Creditors Slated for Nov. 16 KARA HOMES: Court Sets February 14 as Claims Filing Deadline KRISPY KREME: Settles Securities Fraud Lawsuit for $75 Million KUHLMAN COMPANY: Turns to Manchester Cos. for Aid in Turnaround MADISON AVENUE: S&P Removes Junk-Rated Certs from CreditWatch MAGELLAN HEALTH: Moody's Assigns Loss-Given-Default Ratings MARKWEST ENERGY: Moody's Assigns Loss-Given-Default Rating MEDICAL SERVICES: Moody's Assigns Loss-Given-Default Ratings MERIDIAN AUTOMOTIVE: 11 Creditors Opposes Assumption of Contracts MERIDIAN AUTOMOTIVE: Stegenga Stays as Chief Restructuring Officer MESABA AVIATION: Pinnacle Transfers $15-Mil. Claim to GSCP MESABA AVIATION: Can Reject NO27XJ Aircraft Lease MILLER PETROLEUM: Posts $131,197 Net Loss in Quarter Ended July 31 MIRANT CORP: Committee Approves $34 Million Bonus to Employees MKT #2 INC: Case Summary & 11 Largest Unsecured Creditors MONEY CENTERS: Posts $660,703 Net Loss in 2006 Second Quarter MORGAN STANLEY: Fitch Holds B- Rating on $13.8-Mil. Class L Certs. MOTORSPORT AFTERMARKET: Moody's Rates $220 Million Loan at Ba3 MULTIPLAN INC: Moody's Assigns Loss-Given-Default Ratings NE ENERGY: Moody's Affirms B2 Corporate Family Rating NEW MEDIA: Has $4.6 Million Stockholders' Deficit as of July 31 NEW RISING FENIX: Case Summary & 18 Largest Unsecured Creditors NEW WORLD: Moody's Assigns Loss-Given-Default Rating NORTHWEST AIRLINES: Posts $1.179 Bil. Net Loss in 2006 Third Qtr. NPC INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating OCCAM NETWORKS: Restates 2005 Annual Financial Report OMNICARE INC: Moody's Assigns Loss-Given-Default Ratings PERKINS & MARIE: Moody's Assigns Loss-Given-Default Rating PINNOAK RESOURCES: Operating Risks Cues S&P to Junk Rating PORTLAND GENERAL: Earns $10 Million in Third Quarter of 2006 PREMIUM PAPERS: Files Disclosure Statement in Delaware PREMIUM PAPERS: Wants Until Feb. 14 to Remove Prepetition Actions PTX FLOORING: Case Summary & 20 Largest Unsecured Creditors QWEST COMMS: Sept. 30 Stockholders' Deficit Narrows to $2.576 Bil. REGENCY GAS: Moody's Assigns Loss-Given-Default Rating RELIANCE NATIONAL: Permanent Injunction Hearing Set on December 12 SAINT PAUL: Case Summary & Two Largest Unsecured Creditors SEA CONTAINERS: Court Allows Payment of Employee Obligations SEMGROUP LP: Moody's Assigns Loss-Given-Default Rating SFG LP: U.S. Trustee Schedules Creditors Meeting on November 24 SHORE MEDICAL: Case Summary & 20 Largest Unsecured Creditors SOUTHERN NATURAL: Moody's Assigns Loss-Given-Default Rating STATION CASINOS: S&P Assigns 'BB' Long-Term Corp. Credit Rating STRIKEFORCE TECH.: Posts $778,483 Net Loss in 2006 Second Quarter SUPERIOR ENERGY: S&P Affirms 'BB' Corporate Credit Rating SUTTER CBO: Fitch Puts Dura-exposed CDOs on Rating Watch Negative TENNESSEE GAS: Moody's Assigns Loss-Given-Default Rating TOWER RECORDS: Wants to End Russell Solomon's Employment Pact TREY RESOURCES: Posts $638,899 Net Loss in 2006 Second Quarter UNITED RENTALS: Earns $95 Million in 2006 Third Quarter UNUMPROVIDENT CORPORATION: Moody's Changes Outlook to Negative VISTEON CORP: Anticipates 900-Person Workforce Reduction VISTEON CORP: Posts $177 Million Net Loss in 2006 Third Quarter VISTEON CORP: Weak Earnings Cue S&P to Pare 'B+' Corp. Rating WAMU MORTGAGE: Moody's Rates Subordinate Certificates at B2 WASHINGTON MUTUAL: Moody's Rates Subordinate Certificates at Ba1 WELD WHEEL: Court Okays Dinsmore & Shohl as Committee's Co-Counsel YUKOS OIL: Rosneft Wins $24.5-Bln Loan Pledges From Bank Group * BOND PRICING: For the week of October 30 -- November 3, 2006 ********* ADVENTURE PARKS: Court Approves Fowler Holley as Accountant ----------------------------------------------------------- The U.S. Bankruptcy Court for the Middle District of Georgia gave Adventure Parks Group, LLC, and its debtor-affiliates authority to employ Fowler, Holley, Rambo, Haynes & Stavley, P.C., as their accountants. As reported in the Troubled Company Reporter on Oct. 4, 2006, Fowler Holley is expected to perform accounting, auditing and tax services that include the preparation of: * monthly financial reports; * quarterly statement of disbursements; * monthly bank account reconciliation report; * monthly check register report; * monthly tax report; * year-end audited financial statements; * federal, state and local tax returns; and * monthly summary of office or owner compensation and personnel and insurance coverage. Carlton W. Holley, a shareholder of Fowler Holley, told the Court that the firm's professionals bill: Professional Hourly Rate ------------ ----------- Curtis G. Fowler, CPA, PFS, CFP $260 Carlton W. Holley, CPA $250 Richard A. Stalvey, CPA $250 C. Wayne Rambo, CPA, CVA $250 James E. Folsom, CPA $215 R. Arden DeLoach, Jr., CPA $190 G. Michael Walker, CPA $180 Josie Miller, CPA $180 Robert D. Elliott, CPA $135 Tally M. Wisenbaker, III $135 Emily A. Browning $135 Judith A. Sims $100 Melissa Rhodes $95 Whitney H. Jacobs $95 Mr. Holley assured the Court that his firm does not hold nor represent any interest adverse to the Debtors or their estates. Headquartered in Valdosta, Georgia, Adventure Parks Group, LLC, is the holding company of Wild Adventures and Cypress Gardens. Wild Adventures operates an amusement park in Valdosta, Georgia while Cypress operates an amusement park in Winter Haven, Florida. The Company, along with Wild Adventures and Cypress Gardens, filed for chapter 11 protection on Sept. 11, 2006 (Bankr. M.D. Ga. Case Nos. 06-70659 through 06-70661). George H. McCallum, Esq., James P. Smith, Esq., and Ward Stone, Jr., Esq., at Stone & Baxter, LLP, represent the Debtors. When the Debtors filed for protection from their creditors, they estimated assets and debts between $50 million and $100 million. ALASKA AIR: Moody's Holds B1 Rating and Changes Outlook to Stable ----------------------------------------------------------------- Moody's Investors Service affirmed the corporate family rating of Alaska Air Group, Inc. and the Equipment Trust Certificate rating of Alaska Airlines, Inc. at B1, and changed the outlook to stable from negative. Moody's also withdrew the prospective ratings on certain inactive shelf registrations. The B1 rating reflects Alaska Air's credit metrics of EBIT to Interest of 1.3x and Debt to EBITDA of 6x, and the potential for further improvement as a result of management programs to reduce non-fuel costs during an improving operating environment. Nonetheless, growth in unit revenues and passenger yield over the last twelve months through September 30 2006, while positive, somewhat lags the meaningful recent improvements at other air carriers suggesting that Alaska Air has been less successful in passing through fare increases. This weaker yield performance is one factor that constrains the rating. Nonetheless, financial performance has benefited from the company's fuel hedging program as well as operating cost reductions as part of the "Long-Term Transformation Plan". Positively reflected in the ratings are the company's solid brand and specialty markets served (intra- and inter-Alaska) which are somewhat more protected from competition, and the company's particularly strong liquidity. The stable outlook reflects Moody's expectation that Alaska Air's fleet transition program -- replacing the MD-80 aircraft with a new B737-800 fleet -- will not increase financial leverage meaningfully and that operations will not be disrupted as the transition occur. As well, operating profit, EBIT to Interest and retained cash flow to debt should improve steadily over the near term and remain consistent with other issuers with a B1 corporate family rating. Ratings could be pressured down should EBIT to Interest fall below 1.5x, or retained cash flow to debt fall below 7.5%. Inability to efficiently employ its new B737-800 aircraft, higher-than-expected borrowing as a result of fleet deliveries and/or a worsening of the operating environment would likely put downward pressure on the rating. The rating could be raised if sustained growth in operating income and cash flows, resulting from further unit cost reductions and accelerated yield growth, results in ratios of EBIT to Interest sustainably exceeding 2x and retained cash flow to debt in excess of 15%. Outlook Actions: * Issuer: Alaska Air Group, Inc. -- Outlook, Changed To Stable From Negative * Issuer: Alaska Airlines Inc. -- Outlook, Changed To Stable From Negative Withdrawals: * Issuer: Alaska Air Group, Inc. -- Multiple Seniority Shelf, Withdrawn, previously rated (P)Caa1 * Issuer: Alaska Airlines Inc. -- Multiple Seniority Shelf, Withdrawn, previously rated (P)B2 Alaska Air Group, headquartered in Seattle, Washington, is a holding company for two U.S. passenger airlines, Alaska Airlines Inc. and Horizon Air Industries. ANDREW CORP: Posts $59.7 Mil. Net Loss in Quarter Ended Sept. 30 ---------------------------------------------------------------- Andrew Corporation reported total sales of $599 million for its fourth quarter ended Sept. 30, 2006, an increase of 16% compared to $518 million in the prior year quarter. In the fourth quarter 2006, wireless infrastructure sales increased 16% versus the prior year quarter and included the $23.7 million sales from the acquisition of Precision Antennas Ltd. in April 2006. Satellite Communications sales increased 2% versus the prior year quarter. In the fourth quarter of fiscal 2006 the Company recorded a net loss of $59.7 million compared to net income of $7.5 million in the year ago quarter. The company recorded a non-cash charge in the fourth quarter to provide a full valuation allowance of $83.4 million on its U.S. deferred tax assets. "Recording this non-cash charge is based upon our assessment of the accounting rules related to valuation allowances, and is not a reflection of our future global business prospects," Ralph Faison, president and chief executive officer, said. "We are currently analyzing a number of strategies that may enable us to utilize a greater portion of these underlying U.S. tax benefits prior to their expiration, and realize more of their cash value." The fourth quarter net loss also included $4.7 million related to intangible amortization; $5 million related to restructuring activities; $10.3 million of expenses associated with the termination of the proposed ADC merger; an impairment charge on capitalized software of $3.9 million; filter product line transition costs of $3.8 million; a gain of $2.6 million for repatriation benefit; a gain on the sale of land at the Company's Orland Park facility of $9 million; and a gain on the termination of the former Allen Telecom pension plan of $14.2 million. Gross margin for the fourth quarter of fiscal 2006 was 22.6%, compared with 22.1% in the prior quarter and 22.4% in the prior year quarter. Excluding a $3.8 million charge related to the previously announced restructuring of the filter product supply chain, gross margin in the current quarter was 23.2%. Operating income for the fourth quarter was $35 million or 5.9% of sales compared to $22 million or 4.3% of sales in the prior year quarter. Fiscal 2006 Results Fiscal 2006 sales increased 9% to $2.15 billion. Wireless infrastructure sales, including $39 million from the acquisition of Precision Antennas Ltd., increased 11% versus the prior year. Satellite communication sales decreased by 13%. Total orders increased by 13%, and backlog at fiscal year end was 14% higher than a year ago. Gross margin for fiscal 2006 was 22.1%, a decrease of 20 basis points from the prior year. Operating income for fiscal 2006 was $83 million or 3.9% of sales compared to $78 million or 4% of sales in the prior year. Including the non-cash charge to provide a full valuation allowance of $83.4 million on the Company's U.S. deferred tax assets, a net loss of $34 million was recorded for the year compared to net income of $39 million for the prior year. Balance Sheet and Cash Flow Highlights Cash and cash equivalents were $170 million at Sept. 30, 2006, compared to $116 million at June 30, 2006 and $189 million at Sept. 30, 2005. Total debt outstanding and debt to capital were $346 million and 18.7% at Sept. 30, 2006, compared to $302 million and 16.1% at June 30, 2006 and $303 million and 16.3% at Sept. 30, 2005. Debt increased during the quarter due to working capital funding for foreign operations and foreign acquisitions and the recognition of a $25 million lease obligation resulting from the classification of the Company's new Joliet facility, currently under construction, as a capitalized lease. Cash flow from operations was $56.1 million for the fourth quarter, compared to cash flow from operations of $24.5 million in the prior quarter and cash flow from operations of $45.9 million in the prior year quarter. Capital expenditures were $20.2 million for the fourth quarter, compared to $17.7 million in the prior quarter and $17.7 million in the prior year quarter. For the full year, cash flow from operations was $92.3 million compared to cash flow from operations in the prior year of $89.4 million. Capital expenditures were $71.0 million, or 3.3% of sales, for the full year compared to $66.4 million, or 3.4% of sales, in fiscal year 2005. Fiscal 2007 Outlook For the fiscal year 2007, the Company anticipates sales to range from $2.25 billion to $2.375 billion, excluding any further significant rationalization of product lines or significant acquisitions. It anticipates that total intangible amortization will be approximately $15 million in fiscal 2007 compared to $19 million in fiscal 2006 and reported tax rate to be in the range of 35% to 37%. Average diluted shares outstanding are anticipated to be approximately 175 million due to the accounting effect of outstanding convertible debt. Headquartered in Westchester, Illinois, Andrew Corporation (NASDAQ:ANDW) -- http://www.andrew.com/-- designs, manufactures and delivers equipment and solutions for the global communications infrastructure market. The company serves operators and original equipment manufacturers from facilities in 35 countries. * * * As reported in the Troubled Company Reporter, Standard & Poor's Ratings Services revised its CreditWatch implications on Andrew Corp. to negative from developing. The 'BB' corporate credit rating and other ratings on the company were placed on CreditWatch developing on Aug. 7, 2006. ANR PIPELINE: 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 broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its Ba1 corporate family rating on ANR Pipeline Company. 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 ---------- ------- ------- ------ ---------- Debs and nts, 7.0% through 9.625% due 2010 through 2025 Ba2 Ba1 LGD3 36% Nts, 13.75% due 2010 Ba2 Ba1 LGD3 36% 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%). ANR Pipeline Company -- http://www.anrpl.com/-- a subsidiary of El Paso Corp. operates an interstate natural gas pipeline systems. ANR provides storage, transportation, and various capacity-related services to a variety of customers in both the United States and Canada. ANVIL KNITWEAR: Proof of Claims Filing Period Ends Wednesday ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York established Nov. 8, 2006, at 4:00 p.m., as the deadline for creditors of Anvil Knitwear Inc. and its debtor-affiliates to file Proofs of Claims. Creditors must file their written proofs of claim on or before the Nov. 8 Claims Bar Date and those forms must be delivered: If by mail to: The U.S. Bankruptcy Court Southern District of New York Anvil Knitwear, Inc., et al. Claims Processing P.O. Box __________ Bowling Green Station New York, New York 10274 If by overnight mail or by hand delivery to: The U.S. Bankruptcy Court Southern District of New York Anvil Knitwear, Inc., et al. Claims Processing One Bowling Green, Room 534 New York, New York 10004; Governmental units have until April 2, 2007, to file their proofs of claim. Headquartered in New York, Anvil Holdings, Inc., is a Delaware holding company with no material operations and owns all of the outstanding common stock of Anvil Knitwear, Inc. Anvil Knitwear, in turn, owns all of the outstanding common stock of Spectratex, Inc., fka Cottontops, Inc. The Debtors design, manufacture, and market active wear. The Debtors filed for chapter 11 protection on Oct. 2, 2006 (Bankr. S.D.N.Y. Case Nos. 06-12345 through 06- 12347). The Debtors' consolidated financial data as of July 29, 2006 showed total assets of $110,682,000 and total debts of $244,586,000. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 30, 2007. AQUA SOCIETY: Posts $1,571,110 Net Loss in 2006 Third Quarter -------------------------------------------------------------- Aqua Society Inc. reported a $1,571,110 net loss on $273,301 of revenues for the third fiscal quarter ended June 30, 2006, compared with a $317,658 net loss on $601,068 of revenues for the same period in 2005. At June 30, 2006, the company's balance sheet showed $1,291,100 in total assets and $2,392,846 in total liabilities, resulting in a $1,101,746 stockholders' deficit. The company's balance sheet at June 30, 2006, also showed strained liquidity with $1,038,520 in total current assets available to pay $2,392,846 in total current liabilities. Full-text copies of the company's third quarter financial statements ended June 30, 2006, are available for free at: http://researcharchives.com/t/s?145e Going Concern Doubt As reported in the Troubled Company Reporter on March 29, 2006, Amisano Hanson, Chartered Accountants expressed substantial doubt about Aqua Society's ability to continue as a going concern after auditing the company's financial statements for the years ended Sept. 30, 2005, and 2004. The auditing firm pointed to the company's uncertainty in raising capital from stockholders or other sources to sustain operations and uncertainty in obtaining necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. About Aqua Society Headquartered in Herten, Germany, Aqua Society, Inc., -- www.aqua-society.com/ -- designs and develops applied technologies and provides consulting services in the areas of heating, ventilation, air conditioning, refrigeration, water purification, waste water treatment and energy. The company was incorporated under the laws of the State of Nevada. ASARCO LLC: Wants Dept. of Interior's Claim #10744 Disallowed ------------------------------------------------------------- ASARCO LLC asks the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to: (a) disallow the U.S. Government's Proof of Claim; (b) determine that ASARCO has no obligation to backfill or revegetate Tract I and, by implication, Tract II; (c) deny the claim of damages relating to Tract III; and (d) disallow the claims of unpaid royalties, rents, interests and penalties for Tracts I and II. In 1959, Asarco Inc., predecessor in interest to ASARCO LLC, and the Department of Interior entered into two Mining Leases and 12 Business Leases with the San Xavier District of the Tohono O'odham Indian Nation and certain members of the Nation holding trust patent allotments on the Reservation. The Leases facilitate ASARCO's mining and milling operations on portions of the Mission Mine: * The Mining Leases allow ASARCO to mine and mill ore, and deposit the alluvial burden, unmilled waste rock and mill tailings on portions of the Reservation designated as "Tract I" and "Tract II," in exchange for paying the Nation and Allottees royalties on the ore production and rent for the land. * The Business Leases allow ASARCO to deposit waste rock and tailings from portions of the Mission Mine "on or adjacent to" the Reservation onto portions of the Reservation designated "Tract III," in exchange for paying the Indians rent for the land. On July 28, 2006, the United States Government, on behalf of the Interior Department and the Indians, filed Claim No. 10744 against ASARCO LLC, asserting a $5,334,000 reclamation obligation for Tract I. The Claim Amount includes: -- $3,245,000 for "earthwork," which presumably includes backfilling, and -- $836,000 for "revegetation." In addition, the U.S. Government reserves its right to make future reclamation claims on Tracts II and III for different amounts because the Mining and Business Leases for those tracts remain in effect. Judith W. Ross, Esq., at Baker Botts L.L.P., in Dallas, Texas, notes that the U.S. Government alleged that: (a) ASARCO's obligation to conduct backfilling and revegetation on Tract I derives from the lease termination provision of the Mining Leases; (b) ASARCO is liable for the payment of damages for depositing waste rock and tailings on Tract III in violation of the Business Lease provision that limits deposition to waste rock and tailings from portions of the Mission Mine "on or adjacent to" the Reservation; and (c) ASARCO owes the Indians unpaid production royalties, land rent, associated interest, and late payment penalties that became due prepetition under the Mining Leases that govern Tracts I and II. The Debtors complain that the U.S. Government's Claim overstates the cost of ASARCO's reclamation obligation for Tract I because the Mining Leases do not require backfilling or revegetation Ms. Ross points out that the Mining Leases requires ASARCO to surrender the premises to the Indians in a condition that accounts for "the ordinary wear and tear . . . in their proper use." The Mining Leases also provides that the Indians will assume full ownership of the waste rock and tailings in the premises after ASARCO has surrendered the Leases for the Indians to realize the remaining ore value. A ruling that ASARCO has no obligation to backfill or revegetate does not mean portions of Tract I disturbed by mining, milling, waste rock and tailings would be left as is, Ms. Ross contends. Other federal regulations require ASARCO to leave Tract I in a "safe" and stable condition, as provided for in the Mining Leases. Ms. Ross relates that five years ago, the Interior Department estimated that reclamation obligation for Tract I is $760,000. In response, ASARCO posted a $760,000 bond and the Interior lifted a mining cessation order and permitted ASARCO to continue operating on Tract I. Ms. Ross asserts that the Interior's $760,000 estimate in 2001 must be given legal weight, force and effect in any assessment of ASARCO's reclamation obligation for Tract I. Any claim that substantially deviates from the $760,000 estimate without adequate justification should be disallowed, Ms. Ross adds ASARCO complains that the U.S. Government improperly asserted contract damages for Tract III because damages are not legally available for business lease violations Ms. Ross tells the Court that in 1985, the Interior and the Indians first alleged that ASARCO was wrongfully depositing tailings from the "Pima" ore body onto Tract III, in violation of the "adjacent" provision of the Business Leases. ASARCO argued that the "Pima" ore body was "adjacent to" the Reservation within the meaning of the Business Leases. After the parties failed to negotiate a resolution of the matter, Interior notified ASARCO in August 1991 that it was in violation of the Business Leases and ordered it to cease depositing the "Pima" tailings onto Tract III and to pay a $500 per day penalty. ASARCO also complains that the U.S. Government miscalculated royalties and rents due under the Mining Leases. ASARCO's records indicate it made minimum royalty payments on Tract I totaling $808,972 for the period from December 2001 through July 2004, at a time when there was zero production on Tract I, Ms. Ross tells the Court. In addition, the Interior decided to cancel the Mining Leases in December 2004, even though it waited until January 2005 to issue the lease cancellation notice. Thus, Ms. Ross asserts, the Royalty and Rent Claim should be reduced by $808,972, and the balance refunded to ASARCO. About ASARCO LLC Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). ASARCO LLC: Wants Tract I Mining Leases Declared Dischargeable -------------------------------------------------------------- ASARCO LLC asks the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi to declare that: (a) all claims with regard to the Mining Leases are dischargeable pursuant to Section 1141(d)(1)(A); and (b) the U.S. Government is entitled to only the $760,000 Tract I Bond securing ASARCO's royalty, rental and reclamation obligations related to the Tract I Lease, but that no property of the Debtor's estate otherwise secures those obligations. Furthermore, ASARCO objects to the Claim to the extent the U.S. Government does not recognize that the obligations related to the Tract I Lease are dischargeable pursuant to Section 1141(d)(1)(A) of the Bankruptcy Code. ASARCO seeks declaratory judgment to determine: -- the dischargeability of certain Tract I claims; and -- the validity, priority and extent of liens or other interest in property relating to Claim No. 10744 filed by the United States Government on behalf of the U.S. Department of the Interior. As previously reported, in 1959, the Interior Department, on behalf of the San Xavier District of the Tohono O'odham Indian Nation and certain members of the Nation holding trust patent allotments on the Reservation and ASARCO Inc., as predecessor in interest to ASARCO LLC, entered into: -- two mining leases for portions of the Reservation designated as Tract I and Tract II; and -- 21 business leases for portions of the Reservation designated as Tract III. The Mining Lease for Tract I was cancelled prior to the Petition Date by order of the Interior Department dated January 5, 2005. The Mining Lease for Tract II and the Business Leases that govern Tract III remain in effect. In July 2008, the U.S. Government filed Claim No. 10744 asserting a number of claims related to the Leases. ASARCO LLC complains that the U.S. Government made inconsistent statements regarding the liens securing the Claim it filed against ASARCO. The U.S. Government also checked both the "secured" box and the "unsecured" box in the Proof of Claim Form B-10, Judith W. Ross, Esq., at Baker Botts L.L.P., in Dallas, Texas, relates. ASARCO maintains that only three bonds, issued by St. Paul Travelers, secure its lease obligations to pay mining royalties and rents, and to conduct post-mining reclamation on Tracts I-III: (1) a $760,000 Bond for Tract I, (2) a $3,500, 000 Bond for Tract II, and (3) a $7,000,000 Bond for Tract III. No property of ASARCO secures the reclamation obligation, Ms. Ross asserts. About ASARCO LLC Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. Lehman Brothers Inc. provides the ASARCO with financial advisory services and investment banking services. Paul M. Singer, Esq., James C. McCarroll, Esq., and Derek J. Baker, Esq., at Reed Smith LLP give legal advice to the Official Committee of Unsecured Creditors and David J. Beckman at FTI Consulting, Inc., gives financial advisory services to the Committee. When the Debtor filed for protection from its creditors, it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05-21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. On Oct. 24, 2005, Encycle/Texas' case was converted to a Chapter 7 liquidation proceeding. The Court appointed Michael Boudloche as Encycle/Texas, Inc.'s Chapter 7 Trustee. Michael B. Schmidt, Esq., and John Vardeman, Esq., at Law Offices of Michael B. Schmidt represent the Chapter 7 Trustee. (ASARCO Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/ or 215/945-7000). BOFA-FUNB: Fitch Raises Rating on $14.2 Mil. Class N Certs. to BB ----------------------------------------------------------------- Fitch Ratings upgrades seven classes of Bank of America, N.A.- First Union National Bank Commercial Mortgage Trust's (BofA-FUNB) commercial mortgage pass-through certificates, series 2001-3: -- $17.1 million class G to 'AA+' from 'AA'; -- $14.2 million class H to 'AA' from 'AA-'; -- $14.2 million class J to 'A+' from 'A'; -- $29.8 million class K to 'BBB+' from 'BBB'; -- $8.5 million class L to 'BBB' from 'BBB-'; -- $8.5 million class M to 'BBB-' from 'BB+'. -- $14.2 million class N to 'BB' from 'BB-; -- $5.7 million class O to 'B+' from 'B'. In addition, Fitch affirms these classes: -- $93.4 million class A-1 at 'AAA'; -- $608.5 million class A-2 at 'AAA'; -- $50 million class A-2F at 'AAA'; -- Interest-only class XC at 'AAA'; -- Interest-only class XP at 'AAA'; -- $42.6 million class B at 'AAA'; -- $17.1 million class C at 'AAA'; -- $17.1 million class D at 'AAA'; -- $14.2 million class E at 'AAA'; -- $17.1 million class F at 'AAA'; -- $5.7 million class P at 'B-'. Fitch does not rate the $13.7 million class Q or the subordinate component class V-1, V-2, V-3, V-4, and V-5 certificates. The rating upgrades are due to defeasance and amortization since Fitch's last ratings action. Since issuance, 15 loans (14.4%) had defeased, including two of the top five loans (5.9%). As of the Oct. 11, 2006 distribution date, the pool has paid down 12.8% to $994.6 million from $1.14 billion at issuance. There are currently no delinquent or specially serviced loans. BUCKEYE TECHNOLOGIES: S&P Affirms BB- Corporate Credit Rating ------------------------------------------------------------ Standard & Poor's Ratings Services revised its outlook on Memphis, Tenn.-based Buckeye Technologies Inc. to stable from negative. At the same time the rating agency affirmed all ratings, including its 'BB-' corporate credit rating on the company. "The outlook revision reflects our view that Buckeye has taken steps that will strengthen its credit metrics to a level appropriate for the current rating," said Standard & Poor's credit analyst John Kennedy. "The successful implementation of price increases in its specialty fibers, fluff pulp, and nonwoven products to offset higher input costs is improving the company's profitability and cash flow. Furthermore, Buckeye has reconfigured its manufacturing capabilities to become a lower lower-cost producer. We could revise the outlook to negative if earnings and cash flow fall below current levels. It is not likely we would revise the outlook to positive in the next two years, given the company's need to strengthen its financial profile for the current rating." Buckeye is a producer of absorbent products and specialty pulps that serve a wide variety of end uses. "In fiscal 2007, we expect Buckeye's product mix and overall financial performance to improve because of the conversion of the company's Americana plant in Brazil to a market facility from toll manufacturing and the closure of its high-cost facility in Glueckstadt, Germany," Mr. Kennedy said. CEP HOLDINGS: Taps BMC Group as Claims and Balloting Agent ---------------------------------------------------------- CEP Holdings LLC and its debtor-affiliates ask the U.S. Bankruptcy Court for the Northern District of Ohio for permission to employ BMC Group Inc., as their claim, noticing and balloting agent. BMC Group will: a) assist the Debtor, Counsel & Office of the Clerk with noticing and claims handling; b) assist the Debtor with the compilation, administration, evaluation and production of documents and information necessary to support a restructuring effort; c) At Debtor's, Counsel's or the Clerk's direction, as the case may be, and in accordance with any court orders or rules in the bankruptcy cases BMC will: -- prepare and serve those notices required in the bankruptcy cases; -- receive, record and maintain copies of all proofs of claim and proofs of interest filed in the bankruptcy cases; -- create and maintain the official claims registers; -- receive and record all transfers of claims pursuant to Bankruptcy Rule 3001(e); -- maintain an up-to-date mailing list for all entities who have filed proofs of claim and requests for notices in the bankruptcy cases; -- assist Debtor and Counsel with the administrative management, reconciliation and resolution of claims; -- mail and tabulate ballots for purposes of plan voting; -- assist with the preparation and maintenance of Debtors' Schedules of Assets and Liabilities, Statements of Financial Affairs and other master lists and databases of creditors, assets and liabilities; with the preparation and maintenance of Debtors' Schedules of Assets and Liabilities, Statements of Financial Affairs and other master lists and databases of creditors, assets and liabilities; -- assist with the production of reports, exhibits and schedules of information for use by the third parties; -- provide other technical and document management services of a similar nature requested by Debtors or the Clerk's office; -- facilitate or perform distributions; and -- Maintain a call center. The Debtors tell the Court that BMC received $20,000 pre-petition retainer. BMC requested to increase it to $50,000. The firm's professionals bill: Designation Hourly Rate ----------- ----------- Senior/Principals $180-$275 Consultants $100-$175 Case Support $65-$95 Date Entry/Administrative Support $45 To the Debtors' best knowledge, the firm does not hold any interest adverse to the Debtors' estate and is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Based in Akron, Ohio, CEP Holdings, LLC, manufactured hard, molded rubber products and extruded plastic materials for companies in the automotive, construction, and the medical industries. The Company and two of its subsidiaries filed for chapter 11 protection on Sept. 20, 2006 (Bankr. N.D. Ohio Case No. 06-61796). Joseph F. Hutchinson, Jr., Esq., at Baker & Hostetler, LLP, represents the Debtor. When the Debtors filed for protection from their creditors, they estimated assets and debts between $10 million and $50 million. The Debtors' exclusive period to file a chapter 11 plan expires on Jan. 18, 2007. CHARLES BONNELL: Case Summary & 19 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Charles D. Bonnell 2380 Homer Adams Parkway Alton, IL 62002 Bankruptcy Case No.: 06-31896 Chapter 11 Petition Date: November 2, 2006 Court: Southern District of Illinois (East St. Louis) Judge: Kenneth J. Meyers Debtor's Counsel: Steven T. Stanton, Esq. P.O. Box 405 Edwardsville, IL 62025 Tel: (618) 931-3090 Fax: (618) 931-3387 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 19 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ James Halloway $150,000 1700 Karen Court Godfrey, IL 62035 Landreth Lumber and $43,617 Home Center P.O. Box L Bunker Hill, IL 62014 Troy Wohlert $35,000 10354 Prairie Dell Bunker Hill, IL 62014 The Bank of Edwardsville $27,041 DDA Collections Processor 330 West Vandalia Edwardsville, IL 62025 Platinum Plus (Regions Bank) $26,703 BankCard Services P.O. Box 15137 Wilmington, DE 19886-5137 The Telegraph $25,682 American Mediation and Case #06-LM-001510 $19,627 Alternative Resolutions Discover Financial $15,836 Services - Ohio Lowes Commercial $15,411 BMW Financial Services 2004 BMW Roadster $14,014 MBNA America $11,438 R.P. Lumber Co. - Staunton, IL $11,127 Discover Financial $10,117 Services - Utah Spickerman Hardware $7,411 Western Boats & Motors, Inc. $6,947 Advantage $6,343 Piasa Harbor Storage Fees for $6,000 Boat Platinum (Associated Bank) $5,712 R.P. Lumber Co. - Bethatlo, IL $5,551 CHARMING CASTLE: Creditors Meeting Scheduled on November 15 ----------------------------------------------------------- The U.S. Bankruptcy Administrator for the Northern District of Alabama will convene a meeting of Charming Castle LLC' creditors on Nov. 15, 2006, 10:00 a.m., at Room 126, Federal Courthouse, 1118 Greensboro Avenue, in Tuscaloosa, Alabama. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible officer of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Hackleburg, Alabama, Charming Castle LLC, dba Indies House -- http://www.indieshouse.net/-- manufactures mobile homes. The Company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. N.D. Ala. Case No. 06-71420). When the Debtor filed for protection from its creditors, it listed estimated assets of less than $50,000 but estimated debts between $10 million and $50 million. The Debtor's exclusive period to file a chapter 11 expires on Feb. 2, 2007. CITIZENS COMMS: Appoints Michael Dugan to its Board of Directors ---------------------------------------------------------------- Citizens Communications Company has appointed Michael T. Dugan to its Board of Directors. The Company disclosed that Mr. Dugan is currently Senior Technical Advisor for EchoStar Communications Corporation. He assumed the role after 16 years with EchoStar, most recently as chief technical officer, a position he held since November 2005. As chief technical officer he was responsible for all technical development and operations within EchoStar, including Broadcast Centers, Satellite Fleet, EchoStar Technologies Corporation, Broadband Development, Fixed Satellite Services Sales/Operations, Information Technology, DISH Network Service, L.L.C., Customer Service and Technical Innovation. Prior to becoming chief technical officer, Mr. Dugan was senior advisor to EchoStar's executive management Team. He remains a member of EchoStar's Board of Directors. Mr. Dugan joined EchoStar in January 1990 as vice president, Engineering and progressed to positions of increasing responsibility, including senior vice president, Communications Product Division; president, EchoStar Technologies Corporation; and president and chief operating officer. The Company also disclosed that Mr. Dugan's career includes positions at Xerox Corporation, Tandon Corporation, Eastman Kodak and Award Software. His technical expertise and contributions resulted in EchoStar acknowledging Mr. Dugan as "chief architect of the technological foundation upon which the success of DISH Network was founded." He received Associate and Bachelor degrees in Electrical and Electronic Technology from Pennsylvania State University and the Rochester Institute of Technology, respectively. "We are delighted that Mike will serve on our Board of Directors," Maggie Wilderotter, chairman and chief executive officer, remarked. "The fast pace of technological innovation makes it critical that our Board have the bench strength to assess new communications products and services to offer our customers. Mike adds experience to an already strong Board." Ms. Wilderotter noted, "Mike helped EchoStar grow into a company serving more than 12.46 million satellite TV customers through its DISH Network, making it the fastest growing U.S. provider of advanced digital television services in the last six years. Citizens and EchoStar have partnered to offer our customers access to DISH Network's hundreds of video and audio channels, Interactive TV, HDTV, sports and international programming. I am confident that his expertise will enable our Board to make even better decisions in the future regarding wireless data, IPTV and more, decisions that will benefit our customers and our shareholders." Headquartered in Stamford, Connecticut, Citizens Communications fka Citizens Utilities (NYSE: CZN) -- http://www.czn.net-- provides phone, TV, and Internet services to more than two million access lines in parts of 23 states, primarily in rural and suburban markets, where it is the incumbent local-exchange carrier operating under the Frontier brand. * * * As reported in the Troubled Company Reporter on Sept. 20, 2006 Fitch Ratings affirmed Citizens Communications Company's Issuer Default Rating rating at 'BB'. The Rating Outlook is Stable. As reported in the Troubled Company Reporter on Sept. 20, 2006 Moody's Investors Service upgraded the corporate family rating of Citizens Communications to Ba2 from Ba3. Moody's also assigned a Ba2 probability of default rating to the company. The ratings on the senior unsecured revolver and the senior unsecured notes and debentures were also upgraded to Ba2 from Ba3. The instrument ratings reflect both the overall Ba2 probability of default of the company, and a loss given default of LGD 4. The ratings on the preferred EPPICS were upgraded to B1 from B2, and assigned an LGD6 assessment. The outlook is stable. CKE RESTAURANTS: Earns $14.2 Million in Quarter Ended August 14 --------------------------------------------------------------- CKE Restaurants Inc. earned $14,216,000 on $375,965,000 of total revenues for the twelve weeks ended Aug. 14, 2006. This compares to the company's $8,448,000 net income on $359,783,000 of total revenues for the twelve weeks ended Aug. 15, 2005. As of Aug. 14, 2006, CKE Restaurants' balance sheet showed total assets of $791,984,000, total liabilities of $411,227,000, and total stockholders' equity of $380,757,000. The company's August 14 balance sheet also showed strained liquidity with $150,250,000 in total current assets and $176,035,000 in total current liabilities. Full-text copies of the company's financial statements for the quarter ended Aug. 14, 2006, are available for free at: http://researcharchives.com/t/s?146a Headquartered in Carpinteria, California, CKE Restaurants Inc., through its wholly owned subsidiaries, engages in the ownership, operation, and franchising of quick-service and fast-casual restaurants. The company operates its restaurants primarily under Carl's Jr., Hardee's, La Salsa Fresh Mexican Grill, and Green Burrito brand names. As of Jan. 31, 2006, the company operated or franchised approximately 3,160 restaurants in 43 states and 13 countries. * * * As reported in the Troubled Company Reporter on Oct. 30, 2006, Moody's Investors Service's implementation of its new Probability- of-Default and Loss-Given-Default rating methodology for the restaurant sector, the rating agency confirmed its B1 Corporate Family Rating for CKE Restaurants Inc. Additionally, Moody's revised its ratings on the company's $150 million Senior Secured Revolver Due 2007 and $230 million Senior Secured Term Loan B due 2009 from B1 to Ba2. Those loan facilities were assigned an LGD2 rating with a projected loss- given default of 29%. Moody's also revised its rating on the company's $105 million 4% Convertible Subordinated Notes due 2023 from Caa1 to B3. Moody's assigned those debentures an LGD6 rating suggesting noteholders will experience a 95% loss in the event of a default. COFFEE PACIFICA: Posts $1,017,000 Net Loss in 2006 Second Quarter ----------------------------------------------------------------- Coffee Pacifica, Inc., reported a $1,017,000 net loss on $524,878 of revenues for the quarter ended June 30, 2006, compared to a $1,017,000 net loss on zero revenues for the same period in 2005. At June 30, 2006, the company's balance sheet showed $1,419,096 in total assets, $45,505 in total liabilities, and $1,373,591 in total stockholders' equity. Full-text copies of the company's second quarter financial statements are available for free at: http://researcharchives.com/t/s?145d Going Concern As reported in the Troubled Company Reporter on June 22, 2006, Williams & Webster, P.S., in Spokane, Washington, raised substantial doubt about Coffee Pacifica, Inc.'s ability to continue as a going concern after auditing the company's consolidated amended financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's significant operating losses. About Coffee Pacifica Based in Vancouver, Canada, Coffee Pacifica, Inc. -- http://www.coffeepacifica.com/-- is a distributor and marketer of green bean coffee produced in Papua New Guinea. Coffee Pacifica generates revenue from the sale of green bean organic and non-organic premium grade Papua New Guinea grown coffee. The company sells grown green coffee beans directly to coffee roaster retailers, commercial roasters, coffee brokers and gourmet roasters and retailers. Following the acquisition of Uncommon Grounds, Inc., the company now sells the "Uncommon Grounds" brand of roasted coffee, tea, cafe supplies and equipment in North America and Europe. COMPLETE RETREATS: Wants to Walk Away from 14 Contracts and Leases ------------------------------------------------------------------ Complete Retreats LLC and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the District of Connecticut to reject, effective Sept. 30, 2006, fourteen executory contracts and unexpired leases for the use, sale or lease of certain assets or real property with these counterparties: * Gateway Realty, LLC, * Scott A. Boyd, * MR No. 5, LLC, predecessor-in-interest to Murphy Properties, * 7575 E. Redfield, L.L.C., * Alpine Bank, Aspen Branch, * SF101, LLC, * SF201, LLC, * Thurman Family Trust, * Lawrence J. Nasella, * Kenneth E. Moore, * Five Star Destinations Company, * Audi of North Scottsdale, and * UAG Fairfield CM, LLC. The Debtors also ask the Court to: (a) require claims arising from the rejection of the Rejected Agreements to be filed within 30 days from the date the Court grants their Rejection Motion; and (b) require all non-Debtor counterparties to return any amounts remaining after applying any security deposits, amounts held in escrow, or similar funds to any prepetition arrearages or delinquencies relating to the Rejected Agreements. The Debtors assert that they have exited the properties related to the Rejected Agreements on or about Sept. 30, 2006. The Debtors do not believe that the Rejected Agreements could be assigned for any meaningful value or that the Agreements provide any other potential value to their estates. Jeffrey K. Daman, Esq., at Dechert LLP, in Hartford, Connecticut, tells the Court that the Debtors would owe approximately $4,200,000, plus certain additional expenses and taxes, if the Agreements are not rejected. Mr. Daman assures the Court that the Debtors intend to pay, or have already paid, all non-Debtor parties to the Rejected Agreements amounts due up to September 30, 2006. 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. 13; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). COMPLETE RETREATS: U.S. Trustee Balks at Donlin Recano Retention ---------------------------------------------------------------- The United States Trustee for Region 2 opposes the employment of Donlin, Recano & Company Inc. as Complete Retreats LLC and its debtor-affiliates' claims, notice, and balloting agent to the extent that the Debtors propose to continue to pay Donlin for its services in the event the Debtors' cases are converted under Chapter 7 of the Bankruptcy Code. B. Amon James, Assistant United States Trustee, relates that to the extent the Debtors' cases are converted to Chapter 7, the Chapter 7 Trustee that has been entrusted with the responsibility of administering the cases should determine what administrative expenses he or she wishes to incur. The Debtors, who are no longer in possession at that point, should not be authorized to impose their will concerning the administration of the estate on the will of the Chapter 7 Trustee. The U.S. Trustee also objects to provision in the Debtors' Application, which states that "in no event shall [Donlin Recano] be liable for loss of business or other consequential damages even if [Donlin Recano] has been advised of the possibility of such damages." The U.S. Trustee asserts that it may be intended to shield Donlin from liability for any claims that might be asserted against it as a result of services provided in the bankruptcy proceeding, even to the extent that those claims arise from Donlin's willful, malicious, fraudulent, or grossly negligent conduct. The U.S. Trustee further opposes the Debtors' Application to the extent that her representatives are denied the right to review Donlin's monthly invoices to determine if the fees and expenses paid by the Debtors are reasonable. As reported in the Troubled Company Reporter on Oct. 11, 2006, the Debtors sought to employ Donlin Recano as their claims, notice, and balloting agent, nunc pro tunc to Sept. 27, 2006. The Debtors have more than 5,000 creditors and other potential parties-in-interest. The Debtors believe that the Bankruptcy Clerk's Office is not equipped to (i) distribute notices, (ii) process all of the proofs of claim filed in the Chapter 11 cases, and (iii) assist in the balloting process. According to Holly Felder Etlin, the Debtors' chief restructuring officer, Donlin Recano was chosen based on its experience and the competitiveness of its fees. Ms. Etlin noted that Donlin Recano has provided identical or substantially similar services that the Debtors seek from it in other large Chapter 11 cases. As the Debtors' claims, notice, and balloting agent, Donlin Recano will: (a) design, maintain, and administer a claims database; (b) provide copy and notice service consistent with the applicable local bankruptcy rules; (c) file with the Bankruptcy Clerk an affidavit or certificate of service that includes a copy of the notice, a list of persons to whom it was mailed, and the date the notice was mailed; (d) docket all claims received, maintain the official claims registers for each of the Debtors, and provide the Clerk with certified duplicate unofficial Claims Registers on a monthly basis, unless otherwise directed; (e) specify for each claim docketed in the applicable Claims Register: * the claim number assigned, * the date received, * the claimant's name and address or that of the agent who filed the claim, * the filed claim amount, if liquidated, and * the classification of the claim; (f) record and provide notices of all claims transfers as required by Rule 3001 of the Federal Rules of Bankruptcy Procedure; (g) make changes in the Claims Register pursuant to an order of the Court; (h) turn over to the Clerk copies of the Claims Registers for the Clerk's review upon completion of the docketing process for all claims received to date by the Clerk's office; (i) maintain the Claims Register for public examination without charge during regular business hours; (j) maintain the official mailing list for each Debtor of all entities that have filed a proof of claim and make the list available to parties-in-interest or the Clerk upon their request; (k) assist with, among other things, solicitation, calculation, and tabulation of votes and distribution; and (l) provide and maintain a web site where parties can view the claims filed, status of claims, and pleadings or other documents filed with the Court by the Debtors; (m) box and transport all original documents in proper format, as provided by the Clerk's office, to the Federal Records Center at the close of the Debtors' bankruptcy cases. The Debtors will pay for Donlin Recano's consulting services at these hourly rates: Professional Hourly Rate ------------ ----------- Principals $250 Sr. Bankruptcy Consultant/Attorneys $170 to $230 Bankruptcy Analysts $130 to $155 Programming Consultants $135 Case Administrators $65 Data Encoders $35 The Debtors asked the Court to treat Donlin Recano's fees and expenses as an administrative expense of their estates. The Debtors further asked the Court for permission to pay Donlin Recano's fees and expenses in the ordinary course of business without the need for Donlin Recano to seek the Court's approval of its fees and expenses. Donlin Recano will maintain records of all services provided to the Debtors, showing dates, categories of services, fees charged, and expenses incurred and that it will serve monthly invoices on the counsel of the Official Committee of Unsecured Creditors and any other official committees that may be appointed in the Debtors' Chapter 11 cases. In the event the Debtors' cases are converted to cases under Chapter 7 of the Bankruptcy Code, the Debtors sought the Court's permission to continue to pay Donlin Recano for its services until the claims filed in the cases have been completely processed. Moreover, if claims agent representation is necessary in the converted Chapter 7 cases, the Debtors asked to continue paying Donlin Recano's fees and expenses in accordance with Section 156(c). Louis A. Recano, a principal of Donlin, Recano & Company, Inc., assured the Court that his firm neither holds nor represents any interest adverse to the Debtors' respective estates on matters for which it is to be employed and that it has no prior connection with the Debtors. Donlin Recano is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, Mr. Recano said. About Complete Retreats Headquartered in Westport, Connecticut, Complete Retreats LLC operates five-star hospitality and real estate management businesses. In addition to its mainline destination club business, the Debtor also operates an air travel program for destination club members, a villa business, luxury car rental services, wine sales services, fine art sales program, and other amenity programs for members. Complete Retreats and its debtor- affiliates filed for chapter 11 protection on July 23, 2006 (Bankr. D. Conn. Case No. 06-50245). Nicholas H. Mancuso, Esq. and Jeffrey K. Daman, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. Michael J. Reilly, Esq., at Bingham McCutchen LP, in Hartford, Connecticut, serves as counsel to the Official Committee of Unsecured Creditors. No estimated assets have been listed in the Debtors' schedules, however, the Debtors disclosed $308,000,000 in total debts. (Complete Retreats Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). CONSOLIDATED CONTAINER: S&P Affirms 'B-' Corporate Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Consolidated Container Co. LLC and removed all ratings from CreditWatch with negative implications, where they were placed on Aug. 23, 2006. The corporate credit rating on Consolidated Container is 'B-'. The CreditWatch placement had followed the company's announcement that it would delay filing its June 30, 2006, 10-Q, due to an evaluation of the accounting implications of a settlement agreement with a customer related to historical bottle and resin supply contracts. The outlook is negative. Atlanta, Ga.-based Consolidated Container had total debt outstanding of about $592 million at June 30, 2006. "The affirmation of the ratings follows Consolidated Container's October 2006 announcement that it has concluded its accounting review," said Standard & Poor's credit analyst Liley Mehta. The negative outlook incorporates refinancing risk and concerns regarding the company's ability to meet its significantly interest burden from 2007 onward when interest on the 10.75% senior secured discount notes becomes cash payable. Improved operating results support the current ratings, although the ratings outlook will be constrained until management takes steps to extend its credit facilities, senior secured discount notes, and subordinated notes that mature in December 2008, June 2009, and July 2009 respectively. The company also reported improved financial results for the quarter ended June 30, 2006. The restatements for prior periods resulted in somewhat weaker operating results for the periods in question and related primarily to the company's customer contracts with Dean Foods. In August 2006, the company entered into a settlement agreement with Dean Foods, whereby Consolidated Container agreed to pay $10 million to Dean Foods in installments through 2008. Because of the financial restatement and resultant delay in reporting its financial statements, the company obtained a permanent waiver and amendment to its credit agreement and regained access to its revolving credit facility in October 2006. Consolidated Container's cash generated from operations is expected to be sufficient to meet capital expenditures and working capital needs in 2006. The ratings on Consolidated Container and its wholly owned subsidiary, Consolidated Container Capital Inc., reflect the company's highly leveraged financial profile, which overshadows its weak business risk profile in the relatively stable beverage and consumer product packaging markets. With annual revenues of about $870 million, Consolidated Container is a domestic producer of rigid plastic containers for dairy products, water, juice, and other beverages; food, household, and agricultural chemicals; and motor oil. The company derives about 59% of its revenues from dairy, water, and juice packaging, which are relatively commodity- type products and have mature demand patterns. COZZOLINO FURNITURE: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------------ Debtor: Cozzolino Furniture Design, Inc. 20 Standish Avenue West Orange, NJ 07052 Tel: (973) 731-9292 Bankruptcy Case No.: 06-20898 Type of Business: The Debtor manufactures wooden household and office furniture. See http://cozzolino.com/ Chapter 11 Petition Date: November 3, 2006 Court: District of New Jersey (Newark) Judge: Novalyn L. Winfield Debtor's Counsel: Douglas A. Goldstein, Esq. Spector & Ehrenworth 30 Columbia Turnpike Florham Park, NJ 07932 Tel: (973) 593-4800 Total Assets: $704,136 Total Debts: $1,977,572 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Valley National Bank Guaranty of $798,826 1455 Valley Road Mortgage Loan to Value of Wayne, NJ 07470 20 Standish, LLC Security: $506,167 Unsecured Balance: $292,659 United Brotherhood of Judgment $526,310 Carpenters NY District Council of Carpenters 395 Hudson Street New York, NY 10014 20 Standish LLC Loan Balance $311,817 20 Standish Avenue West Orange, NJ 07052 20 Standish LLC Rent $59,329 20 Standish Avenue West Orange, NJ 07052 Roberts Plywood Goods $7,511 45 North Industry Court Deer Park, NY 11729 Horizon Blue Cross Blue Insurance $4,735 Shield P.O. Box 1738 Newark, NJ 07101 Chase Card Services Credit Card $4,399 P.O. Box 15153 Wilmington, DE 19886 PSE&G Utility - Gas & $3,595 P.O. Box 14444 Electricity New Brunswick, NJ 08906 Dimension Designs Limited Goods $2,846 517 Stagg Street Brooklyn, NY 11237 Express Personnel Services Service - $2,726 P.O. Box 730039 Temporary Personnel Dallas, TX 75373 Cozzolino, Steven Wages $2,658 494 Highland Avenue Upper Montclair, NJ 07043 Lum, Samuel Wages and Accrued $2,642 2608 Dewitt Terrace Vacation Linden, NJ 07036 Brennan, Chris Wages and Accrued $2,625 339 Fairview Avenue Vacation Dunellen, NJ 08812 Derr, Greg Wages and Accrued $2,400 15 Iron Forge Road Vacation Warwick, NY 10990 Logan, Kamarjh Wages and Accrued $2,164 10 Union Street Vacation Montclair, NJ 07042 Aetna Health Insurance $2,053 P.O. Box 7247 Philadelphia, PA 19170 Santana, Teodoro Wages and Accrued $2,040 325 21st Avenue, Apt. 6 Vacation Paterson, NJ 07501 BDE Computer Services Services - $2,038 399 Lakeview Avenue Computer Support Clifton, NJ 07011 Atlantic Plywood Corp. Goods $1,930 P.O. Box 2705 Woburn, MA 01888 Cinelli, Raymond Wages and Accrued $1,846 91 Notch Road Vacation Oak Ridge, NJ 07438 CREDIT SUISSE: Fitch Assigns B- Rating on $2.1MM Class O Certs. --------------------------------------------------------------- Fitch affirms Credit Suisse First Boston Mortgage Securities Corp.'s commercial mortgage pass-through certificates, series 2004-C3: --$49.3 million class A-2 'AAA'; --$209.4 million class A-3 'AAA'; --$102.9 million class A-4 'AAA'; --$694.5 million class A-5 'AAA'; --$330.4 million class A-1-A 'AAA'; --Interest-only class A-X 'AAA'; --Interest-only class A-SP 'AAA'; --$45.1 million class B 'AA'; --$14.3 million class C 'AA-'; --$28.7 million class D 'A'; --$16.4 million class E 'A-'; --$20.5 million class F 'BBB+'; --$16.4 million class G 'BBB'; --$22.5 million class H 'BBB-'; --$8.2 million class J 'BB+'; --$6.1 million class K 'BB'; --$8.2 million class L 'BB-'; --$6.1 million class M 'B+'; --$2.1 million class O 'B-'; The $6.1 million class N and $22.5 million class P are not rated by Fitch. Class A-1 has paid in full. The rating affirmations reflect the stable pool performance and minimal paydown since issuance. As of the October 2006 distribution date, the pool's aggregate certificate balance has decreased 1.80% to $1.61 billion from $1.64 billion at issuance. To date, there have been no realized losses within the transaction. No loans are delinquent or in special servicing. Fitch has reviewed credit assessments of One Park Avenue (9.6%) and the Mizner Park building (3.2%). Both loans maintain investment grade credit assessments. One Park Avenue, the largest loan in the pool, is secured by a 926,453 square foot office building in New York. The loan consists of A, B, C, and D notes, with just the A note included in the trust. The year-end 2005 DSCR was 2.44 times (x) compared to 2.69x at issuance and occupancy was 97%. The Mizner Park loan is secured by six mixed-use buildings (50% office, 50% retail) in Boca Raton, Florida. The loan contains an A and B notes, with just the A note included in the trust. As of year-end 2005, the DSCR was 2.34x compared to 2.00x at issuance and occupancy was 85%. CREDIT SUISSE: Fitch Lifts Rating on Ten 2003-C5 Securities ----------------------------------------------------------- Fitch Ratings upgrades Credit Suisse First Boston commercial mortgage securities 2003-C5: -- $39.4 million class B to 'AAA' from 'AA'; -- $15.8 million class C to 'AA+' from 'AA-'; -- $31.5 million class D to 'A+' from 'A'; -- $17.3 million class E to 'A' from 'A-'; -- $17.3 million class F to 'A-' from 'BBB+'; -- $14.2 million class G to 'BBB+' from 'BBB'; -- $14.2 million class H to 'BBB' from 'BBB-'; -- $9.5 million class J to 'BBB-' from 'BB+'; -- $6.3 million class K to 'BB+' from 'BB'; -- $6.3 million class L to 'BB' from 'BB-'. In addition, Fitch affirms: -- $47.2 million class A-1 at 'AAA'; -- $150.4 million class A-2 at 'AAA'; -- $115.6 million class A-3 at 'AAA'; -- $370.3 million class A-4 at 'AAA'; -- $306.6 million class A-1-A at 'AAA'; -- Interest only (IO) class A-X at 'AAA'; -- IO class A-SP at 'AAA'; -- $7.9 million class M at 'B+'; -- $1.6 million class N at from 'B'; -- $4.7 million class O at 'B-'. Fitch does not rate the $15.8 million class P. The upgrades reflect the increased subordination levels due to scheduled amortization and defeasance of eleven loans (8.3%) since Fitch's last rating action. As of the October 2006 distribution date, the pool's aggregate principal balance has decreased 5.5% to $1.19 billion from $1.26 billion at issuance. To date, the transaction has not incurred any losses. Currently there is one loan (0.1%) in special servicing. The loan is secured by a multifamily property located in Buffalo, NY. The loan was transferred to the special servicer due to 60+ day delinquent. The loan was in the process of being condemned by the city and has significant deferred maintenance. Significant losses are expected upon liquidation of the asset. Fitch has reviewed credit assessments of the Mall at Fairfield Commons, Mayfair Mall, Stanford Shopping Mall, Paramount Plaza, and Eastbridge Landing. All loans maintain investment-grade credit assessments due to their stable performance since issuance. The Mall at Fairfield Commons loan (6.9%) is secured by 856,879 square foot of a 1,046,726 sf regional mall in Beavercreek, OH. As of October 2006, the occupancy remained strong at 98.5%. The Mayfair Mall & Office Complex loan (6.3%) is secured by 1,277,483 sf of a 1,488,197 sf commercial complex which is comprised of a regional mall and four office buildings in Wauwatosa, Wis. Occupancy as of June 30, 2006 increased to 98% from 93% at issuance. The Stanford Shopping Mall loan (6.3%) is secured by 1,387,351 sf regional mall in Palo Alto, Calif. Occupancy as of June 30, 2006 increased to 97% from 96% at issuance. The Paramount Plaza loan (3.6%) is secured by two 20-story buildings totaling 911,900 sf located in Los Angeles, Calif. Occupancy as of September 30, 2006 increased to 89.6% from 84% at issuance. The Eastbridge Landing loan (2.7%) is secured by 210-unit multifamily property located in New York City. Occupancy as of September 30, 2006 has increased to 97% from 95% at issuance. CREDIT SUISSE: Moody's Assigns Junk Ratings to $19-Million Certs. ----------------------------------------------------------------- Moody's Investors Service upgraded the ratings of five classes, downgraded the ratings of two classes, and affirmed the ratings of 11 classes of Credit Suisse First Boston Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 2001- CK1: Class A-1, $1,978,057, Fixed, affirmed at Aaa Class A-2, $149,000,000, Fixed, affirmed at Aaa Class A-3, $498,435,000, Fixed, affirmed at Aaa Class A-X, Notional, affirmed at Aaa Class A-Y, Notional, affirmed at Aaa Class A-CP, Notional, affirmed at Aaa Class B, $42,917,000, Fixed, affirmed at Aaa Class C, $45,441,000, Fixed, upgraded to Aa2 from Aa3 Class D, $12,621,000, Fixed, upgraded to Aa3 from A2 Class E, $12,623,000, Fixed, upgraded to A1 from A3 Class F, $20,196,000, Fixed, upgraded to A3 from Baa1 Class G, $17,672,000, Fixed, upgraded to Baa2 from Baa3 Class H, $17,450,000, Fixed, affirmed at Ba1 Class J, $27,421,000, Fixed, affirmed at Ba2 Class K, $7,479,000, Fixed, affirmed at Ba3 Class L, $7,478,000, Fixed, affirmed at B2 Class M, $14,957,000, Fixed, downgraded to Caa2 from Caa1 Class N, $4,986,000, Fixed, downgraded to Caa3 from Caa2 As of the October 18, 2006 distribution date, the transaction's aggregate certificate balance has decreased by approximately 10.7% to $890.1 million from $997.1 million at securitization. The Certificates are collateralized by 128 mortgage loans secured by commercial and multifamily properties. The loans range in size from less than 1.0% to 8.4% of the pool, with the top 10 loans representing 42.2% of the pool. The pool includes one investment grade shadow rated loan, representing 3.8% of the pool, and a conduit component, representing 96.2% of the pool. Twenty-two loans, representing 18.8% of the pool, have defeased and have been replaced with U.S. Government securities. Included among the defeased loans is the First Union Building Loan. Six loans have been liquidated, resulting in an aggregate realized loss of approximately $3 million. There are no loans currently in special servicing. Forty-three loans, representing 27.2% of the pool, are on the master servicer's watchlist. Watchlisted loans include four of the top 10 loans in the pool. Moody's was provided with calendar year 2005 operating results for 98.9% of the performing loans. Moody's loan to value ratio for the conduit component is 90.8%, compared to 87.9% at last review and compared to 84.5% at securitization. Moody's is upgrading Classes C, D, E, F and G due to defeasance and increased subordination levels. Class C was upgraded on August 2, 2006 and placed on review for further possible upgrade based on a Q tool based portfolio review. Moody's is downgrading Classes M and N due to LTV dispersion. Based on Moody's analysis, 29.5% of the conduit pool has a LTV greater than 100%, compared to 1% at securitization. Ten loans, representing 16.3% of the pool, have debt service coverage of 1x or less based on the borrowers' reported operating performance and the actual loan constant. This compares unfavorably to 7% at last review and none at securitization. The shadow rated loan is the 747 Third Avenue Loan, which is secured by a 410,000 square foot office building located in the Plaza District submarket of Manhattan. This Class A office building was built in 1972 and renovated in 1998. The building is occupied primarily by smaller tenants with the largest tenant occupying 7.3% of the premises. Occupancy as of June 2006 was 95.3%, compared to 92.4% at last review and compared to 98% at securitization. Moody's current shadow rating is Aaa, compared to Baa1 at last review and compared to Baa2 at securitization. The top three conduit loans represent 20.7% of the outstanding pool balance. i The largest conduit loan is the Stonewood Center Mall Loan ($75 million - 8.4%), which is secured by a 630,000 square foot portion of a 931,000 square foot regional mall located approximately 13 miles southeast of Los Angeles, in Downey, California. The mall is anchored by J.C. Penney, Macy's, Sears and Mervyn's. As of June 2006 the mall was 98.8% occupied, compared to 99% at last review and compared to 94% at securitization. Moody's LTV is 64.1%, compared to 67.7% at last review and compared to 74.4% at securitization. ii The second largest conduit loan is the 150 Spear Street Loan ($73.4 million - 8.2%), which is secured by a 256,000 square foot Class A office building located in downtown San Francisco, California. The 18-story building was built in 1982 and renovated in 1999. The largest tenant is Market Tools, Inc. (11.8% NRA; lease expiration May 2011). Occupancy as of June 2006 was 70.7%, compared to 98% at securitization. The property's net operating income has declined significantly since securitization as both occupancy and rental rates have declined at the subject property and in the San Francisco office market. The loan matures in January 2008. The loan is on the master servicer's watchlist due to a debt service coverage ratio below 1x and low occupancy. Moody's LTV is in excess of 100%, as it was at last review, compared to 89.7% at securitization. iii The third largest conduit loan is the Central Plaza Loan ($35.8 million - 4%), which is secured by a 786,000 square foot office complex located in Los Angeles, CA. Occupancy at year-end 2005 was 79.8%, compared to 86% at last review and compared to 86% at securitization. The largest tenant is Pacific Bell (14% NRA; lease expiration July 2010). No other tenant represents more than 1% of the building's net rentable area. The property's occupancy has decreased; however, net operating income has increased due to increased rental rates. The loan has also benefited from amortization. Moody's LTV is 59.2%, compared to 75% at last review and compared to 84.5% at securitization. The pool's collateral is a mix of office and mixed use, retail, U.S. Government securities, multifamily and mobile home, industrial and self storage and lodging. The collateral properties are located in 31 states. CROWN HOLDINGS: Sept. 30 Stockholders' Deficit Narrows to $107MM ---------------------------------------------------------------- Crown Holdings Inc. filed its financial statements for the third quarter ended Sept. 30, 2006, with the Securities and Exchange Commission on Nov. 1, 2006. The Company previously sold its remaining European plastics businesses in 2006 and amounts related to those businesses have been reclassified to discontinued operations. At Sept. 30, 2006, the Company's balance sheet showed $7.236 billion in total assets, $7.072 billion in total liabilities, and $271 million in minority interests, resulting in a $107 million shareholders' deficit. The Company had a $236 million deficit at Dec. 31, 2005. Net sales from continuing operations in the third quarter rose to $2.022 billion, up 7% over the $1.89 billion in the third quarter of 2005. The increase in sales was primarily attributable to stronger sales unit volumes. Third quarter gross profit was $262 million compared with $272 million in the 2005 third quarter. As a percentage of net sales, gross profit was 13% in the quarter compared to 14.4% in the third quarter last year. The decline was primarily driven by the impact of higher raw material costs partially offset by stronger sales unit volumes, increased operating efficiencies and productivity gains. Segment income (defined by the Company as gross profit less selling and administrative expense) was $184 million in the third quarter compared with $185 million in the 2005 third quarter. Segment income as a percentage of net sales was 9.1% in the quarter compared to 9.8% in the same period in 2005. Commenting on the quarter, John W. Conway, chairman and chief executive officer, stated, "We are pleased that in the face of significantly higher input costs, profits have remained firm and stable which is particularly noteworthy in light of last year's solid third quarter. "Our North American Food segment had outstanding results on strong volumes and increased productivity. Both volumes and margin increased in the Americas Beverage business from the first and second quarters of this year. Internationally, four new beverage can lines in the Middle East began operations in the quarter which adds to our annual capacity in that fast growing market." Interest expense in the third quarter was $73 million compared with $94 million in the third quarter of 2005. The decrease reflects the impact of lower average interest rates, the result of the Company's 2005 refinancing. Net income from continuing operations in the third quarter was $87 million compared with $82 million in the third quarter of 2005. The Company is currently in a dispute with a European supplier regarding the cost of materials supplied in 2006. If the outcome of the proceedings is unfavorable, the Company anticipates that it would record a charge to its net income from continuing operations for the third quarter and nine months ended Sept. 30, 2006. Included within net income from continuing operations in the third quarter of 2005 the Company recorded a net gain of $13 million related to a net gain on the remeasurement of foreign currency exposures in Europe partially offset by a provision for restructuring. For the three months ended Sept. 30, 2006, the Company reported $85 million of net income compared with $78 million of net income for the comparable period in 2005. Through September 30, the Company has repurchased 6,246,378 shares of common stock for $117 million during 2006, including 5,262,878 shares through a previously announced accelerated share repurchase program. The number of common shares outstanding as of Sept. 30, 2006, was 162,923,235, which is approximately 3% lower than as at June 30, 2006. Full-text copies of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?1470 Philadelphia, Pa.-based Crown Holdings Inc. (NYSE: CCK) -- http://www.crowncork.com/-- through its affiliated companies, supplies packaging products to consumer marketing companies around the world. * * * As reported in the Troubled Company Reporter on July 28, 2006, Standard & Poor's Ratings Services affirmed its 'BB-' rating and its '2' recovery rating on Crown Holdings Inc.'s existing $1.5 billion credit facilities including its $200 million add-on senior secured term loan B due 2012. CUMMINS INC: Earns $171 Mil. in Third Fiscal Quarter Ended Oct. 1 ----------------------------------------------------------------- Cummins Inc. filed its financial statements for the third fiscal quarter ended Oct. 1, 2006, with the Securities and Exchange Commission on Nov. 1, 2006. Sales for the quarter were $2.81 billion, compared with $2.47 billion for the third quarter of 2005. Net income of $171 million was up from $145 million in the same period last year. Earnings before interest and taxes rose 23% to $296 million while gross margins remained near record levels at 23.3% of sales. For the three months ended Oct. 1, 2006, the Company reported $171 million of net income compared with $145 million of net income for the three months ended Sept. 25, 2005. Each of the Company's business segments enjoyed double-digit percentage sales growth in the third quarter, led by the Power Generation and Distribution businesses, both of which performed above the top end of their targeted sales and profit ranges. Sales in the Engine Business, the Company's largest segment, rose 10% despite a decline in light-duty automotive volumes late in the quarter as a result of plant shutdowns at automotive facilities related to inventory rebalancing. The Company saw sales growth in most of its markets around the world -- both in its wholly owned businesses and at its joint ventures, where income increased 19% from the same period in 2005. "We performed well in the third quarter and see great opportunities for the future," Cummins chairman and chief executive officer Tim Solso said. "In particular, our Power Generation and Distribution businesses enjoyed significant growth - both in terms of revenue and profit. "We also continue to produce returns above 10%, even as we are investing in new products, new markets and additional capacity for 2007 and beyond." As a result of the strong financial performance, the Company's cash position has improved by $248 million from the beginning of the year, even as Cummins has continued to pay down debt and increased its pension funding. The Company's debt/capital ratio is below its 30% target range and Cummins plans to repay an additional $250 million in long-term debt in December, as previously announced. The Company also repurchased $14 million of its common stock in the third quarter as part of a previously announced plan to repurchase up to 2 million shares. "Our continued strong financial performance has allowed us to create a strong balance sheet," Cummins chief financial officer Jean Blackwell said. "As a result, the Company is well positioned to withstand the challenges of the business cycle and invest in growth opportunities that will be the key to our future success." Cummins reaffirmed its previous full-year guidance of $14 to $14.20 a share. The Company will provide guidance for 2007 in January, but expects EBIT margins to be within its 7% to 10% target range, on flat to 5% increase in sales. Despite the anticipated temporary slow-down in the heavy-duty engine market due to the emissions changes, Cummins expects 2007 to be a solid year for several reasons: * Cummins expects sales growth in most of its end markets. * The Company expects to see continued profitable growth in emerging markets, most notably China and India. * Cummins has a strong balance sheet, resulting in considerably less interest expense and greater liquidity. * The Company has a cost-control strategy in place across all businesses that is focused on using Six Sigma to become more efficient. * Cummins has increased the flexibility in its manufacturing plants to deal with the expected fluctuations in demand next year resulting from new emissions regulations. The Company also continues to invest in profitable growth opportunities, two of which were highlighted by announcements in October. Cummins announced that it will produce a new line of high-performance, light-duty diesel engines at its Columbus Engine Plant by the end of the decade and that DaimlerChrysler is the first major customer for the new engine. The Company also announced that it had signed a joint venture agreement with Beiqi Foton Motor Company in China to produce 2.8- and 3.8-liter engines for the light commercial vehicle markets in China beginning in 2008. "We have some exciting opportunities ahead," Mr. Solso said. "The work done by Cummins employees around the world in recent years has prepared us well for 2007 and beyond. Third-quarter details Engine segment Revenues rose 10% to $1.84 billion and Segment EBIT increased 20% to $183 million, or 9.9% of sales, which is at the top of the targeted range of 7% to 10%. Global engine shipments rose 3% from the same period in 2005. Higher heavy-duty, medium-duty and high horsepower shipments more than offset a drop in light-duty shipments due to softness in the U.S. auto industry. Heavy-duty engine shipments in North America were strong as OEMs worked to meet increased demand from truck fleets, in part due to fleets replacing trucks ahead of the 2007 emissions changes. The Company also grew its sales in the North American medium-duty truck and bus engine market by 48% from the same quarter in 2005. Power Generation segment Revenues rose 24% to $624 million well above the targeted range of 8% to 10%. Segment EBIT increased 24% to $57 million, or 9.1% of sales compared with the targeted range of 7% to 9%. Sales increases were driven by volume gains as a result of strong demand in the commercial generator set and alternator businesses. Commercial sales rose 32% as demand grew around the world, with the exception of China and Southeast Asia. Alternator sales rose 25% and the segment also posted sales gains in its energy solutions, rental and power electronics businesses. Sales in the consumer business fell 1.5% from the same period in 2005 due to continued softness in the recreational vehicle market. Distribution segment Revenues rose 17% to $346 million above the segment's 10% growth target. Sales gains primarily were driven by growth in the Middle East, Europe, and South Pacific. Increases in sales of power generation equipment were led by the reconstruction effort in the Middle East, which accounted for more than half the sales growth in this business line. Segment EBIT increased 36% to $38 million, or 11% of sales above the target range of 8% to 10% as the segment continues to achieve its goal of growing earnings faster than revenues. The Company also saw significant improvement in income from its North American distributor joint ventures during the quarter. Components segment Sales for the segment made up of the Company's filtration, turbocharger, fuel systems, and exhaust after-treatment businesses rose 17% to $564 million. The segment benefited from strong sales gains in its North and Latin American filtration business as well as significantly higher sales in its North American fuel systems business. Segment EBIT dropped 10% to $19 million, or 3.4% of sales, compared with the same period in 2005. The businesses in this segment -- most notably Emission Solutions and Cummins Turbo Technologies -- continue to invest heavily to ensure that Cummins has both the capability and capacity to provide critical technologies to support the 2007 products. In addition, this segment focused on rationalizing plants and transferring production to assist in future profit improvement, which resulted in manufacturing inefficiencies during the quarter. At Oct. 1, 2006, the Company's balance sheet showed $7.579 billion in total assets, $4.668 billion in total liabilities, $240 million in minority interest, and $5.671 billion in total shareholders' equity. Full-text copies of the Company's third fiscal quarter financials are available for free at http://ResearchArchives.com/t/s?1463 About Cummins Inc. Headquartered in Columbus, Indiana, Cummins Inc. (NYSE: CMI) -- http://www.cummins.com/-- designs, manufactures, distributes and services engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. Cummins serves customers in more than 160 countries through its network of 550 Company- owned and independent distributor facilities and more than 5,000 dealer locations. * * * Cummins' Junior Convertible Subordinated Debentures carry Fitch's 'BB' rating with a stable outlook. As reported in the Troubled Company Reporter on May 11, 2006, Moody's Investors Service raised Cummins Inc.'s convertible preferred stock rating to Ba1 from Ba2 and withdrew the company's SGL-1 Speculative Grade Liquidity rating and its Ba1 Corporate Family Rating. DANA CORP: Amends Trailer Sale Pact, Cuts Purchase Price to $33MM ----------------------------------------------------------------- Dana Corporation and two of its affiliates, and Hendrickson USA LLC and its affiliates agreed to reduce the purchase price for the sale of Dana's trailer axle manufacturing business, from $38 million to $33 million. The Sale Agreement provides for the buyers to acquire certain assets located in Lugoff, South Carolina; Barrie, Ontario, Canada; and Wuxi, China that are used to manufacture heavy-duty trailer axles and suspensions. The United States Bankruptcy Court for the Southern District of New York will provide an opportunity for competitive bids on the trailer axle assets before the sale is approved. While there can be no assurances, Dana now expects that closing of the sale may occur in the first quarter of 2007, rather than in the fourth quarter of 2006. The Court will convene a hearing considering the Amended Sale Agreement on Dec. 15, 2006. 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. DAVITA INC: Earns $94 Million During Quarter Ended September 30 --------------------------------------------------------------- DaVita Inc. earned $94 million of net income on net operating revenue of $1.2 billion for the three months ended Sept. 30, 2006, compared to net income of $55 million from net operating revenue of $644 million for the same quarter in 2005. The company reported income from continuing operations for the three and nine months ended Sept. 30, 2006, excluding the valuation gain on its product supply agreement with Gambro Renal Products, was $69.9 million and $192 million, respectively, as compared with $50.9 million and $151 million, respectively, for the same periods of 2005. Income from continuing operations for the three and nine months ended Sept. 30, 2006 included incremental after-tax stock-based compensation expense of $4.1 million and $10.1 million, respectively. Income from continuing operations for the three and nine months ended September 30, 2006, including the valuation gain on the Product Supply Agreement was $93.1 million and $215.2 million, respectively. Net income for the nine months ended Sept. 30, 2006 was $215 million from net operating revenue of $3.6 billion, versus a net income of $164 million from $1.8 billion in net operating revenue for the comparable period in 2005. For the rolling 12-months ended Sept. 30, 2006, the Company's operating cash flow was $598 million and free cash flow was $488 million, in each case excluding an $85 million income tax payment associated with the divestiture of centers in conjunction with the Gambro Healthcare acquisition. Including these items, operating cash flow for the rolling 12-months was $513 million and free cash flow was $403 million. Operating cash flow for the three months ended Sept. 30, 2006 was $97 million and free cash flow was $67 million. Outlook The Company disclosed that it revised the lower end of its 2006 operating income projection to $690 million to $700 million excluding the valuation gain on the Product Supply Agreement. Its 2007 operating income is projected to be in the range of $680 million to $750 million. Headquartered in El Segundo, California, DaVita (NYSE: DVA) is a leading provider of dialysis services for patients suffering from chronic kidney failure. The Company provides services at kidney dialysis centers and home peritoneal dialysis programs domestically in 41 states, as well as Washington, D.C. As of March 31, 2006, DaVita operated or managed over 1,200 outpatient facilities serving approximately 98,000 patients * * * The Company's 6-5/8% Senior Notes due Mar. 15, 2013 carry Standard & Poor's Ratings Services' B rating. DELPHI CORP: Court Approves EDS and HP Outsourcing Agreements ------------------------------------------------------------- The U.S Bankruptcy Court for the Southern District of New York has authorized Delphi Corporation and its debtor-affiliates to enter into and perform under: (a) an agreement with Electronic Data Systems Corporation and EDS Information Services, LLC, which provides for the outsourcing of global desktops, service desk, and mainframe systems hosting; and (b) an agreement with Hewlett Packard Company, which provides for the outsourcing of server systems hosting. The Debtors' decision to enter into the IT Infrastructure Outsourcing Agreements is one step in the implementation of their transformation plan. The Debtors intend to transform their salaried workforce to ensure a competitive structure aligned with their product portfolio and manufacturing footprint, which would in turn, lower the Debtors' selling, general, and administrative expenses. To achieve this goal, the Debtors are designing and implementing a shared service delivery model that will contribute to the reduction of their global SG&A expense by $450 million annually. One aspect of this effort is Delphi's accelerated consolidation and outsourcing of IT functions and the transition to common processes and systems. Benchmarking analysis conducted with independent consultants concluded that Delphi's 2005 IT operating budget of $588 million could be reduced by $256 million through three transformation actions: (1) outsourcing IT services; (2) reducing the number and type of unique, non-common systems, moving to common operating platforms; and (3) running a streamlined IT shared service organization. The Debtors' shared service model calls for the outsourcing of these IT services: (a) global infrastructure services, including desktops, service desk, and mainframe and server systems hosting; (b) system development, maintenance, and support; and (c) network services such as data networks and voice services. Currently, the Debtors purchase IT services from more than 100 regional-based suppliers. Completion of all three outsourcing phases would enable rationalization of the supplier-provider base to fewer than 10 direct suppliers, which will enable the Debtors to significantly reduce the number of internal employees providing those services. After one-time transition costs of $80 million, net operating savings of $155 million are expected over the seven- year term of the IT Infrastructure Outsourcing Agreements. By moving to a model that provides for the outsourcing of IT infrastructure services to two vendors, the Debtors believe that they will: (a) achieve and sustain a competitive environment in which their service providers will provide service at competitive prices throughout the term of the agreement; (b) be able to develop stronger relationships with their fewer service providers; (c) reduce their costs through common process, common systems, and economies of scale; and (d) find providers with innovation and progressive technology. Delphi will contract for global infrastructure services for a seven-year term, with costs between $700 million and $800 million. Monthly operating expenses and one-time transition costs will be charged directly or allocated to the Delphi affiliates which use the services, with 35% of operating and transition costs being borne by the Debtors and the remaining costs by non-Debtor affiliates. The scope of services to be provided under the IT Infrastructure Outsourcing Agreements includes transition services both at inception and at termination to ensure a smooth transition from existing service providers to EDS and HP and also to ensure that there is no disruption to Delphi's business at the end of the term. Each service provider would be required to submit a detailed transformation plan which identifies principal changes in technology and deliverables to allow Delphi to work toward implementing common systems and a more efficient IT services delivery model and achieve year-over-year price reductions over the life of the contracts. Troy, Mich.-based Delphi Corporation -- http://www.delphi.com/-- is the single largest global supplier of vehicle electronics, transportation components, integrated systems and modules, and other electronic technology. The Company's technology and products are present in more than 75 million vehicles on the road worldwide. The Company filed for chapter 11 protection on Oct. 8, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-44481). John Wm. Butler Jr., Esq., John K. Lyons, Esq., and Ron E. Meisler, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, represent the Debtors in their restructuring efforts. Robert J. Rosenberg, Esq., Mitchell A. Seider, Esq., and Mark A. Broude, Esq., at Latham & Watkins LLP, represents the Official Committee of Unsecured Creditors. As of Aug. 31, 2005, the Debtors' balance sheet showed $17,098,734,530 in total assets and $22,166,280,476 in total debts. (Delphi Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DENNY'S 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 restaurant sector, the rating agency held its B2 Corporate Family Rating for Denny's Holdings 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 ---------- ------- ------- ------ ---------- $75M 1st Lien Revolver due 9/2008 B2 Ba2 LGD2 18% $225M 1st Lien Term Loan due 9/2009 B2 Ba2 LGD2 18% $120M 2nd Lien Term Loan due 9/2010 B3 B2 LGD4 53% $175M Unsecured Notes due 10/2012 Caa1 Caa1 LGD5 89% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Headquartered in Spartanburg, South Carolina, Denny's Holdings Inc. -- http://www.dennys.com/-- a wholly owned subsidiary of Denny's Corporation, operates family-style restaurant chain under the Denny's restaurant brand. DILLON READ: Fitch Places BB Rating on $10-Mil. Mezzanine Notes --------------------------------------------------------------- Fitch has assigned these ratings to Dillon Read CMBS CDO 2006-1, Ltd. and Dillon Read CMBS CDO 2006-1, Corp.: --U.S. $650,000,000 Class A-S1VF Senior secured floating-rate notes due 2046 'AAA'; --U.S. $150,000,000 Class A1 Senior secured floating-rate notes due 2046 'AAA'; --U.S. $60,000,000 Class A2 Senior secured floating-rate notes due 2046 'AA'; --U.S. $41,250,000 Class A3 Secured deferrable interest floating rate notes due 2046 'A'; --U.S. $12,500,000 Class A4 Secured deferrable interest floating -rate notes due 2046 'A-'; --U.S. $28,750,000 Class B1 Mezzanine secured deferrable interest floating-rate notes due 2046 'BBB'; --U.S. $11,250,000 Class B2 Mezzanine secured deferrable interest floating-rate notes Due 2046 'BBB'; --U.S. $8,750,000 Class B3 Mezzanine secured deferrable interest floating-rate notes due 2046 'BBB-'; --U.S. $10,000,000 Class B4 Mezzanine secured deferrable interest fixed rate notes due 2046 'BB'. Additional information, can be obtained at the new issue report titled 'Dillon Read CMBS CDO 2006-1, Ltd./Corp.', available at http://www.derivativefitch.com/ DURA AUTOMOTIVE: Seeks Court Nod to Obtain $300 Mil. DIP Financing ------------------------------------------------------------------ DURA Automotive Systems, Inc., and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the District of Delaware to obtain $300,000,000 of debtor-in-possession financing arranged and provided by Goldman Sachs Capital Partners L.P., General Electric Capital Corporation, and other lender parties. The Debtors propose to borrow or obtain letters of credit from the DIP Lenders in an aggregate principal or face amount not to exceed $50,000,000, pending the Court's final consideration of the DIP Financing. Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that the Debtors have an immediate need to obtain the DIP Financing to permit, among other things, the orderly continuation of the operation of their businesses, to maintain business relationships with vendors, suppliers and customers, to make payroll, to make capital expenditures and to satisfy other working capital and operational needs, all of which are necessary to preserve and maintain their going-concern values and to successfully reorganize. Beginning in September 2006, the Debtors and Miller Buckfire solicited DIP financing proposals from 10 well-known financial institutions. After thoroughly reviewing all of the proposals, and based on their capital and operational requirements, the Debtors chose the GSCP/GECC proposal as providing the most advantageous and least costly terms to their estates. The salient terms of the Senior Secured Super-Priority Debtor-In- Possession Revolving Credit and Guaranty Agreement, and the Senior Secured Super-Priority Debtor-In-Possession Term Loan and Guaranty Agreement executed by the Debtors and the DIP Agents are: Borrower: Dura Operating Corp. Guarantors: Dura Automotive Systems, Inc., and its domestic and Canadian subsidiaries Agent & Banks: Goldman Sachs Capital Partners L.P., as Joint Lead Arranger, Sole Bookrunner, Sole Syndication Agent, and Administrative Agent and Collateral Agent for the Fixed Asset Facilities; General Electric Capital Corporation as Administrative Agent and Collateral Agent for the DIP Revolver; and Barclays Capital as Joint Lead Arranger Commitment: The DIP Financing Facility provides: -- up to $130,000,000 asset based revolving credit facility, subject to borrowing base and availability terms, with a $5,000,000 sublimit for letters of credit; and -- up to $170,000,000 Fixed Asset Facilities consisting of: * up to $150,000,000 tranche B term loan; and * up to $20,000,000 pre-funded synthetic letter of credit facility. Purpose: Repayment of the Debtors' obligations under a $175,000,000 revolving credit facility, payment of certain adequate protection payments, professionals' fees, transaction costs, fees and expenses incurred in connection with the DIP Financing, other approved expenses prior to bankruptcy filing, to provide working capital, and for other general corporate purposes. Term: The earlier of: (i) December 31, 2007; (ii) the effective date of a reorganization plan in the Debtors' Chapter 11 cases; or (iii) termination of the commitment or acceleration of the loans as a result of an Event of Default. Closing Date: The $50,000,000 Interim DIP Facility will close upon or shortly after the Interim DIP Order. The DIP Facility will close on the date on or before December 15, 2006, on which all the conditions precedent to the Interim DIP Facility occur. Priority and Liens: All direct borrowings and reimbursement Obligations under letters of credit, other obligations under the DIP Financing, and hedging and cash management arrangements in connection with the DIP Financing, will at all times: (1) constitute under Section 364(c)(1) of the Bankruptcy Code allowed superpriority administrative expense claims against each of the Debtors having priority over all administrative expenses of the kind specified in, or ordered pursuant to, any provision of the Bankruptcy Code, which superpriority claims will, subject to the Carve-Out, be payable from and have recourse to all property of the Debtors and all proceeds thereof; (2) pursuant to Sections 364(c)(2), (c)(3) and (d), for the sole benefit of the Postpetition Secured Parties valid, binding, enforceable, first priority and perfected Liens in the Collateral, which Liens are: (i) subject only to: (x) the Carve-Out, (y) non avoidable, valid, enforceable and perfected Liens that are capitalized leases, purchase money security interests or mechanics' liens in existence on the date of filing for chapter 11 protection and (z) Existing Liens; and (3) senior priming liens on any Collateral securing the First Lien Revolver, the Second Lien Term Loan, and other indebtedness of the Borrower and Guarantor, either upon consent of the affected secured parties or pursuant to Section 364(d). Collateral: The Collateral will include all assets and properties of each of Debtors before and after their filing for chapter 11 protection; provided, however, that with respect the Capital Stock of any Foreign Subsidiary that is not a Canadian Subsidiary, the Postpetition Liens will attach only to 66% of the voting Capital Stock and 100% of the non- voting Capital Stock thereof. Carve Out: The Carve-Out consists of: (a) unpaid fees of the Clerk of the Bankruptcy Court and the U.S. Trustee pursuant to 28 U.S.C. Section 1930(4); (b) unpaid and allowed fees and expenses of professional persons, retained by any Debtor or any Committee pursuant to an order of the Court, incurred prior to notice by any Postpetition Agent that the Carve-out is invoked; and (c) unpaid and allowed fees and expenses, in an aggregate amount not to exceed $10,000,000, of Professionals incurred subsequent to delivery of a Carve-Out Trigger Notice. Underwriting & Agency Fees: Dura Operating Corp. will pay: -- 1.00% of the maximum amount of the DIP Revolver, payable on the Incremental Facilities Effective Date; -- 1.50% of the maximum of the Fixed Asset Facilities, payable: (x) with respect to that portion of the Underwriting Fees calculated with respect to the Interim DIP Facility, on the Closing Date, and (y) with respect to the remaining portion of the Underwriting Fees, on the Incremental Facilities Effective Date; and -- agency fees to each of the DIP Agents of $100,000 per annum. The fees will be fully earned and nonrefundable once paid. Expenses: Dura Operating will reimburse the DIP Agents for reasonable out-of-pocket expenses, including an aggregate $500,000 evergreen expense deposit, which will be evergreen until the Closing Date. Flex Pricing: GSCP may at any time after consultation with Dura Operating, change the terms, conditions, pricing or structure of any of the Facilities if GSCP reasonably determines, in its discretion, that the changes are necessary to ensure the successful syndication of any of the Facilities; provided that: (1) the total aggregate amount of the Facilities remains unchanged; (2) the overall weighted average interest rates under the Facilities may not be increased by more than 67.5 basis points, determined on a combined basis; (3) the amount of the Revolving Facility may not be increased; (4) prepayment premiums may not be required with respect to the Revolving Facility and the prepayment premium for the Term Facility may not be increased or extended; (5) the maturity dates of the Facilities may not be shortened; (6) amortization may not be required under the Facilities; (7) a LIBOR Rate floor or minimum interest rates may not be required; (8) the mandatory prepayment provisions may not be changed; (9) negative covenants restricting incurrence of Indebtedness, Fundamental Changes, Disposition of Assets, Acquisitions and Sales and Lease-backs may not be changed; (10) the financial covenants may not be changed and additional financial covenants may not be required; and (11) a prohibition on voluntary prepayments may not be imposed with respect to the Facilities. Synthetic L/C Fees: The DIP Agents will invest the amounts in the Synthetic L/C Account in their discretion. On each applicable interest payment date, the DIP Agents will distribute to each Lender under the Synthetic L/C Facility its pro rata portion of any interest actually earned on the amounts on deposit in the Synthetic L/C Account. Dura Operating will pay: (i) each Issuer a fronting fee in an amount to be agreed between the Borrower and the Issuer of 25 basis points per annum or the higher rate as agreed to between Borrower and Issuer on the aggregate face amount of the outstanding Synthetic L/Cs issued by the Issuer and (ii) the Lenders under the Synthetic L/C Facility letter of credit participation fees equal to the interest rate for loans under the DIP Term Loan bearing interest with reference to the reserve adjusted Eurodollar Rate on the full amount of the Synthetic L/C Facility. Dura Operating will also pay the Issuers customary issuance fees. Revolving L/C Fees: Dura Operating agrees to pay to Lenders having Revolving Exposure letter of credit fees equal to: (1) the Applicable Margin for Revolving Loans that are Eurodollar Rate Loans, times (2) the average aggregate daily maximum amount available to be drawn under all the Letters of Credit. Dura Operating agrees to pay directly to Issuing Bank, for its own account, these fees: (i) a fronting fee equal to 0.25%, per annum, or the higher rate as may be agreed between Dura and the Issuing Bank, times the average aggregate daily maximum amount available to be drawn under all Letters of Credit; and (ii) the documentary and processing charges for any issuance, amendment, transfer or payment of a Letter of Credit as are in accordance with the Issuing Bank's standard schedule for the charges and as in effect at the time of the issuance, amendment, transfer or payment, as the case may be. Prepayment Fee: Optional prepayments or mandatory prepayments in connection with proceeds of certain debt or equity issuances of the Fixed Asset Facilities made on or before the earlier of the first anniversary of the Closing Date and prior to the effective date of a plan of reorganization will be subject to the payment of a prepayment fee in an amount equal to 1% of the principal amount prepaid. Interest Rate: All amounts outstanding under the DIP Facilities will bear interest: (a) in the case of the DIP Revolver, at the Borrower's option, (i) at the Base Rate plus 0.75% per annum or, (ii) at the reserve adjusted LIBOR Rate plus 1.75% per annum; and (b) in the case of the DIP Term Loan, at the Borrower's option, (i) at the Base Rate plus 1.50% per annum or (ii) at the reserve adjusted LIBOR Rate plus 2.50% per annum. Default Interest: Following the occurrence and during the continuance of an event of default, the interest rates under the DIP Facility will increase by an additional 2.00% per annum and the additional interest will be payable on demand. Charging Expenses Limitation: Subject to and effective upon entry of the Final DIP Order, except to the extent of the Carve Out, no expenses of administration of the Chapter 11 cases or any future proceeding that may result therefrom will be charged against or recovered from the Collateral securing the DIP Obligations pursuant to Section 506(c), without the prior written consent of the DIP Agents. Events of Default: The DIP Documentation contains customary events of default. Financial Covenants: Under the Revolving Credit Agreement, the Debtors are required to maintain minimum EBITDA: Period MINIMUM EBITDA ------ -------------- 11/01/06 - 01/31/07 ($11,516,665) 11/01/06 - 02/28/07 (13,100,498) 11/01/06 - 03/31/07 (9,785,196) 11/01/06 - 04/30/07 (11,265,601) 11/01/06 - 05/31/07 (10,094,956) 11/01/06 - 06/30/07 (8,016,354) 11/01/06 - 07/31/07 (18,871,520) 11/01/06 - 08/31/07 (17,622,862) 11/01/06 - 09/30/07 (14,986,584) 11/01/06 - 10/31/07 (12,326,569) 12/01/06 - 11/30/07 (8,981,480) 01/01/07 - 12/31/07 (9,030,154) With respect to the Term Loan Credit Agreement, the Debtors are required to maintain: (a) Minimum EBITDA Period MINIMUM EBITDA ------ -------------- 11/01/06 - 01/31/07 ($5,000,000) 11/01/06 - 02/28/07 3,449,945 11/01/06 - 03/31/07 12,782,777 11/01/06 - 04/30/07 17,206,170 11/01/06 - 05/31/07 22,405,451 11/01/06 - 06/30/07 31,785,513 11/01/06 - 07/31/07 27,779,599 11/01/06 - 08/31/07 29,072,155 11/01/06 - 09/30/07 45,324,997 11/01/06 - 10/31/07 52,586,795 12/01/06 - 11/30/07 55,358,832 01/01/07 - 12/31/07 56,176,951 (b) Maximum Consolidated Capital Expenditures Specified Fiscal Quarter Quarterly Amt. -------------- -------------- Two months ended 12/31/06 $22,005,225 Fiscal Qrtr ended 03/31/06 21,120,000 Fiscal Qrtr ended 06/30/06 21,120,000 Fiscal Qrtr ended 09/30/07 30,470,000 Fiscal Qrtr ended 12/31/07 30,470,000 By this motion, the Debtors ask the Court: (a) for authorization to borrow up to $300,000,000 of DIP Financing following a final hearing; (c) for authorization to repay, at the Final Hearing or as soon as practicable thereafter, their obligations owing under the $175,000,000 prepetition credit facility; (d) for authorization to execute and enter into the DIP Credit Agreement and related documents, and to perform the other and further acts as may be required in connection with the DIP Documents; (e) to grant superpriority claims to the DIP Lenders payable from, and having recourse to, all prepetition and postpetition property of the Debtors' estates and all proceeds thereof, in each case subject to the Carve-Out; (f) to schedule a final hearing to be held within 45 days of the Petition Date to consider entry of a Final DIP Order authorizing the balance of the borrowings and letter of credit issuances under the DIP Documents on a final basis. A full-text copy of the Senior Secured Super-Priority Debtor-In- Possession Revolving Credit and Guaranty Agreement is available free of charge at http://ResearchArchives.com/t/s?1461 A full-text copy of the Senior Secured Super-Priority Debtor-In- Possession Term Loan and Guaranty Agreement is available free of charge at http://ResearchArchives.com/t/s?1462 Rochester Hills, Mich.-based DURA Automotive Systems, Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on October 30, 2006 (Bankr. District of Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co- counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). DURA AUTOMOTIVE: Seeks Court Nod to Use All Cash Collateral ----------------------------------------------------------- DURA Automotive Systems, Inc., and its debtor affiliates ask the U.S. Bankruptcy Court for the District of Delaware for authority to use all cash collateral existing on or after their filing for chapter 11 protection subject to the First Lien Lenders' and Second Lien Lenders' liens. The Debtors have an urgent need for the immediate use of the Cash Collateral pending the Final DIP Hearing, Mr. Collins tells the Court. He explains that the Debtors require use of the Cash Collateral to, among other things, pay present operating expenses, including payroll, and pay vendors on a going-forward basis to ensure a continued supply of materials essential to the Debtors' continued viability. In addition, the DIP Financing is explicitly conditioned on the Court granting the Debtors' use of the Cash Collateral. On May 3, 2005, Dura Operating Corp. entered into: (i) a five-year asset-based revolving credit facility of $175,000,000 -- the First Lien Revolver; and (ii) a six-year $150,000,000 senior secured second lien term loan -- the Second Lien Term Loan. On March 29, 2006, the Second Lien Term Loan was amended to include a new $75,000,000 junior tranche. As of October 25, 2006, the total amount drawn on the First Lien Revolver had increased to approximately $106,400,000 and the total First Lien Revolver obligations, including $18,000,000 of settlement costs associated with certain interest rate swap contracts were approximately $124,400,000. The total amount outstanding under the Second Lien Revolver and the Second Lien Term Loan was $225,000,000. If approved, a portion of the proceeds of the $300,000,000 DIP financing facility arranged by Goldman Sachs Capital Partners L.P., General Electric Capital Corporation, and Barclays Capital would be used to repay in full the indebtedness and other obligations under the First Lien Revolver. The repayment, however, will not occur until the DIP Lenders fund the DIP Facility upon entry of the Final DIP Order, Mark D. Collins, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, notes. In addition, the liens securing the DIP Financing temporarily will prime the liens securing the First Lien Revolver until the first lien obligations are repaid. Moreover, the liens securing the DIP Financing will prime the liens granted to secure payment under the Second Lien Agreements. Adequate Protection of the First Lien Lenders A majority of the First Lien Lenders has consented to the Debtors' entry into the DIP Facility and refinancing of the First Lien Revolver. As a condition to the consent, however, pending entry of the Final DIP Order and refinancing of their debt, the First Lien Lenders have requested, and the Debtors have agreed to, certain adequate protection provisions. To protect the First Lien Lenders from diminution, if any, in the value of their interest in their collateral, the Debtors propose to provide adequate protection in these forms: (a) except with respect to default rate interest and swap breakage costs, subject to Section 506(b), they will, on a calendar monthly basis thereafter until the repayment in full in cash of the First Priority Indebtedness made prior to filing for chapter 11 protection, promptly pay in cash all accrued but unpaid reasonable costs and expenses prior to the Debtors' filing for chapter 11 protection of the First Priority Agents for which an invoice was delivered to the Debtors; (b) reasonable fees and expenses, for which an invoice was delivered to the Debtors, of professionals engaged by any First Priority Lender prior to the Debtors' filing for chapter 11 protection, up to a maximum aggregate amount of $50,000 for all the fees and expenses of professionals engaged by all First Priority Lenders prior to the Debtors' filing for chapter 11 protection; and (c) all accrued but unpaid interest on the First Priority Indebtedness, prior to the date of filing for chapter 11 protection, at the non-default rate specified in the First Priority Credit Agreement, prior to chapter 11 protection and all other reasonable fees, expenses, costs and charges provided under the First Priority Credit Agreement or any other First Priority Financing Document, prior to the filing for chapter 11 protection for which an invoice was delivered to the Debtors, in each case. In connection with the repayment in full in cash of the First Priority Indebtedness before the filing of the bankruptcy case, the Debtors will promptly pay the accrued default interest and any and all swap breakage costs outstanding under the First Priority Credit Agreement or any other First Priority Financing Document prior to the filing for chapter 11 protection. The Debtors will provide copies of any invoices to counsel for the Agents before and after the filing for chapter 11 protection, the Second Lien Committee and any Committee. In addition, the Debtors have also agreed to these provisions: (a) Replacement Liens. To the extent of any diminution in the Collateral prior to the filing for chapter 11 protection, replacement liens and superpriority administrative claims, which liens and claims will be, junior only to the Carve-Out, Permitted Liens, and the Liens and claims securing the DIP Obligations; (b) Debtors' Acknowledgement of Validity of Liens. Subject to a 60-day investigation period for the official committee of unsecured creditors, the Debtors will acknowledge the validity, priority, and perfection of the claims and liens of the First Lien Representatives and First Lien Lenders and will waive any claims or causes of action against the First Lien Representatives and First Representatives; (c) Section 364(e) Protection. To the extent applicable, the First Lien Representatives and First Lien Lenders receive the protections of Section 364(e); (d) Waiver of Section 506(c) Surcharge. The Debtors waive the right to surcharge under Section 506(c) against the Collateral prior to chapter 11 protection filing and will not seek to prime the First Lien Lenders, or use the Collateral, other than pursuant to the terns set forth in the DIP Financing Motion and the DIP Order; (e) Termination Event. Subject to reasonable notice prior to lifting of the automatic stay, consent to use of Cash Collateral terminates if the DIP Facility terminates or the Debtors do not make the First Lien Adequate Protection Payments; (f) Consent Requirement. Nothing in the DIP Order will be deemed a finding of adequate protection for the non- consensual use of Cash Collateral; (g) 45-Day Limit to Use of Cash Collateral. Unless the First Lien Representatives' and First Lien Lenders' otherwise consent, the First Lien Representatives' and First Lien Lenders' consent to the use of Cash Collateral will terminate unless: (i) within the 45 days of the Petition Date, the Court enters the Final DIP Order, and (ii) upon entry of the Final DIP Order, the First Lien Revolver has been refinanced; (h) Reservation of Indemnification Rights. Subsequent to, and notwithstanding, refinancing of the First Lien Revolver, the First Lien Representatives and First Lien Lenders reserve the right to assert indemnification claims against the Debtors under the First Lien Agreements; (i) Reservation of Right to Seek Further Adequate Protection. Subject to the creditors committee's Investigation rights, the First Lien Administrative Agent reserves its right to seek further adequate protection or seek lifting of the automatic stay if refinancing of the First Lien Revolver does not occur upon entry of the Final DIP Order; and (j) Limitations on Use of Cash Collateral. i. Other than with respect to $25,000 that can be used by the Creditors Committee for the Investigation, no party, including the creditors committee, can use Cash Collateral to pursue actions, claims, or challenges against the First Lien Representatives or the First Lien Lenders; and ii. Cash Collateral will only be used in accordance with the DIP Documents and DIP Orders. Mr. Collins also notes that the First Lien Lenders' interests are also more than adequately protected by the existence of a substantial equity cushion. According to Mr. Collins, despite the comprehensive nature of the proffered adequate protection measures, the Debtors are given to understand that a minority of First Lien Lenders may not have agreed to consent to being primed on an interim basis until entry of the Final DIP Order. The Debtors nonetheless do not expect that any First Lien Lender will object to entry of the Interim DIP Order. If there is an objection, the Debtors are prepared to go forward to establish that the First Lien Lenders are adequately protected, Mr. Collins avers. Adequate Protection of Second Lien lenders The Debtors also seek to provide adequate protection to the Second Lien Lenders on account of the Debtors' continuing use of their Cash Collateral and the priming of the Second Lien Term Loan by the DIP Facility. The Debtors have reached an interim agreement on adequate protection terms with the Ad Hoe Committee of Second Lien Lenders, which holds or controls a majority in principal amount outstanding under the Second Lien Term Loan. The Interim DIP Order will state that for the avoidance of doubt, the Debtors, the DIP Agents and the DIP Lenders acknowledge that the Second Lien Lenders have stated that they do not consent and do not currently intend to consent to the entry of the Final Order unless certain changes are made to the Final Order compared to the Interim Order. If, by the Final Hearing, the Debtors and the Second Lien Committee cannot reach a full and final accord, the Debtors reserve their right to seek Court approval of the repayment of the First Lien Revolver, use of Cash Collateral and priming over the objection of the Second Lien Committee. As adequate protection to protect the Second Lien Lenders from diminution, if any, in the value of their interest in their collateral, the Debtors propose that: (a) they will timely make current cash payment of interest on each monthly "Interest Payment Date" starting with December 1, 2006 and for the next succeeding five monthly Interest Payment Dates, at the rate equal to the greater of: (x) LIBOR plus 4.75% per annum plus the difference, if any, between (i) the weighted average Flex and (ii) 6.75% and (y) the rate applicable to the DIP Term Loan plus 1.55% per annum. Notwithstanding this Stated Rate, the Second Lien Committee has asserted that the appropriate contractual (non-default) rate under the Second Lien Credit Agreement is the "Base Rate" option, and the Second Lien Lenders or the Second Priority Representative will be entitled to assert that the increment between the Stated Rate and the "Base Rate" option should continue to accrue as part of the claims under the Second Lien Credit Agreement. At the same time, the parties have agreed that, for so long as the monthly interest payments at the Stated Rate are timely paid, the contractual default rate under the Second Lien Credit Agreement will be deemed to have been waived. The interest payment due on December 1 will include all interest accrued to the date (at the Stated Rate), provided that if the Final DIP Order has not been entered on or before the date, the first and second interest payments will both occur on January 2, 2007 and will include the amounts that otherwise would have been paid on December 1, 2006 in addition to the amounts owing on January 2, 2007; (b) on a monthly basis, the Debtors will reimburse the reasonable fees and expenses of: (i) Lazard Freres & Co. LLC, the financial advisor to the Second Lien Committee in the amount of $150,000 per month plus expenses; (ii) Bingham McCutchen LLP, lead counsel to the Second Lien Committee, together with Delaware counsel and, upon notice to the Debtors, other local counsel reasonably necessary to protect the interests of the Second Lien Committee; (iii) JPMorgan Chase Bank, N.A., as the Second Lien Administrative Agent, including its contractual agent fees and the fees and expenses of its counsel, but in each case only to the extent reasonably necessary to administer the Second Lien Credit Agreement and without duplication of the services rendered by counsel to the Second Lien Committee, and (iv) Wilmington Trust Company as the Second Lien Collateral Agent including its contractual agent fees and the fees and expenses of its counsel, but in each case only to the extent reasonably necessary to administer the Second Lien security agreements and without duplication of the services rendered by counsel to the Second Lien Committee or counsel to the Second Lien Administrative Agent; and (c) the monthly interest payments will continue to be timely paid by the Debtors after the sixth monthly interest payment, unless, on no shorter than 20 days' notice, the Debtors will obtain a Court order permitting the Debtors to discontinue making any or all of the monthly interest payments falling due after the entry of the Court order. In all events, the Second Lien Adequate Protection Obligations will remain in full force and effect unless the Court orders otherwise; (d) If they timely make 12 consecutive interest payments starting with the first interest payment, any prepayment fee arising under the Second Lien Credit Agreement will be deemed to have been waived; and (e) to the extent of any diminution in the Collateral prior to the filing for chapter 11 protection, replacement liens and superpriority Administrative claims, which liens and claims will be junior only to the Carve-Out, Permitted Liens, the Liens and claims securing the DIP Obligations, the liens And claims securing the First Lien Revolver, and the replacement liens and superpriority claims of the First Lien Representatives and the First Lien Lenders as part of the First Lien Adequate Protection Obligations. Additionally, the Debtors stipulate that: (i) the DIP Facility commitments will not exceed $300,000,000; (ii) they waive the right to surcharge under Section 506(c) against the Collateral before the chapter 11 protection filing and will not seek to prime the Second Lien Lenders, or use the Collateral, other than pursuant to the terms set forth in this motion and the DIP Order; and (iii) nothing in the DIP Order will be deemed a finding of adequate protection for the non-consensual use of Cash Collateral. Debtors Say Provisions are Fair & Reasonable The Debtors believe that the Adequate Protection Obligations are sufficient to protect any diminution in the value of the Secured Lenders interests', prior to the filing for chapter 11 protection during the period their collateral is used by the Debtors, and are fair and reasonable. Accordingly, the Debtors ask the Court to enter an interim and final order: (a) authorizing them to use the Cash Collateral; (b) granting the Secured Lenders prior to the bankruptcy case, adequate protection with respect to, inter alia, the use of the Cash Collateral and all use and diminution in the value of the Collateral prior to the filing for chapter 11 protection; (c) approving the Debtors' stipulations with respect to the First Lien Agreements and Second Lien Agreements and the liens and security interests arising therefrom; and (d) limiting their right to surcharge against collateral pursuant to Section 506(c). Rochester Hills, Mich.-based DURA Automotive Systems, Inc. (Nasdaq: DRRA) -- http://www.DURAauto.com/-- is an independent designer and manufacturer of driver control systems, seating control systems, glass systems, engineered assemblies, structural door modules and exterior trim systems for the global automotive industry. The company is also a supplier of similar products to the recreation vehicle and specialty vehicle industries. DURA sells its automotive products to North American, Japanese and European original equipment manufacturers and other automotive suppliers. The Debtors filed for chapter 11 petition on October 30, 2006 (Bankr. District of Delaware Case No. 06-11202). Richard M. Cieri, Esq., Marc Kieselstein, Esq., Roger James Higgins, Esq., and Ryan Blaine Bennett, Esq., of Kirkland & Ellis LLP are lead counsel for the Debtors' bankruptcy proceedings. Mark D. Collins, Esq., Daniel J. DeFranseschi, Esq., and Jason M. Madron, Esq., of Richards Layton & Finger, P.A. Attorneys are the Debtors' co- counsel. Baker & McKenzie acts as the Debtors' special counsel. Togut, Segal & Segal LLP is the Debtors' conflicts counsel. Miller Buckfire & Co., LLC is the Debtors' investment banker. Glass & Associates Inc., gives financial advice to the Debtor. Kurtzman Carson Consultants LLC handles the notice, claims and balloting for the Debtors and Brunswick Group LLC acts as their Corporate Communications Consultants for. As of July 2, 2006, the Debtor had $1,993,178,000 in total assets and $1,730,758,000 in total liabilities. (Dura Automotive Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). EDINA DEVELOPMENT: Case Summary & 54 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Edina Development Corporation 700 Bunker Lake Road Anoka, MN 55303 Tel: (763) 323-9086 Bankruptcy Case No.: 06-42532 Debtor-affiliates that filed separate chapter 11 petitions on October 31, 2006: Entity Case No. ------ -------- Rodeo Hills, LLC 06-42515 Water's Edge Development, LLC 06-42516 Chapter 11 Petition Date: November 1, 2006 Court: District of Minnesota (Minneapolis) Judge: Dennis D. O'Brien Debtor's Counsel: Joel D. Nesset, Esq. Henson Efron, P.A. 220 South Sixth Street, Suite 1800 Minneapolis, MN 55402 Tel: (612) 339-2500 Estimated Assets Estimated Debts ---------------- --------------- Edina Development $1 Million to $1 Million to Corporation $100 Million $100 Million Rodeo Hills, LLC Unknown $0 to $50,000 Water's Edge Development, Unknown $0 to $50,000 LLC A. Edina Development Corporation's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ SJ Louis Construction $210,533 P.O. Box 1373 St. Cloud, MN 56302 Kuechle Underground $58,006 20 Main St. N. P.O. Box 509 Kimball, MN 55353 WHKS & Co. $52,850 2905 South Broadway Rochester, MN 55904 Wilkerson & Hegna $49,071 7300 Metro Blvd. Edina, MN 55439 Henry Construction $43,950 6633 115th Ave. NE Foley, MN 56329 Berglund and Baumgartner, Ltd. $40,671 2140 Fourth Ave. N. Anoka, MN 55303 T&J Concrete and Masonry $27,130 17720 Highway 65 NE Ham Lake, MN 55304 Mansfield Tanick & Cohen $24,674 1700 US Bank Plaza 220 S. 6th Street Minneapolis, MN 55402 BP Pipelines $19,635 John Oliver and Assoc. $12,839 580 Dodge Ave. Elk River MN 55330 Anderson Engineering of MN, LLC $12,116 13605 1st Ave. N., Suite 100 Plymouth, MN 55441 MBE Inc. $12,019 P.O. Box 1056 530 River St. S. Delano, MN 55328 John Oliver and Assoc. $11,181 580 Dodge Ave. Elk River, MN 55330 Lowertown Advertising $9,768 509 Sibley St., Suite 650 St. Paul, MN 55101 Doucettes Landscaping and Contracting $7,300 16401 Ramsey Lane Little Falls, MN 56345 Schumacher Excavating, Inc. $7,054 155770 440 St. Zumbrota MN 55992 Plowe Engineering $6,688 9180 Lexington Ave. NE Circle Pines, MN 55014 McCombs Frank Roos Assoc. $6,295 14800 28th Ave N. Plymouth, MN 55447 New Look Contracting $5,531 19696 County Rd. 72 Elk River, MN 55330 New Home Sales Coach $5,000 8420 153rd Place Savage, MN 55378 B. Rodeo Hills, LLC's 26 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Mathiowetz Construction Company, Inc. $251,689 30676 County Road 24 Sleepy Eye, MN 56085 Anderson Engineering of MN, LLC $187,702 13400 15th Avenue North, Suite B Plymouth, MN 55441 Millpond Designs $44,361 Northland Landscaping, LLC $36,797 300 6th Avenue South Sartell, MN 56377 SKD Architects, Inc. $22,114 Franklin Outdoor Advertising $14,312 P.O. Box 218 Albertville, MN 55301 DJR Architecture, Inc. $7,516 St. Cloud Times $6,644 P.O. Box 1636 St. Cloud, MN 56302 Lowertown Advertising, Inc. $5,939 287 East Sixth Street, Suite 550 St. Paul, MN 55101 GVA Marquette Advisors $4,875 333 7th Street Minneapolis, MN 55402 Ehlinger Lawn Service $4,635 P.O. Box 286 Avon, MN 56310 Wilkerson & Hegna, PLLP $4,141 Corporate Center III, Suite 300 7300 Metro Blvd. Edina, MN 55439 Melrose Electric, Inc. $4,039 Red Barn Ridge $2,625 Mark J. Traut Wells, Inc. $1,580 TNT Seeding $1,376 Peterson, Fram & Bergman $862 50 East Fifth Street, Suite 300 St. Paul, MN 55101 Van's Flags & Flag Poles $621 1034 33rd Street South St. Cloud, MN 56301 Qwest $502 P.O. Box 173821 Denver, CO 80217 Site+ Landscape Architecture & $491 Planning 300 East Locust Street, Suite 313 Des Moines, IA 50309 McCombs Frank Roos Associates, Inc. $477 15050 23rd Avenue North Plymouth, MN 55447 American Arbitration Association $325 13455 Noel Road Suite 1750 Dallas, TX 75240 Property Source $325 Benton Soil & Water Conservation $250 14 W. 2nd Avenue Foley, MN 56329 PR Advantage $142 Salisbury Industries $84 C. Water's Edge Development, LLC's 8 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Wilkerson & Hegna, PLLP $20,646 Corporate Center III 7300 Metro Blvd. Edina, MN 55439 SKD Architects, Inc. $2,209 11140 Highway 55, Suite A Plymouth, MN 55441 Buffalo Fire & Rescue $1,200 212 Central Avenue Buffalo, MN 55313 Goodale Transfer, Inc. $1,154 1931 44th Street NE Buffalo, MN 55313 John Oliver & Associates, Inc. $910 580 Dodge Avenue Elk River, MN 55330 McCombs Frank Roos Associates, Inc. $485 1050 23rd Avenue N. Plymouth, MN 55447 Gries & Lenhardt, PLLP $340 12725 43rd Street NE, Suite 201 St. Michael, MN 55376 Greener Alternative, Inc. $72 6451 McKinley Street NW, Suite H Ramsey, MN 55303 EL PASO NATURAL: Moody's Assigns Loss-Given-Default Rating ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its Ba1 corporate family rating on El Paso Natural Gas Company. 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 ---------- ------- ------- ------ ---------- Nts, 7.625% due 2010 Ba2 Ba1 LGD3 35% Nts, 8.375% due 2032 Ba2 Ba1 LGD3 35% Debs, 7.5% due 2026 Ba2 Ba1 LGD3 35% Debs, 8.625% due 2022 Ba2 Ba1 LGD3 35% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). El Paso Corporation -- http://www.elpaso.com/-- provides natural gas and related energy products. The company owns North America's largest natural gas pipeline system and one of North America's largest independent natural gas producers. ENERGY TRANSFER: Fitch Rates Planned $1.3 Bil. Senior Loan at BB ---------------------------------------------------------------- Fitch Ratings has initiated rating coverage on Energy Transfer Equity, L.P. by assigning these new ratings: -- Issuer Default Rating (IDR) 'BB-'; -- Proposed $1.3 billion senior secured series B term loan maturing Nov. 1, 2012 'BB'; -- $150 million outstanding senior secured term loan maturing Feb. 8, 2012 'BB'; -- $500 million outstanding senior secured revolving credit facility maturing Feb. 8, 2011 'BB'. ETE's Rating Outlook is Stable. In assigning a rating to the senior secured credit facilities, Fitch considered the financial and operating characteristics of Energy Transfer Partners, L.P. (ETP; rated 'BBB-' with a Positive Rating Outlook by Fitch), the standalone credit profile of ETE, and the expected recovery for senior secured creditors of ETE under distressed conditions. The series B term loan, along with new ETE equity, is being used to fund the purchase of $1.2 billion of ETP limited partner (LP) units. ETP will use the proceeds to finance the first step of its acquisition of Transwestern Pipeline Co. In a concurrent transaction, ETE will purchase the remaining 50% of ETP incentive distribution rights it doesn't own from an affiliate company, Energy Transfer Investments, L.P., through the exchange of $2.4 billion new ETE LP units and the assumption of $70 million of ETI indebtedness. The senior secured credit facilities are governed by ETE's existing Amended and Restated Credit Agreement dated July 14, 2006 to be further amended by a First Amendment dated Nov. 1, 2006. The First Amendment increases the exiting term loan facility to $1.45 billion from $150 million to allow for the placement of the series B term loan. The senior secured debt has a first priority interest in all tangible and intangible assets of ETE including approximately 62 million ETP LP units and ETP's 2% general partner interest, including 100% of the incentive distribution rights of ETP. Fitch has prepared proforma and projected cash flow analysis for ETE. Fitch considers first year debt to EBITDA and EBITDA to interest for ETE of approximately 4.0 times (x) and 3.5x, respectively, as reasonable for master limited partnership holding company structures and believes the debt at ETE does not present an inordinate amount of risk for ETE or ETP given the amount and predictability of its cash flow stream. With the TWP purchase and several large organic growth projects becoming operational in the coming months, ETP's upstream distributions should increase and as a result, ETE's cash flow ratios will strengthen. However, Fitch recognizes that ETE's outstanding debt at Nov. 1, 2006, of $1.616 billion is substantial and that ETE's ability to refinance the debt in the future could be impaired by deteriorating capital market conditions. In assigning the ratings, Fitch also considered recovery prospects for senior secured lenders in a distressed situation. Based on the value to loan definition in the ETE credit agreement, at current market prices the senior secured lenders would have recovery valuations of approximately of approximately 385%. Moreover, under reasonable stress case scenarios Fitch found that 100% recoveries for creditors were likely. A favorable consideration is ETP's conservative distribution practices and high level of retained cash, which provide a substantial financial cushion. Fitch most recently affirmed ETP's unsecured debt and IDR at 'BBB-' on Sept. 15, 2006 following the company's announcement that it had entered into agreements to purchase TWP from GE Energy Financial Services and Southern Union Gas Company in a series of transactions valued at $1.465 billion. On Oct. 19, 2006, Fitch assigned a 'BBB-' rating to ETP's new $800 million of senior notes. ETP, an MLP, is engaged in the natural gas pipeline, storage, and midstream business through its operating subsidiaries. ETP's Positive Rating Outlook reflects the improving operating performance of its integrated Texas natural gas assets, the increasing scale, scope, and diversity of its operations, strong quantitative credit measures, a conservative distribution policy, a favorable near-term regional natural gas supply situation from expanding Barnett Shale and Bossier Sands development, and the expected benefits of ongoing pipeline expansions. In addition, on Oct. 3, 2006, ETP announced it had entered into an agreement with CenterPoint Energy Resources Corp to convert its legacy merchant gas supply contracts for service into Houston to more predictable, long-term fixed-fee transportation and storage contracts. As a result, effective March 1, 2007, ETP's obligation to finance seasonal natural gas storage inventory will be eliminated. Given its current funding plans for the TWP purchase, Fitch also expects ETP's consolidated credit measures to remain consistent with its long-term targets throughout the TWP purchase and integration. In addition to the execution risk associated with the TWP transaction, of moderate concern is the ongoing event and integration risks inherent in its active growth strategy and the structurally subordinated position of the ETP notes to approximately $306 million of secured notes and bank debt at subsidiary Heritage Operating, L.P. and an undetermined amount of debt anticipated for TWP. In its analysis of ETP, Fitch also considers the long-term exposure to changes in commodity price and supply conditions across all operations and the structural relationships between affiliated companies, including ETE. ETP's distribution coverage and credit ratios are among the strongest for its peer group of investment grade pipeline MLPs. For fiscal year ended Aug. 31, 2006, Fitch expects total debt, including temporary inventory borrowings, to EBITDA and EBITDA to interest to approximate 3.5x and 6.5x, respectively. Debt to EBITDA could drop below 3.0x as seasonal natural gas and propane borrowings are repaid and the financial benefits of the TWP and May 2006 Titan propane acquisitions and ongoing pipeline expansions are recognized. Fitch expects ETP's distribution coverage ratio (distributable cash flow to partnership distributions) for fiscal 2006 to approximate 1.4x, resulting in retained cash in excess of $150 million. ETP's largest ongoing expansion project involves the construction of a series of wide-diameter pipeline extensions from the Fort Worth Basin and other regional producing basins running east and southeast to the Carthage, Texas hub and interconnections with several interstate systems. Total estimated cost for the project is approximately $1.3 billion with the final phase targeted for completion in November 2007. ETP has recently announced the completion of phase one of the project and it remains on schedule. Approximately $420 million had been incurred on the project through May 31, 2006. Reports indicate that ETP has contracted with several shippers representing 1.7 billion cubic feet per day of capacity. At this level of shipper participation, the expansion should provide ETP a profitable return on its investment even if throughput levels are below expectations. Fitch believes that the long-term credit ratios targeted by ETP in its financial policy are generally consistent with a 'BBB' rating given the company's blended business risk and scale of operations. They include: debt to EBITDA of 3.25x or less, interest coverage of greater than 5.0x, and a distribution coverage of 1.2x. Specific factors that Fitch would consider that could lead to a rating upgrade to 'BBB' include: the successful completion of its ongoing pipeline expansion projects; the completion of the purchase and permanent funding of TWP; and a continuation of ETP's conservative financial policy and strong operating results. However, such an upgrade at ETP would not necessarily result in an upgrade of ETE's rating. ENERGY TRANSFER: Moody's Rates Proposed $1.3 Billion Loan at Ba2 ---------------------------------------------------------------- Moody's Investors Service assigned first-time ratings to Energy Transfer Equity, L.P. Moody's assigned a Ba2 rating and a Loss- Given-Default rating of LGD 5, 88% to ETE's senior secured credit facilities which consist of an existing $500 million revolving credit facility, an existing $150 million Term Loan A, and a proposed $1.3 billion Term Loan B. ETE owns the general partner interest of Energy Transfer Partners, L.P. as well as ETP's incentive distribution rights and a substantial amount of ETP's limited partner units. Proceeds from the proposed Term Loan B will be used to purchase additional ETP LP units. The rating outlook is stable. Moody's also assigned a Ba1 Corporate Family Rating and a Ba1 Probability-of-Default Rating to the Energy Transfer group which reflects the combined credit strength and leverage of both ETE and ETP. The ratings were placed at the ETE level because it is the uppermost rated entity in the group. It is useful to view both entities together in such a manner because all debt ultimately is supported by cash flow generated at ETP. Pro forma for contemplated transactions, total group debt will be approximately $4.5 billion, which is supported by ETP's estimated pro forma fiscal 2006 EBITDA of $970 million. This implies total group leverage of about 4.6x. Moody's expects Energy Transfer's total group leverage to decline to around 4.25x by the end fiscal 2007, reflecting growth in EBITDA over the period as well as expected financing needs related to ETP's expansion projects. If total group leverage were to approach 5x, the ratings of both ETE and ETP could be pressured. Moody's observes that the credit facilities contain a covenant that specifies a maximum consolidated leverage ratio of 5.5x. ETE's cash flow is derived entirely from the distributions it receives from ETP. Including the acquisition of $1.2 billion of ETP LP units on November 1, 2006, ETE now owns 62.5 million LP units of ETP. In addition, ETE owns ETP's 2% GP interest and 100% of ETP's IDR's. ETP has consistently increased its distributions over the last several years, increasing its per unit distribution from $1.75 as of the end of 2004 (split-adjusted) to $3.00 currently on an annualized basis. These increases are the result of the growth at ETP due to acquisitions and contributions from expansion projects. While there is not certainty of increasing distributions, it is likely given ETP's history and growth potential. ETE's cash flows are supported by the MLP business model, which depends on consistent distributions. MLP partnership agreements require that the partnership distribute its excess cash flow on a quarterly basis, so MLP's rely on access to the capital markets to finance their growth. Consistent distribution payments are necessary to ensure continued access to additional common units and debt capital. The Ba2 rating on ETE's credit facilities is one notch below the CFR and two notches below ETP's Baa3 senior unsecured rating because ETE's debt holders are structurally subordinate to debt holders at ETP. Debt at ETP must be satisfied before unitholders, including ETE, receive distributions. In addition, there are no restrictions prohibiting ETP from incurring additional business risk or leverage that could further disadvantage ETE debt holders. Even though ETE controls ETP, the degree of structural subordination is more severe than in typical situations involving debt issued at a Holdco supported by cash flows generated by a wholly-owned Opco. This is because both ETP and ETE are separate, publicly traded entities with different groups of unitholders. In the event of a default at ETP, ETE debt holders would be in the same position as ETP unitholders. On November 1, 2006, ETP completed the first of two transactions related to the acquisition of Transwestern Pipeline, LLC. In the first transaction, ETP will acquire the 50% ownership interest in CCE Holdings, LLC owned by GE Energy Financial Services and certain other investors. In the second transaction, expected to be completed on or about December 1, 2006, CCEH will redeem ETP's 50% ownership interest in exchange for 100% ownership of Transwestern after which Southern Union will own all of the member interests of CCEH. At the time the agreements to acquire Transwestern were announced, ETP indicated that it intended to finance more than 50% of the purchase price with equity, to be issued prior to or simultaneous with closing. The borrowings at ETE under its expanded credit facilities were used to acquire $1.2 billion of ETP LP units. Even though 50% of the Transwestern purchase price is only about $750 million, the additional equity is needed at the ETP level to fund a portion of the recently completed acquisition of Titan Energy Partners, L.P. as well as growth expenditures related to its East Texas expansion projects. In addition to the acquisition of LP units from ETP for cash, ETE also acquired, in an exchange of shares, the 50% of IDR's that it currently does not own from affiliate, Energy Transfer Investments, L.P. ETE's rating further reflects its own leverage. On pro forma basis, ETE will have approximately $1.6 billion drawn on its credit facilities and ETE's debt/EBITDA on a stand-alone basis is expected to be about 4x at an annualized distribution rate of $3.00 per LP unit. On a pro forma basis, ETP's debt/EBITDA on a stand-alone basis is about 3. It is the effect of double leverage that causes total group debt/EBITDA to be about 4.6x. The credit facilities are secured by a first priority security interest in all of ETE's assets which consist of 62.5 million in ETP LP units, ETP's 2% GP interest, and 100% of ETP's IDR's. The value of the LP units is about $3.1 billion, which covers the $1.6 billion expected to be drawn under the credit facilities 1.9x before giving any credit to the substantial value associated with ETE's ownership of ETP's IDR's. The stable rating outlook at ETE reflects the stable rating outlook at ETP and the expectation of continued cash flow growth and consistent distributions. The stable outlook also considers delevering at ETE through expected growth in EBITDA at ETP which translates into growth in distributions to ETE. While the credit facilities permit ETE to make voluntary prepayments, none are expected as ETE will likely maintain distribution coverage of about 1x. Moody's ratings on the credit facilities are subject to a review of final documentation. Energy Transfer Equity, L.P. is headquartered in Dallas, Texas. ENRON CORP: To Get $144 Million Cash Settlement from Barclays PLC ----------------------------------------------------------------- Enron Corp. reached an agreement on Nov. 3, 2006, with Barclays PLC to settle Barclays portion of the Enron bankruptcy litigation. According to the terms of the agreement, Barclays will pay Enron $144 million in cash and Enron will allow Barclays claims filed in the bankruptcy totaling $310 million. "The Barclays agreement is the ninth settlement reached with the financial institutions," John J. Ray III, Enron's Board Chairman, said. "[The] announcement reflects our determination to resolve the litigation and continue to deliver value to creditors as quickly as possible, and reflects the lesser role played by Barclays relative to others involved in the litigation." The settlement remains subject to the execution of definitive agreements and the approval of the U.S. Bankruptcy Court for the Southern District of New York Financial institutions yet to settle with Enron include Citigroup Inc. and Deutsche Bank AG. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Albert Togut, Esq., at Togut Segal & Segal LLP and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP represent the Debtor. Jeffrey K. Milton, Esq., at Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. ENRON CORP: Allows AT&T's Administrative Claim for $1,763,928 ------------------------------------------------------------- To resolve their disputes, Enron Corp. and its debtor-affiliates entered into a stipulation with AT&T Corp., which provides that: (1) AT&T's Administrative Claim will be reduced and allowed for $1,763,928; (2) the Reorganized Debtors will pay to AT&T the Claim as follows: Debtor Party Amount ------------ ------ Enron Broadband Services, Inc. $1,119,530 Enron North America Corp. 9,416 Enron Corp. 26,735 Enron Communication Leasing Corp. 23,238 Enron Energy Services, Inc. 21,518 Enron Net Works LLC $563,491 (3) AT&T will waive, release and discharge the Reorganized Debtors and the applicable Debtors from any and all claims relating to the Motion to Compel, the Claim, the Agreements and the AT&T Circuits; and (4) AT&T will withdraw its Motion to Compel with prejudice. On July 3, 2003, AT&T filed a motion asking the Court to compel the Debtors to immediately pay its administrative expenses of $6,916,189. AT&T claims that it provided postpetition telecommunication services to the Debtors through the AT&T circuits. The Reorganized Debtors responded that a portion of the Claim is not entitled to administrative expense priority because they did not derive any postpetition benefit from AT&T's alleged services, and did not utilize the AT&T Circuits. About Enron Corp. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Albert Togut, Esq., at Togut Segal & Segal LLP and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP represent the Debtor. Jeffrey K. Milton, Esq., at Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 179; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ENRON CORP: Allows Aegis Ltd. Claims for $16,716,768 ---------------------------------------------------- Enron North America Corp. and Associated Electric & Gas Insurance Services Limited have entered into a stipulation to resolve their dispute regarding AEGIS Ltd.'s Weather Contract Claims with Enron North. They agree that: (1) Claim No. 14104 will be allowed as a Class 5 Allowed General Unsecured Claim against ENA for $8,358,384; (2) Claim No. 14127 will be allowed as a Class 185 Allowed Guaranty Claim against Enron for $8,358,384; (3) all scheduled liabilities related to the AEGIS Claims will be expunged in their entirety with prejudice; (4) they will not assert any claim related to or based on a document referred to as ENA Contract No. WR1104; and (5) pursuant to Section 553 of the Bankruptcy Code, the Plan and any other applicable law, the parties reserve their right to assert a setoff against Claim Nos. 14104 and 14127 and contest the assertion of a right of set-off alleged by a party. Enron North and AEGIS are parties to an ISDA Heating Degree Day Floor Option, also known as the Weather Contract, dated Oct. 14, 1999, and the effective date of the Contract was Oct. 1, 1999. In connection with the Weather Contract, Enron Corp. and AEGIS entered into a Guaranty Agreement dated Oct. 12, 1999, in which Enron agreed to guaranty ENA's performance under the Contract. On Sept. 30, 2002, AEGIS filed an application with the Court to compel ENA to assume or reject the Weather Contract, which the Court approved on Oct. 31, 2002. The Weather Contract was rejected on Nov. 30, 2002. On Oct. 15, 2002, AEGIS filed Claim No. 14104 as a general unsecured claim for $37,295,000 against ENA based on the Weather Contract. On the same date, AEGIS filed Claim No. 14127 as a general unsecured claim for $37,295,000 against Enron based on the Enron Guaranty. On Jan. 9, 2004, the Debtors filed an objection to the allowance of the AEGIS Claims, arguing that the amount of each of the AEGIS Claims was overstated. On Sept. 2, 2004, the Debtors filed a supplemental objection to the AEGIS Claims, objecting to the contingent and unliquidated portions of the Claims. On Jan. 11, 2006, the Reorganized Debtors filed a second supplemental objection to AEGIS' Claims, stating in the objection their legal position with respect to the proper rejection damages calculations. About Enron Corp. Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Albert Togut, Esq., at Togut Segal & Segal LLP and Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP represent the Debtor. Jeffrey K. Milton, Esq., at Milbank, Tweed, Hadley & McCloy LLP represents the Official Committee of Unsecured Creditors. (Enron Bankruptcy News, Issue No. 179; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ENTERGY NEW: Class Action Plaintiffs Oppose Disclosure Statement ---------------------------------------------------------------- The Gordon and Lowenburg Plaintiffs object to the adequacy of Entergy New Orleans, Inc.'s Disclosure Statement explaining its Chapter 11 Plan of Reorganization Plan on grounds that the Disclosure Statement fails to: (1) describe how ENOI arrived at "zero" estimates for the Gordon and Lowenburg Claims; (2) describe how the intercompany claims were determined and allocated, particularly in view of the conflicting interest of ENOI's parent and affiliates; and (3) adequately describe the Gordon and Lowenburg suits because the description contained in the Disclosure Statement is incomplete and inaccurate. Michael H. Piper, Esq., at Steffes, Vingiello McKenzie, LLC, in New Orleans, Louisiana, also argues that the Disclosure Statement fails to provide a means for estimation of the unsecured claim of the more than 180,000 ratepayers, nor provide a procedure for the ratepayers to vote on the Plan. Additionally, the Disclosure Statement fails to describe how ENOI intends to treat the liability to the ratepayers if either the Gordon and Lowenburg Plaintiffs, or both, are successful on appeal. The Gordon and Lowenburg Plaintiffs claim that ENOI has deliberately chosen not to provide the 180,000 ratepayers with: (i) copies of the Disclosure Statement and Plan, (ii) notice of their claims and notice of their rights under the Plan, and (iii) a notice as to how their rights are affected by the Plan, specifically the discharge and injunction provisions. Mr. Piper argues that as a matter of due process, the ratepayers and the members of the Gordon and Lowenburg putative classes must receive copies of the Disclosure Statement and Plan, and a proper notice of the existence of their rights in the Gordon and Lowenburg claims, including the claims on appeal, the stayed Gordon Antitrust Putative Class Action and the Lowenburg class Action Suit to be refiled. 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. 26; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ENTERGY NEW ORLEANS: Court Extends Exclusivity Periods ------------------------------------------------------ Notwithstanding Entergy New Orleans, Inc.'s filing of a Chapter 11 Plan of Reorganization and an accompanying Disclosure Statement on Oct. 23, 2006, the U.S. Bankruptcy Court for the Eastern District of Louisiana extends until Nov. 15, 2006, the time within which ENOI has the exclusive right to file a plan, and until Dec. 22, 2006, the time within which it can solicit acceptances for the plan. Creditors Committee Objects Prior to Court's order, the Official Committee of Unsecured Creditors asserts that ENOI's third motion to extend its exclusive right to file a Chapter 11 plan and solicit acceptances for the plan is nothing more than a restatement and refinement of its first and second motions to extend its exclusive periods. ENOI in effect is asking the Court to allow an indefinite extension of its exclusive periods until it determines that all purported "contingencies" advanced by it in the first, second and third motions are "resolved," Philip K. Jones, Esq., at Liskow & Lewis, APLC, at New Orleans, Louisiana, notes. Mr. Jones argues that ENOI's regurgitation of "contingencies" does not satisfy its burden of establishing "cause" under Section 1121(d) of the Bankruptcy Court for a further extension of the exclusive periods. In fact, he says, ENOI's reasoning that all purported "contingencies" must be resolved before it files a plan does not constitute "cause" under Section 1121(d). Mr. Jones also maintains that any further extensions of ENOI's exclusive periods will unduly prejudice the creditors and interested parties from formulating and presenting proposed plans of reorganization for ENOI. Additionally, under the 2005 amendments to Section 1121(d), the U.S. Congress clearly stated that extensions of a debtor's exclusive period to file a plan are disfavored, Mr. Jones notes. The 2005 amendments expressly limited the bankruptcy court's discretion in extending the exclusive period, in which it cannot extend beyond a date that is 18 months after the bankruptcy filing. The Creditors Committee believes that ENOI's financial condition is sufficiently stabilized to allow it to propose a full payment plan and based on ENOI's financial projections, sufficient revenues will exist to reinstate its bonds and pay the unsecured creditors in full with interest. ENOI's stabilized financial condition proves that there are no more unresolved contingencies to justify further delay in the filing of a plan, Mr. Jones avers. Apache Corporation supports the Committee's objection to ENOI's request to extend its exclusive periods. 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. 26; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). ENTERPRISE PRODUCTS: Fitch Holds BB+ Rating on Jr. Sub. Notes ------------------------------------------------------------- Fitch has affirmed the ratings of Enterprise Products Operating, L.P. following the announcement that EPOLP will dropdown certain assets to Duncan Energy Partners L.P., a newly formed master limited partnership. Approximately $4.9 billion of outstanding securities at EPOLP are affected. The Rating Outlook is Stable. EPOLP is the operating limited partnership of Enterprise Products Partners, L.P., a publicly traded MLP engaged in pipeline and midstream services for the producers and consumers of natural gas liquids, natural gas, crude oil and petrochemicals. EPD is the sponsor of DEP and owns DEP's general partner. Both EPOLP and EPD are affiliates and under the common control of Dan Duncan, the Chairman and controlling shareholder of EPCO Holdings Inc. EPCO also owns 80% of Enterprise GP Holdings L.P., the publicly traded owner of the 2% general partner of EPD. In addition, EPCO owns 95% of the GP interest in TEPPCO Partners, L.P. that it acquired in February 2005 from Duke Energy Field Services, LLC. Fitch has affirmed these ratings on EPOLP with a Stable Outlook: -- Issuer Default Rating (IDR) 'BBB-'; -- Senior unsecured debt 'BBB-'; -- Junior subordinated notes (hybrids) 'BB+'. As the sponsor of DEP, EPD will initially sell to DEP (dropdown) an approximate 66% interest in several mature assets with DEP's ownership interest representing pro forma annual EBITDA of approximately $50 million. EPOLP will retain the remaining direct 34% ownership interest in the assets and will continue operating the assets. DEP will finance the transaction with cash consideration of approximately $419 million and 7.3 million limited partner units with an estimated value of $146 million (representing 35.2% of the LP interest in DEP, 25.8% if the overallotment option is exercised by the underwriters of DEP's initial public offering). DEP plans to finance the cash portion of the dropdowns with a portion of the proceeds from its IPO (estimated at $243.4 million if the overallotment is not exercised at an assumed price of $20 per share) and borrowings under a new revolver ($200 million). DEP will retain $20.4 million for its portion of capital expenditures to expand the South Texas NGL pipeline. Total consideration for the transactions represents an EBITDA multiple of approximately 11.3x. The 66% interest in DEP's assets will initially represent less than 4% of EPOLP's latest twelve month EBITDA. The affirmation of EPOLP's ratings with a Stable Outlook reflects the opinion that upon completion of the proposed transactions, EPOLP's operating and financial characteristics will continue to support the company's 'BBB-' IDR as the planned asset sales and changes to the corporate structure should not initially have a material impact on EPOLP's credit profile. Any significant change in the asset characteristics or planned credit profile of DEP, however, could pose a risk to EPOLP, possibly resulting in a change in EPOLP's rating and/or Rating Outlook. In evaluating the DEP transaction, Fitch's view is that DEP's credit profile will remain largely dependent on EPOLP due to the proposed corporate structure and the joint ownership of the assets at DEP. Some risk exists that EPOLP could be consolidated into a bankruptcy of DEP or, more likely, that EPOLP would provide financial or credit support for DEP in a distressed situation. The affirmation considers the structural and legal distinctions as evidenced by 'separateness' language and the corporate governance policies of the 'EPCO family' of companies specifically related to the affiliation of EPCO, EPE, EPD and DEP through ownership and management overlap and the resultant control and influence EPCO has over EPD and DEP. In addition, this view is supported by the favorable track record of EPCO and Dan Duncan in the balanced financing of the company's growth strategy, the support provided to EPOLP by regularly committing capital to EPD's common issuances and the agreement in December 2002 to reduce the GP's incentive distribution split to 25% from 50%. In addition, unlike many MLPs, EPD has typically retained substantial available cash that has been used to support its expansions. Of note is that there will be no incentive distribution rights with respect to the GP of DEP. Fitch views the pro-forma capitalization of DEP to be modest with anticipated leverage, as defined by debt to EBITDA, of approximately 4 times (x) which is in line with EPOLP's target leverage. In addition, DEP's proposed conservative distribution policy with no incentive distribution rights or subordinated units for the GP of DEP should help maintain a competitive cost of capital. In reviewing the overall credit quality of EPOLP, the ratings continue to be supported by the: -- Size, diversity and integration of the company's operations; -- Stable and predictable nature of operating cash flows; -- Balanced financing of the company's aggressive growth strategy; -- Proven track record of management in supporting the company's credit ratings; -- Natural hedges built into the company's operations to offset volatility in commodity prices; and -- Governance policies outlined for DEP including three independent directors on DEP's board. The affirmation also recognizes the favorable North American supply/demand fundamentals and robust commodity prices that have encouraged oil and natural gas infrastructure development at EPOLP and its affiliates. In general, rating concerns for EPOLP include the structural and functional ties with EPE and EPCO and, as noted, with DEP following the proposed transactions. These concerns are based on potential rating risks as these entities have weaker credit profiles than EPOLP due generally to either structural subordination or lack of diversification and scale. As such, EPOLP's cash flows may be called upon (at least indirectly) in the future to meet the financial obligations of these affiliates. Fitch believes acquisitions and new project developments will continue to play an important part of the growth objectives of all of the affiliated entities providing constant demands for new financing and equity. These investments continue to come at a time of robust commodity prices and historically rich and unprecedented valuations for such midstream assets, with the valuations dependent on the access to capital and capital markets that is afforded to these partnerships which in turn results in a very favorable weighted average cost of capital. Given current commodity price levels and those anticipated over the near-term, as well as still favorable capital market conditions, Fitch does not expect EPD or its affiliates to have difficultly in arranging these financings. Other more general concerns include increasing levels of operating cash flows coming from hurricane prone regions, construction risks for organic projects and integration risks of new assets being added into the company's portfolio. Additionally, higher interest rates may detract from the market valuation of MLPs affecting their equity prices and even the underlying asset valuations of pipelines and midstream energy assets as MLPs have among the lowest cost of capital giving them an advantage in buying or building energy related assets. Fitch notes the introduction by EPD of hybrids in the capital structure as the first MLP to issue these securities to help mitigate this risk. Ownership risks for EPOLP have been mitigated somewhat by management's track record, conservative incentive splits with EPE, conservative distribution levels to unitholders and the manageable debt levels above EPD. FAIRCHILD SEMICONDUCTOR: Moody's Assigns LGD 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 semiconductor and distributor sector, the rating agency affirmed its Ba3 corporate family rating on Fairchild Semiconductor Corp. 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 ---------- ------- ------- ------ ---------- $100.0MM Sr Secured Revolver due 2012 Ba3 Ba2 LGD2 29% $375.0MM Sr Secured Term Loan B due 2013 Ba3 Ba2 LGD2 29% 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%). Fairchild Semiconductor -- http://www.fairchildsemi.com/-- supplies power products critical to leading electronic applications in the computing, communications, consumer, industrial and automotive segments. Fairchild's 9,000 employees design, manufacture and market power, analog & mixed signal, interface, logic, and optoelectronics products. FIRST FRANKLIN: Moody's Rates Class B Certificates at Ba1 --------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by First Franklin Mortgage Loan Trust 2006- FF15, and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by First Franklin-originated adjustable-rate and fixed-rate subprime mortgage loans acquired by Lehman Brothers Holdings Inc. and First Franklin Financial Corporation. The ratings are based primarily on the credit quality of the loans, and on the protection offered by subordination, overcollateralization and excess spread, a swap agreement and rate cap between the trust and IXIS Financial Products Inc. Moody's expects collateral losses to range from 4.1% to 4.6%. National City Home Loan Services, Inc. will service the loans. Aurora Loan Services LLC will act as master servicer. Moody's has assigned National City Home Loan Services, Inc. its servicer quality rating of SQ1- as a primary servicer of subprime loans. Moody's has also assigned Aurora Loan Services, LLC its servicer quality rating of SQ1- as a master servicer. These are the rating actions: * Issuer: First Franklin Mortgage Loan Trust 2006-FF15 * Security: First Franklin Mortgage Loan Trust 2006-FF15 Mortgage Pass-Through Certificates, Series 2006- FF15 Cl. A1, Assigned Aaa Cl. A2, Assigned Aaa Cl. A3, Assigned Aaa Cl. A4, Assigned Aaa Cl. A5, Assigned Aaa Cl. A6, Assigned Aaa Cl. M1, Assigned Aa1 Cl. M2, Assigned Aa2 Cl. M3, Assigned Aa3 Cl. M4, Assigned A1 Cl. M5, Assigned A2 Cl. M6, Assigned A3 Cl. M7, Assigned Baa1 Cl. M8, Assigned Baa2 Cl. M9, Assigned Baa3 Cl. B, Assigned Ba1 FLYI INC: Court Delays Disclosure Statement Hearing to Nov. 17 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware adjourns until Nov. 17, 2006, at 1:00 p.m., the hearing to consider approval of: (a) the Debtors' Disclosure Statement explaining their Joint Plan of Liquidation pursuant to Section 1125 of the Bankruptcy Code; and (b) the Debtors' request to establish uniform procedures for the solicitation and tabulation of votes to accept or reject the Plan of Liquidation. Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). FLYI INC: U.S. Bank and QVT Object to Disclosure Statement ---------------------------------------------------------- U.S. Bank National Association -- as Indenture Trustee under a February 25, 2004 Indenture for $125,000,000 6% Convertible Notes due 2034, issued by the predecessor-in-interest to Flyi, Inc. -- and QVT Financial LP, holder of approximately 60% of the Notes, contend that the Debtors' Disclosure Statement with respect to their Joint Plan of Liquidation fails to meet the standards set by Section 1125 of the Bankruptcy Code, and, thus should be denied. U.S. Bank and QVT Financial complain that the Disclosure Statement lacks fundamental information relating to key elements of the global resolution underlying the Plan, describes an unconfirmable Plan, and is premised on an invalid scheme for voting. On QVT's behalf, Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, asserts that the Plan unduly favors creditors holding joint claims against both (i) FLYi, Inc., and Independence Air, Inc., and (ii) Independence Air creditors to the detriment of FLYi creditors. He notes that under the Plan, the Joint Creditors are given a 238% premium over the recoveries of the FLYi Creditors, while the Independence Creditors are given a 138% premium over the FLYi Creditors. Mr. DeFranceschi explains that the inequities are the result of: (a) the Debtors' decision not to substantively consolidate the FLYi and Independence estates; (b) the fact that the Plan completely eliminates the $285,000,000 intercompany debt owed by Independence to FLYi, notwithstanding the decision to treat the estates separately; and (c) the arbitrary allocation of other assets and costs to one estate over the other. Specifically, Mr. DeFranceschi relates that the Plan proposes to substantively consolidate each of the direct and indirect subsidiaries of FLYi with and into Independence, but does not consolidate the Independence Estate with and into FLYi. However, he maintains, the Plan eliminates the Intercompany Claim, despite the fact that it is reflected in the Debtors' books and records as a valid intercompany payable, and is one of the two major assets belonging to the FLYi Estate and its creditors. Mr. DeFranceschi relates that the Plan proposes to allocate 50% of the proceeds of the Debtors' jointly filed allowed claim against United Air Lines, Inc., to the Independence Estate, and 50% to the FLYi Estate, which reflects nothing more than a fair and legally appropriate allocation of the UAL Claim Proceeds. However, he points out that the allocation is held out as some form of rationale for why the Intercompany Claim should be disregarded in its entirety, to the significant economic detriment of the FLYi creditors. In addition, Mr. DeFranceschi asserts that there is inadequate explanation for the Plan's arbitrary allocation of other assets and liabilities, which strongly favors the Independence Estate and artificially reduces the value allocable to the FLYi Estate. Given the limited and ever-diminishing resources of the liquidating estates, U.S. Bank and QVT further insist that the Disclosure Statement should not be approved, and valuable estate resources should not be wasted on an "unconfirmable" Plan doomed to failure. "In an apparent disregard of their fiduciary duties to creditors of one of the Debtors' estates, the Debtors put forward a Plan which uses gerrymandered classification and voting to support the excessive enhancement of the recoveries of the Joint Creditors at the expense of parent-only creditors, such as the holders of the Notes," Mr. DeFranceschi tells Judge Walrath. Mr. DeFranceschi argues that the Debtors inappropriately classified and treated the Intercompany Claim separate and apart from other general unsecured claims against Independence -- providing for it to accept a Plan under which it receives no value or distribution in blatant contravention of how the creditors would view the Plan. He asserts that the Debtors are further attempting to coerce acceptance of the Plan by providing for the Joint Creditors to participate in, and therefore control, the voting in the impaired classes of general unsecured creditors of both estates under the Plan. Any dissent is further stifled by the Plan provision that, notwithstanding any Plan modification, creditor acceptances are locked in place even if the Court ultimately strikes down the Plan's core elements, Mr. DeFranceschi contends. Moreover, Mr. DeFranceschi points out that the best interests test is satisfied solely because the Plan's liquidation analysis is skewed by showing the same erroneous allocations in Chapter 7 that are imposed on creditors in the Plan, without considering whether a Chapter 7 trustee for FLYi would allow the same allocations. About FLYi Inc. Headquartered in Dulles, Virginia, FLYi, Inc., aka Atlantic Coast Airlines Holdings, Inc. -- http://www.flyi.com/-- is the parent of Independence Air Inc., a small airline based at Washington Dulles International Airport. The Debtor and its six affiliates filed for chapter 11 protection on Nov. 7, 2005 (Bankr. D. Del. Case Nos. 05-20011 through 05-20017). Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., and Matthew Barry Lunn, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtors in their restructuring efforts. Brett H. Miller, Esq., at Otterbourg, Steindler, Houston & Rosen, P.C., represents the Official Committee of Unsecured Creditors. As of Sept. 30, 2005, the Debtors listed assets totaling $378,500,000 and debts totaling $455,400,000. (FLYi Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). FOAMEX INT'L: Sigma Capital Discloses 2,300,000 Shares Ownership ---------------------------------------------------------------- In an October 20, 2006 filing with the Securities and Exchange Commission, Sigma Capital Associates LLC disclosed that it continues to own 2,300,000 shares of Foamex International, Inc.'s common stock. Sigma Associates' shares represent 9.4% of the 24,509,728 shares of Common Stock outstanding as of August 25, 2006. Sigma Capital Management LLC, investment manager to Sigma Associates, indirectly owns the 2,300,000 shares. Pursuant to an investment agreement, Sigma Management is vested with all investment and voting power with respect to the shares. 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: Trade Creditors Sell 30 Claims ---------------------------------------------------- From October 3 to 26, 2006, the Clerk of the U.S. Bankruptcy Court for the District of Delaware received 30 notices of claim transfers in Foamex International Inc. and its debtor-affiliates' Chapter 11 cases. Among the claim transfers for October 2006 are: Transferor Transferee Claim Amt ---------- ---------- ---------- Shield Security Inc. Fair Harbor Capital 20,462 Polymer Adhesives & Sealant Fair Harbor Capital 15,457 New York Wire Fair Harbor Capital 14,464 Auburn City Utilities Capital Investors 101,056 Staffmark, Inc. Capital Investors 60,772 Lewis Industries Inc. ASM Capital, L.P. 7,353 IFC Inc. Argo Partners 49,227 Allied Contract Services Argo Partners 24,189 American Excelsior Argo Partners 19,489 R.S. Hughes Company, Inc. Argo Partners 10,687 Hamilton Plastics Inc. AFI, LLC 57,520 The claim transfers were filed by: * Adam Moskowitz on behalf of ASM Capital LP 22 Jennings Lane Woodbury, NY 11797 * Matthew Gold on behalf of Argo Partners 12 West 37th Street, 9th Floor New York, NY 10018 * Robert Minkoff on behalf of Capital Investors and AFI One University Plaza, Suite 312 Hackensack, NJ 07601 * Frederic Glass on behalf of Fair Harbor 875 Avenue of the Americas, Suite 2305 New York, NY 10001 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. 31; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). FRESH DEL MONTE: S&P Places BB Rating on Negative CreditWatch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit and other ratings on Cayman Islands-based Fresh Del Monte Produce Inc. on CreditWatch with negative implications, meaning that the ratings could be lowered or affirmed after the completion of its review. Total debt outstanding was about $399 million at Sept. 30, 2006. "The CreditWatch placement follows Fresh Del Monte's recent third-quarter earnings release and reflects continued weak operating performance because of difficulties in the company's prepared food business, competitive pressures in the European banana market, and lower profitability in the other fresh produce segment because of adverse weather conditions," Standard & Poor's credit analyst Alison Sullivan said. Higher costs related to fuel, raw materials, packaging, labor, and transportation also hurt financial results. As a result, credit measures have weakened further than expected. Lease- and pension-adjusted debt to EBITDA increased to over 4x for the 12 months ended Sept. 29, 2006 from about 2.3x at Dec. 31, 2005, and about 3.6x for the 12 months ended June 30, 2006. The company has suspended its dividend and is implementing cost saving initiatives. However, given expected ongoing difficult industry conditions, S&P believes that Fresh Del Monte will be challenged to improve performance in the near term. The rating agency will review Fresh Del Monte's operating, strategic and financial plans with management before resolving the CreditWatch listing. GIFT LIQUIDATORS: Posts $31,312 Net Loss in 2006 Second Quarter --------------------------------------------------------------- Gift Liquidators Inc. reported a $31,312 net loss on $371,246 of revenues for the quarter ended June 30, 2006, compared to an $81,267 net loss on $424,207 of revenues for the comparable period in 2005. Revenues decreased approximately $52,961, from $424,207 in the three-month period ended June 30, 2005 to $371,246 in the three- month period ended June 30, 2006, or approximately 12.5%, as a result of decreased occupancy rates. At June 30, 2006, the company's balance sheet showed $8,531,729 in total assets and $13,409,746 in total liabilities, resulting in a $4,878,017 stockholders' deficit. Full-text copies of the company's second quarter financial statements are available for free at: http://researcharchives.com/t/s?1466 Gift Liquidators Inc. acquires, develops, holds for investment, operating and selling apartment properties in metropolitan areas on the U.S. east coast. As of June 30, 2006, the company owned interests in eight residential real estate properties consisting of 273 units, all located in the metropolitan Hartford area of Connecticut. Prior to the sale of all the company's gift and novelty inventory in September 2005, the company's core business involved the wholesale distribution of a diverse line of gift and novelty products acquired in closeouts from gift developers and distributors. HANGER ORTHOPEDIC: 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 Healthcare Service and Distribution sector, the rating agency confirmed its B3 Corporate Family Rating for Hanger Orthopedic Group, 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 ---------- ------- ------- ------ ---------- 5-Year Senior Secured Revolver, Due 2011 B2 B1 LGD2 25% 7-Year Senior Secured Term Loan B, Due 2013 B2 B1 LGD2 25% Senior Unsecured Notes, Due 2014 B3 Caa2 LGD5 80% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). About Hanger Orthopedic Headquartered in Bethesda, Maryland, Hanger Orthopedic Group, Inc. (NYSE: HGR) -- http://www.hanger.com/-- is the world's premier provider of orthotic and prosthetic patient care services. The company is the market leader in the United States, owning and operating 621 patient care centers in 46 states including the District of Columbia, with 3,290 employees including 1,021 practitioners (as of 12/31/05). Hanger Orthopedic is organized into four units. The two key operating units are patient care, which consists of nationwide orthotic and prosthetic practice centers and distribution which consists of distribution centers managing the supply chain of orthotic and prosthetic componentry to Hanger and third party patient care centers. The third is Linkia, which is the first and only provider network management company for the orthotics and prosthetics industry. The fourth unit, Innovative Neurotronics, introduces emerging neuromuscular technologies developed through independent research in a collaborative effort with industry suppliers worldwide. HEALTHCARE PARTNERS: 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 Healthcare Service and Distribution sector, the rating agency confirmed its B1 Corporate Family Rating for HealthCare Partners, LLC. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Secured Bank Term Loan B1 Ba2 LGD2 29% Secured Revolver B1 Ba2 LGD2 29% 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 Torrance, California, HealthCare Partners, LLC, through its subsidiary, manages the medical practices of HealthCare Partners Affiliates Medical Group. JSA Holdings Inc., headquartered in St. Petersburg, Florida, is a for-profit physician group practice. HEALTHWAYS INC: S&P Places BB Corporate Credit Rating ----------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' corporate credit rating to Nashville, Tenn.-based Healthways Inc. The rating outlook is stable. At the same time, Standard & Poor's assigned its loan and recovery ratings to the Healthways' proposed $400 million senior secured revolving credit facility due in 2011 and $200 million senior secured term loan B due in 2013. The secured financing was rated 'BB' with a recovery rating of '2', indicating the expectation for substantial (80%-100%) recovery of principal in the event of a payment default. Proceeds from the financing will be used to acquire Axia Health Management LLC, a provider of integrated preventive health solutions, for $459 million. "The rating on Healthways reflects the company's narrow business focus, surmountable barriers to competitive entry, and revenue and channel concentration," Standard & Poor's credit analyst Jesse Juliano said. "These risks are partially offset by the strong demand for Healthways' services, their positive momentum in the disease management business, and the company's historically conservative financial profile." Healthways Inc., provides disease and wellness management services in the U.S. The company manages chronic diseases and episodic conditions, such as diabetes, cardiovascular diseases, respiratory disorders, cancer, depression, and others, in addition to outcomes-driven wellness programs for commercial health plans, self-insured employers, and the government. HUNTSMAN CORP: Expects to Raise $708MM in Sr. Subor. Notes Issue ---------------------------------------------------------------- Huntsman International LLC, a wholly owned subsidiary of Huntsman Corporation has priced its private offering of euro and U.S. dollar denominated senior subordinated notes, which will carry interest rates of 6-7/8% and 7-7/8%, respectively. The offering size has been increased from the previously announced $400 million in U.S dollar equivalents to EUR400 million in euro denominated notes and $200 million in dollar denominated notes, or approximately $708 million of combined US dollar equivalents. The euro notes will mature on Nov. 15, 2013, and the dollar notes will mature on Nov, 15, 2014. The closing of the senior subordinated notes offering is expected to occur on Nov. 13, 2006, and is subject to the satisfaction of customary closing conditions. The company intends to use the estimated net proceeds of approximately $699 million in dollar equivalents to redeem all (approximately $366 million) of its outstanding dollar denominated 10-1/8% senior subordinated notes, and a portion (approximately ?258 million) of its outstanding euro denominated 10-1/8% senior subordinated notes, due 2009, subject to completion of the offering. In conjunction with the redemption of notes, the company expects to record a loss on early extinguishment of debt in the fourth quarter of 2006 of approximately $12 million. Kimo Esplin, chief financial officer of Huntsman Corporation, stated, "the nearly 3% improved interest rate on the refinanced notes demonstrates the Company's strong credit profile and will result in the Company reducing its annual interest expense by approximately $17 million." About Huntsman Huntsman Corp. -- http://www.huntsman.com/-- manufactures and markets differentiated and commodity chemicals. Its operating companies manufacture products for a variety of global industries including chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, construction, technology, agriculture, health care, detergent, personal care, furniture, appliances and packaging. * * * As reported in the Troubled Company Reporter on Nov. 1, 2006, Moody's Investors Service assigned a B3 rating to Huntsman International LLC's, a wholly owned subsidiary of Huntsman Corporation, proposed $400 million senior subordinated notes. Moody's also assigned Loss Given Default Assessment of LGD6 to these notes in accordance with its Loss-Given-Default rating methodology that was initially implemented at the end of September 2006. As reported in the Troubled Company Reporter on Nov. 1, 2006, Standard & Poor's Ratings Services assigned its 'B' rating to Huntsman International LLC's proposed senior subordinated notes due 2014 and 2013. HYPPCO FINANCE: Fitch Affirms CCC- Rating on $40-Million Notes -------------------------------------------------------------- Fitch affirms one class of notes issued by HYPPCO Finance Company Ltd. The affirmation is the result of Fitch's review process and is effective immediately: -- $40,066,946 class A-2 notes affirm at 'CCC-', Distressed Recovery revision to 'DR2' from 'DR4'. HYPPCO is a collateralized debt obligation, comprised primarily of high yield bonds that closed Feb. 29, 1996 and is managed by Delaware Investment Advisors. Included in this review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. HYPPCO contains exposure to a recently defaulted Sea Containers bond, which accounts for roughly 8.4% of the current portfolio of eligible assets. Though the transaction will suffer losses upon the sale of this bond, the substantial redemptions of the liabilities since the last rating review largely mitigate this negative event. At the time of the last review, there was $115.7 million of the A-2 notes remaining. Since then, over $75.6 million in principal has been paid to the note holders. Although the transaction remains under-collateralized with a 71% overcollateralization ratio as of the Oct. 2, 2006 trustee report, Fitch projects that the A-2 notes will continue to receive significant principal payments in the future; however, there will likely not be enough proceeds to fully redeem the notes. The current rating remains reflective of the expected ultimate principal recovery of the notes. Based on Fitch's improved projections of total principal and interest proceeds to be paid to the class A-2 notes, the DR rating on the notes has been revised to 'DR2' from 'DR4'. The rating of the class A-2 notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the legal final maturity date. INLAND FIBER: Court OKs Perkins to Assist in Oregon Asset Sale -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware allowed Inland Fiber Group, LLC, and its debtor-affiliates to employ Perkins Coie LLP as their special counsel. As reported in Troubled Company Reporter on Sept. 27, 2006, the Debtors told the Court that Perkins Coie will assist in the completion of the pending sale of their assets in Oregon. The Debtors disclosed that attorneys at Perkins Coie bill between $230 and $440 per hour while paralegals and paralegal assistants bill between $50 and $170 per hour. Douglas R. Pahl, Esq., a partner at Perkins Coie, assured the Court that his firm does not hold nor represent any interest adverse to the Debtors or their estates. Headquartered in Klamath Falls, Oregon, Inland Fiber Group LLC, aka U.S. Timberlands Klamath Falls LLC, and its affiliate Fiber Finance Corp., grow trees and sell logs, standing timber, and timberland. The Debtors filed a chapter 11 petition on Aug. 18, 2006 (Bankr. D. Del. Case Nos. 06-10884 & 06-10885). William P. Bowden, Esq. at Ashby & Geddes P. A. and Glenn E. Siegal, Esq. at Dechert LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, Inland Fiber reported $81,890,311 in total assets and $264,433,754 in total liabilities while its debtor-affiliate, Fiber Finance, disclosed $1,048 in total assets and $263,074,983 in total debts. INFONXX INC: S&P Rates Proposed $125MM 2nd-Lien Facility at CCC+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B' corporate credit rating to Bethlehem, Pa.-based Infonxx, Inc., a privately-held, noncarrier provider of directory assistance, with operations in the U.S. and Europe. The outlook is positive. Standard & Poor's assigned a bank loan rating of 'B' and a recovery rating of '3' to the company's proposed $475 million first-lien credit facilities, indicating expectations for a meaningful (50%-80%) recovery of principal in the event of a payment default. The first-lien credit facilities are comprised of a $200 million revolving credit facility and a $275 million term loan B. A 'CCC+' bank loan rating and '5' recovery rating were assigned to the proposed $125 million second-lien facility, reflecting expectations for a negligible (0%-25%) recovery of principal in the event of a payment default. The ratings are assigned based on preliminary documentation and are subject to review of final documents. Proceeds of $520 million will be used to fund a $300 million dividend to private equity investors and refinance $215 million of existing debt. "The ratings reflect Infonxx's vulnerable business position resulting from its dependence on the retail directory assistance business in Europe, a service which could experience a decline in consumer demand if technological advances in the provisioning of DA change the way consumers obtain directory assistance," Standard & Poor's credit analyst Susan Madison said. Other rating concerns include the potential for margin compression in the company's wholesale U.S. business because of increasing automation, the limited size and scale of the company's overall operations, and an aggressive financial profile. Tempering factors include a demonstrated history of profitability in the U.S. wholesale and U.K. retail DA markets, an experienced management team, strong brand identity in key European markets, and low ongoing capital requirements. INTERDENT SERVICE: 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 Healthcare Service and Distribution sector, the rating agency confirmed its B3 Corporate Family Rating for InterDent Service Corp., and held its B3 rating on the company's 10-3/4% Senior Secured 2nd Lien Notes due on 2011. In addition, 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%). InterDent Service Corp., the principal operating subsidiary of InterDent Inc., provides dental practice management services to multi-specialty group dental practices in Arizona, California, Hawaii, Kansas, Nevada, Oklahoma, Oregon and Washington. The company is based in El Segundo, Calif. INVERNESS MEDICAL: Good Performance Cues S&P's Positive Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit rating and 'CCC+' subordinated debt rating for Inverness Medical Innovations Inc. on CreditWatch with positive implications. "The CreditWatch action was taken in light of the company's continued improvement in operating performance, its demonstrated willingness and ability to access the equity markets to limit borrowings, and the potential benefit of a still-to-be-agreed upon joint venture with consumer products giant Procter & Gamble Co. (AA-/Negative/A-1+)," said Standard & Poor's credit analyst David Lugg. Waltham, Mass. based Inverness has grown its professional and consumer diagnostics businesses through a series of acquisitions that leveraged its key technology patents. Over the last four years, it has spent over $300 million in cash for acquisitions. Still, during this period, adjusted debt has risen only to $237 million from $212 million, as the company privately placed some $300 million in common stock. EBITDA is now about $55 million on a rolling 12-month historic basis, yielding a manageable debt to EBITDA of 3.3X, a figure that will likely improve further. Integration of the acquisitions has been an ongoing effort, and coupled with an effective but expensive effort to defend its intellectual property and chronic weakness in the noncore nutritionals business, has yielded operating measure that is often disappointed, with adjusted operating margins (before D&A) reaching a minimum of 6.8% in 2005. For the quarter ended Sept. 30, 2006, this measure had climbed to 12%. Further improvements are expected from an ongoing manufacturing and facilities rationalization including a move to a low-cost facility in China. "Resolution of the CreditWatch listing will consider the sustainability of the operating improvement along with clarification of the terms of the proposed joint venture with Procter & Gamble," Mr. Lugg said. ITC HOMES: Wants to Hire Century 21 First as Broker --------------------------------------------------- ITC Homes Inc. asks the U.S. Bankruptcy Court for the District of Arizona for permission to employ Century 21 First American, as its broker. Century 21 will market and sell the Debtor's property locates in 10208 East Calle Pueble Estrella in Tucson, Arizona. The Debtor proposes to pay Century 21 a commission of 6% of the sale price of the property at the closing of the sale. The Debtor discloses that Carolyn Grout is the real estate agent. Ms. Grout can be reached at: Carolyn Grout Century 21 1st American 8830 East Speedway Boulevard Tucson, AZ 85710 Tel: (520) 296-5491 To the best of the Debtor's knowledge, Century 21 does not hold any interest adverse to its estate. Vail, Arizona-based ITC Homes, Inc. -- http://www.itchomesinc.net/-- develops residential real estates. The Company filed for chapter 11 protection on Jan. 26, 2006 (Bankr. D. Ariz. Case No. 06-00053). Scott D. Gibson, Esq., at Gibson, Nakamura & Decker, PLLC, represents the Debtor. No Official Committee of Unsecured Creditors has been appointed in this case. When the Debtor filed for protection from its creditors, it estimated assets and debts of $10 million to $50 million. JAMES VAUGHN: Case Summary & Largest Unsecured Creditor ------------------------------------------------------- Debtor: James Charles Vaughn 10128 Buffmont Lane Lone Tree, CO 80124 Bankruptcy Case No.: 06-18082 Chapter 11 Petition Date: November 3, 2006 Court: District of Colorado (Denver) Judge: Michael E. Romero Debtor's Counsel: Lee M. Kutner, Esq. Kutner Miller, P.C. 303 East 17th Avenue, Suite 500 Denver, CO 80203 Tel: (303) 832-2400 Fax: (303) 832-1510 Estimated Assets: More than $100 Million Estimated Debts: $1 Million to $100 Million Debtor's Largest Unsecured Creditor: Entity Claim Amount ------ ------------ Internal Revenue Service $13,784,228 Ogden, UT 84201 JP MORGAN: Credit Enhancement Cues S&P to Affirm Low-B Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on four raked classes of commercial mortgage pass-through certificates from J.P. Morgan Chase Commercial Mortgage Securities Corp.'s series 2003-CIBC7. Concurrently, ratings are affirmed on 20 pooled certificates from the same series. The raised ratings on the raked certificates reflect the improvement in operating performance of The Forum Shops in Las Vegas. The affirmed ratings reflect credit enhancement levels that provide adequate support through various stress scenarios. As of the Oct. 12, 2006, remittance report, the trust collateral consisted of 182 mortgage loans with an outstanding principal balance of $1.4 billion, compared with 185 loans with a balance of $1.5 billion at issuance. The master servicer, Midland Loan Services Inc., reported primarily year-end 2005 financial information for 96% of the pool. Based on this information and excluding $60.3 million (4%) of defeased collateral, Standard & Poor's calculated a weighted average debt service coverage of 1.73x for the pool, up from 1.65x at issuance. To date, the trust has experienced one loss totaling $2.6 million. There are two loans totaling $6.4 million that are 30-plus-days delinquent, and none are with the special servicer, also Midland. The top 10 loans have an aggregate outstanding in-trust balance of $607.7 million and a weighted average DSC of 1.99x, compared with 2.08x at issuance. Standard & Poor's reviewed the property inspection reports obtained from Midland, and all of the properties were reported to be in "good" or "excellent" condition. Three of the top 10 loans exhibited credit characteristics consistent with investment-grade obligations at issuance and continue to do so. The DSC levels for six of the top 10 loans, however, are significantly below issuance levels. Consequently, four of these loans are on the watchlist and are discussed below. In addition to these four loans, the largest loan is on the watchlist because the sponsor is facing legal issues. The largest loan in the pool, The Forum Shops, consists of four notes. One of the notes, a $459.3 million A note, is participated into three pari passu pieces, $153.1 million of which serves as trust collateral. The fourth note is the B note with a balance of $84 million. The trust's portion of the A and B notes represents 17% of the aggregate outstanding pool balance. The raked certificates in the transaction derive 100% of their cash flows from the B note. Standard & Poor's underwritten net cash flow has increased 17% since issuance. The loan continues to exhibit high investment-grade credit characteristics consistent with those at issuance. The loan is on the watchlist because a former partner, who sold its interest in the subject property to the sponsor, Simon Property Group Inc., filed a lawsuit against the sponsor for over $1 billion alleging that the sponsor misrepresented the value of the property. Per Midland, the lawsuit is still pending. The master servicer's watchlist includes 33 loans totaling $395.8 million. In addition to The Forum Shops loan, four other top 10 loans are on the watchlist. Together with The Forum Shops, they represent approximately 57% ($227.5 million) of the loans on the watchlist. These are the details concerning these four loans: -- One of the five cross-collateralized, cross-defaulted loans ($3.4 million, 0.2%) that make up the seventh-largest exposure (Brown Noltemeyer Apartment portfolio; $36.9 million, 3%) is on the watchlist. The loan is secured by two class B garden-style multifamily apartment complexes with a total of 233 units, in Louisville, Ky. The loan is on the watchlist because the properties reported a low combined DSC of 1.03x as of Dec. 31, 2005, due to increased operating expenses. Combined occupancy was 99% as of July 20, 2006. -- The eighth-largest exposure, The Villagio and Palm Court Apartments ($24.4 million, 2%), consists of two garden- style multifamily apartment complexes with 626 units in Houston, Texas. This loan is on the watchlist because the properties reported a low combined DSC of 0.85x as of Dec. 31, 2005, down from 1.29x at issuance. The decline in DSC is attributable to flat revenue and increased operating expenses. The combined occupancy was 92% as of March 31, 2006. -- Versailles and Dana Point Apartments, the ninth-largest exposure, has a current balance of $24.2 million (2%) and is secured by two garden-style multifamily apartment complexes with a total of 652 units in Dallas, Texas. The loan is on the watchlist because the properties reported a low combined DSC of 0.89x as of June 30, 2006, down from 1.51x at issuance. The decline in DSC is due to increased operating expenses. The combined occupancy was 91% as of June 2006. -- The 10th-largest exposure ($22.4 million, 2%), the Rainier Office portfolio, is secured by four office properties with 479,720 sq. ft. in various cities in Texas. The loan is on the watchlist because the properties reported a low combined DSC of 0.88x as of June 30, 2006, compared with 1.43x at issuance. The decline in DSC resulted from low occupancy, which was 77% as of Oct. 31, 2005, and higher operating expenses. The remaining loans on the watchlist have low occupancy, low DSC, and upcoming lease expirations. Standard & Poor's stressed various assets in the mortgage pool as part of its analysis, including the loans on the watchlist and those otherwise considered credit impaired. The resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised Raked Certificates J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2003-CIBC7 Rating Class To From Credit enhancement (%) ----- -- ---- --------------------- FS-1 AAA A- N/A FS-2 AAA BBB+ N/A FS-3 AA+ BBB N/A FS-4 AA- BBB- N/A Ratings Affirmed Pooled Certificates J.P. Morgan Chase Commercial Mortgage Securities Corp. Commercial mortgage pass-through certificates series 2003-CIBC7 Class Rating Credit enhancement (%) ----- ------ --------------------- A-1 AAA 14.54 A-2 AAA 14.54 A-3 AAA 14.54 A-4 AAA 14.54 A-1A AAA 14.54 B AA 11.91 C AA- 10.86 D A 8.76 E A- 7.57 F BBB+ 6.26 G BBB 5.47 H BBB- 4.03 J BB+ 3.63 K BB 3.24 L BB- 2.58 M B+ 1.92 N B 1.66 P B- 1.40 X-1 AAA N/A X-2 AAA N/A N/A-Not applicable. JP MORGAN: Fitch Lifts Rating on $8.7MM Class L Certs. to BB ------------------------------------------------------------ Fitch Ratings upgrades JP Morgan Commercial Mortgage 2003-PM1: -- $33.2 million class B to 'AAA' from 'AA'; -- $13 million class C to 'AAA' from 'AA-'; -- $27.5 million class D to 'AA' from 'A'; -- $13 million class E to 'AA-' from 'A-'; -- $15.9 million class F to 'A' from 'BBB+'; -- $13 million class G to 'A-' from 'BBB'; -- $18.8 million class H to 'BBB' from 'BBB-'; -- $15.9 million class J to 'BBB-' from 'BB+'; -- $7.2 million class K to 'BB+' from 'BB'; -- $8.7 million class L to 'BB' from 'BB-'. In addition, Fitch affirms: -- $21.3 million class A-1 at 'AAA'; -- $114.4 million class A-2 at 'AAA'; -- $82.6 million class A-3 at 'AAA'; -- $282 million class A-4 at 'AAA'; -- $386.2 million class A-1A at 'AAA'; -- Interest-only class X-1 at 'AAA'; -- Interest-only class X-2 at 'AAA'; -- $7.2 million class M at 'B+'; -- $4.3 million class N at 'B'; -- $2.9 million class P at 'B-'. Fitch does not rate the $20.2 million class NR certificates. The upgrades reflect the increased credit enhancement levels from scheduled amortization as well as additional defeasance since Fitch's last rating action. As of the October 2006 distribution date, the pool's aggregate certificate balance has decreased 8.4% to $1.06 billion from $1.16 billion at issuance. Eight loans (12.3%), including the largest loan in the transaction, have defeased since issuance. To date, the transaction has not incurred any losses. Currently, there is one loan (0.6%) in special servicing. The loan is secured by a multifamily property located in Fort Worth, TX and remains current. The loan was transferred to the special servicer after the property had a small fire. The borrower is in negotiation with the insurance company for insurance proceeds. KAISER ALUMINUM: Chris Parks Represents PI Claimants ---------------------------------------------------- Chris Parks, Esq., at Chris Parks & Associates, discloses that his firm represents claimants alleging personal injuries caused by asbestos products manufactured, marketed, distributed, sold or produced by Kaiser Aluminum & Chemical Corporation. The nature of the claim held by each claimant is a personal injury tort claim for damages caused by asbestos products. Headquartered in Foothill Ranch, California, Kaiser Aluminum Corporation -- http://www.kaiseraluminum.com/-- is a leading producer of fabricated aluminum products for aerospace and high- strength, general engineering, automotive, and custom industrial applications. The Company filed for chapter 11 protection on Feb. 12, 2002 (Bankr. Del. Case No. 02-10429), and has sold off a number of its commodity businesses during course of its cases. Corinne Ball, Esq., at Jones Day, represents the Debtors in their restructuring efforts. Lazard Freres & Co. serves as the Debtors' financial advisor. Lisa G. Beckerman, Esq., H. Rey Stroube, III, Esq., and Henry J. Kaim, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP, and William P. Bowden, Esq., at Ashby & Geddes represent the Debtors' Official Committee of Unsecured Creditors. The Debtors' Chapter 11 Plan became effective on July 6, 2006. On June 30, 2004, the Debtors listed $1.619 billion in assets and $3.396 billion in debts. (Kaiser Bankruptcy News, Issue No. 107; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 609/392-0900) KARA HOMES: Section 341 Meeting of Creditors Slated for Nov. 16 --------------------------------------------------------------- The United States Trustee for Region 3 will convene a hearing of Kara Homes Inc.' creditors on Nov. 16, 2006, 10:00 a.m., at Room 129, Clarkson S. Fisher Federal Courthouse, 402 East State Street, in Trenton, New Jersey. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in East Brunswick, New Jersey, Kara Homes, Inc., aka Kara Homes Development LLC, builds single-family homes, condominiums, town homes, and active-adult communities. The Company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D. N.J. Case No. 06-19626). David L. Bruck, Esq., at Greenbaum, Rowe, Smith, et al., represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $350,179,841 and total debts of $296,840,591. On Oct. 9, 2006, nine affiliates filed separate chapter 11 petitions in the same Bankruptcy Court. On Oct. 10, 2006, 12 more affiliates filed chapter 11 petitions. Kara Homes' exclusive period to file a chapter 11 plan expires on Feb. 2, 2007. KARA HOMES: Court Sets February 14 as Claims Filing Deadline ------------------------------------------------------------ The U.S. Bankruptcy Court for the District of New Jersey set Feb. 14, 2007, as the last day for persons owed money by Kara Homes Inc. to file proofs of claim against the Debtor. Proofs of claim must be received by the Clerk of the Bankruptcy Court at this address: James J. Waldron Office of the Clerk U.S. Bankruptcy Court District of New Jersey 402 East State Street Trenton, NJ 08608 Headquartered in East Brunswick, New Jersey, Kara Homes, Inc., aka Kara Homes Development LLC, builds single-family homes, condominiums, town homes, and active-adult communities. The Company filed for chapter 11 protection on Oct. 5, 2006 (Bankr. D. N.J. Case No. 06-19626). David L. Bruck, Esq., at Greenbaum, Rowe, Smith, et al., represents the Debtor. When the Debtor filed for protection from its creditors, it listed total assets of $350,179,841 and total debts of $296,840,591. On Oct. 9, 2006, nine affiliates filed separate chapter 11 petitions in the same Bankruptcy Court. On Oct. 10, 2006, 12 more affiliates filed chapter 11 petitions. Kara Homes' exclusive period to file a chapter 11 plan expires on Feb. 2, 2007. KRISPY KREME: Settles Securities Fraud Lawsuit for $75 Million -------------------------------------------------------------- Krispy Kreme Doughnuts, Inc., with the approval of the Special Committee of its Board of Directors, has entered into a Stipulation and Settlement Agreement with the lead plaintiffs in the pending securities class action, the plaintiffs in the pending derivative action and all defendants named in the class action and derivative action, except for the Company's former chairman and chief executive officer, providing for the settlement of the securities class action and the derivative action. Both the class action and derivative action settlements are subject to preliminary and final approval of the U.S. District Court for the Middle District of North Carolina. With respect to the securities class action, the Stipulation provides for the certification of a class consisting of all persons who purchased the Company's publicly-traded securities between March 8, 2001 and April 18, 2005, inclusive. The settlement class will receive total consideration of approximately $75 million, consisting of a cash payment of $34,967,000 to be made by the Company's directors' and officers' insurers, a cash payment of $100,000 to be made by the Company's former Chief Operating Officer, John W. Tate, a cash payment of $100,000 to be made by the Company's former Chief Financial Officer, Randy Casstevens, a cash payment of $4,000,000 to be made by the Company's independent registered public accounting firm, and common stock and warrants to purchase common stock to be issued by the Company having an aggregate value of $35,833,000. All claims against defendants will be dismissed with prejudice; however, claims that the Company may have against Scott A. Livengood, the Company's former Chairman and Chief Executive Officer, that may be asserted by the Company in the derivative action for contribution to the securities class action settlement or otherwise under applicable law are expressly preserved. The Stipulation contains no admission of fault or wrongdoing by the Company or the other defendants. With respect to the derivative litigation, the Stipulation provides for the settlement and dismissal with prejudice of all claims against defendants except for claims against Mr. Livengood. The Company, acting through its Special Committee, settled claims against Mr. Tate and Mr. Casstevens for these consideration: -- Messrs. Tate and Casstevens each agreed to contribute $100,000 in cash to the settlement of the securities class action; -- Mr. Tate agreed to cancel his interest in 6,000 shares of the Company's common stock; and -- Messrs. Tate and Casstevens agreed to limit their claims for indemnity from the Company in connection with future proceedings before the Securities and Exchange Commission or the United States Attorney for the Southern District of New York to specified amounts. The Company, acting through its Special Committee, has been in negotiations with Mr. Livengood but has not reached agreement to resolve the derivative claims against him and counsel for the derivative plaintiffs are deferring their application for fees until conclusion of the derivative actions against Mr. Livengood. All other defendants named in the derivative action will be dismissed with prejudice without paying any consideration, consistent with the findings and conclusions of the Company's Special Committee in its report of August 2005. "The settlement of these legal matters represents a significant step in the turnaround of Krispy Kreme," Daryl Brewster, President and Chief Executive Officer, said. The Company estimates that, based on the current market price of its common stock, it will issue approximately 1,875,000 shares of its common stock and warrants to purchase approximately 4,400,000 shares of its common stock in connection with the Stipulation. The exercise price of the warrants will be equal to 125% of the average of the closing prices of the Company's common stock for the 10-day period surrounding the filing of its Annual Report on Form 10-K for the fiscal year ended January 29, 2006. The Company has recorded a non-cash charge to earnings in fiscal 2006 of $35,833,000, representing the estimated fair value of the common stock and warrants to be issued by the Company. The Company has recorded a related receivable from its insurers in the amount of $34,967,000, as well as a liability in the amount of $70,800,000 representing the aggregate value of the securities to be issued by the Company and the cash to be paid by the insurers. The settlement is conditioned upon the Company's insurers and the other contributors paying their share of the settlement. The provision for settlement costs will be adjusted to reflect changes in the fair value of the securities until they are issued following final court approval of the Stipulation, which the Company anticipates will occur in late calendar 2006 or early calendar 2007. Founded in 1937 in Winston-Salem, North Carolina, Krispy Kreme (NYSE: KKD) -- http://www.krispykreme.com/-- is a branded specialty retailer of premium quality doughnuts, including the Company's signature Hot Original Glazed. There are currently approximately 320 Krispy Kreme stores and 80 satellites operating systemwide in 43 U.S. states, Australia, Canada, Mexico, the Republic of South Korea and the United Kingdom. Headquartered in Winston-Salem, North Carolina, Freedom Rings LLC is a majority-owned subsidiary and franchisee partner of Krispy Kreme Doughnuts, Inc., in the Philadelphia region. Freedom Rings operates six out of the approximately 360 Krispy Kreme stores and 50 satellites located worldwide. The Company filed for chapter 11 protection on Oct. 16, 2005 (Bankr. D. Del. Case No. 05-14268). M. Blake Cleary, Esq., Margaret B. Whiteman, Esq., and Matthew Barry Lunn, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated $10 million to $50 million in assets and debts. Headquartered in Oak Brook, Illinois, Glazed Investments, LLC, is a 97%-owned unit of Krispy Kreme. Glazed filed for chapter 11 protection on Feb. 3, 2006 (Bankr. N.D. Ill. Case No. 06-00932). The bankruptcy filing will facilitate the sale of 12 Krispy Kreme stores, as well as the franchise development rights for Colorado, Minnesota and Wisconsin, for approximately $10 million to Westward Dough, the Krispy Kreme area developer for Nevada, Utah, Idaho, Wyoming and Montana. Daniel A. Zazove, Esq., at Perkins Coie LLP represents Glazed in its restructuring efforts. When Glazed filed for protection from its creditors, it estimated assets and debts between $10 million to $50 million. KremeKo, Inc., Krispy Kreme's Canadian franchisee, is currently restructuring under the Companies' Creditors Arrangement Act. Pursuant to the Court's Initial Order, Ernst & Young Inc. was appointed as Monitor in KremeKo's CCAA proceedings. The Monitor is attempting to sell the KremeKo business. KUHLMAN COMPANY: Turns to Manchester Cos. for Aid in Turnaround --------------------------------------------------------------- Kuhlman Company, Inc., disclosed that Charles Walensky, its Interim chief financial officer, has been named Acting Chief Operating Officer effective Oct. 24, 2006; that the Company has retained Manchester Companies, Inc., a Minneapolis-based corporate renewal firm, to act as its "Chief Restructuring Officer"; and that it intends to be quoted on the Over the Counter Bulletin Board Exchange and voluntarily be de-listed from the American Stock Exchange. Mr. Walensky was named Interim Chief Financial Officer for the Company on Oct. 6, 2006, and was recently asked by the Company's Board of Directors to assume the additional responsibilities of Acting Chief Operating Officer. Mr. Walensky is the president, chief executive officer, and chairman of the board of The WF Group, Inc., an investment advisory firm. He is also a director of REAC Computer Services, Inc., for which he has served as the chief financial officer and vice president since 1993. The Company's board of directors also engaged Manchester Companies, Inc. to advise the Company regarding its operations and to assist in developing a new financial structure for the Company that will re-focus the Company on long-term growth initiatives. Manchester's professionals will work closely with Mr. Walensky and the Company's entire board of directors to create and implement a restructuring plan. Additionally, as previously reported, Kuhlman Company, Inc. received notice from the AMEX on September 26, 2006 that it was not in compliance with certain of AMEX's continued listing requirements. The Company informed AMEX that it would respond by Oct. 26, 2006 advising AMEX of its plans. After careful consideration, the Company's Board of Directors decided that it is in the best interests of its shareholders to voluntarily be de- listed from the AMEX and instead trade on the OTC-BB. Scott Kuhlman, Chief Executive Officer and Chairman, commented, "We are working diligently to put in place a comprehensive plan to assure the long-term viability of the Company. It is essential that we properly align our financial structure and our strategic direction for both our immediate operating needs as well as for our long-term growth plan. The steps which we have today announced are an important part of our plan, which is intended to enable us to once again pursue the compelling national growth opportunity that exists for our brand and our specialty retail concept." About Kuhlman Company Kuhlman Company, Inc. -- http://www.kuhlmancompany.com/-- is a retailer and wholesale provider of branded men's and women's apparel, through company-owned retail stores and under private labels through other large retailers. Kuhlman has approximately 150 employees and its corporate office is located in Minneapolis, Minn. MADISON AVENUE: S&P Removes Junk-Rated Certs from CreditWatch ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the subordinate B-1 and B-2 classes issued by Madison Avenue Manufactured Housing Contract Trust 2002-A (Madison 2002-A) and removed them from CreditWatch with negative implications. In addition, the ratings on the senior and mezzanine classes are affirmed. The downgrades reflect negative performance trends displayed by the two underlying pools of manufactured housing loan contracts and diminishing credit support available to cover losses on the rated classes. The rating affirmations reflect adequate credit enhancement relative to expected remaining net losses to support the classes at the current rating levels. With 54 months of performance, Madison 2002-A has experienced higher-than-expected cumulative net losses, at 16.73% of the original pool balance. In addition, overcollateralization has continuously declined; at issuance, the level of overcollateralization was 6% of the original pool balance, and it was expected to grow over time with the application of available excess spread. As of the October 2006 distribution date, overcollateralization was 1.34% of the original aggregate pool balance and 2.61% of the current aggregate pool balance. This decline is due to the diminishing availability of excess spread to pay down the outstanding certificates, as overcollateralization is regularly being used to cover net losses. Standard & Poor's will continue to monitor the outstanding ratings associated with this transaction and will take any future rating actions it deems necessary. Ratings Lowered And Removed From Creditwatch Negative Madison Avenue Manufactured Housing Contract Trust 2002-A Asset-backed certificates series 2002-A Rating Class To From ----- -- ---- B-1 B+ BB+/Watch Neg B-2 CCC B/Watch Neg Ratings Affirmed Madison Avenue Manufactured Housing Contract Trust 2002-A Asset-backed certificates series 2002-A Class Rating ----- ------ A-1 AAA A-2 AAA M-1 A+ M-2 BBB+ MAGELLAN HEALTH: 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 Healthcare Service and Distribution sector, the rating agency revised its Ba3 Corporate Family Rating to B1 for Magellan Health Services, Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- Senior Secured Bank Credit Facility Due 2008 Ba3 Ba2 LGD2 28% Senior Secured Term Loan B Due 2008 Ba3 Ba2 LGD2 28% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). About Magellan Health Headquartered in Avon, Connecticut, Magellan Health Services, Inc. (NASDAQ: MGLN) is the United States' leading manager of behavioral health care and radiology benefits. Its customers include health plans, corporations and government agencies. The Company filed for chapter 11 protection on March 11, 2003 (Bankr. S.D.N.Y. Case No. 03-40515). The Court confirmed the Debtors' Third Amended Plan on Oct. 8, 2003, allowing the Company to emerge from bankruptcy protection on Jan. 5, 2004. MARKWEST ENERGY: Moody's Assigns Loss-Given-Default Rating ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its B1 corporate family rating on MarkWest Energy Partners, LP. 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 ---------- ------- ------- ------ ---------- 6.875% Sr. Unsec. Global Notes due 2014 B2 B2 LGD 4 70% 8.5% Sr. Unsec. Global Notes due 2016 B2 B2 LGD 4 70% 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%). MarkWest Energy Partners, LP -- http://www.markwest.com/-- is a midstream service company primarily engaged in the gathering, processing and transmission of natural gas; the transportation, fractionation and storage of natural gas liquids; and the gathering and transportation of crude oil. MEDICAL SERVICES: 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 Healthcare Services and Distribution sector, the rating agency confirmed its B3 Corporate Family Rating for Medical Services Company, and held its B3 rating on the company's Senior Secured Floating Rate Notes. In addition, 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%). Based in Jacksonville, Florida, Medical Services Company -- http://www.medservco.com/-- delivers medical products and pharmacy services to the workers' compensation industry. MSC serves both the workers' compensation insurance carrier as well as the injured worker. MERIDIAN AUTOMOTIVE: 11 Creditors Opposes Assumption of Contracts ----------------------------------------------------------------- Eleven creditors oppose Meridian Automotive Systems, Inc. and its debtor-affiliates' assumption of their executory contracts and leases: * DaimlerChrysler Corporation, * General Electric Capital Corporation, * Gelco Corporation, d/b/a GE Capital Fleet Services, * Johnson Controls, Inc., * MERI (NC) LLC, * Saint-Gobain Vetrotex America, Inc., * The Dow Chemical Company, * Visteon Corporation, * Interiors of America, Inc., * Intier Automotive Seating of America, Inc., and * United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union. The Creditors complain that the Debtors failed to adequately identify the contracts they seek to assume by, among other things, date, contract number or any other specific information. Without any identifying information, the Creditors assert that they will not be able to ascertain which of their division or affiliate has the information necessary to respond to the Debtors' request. To assume executory contracts, the Debtors must cure all defaults and provide adequate assurance of future performance, the Creditors maintain. Certain of the Creditors refute the Debtors' contention that no cure amounts are due. Three Creditors state that the appropriate cure amount with respect to their contracts total approximately: Creditor Cure Amount -------- ----------- Johnson Control $164,656 MERI 354,079 GE Fleet Services 11,359 Visteon Corp. 3,549,344 The Creditors inform the U.S. Bankruptcy Court for the District of Delaware that the stated Cure Amounts may be later modified as additional charges accrue or become known to them or upon the completion of an appropriate reconciliation. USW is the exclusive bargaining representative of the hourly employees of the Debtors' facility located at Jackson, Ohio. As described in the Disclosure Statement in support of the Debtors' Fourth Amended Plan of Reorganization, the collective bargaining agreement between the Debtors and USW expired on April 21, 2006. Thus, there is no collective bargaining agreement for the Debtors to assume concerning the Jackson, Ohio plant, USW informs the Court. Saint-Gobain reserves the right to assert additional remedies for defaults that have not yet occurred but may occur prior to the Assumption Effective Date. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MERIDIAN AUTOMOTIVE: Stegenga Stays as Chief Restructuring Officer ------------------------------------------------------------------ The U.S. Bankruptcy Court for the District of Delaware authorized Meridian Automotive Systems Inc. and its debtor-affiliates to continue the employment of Jeffery J. Stegenga as their chief restructuring officer under the terms of the FTI Engagement Letter. The Debtors are authorized to remit any Success Fee earned in their Chapter 11 cases to FTI Consulting, Inc., and Alvarez & Marsal as set forth in their request. The Debtors obtained permission from the Court to employ FTI Consulting, Inc., as their restructuring advisors, and designated Jeffery J. Stegenga as their chief restructuring officer. As reported in the Troubled Company Reporter on Oct. 12, 2006, Mr. Stegenga has been serving as the Debtors' chief restructuring officer since their bankruptcy filing, assisting the Debtors in their operations and managing the Debtors' overall restructuring efforts. Among others, Mr. Stegenga assisted in the development of ongoing business and financial plans and conducted restructuring negotiations with creditors with respect to an overall exit strategy for the Debtors' Chapter 11 cases. In August 2006, Mr. Stegenga resigned from FTI and commenced employment with Alvarez & Marsal effective Sept. 1, 2006. As the Debtors' chief restructuring officer, Mr. Stegenga has been intimately involved in the restructuring process and his continued efforts are essential to achieving confirmation of the Plan over the coming months. The Debtors intended to continue employing FTI as their restructuring advisors and do not seek to retain the services of A&M. Neither A&M nor any of its employees except Mr. Stegenga will render any services on the Debtors' behalf. Moreover, the Debtors will not pay to A&M any fees or expense reimbursements. FTI has, however, agreed to give A&M 16% of the Success Fee if earned. Headquartered in Dearborn, Mich., Meridian Automotive Systems, Inc. -- http://www.meridianautosystems.com/-- supplies technologically advanced front and rear end modules, lighting, exterior composites, console modules, instrument panels and other interior systems to automobile and truck manufacturers. Meridian operates 22 plants in the United States, Canada and Mexico, supplying Original Equipment Manufacturers and major Tier One parts suppliers. The Company and its debtor-affiliates filed for chapter 11 protection on April 26, 2005 (Bankr. D. Del. Case Nos. 05-11168 through 05-11176). James F. Conlan, Esq., Larry J. Nyhan, Esq., Paul S. Caruso, Esq., and Bojan Guzina, Esq., at Sidley Austin Brown & Wood LLP, and Robert S. Brady, Esq., Edmon L. Morton, Esq., Edward J. Kosmowski, Esq., and Ian S. Fredericks, Esq., at Young Conaway Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. Eric E. Sagerman, Esq., at Winston & Strawn LLP represents the Official Committee of Unsecured Creditors. The Committee also hired Ian Connor Bifferato, Esq., at Bifferato, Gentilotti, Biden & Balick, P.A., to prosecute an adversary proceeding against Meridian's First Lien Lenders and Second Lien Lenders to invalidate their liens. When the Debtors filed for protection from their creditors, they listed $530 million in total assets and approximately $815 million in total liabilities. (Meridian Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MESABA AVIATION: Pinnacle Transfers $15-Mil. Claim to GSCP ---------------------------------------------------------- The Clerk of the U.S. Bankruptcy Court for the District of Minnesota received a notice of claim transfer for the proof of claim filed by Pinnacle Airlines, Inc., for $15,577,352 to: Goldman Sachs Credit Partners L.P. 85 Broad Street New York, NY 10004 Contact Person: Mark J. Kalla Tel No.: (612) 340-2600 Fax No.: (612) 340-2868 Unless Pinnacle objects to the alleged transfer not later than November 8, 2006, Goldman Sachs will be substituted for Pinnacle, pursuant to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure. Prior to the filing for chapter 11 protection, Pinnacle and Mesaba Aviation, Inc., executed 12 sub-subleases concerning 11 Saab 340B aircraft and two General Electric CT7-9B spare engines. The monthly base rent for the 11 aircraft was $58,000 each. The Debtor rejected the Leases on January 11, 2006. Mesaba returned the Aircraft and the Spare Engines to Pinnacle. Pinnacle has estimated the cost to repair the Aircraft, taking into account various factors, including Aircraft Checks and Inspections, Landing Gear Overhauls, Prop Overhauls, and Aircraft Painting. The breakdown of Pinnacle's Claim Amount: Basic Rent due as of the Petition Date $538,614 Basic Rent due in Pre-Rejection Period 728,295 Basic Rent due in Post-Rejection Period 10,819,330 Estimated Repair Costs 3,491,112 About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MESABA AVIATION: Can Reject NO27XJ Aircraft Lease ------------------------------------------------- The Honorable Gregory F. Kishel of the U.S. Bankruptcy Court for the District of Minnesota permits the Debtor to reject the N027XJ Aircraft Lease and any other leases or agreements that may be determined to govern the Debtor's obligations with respect to the N027XJ Aircraft and related engines and equipment, effective September 1, 2006. Any claims arising from the Debtor's rejection of the N027XJ Aircraft Lease must be filed no later than November 17, 2006. The Debtor had previously rejected the subleases for all of its Saab 340B aircraft and has returned the aircraft to the lessor. The Debtor has likewise rejected all leases related to two of its 340A aircraft, and has arranged for the termination and return of all of its Avro aircraft. About Mesaba Aviation Headquartered in Eagan, Minnesota, Mesaba Aviation, Inc., dba Mesaba Airlines -- http://www.mesaba.com/-- operates as a Northwest Airlink affiliate under code-sharing agreements with Northwest Airlines. The Company filed for chapter 11 protection on Oct. 13, 2005 (Bankr. D. Minn. Case No. 05-39258). Michael L. Meyer, Esq., at Ravich Meyer Kirkman McGrath & Nauman PA, represents the Debtor in its restructuring efforts. Craig D. Hansen, Esq., at Squire Sanders & Dempsey, L.L.P., represents the Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed total assets of $108,540,000 and total debts of $87,000,000. (Mesaba Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000). MILLER PETROLEUM: Posts $131,197 Net Loss in Quarter Ended July 31 ------------------------------------------------------------------ For the three months ended July 31, 2006, Miller Petroleum Inc.'s net loss decreased to $131,197 from net loss of $189,775 for the three months ended July 31, 2005. Total revenues for the current quarter decreased to $531,918 from total revenues of $1,484,066 for the same period last year. The company's balance sheet at July 31, 2006, showed total assets of $4,998,848, total liabilities of $500,276, temporary equity of $4,350,000, and total stockholders' equity of $148,572. Full-text copies of the company's financial statements for the three months ended July 31, 2006, are available for free at: http://researcharchives.com/t/s?1469 Going Concern Doubt As reported in the Troubled Company Reporter on Sept. 6, 2006, Rodefer Moss & Co, PLLC, in Knoxville, Tenn., raised substantial doubt about Miller Petroleum, Inc.'s ability to continue as a going concern after auditing the Company's consolidated financial statements for the year ended April 30, 2006, and 2005. The auditor pointed to the Company's recurring operating losses and common stock subject to put option, which the Company does not have the current capability of funding. Headquartered in Huntsville, Tennessee, Miller Petroleum Inc. -- http://www.millerpetroleum.com/-- operates oil and gas wells, organizes joint drilling ventures with partners, and rebuilds and sells oil field equipment. MIRANT CORP: Committee Approves $34 Million Bonus to Employees -------------------------------------------------------------- Mirant Corporation and its debtor-affiliates will be giving $34,000,000 in bonuses to its 125 U.S. employees for the successful completion of the Company's planned business and asset sales, and as incentive for the employees to remain with the Company, according to Thomas Legro, Mirant's senior vice president and controller, in a regulatory filing with the Securities and Exchange Commission. Mirant's employees -- at a level of senior vice president or below -- are considered as critical to the Company's operation, Mr. Legro says. Bonuses will be established through a Special Bonus Plan approved by the Compensation Committee of Mirant's Board of Directors. Payments under the Special Bonus Plan will be contingent on: (i) the achievement of an established threshold value from the sales; and (ii) the completion of the sale of the Philippine business and receipt of 65% of the threshold values of the remaining assets. Payments under the Plan will be made on or about June 30, 2008, and participants must be actively employed on June 30, 2008, to receive any payment. Target amounts payable to participants in the Plan will be expressed as a percentage of base salary. Targets for the Senior Vice President participants will be from 130% to 200% of their base salaries. Members of the Company's executive committee, are excluded from the Special Bonus Plan: (1) Edward R. Muller, President and Chief Executive Officer; (2) James V. Iaco, Jr., EVP and CFO; (3) S. Linn Williams, EVP and General Counsel; (4) Robert M. Edgell, EVP and U.S. Region Head; and (5) William P. von Blasingame, SVP and GM-Caribbean. Mirant will instead make special equity grants to the Company's executive committee, Mr. Legro adds. The grants will be made under the Company's 2005 Omnibus Incentive Plan at the next regularly scheduled meeting of the Compensation Committee on November 8, 2006. The special equity grants will be vested on June 30, 2008. Headquartered in Atlanta, Georgia, Mirant Corporation (NYSE: MIR) -- http://www.mirant.com/-- is an energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or leases more than 18,000 megawatts of electric generating capacity globally. Mirant Corporation filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590), and emerged under the terms of a confirmed Second Amended Plan on Jan. 3, 2006. Thomas E. Lauria, Esq., at White & Case LLP, represented the Debtors in their successful restructuring. When the Debtors filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. The Debtors emerged from bankruptcy on Jan. 3, 2006. (Mirant Bankruptcy News, Issue No. 107; Bankruptcy Creditors' Service Inc., http://bankrupt.com/newsstand/or 215/945-7000). MKT #2 INC: Case Summary & 11 Largest Unsecured Creditors --------------------------------------------------------- Debtor: MKT #2, Inc. 2241 North Leavitt Avenue Chicago, IL 60647 Bankruptcy Case No.: 06-14327 Chapter 11 Petition Date: November 3, 2006 Court: Northern District of Illinois (Chicago) Judge: Carol A. Doyle Debtor's Counsel: Scott R. Clar, Esq. Crane Heyman Simon Welch & Clar 135 S. Lasalle Suite 3705 Chicago, IL 60603 Tel: (312) 641-6777 Fax: (312) 641-7114 Estimated Assets: $1 Million to $100 Million Estimated Debts: $1 Million to $100 Million Debtor's 11 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Lexus Financial Services $20,000 P.O. Box 9490 Cedar Rapids, IA 52409 ComEd $8,000 Bill Payment Center Chicago, IL 60668 City of Chicago $3,097 Dept. of Water Management P.O. Box 6330 Chicago, IL 60680 Windy City Furniture $2,200 2221 S. Michigan Ave. Chicago, IL 60616 AT&T Unknown 225 W. Randolph Chicago, IL 60606 City of Chicago, Building Unknown Dept. 121 North LaSalle St. Chicago, IL 60602 Edward Vrdolyak Unknown 741 N. Dearborn Chicago, IL 60610 Eric Ferleger may have interest Unknown Ferleger & Associates in Fletcher Jones 29 S. LaSalle St., Suite 300 claim Chicago, IL 60603 Eric Janssen Unknown 932 W. Grace St. Chicago, IL 60613 Fletcher Jones Unknown 1111 North Clark St. Chicago, IL 60610 Jerome Zurla Unknown 741 N. Dearborn St. Chicago, IL 60610 MONEY CENTERS: Posts $660,703 Net Loss in 2006 Second Quarter ------------------------------------------------------------- Money Centers of America, Inc. reported a $660,703 net loss on $3,060,386 of revenues for the second quarter ended June 30, 2006, compared with $44,174 of net income on $5,427,270 of revenues for the same period in 2005. At June 30, 2006, the company's balance sheet showed $6,019,029 in total assets and $12,077,575 in total liabilities, resulting in a $6,058,546 stockholders' deficit. The company's balance sheet at June 30, 2006, also showed strained liquidity with $3,719,222 in total current assets available to pay $11,721,977 in total current liabilities. Full-text copies of the company's second quarter financial statements are available for free at: http://researcharchives.com/t/s?1459 Going Concern Doubt As reported in the Troubled Company Reporter on May 8, 2006, Sherb & Co., LLP, in Boca Raton, Florida, raised substantial doubt about Money Centers of America, Inc.'s ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's recurring losses from operations, working capital deficit, stockholders' deficit, and accumulated deficit. About Money Centers Money Centers of America, Inc. -- http://www.moneycenters.com/-- provides cash access and Transaction Management Systems for the gaming industry, utilizing a customer-centric approach that is aimed at leveraging technology, generating value, and creating measurable results in profitability, customer satisfaction and loyalty. MORGAN STANLEY: Fitch Holds B- Rating on $13.8-Mil. Class L Certs. ------------------------------------------------------------------ Fitch Ratings upgrades Morgan Stanley Dean Witter Capital I Inc., commercial mortgage pass-through certificates, series 2000-LIFE1: -- $8.6 million class D to 'AAA' from 'AA'; -- $17.2 million class E to 'A+' from 'A'; -- $6.9 million class F to 'A' from 'BBB+'; -- $13.8 million class H to 'BBB' from 'BBB-'; -- $6.9 million class J to 'BBB-' from 'BB+'. In addition, Fitch affirms: -- $415.8 million class A-2 at 'AAA'; -- Interest-only class X at 'AAA'; -- $22.4 million class B at 'AAA'; -- $25.9 million class C at 'AAA'; -- $5.2 million class K at 'BB-'; -- $13.8 million class L at 'B-'. The $1.7 million class G and the $5.6 million class M are not rated by Fitch. Class A-1 paid in full. The rating upgrades are due to additional paydown and defeasance since Fitch's last rating action. As of the October 2006 distribution date, the pool's collateral balance has decreased 21% to $543.8 million from $689.0 million at issuance. In total, 13 loans (12.1%) have defeased. Two loans (1.8%) are currently in special servicing. The largest specially serviced asset (1%) is an office property in St. Paul, MN and is currently in foreclosure. The special servicer took title to the property back in August and will be marketing the property for sale. Losses are expected on this asset and will be absorbed by the non-rated class M. The second specially serviced loan (0.7%) is an industrial property in New Orleans, Louisiana which suffered damage as a result of Hurricane Katrina. The borrower has brought the loan current and repairs are ongoing at the property. Fitch does not expect a loss on this loan. MOTORSPORT AFTERMARKET: Moody's Rates $220 Million Loan at Ba3 -------------------------------------------------------------- Moody's Investors Service assigned a Ba3 first time rating to Motorsport Aftermarket Group, Inc.'s $220 million first lien bank debt and a B2 Corporate Family Rating. The ratings reflect both the overall probability of default of the company, to which Moody's assigns a PDR of B2, and a loss given default of LGD3, 32% to the bank debt. The rating outlook is stable. The first lien bank credit commitments, consisting of a $160 million term loan and a $60 million revolving credit facility, are part of the financing arranged to fund Leonard Green & Partners acquisition of MAG. MAG will also issue $110 million of senior subordinated notes, which are not rated. The B2 Corporate Family and PD ratings consider the substantial leverage deployed in MAG's capital structure, its modest size, and the likely role which acquisitions will play in its corporate strategy. The rating is balanced from benefits attributable to leading market shares enjoyed by its multiple brands, current favorable trends in the parts and accessories sector of the motorcycle industry, strong EBITA margins, and the company's favorable initial liquidity profile. While revenues are concentrated in North America, the company has a diverse customer base and benefits from a multi-channel distribution system to efficiently capture available margin. Although its products are predominately used in aftermarket applications, demand is driven more by upgrades to new and used vehicles to enhance performance, image and ergonomics rather than repair or maintenance. Thus, much of the company's revenues are derived from discretionary purchases which could suggest cyclical vulnerability. Current trends support expectations of modest growth in MAG's dominant "on-road" segment. The Ba3 rating of the first lien bank credit facilities reflects an LGD3, 32% loss given default assessment. Both MAG's bank debt and subordinated notes benefit from up-streamed guarantees from material domestic subsidiaries and a down-streamed guarantee by the holding company parent, Rally Holdings, Inc. The bank debt has a first lien over substantially all assets of MAG and the guarantors, including capital stock of the company and of each domestic subsidiary, 65% of the capital stock of each foreign subsidiary and all intercompany debt. Extensive balance sheet intangibles will be created from the multiple paid for the company and application of purchase accounting. Hard asset coverage provided to first lien holders is weak, leaving lender recovery expectations in downside scenarios exposed to enterprise valuations. However, the combination of those values and substantial amounts of junior capital beneath the bank debt accommodate an uplift to Ba3 for the first lien obligations, two notches above the Corporate Family Rating. Headquartered in Irvine, Calif., Motorsport Aftermarket Group, Inc., is a holding company with investments in subsidiaries which design, manufacture and market parts and accessories for the motorcycle and ATV industries. MULTIPLAN INC: 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 Healthcare Service and Distribution sector, the rating agency confirmed its B2 Corporate Family Rating for MultiPlan, Inc. In addition, 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 ---------- ------- ------- ------ ---------- Senior Secured Revolving Credit Facility, Due 2012 B2 B1 LGD3 38% Senior Secured Term Loan B Due 2013 B2 B1 LGD3 38% Senior Secured Term Loan C Due 2013 B2 B1 LGD3 38% Senior Subordinated Notes, Due 2016 Caa1 Caa1 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%). MultiPlan Inc. -- http://www.multiplan.com/-- serves as a single gateway to a host of primary, complementary and out-of-network strategies for managing the financial risks associated with healthcare claims. Clients include large and mid-sized insurers, third-party administrators, self-funded plans, HMOs and other entities that pay claims on behalf of health plans. NE ENERGY: Moody's Affirms B2 Corporate Family Rating ----------------------------------------------------- Moody's Investors Services has affirmed the ratings of NE Energy, Inc. and Northeast Generation Company. NEEI's first lien working capital facility was increased to $70 million from $35 million and its first lien synthetic letter of credit facility was decreased to $65 million from $100 million. However, the ratings and LGD point estimates did not change for any of the facilities as a result of this change in capital structure and the rating outlook for NEEI continues to be stable. Moody's affirmation of NGC's Ba3 rating on its $320 million Series B Senior Secured Bonds due 2026 reflects the announcement by NEEI it had completed the acquisition of NGC from Northeast Utilities, which had been expected. Northeast Generation Company, a wholly-owned subsidiary of NE Energy, Inc., is a power generation project consisting of nearly 1,300 MW of pumped storage and conventional hydroelectric power generation facilities located in Massachusetts and Connecticut. NE Energy, Inc., which is expected to be headquartered near Hartford, Connecticut, is an independent power generation company owned by Energy Capital Partners, a private equity firm with offices in Short Hills, New Jersey and San Diego, California. Ratings affirmed include: * Northeast Generation Company -- Senior secured bonds at Ba3 * NE Energy, Inc -- Corporate family rating at B2 -- Probability of default rating at B2 -- Liquidity rating at SGL-3 -- Senior secured 1st lien term loan at B1 (LGD 3, 42%) -- Senior secured 1st lien working capital facility at B1 (LGD 3, 42%) -- Senior secured 1st lien synthetic L/C facility B1 (LGD 3, 42%) -- Secured 2nd lien term loan at B3 (LGD 5, 76%) NEW MEDIA: Has $4.6 Million Stockholders' Deficit as of July 31 --------------------------------------------------------------- New Media Lottery Services Inc.'s balance sheet at July 31, 2006, showed total assets of $1,692,813, total liabilities of $2,513,193, and minority interest of $3,832,117, resulting in a total stockholders' deficit of $4,652,497. For the three months ended July 31, 2006, the company reported an $897,827 net loss on $54,057 of net revenues, compared to a $480,376 net loss on $0 of net revenues for the three months ended July 31, 2005. Full-text copies of the company's financial statements for the three months ended July 31, 2006, are available for free at: http://researcharchives.com/t/s?1467 Headquartered in Harrisonburg, Virginia, New Media Lottery Services Inc. -- http://www.nmlsinc.com/-- designs, builds, implements, manages, hosts and supports Internet and wireless based lottery programs. NEW RISING FENIX: Case Summary & 18 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: New Rising Fenix, Inc. 995 East Daniel Drive Mt. Vernon, MO 65712 Tel: (417) 466-3700 Fax: (417) 466-7993 Bankruptcy Case No.: 06-30470 Type of Business: The Debtor offers trucking services. See http://www.risingfenix.com/ The Debtor filed for bankruptcy on March 20, 2002 (Bankr. W.D. Mo. Case No. 02-30285). Chapter 11 Petition Date: November 2, 2006 Court: Western District of Missouri (Joplin) Debtor's Counsel: Raymond I. Plaster, Esq. Moon, Plaster & Sweere, LLP 3275 East Ridgeview Street, Suite C Springfield, MO 65804 Tel: (417) 862-3704 Fax: (417) 862-1936 Total Assets: $2,006,042 Total Debts: $2,946,638 Debtor's 18 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Heartland WRHS & Dist. Inc. $676,918 P.O. Box 27 Mt. Vernon, MO 65712 Rocin Liquidation Estate $205,821 c/o Patrick T. McLaughlin Spencer Fane Britt & Browne 1 North Brentwood Boulevard, Suite 1000 St. Louis, MO 63106 Rebsamen Insurance, Inc. $181,992 c/o Brian K. Asberry Neale & Newman P.O. Box 10327 Springfield, MO 65808 IRS Collection Division $153,023 SB/SE Insolvency Terr. 9, Group 2 Stop 5334 STL P.O. Box 66778 St. Louis MO 63166 Rising Fenix, Inc. $125,000 P.O. Box 231 Mt. Vernon, MO 65712 Liberty Bank $96,125 Crum & Forster Insurance $95,941 Peoplease Corp. $70,000 Thilman & Filippini, LLC $45,937 Clifford Strong $35,533 Premium Assignent Corp. $25,802 Charles A. Daniel $25,000 Internal Revenue Service $21,051 Chase Platinum Mastercard $18,012 Qualcomm, Inc. $14,779 Associated Wholesale Grocers $12,743 Froman Law Firm $12,554 Oklahoma Tax Commission $12,000 NEW WORLD: Moody's Assigns Loss-Given-Default Rating ---------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the restaurant sector, the rating agency confirmed its B2 Corporate Family Rating for New World Restaurant Group. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $80M Sr. Sec. Term Loan d. 1/2011 B2 Ba2 LGD2 20% $15M Sr. Sec. Revolver d. 1/2011 B2 Ba2 LGD2 20% $65M Sr. Sec. 2nd Lien Term Loan d. 2/2012 B3 B3 LGD4 65% Moody's explains that current long-term credit ratings are opinions about expected credit loss which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). New World Restaurant Group is headquartered in Golden, Colorado. NORTHWEST AIRLINES: Posts $1.179 Bil. Net Loss in 2006 Third Qtr. ----------------------------------------------------------------- Northwest Airlines Corporation reported a third quarter net loss of $1,179,000,000. This compares with a third quarter 2005 net loss of $475,000,000. Excluding reorganization and unusual items, Northwest reported a third quarter net profit of $252,000,000 versus a third quarter 2005 net loss of $234,000,000. The third quarter results include a net loss for the month of September of $337,000,000. Excluding reorganization items, Northwest reported a September pre-tax loss of $13,000,000. Doug Steenland, Northwest Airlines president and chief executive officer, said, "Our third quarter results are a significant improvement over last year's results and demonstrate further that we are making steady progress in restructuring Northwest Airlines. However, our September loss indicates that we still have work to do in order to reach our goal of sustained profitability." The company reiterated its guidance of early October that it expects to report a loss, excluding reorganization items, for the last four months of the year. For full year 2006, based on the airline's current fuel and revenue estimates, Northwest is forecasting a modest profit with an estimated pre-tax margin of approximately two percent, excluding reorganization items, on more than $12,000,000,000 in revenue. "Our expectation of a modest profit for 2006 is an indication that our restructuring is working. We have been able to stop the losses of the past six years that totaled $4,200,000,000, now achieving break even status and even forecasting a modest profit for the year," Mr. Steenland continued. "While this is an important interim milestone for Northwest, we must continue to implement the remaining actions in our restructuring plan to achieve our goal of sustained profitability." Operating revenues in the third quarter increased 0.9% versus the third quarter of 2005 to $3,400,000,000. System passenger revenue increased 2.9% to more than $2,500,000,000 on 8.0% fewer mainline available seat miles, resulting in an 11.8% improvement in unit revenue. Including regional carrier revenues, Northwest's consolidated unit revenue improved 12.8% on 9.1% fewer ASMs. Operating expenses in the quarter decreased 12.2% year-over-year, excluding unusual items, to $3,000,000,000, while mainline unit costs, excluding fuel and unusual items, decreased by 11.8% on 7.8% fewer ASMs. Salaries, wages and benefits decreased 26.2%, primarily due to a combination of labor cost reductions, headcount reductions and the reduced level of flying. Aircraft rental expense decreased 49%, primarily due to restructured and rejected aircraft leases. During the third quarter, fuel averaged $2.18 per gallon, excluding taxes, up 18.0% versus the third quarter of last year. Increased fuel prices were partially offset by 9.7% fewer gallons consumed primarily because of the company's capacity reductions. Northwest's quarter-ending unrestricted cash and short-term investments balance was approximately $2,100,000,000, including net proceeds from the airline's refinancing of its previous $975,000,000 term loan into a new $1,225,000,000 debtor-in- possession (DIP)/exit facility that closed in August. Pensions On August 17, Northwest employees attended a White House ceremony where President Bush signed the Pension Protection Act into law. The Act, which received broad bipartisan support in Congress, contains a provision that will save airline employees' defined benefit pension plans. "The passage and signing of the Pension Protection Act was the culmination of an unprecedented cooperative effort involving employees from throughout the company, Northwest senior management, and union officials," Mr. Steenland said. "The new law allows us to preserve hard-earned pension benefits at a manageable cost level, a true 'win-win' for our employees and for Northwest." Strengthening Northwest's Global Network Earlier this month, Northwest, along with its joint venture partner KLM, announced an expansion of their European flight network with new service to Brussels, Belgium and Dusseldorf, Germany from Detroit as well as the first nonstop service between Hartford, Connecticut and Europe via the joint venture's hub at Amsterdam, the Netherlands. In September, Northwest filed an application with the U.S. Department of Transportation detailing the important public benefits of the airline's application for new daily service between its WorldGateway at Detroit hub and Shanghai, China. Renewing the Northwest fleet Earlier this month, Northwest reached agreements with The Boeing Company and Rolls-Royce plc that allow the airline to accept delivery of its new-generation Boeing 787 aircraft, beginning in the third quarter of 2008. The agreements are subject to U.S. Bankruptcy Court approval. Northwest will be the first North American airline to fly the new 787. "The Boeing and Rolls-Royce agreements are examples of the steady progress we are making in restructuring and optimizing the airline's fleet," Mr. Steenland added. Northwest achieved a major restructuring milestone earlier this month with orders from two manufacturers for 72 new, two-class aircraft that each will accommodate 76 customers. Northwest ordered 36 Bombardier Canadair Regional Jet 900s and 36 Embraer 175s that will offer Northwest Airlink customers a "best-in-class" product experience. Restructuring During the quarter, Northwest completed a $1,225,000,000 refinancing of $975,000,000 of existing bank obligations at more favorable terms and gained access to $250,000,000 in incremental liquidity. The new facility can be converted to permanent exit financing, securing part of the debt financing the airline will need to emerge from Chapter 11 protection. Neal Cohen, executive vice president and chief financial officer, said, "We are pleased to have closed on a new DIP/exit facility which reduces the company's annual interest expense. Our key stakeholders in the capital markets have recognized Northwest's progress towards its restructuring goal of positive cash flow and sustained profitability." Commenting on the aircraft transactions, he added, "We have now completed restructuring the contracts on our new Airbus and Boeing aircraft as well as our new and existing regional jet aircraft fleets. With these agreements, as well as the other aircraft restructuring actions accomplished during the Chapter 11 process, Northwest will have competitive aircraft ownership costs going forward." Selected Financial Data Northwest Airlines Corporation Unaudited Condensed Consolidated Statement of Operations For Three Months Ended September 30, 2006 Operating Revenues Passenger $2,554,000,000 Regional carrier revenues 358,000,000 Cargo 254,000,000 Other 241,000,000 --------------- Total Operating Revenues 3,407,000,000 Operating Expenses Aircraft fuel and taxes 948,000,000 Salaries, wages, and benefits 678,000,000 Selling and marketing 199,000,000 Aircraft maintenance materials and repair 170,000,000 Other rentals and landing fees 151,000,000 Depreciation and amortization 122,000,000 Aircraft rentals 52,000,000 Regional carrier expenses 356,000,000 Other 365,000,000 --------------- Total Operating Expenses 3,041,000,000 Operating Income 366,000,000 Other Income (Expense) Interest expense, net (137,000,000) Investment income 30,000,000 Foreign currency gain (loss) (3,000,000) Other 2,000,000 --------------- Total other income (expense) (108,000,000) --------------- Income (Loss) Before Income Taxes 258,000,000 Reorganization items, net (1,431,000,000) Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (1,173,000,000) Income tax expense (benefit) 6,000,000 --------------- Income (Loss) Before Cumulative Effect of Accounting Change (1,179,000,000) Cumulative effect of change in acctg. principle - --------------- Net Income (Loss) ($1,179,000,000) =============== Northwest Airlines Corporation Unaudited Condensed Consolidated Statement of Operations For Nine Months Ended September 30, 2006 Operating Revenues Passenger $7,028,000,000 Regional carrier revenues 1,093,000,000 Cargo 704,000,000 Other 763,000,000 --------------- Total Operating Revenues 9,588,000,000 Operating Expenses Aircraft fuel and taxes 2,578,000,000 Salaries, wages, and benefits 2,029,000,000 Selling and marketing 583,000,000 Aircraft maintenance materials and repair 542,000,000 Other rentals and landing fees 436,000,000 Depreciation and amortization 390,000,000 Aircraft rentals 174,000,000 Regional carrier expenses 1,088,000,000 Other 1,122,000,000 --------------- Total Operating Expenses 8,942,000,000 Operating Income (Loss) 646,000,000 Other Income (Expense) Interest expense, net (413,000,000) Investment income 73,000,000 Foreign currency gain (loss) (4,000,000) Other 6,000,000 --------------- Total other income (expense) (338,000,000) --------------- Income (Loss) Before Income Taxes 308,000,000 Reorganization items, net (2,870,000,000) Income (Loss) Before Income Taxes and Cumulative Effect of Accounting Change (2,562,000,000) Income tax expense (benefit) 6,000,000 --------------- Income (Loss) Before Cumulative Effect of Accounting Change (2,568,000,000) Cumulative effect of change in acctg. principle - --------------- Net Income (Loss) ($2,568,000,000) =============== Northwest Airlines Corp. (OTC: NWACQ) -- http://www.nwa.com/ -- is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,400 daily departures. Northwest is a member of SkyTeam, an airline alliance that offers customers one of the world's most extensive global networks. Northwest and its travel partners serve more than 900 cities in excess of 160 countries on six continents. The Company and 12 affiliates filed for chapter 11 protection on Sept. 14, 2005 (Bankr. S.D.N.Y. Lead Case No. 05-17930). Bruce R. Zirinsky, Esq., and Gregory M. Petrick, Esq., at Cadwalader, Wickersham & Taft LLP in New York, and Mark C. Ellenberg, Esq., at Cadwalader, Wickersham & Taft LLP in Washington represent the Debtors in their restructuring efforts. The Official Committee of Unsecured Creditors has retained Akin Gump Strauss Hauer & Feld LLP as its bankruptcy counsel in the Debtors' chapter 11 cases. When the Debtors filed for protection from their creditors, they listed $14.4 billion in total assets and $17.9 billion in total debts. (Northwest Airlines Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) NPC INTERNATIONAL: Moody's Assigns Loss-Given-Default Rating ------------------------------------------------------------ In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the restaurant sector, the rating agency confirmed its B2 Corporate Family Rating for NPC International Inc. Additionally, Moody's revised or held its probability-of-default ratings and assigned loss-given-default ratings on these loans and bond debt obligations: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- $75m Senior secured revolver due 2012 B1 Ba3 LGD3 30% $300m Senior secured term loan B due 2013 B1 Ba3 LGD3 30% $175m 9.5% senior sub. notes due 2014 Caa1 Caa1 LGD5 84% 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%). NPC International Inc. is a franchisee of Pizza Hut restaurants, with about 800 restaurants and delivery kitchens in more than 25 states, mostly in the South. OCCAM NETWORKS: Restates 2005 Annual Financial Report ----------------------------------------------------- Occam Networks Inc. has filed with the Securities and Exchange Commission an amended financial report on Form 10-K for the year ended Dec. 25, 2005, disclosing PriceWaterhouseCoopers LLP's going concern opinion about the company. PriceWaterhouseCoopers raised substantial doubt about the company's ability to continue as a going concern after auditing the company's financial statements for the years ended Dec. 28, 2003 and Dec. 26, 2004. The auditing firm pointed to the company's significant operating losses and negative cash flows from operations since inception. 2005 Results Occam Networks's balance sheet at Dec. 25, 2005, showed total assets of $27,947,000, total liabilities of $13,116,000, and redeemable preferred stock of $34,942,000, resulting in a total stockholders' deficit of $20,111,000. The company's total stockholders' deficit at Dec. 26, 2004, stood at $13,893,000. For the year ended Dec. 25, 2005, the company's net loss decreased to $7,438,000 from $14,989,000 for the year ended Dec. 26, 2004. Sales for the year ended Dec. 25, 2005, rose to $39,238,000 compared to sales of $17,329,000 for year ended Dec. 26, 2004. Full-text copies of the company's financial statements for the year ended Dec. 25, 2005, are available for free at http://researcharchives.com/t/s?146f Based in Santa Barbara, Calif., Occam Networks Inc. (OTCBB:OCNW) -- http://www.occamnetworks.com/-- engages in the design, development, and marketing of broadband loop carrier networking equipment that enables telephone companies to deliver voice, data, and video services. OMNICARE INC: 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 Healthcare Service and Distribution sector, the rating agency confirmed its Ba2 Corporate Family Rating for Omnicare, Inc. Moody's also revised or held its probability-of-default ratings and assigned loss-given-default ratings on these debentures: Projected Old POD New POD LGD Loss-Given Debt Issue Rating Rating Rating Default ---------- ------- ------- ------ ---------- 8.125% Senior Subordinated Notes Due 2011 Ba3 Ba2 LGD4 55% 6.125% Senior Subordinated Notes Due 2013 Ba3 Ba2 LGD4 55% 6.75% Senior Subordinated Notes Due 2013 Ba3 Ba2 LGD4 55% 6.875% Senior Subordinated Notes Due 2015 Ba3 Ba2 LGD4 55% 3.25% Convertible Senior Debentures Due 2035 B1 Ba3 LGD5 82% Old PIERS Trust Preferred B2 B1 LGD6 95% New PIERS Trust Preferred B2 B1 LGD6 95% 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 Covington, Kentucky, Omnicare, Inc. -- http://www.omnicare.com/-- a geriatric pharmaceutical services company, provides pharmaceuticals and related ancillary pharmacy services to long-term healthcare institutions primarily in the United States and Canada. PERKINS & MARIE: Moody's Assigns Loss-Given-Default Rating ---------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the restaurant sector, the rating agency held its B2 Corporate Family Rating for Perkins & Marie Callender's 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 ---------- ------- ------- ------ ---------- $40M Gtd. Sr. Sec. Revolver d. 5/2011 B2 Ba2 LGD2 16% $100M Gtd. Sr. Sec. Term Loan d. 5/2013 B2 Ba2 LGD2 16% $190M Gtd. 10% Sr. Unsec. Notes d. 10/2013 B3 B3 LGD5 72% 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%). Perkins & Marie Callender's Inc. operates and franchises more than 600 full-service restaurants under the Perkins and Marie Callender's banners. The company is headquartered in Memphis, Tennessee. PINNOAK RESOURCES: Operating Risks Cues S&P to Junk Rating ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Canonsburg, Pa. based PinnOak Resources LLC to 'CCC+' from 'B-' and removed all ratings from CreditWatch, where they were placed with negative implications on Sept. 1, 2006. At the same time, the bank loan rating on its $175 million credit facility was lowered to 'B-' from 'B' and the recovery rating was affirmed at '1', indicating expectations of a full recovery of principal in the event of a payment default. The outlook is negative. "The downgrade reflects our concerns about the company's declining liquidity levels--brought about by recent poor financial performance--which we deem to be inadequate to deal with the inherent operating risks endemic to coal mining," Standard & Poor's credit analyst Marie Shmaruk said. "In addition, we expect the company's liquidity position to deteriorate further by year-end, as it continues to deal with operational problems and a below-market coal supply contract." With just over 4 million tons of production, PinnOak is a relatively small producer, with the bulk of its production from only two mines. "We could lower the ratings if the company experiences further adverse operating or market conditions that further affect liquidity," Ms. Shmaruk said. "Conversely, we could revise the outlook to positive if the company weathers near-term challenges and begins to realize higher prices that result in an improving liquidity and financial performance." PORTLAND GENERAL: Earns $10 Million in Third Quarter of 2006 ------------------------------------------------------------ Portland General Electric Company filed its financial statements for the three months ended Sept. 30, 2006, with the Securities and Exchange Commission on Oct. 31, 2006. At Sept. 30, 2006, the Company's balance sheet showed $3.665 billion in total assets, $2.467 billion in total liabilities, and $1.198 billion in total stockholders' equity. Portland General Electric reported net income of $10 million for the third quarter ending Sept. 30, 2006, compared with net income of $19 million for the third quarter 2005. The Company experienced higher operating revenues offset by increased purchased power and fuel expenses during the quarter. Furthermore, in September, the Oregon Public Utility Commission issued permanent rules for the implementation of Oregon Senate Bill 408 (SB 408), a new Oregon law defining the rate treatment of income taxes. As a result, the Company recorded a $22 million reserve ($13 million after-tax) for the potential refund obligation to customers related to the Company's current estimate of the impacts of SB 408. Operating revenues of $372 million for the third quarter 2006 reflect a 4.8% increase compared to the prior year's third quarter revenues of $355 million. The revenue increase this quarter was driven by growth in the average number of customers served, warmer weather and an increase in wholesale sales. A Jan. 1, 2006, rate increase related to higher power costs also contributed to the increase. Increased revenues were reduced by the reserve taken related to SB 408. "One of PGE's top priorities is to invest in ways that meet the needs of our growing service territory," Portland General Electric chief executive officer and president Peggy Fowler said. "Our focus on expanded generating capacity is already evident in our new, highly efficient, 400 MW natural gas-fired plant, Port Westward, and the Biglow Canyon Wind Farm project. We believe that investment in generation, in our transmission and distribution system, and in renewable energy will provide returns to our shareholders while enhancing our service position for our customers." Third Quarter 2006 Summary * Total retail energy deliveries for the period increased 2.5% to 4,717,000 MWhs in 2006 from 4,600,000 MWhs in 2005. * As of Sept. 30, 2006, PGE served approximately 793,000 customers as compared to approximately 779,000 on Sept. 30, 2005, a 1.8% increase. * On July 24, 2006, the Company reached a new all-time high net system load summer peak of 3,706 MW, surpassing the previous record set one month earlier. * Total operating revenues increased by 4.8% to $372 million in 2006 from $355 million in 2005. This was primarily the result of a 3.7% rate increase effective Jan. 1, 2006, increased energy sales across all customer classes and increased wholesale sales. In addition, operating revenues were reduced by $22 million due to the reserve taken related to SB 408. * Purchased power and fuel expense increased by $32 million primarily due to increased power purchases to meet higher total system load requirements as well as higher wholesale prices. These increases were partially offset by continued favorable regional hydro conditions. The mark-to-market impact included $12 million of unrealized net gains on derivative activities in the third quarter of 2006 compared with $7 million of unrealized net gains in the third quarter of 2005. * Production, distribution, administrative and other expenses increased by $2 million compared to last year's third quarter. Year-to-Date 2006 For the nine months ending Sept. 30, 2006, net income was $31 million compared with $73 million for the same period in 2005. The principal drivers for the decrease were replacement power costs related to the unplanned outages at the Company's Boardman Power Plant in the first half of the year, unrealized mark-to- market losses on power and natural gas contracts, which are expected to reverse in the fourth quarter, and a reserve related to SB 408. These factors were partially offset by continued favorable regional hydro conditions and increased retail energy sales. Operating revenues were $1,104 million compared with $1.059 billion for the same period in 2005. The 4.2% increase was driven by an increase in customers served; colder weather in the first quarter and warmer weather in June and September compared to the respective periods in 2005; a Jan. 1, 2006, rate increase related to higher power costs; and increased wholesale sales. Capital Expenditures PGE's capital expenditures for 2006 are expected to be approximately $374 million compared to actual 2005 expenditures of $255 million. Capital expenditures for 2006 consist of $193 million for ongoing production, transmission and distribution facilities and $159 million for Port Westward, the Company's new natural gas-fired plant, currently under construction in Clatskanie, Ore., and expected to come online in the first quarter of 2007. The 2006 estimate also includes $22 million for the Biglow Canyon Wind Farm and advanced metering infrastructure, both of which are in the initial stages of development. Dividend On Oct. 26, 2006, the PGE board of directors approved a quarterly common stock dividend of $0.225 cents per share. The dividend is payable on Jan. 15, 2007, to shareholders of record at the close of business on Dec. 26, 2006. Overview of Recent Developments Senate Bill 408 On Sept. 14, 2006, the OPUC issued a final order that adopted permanent rules to implement SB 408. The intent of SB 408 is to ensure that the amount collected from customers for income taxes matches the amount paid to governmental entities by investor-owned utilities. In the Rules, the OPUC adopted the use of fixed reference points for margins and effective tax rates from a ratemaking proceeding to determine the amount of taxes collected from customers for income taxes. The Commission also adopted a methodology to determine the amounts properly attributed to a consolidated group's income tax liability using a formula based on the ratio of the utility's payroll, property and sales to the consolidated group's amounts for the same items. This ratio is then multiplied by the amount of total taxes paid by the consolidated group to determine the utility's attributed portion. In addition, the OPUC determined that interest should begin to accrue Jan. 1, 2006, using a mid-year convention for differences between income taxes collected and income taxes paid to governmental entities for tax year 2006. The OPUC recognizes the so-called "double whammy" effect wherein the application of the Rules can result in unusual outcomes in certain situations. For example, if the utility incurs higher expenses or receives lower revenues, resulting in lower taxes paid than the OPUC assumed it would incur in its last rate case, the automatic adjustment clause under SB 408 will require the utility to make a refund to customers and decrease the utility's earnings; and if the utility incurs lower expenses or receives higher revenues, the automatic adjustment clause under SB 408 will surcharge customers and increase the utility's earnings. In PGE's assessment of the Rules, the Company has revised its estimate of potential refunds to customers to be about $42 million (pre-tax) for fiscal year 2006. Based on this estimate, the Company recorded a $31 million (pre-tax) reserve for the first nine months of 2006, including $22 million during the third quarter of 2006 for a potential refund obligation to customers. In accordance with the statute, the Company will file a report with the OPUC by Oct. 15, 2007, for the 2006 tax year regarding the amount of taxes paid by the Company as well as the amount of taxes authorized to be collected in rates, as defined by the statute. The Company will continue to evaluate its options for changing or modifying the legislation and Rules, and challenging any adjustment that follows for the 2006 tax year. General Rate Case PGE filed a general rate case in March 2006 for consideration by the OPUC. Based on a 2007 test year, the general rate case proposed a retail rate increase of $143 million (8.9%) across all customer classes and a return on equity of 10.75% to become effective early in 2007. The OPUC staff, the Company, and key intervenors have signed Stipulation agreements, which settled multiple revenue requirement items; key issues of cost of capital and power costs remain outstanding. All testimony has been filed and the OPUC is expected to issue its final order in mid-January 2007 following public hearings, briefs and oral arguments. Boardman Power Plant Deferral of Replacement Power Costs Total incremental power costs to replace the output of Boardman were approximately $92 million, including $52 million in 2006. PGE filed an accounting application with the OPUC for deferral of replacement power costs for the turbine rotor outage, estimated at $46 million, for the period Nov. 18, 2005, through Feb. 5, 2006, for later ratemaking treatment. All testimony has been filed and a decision is expected in the fourth quarter of 2006 or in early 2007. Trojan Investment Recovery On Aug. 31, 2006, the Oregon Supreme Court issued a ruling on PGE's Petitions for Alternative Writ of Mandamus, abating class action proceedings until the OPUC responds to a case remanded by the Marion County Circuit Court in 2003. The Oregon Supreme Court concluded that the OPUC has primary jurisdiction to determine what, if any, remedy it can offer to PGE customers, through rate reductions or refunds, for any amount of return on the Trojan investment PGE collected in rates for the period from April 1995 through October 2000. The Supreme Court further stated that if the OPUC determines that it can provide a remedy to PGE's customers, then the class action proceedings may become moot in whole or in part, but if the OPUC determines that it cannot provide a remedy, and that decision becomes final, the court system may have a role to play. The Supreme Court also ruled that the plaintiffs retain the right to return to the Marion County Circuit Court for disposition of whatever issues remain unresolved from the remanded OPUC proceedings. The Marion County Circuit Court issued an Order of Abatement in response to the Supreme Court's ruling, abating the class actions for one year. Stock Distribution PGE ceased to be a subsidiary of Enron Corp. on April 3, 2006, with the issuance of 62.5 million shares of new common stock, of which approximately 35 million shares were issued to a Disputed Claims Reserve for future distribution to Enron creditors with allowed and settled claims. The stock, listed on the New York Stock Exchange, began regular way trading on April 10, 2006. Subsequent distributions, including an Oct. 3, 2006, distribution of approximately 1,640,000 shares, reduced the total shares held in the Reserve to approximately 53% of total shares outstanding. Full-text copies of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?1465 About Portland General Electric Portland, Ore.-based Portland General Electric Company (NYSE: POR) -- http://www.PortlandGeneral.com/-- is a fully integrated electric utility that serves 793,000 residential, commercial, and industrial customers in Oregon. * * * Portland General Electric Company's preferred stock carries Moody's Investors Service's Ba1 rating. PREMIUM PAPERS: Files Disclosure Statement in Delaware ------------------------------------------------------ Premium Papers Holdco LLC and its debtor-affiliates filed a Disclosure Statement explaining their joint Chapter 11 Plan of Reorganization with the U.S. Bankruptcy Court for District of Delaware on Oct. 30, 2006. The Court previously approved the sale of substantially all of PF Papers' assets related to its business operations in Park Falls, Wisconsin to a third party buyer. The Debtors are now seeking to administer the remaining assets in the PF Papers estate and Smart Papers estate. The Plan contemplates the transfer of substantially all of the Debtors' remaining assets to Newco on the Effective Date. Under the Plan, the Debtors will issue 92.5% of its outstanding shares of capital stock in Newco to Plainfield Asset Management to satisfy Plainfield's $5,000,000 secured claim. The remaining 7.5% of the initially issued and outstanding shares of capital stock in Newco will be issued to the Creditor Trust. The Plan also provides that the Creditor Trust Assets, which include: -- $200,000, -- the Creditor Trust Shares, -- the Excluded Causes of Action, -- the Reorganized Membership Interests, and -- other Excluded Assets, if any, that the Committee elects to be transferred to the Creditors Trust, will be transferred to the Creditor Trust on the Effective Date for the benefit of Allowed General Unsecured Claim holders. The remaining shares will be used to pay unsecured creditors, and another $1.6 million will be paid to former owner International Paper. On the Effective Date, Newco will all or a portion of the Plainfield postpetition claim in cash from proceeds of the exit financing facility. Under the Plan, holders of allowed administrative claims, ad valorem tax claims and priority claims will be paid in full. Holders of other secured claims will either be: a) paid in full; b) received title to the holders' collateral; or c) paid under the terms of an agreement. All Subordinated Claim and Membership Interest holders will not be entitled to receive any distributions or retain any property on account of their claims and interests. The Court will convene a hearing on Nov. 22, 2006, at 10:00 a.m., to consider approval of the Debtors' disclosure statement. Headquartered in Hamilton, Ohio, Premium Papers Holdco, LLC -- http://www.smartpapers.com/-- is an independent manufacturer and marketer of a wide variety of premium coated and uncoated printing papers, such as Kromekote, Knightkote, and Carnival. The Company and its debtor-affiliates, SMART Papers LLC and PF Papers LLC, filed for chapter 11 protection on March 21, 2006 (Bankr. D. Del. Case No. 06-10269). Ian S. Fredericks, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors. Mary E. Seymour, Esq., at Lowenstein Sandler PC, represents the Official Committee of Unsecured Creditors. Traxi LLC serves as the Debtors' financial advisor. When the Debtors filed for protection from their creditors, they listed unknown estimated assets and $10 million to $50 million estimated debts. PREMIUM PAPERS: Wants Until Feb. 14 to Remove Prepetition Actions ----------------------------------------------------------------- Premium Papers Holdco LLC and its debtor-affiliates asks the U.S. Bankruptcy Court for District of Delaware to extend until Feb. 14, 2007, the period within which they can remove pending civil actions from State Court. The Debtors inform the Bankruptcy Court that they have been focused on obtaining one or more buyer's for their assets. Furthermore, they have negotiated a Plan with the Plan Proponents, Wachovia Bank, N.A., the Official Committee of Unsecured Creditors, International Paper Company and Plainfield Special Situations Master Fund Limited. The extension, the Debtors say, will give them ample time to make fully-informed decisions in removing of each pending prepetition action and will assure that they don't forfeit valuable rights under Section 1452. Headquartered in Hamilton, Ohio, Premium Papers Holdco, LLC -- http://www.smartpapers.com/-- is an independent manufacturer and marketer of a wide variety of premium coated and uncoated printing papers, such as Kromekote, Knightkote, and Carnival. The Company and its debtor-affiliates, SMART Papers LLC and PF Papers LLC, filed for chapter 11 protection on March 21, 2006 (Bankr. D. Del. Case No. 06-10269). Ian S. Fredericks, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represents the Debtors. Mary E. Seymour, Esq., at Lowenstein Sandler PC, represents the Official Committee of Unsecured Creditors. Traxi LLC serves as the Debtors' financial advisor. When the Debtors filed for protection from their creditors, they listed unknown estimated assets and $10 million to $50 million estimated debts. PTX FLOORING: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: PTX Flooring Inc. 2701 128th Street Toledo, OH 43611 Bankruptcy Case No.: 06-33162 Type of Business: The Debtor is a wholesaler of home furnishing and a flooring contractor. Chapter 11 Petition Date: November 2, 2006 Court: Northern District of Ohio (Toledo) Judge: Richard L. Speer Debtor's Counsel: Raymond L. Beebe, Esq. Raymond L. Beebe Co., LPA 1107 Adams Street Toledo, OH 43604 Tel: (419) 244-8500 Fax: (419) 244-8538 Total Assets: $1,090,934 Total Debts: $912,071 Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Internal Revenue Services $220,559 Insolvency Group 3 1240 East 9th Street, Room 457 Cleveland, OH 44199 Floorlayers Local #248 Contributions $156,000 9270 East Arena Road Rossford, OH 43460 Ohio Department of Job and Taxes $39,714 Family Services 145 South Front Street Columbus, OH 43265-0836 Ryder Transportation Services Trade Debt $12,117 P.O. Box 96723 Chicago, IL 60693 ICI Paints Trade Debt $6,882 21033 Network Place Chicago, IL 60673-1210 Amtico International Inc. Trade Debt $5,039 Atlas Carpet Mills Inc. Trade Debt $4,914 Home Depot Co. Trade Debt $4,907 Painters Union Local #7 Contributions $4,688 Kissoff Rayner Foos Kruse Trade Debt $4,567 City of Toledo Income Tax $4,181 Bishop Distributing Co. Trade Debt $3,906 Waste Management Services $3,662 NES Rentals Trade Debt $2,711 Florstar Sales Inc. Trade Debt $2,391 Wholesale Installation Supplies Trade Debt $1,677 Sylvania, Ohio Jordan Power Equipment Trade Debt $1,621 JJ Industries Trade Debt $1,566 Columbia Gas Utility Service $1,548 Wholesale Installation Supplies Trade Debt $1,534 Maumee, Ohio. QWEST COMMS: Sept. 30 Stockholders' Deficit Narrows to $2.576 Bil. ------------------------------------------------------------------ Qwest Communications International Inc. filed its financial statements for the third quarter ended Sept. 30, 2006, with the Securities and Exchange Commission on Oct. 31, 2006. Qwest reported solid third quarter results highlighted by higher revenue, strong growth in earnings, and nine consecutive quarters of year-over-year margin expansion. For the current quarter, Qwest reported net income of $194 million compared with a loss of $144 million in the third quarter 2005. "We are very pleased that Qwest continues to gain momentum with its third quarter of sequential improvement in earnings per share," Qwest chairman and chief executive officer Richard C. Notebaert said. "Customers are embracing our higher-value, higher ARPU products that contribute to our revenue while our cost structure and investments remain focused and rational." Financial Results Qwest reported revenue of $3.5 billion for the third quarter, benefiting from improving sales within Qwest's diverse portfolio of growth products, including high-speed Internet, advanced data products and digital voice service. Year-ago revenues included the impact of $52 million recognized in the third quarter of 2005 from a large government contract. "We continue to deliver on our expectations for the year," Qwest vice chairman and chief financial officer Oren G. Shaffer said. "Our margins continue to expand toward our target of the mid-30% range, our free cash flow is squarely on track for the year, and we continue to pursue additional opportunities to expand top-line growth." Qwest's operating expenses declined 6.3% to $3.1 billion for the third quarter of 2006, compared with the third quarter of 2005, as a result of improvements in productivity and operating efficiencies, lower facility costs and lower depreciation. Operating expense in the third quarter of 2006 included $43 million of severance charges as productivity improvements outpaced normal attrition levels. Qwest's adjusted EBITDA margins increased to 32.5% in the third quarter, excluding severance charges, marking the ninth consecutive quarter of year-over-year margin expansion. This represents a 390 basis point improvement from the third quarter a year ago, after adjusting for $26 million of real estate realignment in the year ago quarter, and up 60 basis points sequentially. Net income for the quarter improved to $194 million from a loss of $144 million in the year-ago quarter. The current quarter includes a benefit of $92 million from a tax-sharing settlement and a severance charge of $43 million. Cash Flow, Capital Spending, and Interest The company generated solid free cash flow of $358 million in the quarter resulting from continued improvement in operating results and lower debt levels. Free cash flow year-to-date totaled $803 million before one-time items, which is nearly 70% higher than the same period in 2005. Qwest continues to expect free cash flow of $1.35 billion to $1.5 billion in 2006 compared with $904 million in 2005 (both before one-time payments). Third-quarter capital expenditures totaled $394 million, compared with $445 million in the third quarter of 2005 with a continued focus on the proportion spent on broadband to enable higher speeds and footprint expansion. Capital spending in 2006 is expected to approximate the 2005 level as the company continues to focus on support for the highest service levels and disciplined investment in key growth areas, which includes approximately 40% of wireline spending focused on broadband. Interest expense totaled $291 million for the third quarter, compared to $384 million in the year-ago quarter, which is on track with the company's expectation for a $300 million reduction in annual interest expense resulting from its retirement of high coupon, legacy debt and lower debt levels. Balance Sheet Update In its effort to continue to improve the balance sheet and free cash flow, Qwest reduced total net debt (gross debt less cash and short-term investments) to $13.7 billion, down $800 million since year-end 2005. The company maintained strong liquidity with cash and short-term investments of $1.2 billion at the end of the quarter. At Sept. 30, 2006, the company's balance sheet showed $21.114 billion in total assets and $23.690 billion in total liabilities, resulting in a $2.576 billion stockholders' deficit. The company had a $2.826 billion deficit at June 30, 2006. The company's Sept. 30 balance sheet also showed strained liquidity with $3.575 billion in total current assets and $5.144 billion in total liabilities. Bundles Since the launch of new bundles in 2005, Qwest has experienced measurable success in growing the number of customers who subscribe to more than one service. Qwest's full-featured bundled offering includes digital voice, high-speed Internet access, a national wireless offering and integrated TV services through Qwest's own ChoiceTV or its marketing alliance with DIRECTV, Inc. The company's bundle penetration increased to 56% in the quarter, compared with 50% a year ago. Sales of voice packages plus three or four products continue to drive significant growth. Customer demand for value-added services is driving higher consumer ARPU, which increased 7% to $50 from $47 a year ago. Customer Connections The company continues to see growth from customer connections as a result of bundling and localized sales initiatives. Qwest's customer connections, which include consumer and small-business primary and secondary access lines, high-speed Internet subscribers, wireless, and video customers, grew 121,000 sequentially and 344,000 from the year ago quarter, marking the fourth consecutive quarter of year-over-year increases. Strong results in bundle subscriber additions and customer connections were partially offset by year-over-year total retail line losses of 5.1%, excluding 32,000 affiliate disconnects in the prior year. High-Speed Internet Qwest High-Speed Internet continued to show robust growth for the quarter. As a result, mass markets data and Internet revenues increased 10% sequentially and 42% year-over-year. Qwest benefited from strong demand, particularly in the conversion of customers from dial-up to broadband and migration to higher-speed offerings. The company added over 175,000 high-speed Internet lines in the third quarter. This represents a 10% increase sequentially and a 47% increase year-over-year in total subscribers. This month, the company reached total subscribers of 2 million -- a key milestone. In July, Qwest launched the "Price for Life" promotion that offers Qwest ChoiceTM DSL Deluxe (1.5 Mbps) for new customers who sign a two-year term commitment, a fixed price for life (unless they terminate, change service or change ISPs). Due to the strong response to this promotion, Qwest expanded "Price for Life" in October to new Qwest Choice DSL Premium (3-5 Mbps) customers. Qwest continued to invest in its high-speed Internet footprint as well as increase the speeds available to customers. Currently, 82% of Qwest's households are eligible for broadband services, up from approximately 67% at the end of 2004 with growing focus on increasing speeds to the footprint. Digital Voice Last quarter, the company launched its "digital voice" campaign to promote Qwest's reliable, high-quality, integrated local and long- distance services. Qwest's digital voice penetration, which is long-distance subscribers as a percent of retail local lines, expanded to 39% from 36% a year ago. Wireless Wireless revenue grew 3% compared to the prior year, driven by promotions and successful bundling efforts. Qwest continues to benefit from wireless in the bundle with approximately 75% of wireless subscribers on an integrated bill with at least one other service. The company's wireless subscriber base totaled 781,000 for the quarter. During the quarter, Qwest introduced two new wireless handsets - the Samsung A920 and the ultra-thin Sanyo 6600 Katana. The A920 includes Music on Demand and full-track music downloading through the Qwest music store. Both the A920 and the Katana handsets support some of the most advanced wireless technologies, including global positioning system (GPS) navigation and Bluetoothr capabilities. DIRECTV(R) Alliance Total DIRECTV subscribers reached 311,000 in the quarter with customers growing more than 45% from the second quarter and more than 3x from a year ago. Qwest and DIRECTV's strategic relationship allows Qwest to offer DIRECTV digital satellite television services to residential customers across the entire Qwest 14-state region. In August, the company in coordination with DIRECTV, launched the "Qwest Football Bundle" -- Qwest High-Speed Internet service, digital voice (unlimited local and long-distance service) and DIRECTV programming, including its college football and exclusive professional football package subscriptions, just in time for the football season. Enterprise and Wholesale Enterprise and Wholesale channels continue to be driven by strong demand in data and Internet services. Qwest continues to advance its MPLS-based capabilities, VoIP and iQ suite of services in the marketplace driving strong volumes. Enterprise growth products continue to gain traction representing over 20% of business revenue and growing at nearly 30% on an annualized basis, excluding the impact of the large government contract in the prior year. During the quarter, Qwest closed its acquisition of OnFiber Communications, Inc., an Austin, Texas-based provider of custom- built and managed metropolitan Ethernet and wide-area networks. OnFiber operates an all-optical network in 23 metropolitan areas across the nation and features a full offering of access and transport services. Also in this quarter, Qwest announced new or expanded networking and voice and data agreements with Buca, Inc., the State of Minnesota, USDA Forest Service, OpSource, C&D Technologies, Brooke Corporation, and Affiliated Computer Services (ACS). The company's wholesale channel continued to drive growth and improve efficiency in delivering services to customers. Wholesale long-distance revenue grew 6.1% year over year, continuing to benefit from its focus on growth customers including cable, wireless and VoIP providers. In the current quarter, Qwest added Qwest IP Voice 8xx Origination and Qwest Wholesale Hosted VoIP services to its suite of VoIP solutions, giving wholesale customers a one-stop shop for all their VoIP needs. Customer Service Qwest continues to make measurable improvements toward the goal of providing best-in-class customer service. In the consumer business, J.D. Power and Associates recently released the second wave results for its 2006 Internet Service Provider Residential Customer Satisfaction survey. The results showed improvement for Qwest in every category, with overall high-speed Internet satisfaction up nearly 6% since the first wave earlier this year. In addition, Qwest technicians continue to be ranked higher than the industry average in all areas. The results demonstrate Qwest employees' commitment to further improve customer satisfaction. Awards In October, Atlantic-ACM, a research consultancy serving the telecommunications and information industries, published survey results that ranked Qwest's wholesale channel No. 1 in the industry for provisioning and customer service. In addition, Qwest earned four Metro Carrier Excellence Awards for its local voice, transport, SONET, and direct Internet connection services. Full-text copies of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?1468 Based in Denver, Colorado, Qwest Communications International Inc. (NYSE: Q) -- http://www.qwest.com/-- provides high-speed Internet, data, video and voice services. With approximately 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. * * * As reported in the Troubled Company Reporter on Oct. 27, 2006, 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. As reported in the Troubled Company Reporter on Aug. 3, 2006, Moody's Investors Service placed the B1 corporate family rating of Qwest Communications International Inc. and related entities on review for possible upgrade based on better than expected free cash flow in 2006 and through the first half of 2007 coupled with unexpected revenue strength. In particular, Qwest's ability to grow revenues and slow the cash burn at Qwest Communications Corp. has exceeded Moody's expectations and offset softness in Qwest's incumbent wireline revenue due to access line erosion. REGENCY GAS: 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 broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its B1 corporate family rating on Regency Gas Services LP. 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 ---------- ------- ------- ------ ---------- Sr. Sec. Revolving Credit Facility due 2011 B1 B1 LGD 3 33% Sr. Sec. Term Loan due 2013 B1 B1 LGD 3 33% 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%). Regency Gas Services LP -- http://www.regencygas.com/-- is a mid- stream natural gas service company headquartered in Dallas, Texas. The Company has assets consisting of approximately 3,000 miles of pipelines, 115,000 horsepower of compression and five gas- processing plants with aggregate processing capacity of 330 million cubic feet of gas. RELIANCE NATIONAL: Permanent Injunction Hearing Set on December 12 ------------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York rescheduled Reliance National Insurance Company (Europe) Limited's hearing at 10:00 a.m., on Dec. 12, 2006, to consider whether a permanent injunction pursuant to Section 105 and 304(b) of the Bankruptcy Code should be granted. As reported in the Troubled Company Reporter on Mar. 10, 2006, the hearing was previously scheduled on Feb. 27, 2006. Headquartered in London, England, National Insurance Company (Europe) Limited is a wholly owned subsidiary of Omni Whittington Investments (Guernsey) Limited. Whittington is an indirect, wholly owned subsidiary of Omni Whittington Group B.V. The Debtor underwrote insurance business primarily in Europe. The Debtor did not write business directly in the U.S., however, it has more than 700 U.S. policyholders. The Debtor provided insurance and reinsurance to corporate entities and insurance companies. Richard Paul Whatton, in his capacity as the Debtor's Foreign Representative, filed a Section 304 Petition on Oct. 13, 2005 (Bankr. S.D.N.Y. Case No. 05-46232). Kenneth P. Coleman, Esq., Stephen Doody, Esq., and Kelle Gagne, Esq., at Allen & Overy LLP, represent Mr. Whatton. As of Dec. 31, 2004, the Debtor reported assets totaling GBP184,015,000 and debts totaling GBP165,011,000. SAINT PAUL: Case Summary & Two Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Saint Paul Plaza Office Building, LLC 5817 Allentown Way Temple Hills, MD 20748 Bankruptcy Case No.: 06-16999 Chapter 11 Petition Date: November 5, 2006 Court: District of Maryland (Greenbelt) Judge: Wendelin I. Lipp Debtor's Counsel: Stanton J. Levinson, Esq. P.O. Box 1746 Silver Spring, MD 20915 Tel: (301) 649-7888 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's Two Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ King's Kids Child Unsecured Note $250,000 Development Center, LLC 5817 Allentown Way Temple Hills, MD 20748 Fortress Information Unsecured Note $24,500 Technologies, LLC 3011 Courtside Road Bowie, MD 20721 SEA CONTAINERS: Court Allows Payment of Employee Obligations ------------------------------------------------------------ Sea Containers, Ltd. and its debtor-affiliates obtained permission from the Honorable Kevin J. Carey of the U.S. Bankruptcy Court for the District of Delaware to continue paying in the ordinary course any and all prepetition amounts relating to their employee obligations, with no payment to exceed the statutory cap under Section 507(a)(4) and 507(a)(5). Sea Containers Services, Ltd. is authorized, but not directed, to continue to pay any unpaid prepetition monthly contribution relating to the Employee Pension Schemes and the Pension Allowance. Specifically, the Debtors had asked the Court for permission to: (a) pay all prepetition Employee wages and salaries; (b) reimburse all prepetition Employee Business expenses; (c) continue prepetition benefit programs; (d) make all payments for which prepetition payroll deductions were made; (e) pay processing costs and administrative expenses relating to the payments; and (f) make payments to third parties incidental to the payments. The Debtors asked the Court to authorize, but not require, them to pay any outstanding accrued and unpaid Employee Wages and Benefits up to $10,000 in the aggregate to any individual Employee in the ordinary course of business, pursuant to Section 507(a)(4) of the Bankruptcy Code. The Debtors also asked the Court to authorize and direct applicable banks and other financial institutions to receive, process, honor, and pay all prepetition checks and transfers drawn on their payroll accounts to make the payments. The Debtors' average aggregate monthly compensation over the past 12 months for their Employees, including wages, salaries, and bonuses, is approximately $1,810,701. The Debtors do not believe they owe any prepetition employee salaries and wages because they processed their October payroll just before filing for bankruptcy. But, the Debtors say, it is possible that some Employees may not have been paid all of their outstanding Prepetition Salaries because, among other reasons: (a) some discrepancies may exist, which resolution may reveal that additional amounts are owed to Employees; (b) overtime and additional shifts may not have been processed; or (c) some payroll checks issued prepetition may not have been presented or cleared as of the Petition Date. The Debtors reimburse expenses incurred in the ordinary course of their business on a monthly basis. These expenses include meal, travel, and other business-related expenses. Some employees use corporate charge cards issued by the Debtors. The Debtors believe that they have paid all outstanding balances due in respect of the Reimbursable Expenses as of the Petition Date. The Debtors routinely deduct certain amounts from paychecks, including, without limitation: (a) garnishments, child support, and similar deductions; (b) deductions for voluntary charitable contributions; (c) deductions for employee contributions to pension schemes; (d) private medical insurance; and (e) other pre-tax and after-tax deductions payable pursuant to certain Employee benefit plans. The Debtors forward the deducted amounts to various third party recipients. The Debtors believe that they have forwarded the Deductions to the appropriate third party recipients. The Debtors are also required by law to withhold from an Employee's wages amounts related to, among other things, pay as you earn income tax and Employees National Insurance Contribution for remittance to the appropriate taxing authority. The Debtors are also required by law to contribute an employer portion from their own funds for NIC, based on a percentage of gross payroll. The Debtors' Payroll Taxes, including both the employee and employer portion, for U.K. fiscal tax year 2005 -- April 1, 2005 to March 31, 2006 -- were approximately $11,200,000. On average, the Debtors remit approximately $936,253 per month to the taxing authorities on account of Payroll Taxes. The Debtors believe that, as of the Petition Date, they have paid all outstanding balances due in respect of the Payroll Taxes. Employee Benefits The Debtors provide their Employees, directly or indirectly, and in the ordinary course of business, with a number of employee benefits, including, but not limited to: (a) private medical insurance, (b) vacation, sick, holiday and leave pay, and (c) miscellaneous other employee benefits. The Debtors believe that as of the Petition Date, they have paid all outstanding balances in respect of the Medical and Health Coverage. The total annual cost to the Debtors for paid time-off, paid sick leave, and paid statutory public holidays is approximately $500,000. Before the Debtors filed for bankruptcy, Sea Containers Services, Ltd., maintained several pension schemes for the benefit of its Employees. It sponsors three active Employee Pension Schemes: (1) the Sea Containers Group Stakeholder Pension Plan; (2) the Sea Containers 1983 Pension Scheme; and (3) the Sea Containers 1990 Pension Scheme. Services is the principal participating employer under the 1983 Pension Scheme and 1990 Pension Scheme, while Sea Containers, Ltd., is not a participating employer or sponsor of any of the Employee Pension Scheme. The annual cost under the 1983 Pension Scheme is approximately $3,617,665. Under the 1990 Pension Scheme, the current annual contribution is $13,572. The Sea Containers Group Stakeholder Pension Plan is managed by Norwich Union. Services believes it does not owe any outstanding amount under the 1983 and 1990 Pension Schemes or the Sea Containers Group Stakeholder Pension Plan. Services also provides some Employees with a monthly pension allowance for the Employee to invest into their own individual pension scheme. The Debtors believe that if they don't honor their prepetition employee obligations, Employee morale and loyalty will be jeopardized at a time when their employees' support is critical. As for the Remittances, the Debtors and their Employees may face legal action if payments are not made. About Sea Containers Headquartered in Hamilton, Bermuda, Sea Containers Ltd. -- http://www.seacontainers.com/-- provides passenger and freight transport and marine container leasing. Registered in Bermuda, the company has regional operating offices in London, Genoa, New York, Rio de Janeiro, Sydney, and Singapore. The company is owned almost entirely by United States shareholders and its primary listing is on the New York Stock Exchange (SCRA and SCRB) since 1974. On Oct. 3, the company's common shares and senior notes were suspended from trading on the NYSE and NYSE Arca after the company's failure to file its 2005 annual report on Form 10-K and its quarterly reports on Form 10-Q during 2006 with the U.S. Securities and Exchange Commission. Through its GNER subsidiary, Sea Containers Passenger Transport operates Britain's fastest railway, the Great North Eastern Railway, linking England and Scotland. It also conducts ferry operations, serving Finland and Estonia as well as a commuter service between New York and New Jersey in the U.S. Sea Containers Ltd. and two subsidiaries filed for chapter 11 protection on Oct. 15, 2006 (Bankr. D. Del. Case No. 06-11156). Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they reported $1.7 billion in total assets and $1.6 billion in total debts. (Sea Containers Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., http://bankrupt.com/newsstand/or 215/945-7000) SEMGROUP LP: 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 broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its Ba3 corporate family rating on SemGroup, LP. 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 ---------- ------- ------- ------ ---------- 8.75% Sr. Unsec. Gtd. Global Notes due 2015 B1 B1 LGD5 79% Sr. Sec. Gtd. Revolving Credit Facility due 2010 Ba3 Ba2 LGD3 41% Sr. Sec. Gtd. Term Loan due 2010 Ba3 Ba2 LGD3 41% 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%). SemGroup, LP -- http://www.semgrouplp.com/-- is a midstream service company providing the energy industry means to move products from the wellhead to the wholesale marketplace. SemGroup provides diversified services for end users and consumers of crude oil, natural gas, natural gas liquids, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storing energy. SemGroup serves customers in the United States, Canada, Mexico and the United Kingdom. SFG LP: U.S. Trustee Schedules Creditors Meeting on November 24 --------------------------------------------------------------- The U.S. Trustee for Region 7 will convene a meeting of SFG L.P. and its debtor-affiliates' creditors on Nov. 24, 2006, 9:00 a.m., at Austin Room 118, Homer Thornberry Bldg., 903 San Jacinto in Austin, Texas. SFG LP -- http://sandiafood.com/-- operates as a franchisee and operator of "Johnny Carino's" restaurants in Texas, New Mexico and Arizona. The Company filed for chapter 11 protection on Aug. 4, 2006 (Bankr. W.D. Tex. Case No. 06-11207). When the Debtor filed for protection from its creditors, it estimated its assets and debts between $10 million and $50 million. Sandia Food Group, Inc., its general partner, filed for chapter 11 protection on Aug. 7, 2006 (Bankr. W.D. Tex. Case No. 06-11212). On Aug. 8, 2006, three more affiliates filed chapter 11 petitions in the same Court. On Oct. 23, 2006, the Debtors' consolidated chapter 11 cases were converted into chapter 7 proceeding (Bankr. W.D. Tex. Case No. 06- 11207). SHORE MEDICAL: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Shore Medical Inc. 1050 North Batavia Street, Unit C Orange, CA 92867-5542 Tel: (714) 628-9785 Bankruptcy Case No.: 06-12019 Type of Business: The Debtor manufactures and markets stethoscopes and stethographs. Chapter 11 Petition Date: November 3, 2006 Court: Central District Of California (Santa Ana) Judge: Erithe A. Smith Debtor's Counsel: Nanette D. Sanders, Esq. Ringstad & Sanders, LLP 2030 Main Street, Suite 1200 Irvine, CA 92714 Tel: (949) 851-7450 Estimated Assets: $500,000 to $1 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Vital Signs, Inc. Judgment $1,000,000 c/o Edward Zappia, Esq. 725 South Figueroa Street Suite 2500 Los Angeles, CA 90017-5408 Thermedia Commissions $16,000 301 East Wallace Kneeland Shelton, WA 98584 Betatherm Sensors Trade Debt $5,681 910 Turnpike Road Shrewsbury, MA 01545 Automated Packaging Trade Debt $5,503 P.O. Box 92485 Cleveland, OH 44193 Sensor Scientific Inc. Trade Debt $4,500 6 Kingsbridge Road Fairfield, NJ 07004 MDI Inc. Trade Debt $4,110 Blue Cross of California Trade Debt $2,645 Susquehanna Patriot Bank Trade Debt $1,810 Select Personnel Services Trade Debt $1,638 Exigent Corp. Trade Debt $1,427 Print-Pac Trade Debt $991 Sunridge Resources LLC Trade Debt $944 Peerless Trade Debt $583 ND Industries Inc. Trade Debt $505 Beacon Converters Inc. Trade Debt $380 Prudential Overall Supply Trade Debt $213 Uline Trade Debt $166 MDS Alarm Systems Trade Debt $92 Deco Tech Trade Debt $60 Orange Industrial Hardware Trade Debt $28 SOUTHERN NATURAL: Moody's Assigns Loss-Given-Default Rating ----------------------------------------------------------- In connection with Moody's Investors Service's implementation of its new Probability-of-Default and Loss-Given-Default rating methodology for the broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its Ba1 corporate family rating on Southern Natural Gas Company. Additionally, Moody's revised its Ba2 rating on the Company's Nts, 6.125% through 8.875%, due 2007 through 2032 to Ba1, and assigned and LGD3 loss-given-default rating, suggesting noteholders will experience a 35% 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%). Southern Natural Gas operates an 8,000-mile long natural gas pipeline, which serves major markets in the southeastern US. Its system, which has a storage capacity of about 60 billion cubic feet, is designed to process nearly 3 billion cubic feet of natural gas per day. Southern Natural Gas is a part of El Paso Corporation's Southern Pipeline Group. STATION CASINOS: S&P Assigns 'BB' Long-Term Corp. Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Station Casinos Inc., including its 'BB' long-term and 'B-2' short-term corporate credit ratings, on CreditWatch with negative implications. "The CreditWatch listing reflects softer and more competitive conditions in the Las Vegas 'locals' market, coupled with ongoing share repurchases at a time when the company's credit measures are weak for the ratings," Standard & Poor's credit analyst Michael Scerbo said. During third quarter earnings announcement, Station lowered its earnings guidance for the next several quarters based on its current operating momentum. In addition, the company's aggressive financial policy continued during the quarter, as it repurchased about $145 million in shares, bringing the year to date total to about $880 million. Given these factors, Station's credit measures have weakened materially as 2006 has progressed with pro forma total debt to EBITDA over 6.5x, a level that we consider as very weak for the current ratings. In resolving its CreditWatch listing, Standard & Poor's will assess Station's near- and intermediate-term operating and financial strategies regarding the pursuit of further debt- financed growth opportunities or incremental share repurchases. If the outcome of the analysis is a downgrade, it would likely be limited to one notch. STRIKEFORCE TECH.: Posts $778,483 Net Loss in 2006 Second Quarter ----------------------------------------------------------------- StrikeForce Technologies Inc. reported a $778,483 net loss on $127,750 of revenues for the second quarter ended June 30, 2006, compared with a $1,492,102 net loss on $3,724 of revenues for the comparable period in 2005. At June 30, 2006, the company's balance sheet showed $2,449,584 in total assets and $5,455,481 in total liabilities, resulting in a $3,005,897 stockholders' deficit. The company's balance sheet at June 30, 2006 also showed strained liquidity with $543,724 in total current assets available to pay $2,414,614 in total current liabilities. Full-text copies of the company's second quarter financial statements are available for free at: http://researcharchives.com/t/s?1464 Going Concern Doubt As reported in the Troubled Company Reporter on June 15, 2006, Massella & Associates, CPA, PLLC, in Syosset, New York, raised substantial doubt about StrikeForce Technologies' ability to continue as a going concern after auditing the company's consolidated financial statements for the year ended Dec. 31, 2005. The auditor pointed to the company's recurring losses from operations, deminimus revenues and working capital deficiency. About StrikeForce Technologies Headquartered in Edison, New Jersey, StrikeForce Technologies, Inc. -- http://www.sftnj.com/-- is a software development and services company. The company owns the exclusive right to license and develop various identification protection software products that were developed to protect computer networks from unauthorized access and to protect network owners and users from identity theft. SUPERIOR ENERGY: S&P Affirms 'BB' Corporate Credit Rating --------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit rating and its 'BB-' senior unsecured rating on Superior Energy Services Inc., and also assigned its 'BB+' senior secured rating and '1' recovery rating to Superior's $200 million term loan B. The outlook is stable. Harvey, La. based Superior, a provider of offshore well services, rental tools, and liftboat-based services primarily in the U.S. Gulf of Mexico and Gulf Coast markets, will have around $520 million of debt on a pro forma basis after this transaction. Proceeds from the $200 million term loan will be used to help fund the $358 million acquisition of Warrior Energy Services Corp., expected to close in fourth-quarter 2006. The balance of the acquisition price will be financed with the issuance of roughly 5.3 million shares of common stock. The ratings on Superior reflect its limited geographic diversification, highly cyclical markets, and a growing crude oil and natural gas production business, viewed as higher risk than the remainder of Superior's business portfolio. Solid financial measures, good cash flow generation, and moderate spending needs buffer these weaknesses. The stable outlook reflects the expectation that Superior will remain focused on its core services business. In addition, Superior is expected to continue to make opportunistic acquisitions, while maintaining a moderate financial policy. "If Superior increases its oil and gas production beyond its stated goal of 25% EBITDA, or if that segment exhibits greater- than-expected volatility, ratings would come under negative pressure," Standard & Poor's credit analyst Paul B. Harvey said. "However, if Superior can successfully expand away from the Gulf of Mexico and bolster its business risk profile, ratings could be raised over the medium to long term," Mr. Harvey continued. SUTTER CBO: Fitch Puts Dura-exposed CDOs on Rating Watch Negative ----------------------------------------------------------------- Fitch has placed one tranche from one public collateralized debt obligation and one tranche from a private CDO on Rating Watch Negative following Dura Automotive Corporation's filing for protection under Chapter 11. Fitch has identified eight European deals and 32 U.S. deals, with a total portfolio notional exposure to Dura of more than EUR2.588 billion ($3.235 billion) equivalent. Fitch will resolve the Rating Watch Negative status on all CDOs as and when final valuations for Dura in each transaction are made available. Transactions with synthetic exposure to Dura, which have not been placed on Rating Watch Negative, are expected to have sufficient credit enhancement to withstand the impact of Dura's default. In performing this analysis, Fitch applied a 25% recovery rate assumption for senior debt and assumed total loss for subordinate positions. These estimates were based on conservative market value estimates. The majority of the U.S. cash CDOs containing exposure to Dura are high-yield bond CDOs. They have already experienced rating downgrades due to the previous credit cycle downturn of 2001 and 2002. Dura's bankruptcy alone may not be sufficient to cause further rating volatility as excess spread and de-leveraging may offset the loss of par value. Fitch will review these transactions individually to determine the effect of the loss on each CDO. Fitch has placed these tranches on Rating Watch Negative: U.S. CDOs: Sutter CBO 1998-1 Ltd. --Class B 'B-/DR1'. ** One privately rated tranche from one European CDO was placed on Rating Watch Negative. TENNESSEE GAS: 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 broad energy midstream sector, encompassing companies that engage in the extraction, treating, transmission, distribution, and logistics for crude oil, natural gas, and other hydrocarbon products, the rating agency affirmed its Ba1 corporate family rating on Tennessee Gas Pipeline Company. 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 ---------- ------- ------- ------ ---------- Debs, 6.0% through 7.625%, due 2011 through 2037 Ba2 Ba1 LGD3 35% Nts, 8.375%, due 2032, Ba2 Ba1 LGD3 35% Moody's explains that current long-term credit ratings are opinions about expected credit loss, which incorporate both the likelihood of default and the expected loss in the event of default. The LGD rating methodology will disaggregate these two key assessments in long-term ratings. The LGD rating methodology will also enhance the consistency in Moody's notching practices across industries and will improve the transparency and accuracy of Moody's ratings as Moody's research has shown that credit losses on bank loans have tended to be lower than those for similarly rated bonds. Probability-of-default ratings are assigned only to issuers, not specific debt instruments, and use the standard Moody's alpha- numeric scale. They express Moody's opinion of the likelihood that any entity within a corporate family will default on any of its debt obligations. Loss-given-default assessments are assigned to individual rated debt issues -- loans, bonds, and preferred stock. Moody's opinion of expected loss are expressed as a percent of principal and accrued interest at the resolution of the default, with assessments ranging from LGD1 (loss anticipated to be 0% to 9%) to LGD6 (loss anticipated to be 90% to 100%). Tennessee Gas Pipeline -- http://www.tennesseeadvantage.com/-- is one of the five interstate pipelines that make up El Paso Corporation's Pipeline Group. Tennessee is comprised of approximately 14,200 miles and 1.4mm certificated horsepower. The pipeline stretches from the Mexican border to Canada. Tapping supply regions in the Gulf of Mexico, Texas, Appalachia, and Canada, the Tennessee system serves markets across the Midwest and mid-Atlantic regions, including major metropolitan centers such as Chicago, New York, and Boston. TOWER RECORDS: Wants to End Russell Solomon's Employment Pact ------------------------------------------------------------- MTS Incorporated, dba Tower Records, and its debtor-affiliates ask the Hon. Brendan Linehan Shannon of the U.S. Bankruptcy Court for the District of Delaware to end Russell Solomon's employment contract, The Associated Press reports. According to the report, Mr. Solomon, the founder and chairman emeritus of the Company, had enjoyed annual compensation of $400,000 in cash and $232,000 in notes. On Thursday, Tower Records' lawyers said no one protested the decision to sever the employment. Mr. Solomon, who led the music retailer for more than 40 years, also did not object to the request. Headquartered in West Sacramento, California, MTS, Inc., dba Tower Records -- http://www.towerrecords.com/-- is a retailer of music in the U.S., with nearly 100 company-owned music, book, and video stores. The Company and its affiliates previously filed for chapter 11 protection on Feb. 9, 2004 (Bankr. D. Del. Lead Case No. 04-10394). The Court confirmed the Debtors' plan on March 15, 2004. The Company and seven of its affiliates filed their second voluntary chapter 11 petition on Aug. 20, 2006 (Bankr. D. Del. Case Nos. 06-10886 through 06-10893). Richards, Layton & Finger, P.A. and O'Melveny & Myers LLP represent the Debtors. The Official Committee of Unsecured Creditors is represented by McGuirewoods LLP and Cozen O'Connor. When the Debtors filed for protection from their creditors, they estimated assets and debts of more than $100 million. The Debtors' exclusive period to file a chapter 11 plan expires on Dec. 18, 2006. TREY RESOURCES: Posts $638,899 Net Loss in 2006 Second Quarter --------------------------------------------------------------- Trey Resources, Inc. reported a $638,899 net loss on $1,568,772 of revenues for the quarter ended June 30, 2006, compared to a $334,203 net loss on $955,527 of revenues for the comparable period in 2005. At June 30, 2006, the company's balance sheet showed $3,273,249 in total assets and $5,633,253 in total liabilities, resulting in a $2,360,004 stockholders' deficit. The company's balance sheet also showed strained liquidity with $1,679,463 in total current assets available to pay $2,838,258 in total current liabilities. Full-text copies of the company's second quarter financial statements are available for free at: http://researcharchives.com/t/s?1460 Going Concern Doubt Bagell, Josephs, Levine & Company, LLC, expressed substantial doubt about Trey Resources, Inc.'s ability to continue as a going concern after auditing the company's financial statements for the year ended Dec. 31, 2005. The auditing firm pointed to the company's substantial accumulated deficits and operating losses. About Trey Resources With principal offices and facilities at Livingston, New Jersey, Trey Resources, Inc. are business consultants for small and medium sized businesses and value-added resellers and developers of financial accounting software. The company also publishes its own proprietary EDI software. The sale of the company's financial accounting software is concentrated in the northeastern United States, while their EDI software and programming services are sold to corporations nationwide. UNITED RENTALS: Earns $95 Million in 2006 Third Quarter ------------------------------------------------------- United Rentals Inc. filed its financial statements for the third quarter ended Sept. 30, 2006, with the Securities and Exchange Commission on Oct. 31, 2006. At Sept. 30, 2006, the Company's balance sheet showed $5.488 billion in total assets, $3.987 billion in total liabilities, and $1.501 billion in total stockholders' equity. Total revenues of $1.070 billion for the third quarter increased 9.3% from the third quarter 2005. Third quarter net income of $95 million increased 25% from $76 million for the third quarter 2005. Same-store rental revenues increased 3.5% from the third quarter 2005, and dollar utilization was essentially flat at 72.2%. Free cash flow for the third quarter was $135 million after total capital expenditures of $192 million. Free cash flow is a non-GAAP measure. The company expects to generate $3.95 billion in total revenues in 2006, and raised its outlook for free cash flow to $175 million after total capital expenditures of approximately $955 million. Third Quarter 2006 Financial Highlights For the third quarter 2006 compared with last year's third quarter: -- Return on invested capital improved 2.3 percentage points to 13.0%. -- Rental rates increased 5.1%. -- SG&A expenses improved 1.2 percentage points to 15.3% of revenues. -- Operating income of $216 million increased 25%. -- Free cash flow generation was $135 million compared with negative free cash flow of $62 million. -- Contractor supplies sales increased 23% to $109 million. The size of the rental fleet, as measured by the original equipment cost, was $4.1 billion and the age of the rental fleet was 38 months at Sept. 30, 2006, compared with $3.9 billion and 40 months at year-end 2005, and $4 billion and 39 months at Sept. 30, 2005. Cash flow from operations was $237 million for the third quarter 2006 compared with $96 million for the same period last year. After total rental and non-rental capital expenditures of $192 million, free cash flow for the third quarter 2006 was $135 million compared with negative free cash flow of $62 million for the same period last year. First Nine Months Results Net income, including the second and third quarter charges totaling $9 million, increased 24% to $171 million for the first nine months 2006 from $138 million for the first nine months 2005. Total revenues of $2.91 billion for the first nine months 2006 increased 12.0% from the first nine months 2005. After total rental and non-rental capital expenditures of $851 million compared with $736 million for the first nine months 2005, free cash flow for the first nine months 2006 was $19 million compared with negative free cash flow of $83 million for the same period last year. Net debt, which represents debt plus subordinated convertible debentures less cash, of $2.82 billion at Sept. 30, 2006, decreased $19 million from Dec. 31, 2005, and $190 million from Sept. 30, 2005. CEO Comments and Outlook Wayland Hicks, chief executive officer for United Rentals, said, "The combination of improved rental rates and excellent profit flow-through resulted in our continued strong performance in the quarter. We also continued our strong contractor supplies growth, improved our SG&A expense ratio and increased our operating margin to more than 20%. "The investments we have been making to take advantage of the growth opportunities in our markets are paying off in the form of free cash flow generation, debt reduction and return on invested capital improvement." Hicks also said, "We remain focused on driving revenue growth, improving our margins and increasing our return on capital. For the full year 2006, after absorbing the impact of the second and third quarter items, we are adjusting our outlook range for diluted earnings per share to $2.12 to $2.22 on total revenue of $3.95 billion and increasing our outlook for free cash flow to $175 million." Return on Invested Capital Return on invested capital was 13.0% for the 12 months ended Sept. 30, 2006, an improvement of 2.3 percentage points from the same period a year ago. The company's ROIC metric uses operating income for the trailing 12 months divided by the averages of stockholders' equity, debt, and deferred taxes, net of average cash. The company reports ROIC to provide information on the company's efficiency and effectiveness in deploying its capital and improving shareholder value. Segment Performance The company's financial reporting segments are general rentals; trench safety, pump and power; and traffic control. General Rentals The general rentals segment includes rental of construction, aerial, industrial and homeowner equipment, as well as related services and activities. Third quarter 2006 revenues for general rentals were $921 million, an increase of 9.1% compared with $844 million for the third quarter 2005. Rental rates for the third quarter increased 5.3% and same-store rental revenues increased 3.3% from the same period last year. Operating income for general rentals was $190 million for the third quarter, an increase of 21.8% compared with $156 million for the same period last year. First nine months 2006 revenues for general rentals were $2.54 billion, an increase of 11.8% compared with $2.27 billion for the first nine months 2005. Operating income for general rentals was $414 million for the first nine months, an increase of 18.3% compared with $350 million for the same period last year. General rentals segment revenues represented 87% of total revenues for the first nine months 2006. Trench Safety, Pump and Power The trench safety, pump and power segment includes rental of steel trench shields and shoring, pumps, temporary power and climate control equipment, as well as related services and activities. Third quarter 2006 revenues for trench safety, pump and power of $62 million, including a rental rate increase of 2.9%, represent an increase of 19.2% compared with $52 million for the third quarter 2005. Operating income for trench safety, pump and power was $18 million for the third quarter, unchanged from the same period last year, reflecting the impact of start up costs related to seven new branch locations. First nine months 2006 revenues for trench safety, pump and power were $166 million, an increase of 27.7% compared with $130 million for the first nine months 2005. Operating income for trench safety, pump and power was $44 million for the first nine months, an increase of $9 million from the same period last year. Traffic Control The traffic control segment includes rental of equipment used for traffic management, as well as related services and activities. Third quarter 2006 revenues for traffic control were $87 million, an increase of $4 million from the third quarter 2005. Operating income for traffic control was $8 million for the third quarter compared with an operating loss of $1 million for the same period last year. First nine months 2006 revenues for traffic control were $209 million, an increase of 4.5% compared with $200 million for the first nine months 2005. Traffic control had an operating loss of $4 million for the first nine months 2006 compared with an operating loss of $14 million for the first nine months 2005. Third Quarter 2006 Charges The third quarter 2006 results include debt prepayment charges of $6 million pre-tax related to the retirement of $63 million of subordinated convertible debentures in connection with the QUIPs redemption and a $400 million prepayment of the term loan. Status of the SEC Inquiry The previously announced SEC inquiry of the company is ongoing. The company is continuing to cooperate fully with the SEC. As previously stated, the inquiry appears to relate to a broad range of the company's accounting practices and is not confined to a specific period. Full-text copy of the Company's third quarter financials are available for free at http://ResearchArchives.com/t/s?146e Greenwich, Conn.-based United Rentals Inc. (NYSE: URI) -- http://unitedrentals.com/-- is an equipment rental company, with an integrated network of more than 760 rental locations in 48 states, 10 Canadian provinces, and Mexico. The company's 13,900 employees serve construction and industrial customers, utilities, municipalities, homeowners and others. The company offers for rent over 20,000 classes of rental equipment. United Rentals is a member of the Standard & Poor's MidCap 400 Index and the Russell 2000 Index(R). * * * As reported in the Troubled Company Reporter on Sept. 12, 2006, Moody's Investors Service upgraded the ratings of United Rentals Inc. -- corporate family rating to B1 from B2; senior secured to B1 from B2; senior unsecured to B2 from B3; senior subordinate to B3 from Caa1; quarterly income preferred securities to Caa1 from Caa2; and, speculative grade liquidity rating to SGL-2 from SGL-3. Moody's said the rating outlook is stable. As reported in the Troubled Company Reporter on Aug. 29, 2006, Standard & Poor's Ratings Services removed the ratings, including its 'BB-' corporate credit rating, on equipment rental company United Rentals (North America) Inc. and on its parent, United Rentals Inc., from CreditWatch with developing implications. UNUMPROVIDENT CORPORATION: Moody's Changes Outlook to Negative -------------------------------------------------------------- Moody's Investors Service changed the outlook on UnumProvident Corporation's debt ratings, as well as the Baa1 insurance financial strength ratings of the company's U.S. life insurance subsidiaries to negative from stable. Commenting on the change in UnumProvident's outlook, Moody's cited the third quarter $325 million pre-tax charge in connection with the disability claims reassessment process. This charge, in addition to the first quarter 2006 charge of $86 million, more than tripled the original reserves of $202 million set aside at the end of 2004 and the beginning of 2005 to cover the multi-state and the California claims processing settlements. The new charge stems from the company's prior inaccurate assessment of the level of claims requiring remediation. Because the process is continuing, Ann Perry, Moody's Vice President and Senior Credit Officer, noted that "Moody's is concerned that current estimates of re-opened claims may prove inadequate, and additional reserves may be required. Furthermore, the California and multi-state regulatory settlements could continue to put pressure on expenses and profits as UnumProvident changes its policy provisions and policy claims handling procedures for current business to comply with the agreements." Perry added that absence of additional one-time charges, including those related to the claims settlement agreements, had been incorporated into the company's current rating. In addition, the rating agency said that it believes that the company will not achieve a group benefit loss ratio of 92% in its group protection business by the fourth quarter of 2006. According to Perry, "although the benefit ratio had improved somewhat since the beginning of 2006, progress on restoring profitability to the company's core group protection business was slower that anticipated. Improvement in the group benefit ratio to 92% by the end of 2006 had been incorporated into Moody's rating expectations." The rating agency indicated that the change in outlook also reflects the company's earnings interest coverage, and the likelihood that UnumProvident's earnings interest coverage for 2006 was likely to decline to just over 3x, lower than the rating agency's expectation of 4 to 6x. On the positive side, Moody's noted that the company had shown improvement in recent years in several of its key financial metrics including lower financial leverage, stronger cash flow interest coverage and earnings interest coverage ratios, and stronger consolidated risk based capital ratio. Moody's said that the factors that could lead to a stable outlook included the following: -- ultimate costs for the disability claims assessment process that are within the company's published range of expectations; -- continued improvement in GAAP and statutory profitability and reduced volatility of earnings; -- adjusted financial leverage of less than 30%; -- sustained consolidated NAIC RBC, including captive reinsurers, of at least 300%; and, -- cash flow interest coverage of at least 3-4x. The rating agency noted that UnumProvident's rating could be lowered -- if the company experiences a negative impact to its franchise, hurting sales, customer retention, or distribution loyalty as a result of financial or competitive issues; -- if profitability, measured by ROE deteriorates below 5%, either because of reduced operating profitability or increased charges; -- if the capital position, or risk profile of the remaining businesses deteriorates as a result of capital redeployment of "freed-up" capital associated with structured transactions; -- if consolidated RBC, including captive reinsurers, drops below 275%; if adjusted financial leverage exceeds 35%; or, -- cash flow interest coverage falls below 3x. The outlook on the ratings changed to negative: * UnumProvident Corporation: -- Senior unsecured debt at Ba1; -- subordinated shelf at (P) Ba2; -- preferred shelf at (P) Ba3; * UNUM Corporation: -- Senior unsecured debt at Ba1; * Provident Companies, Inc.: -- Senior unsecured debt at Ba1; * Provident Financing Trust I: -- Preferred stock at Ba2; * Provident Financing Trusts II/III: -- Backed preferred shelf at (P) Ba2; * UnumProvident Finance Company plc: -- Senior unsecured debt at Ba1; * UNUM Life Insurance Company of America: -- Insurance financial strength at Baa1; * First UNUM Life Insurance Company: -- Insurance financial strength at Baa1; * Colonial Life & Accident Insurance Company: -- Insurance financial strength at Baa1; * Provident Life and Accident Insurance Co.: -- Insurance financial strength at Baa1; * Paul Revere Life Insurance Company: -- Insurance financial strength at Baa1; * Paul Revere Variable Annuity Insurance Co.: -- Insurance financial strength at Baa1. Moody's last rating action on UnumProvident took place on May 23, 2006 when the rating agency changed the company's rating outlook to stable from negative. UnumProvident Corporation is headquartered in Chattanooga, Tennessee. At September 30, 2006, UnumProvident had total assets of $52 billion and total shareholders' equity of $7.6 billion. VISTEON CORP: Anticipates 900-Person Workforce Reduction -------------------------------------------------------- Visteon Corporation expects to reduce its salaried workforce by approximately 900 people, primarily in higher cost countries. A charge of up to $65 million is expected to be recorded in the fourth quarter of 2006, and the related costs will qualify for reimbursement from the escrow account. The company anticipates that this action will generate up to $75 million of annual savings when completed. Visteon says its three-year restructuring plan remains on track. In January of this year, the company announced plans to fix, sell or close 23 facilities, of which 11 were to be addressed in 2006. To date, the company has addressed seven of the 11 facilities. The company continues to evaluate alternatives and solutions for the remaining facilities, including divestitures, that yield acceptable returns to the company. In the third quarter, the company announced two additional restructuring actions that were not in the original plan. These actions were the announcement of the closure of Visteon's Chicago facility and the exit of its Vitro Flex glass joint venture. "We are making good progress implementing our restructuring activities," James F. Palmer, executive vice president and chief financial officer, said. "In addition to the original actions identified, we have addressed more facilities and announced plans to further reduce our salaried workforce to continue improving performance. We know we have to do more to meet our objectives, and we are taking the necessary actions." About Visteon Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. With corporate offices in the Michigan (U.S.); Shanghai, China; and Kerpen, Germany; the company has more than 170 facilities in 24 countries and employs approximately 50,000 people. * * * Standard & Poor's Ratings Services has lowered its long-term corporate credit rating on Visteon Corp. to 'B' from 'B+' and its short-term rating to 'B-3' from 'B-2'. These actions stem from the company's weaker-than-expected earnings and cash flow generation, caused by vehicle production cuts, inefficiencies at several plant locations, sharply lower aftermarket product sales, continued pressure from high raw material costs, and several unusual items that will impact 2006 results. VISTEON CORP: Posts $177 Million Net Loss in 2006 Third Quarter --------------------------------------------------------------- Visteon Corporation reported third quarter 2006 results that included a net loss of $177 million, an improvement over the third quarter 2005's net loss of $207 million. The company also reported continued progress in implementing its three-year plan, which includes restructuring, improving base operations and profitably growing its business. "Our third quarter results came under pressure due, in part, to significant reductions in vehicle production by a number of our customers. We are taking aggressive actions to resize the business in light of these declines, and we expect conditions to continue to be challenging for the remainder of the year and into 2007," Michael F. Johnston, chairman and chief executive officer, said. "Through the efforts of our employees around the world, we continued to make solid progress implementing our three-year plan which is key to positioning Visteon for the long-term." For third quarter 2006, product sales were $2.48 billion. Sales for the same period a year ago totaled $4.12 billion. Lower product sales were primarily due to the Oct. 1, 2005 transaction with Ford Motor Co. that transferred 23 Visteon facilities to Automotive Components Holdings, LLC, a Ford-managed business entity. Services sales for third quarter 2006 were $133 million; no sales for services were recorded in third quarter 2005. Nine-Month Results For the first nine months of 2006, product sales were $8.16 billion. More than half of the company's product sales were generated from customers other than Ford, demonstrating continued progress in diversifying Visteon's customer base. Sales for the same period a year ago totaled $14.11 billion, of which non-Ford sales were 35 percent. Product sales were lower by $5.95 billion, primarily due to the transfer of certain plants to ACH in October 2005. Services sales for the first nine months of 2006 were $416 million; no sales for services were recorded in the first nine months of 2005. Visteon's net loss of $124 million for the first nine months reflects cost savings net of customer price reductions, the financial benefit of the elimination of the plants transferred to ACH and lower depreciation and amortization expense. The results include $22 million of non-cash asset impairments related to the Company's restructuring actions and an extraordinary gain of $8 million associated with the acquisition of a lighting facility in Mexico, both of which were recognized in the second quarter of 2006. Also, as previously indicated, Visteon recognized a cumulative benefit of $72 million in the first half of 2006 related to the relief of post-employment benefits for Visteon salaried employees associated with two ACH manufacturing facilities transferred to Ford. For the first nine months of 2005, Visteon reported a net loss of $1.61 billion. These results included $1.18 billion of non-cash asset impairments and $18 million of restructuring expenses. New Business Wins During the first nine months of the year, Visteon was awarded new incremental business totaling nearly $1 billion, more than 20% of which will go into production in 2007. The company continues to win new business from a diverse range of customers around the world and across each of the company's key product lines of climate, electronics, including lighting, and interiors. "Our business wins highlight the strength of our global footprint, our innovation, the capability of our people and the growing diversification of our customer base," Donald J. Stebbins, president and chief operating officer, said. "Growing the business profitably and leveraging technology for our customers are key elements of our three-year plan." Financing Activities Free cash flow of negative $116 million for the quarter was an improvement of $137 million over third quarter 2005. For the first nine months of 2006, free cash flow was negative $223 million, compared with negative $25 million for the same period in 2005 in which Visteon received the benefit of accelerated payment terms from Ford as part of the funding agreement. During the third quarter, Visteon closed on a new U.S. secured five-year revolving credit facility with an aggregate availability of up to $350 million and a European accounts receivable securitization facility that provides for up to $325 million of funding for qualified trade receivables, both of which expire in 2011. These facilities replaced the company's multi-year secured revolving credit facility of $500 million that was to expire in June 2007. The completion of these financings, including the seven-year $800 million secured term loan closed earlier this year, provides Visteon with additional flexibility as it implements its three- year plan. Outlook The fourth quarter of 2006 is expected to be challenged by low production volumes from several key customers globally. Visteon currently estimates that its 2006 full year EBIT-R will be in the range of $40 million to $50 million, reflecting lower production levels and other cost pressures in the second half of the year. Additionally, the company currently expects free cash flow to be negative $100 million for full year 2006. Full year product sales are expected to be $10.9 billion. About Visteon Headquartered in Van Buren Township, Michigan, Visteon Corporation (NYSE: VC) -- http://www.visteon.com/-- is a global automotive supplier that designs, engineers and manufactures innovative climate, interior, electronic and lighting products for vehicle manufacturers, and also provides a range of products and services to aftermarket customers. With corporate offices in the Michigan (U.S.); Shanghai, China; and Kerpen, Germany; the company has more than 170 facilities in 24 countries and employs approximately 50,000 people. * * * Standard & Poor's Ratings Services has lowered its long-term corporate credit rating on Visteon Corp. to 'B' from 'B+' and its short-term rating to 'B-3' from 'B-2'. These actions stem from the company's weaker-than-expected earnings and cash flow generation, caused by vehicle production cuts, inefficiencies at several plant locations, sharply lower aftermarket product sales, continued pressure from high raw material costs, and several unusual items that will impact 2006 results. VISTEON CORP: Weak Earnings Cue S&P to Pare 'B+' Corp. Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Visteon Corp. to 'B' from 'B+' and its short-term rating to 'B-3' from 'B-2'. These actions stem from the company's weaker-than-expected earnings and cash flow generation, caused by vehicle production cuts, inefficiencies at several plant locations, sharply lower aftermarket product sales, continued pressure from high raw material costs, and several unusual items that will impact 2006 results. Visteon, a manufacturer of automotive components, has total debt of about $4 billion, including $1.7 billion of underfunded employee benefit obligations. The rating outlook is negative. Visteon has lowered its earnings and cash flow expectations for 2006 to its business challenges. Earnings, as measured by EBIT before restructuring costs, are expected to be $40 million to $50 million, down from previous expectations of $170 million to $200 million. Visteon now forecasts negative free cash flow at about $100 million, down from earlier expectations of positive $50 million of free cash flow. Lower vehicle production from the company's major customers account are a major factor, and had been expected by Standard & Poor's. But several other factors have combined to make the earnings and cash flow forecast significantly lower than our expectations. Included are these factors: -- Labor disruptions in Europe that have resulted in production inefficiencies and premium freight costs; -- A 25% drop in aftermarket sales to Ford Motor Co., and a rise in aftermarket production costs as the company shifts manufacturing to Mexico; -- Higher-than-expected materials costs as commodity prices remain high, volumes are low, and certain sub-suppliers experience financial distress; and, -- One-time financing and litigation costs. WAMU MORTGAGE: Moody's Rates Subordinate Certificates at B2 ----------------------------------------------------------- Moody's Investors Service assigned an Aaa rating to the senior certificates issued by WAMU Mortgage Pass-Through Certificates, Series 2006-AR15, and ratings ranging from Aa1 to B2 to the subordinate certificates in the deal. The securitization is backed by Washington Mutual Bank originated adjustable-rate, negatively amortizing Jumbo mortgage loans. The ratings are based primarily on the credit quality of the loans, and on the protection from subordination. Moody's expects collateral losses to range from 0.55% to 0.7%. Washington Mutual Bank will service the loans and Washington Mutual Mortgage Securities Corp. will act as master servicer. Moody's has assigned Washington Mutual Mortgage Securities Corp its servicer quality rating of SQ2+ as master servicer. These are the rating actions: * Washington Mutual Pass-Through Certificates, Series 2006- AR15 Cl. 1A, Assigned Aaa Cl. 1A-1B, Assigned Aaa Cl. 2A, Assigned Aaa Cl. 2A-1B, Assigned Aaa Cl. 2X-PPP, Assigned Aaa Cl. CA-1C, Assigned Aaa Cl. R, Assigned Aaa Cl. 1X-PPP, Assigned Aaa Cl. B-1, Assigned Aa1 Cl. B-2, Assigned Aa1 Cl. B-3, Assigned Aa1 Cl. B-4, Assigned Aa2 Cl. B-5, Assigned Aa2 Cl. B-6, Assigned Aa3 Cl. B-7, Assigned A1 Cl. B-8, Assigned A2 Cl. B-9, Assigned A3 Cl. B-10, Assigned Baa1 Cl. B-11, Assigned Baa3 Cl. B-12, Assigned Ba2 Cl. B-13, Assigned B2 WASHINGTON MUTUAL: Moody's Rates Subordinate Certificates at Ba1 ---------------------------------------------------------------- Moody's Investors Service assigned a Aaa rating to the senior certificates issued by the Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-AR9 Trust and ratings ranging from Aa1 to Ba1 to the subordinate certificates in the deal. The securitization is backed by SunTrust Mortgage Inc., Alliance Bancorp, Countrywide Home Loans, Inc., First Magnus Financial Corporation and various others originated adjustable-rate negative amortization Alt-A mortgage loans. The ratings are based primarily on the credit quality of the loans and on the protection from subordination. Moody's expects collateral losses to range from 1.1% to 1.3%. Washington Mutual Bank will service approximately 86.8% of the mortgage loans, and Countrywide Home Loans, Inc. will service the remaining 13.2% of the mortgage loans. Moody's has assigned Countrywide Home Loans, Inc. its top servicer quality rating of SQ1 as a primary servicer of prime loans. These are the rating actions: * Issuer: Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-AR9 Trust * Security: Washington Mutual Mortgage Pass-Through Certificates, WMALT Series 2006-AR9 Cl. 1-A, Assigned Aaa Cl. R, Assigned Aaa Cl. CA-1B, Assigned Aaa Cl. CA-1C, Assigned Aaa Cl. CX-1, Assigned Aaa Cl. 2-A, Assigned Aaa Cl. CX-2-PPP, Assigned Aaa Cl. B-1, Assigned Aa1 Cl. B-2, Assigned Aa1 Cl. B-3, Assigned Aa1 Cl. B-4, Assigned Aa1 Cl. B-5, Assigned Aa2 Cl. B-6, Assigned Aa3 Cl. B-7, Assigned A1 Cl. B-8, Assigned A2 Cl. B-9, Assigned A3 Cl. B-10, Assigned Baa1 Cl. B-11, Assigned Baa3 Cl. B-12, Assigned Ba1 WELD WHEEL: Court Okays Dinsmore & Shohl as Committee's Co-Counsel ------------------------------------------------------------------ The Honorable Jerry W. Venters of the U.S. Bankruptcy Court for the Western District of Missouri in Kansas City authorized the Official Committee of Unsecured Creditors appointed in Weld Wheel Industries Inc., and its debtor-affiliates' bankruptcy cases to retain Dinsmore & Shohl LLP as its co-counsel. As reported in the Troubled Company Reporter on Sept. 20, 2006, Dinsmore & Shohl will: a) advise the Committee with respect to its rights, duties and powers as an official unsecured creditors' committee; b) advise the Committee with respect to terms, conditions and documentation of financing agreements, cash collateral orders and related transactions; c) advise the Committee in connection with any potential sale of assets or businesses; d) investigate the nature and validity of liens asserted against Debtors' assets and to advise the Committee concerning the enforceability of said liens; e) investigate and advise the Committee with respect to the taking of such actions as may be necessary to collect and, in accordance with the applicable law, recover property for the benefit of the estates; f) prepare and submit on behalf of the Committee, among other things, all applications, motions, pleadings, orders, notices, schedules and other legal papers to be prepared and submitted in the Debtors' case, and to review the financial and other reports filed; g) advise the Committee and prepare responses to applications, motions, pleadings, notices and other documents that may be filed and served herein, on the Committee's behalf; h) counsel the Committee in connection with the formulation, negotiation and promulgation of a plan or plans of reorganization and related documents; i) appear on behalf of the Committee at all hearings scheduled before the Court; j) review pending litigation and evaluating and advising the Committee concerning appropriate actions to be taken under the circumstances; and k) represent the Committee, and perform all other legal services for the Committee that may be necessary. The hourly rates applicable to the attorneys and paralegals who will be representing the Committee in connection with the Debtors' chapter 11 cases are: Professional Hourly Rate ------------ ----------- Kim Martin Lewis, Esq. $440 John B. Persiani, Esq. $270 Donald W. Mallory, Esq. $245 Daniel Anstey, Esq. $160 Lisa M. Geeding $100 Ms. Lewis informed the Court that Dinsmore & Shohl represented Ormet Primary Aluminum Corporation, the largest unsecured creditor of the Debtors in other matters. Ormet had asked the firm to advise them regarding the Debtors' cases after these cases were filed and before the firm was selected as co-counsel for the Committee. Dinsmore & Shohl had advised the Committee of its connection with Ormet. The firm had also informed Ormet that it can no longer represent Ormet's interests with respect to the Debtors' chapter 11 cases. To the best of the Committee's knowledge and except as disclosed by Ms. Lewis, Dinsmore & Shohl does not hold or represent any interest adverse to Debtors' estates and is disinterested pursuant to Section 101(14) of the Bankruptcy Code. Kansas City, Missouri- based Weld Wheel Industries, Inc., nka XWW Inc. -- http://www.weldracing.com/-- manufactures forged alloy wheels to enhance the performance and appearance of racecars, off- road trucks, luxury pickups, SUV's, premium motorcars, customs, hot rods, and motorcycles. Weld Wheel and its two debtor- affiliates filed for Chapter 11 protection on Aug. 17, 2006 (Bankr W.D. Mo. Case No. 06-42105). Cynthia Dillard Parres, Esq., and Laurence M. Frazen, Esq., at Bryan Cave LLP, represent the Debtors. Lisa A. Epps, Esq., at Spencer Fane Britt & Browne LLP and Kim Martin Lewis, Esq., at Dinsmore & Shohl LLP represent the Official Committee of Unsecured Creditors. Mesirow Financial Consulting LLC gives financial advice to the Committee. When the Debtors sought protection from their creditors, they estimated assets and debts at $10 million to $50 million. YUKOS OIL: Rosneft Wins $24.5-Bln Loan Pledges From Bank Group -------------------------------------------------------------- OAO Rosneft Oil Co. received up to $24.5 billion in loan commitments from a bank consortium, which include Citigroup Inc. and Morgan Stanley, to finance the purchase of bankrupt OAO Yukos Oil Co.'s remaining assets, Cecile Gutscher and Todd Prince write for Bloomberg News. Bloomberg states that Rosneft has made no decision on borrowing, citing spokesman Nikolai Manvelov as saying. According to data compiled by Bloomberg, the financing would be the biggest-ever to a Russian company and the fourth largest for Europe. Bankers familiar with the deal told Bloomberg that: -- ABN Amro Holding NV, -- Barclays Plc, -- Credit Agricole SA's Calyon, -- Citigroup, -- Goldman Sachs Group Inc., -- JPMorgan Chase & Co., and -- Morgan Stanley have each offered $3.5 billion to Rosneft, which would be repaid with proceeds from debt and equity sales in 2007. The bankers said the lenders are offering Rosneft cheaper rates than it paid six months ago, with the funding split into parts maturing in six months, one year and 18 months, Bloomberg relates. The interest payments on the longer dated loans, Bloomberg adds, will increase if they're not repaid within a year. Sale Auction Yukos-RM CJSC President Sergey Tregub revealed that the assets of Yukos Oil may be auctioned off in April-May 2007, noting that the company is still under inventory procedure. "The procedure will be completed on Jan. 19. The results will be summarized in 45-50 days, upon which the tenders will be held. It will be in April-May roughly. The tenders will be open," Mr. Tregub was cited by AK&M as saying. As reported in the TCR-Europe on Oct. 26, Yukos's assets may be sold at a discount after a consortium of five appraisers assess the value of the company's properties. About Yukos Headquartered in Moscow, Yukos Oil -- http://yukos.com/-- is an open joint stock company existing under the laws of the Russian Federation. Yukos is involved in energy industry substantially through its ownership of its various subsidiaries, which own or are otherwise entitled to enjoy certain rights to oil and gas production, refining and marketing assets. The Company filed for Chapter 11 protection Dec. 14, 2004 (Bankr. S.D. Tex. Case No. 04-47742), but the case was dismissed on Feb. 24, 2005, by the Hon. Letitia Z. Clark. A few days later, the Government sold its main production unit Yugansk, to a little-known firm Baikalfinansgroup for US$9.35 billion, as payment for US$27.5 billion in tax arrears for 2000- 2003. Yugansk eventually was bought by state-owned Rosneft, which is now claiming more than US$12 billion from Yukos. On March 10, a 14-bank consortium led by Societe Generale filed a bankruptcy suit in the Moscow Arbitration Court in an attempt to recover the remainder of a US$1 billion debt under outstanding loan agreements. The banks, however, sold the claim to Rosneft, prompting the Court to replace them with the state- owned oil company as plaintiff. On April 13, court-appointed external manager Eduard Rebgun filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York (Bankr. S.D.N.Y. Case No. 06- 0775), in an attempt to halt the sale of Yukos' 53.7% ownership interest in Lithuanian AB Mazeikiu Nafta. On May 26, Yukos signed a US$1.49 billion Share Sale and Purchase Agreement with PKN Orlen S.A., Poland's largest oil refiner, for its Mazeikiu ownership stake. The move was made a day after the Manhattan Court lifted an order barring Yukos from selling its controlling stake in the Lithuanian oil refinery. On Aug. 1, the Hon. Pavel Markov of the Moscow Arbitration Court upheld creditors' vote to liquidate OAO Yukos Oil Co. and declared what was once Russia's biggest oil firm bankrupt. The expected court ruling paves the way for the company's liquidation and auction. * BOND PRICING: For the week of October 30 -- November 3, 2006 -------------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- ABC Rail Product 10.500% 12/31/04 0 Adelphia Comm. 3.250% 05/01/21 0 Adelphia Comm. 6.000% 02/15/06 1 Adelphia Comm. 7.500% 01/15/04 75 Adelphia Comm. 8.125% 07/15/03 71 Adelphia Comm. 9.500% 02/15/04 64 Allegiance Tel. 11.750% 02/15/08 45 Allegiance Tel. 12.875% 05/15/08 40 Amer & Forgn Pwr 5.000% 03/01/30 67 Amer Color Graph 10.000% 06/15/10 69 Antigenics 5.250% 02/01/25 64 Anvil Knitwear 10.875% 03/15/07 69 Archibald Candy 10.000% 11/01/07 0 ATA Holdings 13.000% 02/01/09 4 Atlantic Coast 6.000% 02/15/34 13 Autocam Corp. 10.875% 06/15/14 51 Bank New England 8.750% 04/01/99 5 Bank New England 9.500% 02/15/96 13 BBN Corp 6.000% 04/01/12 0 Budget Group Inc 9.125% 04/01/06 0 Burlington North 3.200% 01/01/45 58 Calpine Corp 4.750% 11/15/23 51 Calpine Corp 6.000% 09/30/14 43 Calpine Corp 7.625% 04/15/06 73 Calpine Corp 7.750% 04/15/09 73 Calpine Corp 7.750% 06/01/15 35 Calpine Corp 7.875% 04/01/08 75 Calpine Corp 8.500% 02/15/11 52 Calpine Corp 8.625% 08/15/10 52 Calpine Corp 8.750% 07/15/07 71 Calpine Corp 10.500% 05/15/06 74 Cell Therapeutic 5.750% 06/15/08 70 Central Tractor 10.625% 04/01/07 0 Chic East Ill RR 5.000% 01/01/54 57 Clark Material 10.750% 11/15/06 0 Collins & Aikman 10.750% 12/31/11 5 Comcast Corp 2.000% 10/15/29 41 Comprehens Care 7.500% 04/15/10 65 Cooper Standard 8.375% 12/15/14 74 Dal-Dflt09/05 9.000% 05/15/16 33 Dana Corp 5.850% 01/15/15 69 Dana Corp 6.500% 03/01/09 74 Dana Corp 6.500% 03/15/08 74 Dana Corp 7.000% 03/01/29 69 Dana Corp 7.000% 03/15/28 69 Dana Corp 9.000% 08/15/11 72 Delco Remy Intl 9.375% 04/15/12 44 Delco Remy Intl 11.000% 05/01/09 49 Delta Air Lines 2.875% 02/18/24 34 Delta Air Lines 7.700% 12/15/05 34 Delta Air Lines 7.900% 12/15/09 35 Delta Air Lines 8.000% 06/03/23 35 Delta Air Lines 8.300% 12/15/29 36 Delta Air Lines 9.250% 03/15/22 36 Delta Air Lines 9.250% 12/27/07 29 Delta Air Lines 9.750% 05/15/21 35 Delta Air Lines 10.000% 06/01/08 56 Delta Air Lines 10.000% 06/01/11 70 Delta Air Lines 10.000% 08/15/08 36 Delta Air Lines 10.060% 01/02/16 73 Delta Air Lines 10.125% 05/15/10 35 Delta Air Lines 10.375% 02/01/11 36 Delta Air Lines 10.375% 12/15/22 35 Delta Mills Inc 9.625% 09/01/07 23 Deutsche Bank NY 8.500% 11/15/16 72 Diamond Triumph 9.250% 04/01/08 71 Diva Systems 12.625% 03/01/08 1 Dov Pharmaceutic 2.500% 01/15/25 48 Drum Financial 12.875% 09/15/99 0 Dura Operating 8.625% 04/15/12 30 Dura Operating 9.000% 05/01/09 8 Duty Free Int'l 7.000% 01/15/04 0 DVI Inc 9.875% 02/01/04 8 Dyersburg Corp 9.750% 09/01/07 0 E.Spire Comm Inc 10.625% 07/01/08 0 E.Spire Comm Inc 13.750% 07/15/07 0 Eagle Family Food 8.750% 01/15/08 74 Empire Gas Corp 9.000% 12/31/07 1 Epix Medical Inc 3.000% 06/15/24 71 Exodus Comm Inc 10.750% 12/15/09 0 Exodus Comm Inc 11.625% 07/15/10 0 Fedders North AM 9.875% 03/01/14 63 Federal-Mogul Co. 7.375% 01/15/06 63 Federal-Mogul Co. 7.500% 01/15/09 65 Federal-Mogul Co. 8.160% 03/06/03 60 Federal-Mogul Co. 8.250% 03/03/05 61 Federal-Mogul Co. 8.330% 11/15/01 63 Federal-Mogul Co. 8.370% 11/15/01 60 Federal-Mogul Co. 8.370% 11/15/01 63 Federal-Mogul Co. 8.800% 04/15/07 65 Finova Group 7.500% 11/15/09 28 Ford Motor Co 6.625% 02/15/28 74 Ford Motor Co 7.125% 11/15/25 75 Ford Motor Co 7.400% 11/01/46 74 Ford Motor Co 7.700% 05/15/97 74 Ford Motor Co 7.750% 06/15/43 75 GB Property Fndg 11.000% 09/29/05 57 Golden Books Pub 10.750% 12/31/04 0 Graftech Int'l 1.625% 01/15/24 75 GST Network Fndg 10.500% 05/01/08 0 Gulf Mobile Ohio 5.000% 12/01/56 75 HNG Internorth 9.625% 03/15/06 38 Home Prod Intl 9.625% 05/15/08 71 Imperial Credit 9.875% 01/15/07 0 Inland Fiber 9.625% 11/15/07 63 Insight Health 9.875% 11/01/11 22 Iridium LLC/CAP 10.875% 07/15/05 24 Iridium LLC/CAP 11.250% 07/15/05 24 Iridium LLC/CAP 13.000% 07/15/05 24 Iridium LLC/CAP 14.000% 07/15/05 25 Isolagen Inc. 3.500% 11/01/24 74 IT Group Inc 11.250% 04/01/09 0 JTS Corp 5.250% 04/29/02 0 Kaiser Aluminum 9.875% 02/15/02 33 Kaiser Aluminum 12.750% 02/01/03 9 Kellstrom Inds 5.500% 06/15/03 0 Kellstrom Inds 5.750% 10/15/02 0 Kmart Corp 8.540% 01/02/15 28 Kmart Corp 9.350% 01/02/20 10 Kmart Funding 9.440% 07/01/18 23 Liberty Media 3.250% 03/15/31 72 Liberty Media 3.750% 02/15/30 62 Liberty Media 4.000% 11/15/29 67 Lifecare Holding 9.250% 08/15/13 63 Macsaver Financl 7.400% 02/15/02 5 Macsaver Financl 7.600% 08/01/07 5 Macsaver Financl 7.875% 08/01/03 5 Merisant Co 9.500% 07/15/13 63 MHS Holdings Co 16.875% 09/22/04 0 Movie Gallery 11.000% 05/01/12 65 MSX Int'l Inc. 11.375% 01/15/08 73 Muzak LLC 9.875% 03/15/09 62 New Orl Grt N RR 5.000% 07/01/32 69 Northern Pacific RY 3.000% 01/01/47 58 Northern Pacific RY 3.000% 01/01/47 58 Northwest Airlines 6.625% 05/15/23 62 Northwest Airlines 7.248% 01/02/12 20 Northwest Airlines 7.625% 11/15/23 62 Northwest Airlines 7.875% 03/15/08 63 Northwest Airlines 8.700% 03/15/07 64 Northwest Airlines 8.875% 06/01/06 63 Northwest Airlines 9.152% 04/01/10 7 Northwest Airlines 9.179% 04/01/10 27 Northwest Airlines 9.875% 03/15/07 64 Northwest Airlines 10.000% 02/01/09 62 NTK Holdings Inc 10.750% 03/01/14 69 Nutritional Src 10.125% 08/01/09 66 Oakwood Homes 7.875% 03/01/04 9 Oakwood Homes 8.125% 03/01/09 6 Oscient Pharm 3.500% 04/15/11 70 OSU-DFLT10/05 13.375% 10/15/09 0 Outboard Marine 9.125% 04/15/17 0 Overstock.com 3.750% 12/01/11 73 Pac-West-Tender 13.500% 02/01/09 55 PCA LLC/PCA Fin 11.875% 08/01/09 25 Pegasus Satellite 9.625% 10/15/49 13 Pegasus Satellite 9.750% 12/01/06 11 Pegasus Satellite 12.375% 08/01/06 11 Pegasus Satellite 13.500% 03/01/07 0 Phar-mor Inc 11.720% 09/11/02 2 Piedmont Aviat 10.250% 01/15/49 3 Pixelworks Inc 1.750% 05/15/24 73 Plainwell Inc 11.000% 03/01/08 2 Pliant Corp 13.000% 07/15/10 40 Polaroid Corp 7.250% 01/15/07 0 Polaroid Corp 11.500% 02/15/06 0 Primus Telecom 3.750% 09/15/10 41 Primus Telecom 8.000% 01/15/14 60 Primus Telecom 12.750% 10/15/09 74 PSINET Inc 10.500% 12/01/06 0 PSINET Inc 11.000% 08/01/09 0 Radnor Holdings 11.000% 03/15/10 12 Railworks Corp 11.500% 04/15/09 1 Read-Rite Corp. 6.500% 09/01/04 8 RJ Tower Corp. 12.000% 06/01/13 22 Scotia Pac Co 7.110% 01/20/14 75 Spinnaker Inds 10.750% 10/15/06 0 Toys R Us 7.375% 10/15/18 75 Tribune Co 2.000% 05/15/29 67 Trism Inc 12.000% 02/15/05 0 United Air Lines 8.700% 10/07/08 39 United Air Lines 9.020% 04/19/12 56 United Air Lines 9.200% 03/22/08 49 United Air Lines 9.300% 03/22/08 49 United Air Lines 9.350% 04/07/16 33 United Air Lines 9.560% 10/19/18 61 United Air Lines 10.020% 03/22/14 49 United Air Lines 10.110% 01/05/06 3 United Air Lines 10.110% 02/19/49 48 United Air Lines 10.850% 02/19/15 48 United Homes Inc 11.000% 03/15/05 0 US Air Inc. 10.750% 01/01/49 24 Venture Holdings 11.000% 06/01/07 0 Venture Holdings 12.000% 06/01/09 0 Vesta Insurance Group 8.750% 07/15/25 9 Werner Holdings 10.000% 11/15/07 8 Wheeling-Pitt St 6.000% 08/01/10 70 Winn-Dixie Store 8.875% 04/01/08 75 Winstar Comm Inc 12.500% 04/15/08 0 Winstar Comm Inc 12.750% 04/15/10 0 World Access Inc 13.250% 01/15/08 5 Xerox Corp 0.570% 04/21/18 43 Ziff Davis Media 12.000% 07/15/10 42 ********* 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 ***